10-Q

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

Commission file number: 001-34580

FIRST AMERICAN FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)


Delaware		26-1911571
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1 First American Way, Santa Ana, California		92707-5913
(Address of principal executive offices)		(Zip Code)

(714) 250-3000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.00001 par value	FAF	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

On April 21, 2025 there were 102.9 million shares of common stock outstanding.

FIRST AMERICAN FINANCIAL CORPORATION

AND SUBSIDIARY COMPANIES

INFORMATION INCLUDED IN REPORT


PART I: FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)

	A. Condensed Consolidated Balance Sheets as of March 31, 2025 and December 31, 2024	5

	B. Condensed Consolidated Statements of Income for the three months ended March 31, 2025 and 2024	6

	C. Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2025 and 2024	7

	D. Condensed Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2025 and 2024	8

	E. Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2025 and 2024	10

	F. Notes to Condensed Consolidated Financial Statements	11

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39

Item 4.	Controls and Procedures	39

PART II: OTHER INFORMATION

Item 1.	Legal Proceedings	40

Item 1A.	Risk Factors	40

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	50

Item 3.	Defaults Upon Senior Securities	50

Item 4.	Mine Safety Disclosures	50

Item 5.	Other Information	50

Item 6.	Exhibits	51

THIS QUARTERLY REPORT ON FORM 10-Q CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. THESE FORWARD-LOOKING STATEMENTS CAN BE IDENTIFIED BY THE FACT THAT THEY DO NOT RELATE STRICTLY TO HISTORICAL OR CURRENT FACTS AND MAY CONTAIN THE WORDS “BELIEVE,” “ANTICIPATE,” “EXPECT,” “INTEND,” “PLAN,” “PREDICT,” “ESTIMATE,” “PROJECT,” “WILL BE,” “WILL CONTINUE,” “WILL LIKELY RESULT,” OR OTHER SIMILAR WORDS AND PHRASES OR FUTURE OR CONDITIONAL VERBS SUCH AS “WILL,” “MAY,” “MIGHT,” “SHOULD,” “WOULD,” OR “COULD.” THESE FORWARD-LOOKING STATEMENTS INCLUDE, WITHOUT LIMITATION, STATEMENTS REGARDING FUTURE OPERATIONS, PERFORMANCE, FINANCIAL CONDITION, PROSPECTS, PLANS AND STRATEGIES. THESE FORWARD-LOOKING STATEMENTS ARE BASED ON CURRENT EXPECTATIONS AND ASSUMPTIONS THAT MAY PROVE TO BE INCORRECT.

•

INTEREST RATE FLUCTUATIONS;

•

CHANGES IN CONDITIONS OF THE REAL ESTATE MARKETS;

•

VOLATILITY IN THE CAPITAL MARKETS;

•

UNFAVORABLE ECONOMIC CONDITIONS;

•

IMPAIRMENTS IN THE COMPANY’S GOODWILL OR OTHER INTANGIBLE ASSETS;

•

FAILURES AT FINANCIAL INSTITUTIONS WHERE THE COMPANY DEPOSITS FUNDS;

•

REGULATORY OVERSIGHT AND CHANGES IN APPLICABLE LAWS AND GOVERNMENT REGULATIONS, INCLUDING PRIVACY AND DATA PROTECTION LAWS;

•

HEIGHTENED SCRUTINY BY LEGISLATORS AND REGULATORS OF THE COMPANY’S TITLE INSURANCE AND SERVICES SEGMENT AND CERTAIN OTHER OF THE COMPANY’S BUSINESSES;

•

REGULATION OF TITLE INSURANCE RATES;

•

LIMITATIONS ON ACCESS TO PUBLIC RECORDS AND OTHER DATA;

•

SEVERE WEATHER CONDITIONS, HEALTH CRISES, TERRORIST ATTACKS AND OTHER CATASTROPHES;

•

CHANGES IN RELATIONSHIPS WITH LARGE MORTGAGE LENDERS AND GOVERNMENT-SPONSORED ENTERPRISES;

•

CHANGES IN MEASURES OF THE STRENGTH OF THE COMPANY’S TITLE INSURANCE UNDERWRITERS, INCLUDING RATINGS AND STATUTORY CAPITAL AND SURPLUS;

•

LOSSES IN THE COMPANY’S INVESTMENT PORTFOLIO OR VENTURE INVESTMENT PORTFOLIO;

•

MATERIAL VARIANCE BETWEEN ACTUAL AND EXPECTED CLAIMS EXPERIENCE;

•

PROVISION OF CAPITAL TO SUBSIDIARIES THAT COULD AFFECT THE COMPANY’S LIQUIDITY POSITION;

•

DEFALCATIONS, INCREASED CLAIMS OR OTHER COSTS AND EXPENSES ATTRIBUTABLE TO THE COMPANY’S USE OF TITLE AGENTS;

•

ANY INADEQUACY IN THE COMPANY’S RISK MANAGEMENT FRAMEWORK OR USE OF MODELS;

•

SYSTEMS DAMAGE, FAILURES, INTERRUPTIONS, CYBERATTACKS AND INTRUSIONS, OR UNAUTHORIZED DATA DISCLOSURES;

•

INNOVATION EFFORTS OF THE COMPANY AND OTHER INDUSTRY PARTICIPANTS AND ANY RELATED MARKET DISRUPTION;

•

ERRORS AND FRAUD INVOLVING THE TRANSFER OF FUNDS;

•

FAILURES TO RECRUIT AND RETAIN QUALIFIED EMPLOYEES;

•

THE COMPANY’S USE OF A GLOBAL WORKFORCE;

•

INABILITY OF THE COMPANY TO FULFILL PARENT COMPANY OBLIGATIONS AND/OR PAY DIVIDENDS;

•

INABILITY TO REALIZE ANTICIPATED SYNERGIES OR PRODUCE RETURNS THAT JUSTIFY INVESTMENT IN ACQUIRED BUSINESSES;

•

A REDUCTION IN THE DEPOSITS AT THE COMPANY’S FEDERAL SAVINGS BANK SUBSIDIARY;

•

CLAIMS OF INFRINGEMENT OR INABILITY TO ADEQUATELY PROTECT THE COMPANY’S INTELLECTUAL PROPERTY; AND

•

OTHER FACTORS DESCRIBED IN THIS QUARTERLY REPORT ON FORM 10-Q, INCLUDING UNDER THE CAPTION RISK FACTORS IN ITEM 1A OF PART II.

THE FORWARD-LOOKING STATEMENTS SPEAK ONLY AS OF THE DATE THEY ARE MADE. THE COMPANY DOES NOT UNDERTAKE TO UPDATE FORWARD-LOOKING STATEMENTS TO REFLECT CIRCUMSTANCES OR EVENTS THAT OCCUR AFTER THE DATE THE FORWARD-LOOKING STATEMENTS ARE MADE.

PART I: FINANCIAL INFORMATION

Item 1. Financial Statements.

FIRST AMERICAN FINANCIAL CORPORATION

AND SUBSIDIARY COMPANIES

Condensed Consolidated Balance Sheets

(in millions, except par values)

(unaudited)


	March 31, 2025			December 31, 2024
Assets
Cash and cash equivalents	$	2,045.1		$	1,718.1
Accounts and accrued income receivable, less allowance for credit losses of $22.7 and $21.5		376.8			374.8
Income taxes receivable		26.8			61.3
Investments:
Deposits with banks		62.8			85.4
Debt securities (amortized cost of $7,774.6 and $7,730.9; pledged of $103.5 and $92.4)		7,434.0			7,265.9
Equity securities		686.7			691.3
	$	8,183.5		$	8,042.6
Secured financings receivable		844.7			690.0
Property and equipment, net		735.7			745.1
Operating lease assets		215.3			214.7
Title plants and other indexes		678.5			673.9
Deferred income taxes		43.8			43.8
Goodwill		1,809.6			1,804.3
Other intangible assets, net		121.5			125.2
Other assets		416.1			414.8
	$	15,497.4		$	14,908.6
Liabilities and Equity
Deposits		5,661.0			5,048.1
Accounts payable and accrued liabilities		723.5			943.3
Deferred revenue		196.2			210.4
Reserve for known and incurred but not reported claims		1,187.5			1,193.4
Income taxes payable		37.5			27.0
Deferred income taxes		139.1			139.1
Operating lease liabilities		229.5			229.9
Secured financings payable		735.8			643.8
Notes and contracts payable		1,546.4			1,546.6
	$	10,456.5		$	9,981.6
Commitments and contingencies (Note 16)
Stockholders’ equity:
Preferred stock, $0.00001 par value; Authorized—0.5 shares; Outstanding—none		—			—
Common stock, $0.00001 par value; Authorized—300.0 shares; Outstanding—103.2 shares and 103.0 shares		—			—
Additional paid-in capital		1,784.3			1,787.6
Retained earnings		3,634.8			3,617.3
Accumulated other comprehensive loss		(399.8	)		(496.4	)
Total stockholders’ equity	$	5,019.3		$	4,908.5
Noncontrolling interests		21.6			18.5
Total equity	$	5,040.9		$	4,927.0
	$	15,497.4		$	14,908.6

See notes to condensed consolidated financial statements.

FIRST AMERICAN FINANCIAL CORPORATION

AND SUBSIDIARY COMPANIES

Condensed Consolidated Statements of Income

(in millions, except per share amounts)

(unaudited)


	Three Months Ended
	March 31,
	2025			2024
Revenues
Direct premiums and escrow fees	$	561.1		$	500.9
Agent premiums		654.6			563.8
Information and other		242.2			223.0
Net investment income		135.2			127.9
Net investment (losses) gains (realized of $(1.5) and $(3.4))		(10.8	)		9.0
		1,582.3			1,424.6
Expenses
Personnel costs		506.7			484.9
Premiums retained by agents		525.5			447.8
Other operating expenses		278.3			265.8
Provision for policy losses and other claims		70.1			69.5
Depreciation and amortization		52.5			50.1
Premium taxes		17.4			13.9
Interest		35.2			34.3
		1,485.7			1,366.3
Income before income taxes		96.6			58.3
Income taxes		21.8			11.6
Net income		74.8			46.7
Less: Net income attributable to noncontrolling interests		0.6			—
Net income attributable to the Company	$	74.2		$	46.7
Net income per share attributable to the Company's stockholders (Note 10):
Basic	$	0.72		$	0.45
Diluted	$	0.71		$	0.45
Cash dividends per share	$	0.54		$	0.53
Weighted-average common shares outstanding (Note 10):
Basic		103.8			104.1
Diluted		104.2			104.4

See notes to condensed consolidated financial statements.

FIRST AMERICAN FINANCIAL CORPORATION

AND SUBSIDIARY COMPANIES

Condensed Consolidated Statements of Comprehensive Income

(in millions)

(unaudited)


	Three Months Ended March 31,
	2025		2024
Net income	$	74.8	$	46.7
Other comprehensive income (loss), net of tax:
Change in unrealized gains (losses) on debt securities		92.3		(50.6	)
Change in foreign currency translation adjustment		3.9		(14.5	)
Change in pension benefit adjustment		0.4		0.4
Total other comprehensive income (loss), net of tax		96.6		(64.7	)
Comprehensive income (loss)		171.4		(18.0	)
Less: Comprehensive income attributable to noncontrolling interests		0.6		—
Comprehensive income (loss) attributable to the Company	$	170.8	$	(18.0	)

See notes to condensed consolidated financial statements.

FIRST AMERICAN FINANCIAL CORPORATION

AND SUBSIDIARY COMPANIES

Condensed Consolidated Statements of Stockholders’ Equity

(in millions)

(unaudited)


	First American Financial Corporation Stockholders
	Shares			Common stock		Additional paid-in capital			Retained earnings			Accumulated other comprehensive income (loss)			Total stockholders’ equity			Noncontrolling interests		Total
Balance at December 31, 2024		103.0		$	—	$	1,787.6		$	3,617.3		$	(496.4	)	$	4,908.5		$	18.5	$	4,927.0
Net income for three months ended March 31, 2025		—			—		—			74.2			—			74.2			0.6		74.8
Dividends on common shares		—			—		—			(55.7	)		—			(55.7	)		—		(55.7	)
Repurchases of Company shares		(0.4	)		—		(28.2	)		—			—			(28.2	)		—		(28.2	)
Shares issued in connection with share-based compensation		0.6			—		(5.7	)		(1.0	)		—			(6.7	)		—		(6.7	)
Share-based compensation		—			—		30.6			—			—			30.6			—		30.6
Net activity related to noncontrolling interests		—			—		—			—			—			—			2.5		2.5
Other comprehensive income		—			—		—			—			96.6			96.6			—		96.6
Balance at March 31, 2025		103.2		$	—	$	1,784.3		$	3,634.8		$	(399.8	)	$	5,019.3		$	21.6	$	5,040.9

See notes to condensed consolidated financial statements.

FIRST AMERICAN FINANCIAL CORPORATION

AND SUBSIDIARY COMPANIES

Condensed Consolidated Statements of Stockholders’ Equity – (Continued)

(in millions)

(unaudited)


	First American Financial Corporation Stockholders
	Shares			Common stock		Additional paid-in capital			Retained earnings			Accumulated other comprehensive income (loss)			Total stockholders’ equity			Noncontrolling interests		Total
Balance at December 31, 2023		103.1		$	—	$	1,793.3		$	3,710.6		$	(655.8	)	$	4,848.1		$	14.7	$	4,862.8
Net income for three months ended March 31, 2024		—			—		—			46.7			—			46.7			—		46.7
Dividends on common shares		—			—		—			(54.9	)		—			(54.9	)		—		(54.9	)
Repurchases of Company shares		(0.1	)		—		(3.5	)		—			—			(3.5	)		—		(3.5	)
Shares issued in connection with share-based compensation		0.7			—		(7.2	)		(0.8	)		—			(8.0	)		—		(8.0	)
Share-based compensation		—			—		23.4			—			—			23.4			—		23.4
Net activity related to noncontrolling interests		—			—		—			—			—			—			4.1		4.1
Other comprehensive loss		—			—		—			—			(64.7	)		(64.7	)		—		(64.7	)
Balance at March 31, 2024		103.7		$	—	$	1,806.0		$	3,701.6		$	(720.5	)	$	4,787.1		$	18.8	$	4,805.9

See notes to condensed consolidated financial statements.

FIRST AMERICAN FINANCIAL CORPORATION

AND SUBSIDIARY COMPANIES

Condensed Consolidated Statements of Cash Flows

(in millions)

(unaudited)


	Three Months Ended March 31,
	2025			2024
Cash flows from operating activities:
Net income	$	74.8		$	46.7
Adjustments to reconcile net income to cash provided by operating activities:
Provision for policy losses and other claims		70.1			69.5
Depreciation and amortization		52.5			50.1
Amortization of premiums and accretion of discounts on debt securities, net		(10.0	)		2.1
Net investment losses (gains)		10.8			(9.0	)
Share-based compensation		30.6			23.4
Equity in earnings of affiliates, net		(2.7	)		(1.1	)
Dividends from equity method investments		2.3			0.8
Changes in assets and liabilities excluding effects of acquisitions and noncash transactions:
Claims paid, including assets acquired, net of recoveries		(76.3	)		(91.6	)
Net change in income tax accounts		12.8			20.9
(Increase) decrease in accounts and accrued income receivable		(2.3	)		160.2
Decrease in accounts payable and accrued liabilities		(202.0	)		(143.7	)
Decrease in deferred revenue		(14.5	)		(13.8	)
Other, net		1.1			(45.2	)
Cash (used for) provided by operating activities		(52.8	)		69.3
Cash flows from investing activities:
Acquisitions/dispositions, net of cash acquired/divested		(4.4	)		(3.5	)
Net decrease (increase) in deposits with banks		22.9			(23.3	)
Purchases of debt securities		(468.2	)		(332.5	)
Proceeds from sales of debt securities		266.8			224.5
Proceeds from maturities of debt securities		146.0			132.8
Purchases of equity securities		(16.9	)		(31.6	)
Proceeds from sales of equity securities		15.1			44.2
Net change in other investments		(0.6	)		(1.6	)
Advances under secured financing agreements		(7,861.3	)		(4,792.6	)
Collections of secured financings receivable		7,706.6			4,601.0
Capital expenditures		(41.7	)		(51.7	)
Proceeds from sales of property and equipment		0.1			—
Proceeds from insurance settlement		1.1			2.9
Cash used for investing activities		(234.5	)		(231.4	)
Cash flows from financing activities:
Net change in deposits		612.9			(2,004.8	)
Borrowings under secured financing agreements		7,592.5			4,732.8
Repayments of secured financings payable		(7,500.5	)		(4,597.3	)
Repayments of other notes and contracts payable		(0.6	)		(0.6	)
Net activity related to noncontrolling interests		(1.4	)		4.1
Net payments in connection with share-based compensation		(6.7	)		(8.0	)
Repurchases of Company shares		(28.2	)		(3.5	)
Payments of cash dividends		(55.7	)		(54.9	)
Cash provided by (used for) financing activities		612.3			(1,932.2	)
Effect of exchange rate changes on cash		2.0			(4.6	)
Net increase (decrease) in cash and cash equivalents		327.0			(2,098.9	)
Cash and cash equivalents—Beginning of period		1,718.1			3,605.3
Cash and cash equivalents—End of period	$	2,045.1		$	1,506.4
Supplemental information:
Cash paid (received) during the period for:
Interest	$	40.6		$	36.2
Premium taxes	$	25.7		$	19.5
Income taxes paid	$	11.1		$	3.4
Income tax refunds	$	(2.1	)	$	(12.7	)

See notes to condensed consolidated financial statements.

FIRST AMERICAN FINANCIAL CORPORATION
AND SUBSIDIARY COMPANIES

Notes to Condensed Consolidated Financial Statements
(unaudited)

Note 1 – Basis of Condensed Consolidated Financial Statements

Basis of Presentation

The condensed consolidated financial information included in this report has been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and Article 10 of Securities and Exchange Commission Regulation S-X. The principles for condensed interim financial information do not require the inclusion of all the information and footnotes required by GAAP for complete financial statements. Therefore, these financial statements should be read in conjunction with the First American Financial Corporation (the “Company”) Annual Report on Form 10-K for the year ended December 31, 2024. The condensed consolidated financial statements included herein are unaudited; however, in the opinion of management, they contain all normal recurring adjustments necessary for a fair statement of the consolidated results for the interim periods. All material intercompany transactions and balances have been eliminated upon consolidation.

Recently Adopted Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (“FASB”) issued updated guidance intended to enhance the transparency and decision usefulness of income tax disclosures. The updated guidance requires disclosure of specific categories and greater disaggregation of information included in the rate reconciliation and additional disclosures related to income taxes paid. The updated guidance, which was adopted on January 1, 2025, and, is effective for annual reporting periods, had no impact on the Company's condensed consolidated financial statements.

In August 2023, the FASB issued updated guidance that is intended to provide decision-useful information to investors and reduce diversity in practice in accounting for contributions made to a joint venture, upon formation, in a joint venture’s separate financial statements. The updated guidance requires joint ventures to recognize and initially measure their assets and liabilities at fair value, with certain exceptions to fair value measurement consistent with business combination guidance. The updated guidance, which was adopted on January 1, 2025, had no impact on the Company's condensed consolidated financial statements.

Pending Accounting Pronouncements

In November 2024, the FASB issued updated guidance intended to improve financial reporting by requiring entities to disclose additional information in the notes to the financial statements about specific expense categories within the income statement. The updated guidance is effective for annual reporting periods beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The updated disclosures can be applied either prospectively or retrospectively in the Company's financial statements. Except for the disclosure requirements, the Company does not expect the adoption of this guidance to have a material impact on its condensed consolidated financial statements.

FIRST AMERICAN FINANCIAL CORPORATION
AND SUBSIDIARY COMPANIES
Notes to Condensed Consolidated Financial Statements – (Continued)
(unaudited)

Note 2 –Trust Assets, Escrow and Other Deposits

The Company administers escrow deposits as a service to customers in its direct title operations. Escrow deposits totaled $9.8 billion and $8.9 billion at March 31, 2025 and December 31, 2024, respectively, of which $4.3 billion and $4.0 billion, respectively, were held at First American Trust, FSB (“FA Trust”). The remaining deposits were held at third-party financial institutions. Escrow deposits held at third-party financial institutions are not considered assets of the Company and, therefore, are not included in the accompanying condensed consolidated balance sheets. All such amounts are placed in deposit accounts insured, up to applicable limits, by the Federal Deposit Insurance Corporation. The Company could be held contingently liable for the disposition of these assets.

Trust assets administered by FA Trust totaled $4.9 billion and $4.8 billion at March 31, 2025 and December 31, 2024, respectively, of which $193.2 million and $169.4 million, respectively, were held at FA Trust. The remaining trust assets were held at third-party financial institutions. Trust assets administered by FA Trust and held at third-party institutions are fiduciary client assets. As such, these trust assets are not considered assets of the Company and, therefore, are not included in the accompanying condensed consolidated balance sheets. The Company could be held contingently liable if FA Trust were to breach any of its fiduciary duties.

In conducting its operations, the Company often holds customers’ assets in escrow, pending completion of real estate transactions and, as a result, the Company has ongoing programs for realizing economic benefits with various financial institutions. The results from these programs are included as either income or as a reduction in expense, as appropriate, in the condensed consolidated statements of income based on the nature of the arrangement and benefit received.

The Company facilitates tax-deferred property exchanges for customers pursuant to Section 1031 of the Internal Revenue Code and tax-deferred reverse exchanges pursuant to Revenue Procedure 2000-37. As a facilitator and intermediary, the Company holds the proceeds from sales transactions and takes temporary title to property identified by the customer to be acquired with such proceeds. Upon the completion of each such exchange, the identified property is transferred to the customer or, if the exchange does not take place, an amount equal to the sales proceeds or, in the case of a reverse exchange, title to the property held by the Company is transferred to the customer. Like-kind exchange funds administered by the Company totaled $1.8 billion and $2.3 billion at March 31, 2025 and December 31, 2024, respectively. The like-kind exchange deposits are held at third-party financial institutions and, due to the structure utilized to facilitate these transactions, the proceeds and property are not considered assets of the Company and, therefore, are not included in the accompanying condensed consolidated balance sheets. All such amounts are placed in deposit accounts insured, up to applicable limits, by the Federal Deposit Insurance Corporation. The Company could be held contingently liable to the customer for the transfers of property, disbursements of proceeds and the returns on such proceeds.

In conducting its residential mortgage loan subservicing operations, the Company administers cash deposits on behalf of its clients. Cash deposits totaled $1.1 billion and $901.0 million at March 31, 2025 and December 31, 2024, respectively, of which $764.7 million and $606.5 million, respectively, were held at FA Trust. The remaining deposits were held at third-party financial institutions. Cash deposits held at third-party financial institutions are not considered assets of the Company and, therefore, are not included in the accompanying condensed consolidated balance sheets. All such amounts are placed in deposit accounts insured, up to applicable limits, by the Federal Deposit Insurance Corporation. The Company could be held contingently liable for the disposition of these assets. In connection with certain accounts, the Company has ongoing programs for realizing economic benefits with various financial institutions whereby it earns economic benefits either as income or as a reduction in expense.

Deposit balances held at FA Trust are temporarily invested in cash and cash equivalents and debt securities, with offsetting liabilities included in deposits in the accompanying condensed consolidated balance sheets.

FIRST AMERICAN FINANCIAL CORPORATION
AND SUBSIDIARY COMPANIES
Notes to Condensed Consolidated Financial Statements – (Continued)
(unaudited)

Note 3 – Debt Securities

Investments in debt securities, classified as available-for-sale, are as follows:


	Amortized		Gross unrealized					Estimated
(in millions)	cost		Gains		Losses			fair value
March 31, 2025
U.S. Treasury bonds	$	175.5	$	0.5	$	(3.1	)	$	172.9
Municipal bonds		864.2		3.9		(71.6	)		796.5
Foreign government bonds		215.8		2.1		(5.2	)		212.7
Governmental agency bonds		202.2		—		(9.7	)		192.5
Governmental agency mortgage-backed securities		4,848.2		10.4		(249.8	)		4,608.8
U.S. corporate debt securities		981.9		7.7		(23.1	)		966.5
Foreign corporate debt securities		486.8		6.6		(9.3	)		484.1
	$	7,774.6	$	31.2	$	(371.8	)	$	7,434.0
December 31, 2024
U.S. Treasury bonds	$	180.7	$	0.1	$	(5.2	)	$	175.6
Municipal bonds		844.9		5.3		(73.7	)		776.5
Foreign government bonds		217.1		1.6		(7.1	)		211.6
Governmental agency bonds		203.8		—		(14.0	)		189.8
Governmental agency mortgage-backed securities		4,844.4		1.7		(343.8	)		4,502.3
U.S. corporate debt securities		948.4		5.6		(28.4	)		925.6
Foreign corporate debt securities		491.6		5.3		(12.4	)		484.5
	$	7,730.9	$	19.6	$	(484.6	)	$	7,265.9

Sales of debt securities resulted in realized gains of $1.1 million and $0.8 million, realized losses of $2.6 million and $4.2 million and proceeds of $266.8 million and $224.5 million for the three months ended March 31, 2025 and 2024, respectively.

FIRST AMERICAN FINANCIAL CORPORATION
AND SUBSIDIARY COMPANIES
Notes to Condensed Consolidated Financial Statements – (Continued)
(unaudited)

Investments in debt securities in an unrealized loss position, and their respective length of time in such position, are as follows:


	Less than 12 months					12 months or longer					Total
(in millions)	Estimated fair value		Unrealized losses			Estimated fair value		Unrealized losses			Estimated fair value		Unrealized losses
March 31, 2025
U.S. Treasury bonds	$	38.4	$	(0.7	)	$	45.8	$	(2.4	)	$	84.2	$	(3.1	)
Municipal bonds		268.0		(5.8	)		412.0		(65.8	)		680.0		(71.6	)
Foreign government bonds		4.4		—			63.7		(5.2	)		68.1		(5.2	)
Governmental agency bonds		146.3		(1.8	)		37.8		(7.9	)		184.1		(9.7	)
Governmental agency mortgage-backed securities		2,558.4		(52.1	)		1,283.8		(197.7	)		3,842.2		(249.8	)
U.S. corporate debt securities		415.7		(5.5	)		118.1		(17.6	)		533.8		(23.1	)
Foreign corporate debt securities		153.5		(1.7	)		97.8		(7.6	)		251.3		(9.3	)
	$	3,584.7	$	(67.6	)	$	2,059.0	$	(304.2	)	$	5,643.7	$	(371.8	)
December 31, 2024
U.S. Treasury bonds	$	81.8	$	(1.8	)	$	52.9	$	(3.4	)	$	134.7	$	(5.2	)
Municipal bonds		248.3		(4.4	)		417.0		(69.3	)		665.3		(73.7	)
Foreign government bonds		29.8		(0.2	)		72.7		(6.9	)		102.5		(7.1	)
Governmental agency bonds		144.4		(5.3	)		37.9		(8.7	)		182.3		(14.0	)
Governmental agency mortgage-backed securities		2,977.2		(98.4	)		1,290.4		(245.4	)		4,267.6		(343.8	)
U.S. corporate debt securities		435.2		(9.6	)		117.5		(18.8	)		552.7		(28.4	)
Foreign corporate debt securities		159.4		(3.2	)		110.5		(9.2	)		269.9		(12.4	)
	$	4,076.1	$	(122.9	)	$	2,098.9	$	(361.7	)	$	6,175.0	$	(484.6	)

Based on the Company’s review of its debt securities in an unrealized loss position it determined that the losses were due to non-credit factors and, therefore, it does not consider these securities to be credit impaired at March 31, 2025. As of March 31, 2025, the Company did not intend to sell any debt securities in an unrealized loss position and it is not more likely than not that the Company will be required to sell any debt securities before recovery of their amortized cost basis.

In determining credit losses on its debt securities in an unrealized loss position, the Company considers certain factors that may include, among others, severity of the unrealized loss, security type, industry sector, credit rating, yield to maturity, profitability and stock performance.

In the normal course of operations, the Company may seek to optimize its investment portfolio and prospective investment returns by selling certain debt securities in an unrealized loss (or gain) position for which such unrealized loss or gain has been deferred in other comprehensive income. Sales of such debt securities could result in the realization of material gains or losses recorded in net income in the period the debt securities are sold.

FIRST AMERICAN FINANCIAL CORPORATION
AND SUBSIDIARY COMPANIES
Notes to Condensed Consolidated Financial Statements – (Continued)
(unaudited)

Investments in debt securities at March 31, 2025, by contractual maturities, are as follows:


(in millions)	Due in one year or less		Due after one through five years		Due after five through ten years		Due after ten years		Total
U.S. Treasury bonds
Amortized cost	$	38.7	$	106.6	$	4.7	$	25.5	$	175.5
Estimated fair value	$	38.6	$	105.3	$	4.8	$	24.2	$	172.9
Municipal bonds
Amortized cost		13.0		85.7		286.1		479.4		864.2
Estimated fair value		13.1		83.2		256.2		444.0		796.5
Foreign government bonds
Amortized cost		8.2		125.7		78.2		3.7		215.8
Estimated fair value		8.2		127.7		74.1		2.7		212.7
Governmental agency bonds
Amortized cost		8.6		1.4		148.8		43.4		202.2
Estimated fair value		8.6		1.4		147.0		35.5		192.5
U.S. corporate debt securities
Amortized cost		14.1		555.9		319.5		92.4		981.9
Estimated fair value		14.1		554.0		316.9		81.5		966.5
Foreign corporate debt securities
Amortized cost		24.1		308.5		122.9		31.3		486.8
Estimated fair value		24.1		309.6		122.0		28.4		484.1
Total debt securities (excluding mortgage-backed securities)
Amortized cost	$	106.7	$	1,183.8	$	960.2	$	675.7	$	2,926.4
Estimated fair value	$	106.7	$	1,181.2	$	921.0	$	616.3	$	2,825.2
Total mortgage-backed securities
Amortized cost										4,848.2
Estimated fair value										4,608.8
Total debt securities
Amortized cost									$	7,774.6
Estimated fair value									$	7,434.0

Mortgage-backed securities, which include contractual terms to maturity, are not categorized by contractual maturity as borrowers may have the right to call or prepay obligations with, or without, call or prepayment penalties.

FIRST AMERICAN FINANCIAL CORPORATION
AND SUBSIDIARY COMPANIES
Notes to Condensed Consolidated Financial Statements – (Continued)
(unaudited)

The composition of the debt securities portfolio at March 31, 2025, by credit rating, is as follows:


	A- or higher					BBB+ to BBB-					Non-Investment Grade					Total
(dollars in millions)	Estimated fair value		Percentage			Estimated fair value		Percentage			Estimated fair value		Percentage			Estimated fair value
U.S. Treasury bonds	$	172.9		100.0	%	$	—		—	%	$	—		—	%	$	172.9
Municipal bonds		775.9		97.5			20.3		2.5			0.3		—			796.5
Foreign government bonds		207.5		97.6			4.5		2.1			0.7		0.3			212.7
Governmental agency bonds		192.5		100.0			—		—			—		—			192.5
Governmental agency mortgage- backed securities		4,608.8		100.0			—		—			—		—			4,608.8
U.S. corporate debt securities		476.4		49.3			326.0		33.7			164.1		17.0			966.5
Foreign corporate debt securities		254.2		52.5			186.0		38.4			43.9		9.1			484.1
	$	6,688.2		90.0	%	$	536.8		7.2	%	$	209.0		2.8	%	$	7,434.0

Included in debt securities at March 31, 2025, were bank loans totaling $140.5 million, of which $129.8 million were non-investment grade; high yield corporate debt securities totaling $69.5 million, all of which were non-investment grade; and emerging market debt securities totaling $34.5 million, of which $9.4 million were non-investment grade.

The composition of the debt securities portfolio in an unrealized loss position at March 31, 2025, by credit rating, is as follows:


	A- or higher					BBB+ to BBB-					Non-Investment Grade					Total
(dollars in millions)	Estimated fair value		Percentage			Estimated fair value		Percentage			Estimated fair value		Percentage			Estimated fair value
U.S. Treasury bonds	$	84.2		100.0	%	$	—		—	%	$	—		—	%	$	84.2
Municipal bonds		664.5		97.8			15.2		2.2			0.3		—			680.0
Foreign government bonds		65.9		96.8			1.5		2.2			0.7		1.0			68.1
Governmental agency bonds		184.1		100.0			—		—			—		—			184.1
Governmental agency mortgage- backed securities		3,842.2		100.0			—		—			—		—			3,842.2
U.S. corporate debt securities		279.3		52.3			168.1		31.5			86.4		16.2			533.8
Foreign corporate debt securities		147.3		58.7			78.0		31.0			26.0		10.3			251.3
	$	5,267.5		93.3	%	$	262.8		4.7	%	$	113.4		2.0	%	$	5,643.7

Debt securities in an unrealized loss position at March 31, 2025, included bank loans totaling $76.9 million, of which $75.5 million were non-investment grade; high yield corporate debt securities totaling $32.0 million, all of which were non-investment grade; and emerging market debt securities totaling $19.9 million, of which $5.6 million were non-investment grade.

The credit ratings in the above tables reflect published ratings obtained from globally recognized securities rating agencies. If a security was rated differently among the rating agencies, the lowest rating was selected. Governmental agency mortgage-backed securities are not rated by any of the ratings agencies; however, these securities have been included in the above table in the “A- or higher” rating category because the payments of principal and interest are guaranteed by the governmental agency that issued the security.

FIRST AMERICAN FINANCIAL CORPORATION
AND SUBSIDIARY COMPANIES
Notes to Condensed Consolidated Financial Statements – (Continued)
(unaudited)

Note 4 – Equity Securities

Investments in equity securities, by accounting classification, are summarized as follows:


(in millions)	March 31, 2025		December 31, 2024
Marketable equity securities	$	367.4	$	386.8
Non-marketable equity securities		216.6		202.4
Equity method investments		102.7		102.1
	$	686.7	$	691.3

Investments in marketable equity securities are summarized as follows:


(in millions)	Cost		Unrealized losses			Estimated fair value
March 31, 2025
Common stocks	$	390.9	$	(35.6	)	$	355.3
Preferred stocks		12.0		0.1			12.1
	$	402.9	$	(35.5	)	$	367.4
December 31, 2024
Common stocks	$	397.3	$	(22.6	)	$	374.7
Preferred stocks		12.0		0.1			12.1
	$	409.3	$	(22.5	)	$	386.8

Net losses of $7.0 million and net gains of $10.9 million resulting from changes in the fair values of marketable equity securities were recognized for the three months ended March 31, 2025 and 2024, respectively, which included net unrealized losses of $6.7 million and net unrealized gains of $10.5 million on securities still held at March 31, 2025 and 2024, respectively.

A summary of the changes in the carrying amounts of non-marketable equity securities, which primarily relate to the Company's venture investment portfolio, for the three months ended March 31, 2025 and 2024, is as follows:


	Three Months Ended March 31,
(in millions)	2025			2024
Carrying amount, beginning of period	$	202.4		$	224.1
Net additions		15.0			1.8
Gross unrealized gains		—			0.2
Gross unrealized losses and impairments		(0.8	)		—
Carrying amount, end of period	$	216.6		$	226.1

Cumulative gross unrealized gains and cumulative gross unrealized losses and impairments related to non-marketable equity securities at March 31, 2025 and December 31, 2024, are summarized as follows:


(in millions)	March 31, 2025		December 31, 2024
Cumulative gross unrealized gains	$	244.8	$	244.8
Cumulative gross unrealized losses and impairments	$	352.4	$	351.6

FIRST AMERICAN FINANCIAL CORPORATION
AND SUBSIDIARY COMPANIES
Notes to Condensed Consolidated Financial Statements – (Continued)
(unaudited)

Note 5 – Allowance for Credit Losses – Accounts Receivable

Activity in the allowance for credit losses on accounts receivable is summarized as follows:


	Three Months Ended March 31,
(in millions)	2025			2024
Balance at beginning of period	$	21.5		$	21.8
Provision for expected credit losses		2.4			0.8
Write-offs/recoveries		(1.2	)		(1.8	)
Balance at end of period	$	22.7		$	20.8

Note 6 – Goodwill

A summary of the changes in the carrying amount of goodwill, by reportable segment, for the three months ended March 31, 2025, is as follows:


(in millions)	Title Insurance and Services		Home Warranty		Total
Balance at beginning of period	$	1,763.4	$	40.9	$	1,804.3
Acquisitions		4.5		—		4.5
Foreign currency translation		0.8		—		0.8
Balance at end of period	$	1,768.7	$	40.9	$	1,809.6

Note 7 – Other Intangible Assets

Other intangible assets are summarized as follows:


(in millions)	March 31, 2025			December 31, 2024
Finite-lived intangible assets:
Customer relationships	$	148.2		$	160.8
Noncompete agreements		4.8			10.5
Trademarks		72.4			70.7
Internal-use software licenses		19.7			21.7
Patents		2.8			2.8
		247.9			266.5
Accumulated amortization		(143.3	)		(158.2	)
		104.6			108.3
Indefinite-lived intangible assets:
Licenses		16.9			16.9
	$	121.5		$	125.2

Amortization expense for finite-lived intangible assets was $9.6 million and $12.3 million for the three months ended March 31, 2025 and 2024, respectively.

FIRST AMERICAN FINANCIAL CORPORATION
AND SUBSIDIARY COMPANIES
Notes to Condensed Consolidated Financial Statements – (Continued)
(unaudited)

Estimated amortization expense for finite-lived intangible assets for the next five years is as follows:


Year	(in millions)
Remainder of 2025	$	28.1
2026	$	27.7
2027	$	12.9
2028	$	8.4
2029	$	5.9
2030	$	5.2

Note 8 – Reserve for Known and Incurred But Not Reported Claims

Activity in the reserve for known and incurred but not reported claims is summarized as follows:


	Three Months Ended March 31,
(in millions)	2025			2024
Balance at beginning of period	$	1,193.4		$	1,282.4
Provision related to:
Current year		79.5			77.0
Prior years		(9.4	)		(7.5	)
		70.1			69.5
Payments, net of recoveries, related to:
Current year		24.4			30.6
Prior years		51.9			61.0
		76.3			91.6
Other		0.3			1.3
Balance at end of period	$	1,187.5		$	1,261.6

The provision for title insurance losses, expressed as a percentage of title insurance premiums and escrow fees, was 3.0% for the three months ended March 31, 2025 and 2024.

The 3.0% loss provision rate for the three months ended March 31, 2025 reflects an ultimate loss rate of 3.75% for the 2025 policy year and reserve releases of 0.75%, or $8.4 million for prior policy years, all based on title insurance premiums and escrow fees for the three months ended March 31, 2025.

The 3.0% loss provision rate for the three months ended March 31, 2024 reflected an ultimate loss rate of 3.75% for the 2024 policy year and reserve releases of 0.75%, or $7.3 million for prior policy years, all based on title insurance premiums and escrow fees for the three months ended March 31, 2024.

A summary of the Company’s loss reserves is as follows:


(dollars in millions)	March 31, 2025				December 31, 2024
Known title claims	$	54.6	4.6	%	$	55.3	4.6	%
Incurred but not reported claims		1,105.4	93.1	%		1,109.4	93.0	%
Total title claims		1,160.0	97.7	%		1,164.7	97.6	%
Non-title claims		27.5	2.3	%		28.7	2.4	%
Total loss reserves	$	1,187.5	100.0	%	$	1,193.4	100.0	%

FIRST AMERICAN FINANCIAL CORPORATION
AND SUBSIDIARY COMPANIES
Notes to Condensed Consolidated Financial Statements – (Continued)
(unaudited)

Note 9 – Income Taxes

The Company’s effective income tax rates (income tax expense as a percentage of income before income taxes) were 22.6% and 19.9% for the three months ended March 31, 2025 and 2024, respectively. The effective income tax rates differ from the federal statutory rate due to (1) state and foreign income taxes for which the Company is liable, (2) permanent differences between amounts reported for financial statement purposes and amounts reported for income tax purposes, (3) the recognition of excess tax benefits or tax deficiencies associated with share-based payment transactions through income tax expense and (4) tax credits claimed. In addition, the effective income tax rate for 2024 reflects tax benefits related to a state tax matter from prior years.

The Company evaluates the realizability of its deferred tax assets by assessing the valuation allowance and makes adjustments to the allowance as necessary. The factors used in assessing the likelihood of realization include forecasts of future taxable income and available tax planning strategies that could be implemented. The Company’s ability to achieve forecasted taxable income in the applicable taxing jurisdictions could affect the ultimate realization of its deferred tax assets. As of March 31, 2025 and December 31, 2024, the Company carried a valuation allowance of $27.9 million. Based on future operating results in certain jurisdictions, it is possible that the current valuation allowance positions of those jurisdictions could be adjusted during the next 12 months.

As of March 31, 2025 and December 31, 2024, the liabilities for income taxes associated with uncertain tax positions were $32.6 million and $31.6 million, respectively. The net increase in the liability during 2025 was primarily attributable to positions taken on the Company’s tax returns for the current year. The liabilities as of March 31, 2025 and December 31, 2024 could be reduced by $3.7 million due to offsetting tax benefits associated with the correlative effects of potential adjustments, including timing adjustments and state income taxes. The net liability, if recognized, would favorably affect the Company’s effective income tax rate.

The Company’s continuing practice is to recognize interest and penalties related to uncertain tax positions in income tax expense. Accrued interest and penalties, net of tax benefits, related to uncertain tax positions were not material as of March 31, 2025 and December 31, 2024.

It is reasonably possible that the unrecognized benefit with respect to certain of the Company’s unrecognized tax positions may increase or decrease within the next 12 months. Any such change may be the result of either ongoing audits or the expiration of federal and state statutes of limitations for the assessment of taxes.

The Company, or one of its subsidiaries, files income tax returns in the U.S. federal jurisdiction, various state jurisdictions and in various non-U.S. jurisdictions. The primary non-federal jurisdictions are California, Canada, India and the United Kingdom. As of March 31, 2025, the Company is, generally, no longer subject to income tax examinations for U.S. federal, state and non-U.S. jurisdictions for years prior to 2021, 2019 and 2014, respectively.

Effective in 2024, the Company is subject to international anti-base erosion rules that assess a minimum tax rate of 15% in the jurisdictions in which it operates. Commonly known as “Pillar II,” these rules apply to large multinational enterprises and are designed to address the tax challenges arising from the globalization and digitalization of the economy. The Company has calculated the minimum tax on a jurisdiction-by-jurisdiction basis and has determined that the resulting tax is not material to its financial results.

FIRST AMERICAN FINANCIAL CORPORATION
AND SUBSIDIARY COMPANIES
Notes to Condensed Consolidated Financial Statements – (Continued)
(unaudited)

Note 10 – Earnings Per Share

The computation of basic and diluted earnings per share is as follows:


	Three Months Ended March 31,
(in millions, except per share data)	2025		2024
Numerator
Net income attributable to the Company	$	74.2	$	46.7
Denominator
Basic weighted-average shares		103.8		104.1
Effect of dilutive restricted stock units (“RSUs”) and performance restricted stock units (“PRSUs”)		0.4		0.3
Diluted weighted-average shares		104.2		104.4
Net income per share attributable to the Company’s stockholders (1)
Basic	$	0.72	$	0.45
Diluted	$	0.71	$	0.45

(1)

Net income per share may not recalculate due to rounding.

For the three months ended March 31, 2025, no RSUs or PRSUs had an antidilutive effect on weighted-average diluted common shares outstanding. For the three months ended March 31, 2024, 85 thousand RSUs were excluded from diluted weighted-average common shares outstanding due to their antidilutive effect.

Note 11 – Employee Benefit Plans

Net periodic benefit costs related to the Company’s unfunded supplemental benefit pension plans are summarized as follows:


	Three Months Ended March 31,
(in millions)	2025		2024
Expense:
Interest costs	$	2.4	$	2.4
Amortization of net actuarial loss		0.5		0.6
	$	2.9	$	3.0

The Company contributed $3.7 million to its unfunded supplemental benefit pension plans during the three months ended March 31, 2025 and expects to contribute an additional $12.6 million during the remainder of 2025.

FIRST AMERICAN FINANCIAL CORPORATION
AND SUBSIDIARY COMPANIES
Notes to Condensed Consolidated Financial Statements – (Continued)
(unaudited)

Note 12 – Fair Value Measurements

Certain of the Company’s assets are carried at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The Company categorizes its assets and liabilities carried at fair value using a three-level hierarchy for fair value measurements that distinguishes between market participant assumptions developed based on market data obtained from sources independent of the Company (observable inputs) and the Company’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The hierarchy for inputs used in determining fair value maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available. The hierarchy level assigned to the assets and liabilities is based on management’s assessment of the transparency and reliability of the inputs used to estimate the fair values at the measurement date. The three hierarchy levels are defined as follows:

Level 1—Valuations based on unadjusted quoted market prices in active markets for identical assets or liabilities.

Level 2—Valuations based on observable inputs (other than Level 1 prices), such as quoted prices for similar assets or liabilities at the measurement date; quoted prices in markets that are not active; or other inputs that are observable, either directly or indirectly.

Level 3—Valuations based on inputs that are unobservable and significant to the overall fair value measurement and involve management judgment.

If the inputs used to measure fair value fall into different levels of the fair value hierarchy, the hierarchy level assigned is based upon the lowest level of input that is significant to the fair value measurement.

The following tables present the fair values of the Company’s assets, measured on a recurring basis, as of March 31, 2025 and December 31, 2024:


(in millions)	Total		Level 1		Level 2		Level 3
March 31, 2025
Debt securities:
U.S. Treasury bonds	$	172.9	$	—	$	172.9	$	—
Municipal bonds		796.5		—		796.5		—
Foreign government bonds		212.7		—		212.7		—
Governmental agency bonds		192.5		—		192.5		—
Governmental agency mortgage-backed securities		4,608.8		—		4,608.8		—
U.S. corporate debt securities		966.5		—		966.5		—
Foreign corporate debt securities		484.1		—		484.1		—
		7,434.0		—		7,434.0		—
Equity securities:
Common stocks		355.3		355.3		—		—
Preferred stocks		12.1		12.1		—		—
		367.4		367.4		—		—
Total	$	7,801.4	$	367.4	$	7,434.0	$	—

FIRST AMERICAN FINANCIAL CORPORATION
AND SUBSIDIARY COMPANIES
Notes to Condensed Consolidated Financial Statements – (Continued)
(unaudited)


(in millions)	Total		Level 1		Level 2		Level 3
December 31, 2024
Debt securities:
U.S. Treasury bonds	$	175.6	$	—	$	175.6	$	—
Municipal bonds		776.5		—		776.5		—
Foreign government bonds		211.6		—		211.6		—
Governmental agency bonds		189.8		—		189.8		—
Governmental agency mortgage-backed securities		4,502.3		—		4,502.3		—
U.S. corporate debt securities		925.6		—		925.6		—
Foreign corporate debt securities		484.5		—		484.5		—
		7,265.9		—		7,265.9		—
Equity securities:
Common stocks		374.7		374.7		—		—
Preferred stocks		12.1		12.1		—		—
		386.8		386.8		—		—
Total	$	7,652.7	$	386.8	$	7,265.9	$	—

The following table presents the carrying amounts and estimated fair values of the Company’s financial instruments not measured at fair value as of March 31, 2025 and December 31, 2024:


	Carrying		Estimated fair value
(in millions)	Amount		Total		Level 1		Level 2		Level 3
March 31, 2025
Assets:
Cash and cash equivalents	$	2,045.1	$	2,045.1	$	2,045.1	$	—	$	—
Deposits with banks	$	62.8	$	62.7	$	10.9	$	51.8	$	—
Notes receivable, net	$	34.9	$	35.1	$	—	$	—	$	35.1
Secured financings receivable	$	844.7	$	844.7	$	—	$	844.7	$	—
Liabilities:
Secured financings payable	$	735.8	$	735.8	$	—	$	735.8	$	—
Notes and contracts payable	$	1,546.4	$	1,428.2	$	—	$	1,417.9	$	10.3


	Carrying		Estimated fair value
(in millions)	Amount		Total		Level 1		Level 2		Level 3
December 31, 2024
Assets:
Cash and cash equivalents	$	1,718.1	$	1,718.1	$	1,718.1	$	—	$	—
Deposits with banks	$	85.4	$	85.3	$	20.7	$	64.6	$	—
Notes receivable, net	$	34.4	$	34.6	$	—	$	—	$	34.6
Secured financings receivable	$	690.0	$	690.0	$	—	$	690.0	$	—
Liabilities:
Secured financings payable	$	643.8	$	643.8	$	—	$	643.8	$	—
Notes and contracts payable	$	1,546.6	$	1,399.4	$	—	$	1,388.4	$	11.0

FIRST AMERICAN FINANCIAL CORPORATION
AND SUBSIDIARY COMPANIES
Notes to Condensed Consolidated Financial Statements – (Continued)
(unaudited)

Note 13 – Share-Based Compensation

The following table summarizes the costs associated with the Company’s share-based compensation plans:


	Three Months Ended March 31,
(in millions)	2025		2024
Expense:
RSUs	$	25.4	$	18.9
PRSUs		3.0		2.4
Employee stock purchase plan		2.2		2.1
	$	30.6	$	23.4

The following table summarizes RSU and PRSU activity for the three months ended March 31, 2025:


(in millions, except weighted-average grant-date fair value)	Shares			Weighted-average grant-date fair value
Unvested at December 31, 2024		1.2		$	62.37
Granted during 2025		1.0		$	65.32
Vested during 2025		(0.7	)	$	63.36
Unvested at March 31, 2025		1.5		$	63.92

In March 2025, the Company’s board of directors approved an amendment and restatement of the Company's 2020 Incentive Compensation Plan (the “Incentive Compensation Plan”), effective May 13, 2025. The Incentive Compensation Plan, which is subject to stockholder approval, increases the number of shares of Company common stock available for grant by 2.0 million shares and extends the term until May 13, 2035.

Note 14 – Stockholders’ Equity

The Company maintains a stock repurchase plan with authorization up to $400.0 million, of which $117.2 million remained as of March 31, 2025. Purchases may be made from time to time by the Company in the open market at prevailing market prices or in privately negotiated transactions. During the three months ended March 31, 2025, the Company repurchased and retired 0.4 million shares of its common stock for a total purchase price of $28.2 million and, as of March 31, 2025, the Company has repurchased and retired 5.2 million shares of its common stock under the current authorization for a total purchase price of $282.8 million.

Note 15 – Accumulated Other Comprehensive Income (Loss) (“AOCI”)

The following table presents a summary of the changes in each component of AOCI for the three months ended March 31, 2025:


(in millions)	Unrealized gains (losses) on debt securities			Foreign currency translation adjustment			Pension benefit adjustment			Accumulated other comprehensive income (loss)
Balance at December 31, 2024	$	(353.7	)	$	(111.0	)	$	(31.7	)	$	(496.4	)
Change in unrealized losses on debt securities		124.4			—			—			124.4
Change in foreign currency translation adjustment		—			3.9			—			3.9
Amortization of net actuarial loss		—			—			0.5			0.5
Tax effect		(32.1	)		—			(0.1	)		(32.2	)
Balance at March 31, 2025	$	(261.4	)	$	(107.1	)	$	(31.3	)	$	(399.8	)

FIRST AMERICAN FINANCIAL CORPORATION
AND SUBSIDIARY COMPANIES
Notes to Condensed Consolidated Financial Statements – (Continued)
(unaudited)

The following table presents the other comprehensive income (loss) reclassification adjustments for the three months ended March 31, 2025 and 2024:


(in millions)	Unrealized gains (losses) on debt securities			Foreign currency translation adjustment			Pension benefit adjustment			Total other comprehensive income (loss)
Three Months Ended March 31, 2025
Pretax change before reclassifications	$	122.9		$	3.9		$	—		$	126.8
Reclassifications out of AOCI		1.5			—			0.5			2.0
Tax effect		(32.1	)		—			(0.1	)		(32.2	)
Total other comprehensive income, net of tax	$	92.3		$	3.9		$	0.4		$	96.6
Three Months Ended March 31, 2024
Pretax change before reclassifications	$	(70.3	)	$	(14.9	)	$	—		$	(85.2	)
Reclassifications out of AOCI		3.4			—			0.6			4.0
Tax effect		16.3			0.4			(0.2	)		16.5
Total other comprehensive (loss) income, net of tax	$	(50.6	)	$	(14.5	)	$	0.4		$	(64.7	)

The following table presents the effects of the reclassifications out of AOCI on the respective line items in the condensed consolidated statements of income:


	Three Months Ended March 31,
(in millions)	2025			2024			Affected line items
Unrealized gains (losses) on debt securities:
Net realized losses on sales of debt securities	$	(1.5	)	$	(3.4	)	Net investment (losses) gains
Tax effect	$	0.4		$	0.8
Pension benefit adjustment (1):
Amortization of net actuarial loss	$	(0.5	)	$	(0.6	)	Other operating expenses
Tax effect	$	0.1		$	0.2

(1)

Amounts are components of net periodic cost. See Note 11 Employee Benefit Plans for additional details.

FIRST AMERICAN FINANCIAL CORPORATION
AND SUBSIDIARY COMPANIES
Notes to Condensed Consolidated Financial Statements – (Continued)
(unaudited)

Note 16 – Litigation and Regulatory Contingencies

The Company and its subsidiaries are parties to lawsuits and are also involved in ongoing routine legal and regulatory proceedings related to their operations. These lawsuits and proceedings frequently are similar in nature to other lawsuits and proceedings pending against the Company’s competitors. When the Company has determined that a loss is both probable and reasonably estimable, a liability representing the best estimate of the Company’s financial exposure based on known facts has been recorded. Actual losses may materially differ from the amounts recorded.

With respect to the Company’s outstanding ordinary course lawsuits and proceedings, the Company has determined either that a loss is not reasonably possible or that the estimated loss or range of loss, if any, is not expected to have a material adverse effect on the Company’s financial condition, results of operations or cash flows.

The Company’s ordinary course lawsuits include class actions or purported class action lawsuits, which challenge practices in the Company’s home warranty, subservicing and title insurance and settlement services businesses. On February 25, 2005, a lawsuit styled, Sjobring vs. First American Title Insurance Company, et al., was filed in the Superior Court of the State of California, County of Los Angeles. On March 26, 2025, a jury rendered a verdict in favor of the Company. On April 22, 2025, the plaintiffs filed a notice of intention to move for a new trial and judgment notwithstanding the verdict.

Most of the Company’s businesses are regulated by various federal, state and local governmental agencies. Many of the Company’s other businesses operate within statutory guidelines. Consequently, the Company may from time to time be subject to examination or investigation by such governmental agencies. Currently, governmental agencies are examining or investigating certain of the Company’s operations.

The Company does not believe that any pending examinations or investigations will have a material adverse effect on the Company’s financial condition, results of operations or cash flows. Some of these exams or investigations could, however, result in changes to the Company’s business practices which could ultimately have a material adverse impact on the Company’s financial condition, results of operations or cash flows.

Note 17 – Segment Information

The Company consists of the following reportable segments:

•

The title insurance and services segment issues title insurance policies on residential and commercial property in the United States and offers similar or related products and services internationally. This segment also provides closing and/or escrow services; accommodates tax-deferred exchanges of real estate; provides products, services and solutions designed to mitigate risk or otherwise facilitate real estate transactions; maintains, manages and provides access to title plant data and records; provides appraisals and other valuation-related products and services; provides lien release, document custodial and default-related products and services; provides document generation services; provides warehouse lending services; subservices mortgage loans; and provides banking, trust and wealth management services. The Company, through its principal title insurance subsidiary and such subsidiary’s affiliates, transacts its title insurance business through a network of direct operations and agents. Through this network, the Company issues policies in the 49 states that permit the issuance of title insurance policies, the District of Columbia and certain United States territories. The Company also offers title insurance, closing services and similar or related products and services, either directly or through third parties in other countries, including Canada, the United Kingdom, South Korea, Australia, New Zealand and various other established and emerging markets.

•

The home warranty segment sells products including residential service contracts that cover residential systems, such as heating and air conditioning systems, and certain appliances against failures that occur as the result of normal usage during the coverage period. This business currently operates in 36 states and the District of Columbia.

•

The corporate segment includes investments in venture-stage companies, certain financing facilities and corporate services that support the Company’s business operations.

FIRST AMERICAN FINANCIAL CORPORATION
AND SUBSIDIARY COMPANIES
Notes to Condensed Consolidated Financial Statements – (Continued)
(unaudited)

Information about reportable segment performance, significant expenses and assets are as follows:

For the three months ended March 31, 2025:


(dollars in millions)	Title Insurance and Services			Home Warranty			Corporate			Consolidated
Total segment revenue (1)	$	1,484.4		$	107.8		$	(9.9	)	$	1,582.3
Elimination of intersegment revenue											—
Total consolidated revenue										$	1,582.3

Less: (2)
Personnel costs		484.8			20.5			1.5			506.8
Premiums retained by agents		525.5			—			—			525.5
Other operating expenses (3)		246.4			22.5			9.4			278.3
Provision for policy losses		33.4			37.7			(1.1	)		70.0
Depreciation and amortization		51.2			1.3			—			52.5
Premium taxes		16.3			1.1			—			17.4
Interest		20.0			—			15.2			35.2
Segment income (loss) before income taxes	$	106.8		$	24.7		$	(34.9	)	$	96.6
Elimination of intersegment expenses											—
Consolidated income before income taxes										$	96.6

Pretax margin		7.2	%		22.9	%

Segment assets	$	14,616.5		$	377.1		$	634.8		$	15,628.4
Elimination of intersegment assets (4)											(131.0	)
Consolidated total assets										$	15,497.4

Segment capital expenditures	$	44.4		$	1.2					$	45.6

(1)

Intersegment revenue is included within amounts shown.

(2)

The significant expense categories and amounts align with segment level information that is regularly provided to the chief operating decision maker. Intersegment expenses are included within amounts shown.

(3)

Other operating expenses for each segment primarily include the following:

Title insurance and services - title and data search expenses, office and occupancy expenses and software expense.

Home warranty - advertising expense, office and occupancy expenses, software expense, delivery and storage expenses.

Corporate - employee benefit expense and certain overhead expenses.

(4)

Elimination of intercompany asset balances:


Holding company cash balances also included in the title insurance and services segment		$	(131.0	)

FIRST AMERICAN FINANCIAL CORPORATION
AND SUBSIDIARY COMPANIES
Notes to Condensed Consolidated Financial Statements – (Continued)
(unaudited)

For the three months ended March 31, 2024:


(dollars in millions)	Title Insurance and Services			Home Warranty			Corporate			Consolidated
Total segment revenue (1)	$	1,319.8		$	105.2		$	0.1		$	1,425.1
Elimination of intersegment revenue											(0.5	)
Total consolidated revenue										$	1,424.6

Less: (2)
Personnel costs		452.5			19.8			12.5			484.8
Premiums retained by agents		447.8			—			—			447.8
Other operating expenses (3)		233.7			22.1			10.0			265.8
Provision for policy losses		29.0			40.7			(0.2	)		69.5
Depreciation and amortization		48.8			1.3			—			50.1
Premium taxes		12.9			1.0			—			13.9
Interest		22.4			—			12.5			34.9
Segment income (loss) before income taxes	$	72.7		$	20.3		$	(34.7	)	$	57.8
Elimination of intersegment expenses											0.5
Consolidated income before income taxes										$	58.3

Pretax margin		5.5	%		19.3	%

Segment assets	$	13,734.9		$	353.9		$	797.5		$	14,886.3
Elimination of intersegment assets (4)											(188.5	)
Consolidated total assets										$	14,697.8

Segment capital expenditures	$	59.6		$	1.9					$	61.5

(1)

Intersegment revenue is included within amounts shown.

(2)

(3)

Other operating expenses for each segment primarily include the following:

Title insurance and services - title and data search expenses, office and occupancy expenses and software expense.

Home warranty - advertising expense, office and occupancy expenses, software expense, delivery and storage expenses.

Corporate - employee benefit expense and certain overhead expenses.

(4)

Elimination of intercompany asset balances:


Holding company cash balances also included in the title insurance segment and services segment	$	(112.3	)
Holding company receivable from a subsidiary within the title insurance and services segment		(76.2	)
	$	(188.5	)

(5)

FIRST AMERICAN FINANCIAL CORPORATION
AND SUBSIDIARY COMPANIES
Notes to Condensed Consolidated Financial Statements – (Continued)
(unaudited)

Selected financial information about the Company’s operations, by segment, is as follows:

For the three months ended March 31, 2025:


(in millions)	Direct premiums and escrow fees			Agent premiums		Information and other		Net investment income (loss)			Net investment losses			Total Revenues
Title Insurance and Services	$	459.6		$	654.6	$	236.0	$	137.7		$	(3.5	)	$	1,484.4
Home Warranty		101.6			—		6.2		0.8			(0.8	)		107.8
Corporate and Eliminations		(0.1	)		—		—		(3.3	)		(6.5	)		(9.9	)
	$	561.1		$	654.6	$	242.2	$	135.2		$	(10.8	)	$	1,582.3

For the three months ended March 31, 2024:


(in millions)	Direct premiums and escrow fees		Agent premiums		Information and other			Net investment income		Net investment gains (losses)			Total Revenues
Title Insurance and Services	$	403.2	$	563.8	$	217.2		$	116.7	$	18.9		$	1,319.8
Home Warranty		97.7		—		5.9			0.9		0.7			105.2
Corporate and Eliminations		—		—		(0.1	)		10.3		(10.6	)		(0.4	)
	$	500.9	$	563.8	$	223.0		$	127.9	$	9.0		$	1,424.6

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

CERTAIN STATEMENTS IN THIS QUARTERLY REPORT ON FORM 10-Q ARE FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. THESE FORWARD-LOOKING STATEMENTS MAY CONTAIN THE WORDS “BELIEVE,” “ANTICIPATE,” “EXPECT,” “PLAN,” “PREDICT,” “ESTIMATE,” “PROJECT,” “WILL BE,” “WILL CONTINUE,” “WILL LIKELY RESULT,” OR OTHER SIMILAR WORDS AND PHRASES.

RISKS AND UNCERTAINTIES EXIST THAT MAY CAUSE RESULTS TO DIFFER MATERIALLY FROM THOSE SET FORTH IN THESE FORWARD-LOOKING STATEMENTS. FACTORS THAT COULD CAUSE THE ANTICIPATED RESULTS TO DIFFER FROM THOSE DESCRIBED IN THE FORWARD-LOOKING STATEMENTS INCLUDE THE FACTORS SET FORTH ON PAGES 3-4 OF THIS QUARTERLY REPORT. THE FORWARD-LOOKING STATEMENTS SPEAK ONLY AS OF THE DATE THEY ARE MADE. THE COMPANY DOES NOT UNDERTAKE TO UPDATE FORWARD-LOOKING STATEMENTS TO REFLECT CIRCUMSTANCES OR EVENTS THAT OCCUR AFTER THE DATE THE FORWARD-LOOKING STATEMENTS ARE MADE.

This Management’s Discussion and Analysis contains the financial measure adjusted debt to capitalization ratio that is not presented in accordance with generally accepted accounting principles (“GAAP”), as it excludes the effects of secured financings payable and accumulated other comprehensive loss. The Company is presenting this non-GAAP financial measure because it provides the Company’s management and readers of this Quarterly Report on Form 10-Q with additional insight into the financial leverage of the Company. The Company does not intend for this non-GAAP financial measure to be a substitute for any GAAP financial information. In this Quarterly Report on Form 10-Q, this non-GAAP financial measure has been presented with, and reconciled to, the most directly comparable GAAP financial measure. Readers of this Quarterly Report on Form 10-Q should use this non-GAAP financial measure only in conjunction with the comparable GAAP financial measure. Because not all companies use identical calculations, the presentation of adjusted debt to capitalization ratio may not be comparable to other similarly titled measures of other companies.

CRITICAL ACCOUNTING ESTIMATES

A summary of the Company’s significant accounting policies that it considers to be the most dependent on the application of estimates and assumptions can be found in the Management’s Discussion and Analysis section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

Recently Adopted Accounting Pronouncements

See Note 1 Basis of Condensed Consolidated Financial Statements to the condensed consolidated financial statements.

Pending Accounting Pronouncements

See Note 1 Basis of Condensed Consolidated Financial Statements to the condensed consolidated financial statements.

Results of Operations

Summary


	Three Months Ended March 31,
(dollars in millions)	2025			2024			$ Change			% Change
Total Revenues by Segment
Title Insurance and Services	$	1,484.4		$	1,319.8		$	164.6			12.5	%
Home Warranty		107.8			105.2			2.6			2.5
Corporate and Eliminations		(9.9	)		(0.4	)		(9.5	)	NM1
	$	1,582.3		$	1,424.6		$	157.7			11.1	%

(1)

Not meaningful

A substantial portion of the revenues for the Company’s title insurance and services segment result from sales of, and refinancings of loans on, residential and commercial real estate. In the home warranty segment, revenues associated with the initial year of coverage are impacted by volatility in residential purchase transactions. Traditionally, the greatest volume of real estate activity, particularly residential purchase activity, has occurred in the spring and summer months. However, changes in interest rates, as well as other changes in general economic conditions in the United States and abroad, can cause fluctuations in the traditional pattern of real estate activity.

The Company’s total revenues for the first quarter of 2025 were $1.6 billion, which reflected an increase of $157.7 million, or 11.1%, when compared with $1.4 billion for the first quarter of 2024. This increase was primarily attributable to increases in agent premiums of $90.8 million, or 16.1%, and direct premiums and escrow fees in the title insurance business of $56.4 million, or 14.0%. In the title insurance and services segment, direct premiums and escrow fees from domestic commercial, purchase and residential refinance transactions increased $40.9 million, or 28.7%, $2.8 million, or 1.4%, and $6.9 million, or 40.2%, respectively, in the first quarter of 2025 when compared to the first quarter of 2024.

According to the Mortgage Bankers Association’s April 11, 2025 Mortgage Finance Forecast (the “MBA Forecast”), residential mortgage originations in the United States (based on the total dollar value of the transactions) are forecasted to increase 1.9% in the first quarter of 2025 when compared to the first quarter of 2024. According to the MBA Forecast, the dollar amount of purchase originations are forecasted to decrease 6.5% and refinance originations are forecasted to increase 30.2%. This volume of domestic residential mortgage origination activity contributed to an increase of 1.4% in direct premiums and escrow fees for the Company’s direct title operations from domestic residential purchase transactions and an increase of 40.2% from domestic refinance transactions in the first quarter of 2025 when compared to the first quarter of 2024.

During the first quarter of 2025, the level of domestic title orders opened per day by the Company’s direct title operations increased 7.1% when compared with the first quarter of 2024. Refinance and commercial opened orders per day increased 45.7% and 4.8%, respectively, while residential purchase opened orders per day decreased 0.5% in the first quarter of 2025 when compared with the first quarter of 2024.

Title Insurance and Services


	Three Months Ended March 31,
(dollars in millions)	2025			2024			$ Change			% Change
Revenues
Direct premiums and escrow fees	$	459.6		$	403.2		$	56.4			14.0	%
Agent premiums		654.6			563.8			90.8			16.1
Information and other		236.0			217.2			18.8			8.7
Net investment income		137.7			116.7			21.0			18.0
Net investment (losses) gains		(3.5	)		18.9			(22.4	)		(118.5	)
		1,484.4			1,319.8			164.6			12.5
Expenses
Personnel costs		484.8			452.5			32.3			7.1
Premiums retained by agents		525.5			447.8			77.7			17.4
Other operating expenses		246.4			233.7			12.7			5.4
Provision for policy losses and other claims		33.4			29.0			4.4			15.2
Depreciation and amortization		51.2			48.8			2.4			4.9
Premium taxes		16.3			12.9			3.4			26.4
Interest		20.0			22.4			(2.4	)		(10.7	)
		1,377.6			1,247.1			130.5			10.5
Income before income taxes	$	106.8		$	72.7		$	34.1			46.9	%
Pretax margins		7.2	%		5.5	%		1.7	%		30.9	%

Direct premiums and escrow fees were $459.6 million for the three months ended March 31, 2025, an increase of $56.4 million, or 14.0%, when compared with the same period of the prior year. The increase was due to increases in domestic average revenues per order and in the number of domestic title orders closed by the Company’s direct title operations. Domestic average revenues per order closed was $3,920 for the three months ended March 31, 2025, an increase of 11.5% when compared with $3,516 for the three months ended March 31, 2024, which was primarily due to an increase in average revenues per order on commercial transactions. The Company’s direct title operations closed 105,400 domestic title orders during the three months ended March 31, 2025, an increase of 2.6% when compared with 102,700 domestic title orders closed during the same period of the prior year, which were generally consistent with the changes in residential mortgage origination activity in the United States as reported in the MBA Forecast. Domestic residential purchase and refinance orders closed per day decreased by 4.9% and increased by 30.6%, respectively, for the three months ended March 31, 2025 when compared to the same period of the prior year.

Agent premiums were $654.6 million for the three months ended March 31, 2025, an increase of $90.8 million, or 16.1%, when compared with the same period of the prior year. Agent premiums are recorded when notice of issuance is received from the agent, which is generally when cash payment is received by the Company. As a result, there is generally a delay between the agent’s issuance of a title policy and the Company’s recognition of agent premiums. Therefore, current quarter agent premiums typically reflect prior quarter mortgage origination activity. The increase in agent premiums for the three months ended March 31, 2025 is generally consistent with the 30.8% increase in the Company’s direct premiums and escrow fees in the fourth quarter of 2024 as compared with the fourth quarter of 2023.

Information and other revenues primarily consist of revenues generated from fees associated with title search and related reports, title and other real property records and images, other non-insured settlement services and risk mitigation products and services. These revenues generally trend with direct premiums and escrow fees but are typically less volatile since a portion of the revenues are subscription based and do not fluctuate with transaction volumes.

Information and other revenues were $236.0 million for the three months ended March 31, 2025, an increase of $18.8 million, or 8.7%, when compared with the same period of the prior year. The increase was primarily due to an increase in demand for uninsured products and services in the Company's Canadian operations and demand for the Company’s information products.

Net investment income totaled $137.7 million for the three months ended March 31, 2025, an increase of $21.0 million, or 18.0%, when compared with the same period of the prior year. The increase in investment income was primarily driven by an increase in interest income from the Company’s investment portfolio.

Net investment gains/losses totaled losses of $3.5 million and gains of $18.9 million for the three months ended March 31, 2025 and 2024, respectively. The losses for the three months ended March 31, 2025 were primarily attributable to asset impairments. The gains for the three months ended March 31, 2024 were primarily attributable to changes in the fair values of marketable equity securities, partially offset by losses recognized on sales of debt securities.

Personnel costs were $484.8 million for the three months ended March 31, 2025, an increase of $32.3 million, or 7.1%, when compared with the same period of the prior year. The increase was primarily attributable to higher incentive compensation expense due to higher revenue and profitability, and higher share-based compensation, salary and severance expenses.

Agents retained $525.5 million of title premiums generated by agency operations for the three months ended March 31, 2025, which compares with $447.8 million for the same period of the prior year. The percentage of title premiums retained by agents was 80.3% and 79.4% for the three months ended March 31, 2025 and 2024, respectively.

Other operating expenses were $246.4 million for the three months ended March 31, 2025, an increase of $12.7 million, or 5.4%, when compared with the same period of the prior year. The increase was primarily due to higher production expenses on higher volumes, increases in software expense, legal expense, travel expense and increases across various other operating expenses. These increases were partially offset by a credit related to the release of a $5.7 million acquisition-related incentive obligation in the current year and the non-recurrence of a prior year out-of-period adjustment that totaled $6.2 million.

The provision for policy losses and other claims, expressed as a percentage of title insurance premiums and escrow fees, was 3.0% for the three months ended March 31, 2025 and 2024. The 3.0% loss provision rate for the three months ended March 31, 2025 reflects an ultimate loss rate of 3.75% for the 2025 policy year and reserve releases of 0.75%, or $8.4 million for prior policy years, all based on title insurance premiums and escrow fees for the three months ended March 31, 2025. The 3.0% loss provision rate for the three months ended March 31, 2024 reflected an ultimate loss rate of 3.75% for the 2024 policy year and reserve releases of 0.75%, or $7.3 million for prior policy years, all based on title insurance premiums and escrow fees for the three months ended March 31, 2024.

Depreciation and amortization expense was $51.2 million for the three months ended March 31, 2025, an increase of $2.4 million, or 4.9%, when compared with the same period of the prior year. The increase was primarily due to higher amortization of capitalized software from recently deployed digital settlement products.

Premium taxes were $16.3 million for the three months ended March 31, 2025, an increase of $3.4 million, or 26.4%, when compared with the same period of the prior year. Premium taxes as a percentage of title insurance premiums and escrow fees were 1.5% and 1.3% for the three months ended March 31, 2025 and 2024, respectively.

Interest expense was $20.0 million for the three months ended March 31, 2025, a decrease of $2.4 million, or 10.7%, when compared with the same period of the prior year. The decrease was primarily attributable to lower interest expense in the Company’s warehouse lending business.

Pretax margins for the title insurance business reflect the high cost of performing the essential services required before insuring title, whereas the corresponding revenues are subject to regulatory and competitive pricing restraints. Due to the relatively high proportion of fixed costs in the title insurance business, pretax margins generally improve as closed order volumes increase. Pretax margins for the segment are also impacted by (1) net investment income and net investment gains or losses, which may not move in the same direction as closed order volumes, (2) the composition (residential or commercial) and type (resale, refinancing or new construction) of real estate activity and (3) the percentage of title insurance premiums generated by agency operations as margins from direct operations are generally higher than from agency operations due primarily to the large portion of the premium that is retained by the agent. The title insurance and services segment recorded pretax margins of 7.2% and 5.5% for the three months ended March 31, 2025 and 2024, respectively.

Home Warranty


	Three Months Ended March 31,
(dollars in millions)	2025			2024			$ Change			% Change
Revenues
Direct premiums	$	101.6		$	97.7		$	3.9			4.0	%
Information and other		6.2			5.9			0.3			5.1
Net investment income		0.8			0.9			(0.1	)		(11.1	)
Net investment (losses) gains		(0.8	)		0.7			(1.5	)		(214.3	)
		107.8			105.2			2.6			2.5
Expenses
Personnel costs		20.5			19.8			0.7			3.5
Other operating expenses		22.5			22.1			0.4			1.8
Provision for policy losses and other claims		37.7			40.7			(3.0	)		(7.4	)
Depreciation and amortization		1.3			1.3			—			—
Premium taxes		1.1			1.0			0.1			10.0
		83.1			84.9			(1.8	)		(2.1	)
Income before income taxes	$	24.7		$	20.3		$	4.4			21.7	%
Pretax margins		22.9	%		19.3	%		3.6	%		18.7	%

Direct premiums were $101.6 million for the three months ended March 31, 2025, an increase of $3.9 million, or 4.0%, when compared with the same period of the prior year. The increase was primarily attributable to an increase in the average price per policy.

Personnel costs and other operating expenses totaled $43.0 million for the three months ended March 31, 2025, an increase of $1.1 million, or 2.6%, when compared with the same period of the prior year. The increase was primarily attributable to higher marketing and incentive compensation expense.

The provision for home warranty claims, expressed as a percentage of home warranty premiums, was 37.1% and 41.7% for the three months ended March 31, 2025 and 2024, respectively. The decrease in the claims rate was primarily attributable to lower claims severity and volume.

A large part of the revenues for the home warranty segment are generated by renewals and are not dependent on the level of real estate activity in the year of renewal. With the exception of the provision for losses, the majority of the expenses for this segment are variable in nature and, therefore, generally fluctuate with revenue. Accordingly, pretax margins (before loss expense) are relatively constant, although, as a result of some fixed expenses, profit margins (before loss expense) should nominally improve as premium revenues increase. Pretax margins are also impacted by net investment income and net investment gains or losses, which may not move in the same direction as premium revenues. The home warranty segment recorded pretax margins of 22.9% and 19.3% for the three months ended March 31, 2025 and 2024, respectively.

Corporate


	Three Months Ended March 31,
(dollars in millions)	2025			2024			$ Change			% Change
Revenues
Net investment (loss) income	$	(3.4	)	$	10.7		$	(14.1	)		(131.8	)
Net investment losses		(6.5	)		(10.6	)		4.1			38.7
		(9.9	)		0.1			(10.0	)	NM1
Expenses
Personnel costs		1.5			12.5			(11.0	)		(88.0	)
Other operating expenses		9.4			10.0			(0.6	)		(6.0	)
Provision for policy losses and other claims		(1.1	)		(0.2	)		(0.9	)		(450.0	)
Interest		15.2			12.5			2.7			21.6
		25.0			34.8			(9.8	)		(28.2	)%
Loss before income taxes	$	(34.9	)	$	(34.7	)	$	(0.2	)		(0.6	)%

(1)

Not meaningful

Net investment income/loss totaled losses of $3.4 million and income of $10.7 million for the three months ended March 31, 2025 and 2024, respectively. The change in net investment income/loss was primarily attributable to fluctuations in earnings on investments associated with the Company’s deferred compensation plan.

Net investment losses of $6.5 million and $10.6 million for the three months ended March 31, 2025 and 2024, respectively, were primarily related to changes in the fair values of marketable equity securities.

Personnel costs and other operating expenses totaled $10.9 million and $22.5 million for the three months ended March 31, 2025 and 2024, respectively. The decrease was primarily attributable to lower returns on participant investments within the Company’s deferred compensation plan in the current year.

Interest expense totaled $15.2 million and $12.5 million for the three months ended March 31, 2025 and 2024, respectively. The increase was primarily attributable to additional interest on the Company's $450.0 million 5.45% senior unsecured notes issued in September 2024, partially offset by a reduction in interest on the Company's $300.0 million 4.60% senior unsecured notes, repaid upon maturity, in November 2024.

Eliminations

The Company’s inter-segment eliminations were not material for the three months ended March 31, 2025 and 2024.

INCOME TAXES

The Company’s effective income tax rates (income tax expense as a percentage of income before income taxes) were 22.6% and 19.9% for the three months ended March 31, 2025 and 2024, respectively. The differences in the effective tax rates are primarily due to the impact on state income taxes resulting from the relative proportion of income derived from the Company’s insurance and non-insurance businesses. In addition, the effective income tax rate for 2024 reflects tax benefits related to a state tax matter from prior years.

The Company evaluates the realizability of its deferred tax assets by assessing the valuation allowance and makes adjustments to the allowance as necessary. The factors used in assessing the likelihood of realization include forecasts of future taxable income and available tax planning strategies that could be implemented. The Company’s ability to achieve forecasted taxable income in the applicable taxing jurisdictions could affect the ultimate realization of its deferred tax assets. Based on future operating results in certain jurisdictions, it is possible that the current valuation allowance positions of those jurisdictions could be adjusted during the next 12 months.

NET INCOME AND NET INCOME ATTRIBUTABLE TO THE COMPANY

Net income for the three months ended March 31, 2025 and 2024 was $74.8 million and $46.7 million, respectively. Net income attributable to the Company for the three months ended March 31, 2025 and 2024 was $74.2 million, or $0.71 per diluted share, and $46.7 million, or $0.45 per diluted share, respectively.

LIQUIDITY AND CAPITAL RESOURCES

Cash requirements. The Company generates cash primarily from sales of its products and services and from investment income. The Company’s current cash requirements include operating expenses, taxes, payments of principal and interest on its debt, capital expenditures, dividends on its common stock, and may include business acquisitions, investments and loans in private companies and repurchases of its common stock. Management forecasts the cash needs of the holding company and its primary subsidiaries and regularly reviews their short-term and long-term projected sources and uses of funds, as well as the asset, liability, investment and cash flow assumptions underlying such forecasts. Based on the Company’s ability to generate cash flows from operations, its liquid-asset position and amounts available on its revolving credit facility, management believes that its resources are sufficient to satisfy its anticipated operational cash requirements and obligations for at least the next twelve months.

The substantial majority of the Company’s business is dependent upon activity in the real estate and mortgage markets, which are cyclical and seasonal. Periods of increasing interest rates and reduced affordability, supply and mortgage financing availability generally have an adverse effect on residential real estate activity and, therefore, typically decrease the Company’s revenues. In contrast, periods of declining interest rates and increased affordability, supply and mortgage financing availability generally have a positive effect on residential real estate activity, which typically increases the Company’s revenues. Residential purchase activity is typically slower in the winter months with increased volumes in the spring and summer months. Residential refinance activity is typically more volatile than purchase activity and is highly impacted by changes in interest rates. Commercial real estate volumes are less sensitive to changes in interest rates but fluctuate based on local supply and demand conditions for space and financing availability.

Cash used for operating activities totaled $52.8 million and cash provided by operating activities totaled $69.3 million after claim payments, net of recoveries, of $76.3 million and $91.6 million for the three months ended March 31, 2025 and 2024, respectively. The principal nonoperating uses of cash and cash equivalents for the three months ended March 31, 2025 and 2024 were advances and repayments related to secured financing transactions, purchases of debt and equity securities, dividends to common stockholders and capital expenditures. Principal nonoperating uses of cash and cash equivalents also included repurchases of company common shares for the three months ended March 31, 2025 and decreases in deposits at the Company's banking operations for the three months ended March 31, 2024. The principal nonoperating sources of cash and cash equivalents for the three months ended March 31, 2025 and 2024 were borrowings and collections related to secured financing transactions, proceeds from the sales and maturities of debt and equity securities and, for the three months ended March 31, 2025, increases in the deposit balances at the Company’s banking operations. The net effect of all activities on cash and cash equivalents was an increase of $327.0 million and a decrease of $2.1 billion for the three months ended March 31, 2025 and 2024, respectively.

The Company continually assesses its capital allocation strategy, including decisions relating to dividends, stock repurchases, capital expenditures, acquisitions and investments. In March 2025, the Company paid a first quarter cash dividend of 54 cents per common share. Management expects that the Company will continue to pay quarterly cash dividends at or above the current level. The timing, declaration and payment of future dividends, however, falls within the discretion of the Company’s board of directors and will depend upon many factors, including the Company’s financial condition and earnings, the capital requirements of the Company’s businesses, restrictions imposed by applicable law and any other factors the board of directors deems relevant from time to time.

Holding Company. First American Financial Corporation is a holding company that conducts all of its operations through its subsidiaries. The holding company’s current cash requirements include payments of principal and interest on its debt, taxes, payments in connection with employee benefit plans, dividends on its common stock and other expenses. The holding company is dependent upon dividends and other payments from its operating subsidiaries to meet its cash requirements. The Company’s target is to maintain a cash balance at the holding company equal to at least twelve months of estimated cash requirements. At certain points in time, the actual cash balance at the holding company may vary from this target due to, among other factors, the timing and amount of cash payments made and dividend payments received. Pursuant to insurance and other regulations under which the Company’s insurance subsidiaries operate, the amount of dividends, loans and advances available to the holding company is limited, principally for the protection of policyholders. As of March 31, 2025, under such regulations, the maximum amount available to the holding company from its insurance subsidiaries for the remainder of 2025, without prior approval from applicable regulators, was dividends of $535.0 million and loans and advances of $114.2 million. However, the timing and amount of dividends paid by the Company’s insurance subsidiaries to the holding company falls within the discretion of each insurance subsidiary’s board of directors and will depend upon many factors, including the level of total statutory capital and surplus required to support minimum financial strength ratings by certain rating agencies. Such restrictions have not had, nor are they expected to have, an impact on the holding company’s ability to meet its cash obligations.

As of March 31, 2025, the holding company’s sources of liquidity included $101.1 million of cash and cash equivalents and $900.0 million available on the Company’s revolving credit facility. Management believes that liquidity at the holding company is sufficient to satisfy anticipated cash requirements and obligations for at least the next twelve months.

Financing. The Company maintains a senior unsecured credit agreement with JPMorgan Chase Bank, N.A., in its capacity as administrative agent, and the lenders party thereto that provides for a $900.0 million revolving credit facility. The credit agreement includes an expansion option that permits the Company, subject to satisfaction of certain conditions, to increase the revolving commitments and/or add term loan tranches in an aggregate amount not to exceed $450.0 million. The obligations of the Company under the credit agreement are neither secured nor guaranteed. Proceeds from borrowings made from time to time under the credit agreement may be used for general corporate purposes. Unless terminated earlier, the credit agreement will terminate on May 17, 2028. At March 31, 2025, the Company had no outstanding borrowings under the facility.

In addition to amounts available under its credit facility, certain subsidiaries of the Company maintain separate financing arrangements. The primary financing arrangements maintained by subsidiaries of the Company are as follows:

•

FirstFunding, Inc., a specialized warehouse lender to correspondent mortgage lenders, maintains secured warehouse lending facilities with several banking institutions. At March 31, 2025, outstanding borrowings under these facilities totaled $735.8 million.

•

First American Trust, FSB (“FA Trust”), a federal savings bank, maintains a secured line of credit with the Federal Home Loan Bank and maintains access to the Federal Reserve's Discount Window. At March 31, 2025, no amounts were outstanding under any of these facilities.

•

First Canadian Title Company Limited, a Canadian title insurance and services company, maintains credit facilities with certain Canadian banking institutions. At March 31, 2025, no amounts were outstanding under these facilities.

The Company’s debt to capitalization ratios were 31.2% and 30.8% at March 31, 2025 and December 31, 2024, respectively. The Company’s adjusted debt to capitalization ratio, excluding secured financings payable of $735.8 million and $643.8 million and accumulated other comprehensive loss of $399.8 million and $496.4 million at March 31, 2025 and December 31, 2024, was 22.1% and 22.2%, respectively.

Investment Portfolio. The Company maintains a high quality, liquid investment portfolio that is primarily held at its insurance and banking subsidiaries. As of March 31, 2025, 95% of the Company’s investment portfolio consisted of debt securities, of which 71% were either United States government-backed or rated AAA and 97% were either rated or classified as investment grade. Percentages are based on the estimated fair values of the securities. Credit ratings reflect published ratings obtained from globally recognized securities rating agencies. If a security was rated differently among the rating agencies, the lowest rating was selected. For further information on the credit quality of the Company’s debt securities portfolio at March 31, 2025, see Note 3 Debt Securities to the condensed consolidated financial statements.

In addition to its debt and marketable equity securities portfolio, the Company maintains investments in non-marketable equity securities and securities accounted for under the equity method. For further information on the Company’s equity securities, see Note 4 Equity Securities to the condensed consolidated financial statements.

Off-balance sheet arrangements. The Company administers escrow deposits as a service to customers in its direct title operations. Escrow deposits totaled $9.8 billion and $8.9 billion at March 31, 2025 and December 31, 2024, respectively, of which $4.3 billion and $4.0 billion, respectively, were held at FA Trust. The remaining deposits were held at third-party financial institutions. Escrow deposits held at third-party financial institutions are not considered assets of the Company and, therefore, are not included in the accompanying condensed consolidated balance sheets. All such amounts are placed in deposit accounts insured, up to applicable limits, by the Federal Deposit Insurance Corporation. The Company could be held contingently liable for the disposition of these assets.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

The Company’s primary exposure to market risk relates to interest rate risk associated with certain financial instruments. Although the Company monitors its risk associated with fluctuations in interest rates, it does not currently use derivative financial instruments on any significant scale to hedge these risks.

There have been no material changes in the Company’s market risks since the filing of its Annual Report on Form 10-K for the year ended December 31, 2024.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

The Company’s chief executive officer and chief financial officer have concluded that, as of March 31, 2025, the end of the quarterly period covered by this Quarterly Report on Form 10-Q, the Company’s disclosure controls and procedures, as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended, were effective, based on the evaluation of these controls and procedures required by Rule 13a-15(b) thereunder.

Changes in Internal Control Over Financial Reporting

There was no change in the Company’s internal control over financial reporting during the quarter ended March 31, 2025, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II: OTHER INFORMATION

Item 1. Legal Proceedings.

See Note 16 Litigation and Regulatory Contingencies to the condensed consolidated financial statements included in “Item 1. Financial Statements (unaudited)” of Part I of this report, which is incorporated by reference into this Item 1 of Part II.

Item 1A. Risk Factors.

The following “risk factors” could materially and adversely affect the Company’s business, operations, reputation, financial position or future financial performance. Some of the factors, events and contingencies discussed below may have occurred in the past, but the disclosures below are not representations as to whether or not the factors, events or contingencies have occurred in the past, and instead reflect our beliefs and opinions as to the factors, events, or contingencies that could materially and adversely affect us in the future. You should carefully consider each of the following risk factors and the other information contained in this Quarterly Report on Form 10-Q. The Company faces risks other than those listed here, including those that are unknown to the Company and others of which the Company may be aware but, at present, considers immaterial. Because of the following factors, as well as other variables affecting the Company’s operating results, past financial performance may not be a reliable indicator of future performance, and historical trends should not be used to anticipate results or trends in future periods.

STRATEGIC RISK FACTORS

The Company’s risk management framework could prove inadequate, which could adversely affect the Company

The Company’s risk management framework is designed to identify, monitor and mitigate risks that could have a negative impact on the Company’s financial condition or reputation. This framework includes departments or groups dedicated to enterprise risk management, treasury management, information security, model risk management, disaster recovery and other information technology-related risks, business continuity, legal and compliance, compensation structures and other human resources matters, vendor management and internal audit, among others. Many of the processes overseen by these departments function at the enterprise level, but many also function through, or rely to a certain degree upon, risk mitigation efforts in local operating groups. This is especially the case with respect to the Company’s operations outside of the United States and recently acquired businesses, which may not be fully integrated into the Company’s risk management framework. Similarly, with respect to the risks the Company assumes in the ordinary course of its business through the issuance of title insurance policies and the provision of related products and services, the Company employs localized, as well as centralized risk mitigation efforts. These efforts include the implementation of underwriting policies and procedures, automated underwriting and other risk-decisioning tools and other mechanisms for assessing and managing risk. Underwriting title insurance policies and making other risk-assumption decisions frequently involves a substantial degree of individual judgment and, accordingly, underwriters are maintained at the state, regional, divisional, and corporate levels with varying degrees of underwriting authority. These individuals may be encouraged by customers or others to assume risks or to expeditiously make risk determinations. If the Company’s risk mitigation efforts prove inadequate, the Company could be adversely affected.

The Company is pursuing various innovative initiatives, which could result in increased title claims or otherwise adversely affect the Company

In an effort to speed the delivery of its products, increase efficiency, improve quality, improve the customer experience and decrease risk, the Company is utilizing innovative technologies, processes and techniques, including artificial intelligence, in the production and delivery of its products and services. These efforts include converting certain manual processes into automated ones to streamline searches, examinations and other underwriting functions in connection with the issuance of title insurance policies, building and maintaining title plants and other data assets, and digitizing and automating components of the settlement process. The Company believes these innovations will improve the customer experience by simplifying and reducing the time it takes to close a transaction, reduce risk and improve communication, and expects to continue expanding its use of these technologies. Risks from these and other innovative initiatives include those associated with potential defects in the design and development of the technologies used to automate processes; misapplication of technologies; the reliance on data, rules or assumptions that may prove inadequate; increased costs from third parties on whose technologies we are dependent; information security vulnerabilities; and failure to meet customer expectations, among others. As a result of these risks, the Company could experience increased claims, reputational damage or other adverse effects, which could be material to the Company.

Potentially disruptive innovation in the real estate industry and/or the Company’s participation in these efforts could adversely affect the Company

In addition to the Company’s innovative activities, other participants in the real estate industry are seeking to innovate in ways that could adversely impact the Company’s businesses. These participants include certain of the Company’s sources of business, competitors, investments and ultimate customers. Innovations by these participants may change the demand for the Company’s products and services, the manner in which the Company’s products and services are ordered or fulfilled and the revenue or profitability derived from the Company’s products and services. The Company’s investments in some of these participants could also facilitate efforts that ultimately disrupt the Company’s business or enable competitors. Accordingly, the Company’s efforts to anticipate and participate in these transformations could require significant additional investment and management attention and may not succeed. These innovative efforts by third parties, and the manner in which the Company, its agents and other industry participants respond to them, could therefore have an adverse effect on the Company.

OPERATIONAL RISK FACTORS

Conditions in the real estate market generally impact the demand for a substantial portion of the Company’s products and services

Demand for a substantial portion of the Company’s products and services generally decreases as the number of real estate transactions in which its products and services are purchased decreases. The number of real estate transactions in which the Company’s products and services are purchased typically decreases in the following situations, among others:

•

when mortgage interest rates are high or rising;

•

when the availability of credit, including commercial and residential mortgage funding, is limited;

•

when real estate affordability is declining;

•

when real estate inventory levels are insufficient or declining; and

•

when economic conditions are unfavorable, including during periods of high unemployment.

Certain of these circumstances, particularly when combined with declining real estate values and the increase in foreclosures that often results therefrom, also tend to adversely impact the Company’s title claims experience. National inventory levels for residential homes for sale remain below historical average levels, and, combined with sustained high mortgage interest rates and elevated home prices, which decreased demand, contributed to historically weak residential purchase activity. Residential refinance activity is generally correlated with changes in mortgage interest rates and rising mortgage rates, beginning in 2022, expectedly had an adverse impact on the Company’s refinance business that is expected to continue for so long as mortgage rates remain high relative to the interest rates of outstanding mortgages. Higher interest rates and other unfavorable economic conditions also negatively impacted commercial transactions beginning in the second half of 2022; however, revenues and activity levels have improved in recent quarters.

Unfavorable economic conditions adversely affect the Company

Historically, uncertainty and negative trends in general economic conditions in the United States and abroad, including significant tightening of credit markets and/or a general decline in the value of real property, have created a difficult operating environment for the Company. These conditions also tend to negatively impact, and recently have impacted, the amount of funds the Company receives from third parties held in trust pending the closing of commercial and residential real estate transactions.

The Company deposits a substantial portion of these funds, as well as its own funds, with the federal savings bank it owns. During periods of unfavorable economic conditions, the return on these funds deposited at the Company’s bank, as well as funds the Company deposits with third party financial institutions, tends to decline. In addition, the Company holds investments in entities, such as title agencies, settlement service providers and venture-stage companies, some of which have been negatively impacted by these conditions, as well as other securities in its investment portfolio, which also may be, and recently have been, negatively impacted by these conditions.

Certain funds deposited at the Company’s bank are invested into investment grade fixed income securities and any realized and unrealized losses on those investments will be reflected in the Company’s consolidated financial statements. The likelihood of such losses, which would generally not occur if the Company were to deposit these funds in an unaffiliated entity, increases when interest rates increase and/or when economic conditions are unfavorable.

Depending upon the ultimate severity and duration of any economic downturn and other negative economic conditions, the resulting effects on the Company could be materially adverse, including a significant reduction in revenues, earnings and cash flows, higher claims, challenges to the Company’s ability to satisfy covenants or otherwise meet its obligations under debt facilities and other contracts, difficulties in obtaining access to capital, challenges to the Company’s ability to pay dividends at currently anticipated levels, deterioration in the value of or return on its investments and increased credit risk from customers and others with obligations to the Company.

The Company’s use of models involves risks and uncertainties that could adversely affect the Company

The Company utilizes models to support decisions related to risk management, capital and liquidity planning, financial accounting, data extraction and other business purposes. Models are, by their nature, inherently limited due to their reliance on statistical, economic, financial or mathematical theories, techniques, data and assumptions that may be erroneous or inappropriate for the intended or actual use. Flawed models or uses of models, particularly those that rely on artificial intelligence, may result in, among other consequences, erroneous, biased or misleading outputs, imprudent business decisions, inadequate risk management or enhanced regulatory supervision. Heightened regulatory supervision and an evolving regulatory landscape could hinder the pace of the Company’s innovation and may require burdensome changes to the Company’s existing governance, processes and controls. These risks and uncertainties could have a material adverse effect on the Company’s results of operations, financial condition and reputation.

Severe weather conditions, health crises, terrorist attacks and other catastrophes could adversely affect the Company

Severe weather conditions, global or extensive health crises, terrorist attacks and other catastrophes and responses to these events could adversely affect the Company. The extent to which these catastrophes and responses to them impact the Company’s business, operations and financial results will depend on numerous factors that the Company may not be able to accurately predict, including: the duration and scope of the catastrophe and restrictions and responses to it; the impact of the catastrophe on economic activity and actions taken in response, including the efficacy of governmental and other relief efforts or countermeasures; the effect on participants in real estate transactions and the demand for the Company’s products and services.

The Company’s home warranty business has been and may be impacted by increases in the frequency and severity of weather events. Home warranty claims, including those pertaining to HVAC systems, tend to rise as temperatures become extreme, especially in geographies where extreme temperatures are infrequent.

In addition, the Company manages its financial exposure for losses in its title insurance business with third-party reinsurance. Catastrophes could adversely affect the cost and availability of that reinsurance. Moreover, to the extent severe weather conditions, health crises, terrorist attacks and other catastrophes impact companies or municipalities whose securities the Company invests in, the value of its investments may also decrease due to these factors.

The frequency, severity, duration, and geographic location and scope of such health crises, catastrophe and severe weather events are inherently unpredictable, and, therefore, the Company is unable to predict the ultimate impact these events and responses to them will have on its businesses. The impacts of catastrophes and responses to them may also exacerbate the risks discussed elsewhere in Part II, Item 1A of this Quarterly Report.

The Company may find it difficult to acquire necessary data

Certain data used and supplied by the Company are subject to regulation by various federal, state and local regulatory authorities. Compliance with existing federal, state and local laws and regulations with respect to such data has not had a material adverse effect on the Company’s results of operations to date. Nonetheless, federal, state and local laws and regulations in the United States designed to protect the public from the misuse of personal information in the marketplace and adverse publicity or potential litigation concerning the commercial use of such information may affect the Company’s operations and could result in substantial regulatory compliance expense, litigation expense and a loss of revenue. The suppliers of data to the Company face similar burdens. As a result of these and other factors, the Company may find it financially burdensome to acquire necessary data.

Changes in the Company’s relationships with large mortgage lenders or government–sponsored enterprises could adversely affect the Company

Large mortgage lenders and government-sponsored enterprises, because of their significant role in the mortgage process, have significant influence over the Company and other service providers. Changes in the Company’s relationship with any of these lenders or government-sponsored enterprises, the loss of all or a portion of the business the Company derives from these parties, any refusal of these parties to accept the Company’s products and services, the modification of the government-sponsored enterprises’ requirements for title insurance or mortgage servicing in connection with mortgages they purchase or the use of alternatives to the Company’s products and services, could have a material adverse effect on the Company.

10.

A downgrade by ratings agencies, reductions in statutory capital and surplus maintained by the Company’s title insurance underwriters or a deterioration in other measures of financial strength could adversely affect the Company

Certain of the Company’s customers use measurements of the financial strength of the Company’s title insurance underwriters, including, among others, ratings provided by ratings agencies and levels of statutory capital and surplus maintained by those underwriters, in determining the amount of a policy they will accept and the amount of reinsurance required. Each of the major ratings agencies currently rates the Company’s title insurance operations. These ratings provide the agencies’ perspectives on the financial strength, operating performance and cash generating ability of those operations. These agencies continually review these ratings and the ratings are subject to change. Statutory capital and surplus, or the amount by which statutory assets exceed statutory liabilities, is also a measure of financial strength. Accordingly, if the ratings or statutory capital and surplus of these title insurance underwriters are reduced from their current levels, or if there is a deterioration in other measures of financial strength, the Company’s results of operations, competitive position and liquidity could be adversely affected. In addition, a downgrade in the ratings or rankings for the Company’s federal savings bank subsidiary or its mortgage servicing business could have an adverse effect on that particular business.

11.

The issuance of the Company’s title insurance policies and related activities by independent title agents could adversely affect the Company

The Company’s title insurance subsidiaries issue a significant portion of their policies through title agents that usually operate with substantial independence from the Company. There is no guarantee that these title agents will fulfill their fiduciary duties or contractual obligations to the Company, which are designed to limit the Company’s risk with respect to their activities. Certain activities that are not governed by fiduciary duties or contractual obligations to the Company can also create risks. If, for example, funds held in trust by an independent title agent are not appropriately applied by the agent in a transaction, it may result in one or more parties to a transaction having defective title to or lien on a property, which, in turn, has led to and may continue to lead to title claims against the Company for which the Company may be liable.

In addition, regulators are increasingly seeking to hold the Company responsible for the actions of these title agents and, under certain circumstances, the Company may be held liable directly to third parties for actions (including defalcations) or omissions of these agents. Case law and statutes in certain states also suggest that the Company is liable for the actions or omissions of its agents in those states, regardless of contractual limitations. As a result, the Company’s use of title agents could result in increased claims and loss severity on the Company’s policies issued through agents and an increase in other costs and expenses.

12.

Systems damage, failures, interruptions, cyberattacks and intrusions, and unauthorized data disclosures by the Company or its service providers may disrupt the Company’s business, harm the Company’s reputation, result in material claims for damages or otherwise adversely affect the Company

The Company uses computer software applications, systems and other technologies (collectively referred to as “systems”), some of which it owns and manages and some of which are owned and/or managed by third parties, including providers of Software as a Service (SaaS) and providers of distributed computing infrastructure platforms commonly known as the “cloud.” The Company and its agents, suppliers, service providers, and customers use systems to receive, process, store and transmit business information, including non-public personal information as well as data from suppliers and other information upon which the Company’s business relies. The Company also uses these systems to manage substantial cash, investment assets, bank deposits, trust assets, escrow account balances and custodial balances on behalf of itself and its customers, among other activities. Many of the Company’s products, services and solutions involving the use of real property related data are fully reliant on these systems and are only available electronically. Accordingly, for a variety of reasons, the integrity of these systems and the protection of the information that resides thereon are critically important to the Company’s successful operation.

These systems have been subject to, and are likely to continue to be the target of, malware, cyberattacks and cyberterrorism, ransomware attacks, phishing attacks, unauthorized access, online and offline fraud and other malicious activity. These attacks are prevalent, continue to increase in frequency and sophistication, and are increasingly difficult to prevent or detect. These systems also have known and unknown vulnerabilities. Once identified, the Company’s information technology and information security personnel seek to remediate these vulnerabilities based, in part, on the level of risk presented and the burden of remediation. For a number of reasons, including the introduction of new vulnerabilities, resource constraints, competing business demands and dependence on third parties, a number of unremediated vulnerabilities will always exist. Remediation of some vulnerabilities are outside of the control of the Company and third-party remediation efforts may not be timely provided or implemented or otherwise adequate, even when the level of risk is critical or high. Further, certain other potential causes of system damage or other negative system-related events are wholly or partially beyond the Company’s control, such as natural disasters, vendor failures to satisfy service level requirements, third party negligence or intentional acts, and power or telecommunications failures. These circumstances could expose the Company to system-related damages, failures, interruptions, cyberattacks, as the Company experienced in December 2023 (as described further in Item 1C. of the Company’s Annual Report on Form 10-K for the fiscal year ended 2024), and other negative events or could otherwise disrupt the Company’s business and could also result in the loss or unauthorized release, gathering, monitoring or destruction of confidential, proprietary and other information pertaining to the Company, its customers, employees, agents or suppliers.

In conducting its business and delivering its products and services, the Company also utilizes service providers. These service providers and the systems they utilize are typically subject to similar types of system- and information security-related risks that the Company faces. The Company provides certain of these service providers with data, including nonpublic personal information. There is no guarantee that the Company’s due diligence or ongoing vendor oversight will be sufficient to ensure the integrity and security of the systems utilized by these service providers or the protection of the information that resides thereon.

Certain laws and contracts the Company has entered into require it to comply with certain information security requirements and to notify various parties, including consumers or customers, in the event of certain actual or potential data breaches or systems failures, including those of the Company’s service providers. Further, the Company’s financial institution customers have obligations to safeguard their systems and sensitive information and the Company may be bound contractually and/or by regulation to comply with the same requirements. If the Company or its service providers fail to comply with applicable regulations and contractual requirements, the Company could be exposed to lawsuits, governmental proceedings or the imposition of fines, among other consequences.

Any inability of the Company or its service providers to prevent or adequately respond to the issues described above could disrupt the Company’s business, delay the delivery of its products and services, inhibit its ability to retain existing customers or attract new customers, divert management’s time and energy, otherwise harm its reputation and/or result in financial losses, litigation, regulatory inquiries, increased costs or other adverse consequences that could be material to the Company.

13.

Errors and fraud involving the transfer of funds may adversely affect the Company

The Company relies on its systems, employees and domestic and international banks to transfer its own funds and the funds of third parties. In addition to relying on third-party banks to transfer these funds, the Company’s federal savings bank subsidiary transfers funds on behalf of the Company as well as title agents that are not affiliates of the Company. These transfers are susceptible to user input error, fraud, system interruptions, incorrect processing and similar errors that from time to time result in lost funds or delayed transactions. The Company’s email and computer systems and systems used by its agents, customers and other parties involved in a transaction have been subject to, and are likely to continue to be the target of, fraudulent attacks, including attempts to cause the Company or its agents to improperly transfer funds. These attacks continue to increase in frequency and sophistication. Funds transferred to a fraudulent recipient may not be recoverable. In certain instances the Company may be liable for those unrecovered funds. The controls and procedures used by the Company to prevent transfer errors and fraud may prove inadequate, resulting in financial losses, reputational harm, loss of customers or other adverse consequences which could be material to the Company.

14.

The Company’s failure to recruit and retain qualified employees may adversely affect the business

The Company’s continued success depends, in large part, on its ability to hire and retain qualified people. Competition for highly qualified people is significant, and there is no assurance that the Company will be successful in attracting, training or retaining people. If the Company is unable to attract and retain qualified people, its business and operations may be impaired or disrupted.

15.

The Company’s use of a global workforce involves risks that could adversely affect the Company

The Company utilizes lower cost labor in countries such as India and the Philippines, among others. These countries are subject to relatively high degrees of political and social instability and may lack the infrastructure to withstand natural disasters, health crises and other catastrophes. Such disruptions could decrease efficiency and increase the Company’s costs. Weakness of the United States dollar in relation to the currencies used in these countries may also reduce the savings achievable through this strategy. Laws, regulations, business requirements or social or political pressures may require the Company to use labor based in the United States or may otherwise effectively increase the Company’s labor costs abroad. The Company may not be able to pass on these increased costs to its customers.

16.

Acquisitions may have an adverse effect on our business

The Company has in the past acquired, and is expected to acquire in the future, other businesses. When businesses are acquired, the Company may not be able to integrate or manage these businesses in such a manner as to realize the anticipated synergies or otherwise produce returns that justify the investment. Acquired businesses may subject the Company to increased regulatory or compliance requirements. The Company’s acquisitions have involved, and may continue to involve, the entry into businesses in which the Company’s management has limited prior experience, making the Company reliant on the management team of the acquired business. The Company may not be able to successfully retain employees of acquired businesses or integrate them, and could lose customers, suppliers or other partners as a result of the acquisitions. The Company may also assume or incur unanticipated liabilities from acquisitions. For these and other reasons, including changes in market conditions, the projections used to value the acquired businesses may prove inaccurate. These and other factors related to acquisitions could have a material adverse effect on the Company’s results of operations, financial condition and liquidity. The Company’s management also will continue to be required to dedicate substantial time and effort to the integration of its acquisitions. These efforts could divert management’s focus and resources from other strategic opportunities and operational matters.

LEGAL AND COMPLIANCE RISK FACTORS

17.

Regulatory oversight and changes in government regulation could require the Company to raise capital, make it more difficult to deploy capital, including dividends to stockholders and repurchases of the Company’s shares, prohibit or limit the Company’s operations, make it more costly or burdensome to conduct such operations, result in decreased demand for the Company’s products and services or otherwise adversely affect the Company

Most of the Company’s businesses are regulated by various federal, state, local and foreign governmental agencies. These and other of the Company’s businesses also operate within statutory guidelines, which can include requirements to maintain certain licenses at the federal, state and/or local levels. The industry in which the Company operates and the markets into which it sells its products are also regulated and subject to statutory guidelines. In general, in recent years, the Company experienced increasing regulatory oversight and became subject to increasingly complex statutory guidelines.

Regulatory oversight could require the Company to raise capital, and/or make it more difficult to deploy capital, including dividends to stockholders and repurchases of the Company’s shares. It is possible that the group capital calculations, particularly in an economic downturn, could have the effect of requiring the Company to raise capital and/or making it more difficult to otherwise deploy capital, including dividends to stockholders and repurchases of the Company’s shares.

An increasing number of federal, state, and international laws and regulations apply to the collection, use, retention, protection, disclosure, transfer, and other processing of personal data. The effects of these privacy and data protection laws, including the cost of compliance and required changes in the manner in which the Company conducts its business, are not fully known and are potentially significant, and the failure to comply could adversely affect the Company. The Company has incurred costs to comply with these laws and to respond to inquiries about its compliance with them.

In addition, changes in the applicable regulatory environment, statutory guidelines or interpretations of existing regulations or statutes; reform of government-sponsored enterprises such as the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”); enhanced governmental oversight or efforts by governmental agencies to cause customers to refrain from using the Company’s products or services could prohibit or limit its future operations or make it more costly or burdensome to conduct such operations or result in decreased demand

for the Company’s products and services or a change in its competitive position. The impact of these changes would be more significant if they involve jurisdictions in which the Company generates a greater portion of its title premiums, such as the states of Arizona, California, Florida, New York, and Texas. These changes may compel the Company to reduce its prices, may restrict its ability to implement price increases or acquire assets or businesses, may limit the manner in which the Company conducts its business or otherwise may have a negative impact on its ability to generate revenues, earnings and cash flows.

18.

Scrutiny of the Company’s businesses and the industries in which it operates by governmental entities and others could adversely affect the Company

The real estate settlement services industry, an industry in which the Company generates a substantial portion of its revenue and earnings, and the mortgage servicing and subservicing industry are subject to continuous scrutiny by regulators, legislators, the media and plaintiffs’ attorneys. Though often directed at these industries generally, these groups also focus their attention directly on the Company’s businesses from time to time. In either case, this scrutiny may result in changes which could adversely affect the Company’s operations and, therefore, its financial condition and liquidity.

Governmental entities have routinely inquired into certain practices in the real estate settlement services industry and the mortgage servicing and subservicing industry to determine whether certain of the Company’s businesses or its competitors have violated applicable laws, which include, among others, the insurance codes of the various jurisdictions, the Real Estate Settlement Procedures Act, the Truth in Lending Act and similar state, federal and foreign laws. Departments of insurance in the various states, the Consumer Financial Protection Bureau (“CFPB”) and other federal regulators and applicable regulators in international jurisdictions, either separately or together, also periodically conduct targeted inquiries into the practices of title insurance companies, other settlement services providers and mortgage servicers in their respective jurisdictions. Currently, the Company is the subject of regulatory inquiries.

Further, from time to time, plaintiffs’ lawyers have targeted, and are expected to continue to target, the Company and other members of the Company’s industry with lawsuits claiming legal violations or other wrongful conduct. These lawsuits often involve large groups of plaintiffs and claims for substantial damages. These types of inquiries or proceedings have from time to time resulted, and may in the future result, in findings of a violation of the law or other wrongful conduct and the payment of fines or damages or the imposition of restrictions on the Company’s conduct. This could impact the Company’s operations and financial condition. Moreover, these laws and standards of conduct often are ambiguous and, thus, it may be difficult to ensure compliance. This ambiguity may force the Company to mitigate its risk by settling claims or by ending practices that generate revenues, earnings and cash flows. Currently the Company is a party to class action lawsuits.

19.

Regulation of title insurance rates could adversely affect the Company

Title insurance rates are subject to extensive regulation, which varies from state to state. In many states the approval of the applicable state insurance regulator is required prior to implementing a rate change. These regulations could hinder the Company’s ability to promptly adapt to changing market dynamics through price adjustments, which could adversely affect its results of operations, particularly in a rapidly declining market.

FINANCIAL RISK FACTORS

20.

Failures at financial institutions at which the Company deposits funds could adversely affect the Company

The Company deposits substantial funds in financial institutions. These funds include amounts owned by third parties, such as escrow deposits, like-kind exchange deposits and investor, mortgagor and subservicer deposits. Should one or more of the financial institutions at which deposits are maintained fail, there is no guarantee that the Company would recover the funds deposited, whether through Federal Deposit Insurance Corporation coverage or otherwise. In the event of any such failure, the Company also could be held liable for the funds owned by third parties. Unfavorable economic conditions may lead to a heightened risk of failures of financial institutions at which the Company maintains deposits. Failures may be difficult to predict and the Company may not be able to react in a sufficiently timely manner to avoid adverse effects on the Company.

21.

Unfavorable economic or other conditions could cause the Company to write off a portion of its goodwill and other intangible assets

The Company performs an impairment test of the carrying value of goodwill and other indefinite-lived intangible assets annually in the fourth quarter, or sooner if circumstances indicate a possible impairment. Finite-lived intangible assets are subject to impairment tests on a periodic basis. Factors that may be considered in connection with this review include, without limitation, underperformance relative to historical or projected future operating results, reductions in the Company’s stock price and market capitalization, increased cost of capital and negative macroeconomic, industry and company-specific trends. These and other factors could lead to a conclusion that goodwill or other intangible assets are impaired, in which case the Company would be required to write off the portion believed to be impaired. Any substantial goodwill and other intangible asset impairments that may be required could have a material adverse effect on the Company’s results of operations and financial condition.

22.

The Company’s investment portfolio is subject to certain risks and could experience losses

The Company maintains a substantial investment portfolio, primarily consisting of fixed income debt securities. The investment portfolio also includes adjustable-rate debt securities, common and preferred stock, as well as money-market and other short-term investments. Securities in the Company’s investment portfolio are subject to certain economic and financial market risks, such as credit risk, interest rate (including call, prepayment and extension) risk and/or liquidity risk. The risk of loss associated with the portfolio is increased during periods of instability in credit markets and economic conditions. Debt and equity securities are carried at fair value on the Company’s balance sheet. Changes in the fair values of debt securities are recorded as a component of accumulated other comprehensive income/loss on the balance sheet. For debt securities in an unrealized loss position, where the loss is determined to be due to credit-related factors, the Company records the loss in earnings. Changes in the fair values of marketable equity securities are recognized in earnings. Changes in the fair values of securities in the Company’s investment portfolio have had an adverse impact on the Company and could have a material adverse effect on the Company’s results of operations, statutory surplus, financial condition and cash flow.

23.

The Company’s venture investment portfolio is volatile and subject to certain risks and could experience losses

The Company’s venture investment portfolio is primarily comprised of investments in the equity of private venture-stage companies that operate in the real-estate industry and related industries (many of which offer technology-enabled products and services), investments in funds that typically invest in these same types of companies, and a similar investment that is trading publicly. The venture investment portfolio is managed independent of the Company’s portfolio of debt securities and marketable equity securities, which is overseen by the Company’s investment department and an investment committee. The Company may continue to make similar venture investments. These investments may cause material fluctuations in the Company’s quarterly results of operations due to the recognition of gains or losses in connection with observable price changes, such as from liquidity events, impairments, subsequent equity sales, or price changes in investments that begin trading publicly, which changes can be volatile.

24.

Actual claims experience could materially vary from the expected claims experience reflected in the Company’s reserve for incurred but not reported claims

The Company maintains a reserve for incurred but not reported (“IBNR”) claims pertaining to its title, escrow and other insurance and guarantee products. The majority of this reserve pertains to title insurance policies, which are long-duration contracts with the majority of the claims reported within the first few years following the issuance of the policy. Generally, 65% to 75% of claim amounts become known in the first six years of the policy life, and the majority of IBNR reserves relate to the six most recent policy years. Changes in expected ultimate losses and corresponding loss rates for recent policy years are considered likely and could result in a material adjustment to the IBNR reserves. In uncertain economic times, an even larger change is more likely. A material change in expected ultimate losses and corresponding loss rates for older policy years is also possible, particularly for the ten most recent policy years. The estimates made by management in determining the appropriate level of IBNR reserves could ultimately prove to be materially different from actual claims experience.

Changes in laws or regulations impacting real estate, particularly when applied retroactively, may cause a material change in expected ultimate losses and corresponding loss rates for recent and/or older policy years. For example, the 2020 United States Supreme Court decision in McGirt v. Oklahoma calls into question the governing authority for certain real estate-related matters in Native American reservations once thought to have been disestablished. To the extent the Company, in those areas, underwrote title insurance policies or closed real estate transactions in conformity with authority that ultimately proves inapplicable, expected ultimate losses arising from those policies and transactions could change materially and could result in a material change to loss rates.

25.

The Company may have to provide capital to one or more of its subsidiaries, which may necessitate accessing funds from the Company’s revolving credit facility or otherwise

The Company is a holding company and its subsidiaries, from time to time, may need additional capital from the Company to, for example, fund operations, meet regulatory requirements or pay liabilities. In order to provide such capital, the Company may need to draw down on its revolving credit facility or access other sources of capital, which could negatively affect its debt-to-capital ratio and liquidity position.

26.

The Company's ability to fulfill parent company obligations and/or pay dividends may be limited

The Company is a holding company whose primary assets are investments in its operating subsidiaries. The Company’s ability to fulfill parent company obligations and/or declare and pay dividends is dependent on the ability of its subsidiaries to pay dividends or repay funds. If the Company’s operating subsidiaries are not able to pay dividends or repay funds, the Company may not be able to fulfill parent company obligations and/or declare and pay dividends. Moreover, pursuant to insurance and other regulations under which the Company’s insurance subsidiaries operate, the amount of dividends, loans and advances available is limited. See Item 2 – MD&A – Liquidity and Capital Resources for details on dividend restrictions. The Company may also be required to invest capital in its subsidiaries which could further limit its ability to fulfill parent company obligations and/or declare and pay dividends.

27.

A reduction in the deposits at the Company’s federal savings bank subsidiary could require the Company to borrow funds to maintain liquidity

The deposits of the Company’s federal savings bank subsidiary consist almost entirely of funds deposited by its affiliates, the majority of which are from third parties to be held in trust pending the closing of real estate transactions. When real estate transactions decline, aggregate deposits held in trust at the Company’s bank tend to decline. There is also a portion of the bank’s deposits that are custodial funds held on behalf of clients of the Company’s residential mortgage subservicer subsidiary. Such clients may cause their custodial funds to be moved out of the Company’s bank subsidiary in connection with the transfer of ownership of mortgage servicing rights or loans, termination of subservicing contracts or otherwise. The likelihood of these clients causing funds to be moved increases as interest rates rise, which could result in a marked decline in the bank’s deposits. When there is a reduction in the bank’s deposits, the Company could be required to borrow funds to maintain the bank’s liquidity.

GENERAL RISK FACTORS

28.

Certain provisions of the Company’s bylaws and certificate of incorporation, as well as regulatory hurdles, may reduce the likelihood of any unsolicited acquisition proposal or potential change of control that the Company’s stockholders might consider favorable

The Company’s bylaws and certificate of incorporation contain provisions that could be considered “anti-takeover” provisions because they make it harder for a third-party to acquire the Company without the consent of the Company’s incumbent board of directors. Under these provisions:

•

election of the Company’s board of directors is staggered such that only three or four of the directors are elected by the stockholders each year and the directors serve three year terms prior to reelection;

•

stockholders may not remove directors without cause, change the size of the board of directors or, except as may be provided for in the terms of preferred stock the Company issues in the future, fill vacancies on the board of directors;

•

stockholders may act only at stockholder meetings and not by written consent;

•

stockholders must comply with advance notice provisions for nominating directors or presenting other proposals at stockholder meetings; and

•

the Company’s board of directors may without stockholder approval issue preferred shares and determine their rights and terms, including voting rights, or adopt a stockholder rights plan.

While the Company believes that they are appropriate, these provisions may only be amended by the affirmative vote of the holders of approximately 67% of the Company’s issued voting shares. In addition, federal banking laws and regulations and state insurance laws and regulations require third parties to obtain prior approval to acquire control of the Company due to its status as a savings and loan holding company and an insurance holding company. These provisions and regulatory requirements could have the effect of discouraging an unsolicited acquisition proposal or delaying, deferring or preventing a change of control transaction that might involve a premium price or otherwise be considered favorably by the Company’s stockholders.

29.

The Company may be susceptible to claims of infringement and may not be able to adequately protect its intellectual property

The Company relies on a combination of patents, trademarks, copyrights, trade secret laws, non-disclosure agreements, contractual provisions and systems of internal safeguards to protect its intellectual property. As the Company expands its utilization of innovative technologies, processes and techniques in the production and delivery of its products and services, the Company may increasingly have to litigate to enforce and protect its intellectual property rights, which may divert Company resources, cause reputational harm to the Company or result in other adverse consequences, including a loss of competitive advantage, and there is no guarantee that such protection and enforcement efforts would be successful. In addition, third parties may allege that the Company’s operations or activities infringe on their intellectual property rights, including through the Company’s use of software containing open source code, which may expose the Company to third-party claims of ownership of, or demands for the release of, the source code, the open source software and/or derivative works that were developed using such software, or otherwise seeking to enforce the terms of the applicable open source license. Many of the risks associated with usage of open source cannot be eliminated, and could, if not properly addressed, adversely affect the Company’s business. Infringement claims may give rise to litigation, which could result in damages, injunctions prohibiting the Company from providing certain products or services, entry into costly licensing arrangements or other adverse consequences.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Unregistered Sales of Equity Securities

During the quarter ended March 31, 2025, the Company did not issue any unregistered common stock.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

Pursuant to the share repurchase program approved by the Company’s board of directors in June 2022, which program has no expiration date, the Company may repurchase up to $400.0 million of the Company’s issued and outstanding common stock. The following table describes purchases by the Company under the share repurchase program that settled during each period set forth in the table. Prices in column (b) include commissions. Cumulatively, as of March 31, 2025, the Company had repurchased $282.8 million (including commissions) of its shares authorized under the share repurchase program and had the authority to repurchase an additional $117.2 million (including commissions) under that program.


	(a) Total Number of Shares Purchased		(b) Average Price Paid per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		(d) Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
January 1 to January 31, 2025		145,098	$	60.68		145,098	$	136,564,504
February 1 to February 28, 2025		110,123		63.83		110,123		129,535,075
March 1, 2024 to March 31, 2025		192,591		64.25		192,591		117,161,374
Total		447,812	$	62.99		447,812	$	117,161,374

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

(a)

None.

(b)

Not applicable.

(c)

During the quarter ended March 31, 2025, no director or Section 16 officer adopted or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements (in each case, as defined in Item 408(a) of Regulation S-K).

Item 6. Exhibits.

Each management contract or compensatory plan or arrangement in which any director or named executive officer of First American Financial Corporation, as defined by Item 402(a)(3) of Regulation S-K (17 C.F.R. §229.402(a)(3)), participates that is included among the exhibits listed on the Exhibit Index is identified on the Exhibit Index by an asterisk (*).


Exhibit No.	Description	Location

3.1	Amended and Restated Certificate of Incorporation of First American Financial Corporation dated May 28, 2010.	Incorporated by reference herein to Exhibit 3.1 to the Current Report on Form 8-K filed June 1, 2010.

3.2	Bylaws of First American Financial Corporation, amended and restated effective as of November 7, 2023.	Incorporated by reference herein to Exhibit 3.1 to the Current Report on Form 8-K filed November 9, 2023.

31(a)	Certification by Chief Executive Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.	Attached.

31(b)	Certification by Chief Financial Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.	Attached.

32(a)	Certification by Chief Executive Officer Pursuant to 18 U.S.C. Section 1350.	Attached.

32(b)	Certification by Chief Financial Officer Pursuant to 18 U.S.C. Section 1350.	Attached.

101.INS	Inline XBRL Instance Document. The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.	N/A.

101.SCH	Inline XBRL Taxonomy Extension Schema With Embedded Linkbases Document.	N/A.

104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).	N/A.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	FIRST AMERICAN FINANCIAL CORPORATION (Registrant)

Date: April 24, 2025	By	/s/ Mark E. Seaton
		Mark E. Seaton
		Chief Executive Officer (Principal Executive Officer)

Date: April 24, 2025	By	/s/ Matthew F. Wajner
		Matthew F. Wajner
		Chief Financial Officer (Principal Financial Officer)