third quarter 2026
Filed Oct 21, 2026First American Financial reports third quarter 2026 results: total revenue increased 5 percent, adjusted EPS increased to $1.78, while GAAP net income and GAAP EPS declined.
Revenue, adjusted net income and adjusted EPS increased, supported by commercial activity and investment income, but GAAP net income, GAAP EPS, Title pretax margin and Home Warranty pretax income declined.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Total revenues, three months ended September 30, 2026GAAP | $2.08B | – | up 5 percent |
| Income before income taxes, three months ended September 30, 2026GAAP | $227.6M | – | – |
| Income tax expense, three months ended September 30, 2026GAAP | $51M | – | – |
| Effective tax rate, third quarter 2026GAAP | 22.4 percent | – | – |
| Net income attributable to the Company, three months ended September 30, 2026GAAP | $177M | – | – |
| Diluted net income per share attributable to stockholders, three months ended September 30, 2026GAAP | $1.72 | – | – |
| Adjusted total revenues, three months ended September 30, 2026non-GAAP | $2.09B | – | up 7 percent |
| Adjusted pretax income, three months ended September 30, 2026non-GAAP | $235.9M | – | – |
| Pretax margin, three months ended September 30, 2026GAAP | 10.9 % | – | – |
| Adjusted pretax margin, three months ended September 30, 2026non-GAAP | 11.3 % | – | – |
| Adjusted net income, three months ended September 30, 2026non-GAAP | $183.4M | – | – |
| Adjusted EPS, three months ended September 30, 2026non-GAAP | $1.78 | – | – |
| Cash flow from operations, third quarter 2026GAAP | $238M | – | – |
| Total revenues, nine months ended September 30, 2026GAAP | $6.04B | – | – |
| Net income attributable to the Company, nine months ended September 30, 2026GAAP | $520.6M | – | – |
| Diluted net income per share attributable to stockholders, nine months ended September 30, 2026GAAP | $5.04 | – | – |
| Adjusted net income, nine months ended September 30, 2026non-GAAP | $535.1M | – | – |
| Adjusted EPS, nine months ended September 30, 2026non-GAAP | $5.18 | – | – |
| Title orders opened, three months ended September 30, 2026other | 175,600 | – | – |
| Title orders closed, three months ended September 30, 2026other | 134,900 | – | – |
| Paid title claims, three months ended September 30, 2026other | $55.2M | – | – |
| Direct title average revenue per order, third quarter 2026other | $4,304 | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Title Insurance and ServicesDirect premiums and escrow fees were $643 million, an increase of 7 percent, driven by a 13 percent increase in average revenue per order closed, partially offset by a 5 percent decline in direct title orders closed in domestic operations. Agent premiums were $868 million, up 9 percent; information and other revenues were $292 million, up $16 million, or 6 percent; and investment income was $169 million, up $16 million, or 11 percent. | $1.97B | – | up 7 percent |
| U.S. CommercialOpen orders were 28,900 versus 28,200, closed orders were 16,300 versus 15,300, and average revenue per order was $18,200 versus $16,100. | $297.4M | – | up 21 percent |
| Home WarrantyPretax income was $11.3 million versus $16.2 million, primarily attributable to higher marketing expense to drive continued growth in the direct-to-consumer sales channel. The claims loss rate was 47 percent, virtually unchanged compared with last year. | $114.7M | – | flat |
| CorporatePretax loss was $28 million compared with a loss of $5 million last year. Excluding net investment gains and losses, Corporate pretax loss was $26 million compared with a $24 million loss. | −$3M | – | – |
Amounts quoted below without a unit are in millions, as in the filing’s tables. Per-share figures are as printed.
Capital returns
- Raised common stock dividend by 11 percent to an annual rate of $2.44 per share.
- Cash dividends declared per share were $0.61 for the three months ended September 30, 2026, compared with $0.55 in 2025.
- Repurchased 23,149 shares for a total of $1 million at an average price of $64.24.
- In the fourth quarter, through October 21, repurchased 143,254 shares for a total of $9 million at an average price of $62.40.
What drove it
- Title Insurance and Services pretax income was $244.1 million compared with $236.2 million, while pretax margin was 12.4 percent compared with 12.9 percent.
- Title Insurance and Services adjusted pretax margin was 12.7 percent compared with 12.9 percent.
- Net investment income in Title Insurance and Services was $169.3 million compared with $153.1 million.
- Information and other revenue growth was primarily driven by 31 percent growth in the company's subservicing business.
- The Title segment's provision for policy losses and other claims was $45 million, or 3.0 percent of title premiums and escrow fees, unchanged from the prior year. The quarter reflected an ultimate loss rate of 3.75 percent for the current policy year and a net decrease of $11 million in the loss reserve estimate for prior policy years.
- Consolidated net investment losses were $2 million, or 1 cent per diluted share, compared with net investment gains of $26 million, or 20 cents per diluted share.
Concerns
- GAAP net income attributable to the Company was $177.0 million compared with $189.6 million, and GAAP diluted EPS was $1.72 compared with $1.84.
- The Title Insurance and Services pretax margin declined to 12.4 percent from 12.9 percent, while adjusted pretax margin declined to 12.7 percent from 12.9 percent.
- Title open orders declined to 175,600 from 191,300 and closed orders declined to 134,900 from 141,800.
- Personnel costs in Title Insurance and Services were $574 million, up $31 million, or 6 percent; other operating expenses were $306 million, up $31 million, or 11 percent; and interest expense was $31 million, up $7 million, or 27 percent.
- Home Warranty pretax margin was 9.9 percent compared with 14.1 percent, and adjusted pretax margin was 9.7 percent compared with 13.5 percent.
- Cash flow from operations declined to $238 million from $273 million.
What to watch
- Residential origination conditions following the recent increase in mortgage rates, which management said reinforces its expectation for a lower-for-longer residential origination market.
- Commercial revenue, order counts and average revenue per order, including commercial average revenue per order of $18,200.
- The rollout of new AI-native title and settlement platforms, which management said is intended to enhance customer experience and improve operating efficiency.
- The trajectory of Title Insurance and Services personnel costs, other operating expenses, interest expense and pretax margin.
- Home Warranty marketing expense and direct-to-consumer sales channel growth.
Balance sheet and cash flow
- Cash flow from operations was $238 million compared with $273 million last year.
- Cash and cash equivalents were $1,731.1 million at September 30, 2026, compared with $1,387.3 million at December 31, 2025.
- Investments were $10,737.5 million at September 30, 2026, compared with $9,394.3 million at December 31, 2025.
- Total assets were $17,982.8 million at September 30, 2026, compared with $16,228.8 million at December 31, 2025.
- Notes and contracts payable were $1,546.8 million at September 30, 2026, compared with $1,545.4 million at December 31, 2025.
- Total stockholders’ equity was $5,386.9 million at September 30, 2026, compared with $5,499.5 million at December 31, 2025.
- Debt-to-capital ratio was 30.3 percent, or 22.2 percent excluding secured financings payable of $808 million.
Analysis
First American reported third-quarter total revenues of $2,084.6 million, compared with $1,978.9 million a year earlier. Adjusted total revenues were $2,086.2 million compared with $1,952.6 million. GAAP net income attributable to the Company declined to $177.0 million from $189.6 million and diluted EPS declined to $1.72 from $1.84, while adjusted net income increased to $183.4 million from $174.9 million and adjusted EPS increased to $1.78 from $1.70. The GAAP comparison included net investment losses of $2 million in the current quarter versus net investment gains of $26 million in the prior-year quarter.
Title Insurance and Services produced $1,972.9 million of revenue versus $1,835.9 million and pretax income of $244.1 million versus $236.2 million. Revenue growth was led by commercial activity, agent premiums and investment income. Commercial revenue was $297.4 million, up 21 percent, and commercial average revenue per order was $18,200 compared with $16,100. Direct premiums and escrow fees were $643 million, supported by a 13 percent increase in average revenue per order closed, but domestic direct closed orders declined 5 percent. Total title closed orders were 134,900 compared with 141,800.
Title profitability improved in dollars but narrowed as expenses increased. The segment's pretax margin was 12.4 percent compared with 12.9 percent, and adjusted pretax margin was 12.7 percent compared with 12.9 percent. Personnel costs rose $31 million, or 6 percent, other operating expenses rose $31 million, or 11 percent, and interest expense rose $7 million, or 27 percent. The policy-loss provision was $45 million, or 3.0 percent of title premiums and escrow fees, unchanged from the prior year.
Home Warranty revenue was $114.7 million versus $114.6 million, but pretax income declined to $11.3 million from $16.2 million and pretax margin fell to 9.9 percent from 14.1 percent. The company attributed the decline primarily to higher marketing expense for direct-to-consumer sales growth. Corporate pretax loss widened to $27.8 million from $5.4 million. Cash flow from operations was $238 million compared with $273 million, while the company raised its annual common-stock dividend rate by 11 percent to $2.44 per share and continued repurchases.
The release did not provide quantitative forward guidance. Management described a lower-for-longer residential origination market following the recent increase in mortgage rates, while emphasizing commercial growth, customer relationships and deployment of AI-native title and settlement platforms. Key reported indicators are the decline in title order volumes, the higher average revenue per order, Title margin movement, expense growth and the durability of investment income.
Management, verbatim
Continued growth in our commercial business and higher investment income drove our earnings this quarter.
Mark Seaton, chief executive officer at First American Financial Corporation
The recent increase in mortgage rates reinforces our expectation for a lower-for-longer residential origination market. We will use this environment to deepen our customer relationships and execute the rollout of our new AI-native title and settlement platforms, which will enhance the customer experience, improve operating efficiency and position First American for stronger earnings growth as the market recovers.
Mark Seaton, chief executive officer at First American Financial Corporation
Not in the filing
stated, not guessed- Quantitative forward financial guidance
- Prior-outlook comparison
- Gross margin
- Operating income
- Free cash flow
- Prior-quarter consolidated revenue, income, EPS and cash flow comparisons
- Share-price reaction
- Consensus estimates or analyst expectations
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.