The First American Corporation Reports Financial Results for the Fourth Quarter and Full Year 2007
February 29, 2008
SANTA ANA, Calif., -- The First American Corporation (NYSE: FAF) has announced financial results for the fourth quarter and 12 months ended Dec. 31, 2007.
Total revenues for the fourth quarter of 2007 were $1.9 billion, a decrease of 14 percent relative to the fourth quarter of 2006. Net loss was $67.5 million in the fourth quarter of 2007, compared with net income of $104.0 million in the fourth quarter of 2006. Loss per diluted share was 74 cents in the fourth quarter of 2007, versus earnings per share of $1.06 in the fourth quarter of the prior year. The results for the current quarter included pretax net realized investment gains of $26.2 million, a reserve-strengthening adjustment of $122.3 million due to adverse claim development and restructuring expenses of $25.6 million. The results for the quarter were negatively impacted by an increase to the effective income tax rate for the year ended Dec. 31, 2007, which rose to 108 percent due primarily to an increase in the ratio of permanent differences to pretax income. This change to the full-year rate resulted in lower than anticipated tax benefit being provided to the current quarter loss.
For the year ended Dec. 31, 2007, total revenues were $8.2 billion, a 4 percent decrease relative to the year ended Dec. 31, 2006. Net loss was $3.1 million for the full year 2007, versus net income of $287.7 million for 2006. Diluted loss per share was 3 cents in the year ended Dec. 31, 2007, compared with diluted earnings per share of $2.92 in the prior year.
"While we are encouraged by an increase in title orders during January and February, we will continue our focus on aggressive expense reduction efforts throughout the entire organization," stated Parker S. Kennedy, chairman and chief executive officer of The First American Corporation. "In light of continued declines in real estate activity, we were pleased to report strong cash flows from operations of $202 million for the quarter.
"The Information Technology business group, comprised of our Mortgage Information, Property Information and First Advantage reporting segments, generated mixed results. The slowdown in mortgage activity adversely impacted our businesses focused on origination and securitization clients; however, the company's default-related businesses and First Advantage continued to post favorable results.
"The spin-off of the company's Financial Services businesses, which was originally announced on Jan. 15, 2008, is expected to close in the third quarter of 2008. We are extremely excited about the potential of these soon- to-be created entities."