First American Financial Corp

Previous wording

The Company’s total revenues decreased $34.6 million, or 2.1%, in the second quarter of 2024 when compared with the second quarter of 2023. This decrease was primarily attributable to a decline in net investment income of $20.4 million, or 13.6% and net investment losses of $13.2 million in the current quarter compared to $6.3 million in net investment gains recognized in the prior year. In the title insurance and services segment, direct premiums and escrow fees from domestic commercial and residential refinance transactions decreased $1.2 million, or 0.7%, and $2.0 million, or 8.9%, respectively, while direct premiums and escrow fees from domestic residential purchase transactions increased $11.2 million, or 4.3%, in the second quarter of 2024 when compared to the second quarter of 2023.

Current wording

The Company’s total revenues decreased $75.1 million, or 5.1%, in the third quarter of 2024 when compared with the third quarter of 2023. This decrease was primarily attributable to net investment losses of $311.5 million in the current quarter compared to $163.6 million in net investment losses recognized in the prior year. This decrease was partially offset by increases in direct premiums and escrow fees in the title insurance business of $42.5 million, or 8.6%, and agent premiums of $19.4 million, or 2.9%. In the title insurance and services segment, direct premiums and escrow fees from domestic commercial purchase and residential refinance transactions increased $30.2 million, or 18.9%, $6.4 million, or 2.6%, and $4.3 million, or 20.0%, respectively.

Previous wording

According to the Mortgage Bankers Association’s July 19, 2024 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 decrease 7.3% in the second quarter of 2024 when compared with the second quarter of 2023. According to the MBA Forecast, the dollar amount of purchase originations are forecasted to decrease 9.4%. This volume of domestic residential mortgage origination activity contributed to an increase of 4.3% in direct premiums and escrow fees for the Company’s direct title operations from domestic residential purchase transactions and a decrease of 8.9% from domestic refinance transactions in the second quarter of 2024 when compared with the second quarter of 2023.

Current wording

According to the Mortgage Bankers Association’s September 23, 2024 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 21.3% in the third quarter of 2024 when compared with the third quarter of 2023. According to the MBA Forecast, the dollar amount of purchase originations are forecasted to increase 5.3% and refinance originations are forecasted to increase 117.9%. This volume of domestic residential mortgage origination activity contributed to an increase of 2.6% in direct premiums and escrow fees for the Company’s direct title operations from domestic residential purchase transactions and an increase of 20.0% from domestic refinance transactions in the third quarter of 2024 when compared with the third quarter of 2023.

Previous wording

During the second quarter of 2024, the level of domestic title orders opened per day by the Company’s direct title operations decreased 2.9% when compared with the second quarter of 2023. Commercial opened orders per day decreased 1.8%, while residential purchase and refinance opened orders per day increased 0.5% and 6.3%, respectively, when compared with the second quarter of 2023.

Current wording

During the third quarter of 2024, the level of domestic title orders opened per day by the Company’s direct title operations increased 3.9% when compared with the third quarter of 2023. Refinance opened orders per day increased 41.3%, while residential purchase and commercial opened orders per day decreased 2.3% and 0.3%, respectively, when compared with the third quarter of 2023.

Previous wording

Direct premiums and escrow fees were $533.0 million and $936.2 million for the three and six months ended June 30, 2024, respectively, increases of $16.2 million, or 3.1%, and $13.8 million, or 1.5%, when compared with the respective periods of the prior year. The increases were due to increases in domestic average revenues per order, partially offset by reductions in the number of domestic title orders closed by the Company’s direct title operations. Domestic average revenues per order closed were $3,818 and $3,682 for the three and six months ended June 30, 2024, respectively, increases of 4.9% and 3.9% when compared with $3,640 and $3,544 for the respective periods of the prior year, which was due to a shift in mix from lower premium default transactions to higher premium commercial transactions and an increase in average revenues per order on purchase transactions. The Company’s direct title operations closed 124,700 and 227,400 domestic title orders during the three and six months ended June 30, 2024, respectively, decreases of 2.8% and 3.2% when compared with 128,300 and 234,900 domestic title orders closed during the respective periods 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 refinance orders closed per day decreased by 4.9% and 4.1%, respectively, and domestic residential purchase orders closed per day increased by 0.5% and 0.4%, respectively, for the three and six months ended June 30, 2024, when compared to the respective periods of the prior year.

Current wording

Direct premiums and escrow fees were $536.2 million and $1.5 billion for the three and nine months ended September 30, 2024, respectively, increases of $42.5 million, or 8.6%, and $56.3 million, or 4.0%, when compared with the respective periods of the prior year. The increases were due to increases in domestic average revenues per order. Domestic average revenues per order closed were $3,926 and $3,767 for the three and nine months ended September 30, 2024, respectively, increases of 7.5% and 5.2% when compared with $3,653 and $3,581 for the respective periods of the prior year, which were due to increases in average revenues per order on commercial and purchase transactions. The Company’s direct title operations closed 121,600 and 349,000 domestic title orders during the three and nine months ended September 30, 2024, respectively, an increase of 1.3% and a decrease of 1.7% when compared with 120,000 and 354,900 domestic title orders closed during the respective periods 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. For the three and nine months ended September 30, 2024, domestic residential refinance orders closed per day increased by 12.3% and 1.6%, respectively, and domestic residential purchase orders closed per day decreased by 1.8% and 0.3%, respectively, when compared to the respective periods of the prior year.

Previous wording

Agent premiums were $616.3 million and $1.2 billion for the three and six months ended June 30, 2024, respectively, decreases of $8.4 million, or 1.3%, and $35.0 million, or 2.9%, when compared with the respective periods 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 decrease in agent premiums for the three months ended June 30, 2024 is generally consistent with the 0.6% decrease in the Company’s direct premiums and escrow fees in the first quarter of 2024 as compared with the first quarter of 2023.

Current wording

Agent premiums were $683.9 million and $1.9 billion for the three and nine months ended September 30, 2024, respectively, an increase of $19.4 million, or 2.9%, and a decrease of $15.6 million, or 0.8%, when compared with the respective periods 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 September 30, 2024 is generally consistent with the 3.1% increase in the Company’s direct premiums and escrow fees in the second quarter of 2024 as compared with the second quarter of 2023.

Previous wording

Information and other revenues were $240.9 million and $458.1 million for the three and six months ended June 30, 2024, respectively, decreases of $3.5 million, or 1.4%, and $7.8 million, or 1.7%, when compared with the respective periods of the prior year. The decreases were primarily due to the increased capture rate of title premiums from an affiliated title agent, which caused decreases in information and other revenues and comparable increases in direct premiums and escrow fees.

Current wording

Information and other revenues were $241.7 million and $699.8 million for the three and nine months ended September 30, 2024, respectively, an increase of $1.6 million, or 0.7%, and a decrease of $6.2 million, or 0.9%, when compared with the respective periods of the prior year. The increase for the three months ended September 30, 2024, was due to an increase in demand for the Company’s information products. The decrease for the nine months ended September 30, 2024 was due to the increased capture rate of title premiums from an affiliated title agent, which caused decreases in information and other revenues and comparable increases in direct premiums and escrow fees.

Previous wording

Net investment income totaled $125.7 million and $242.4 million for the three and six months ended June 30, 2024, respectively, decreases of $16.2 million, or 11.4%, and $24.1 million, or 9.0%, when compared with the respective periods of the prior year. The decreases in investment income were primarily driven by declines in the Company’s escrow and tax-deferred property exchange balances, partially offset by an increase in interest income from the Company’s warehouse lending business.

Current wording

Net investment income totaled $136.5 million and $378.9 million for the three and nine months ended September 30, 2024, respectively, decreases of $5.2 million, or 3.7%, and $29.3 million, or 7.2%, when compared with the respective periods of the prior year. The decreases in investment income were primarily driven by declines in the Company’s escrow and tax-deferred property exchange balances, partially offset by an increase in interest income from the Company’s warehouse lending business.

Previous wording

Net investment gains of $6.0 million and $24.9 million for the three and six months ended June 30, 2024, respectively, were primarily attributable to changes in the fair values of marketable equity securities, partially offset by losses recognized on sales of debt securities. Net investment gains of $2.9 million and $9.4 million for the three and six months ended June 30, 2023, respectively, were primarily attributable to changes in the fair values of marketable equity securities, partially offset by losses recognized on sales of debt securities and losses recognized on the sale of a title plant.

Current wording

Net investment losses of $308.0 million and $283.1 million for the three and nine months ended September 30, 2024, respectively, were primarily attributable to losses realized from the Company’s investment portfolio rebalancing project discussed above, partially offset by a change in the fair values of marketable equity securities. Net investment losses of $15.6 million and $6.2 million for the three and nine months ended September 30, 2023, respectively, were primarily attributable to changes in the fair values of marketable equity securities and losses recognized on sales of debt securities. Net investment losses for the nine months ended September 30, 2023 were also due to losses recognized on the sale of a title plant.

Previous wording

Personnel costs were $485.6 million and $938.1 million for the three and six months ended June 30, 2024, respectively, an increase of $0.6 million, or 0.1%, and a decrease of $5.7 million, or 0.6%, when compared with the respective periods of the prior year. The increase for the three months ended June 20, 2024, was primarily attributable to higher incentive compensation and payroll tax expense, partially offset by lower employee benefits expense. The decrease for the six months ended June 30, 2024 was due to reductions in salary, employee benefits and severance expense, partially offset by increases in incentive compensation and payroll tax expense.

Current wording

Personnel costs were $491.7 million and $1.4 billion for the three and nine months ended September 30, 2024, respectively, increases of $23.2 million, or 5.0%, and $17.5 million, or 1.2%, when compared with the respective periods of the prior year. The increases for the three months and nine months ended September 30, 2024, were primarily attributable to higher salary, incentive compensation, employee benefits, and payroll tax expense, partially offset by lower severance expense.

Previous wording

Agents retained $492.2 million and $940.0 million of title premiums generated by agency operations for the three and six months ended June 30, 2024, respectively, which compares with $496.4 million and $965.4 million for the respective periods of the prior year. The percentage of title premiums retained by agents was 79.9% and 79.7% for the three and six months ended June 30, 2024, respectively, compared to 79.5% for the respective periods of the prior year.

Current wording

Agents retained $546.7 million and $1.5 billion of title premiums generated by agency operations for the three and nine months ended September 30, 2024, respectively, which compares with $531.4 million and $1.5 billion for the respective periods of the prior year. The percentages of title premiums retained by agents were 79.9% and 79.8% for the three and nine months ended September 30, 2024, respectively, compared to 80.0% and 79.6% for the respective periods of the prior year.

Previous wording

Other operating expenses totaling $243.6 million for the three months ended June 30, 2024 were flat with the respective period of the prior year. Other operating expenses were $477.3 million for the six months ended June 30, 2024, an increase of $10.1 million, or 2.2%, when compared with the respective period of the prior year. The increase for the six months ended June 30, 2024 was primarily due to an out-of-period adjustment of $6.2 million recorded in the first quarter of 2024 to write-off certain uncollectible balances related to fees that should have been previously written off. The increase also reflects higher legal and software expense, partially offset by a decline in professional services expense.

Current wording

Other operating expenses were $251.8 million and $729.1 million for the three and nine months ended September 30, 2024, respectively, increases of $8.6 million, or 3.5%, and $18.7 million, or 2.6%, when compared with the respective periods of the prior year. The increases were primarily due to higher production and software expense. The increase for the nine months ended September 30, 2024, was also due to higher legal expense and the impact of an out-of-period adjustment of $6.2 million recorded in the first quarter of 2024 to write-off certain uncollectible balances related to fees that should have been previously written off, partially offset by lower professional services expense.

Previous wording

The provision for policy losses and other claims, expressed as a percentage of title insurance premiums and escrow fees, was 3.0% and 3.5% for the three and six months ended June 30, 2024 and 2023, respectively. The 3.0% loss provision rate for the three and six months ended June 30, 2024 reflects an ultimate loss rate of 3.75% for the 2024 policy year and reserve releases of 0.75%, or $8.6 million and $15.9 million, respectively, for prior policy years, all based on title insurance premiums and escrow fees for the three and six months ended June 30, 2024. The 3.5% loss provision rate for the three and six months ended June 30, 2023 reflected an ultimate loss rate of 3.75% for the 2023 policy year and reserve releases of 0.25%, or $2.9 million and $5.4 million, respectively, for prior policy years, all based on title insurance premiums and escrow fees for the three and six months ended June 30, 2023.

Current wording

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 and nine months ended September 30, 2024, and 3.0% and 3.33% for the three and nine months ended September 30, 2023, respectively. The 3.0% loss provision rate for the three and nine months ended September 30, 2024 reflects an ultimate loss rate of 3.75% for the 2024 policy year and reserve releases of 0.75%, or $9.1 million and $25.0 million, respectively, for prior policy years, all based on title insurance premiums and escrow fees for the three and nine months ended September 30, 2024. The 3.0% and 3.33% loss provision rates for the three and nine months ended September 30, 2023, respectively, reflected an ultimate loss rate of 3.75% for the 2023 policy year and reserve releases of 0.75%, or $8.6 million and 0.42%, or $14.0 million, respectively, for prior policy years, all based on title insurance premiums and escrow fees for the three and nine months ended September 30, 2023.

Previous wording

Depreciation and amortization expense was $50.9 million and $99.7 million for the three and six months ended June 30, 2024, respectively, increases of $6.1 million, or 13.6%, and $10.7 million, or 12.0%, when compared with the respective periods of the prior year. The increases were primarily due to higher amortization of capitalized software from recently deployed digital settlement products.

Current wording

Depreciation and amortization expense was $51.9 million and $151.6 million for the three and nine months ended September 30, 2024, respectively, increases of $5.7 million, or 12.3%, and $16.4 million, or 12.1%, when compared with the respective periods of the prior year. The increases were primarily due to higher amortization of capitalized software from recently deployed digital settlement products.

Previous wording

Premium taxes totaling $14.3 million for the three months ended June 30, 2024 were flat with the respective period of the prior year. Premium taxes were $27.2 million for the six months ended June 30, 2024, a decrease of $0.6 million, or 2.2%, when compared with the respective period of the prior year. Premium taxes as a percentage of title insurance premiums and escrow fees were 1.2% and 1.3% for the three and six months ended June 30, 2024, respectively, and 1.3% for the three and six months ended June 30, 2023, respectively.

Current wording

Premium taxes were $17.8 million and $45.0 million for the three and nine months ended September 30, 2024, respectively, increases of $1.4 million, or 8.5%, and $0.8 million, or 1.8%, when compared with the respective periods 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 and nine months ended September 30, 2024, respectively, and 1.4% and 1.3% for the three and nine months ended September 30, 2023, respectively.

Previous wording

Interest expense was $23.4 million and $45.8 million for the three and six months ended June 30, 2024, respectively, increases of $1.9 million, or 8.8%, and $8.4 million, or 22.5%, respectively, when compared with the respective periods of the prior year. The increases were primarily attributable to higher interest expense in the Company’s warehouse lending business.

Current wording

Interest expense was $24.1 million and $69.9 million for the three and nine months ended September 30, 2024, respectively, increases of $0.5 million, or 2.1%, and $8.9 million, or 14.6%, respectively, when compared with the respective periods of the prior year. The increases were primarily attributable to higher interest expense in the Company’s warehouse lending business.

Previous wording

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 11.7% and 8.8% for the three and six months ended June 30, 2024, respectively, compared with 12.1% and 9.5% in the respective periods of the prior year.

Current wording

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 a pretax margin loss of (10.1)% and a pretax margin of 2.9% for the three and nine months ended September 30, 2024, respectively, compared with pretax margins of 10.5% and 9.9% in the respective periods of the prior year.

Previous wording

Personnel costs and other operating expenses totaled $42.4 million and $84.3 million for the three and six months ended June 30, 2024, respectively, increases of $1.0 million, or 2.4%, and $3.1 million, or 3.8%, when compared with the respective periods of the prior year. The increases were primarily attributable to higher advertising, postage, and salary expense.

Current wording

Personnel costs and other operating expenses totaled $43.6 million and $127.9 million for the three and nine months ended September 30, 2024, respectively, increases of $3.1 million, or 7.7%, and $6.2 million, or 5.1%, when compared with the respective periods of the prior year. The increases were primarily attributable to higher advertising, postage and salary expense.

Previous wording

The provision for home warranty claims, expressed as a percentage of home warranty premiums, was 45.8% and 43.7% for the three and six months ended June 30, 2024, respectively, compared with 49.2% and 48.3% for the respective periods of the prior year. The decreases in the claims rates were primarily attributable to lower claims severity, partially offset by higher claims frequency.

Current wording

The provision for home warranty claims, expressed as a percentage of home warranty premiums, was 53.8% and 47.2% for the three and nine months ended September 30, 2024, respectively, compared with 54.9% and 50.6% for the respective periods of the prior year. The decrease in the claims rate for the three months ended September 30, 2024, was primarily attributable to lower claims frequency, partially offset by higher severity. The decrease in the claims rate for the nine months ended September 30, 2024, was due to lower severity, partially offset by higher frequency.

Previous wording

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 15.4% and 17.4% for the three and six months ended June 30, 2024, respectively, compared with 13.4% and 14.4% in the respective periods of the prior year.

Current wording

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 provision for losses) are relatively constant, although, as a result of some fixed expenses, profit margins (before provision for losses) 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 8.1% and 14.2% for the three and nine months ended September 30, 2024, respectively, compared with 8.7% and 12.4% in the respective periods of the prior year.

Previous wording

Net investment income totaled $3.7 million and $14.4 million for the three and six months ended June 30, 2024, respectively, compared with $7.3 million and $15.5 million in the respective periods of the prior year. The changes in net investment income were primarily attributable to fluctuations in earnings on investments associated with the Company’s deferred compensation plan.

Current wording

Net investment income totaled $9.2 million and $23.6 million for the three and nine months ended September 30, 2024, respectively, compared with losses of $3.8 million and income of $11.7 million in the respective periods of the prior year. The changes in net investment income/losses were primarily attributable to fluctuations in earnings on investments associated with the Company’s deferred compensation plan.

Previous wording

Net investment losses of $19.5 million and $30.1 million for the three and six months ended June 30, 2024 were primarily related to unrealized losses on the Company's investment in Offerpad. Net investment gains of $2.8 million and net investment losses of $11.4 million for the three and six months ended June 30, 2023, respectively, were primarily related to unrealized gains on the Company's investment in Offerpad, partially offset by unrealized losses and impairment charges on non-marketable equity investments within the Company's venture investment portfolio.

Current wording

Net investment losses of $4.0 million and $34.1 million for the three and nine months ended September 30, 2024 were primarily related to unrealized losses and impairment charges on non-marketable equity investments within the Company's venture investment portfolio and, also, included changes in the fair value of the Company's investment in Offerpad. Net investment losses of $147.3 million and $158.7 million for the three and nine months ended September 30, 2023, respectively, were primarily related to unrealized losses and impairment charges on non-marketable equity investments within the Company's venture investment portfolio and, also, included changes in the fair value of the Company's investment in Offerpad.

Previous wording

Personnel costs and other operating expenses totaled $14.6 million and $37.1 million for the three and six months ended June 30, 2024, respectively, compared with $17.7 million and $41.1 million for the respective periods of the prior year. The decreases for the three and six months ended June 30, 2024 were primarily attributable to lower returns on participant investments within the Company’s deferred compensation plan, partially offset by expenses related to the December 2023 cybersecurity event.

Current wording

Personnel costs and other operating expenses totaled $16.3 million and $53.4 million for the three and nine months ended September 30, 2024, respectively, compared with $7.4 million and $48.5 million for the respective periods of the prior year. The increases for the three and nine months ended September 30, 2024 were primarily attributable to higher returns on participant investments within the Company’s deferred compensation plan, partially offset by a reinsurance credit related to the wind down of the property and casualty insurance business.

Previous wording

Interest expense totaled $12.4 million and $24.9 million for the three and six months ended June 30, 2024, respectively, decreases of $0.7 million, or 5.3%, and $1.6 million, or 6.0%, when compared with the respective periods of the prior year. The decreases for the three and six months ended June 30, 2024, were primarily attributable to the repayment of the Company's $250 million 4.30% senior unsecured notes, upon maturity, in February 2023.

Current wording

Interest expense totaled $12.5 million and $37.4 million for the three and nine months ended September 30, 2024, respectively, compared with $12.5 million and $39.0 for the respective periods of the prior year. The decrease for the nine months ended September 30, 2024 was primarily attributable to the repayment of the Company's $250 million 4.30% senior unsecured notes, upon maturity, in February 2023.

Previous wording

The Company’s inter-segment eliminations were not material for the three and six months ended June 30, 2024 and 2023.

Current wording

The Company’s inter-segment eliminations were not material for the three and nine months ended September 30, 2024 and 2023.

Previous wording

The Company’s effective income tax rates (income tax expense as a percentage of income before income taxes) were 23.2% and 22.3% for the three and six months ended June 30, 2024, respectively, compared with 23.4% and 23.3% for the respective periods of the prior year. 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 rates for 2024 reflect tax credits claimed in the current year.

Current wording

The Company’s effective income tax rates (income tax benefit/expense as a percentage of loss/income before income taxes) were 28.4% and 8.9% for the three and nine months ended September 30, 2024, respectively, compared with 29.4% and 23.2% for the respective periods of the prior year. The differences in the effective tax rates are primarily due to the impact on pretax earnings from losses and impairments on investments and 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 rates for 2024 reflect tax credits claimed in current and prior years.

Previous wording

Net income for the three and six months ended June 30, 2024 was $116.4 million and $163.1 million, respectively, compared with $136.4 million and $182.4 million for the respective periods of the prior year. Net income attributable to the Company for the three and six months ended June 30, 2024 was $116.0 million, or $1.11 per diluted share, and $162.7 million, or $1.56 per diluted share, respectively, compared with $138.5 million, or $1.33 per diluted share, and $184.4 million, or $1.76 per diluted share, for the respective periods of the prior year.

Current wording

Net (loss) income for the three and nine months ended September 30, 2024 was $(103.4) million and $59.7 million, respectively, compared with $(1.2) million and $181.2 million for the respective periods of the prior year. Net (loss) income attributable to the Company for the three and nine months ended September 30, 2024 was $(104.0) million, or $(1.00) per diluted share, and $58.7 million, or $0.56 per diluted share, respectively, compared with $(1.7) million, or $(0.02) per diluted share, and $182.7 million, or $1.75 per diluted share, for the respective periods of the prior year.

Previous wording

Cash provided by operating activities totaled $336.0 million and $176.7 million for the six months ended June 30, 2024 and 2023, respectively, after claim payments, net of recoveries, of $179.4 million and $179.5 million, respectively. The principal nonoperating uses of cash and cash equivalents for the six months ended June 30, 2024 and 2023 were advances and repayments related to secured financing transactions, purchases of debt and equity securities, dividends to common stockholders, capital expenditures and repurchases of Company shares. Principal nonoperating uses of cash and cash equivalents also included decreases in deposits at the Company's banking operations for the six months ended June 30, 2024 and repayment of senior unsecured notes for the six months ended June 30, 2023. The principal nonoperating sources of cash and cash equivalents for the six months ended June 30, 2024 and 2023 were borrowings and collections related to secured financing transactions, proceeds from the sales and maturities of debt and equity securities and, for the six months ended June 30, 2023, increases in the deposit balances at the Company’s banking operations. The net effect of all activities on cash and cash equivalents was a decrease of $1.6 billion and an increase of $1.0 billion for the six months ended June 30, 2024 and 2023, respectively.

Current wording

Cash provided by operating activities totaled $572.9 million and $396.0 million for the nine months ended September 30, 2024 and 2023, respectively, after claim payments, net of recoveries, of $295.9 million and $289.1 million, respectively. The principal nonoperating uses of cash and cash equivalents for the nine months ended September 30, 2024 and 2023 were advances and repayments related to secured financing transactions, purchases of debt and equity securities, dividends to common stockholders, capital expenditures and repurchases of Company shares. Principal nonoperating uses of cash and cash equivalents also included decreases in deposits at the Company's banking operations for the nine months ended September 30, 2024 and repayment of senior unsecured notes for the nine months ended September 30, 2023. The principal nonoperating sources of cash and cash equivalents for the nine months ended September 30, 2024 and 2023 were borrowings and collections related to secured financing transactions, and proceeds from the sales and maturities of debt and equity securities. Principal nonoperating sources of cash and cash equivalents also included net proceeds from issuance of unsecured senior notes for the nine months ended September 30, 2024 and increases in the deposit balances at the Company’s banking operations for the nine months ended September 30, 2023. The net effect of all activities on cash and cash equivalents was a decrease of $651.9 million and an increase of $355.6 million for the nine months ended September 30, 2024 and 2023, respectively.

Previous wording

The Company continually assesses its capital allocation strategy, including decisions relating to dividends, stock repurchases, capital expenditures, acquisitions and investments. In June 2024, the Company paid a second quarter cash dividend of 53 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.

Current wording

The Company continually assesses its capital allocation strategy, including decisions relating to dividends, stock repurchases, capital expenditures, acquisitions and investments. In September 2024, the quarterly cash dividend was increased to 54 cents per common share, representing a 2% increase. The dividend increase was effective beginning with the September 2024 dividend. 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.

Previous wording

The Company maintains a stock repurchase plan with authorization up to $400.0 million, of which $169.6 million remained as of June 30, 2024. 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 six months ended June 30, 2024, the Company repurchased and retired 811 thousand shares of its common stock for a total purchase price of $44.2 million and, as of June 30, 2024, repurchased and retired 4.3 million shares of its common stock under the current authorization for a total purchase price of $230.4 million.

Current wording

The Company maintains a stock repurchase plan with authorization up to $400.0 million, of which $153.5 million remained as of September 30, 2024. 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 nine months ended September 30, 2024, the Company repurchased and retired 1.1 million shares of its common stock for a total purchase price of $60.3 million and, as of September 30, 2024, the Company has repurchased and retired 4.6 million shares of its common stock under the current authorization for a total purchase price of $246.5 million.

Previous wording

As of June 30, 2024, the holding company’s sources of liquidity included $79.8 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.

Current wording

As of September 30, 2024, the holding company’s sources of liquidity included $568.5 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.

Previous wording

The Company expects to repay its $300.0 million 4.60% senior unsecured notes due November 15, 2024, upon maturity, through available cash at the holding company, borrowings under its credit facility or through the issuance of additional bonds.

Current wording

The Company expects to repay its $300.0 million 4.60% senior unsecured notes due November 15, 2024, upon maturity, through proceeds from its bond offering in September 2024.

Previous wording

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 June 30, 2024, the Company had no outstanding borrowings under the facility.

Current wording

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 September 30, 2024, the Company had no outstanding borrowings under the facility.

Previous wording

FirstFunding, Inc., a specialized warehouse lender to correspondent mortgage lenders, maintains secured warehouse lending facilities with several banking institutions. At June 30, 2024, outstanding borrowings under these facilities totaled $641.5 million.

Current wording

FirstFunding, Inc., a specialized warehouse lender to correspondent mortgage lenders, maintains secured warehouse lending facilities with several banking institutions. At September 30, 2024, outstanding borrowings under these facilities totaled $878.2 million.

Previous wording

The Company’s debt to capitalization ratios were 29.7% and 28.6% at June 30, 2024 and December 31, 2023, respectively. The Company’s adjusted debt to capitalization ratio, excluding secured financings payable of $641.5 million and $553.3 million and accumulated other comprehensive loss of $729.7 million and $655.8 million at June 30, 2024 and December 31, 2023, was 20.1% and 20.2%, respectively.

Current wording

The Company’s debt to capitalization ratios were 34.8% and 28.6% at September 30, 2024 and December 31, 2023, respectively. The Company’s adjusted debt to capitalization ratio, excluding secured financings payable of $878.2 million and $553.3 million and accumulated other comprehensive loss of $290.5 million and $655.8 million at September 30, 2024 and December 31, 2023, was 25.5% and 20.2%, respectively.

Previous wording

Investment Portfolio. The Company maintains a high quality, liquid investment portfolio that is primarily held at its insurance and banking subsidiaries. As of June 30, 2024, 95% of the Company’s investment portfolio consisted of debt securities, of which 64% 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 June 30, 2024, see Note 3 Debt Securities to the condensed consolidated financial statements.

Current wording

Investment Portfolio. The Company maintains a high quality, liquid investment portfolio that is primarily held at its insurance and banking subsidiaries. As of September 30, 2024, 95% of the Company’s investment portfolio consisted of debt securities, of which 72% 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 September 30, 2024, see Note 3 Debt Securities to the condensed consolidated financial statements.

Previous wording

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 $10.6 billion at June 30, 2024 and December 31, 2023, respectively, of which $4.5 billion and $6.3 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.

Current wording

Off-balance sheet arrangements. The Company administers escrow deposits as a service to customers in its direct title operations. Escrow deposits totaled $9.0 billion and $10.6 billion at September 30, 2024 and December 31, 2023, respectively, of which $4.6 billion and $6.3 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.

Previous wording

Trust assets administered by FA Trust totaled $4.7 billion and $4.4 billion at June 30, 2024 and December 31, 2023, respectively, of which $127.6 million and $197.1 million, respectively, were held at FA Trust. The remaining trust assets were held at third-party financial institutions. Trust assets, which are 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.

Current wording

Trust assets administered by FA Trust totaled $4.8 billion and $4.4 billion at September 30, 2024 and December 31, 2023, respectively, of which $155.2 million and $197.1 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.

Previous wording

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 at June 30, 2024 and December 31, 2023. 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.

Current wording

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 $2.0 billion and $1.8 billion at September 30, 2024 and December 31, 2023, 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.

Previous wording

In conducting its residential mortgage loan subservicing operations, the Company administers cash deposits on behalf of its clients. Cash deposits totaled $1.0 billion and $830.5 million at June 30, 2024 and December 31, 2023, respectively, of which $670.6 million and $485.7 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.

Current wording

In conducting its residential mortgage loan subservicing operations, the Company administers cash deposits on behalf of its clients. Cash deposits totaled $1.2 billion and $830.5 million at September 30, 2024 and December 31, 2023, respectively, of which $882.7 million and $485.7 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.