First American shuffles leadership amid mixed Q4 earnings

First American Financial, the second largest underwriter of title insurance, has shuffled its leadership, with company President Kenneth DeGiorgio promoted to CEO.

Dennis Gilmore, who has been CEO since 2010, now becomes First American's chairman. His predecessor in the role since 2010, the great-grandson of the company’s founder C.E. Parker, Parker Kennedy, now is chairman emeritus and lead independent director.

DeGiorgio joined First American in 1999 and became its executive vice president following the separation of the current company and what would becomeCoreLogic into distinct publicly traded entities in June 2010. He assumed responsibility for First American’s title insurance, specialty insurance, and data and analytics businesses when he was promoted to president last May.

Gilmore joined First American in 1993. "The culture of excellence and inclusivity that Dennis has fostered among our employees during his tenure has led to best-in-class service for our customers and has produced record returns for our shareholders," Kennedy said in a press release. "Long before it became common to tout a 'digital strategy,' Dennis had us aggressively investing in the core data assets that now fuel the title insurance and settlement services industry."

First American issued its fourth quarter results on Feb. 10, the morning after announcing the leadership change.

For the period, First American earned $260 million, compared with $445.3 million in the third quarter and $280 million in the fourth quarter of 2020.

First American's net income for the full year was $1.24 billion, up from $696 million in 2020.

"We achieved [full year-over-year] revenue growth of 30% to $9.2 billion, and delivered a pretax title margin of 16.3%, both setting new annual records for the company," DeGiorgio said in the earnings release.

For the title insurance business in the fourth quarter, First American had total revenue of $2.3 billion, up 13% from the same period last year of $2 billion.

Average revenue per direct title order closed increased 36% to $3,339, which First American attributed to an increase in the average deal size for commercial transactions insured, the increase in residential home values seen in purchase transactions and the overall shift to purchase mortgage business from refinancings, where higher premiums are charged for title policies.

But that was partially offset by a 19% year-over-year decline in the number of direct title orders closed in the quarter to 239,300 from 295,100. Direct title orders opened fell to 263,500 in the fourth quarter from 354,600 one year prior.

Included in the title segment are the results for information and other revenues, which were $322 million during the quarter, up 15% compared with the same quarter of last year. This was due to the completion of the mortgage loan subservicer ServiceMac acquisition and higher demand for the company's loss mitigation products as pandemic-related forbearances and foreclosure moratoriums end.

First American's net investment gains totaled $7 million for the current quarter, compared with gains of $56 million in the fourth quarter of 2020, primarily due to the change in the fair value of equity securities.