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Investing.com -- First American Financial Corporation (NYSE:FAF) saw its shares surge 3.5% after the title insurance provider reported second-quarter earnings that significantly exceeded analyst expectations, driven by strong commercial revenue growth and improved margins across its business segments.
The Santa Ana, California-based company posted adjusted earnings of $1.53 per share for the quarter ended June 30, 2025, surpassing the analyst consensus of $1.36. Revenue reached $1.84 billion, exceeding estimates of $1.77 billion and representing a 14% increase compared to the same period last year.
First American’s commercial business was particularly strong, with revenues jumping 33% YoY to $234.2 million. The company’s Title Insurance and Services segment, its largest business unit, delivered a pretax margin of 12.6%, or 13.2% on an adjusted basis, up from 11.7% in the prior-year quarter.
"Our second quarter performance was strong despite continued challenges in the U.S. housing market," said Mark Seaton, chief executive officer at First American Financial Corporation. "The strength of our commercial business, growth in investment income and management of our cost structure enabled us to deliver an adjusted margin in our title segment of 13.2%."
The Home Warranty segment also performed well, with pretax margin improving to 20.2%, or 20.7% on an adjusted basis, compared to 15.4% a year ago. This improvement was primarily due to lower claim frequency, though partially offset by higher severity.
First American’s board approved a new $300 million share repurchase authorization in July. During the second quarter, the company repurchased over 1 million shares for $61 million at an average price of $57.95, and continued buybacks into the third quarter with an additional 577,036 shares purchased for $32 million through July 23.
Investment income in the Title Insurance segment rose 17% to $147 million, providing another boost to the company’s overall performance.
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