Earnings call transcript: First American Q3 2025 beats forecasts, stock rises

First American Financial Corporation (FAF) reported strong third-quarter earnings for 2025, posting an adjusted earnings per share (EPS) of $1.70, surpassing analyst forecasts of $1.38. The company’s revenue reached 1.98 billion dollars, exceeding expectations of 1.87 billion dollars. Following the announcement, First American’s stock rose by 4.68% to 61.41 dollars, reflecting positive investor sentiment. According to InvestingPro analysis, the company currently trades above its Fair Value, with analysts setting price targets between $71 and $86.

Key Takeaways

• First American’s EPS exceeded forecasts by 23.19%.
• Revenue growth was driven by a 29% increase in commercial revenue.
• The company is advancing with AI-driven platforms, targeting a national rollout over the next two years.
• Stock price increased by 4.68% post-earnings announcement.

Company Performance

First American delivered a robust performance in Q3 2025, marked by a 14% increase in adjusted consolidated revenue. The company benefited from a strong commercial market, which saw revenue growth of 29%. The real estate and insurance sectors continue to face challenges, yet First American’s strategic investments in AI and technology have positioned it well against competitors. InvestingPro data shows the company maintains strong financial health metrics, with a notable gross profit margin of 61.2% and consistent dividend payments for 16 consecutive years. For deeper insights into FAF’s financial health and growth potential, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

Financial Highlights

• Revenue: 1.98 billion dollars, up from 1.87 billion dollars forecasted.
• Earnings per share: $1.70, compared to a forecast of $1.38.
• Commercial revenue increased by 29%.
• Investment income grew by 12%.

Earnings vs. Forecast

First American’s actual EPS of $1.70 exceeded the forecasted $1.38 by 23.19%, marking a significant earnings surprise. This performance aligns with the company’s historical trend of surpassing expectations, underscoring its effective operational strategies.

Market Reaction

Following the earnings announcement, First American’s stock price rose by 4.68% to 61.41 dollars. This increase reflects investor confidence in the company’s growth prospects and strategic initiatives. The stock remains within its 52-week range, with a high of 70.92 dollars and a low of 53.09 dollars. With a beta of 1.28 and an attractive dividend yield of 3.68%, FAF offers both growth potential and income opportunities. InvestingPro subscribers can access additional insights through 8 more ProTips and detailed valuation metrics.

Outlook & Guidance

Looking ahead, First American is optimistic about its long-term outlook. The company anticipates gradual improvements in efficiency through AI-driven initiatives. While the residential purchase market faces affordability challenges, the commercial sector remains robust. First American expects a potential 6.2% cut in Texas title insurance rates in March 2026, which could impact investment income.

Executive Commentary

CEO Mark Seaton highlighted, "We’re at the early stages of the next real estate cycle, and our industry-leading investments in data, technology, and AI position us to outperform as the market strengthens." He also emphasized the company’s commitment to consumer protection, stating, "We’re not in the title waiver business. We have a responsibility to protect consumers and lenders at a reasonable price point."

Risks and Challenges

• Potential rate cuts could affect investment income in 2026.
• The residential market remains soft due to affordability challenges.
• Rising personnel costs, up 10%, may impact profit margins.
• The refinance market continues to be at historically low levels.

Q&A

During the earnings call, analysts inquired about the implementation of AI across operations and the development of the Sequoia and Endpoint platforms. Questions also focused on potential mergers and acquisitions, investment income outlook, and the company’s share buyback strategy.

Full transcript - First American Financial Corp (FAF) Q3 2025:

Conference Call Operator, Call Moderator: Welcome to the First American Financial Corporation’s third quarter earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. A copy of today’s press release is available on First American’s website at www.firstam.com/investor. Please note that the call is being recorded and will be available for replay from the company’s investor website and for a short time by dialing 877-660-6853 or 201-612-7415 and entering the conference ID 137-56-641. We will now turn the call over to Craig Barberio, Vice President of Investor Relations, to make an introductory statement. Craig, please go ahead.

Craig Barberio, Vice President of Investor Relations, First American Financial Corporation: Thank you. Good morning, everyone, and welcome to First American Financial Corporation’s earnings conference call for the third quarter of 2025. Joining us today on the call will be our Chief Executive Officer, Mark Seaton, and Matt Wagner, Chief Financial Officer. Some of the statements made today may contain forward-looking statements that do not relate strictly to historical or current fact. These forward-looking statements speak only as of the date they are made, and the company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made. Risks and uncertainties exist that may cause results to differ materially from those set forth in these forward-looking statements. For more information on these risks and uncertainties, please refer to yesterday’s earnings release and the risk factors discussed on our Form 10-K and subsequent SEC filings.

Our presentation today also contains certain non-GAAP financial measures that we believe provide additional insight into the operational efficiency and performance of the company relative to earlier periods and relative to the company’s competitors. For more details on these non-GAAP financial measures, including presentation with and reconciliation to the most directly comparable GAAP financials, please refer to yesterday’s earnings release, which is available on our website at www.firstam.com. I will now turn the call over to Mark Seaton.

Conference Call Operator, Call Moderator: Thank you, Craig. Thank you to everyone joining our call. Today, I will provide a brief review of our earnings and share our outlook on the market. Today, we announced adjusted earnings per share of $1.70 for the third quarter, another strong result that highlights the resilience of our business. We continue to see two distinct market dynamics. Our commercial business delivered outstanding performance, while the residential market remains in a period of transition. Even so, our adjusted consolidated revenue grew 14%, and adjusted EPS increased 27%. Commercial revenue increased 29%, and we set a record for average revenue per order at just over $16,000 per closing. The rebound in the commercial market began in the third quarter of 2024, which means the year-over-year comparisons are becoming more challenging. Nonetheless, even against tougher comps, we delivered another strong quarter with a 29% growth rate.

We continue to see broad-based strength in commercial, led by the industrial sector, which includes data center transactions, a consistently high-performing sub-asset class. Even excluding data centers, the industrial market remains robust, driven by sustained e-commerce demand for logistics and warehouse space. Multifamily was our second strongest asset class, with solid performance across a wide range of geographies. Investment income grew 12% this quarter. Our investment portfolio, and particularly our bank, continues to serve as a countercyclical earnings driver. The residential side of our business continues to navigate challenging market conditions. Purchase revenue declined 2%, primarily due to reduced demand for new homes. The purchase market has remained soft over the last three years, largely driven by affordability challenges and elevated mortgage rates.

However, when purchase volumes begin to normalize and return to long-term trends, we are well-positioned to capture growth, thanks to our operating leverage and strong relationships with local real estate professionals who play a critical role in driving purchase activity. Refinance revenue was up 28% this quarter. Although we’ve seen an uptick in volumes, the refinance market remains at historically low levels. Our home warranty business continues to post very strong earnings. Our pre-tax income was up 80%, driven by a lower loss rate, and we continue to grow our direct-to-consumer channel, which is offsetting the ongoing weakness in real estate. I’m optimistic about our long-term outlook. We’re at the early stages of the next real estate cycle, and our industry-leading investments in data, technology, and AI position us to outperform as the market strengthens.

By modernizing our platforms and integrating AI across our operations, we expect to drive significant productivity gains, reduce risk, and unlock new revenue opportunities, further extending First American’s leadership in the industry. Now, I would like to turn the call over to Matt for a more detailed review of our financial results.

Craig Barberio, Vice President of Investor Relations, First American Financial Corporation: Thank you, Mark. This quarter, we generated GAAP earnings of $1.84 per diluted share. Our adjusted earnings, which exclude the impact of net investment gains and purchase-related intangible amortization, was $1.70 per diluted share. Adjusted revenue in our title segment was $1.8 billion, up 14% compared with the same quarter of 2024. Commercial revenue was $246 million, a 29% increase over last year. Our closed orders increased 6% from the prior year, and our average revenue per order was up 22%. Purchase revenue was down 2% during the quarter, driven by a 5% decline in closed orders, partially offset by a 3% improvement in the average revenue per order. While refinance revenue was up 28% compared with last year, it accounted for just 6% of our direct revenue this quarter and highlights how challenged this market continues to be.

In the agency business, revenue was $799 million, up 17% from last year. Given the reporting lag in agent revenues of approximately one quarter, these results primarily reflect remittances related to second-quarter economic activity. Information and other revenues were $276 million during the quarter, up 14% compared with last year, primarily due to refinance activity in the company’s Canadian operations, revenue growth in the company’s sub-servicing business, and higher demand for non-insured information products and services. Investment income was $153 million in the third quarter, up 12% compared with the same quarter of last year, primarily due to higher interest income from the company’s investment portfolio, partly offset by a decline in interest income from operating cash due to lower balances and lower short-term interest rates.

Net investment gains were $6 million in the current quarter, compared with net investment losses of $308 million in the third quarter of 2024, which were primarily due to losses realized from the company’s investment portfolio rebalancing project. Personnel costs were $543 million in the third quarter, up 10% compared with the same quarter of 2024. The increase was primarily due to incentive compensation expense resulting from higher revenue and profitability and higher salary expense and employee benefit costs. Other operating expenses were $276 million in the quarter, up 9% compared with last year, primarily due to higher production expense driven by higher volumes and increased software expense. Our success ratio for the quarter was 62%, which is in line with our historic target of 60%.

The provision for policy losses and other claims was $42 million in the third quarter, or 3.0% of title premiums and escrow fees, unchanged from the prior year. The third quarter rate reflects an ultimate loss rate of 3.75% for the current policy year and a net decrease of $11 million in the loss reserve estimate for prior policy years. Pre-tax margin in the title segment was 12.9% on both a GAAP and adjusted basis. Looking at October, we are seeing a similar pattern in opened orders to what we have experienced so far this year, with a strong commercial market and sluggish residential market continuing. For the first three weeks of October, commercial orders are up 14%, while purchase orders are down 6%. The strength in commercial order activity is positioning us well for the remainder of the year and into 2026.

Turning to the home warranty segment, total revenue was $115 million this quarter, up 3% compared with last year. The loss ratio was 47%, down from 54% in the third quarter of 2024. The improvement in the loss ratio was primarily due to lower claim frequency, largely driven by favorable weather conditions. Pre-tax margin in the home warranty segment was 14.1%, or 13.5% on an adjusted basis. The effective tax rate in the quarter was 23.1%, which is slightly below the company’s normalized tax rate of 24%. Our debt-to-capital ratio was 33.0%. Excluding secured financings payable, our debt-to-capital ratio was 22.5%. This quarter, we raised our common stock dividend by 2% to an annual rate of $2.20 per share. We also repurchased 598,000 shares in the third quarter for a total of $34 million at an average price of $56.24.

Now, I would like to turn the call back over to the operator to take your questions.

Conference Call Operator, Call Moderator: Thank you, sir. Ladies and gentlemen, if you would like to ask your question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your headset before pressing the star keys. Our first question comes from the line of Mark Hughes with Truist Securities. Please proceed.

Thank you very much. On the commercial ARPO, revenue per order, obviously, 3Q is very strong. Could you talk about that, the sustainability, perhaps what you’re seeing so far in 4Q?

Mark Seaton, Chief Executive Officer, First American Financial Corporation: Thanks for the question, Mark. Yeah, I would say it’s sustainable. I mean, typically in commercial, there is some seasonality to ARPO, right? It usually builds throughout the year, and we think it’ll continue to build in Q4. We’re just seeing a lot of momentum in commercial. There’s a lot of big transactions. We track 11 asset classes. 10 of our asset classes were up in the third quarter, year over year. The only one that wasn’t up was energy, which has historically been a really good asset class for us. Q4 is typically a big energy quarter. We’ve got some big deals in the pipeline. Just in terms of Q3, it exceeded our expectations. We’re really optimistic about what we see in Q4. It’s been a really good story for us.

How about the outlook currently for investment income? I know you’ve talked about some historically, some sensitivities, but kind of what should we anticipate in Q4?

Craig Barberio, Vice President of Investor Relations, First American Financial Corporation: Hi, this is Matt. Thanks for the question, Mark. For Q4, we continue to see we think it’ll be down slightly sequentially just due to kind of some of the headwinds from the rate cuts. It should be modestly down sequentially, is the expectation right now.

Okay, when we think about the refinance orders, what’s the kind of recent trend in refi per day?

For the first three weeks of October, we’re opening about 875 open orders per day in refi.

Thank you very much.

Mark Seaton, Chief Executive Officer, First American Financial Corporation: Thanks, Mark.

Conference Call Operator, Call Moderator: The next question comes from the line of Terry Ma with Barclays. Please proceed.

Hey, thank you. Good morning. I was hoping you could give an update on maybe just Sequoia and Endpoint in terms of the timeline for the pilots. I think, you know, last quarter you said Endpoint pilot was going to roll out December. Is that still on track? For Sequoia and the markets that you’re piloting currently, any kind of early results?

Mark Seaton, Chief Executive Officer, First American Financial Corporation: Thank you, Terry. First of all, in terms of Endpoint, we are still on track with everything we talked about in the third quarter. The product is ready for testing. In fact, we had people here on campus last week and this week testing the product. Testing is going well, and we are still on track to roll it out in our first office in December. Right now, we are planning on a broader rollout in the springtime to start rolling it out throughout the country. It is going to take us roughly two years or so to get it national, but it is something we are really excited about. Our current system, which we call FAST, we rolled it out in 2002, and so we have been on the system for 23 years. It has been a good system for us for a long time.

Obviously, technology has changed and AI is here, and we are really excited about Endpoint. It is going to give us productivity improvements we have not seen before. It is going to be a great user interface for our escrow officers, and it is really going to amplify their talents. It is going to reduce the mundane tasks that are part of the escrow transaction and free up more time for our escrow officers to spend more time with the clients. We are really excited about it, and we are really on track with everything since last quarter, since we talked about last quarter. That is good. We keep hitting our milestones. In terms of Sequoia, we are also very optimistic about Sequoia.

We really started Sequoia with the vision of having instant title for purchase transactions. It has never been done in the industry. There is instant title for refinance transactions. We have got a solution for that. Our competitors have solutions for that. Nobody has it for purchase transactions. We are continuing to make milestones with Sequoia too. We have rolled out our AI engine for Sequoia, and we are running live refinance orders through Sequoia today. That is a big milestone. The product is out there, it is in production, it is in three counties. We have exceeded our expectations in terms of the hit rates that we can get. As of right now, the plan is to have our first purchase transaction go live in the first quarter, and that has been our plan and it continues to be our plan.

We see really good progress with Sequoia as well. We are going to start testing the purchase product in the first quarter, and similarly, it is going to take us roughly two years or so to do a national rollout. When we do, we will be able to produce a commitment faster, arguably with more accuracy and cheaper than anything that is out there in the market. We are really excited about both Endpoint and Sequoia.

Got it. Thank you. That’s helpful.

Thank you, Terry.

Conference Call Operator, Call Moderator: The next question comes from the line of Bose George with KBW. Please proceed.

Hey, guys. Good morning. Just sticking to Sequoia and Endpoint, can you remind us just what the margin impact of those programs are, of just running the two platforms, and just the way to think about the timeline for that kind of rolling off?

Mark Seaton, Chief Executive Officer, First American Financial Corporation: Yeah, thanks a lot, Bose. One thing I would say is we initially broke out our, you know, we call it our margin drag from Endpoint and Sequoia early on because we really wanted investors to be able to evaluate the performance of our core title business without these investments that we were making with Endpoint and Sequoia. At the time, you know, we didn’t know if they were going to work or not. There were big technological hurdles. We weren’t sure if, you know, it was going to work. Now we know it’s going to work. I think there’s still, there’s always questions on the timing of things, but we know that they’re both going to work. We are integrating them into our core operations now. It’s just part of our title segment. We’re not going to disclose the drag with Endpoint and Sequoia anymore.

A, because we don’t feel like it’s fair to back that out. We want investors to judge us on our core operating performance, including those. B, is because they’re being integrated into our core operations. Before, they were really standalone entities, but now it’s just being, it’s harder and harder for us to track it just because they’re being more integrated into what we’re doing. We’re not going to, you know, give that anymore.

Yeah, that makes sense. I guess I’m just trying to think about, there will be a benefit as, you know, once they rolled out and your old platforms are shut down, right? I guess it’s hard to quantify at the moment, but there’s going to be that sort of benefit at the end of this process.

There’s no question about that, Bose. The last time that we have talked about the drag, it’s been roughly 100 basis points. You don’t spend 100 basis points just to get nothing. You spend 100 basis points to get more than 100 basis points, right? There are a few different ways to get value. The first is we’re really supporting two different systems. I think for both Endpoint and Sequoia, we’ve got our old system where our business is running on the old systems, and then we have the new systems, which are showing a lot of promise, but they have very little volumes, right? We’re really double paying with technology right now. Eventually, we’ll get everything on the new systems, and there will be some savings by shutting down the old systems. That’s the first thing.

The second thing is the thing we’re excited about is it’s not just a copy and paste in terms of productivity. The new system is going to create a lot more productivity, and we’ll see that. The third is I really believe that we can gain market share for both of those products, and that remains to be seen. It’s tough to gain market share in our business, but I think there’s a lot of reasons to believe that more customers are going to want to do business with First American Financial Corporation because of this modern platform that we have. I think there’s three different levels of value creation, and they’ll happen gradually over time. You’ll see incremental improvements.

Okay, that’s helpful. Thanks. Actually, just on the order count, the default and the other, you know, that line item has gone up quite a bit again. Is that, I mean, are those like new sort of clients allocating product? Just curious what’s going on there.

Just so you’re looking at default and other, Bose?

Yeah, the order count, just the increase in the order count and that other line item.

I would just say, first of all, of all of our order counts, we look at purchase, commercial, refi, and then of course, what you’re referring to is the other. We have seen an increase in default activity. It’s there, but I wouldn’t say it’s material, and it’s really not a material part of our business right now, but we have seen it.

Okay, great. Thank you.

It is not necessarily like foreclosures. There could be some foreclosures. A lot of it is loss mitigation work that we do and some alternative products.

Okay, great. Thanks a lot.

Thanks, Bo’s.

Conference Call Operator, Call Moderator: As a reminder, if you would like to ask a question, please press star one on your telephone keypad. The next question comes from the line of Geoffrey Dunn with Dowling & Partners. Please proceed.

Thanks. Good morning. Mark, back on Sequoia, you know, it doesn’t seem like there’s a demand for instantaneous title. It really sounds like it’s more about efficiency gains. Obviously, you have political pressure picking up every so often, pointing to the cost of title. As you think about the longer-term profile of the business, is this just naturally where the business is evolving to? Maybe you struggle to keep those gains, or do you think that there’s something more sustainable in those efficiency gains over time?

Mark Seaton, Chief Executive Officer, First American Financial Corporation: I think there are a few things there, Jeff. I want to make sure I answer your questions. If I do not, call me back, call me out on it. First of all, I think for Sequoia, I do not know. I would take issue that the demand is not there for instant title. I have heard that, but I will tell you, I have talked to customers and our sales team that think that instant title for purchase transactions is a big deal. Maybe it is, maybe it is not, but we are going to test it. We are going to be the ones to test it. Even if it is not, even in the worst case that it is not helpful to have an instant purchase transaction, right? You can have an instant purchase transaction when the transaction will not close in 55 days.

Even if it is not, we are really turning a labor product into a data product. It gives us a lot more flexibility and innovation to create new products out there. I think that it will be an advantage. I think particularly on the agency side, if you can have a lower cost to produce your products, you are going to have an advantage out there. In terms of the title waivers and where the market is going and whether these are sustainable, we are in the title insurance business. We are not in the title waiver business. I think we have got a responsibility to consumers to not only protect consumers and lenders, but also to do it at a reasonable price point too. There has been a lot of talk about the title waiver pilot. I just think that title insurance is going to be here.

It is necessary. The title waivers, we all as an industry have an obligation to do what is best for the consumer, both in terms of protections, protecting their property rights, but also we have got an obligation to make it affordable too. We will see what happens and how the market develops. I think particularly with Sequoia, it just gives us a lot of strategic optionality going forward once it is nationally rolled out.

Okay. I thought it was interesting that you brought up AI directly in your press release. You mentioned it again on the call. Can you give some examples of how you’re using AI? I guess in particular, how much is AI coming into play with your kind of living title initiatives?

It’s a huge deal for both Endpoint and Sequoia, which we were getting a lot of questions on this call. It’s for good reason. We’re spending a lot of time talking about it internally and focusing on it. We started both of those initiatives without AI. We started to reimagine the title production process through Sequoia and the settlement process through Endpoint. It wasn’t AI-driven at first. We wanted to build modern platforms. About 6 to 12 months ago, these AI models came out. These new LLM models came out. Agentic AIs came out. It’s really changed our thinking on how to do things. We pivoted, and both of those are AI-native platforms now. Both Endpoint and Sequoia leverage AI at the core to build a better product than we were on pace to build just because these technologies have become available to us in the last year.

Those are AI-driven and AI-native products that we’re very excited about. They’re just going to be better than the track that we were on. We have this top-down approach with leveraging AI, but we also have a bottoms-up approach with leveraging AI. We’ve got ChatGPT Enterprise for all 19,000 of our employees. We just rolled it out in October, October 1st. I’m very excited to see what that produces too. I have anecdotes of us keeping customers because of AI, us reducing risk, us thinking about new ways to do our process. We have a top-down and bottoms-up approach. I think the gains are going to happen over time. We’re not going to wake up one quarter and see a 300 bps jump in margins because of AI.

I think over time, gradually, we will start to become more and more efficient as we as a company learn how to use these technologies.

Okay. Just specifically to the living title efforts, is AI a big part of that?

It is.

Is that still?

Yeah.

It is okay.

No, it’s, it’s, so the living title, it is, it is AI. You know, and I can go into, I could go into more details on this. I’ll just say that when I think of Sequoia now, it is, it’s an AI-driven product that is producing an automated title commitment for refis today and purchase tomorrow using AI.

All right. Great. Thank you.

Thanks, Jeff.

Conference Call Operator, Call Moderator: The next question comes from the line of Mark DeVries with Deutsche Bank. Please proceed.

Thanks. Looks like you only purchased about 20,000 shares after you reported 2Q results. Is there any color you can provide on why you pulled back and what you need to see to get more active?

Craig Barberio, Vice President of Investor Relations, First American Financial Corporation: Hi, Mark. Thanks for the question. This is Matt. We’re continuing to focus on returning excess capital to shareholders. During the quarter, we raised our dividend. Like you mentioned, we repurchased some shares during the quarter. We purchased $122 million worth of shares this year. At this time, we’ve paused our buyback program to evaluate how things develop and consider whether there may be better uses for the capital. We continually evaluate it, and we will be buying back shares opportunistically.

Okay. Thanks. Yeah, it looks like you ended up delevering a little bit in the quarter. Could you just discuss the range of debt-to-capital ratios you’ll look to operate in and where you’d expect to get more aggressive on using excess capital?

Yeah. Over the long term of the cycle, we target a debt-to-capital of 20%. Right now, we’re a little bit over that at 22.5%, which we feel very comfortable in because we’re at the lower part of the market right now, lower part of the cycle. It’s okay for us to have a little bit of a higher debt-to-cap. When you say we did levered, we didn’t pay down any debt. We just, as we generate earnings, we obviously generate additional capital. It went from, I think, 23% to 22.5%. We’re comfortable where we’re at. As the market continues to increase and the cycle turns, we look to get back towards the 20% over time.

Are you guys seeing more of potential interest on the M&A front that could be a use of some of that excess?

Mark Seaton, Chief Executive Officer, First American Financial Corporation: We are seeing it. When the market initially fell in the first half of 2022, I think we were really hopeful that there would be acquisitions and deals to do. We just really didn’t see much. Over the last couple of years, we really kind of leaned into the buyback, and we felt really good about that. Now there are more things that are coming across our desk. We’ll see if those deals close or what happens. They’re both on the title side and the non-title side. There’s just more opportunities today than there have been in the last couple of years.

Yeah, it makes sense. I mean, is it fair to say that some of the weakness on the residential side is creating more and more pressure from potential sellers at this point?

Yeah, we’re seeing that. We’re definitely seeing that.

Okay.

We’re disciplined. I would just say on the M&A side too, Mark, we don’t feel like we have to do anything. We’re not just trying to grow for the sake of growing. The deal has to make sense and it has to be strategic. We have to make sure we have a good expected outcome in terms of the financials. If we don’t do any deals, we’re fine with that. We do think what we know, there’s just more and more opportunities that are rising because the sluggish market has lasted a long time. I think more and more people are calling us now.

Got it. Makes sense. Thank you.

Thanks, Mark.

Conference Call Operator, Call Moderator: The next question will come again from the line of Mark Hughes with Truist Securities. Please proceed.

Yeah, thanks for taking the follow-up. Mark, you’d mentioned the title waiver. You were proposing a title solution. Anything new on the regulatory front, either on the demonstration project or maybe even on the rate front at the various states? Anything new?

Mark Seaton, Chief Executive Officer, First American Financial Corporation: I would say there’s nothing new since last quarter. The title waiver pilot is still going on. We’re just on the sidelines waiting to kind of, we’re sort of monitoring results and seeing where that goes. There’s been nothing new on that front. On the state front, I would say there’s nothing new. The most material thing is the Texas rate issue. That’s not new from the last call. The industry now is expecting a 6.2% rate cut in Texas in March. It’s not final yet. There’s still another hearing that needs to happen. I think that’s what we’re sort of expecting internally. That’s probably the biggest news on the rate side. That’s not new since the last call we had.

When we think about net investment income for 2026, any early thoughts there?

Craig Barberio, Vice President of Investor Relations, First American Financial Corporation: Yeah, Mark. From an early thought perspective, when I look out into 2026, the obvious headwinds for interest for investment income are the expected rate cuts. We’ve already gotten a rate cut this year. As a reminder, each 25 basis point rate cut impacts us by $15 million on an annual basis. Each rate cut will reduce investment income by approximately $15 million based on current balances. The offsets that we have potentially for next year that could help that are, one, we are expecting growth in all of our markets that matter to us, specifically commercial and moderately in purchase. If we get growth in transaction levels and transaction volumes, we’ll get growth in deposit balances. We’ll have a higher balance rate, or a higher level of balances, which will be helpful.

The other thing that we did recently towards the end of Q3 is we made some operational enhancements at our bank, which now allows us to put 1031 exchange deposits at our bank. Historically, we’ve had to put those deposits at third-party banks. Now our bank can handle those deposits, which will just increase the economic value of those deposits. That’ll be a tailwind going into next year that’ll hopefully offset any impacts of rate cuts.

Is the kind of takeaway message the balances, the operational enhancements may be offsetting the rate cuts and therefore kind of a more stable outlook for 2026?

I’d say it’s too early to say, right? It’s dependent on the level of activity and the level of rate cuts. Right now, where we sit, we would probably see investment income being down year over year.

Okay. All right. Appreciate the feedback. Thank you.

Mark Seaton, Chief Executive Officer, First American Financial Corporation: Thanks, Mark.

Conference Call Operator, Call Moderator: Thank you. There are no additional questions at this time. This will conclude this morning’s call. We’d like to remind listeners that today’s call will be available for replay on the company’s website or by dialing 877-680-6853 or 201-612-7415 and entering the conference ID 137-56-641. The company would like to thank you for your participation. This concludes today’s conference call. You may now disconnect.

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