First American Financial Reports Third-Quarter 2026 Results as Revenue Grows 5% on Commercial Strength and Higher Investment Income
First American Financial Corporation (NYSE: FAF), a leading provider of title insurance, settlement services, and risk solutions for real estate transactions, has reported its financial results for the third quarter ended September 30, 2026. The company recorded higher revenue compared with the same period last year, supported by continued growth in its commercial business, increased investment income, and expansion in selected service operations.
Total revenue reached $2.085 billion, representing a 5% increase from $1.979 billion in the third quarter of 2025. Adjusted total revenue increased 7% year over year to approximately $2.1 billion. Despite revenue growth, reported net income declined as the company faced a less favorable comparison with the prior-year period, which included higher net investment gains.
First American reported net income of $177 million, or $1.72 per diluted share, compared with $189.6 million, or $1.84 per diluted share, a year earlier. On an adjusted basis, however, net income increased to $183.4 million, or $1.78 per diluted share, from $174.9 million, or $1.70 per diluted share, in the third quarter of 2025.
The results reflect differences in investment performance between the two periods, alongside operating developments across the company’s Title Insurance and Services, Home Warranty, and Corporate segments. Growth in commercial real estate transactions and higher investment income helped support the company’s performance, while lower residential title order volumes and increased operating expenses influenced results.
Commercial Business and Investment Income Support Quarterly Performance
Mark Seaton, chief executive officer of First American Financial Corporation, said continued growth in the company’s commercial business and higher investment income were the primary drivers of earnings during the quarter.
“Continued growth in our commercial business and higher investment income drove our earnings this quarter,” Seaton said.
He also addressed the outlook for residential real estate transactions, noting that the recent increase in mortgage rates reinforces the company’s expectation that residential mortgage origination activity will remain subdued for an extended period.
According to Seaton, First American intends to use the current market environment to deepen customer relationships and advance the rollout of its new artificial intelligence-native title and settlement platforms. The company expects these platforms to enhance customer experience, improve operating efficiency, and position the business for stronger earnings growth as real estate market conditions recover.
The company’s technology strategy is particularly relevant as title insurance and settlement providers look for ways to streamline transaction processes, improve information management, and reduce operational friction. Real estate transactions involve extensive documentation, property records, risk assessments, and coordination among multiple parties. Technology investments can help providers manage these requirements more efficiently while supporting customers throughout the closing process.
However, the pace of improvement in residential transaction activity remains dependent on market conditions, including mortgage rates, housing affordability, property sales, and refinancing demand.
Key Financial Results for the Third Quarter
First American’s third-quarter financial performance showed a combination of revenue growth and lower reported net income.
The principal financial measures for the three months ended September 30 were:
- Total revenue: $2.085 billion, up 5% from $1.979 billion in the third quarter of 2025.
- Income before taxes: $227.6 million, compared with $247 million a year earlier.
- Net income: $177 million, compared with $189.6 million in the prior-year quarter.
- Diluted earnings per share: $1.72, compared with $1.84.
- Adjusted net income: $183.4 million, up from $174.9 million.
- Adjusted diluted earnings per share: $1.78, compared with $1.70.
- Title Insurance and Services revenue: $1.973 billion, up approximately 7%.
- Home Warranty revenue: $114.7 million, essentially unchanged year over year.
The company recorded net investment losses of approximately $2 million during the quarter, equivalent to about $0.01 per diluted share. In the third quarter of 2025, it recorded net investment gains of approximately $26 million, or $0.20 per diluted share, contributing to the stronger prior-year reported earnings comparison.
Purchase-related intangible amortization amounted to approximately $7 million in both periods, representing about $0.05 per diluted share. First American’s effective tax rate for the current quarter was 22.4%.
The results demonstrate why reported and adjusted earnings can move in different directions. While reported net income declined, adjusted net income increased, indicating improved performance under the company’s adjusted reporting measure. Investors typically examine both figures to understand the impact of items that management excludes from adjusted results.
Title Insurance and Services Segment Delivers Higher Revenue
First American’s Title Insurance and Services segment remained the company’s principal revenue contributor during the third quarter. The segment generated total revenue of $1.973 billion, compared with $1.836 billion in the same period of 2025, representing growth of approximately 7%.
Adjusted revenue for the segment increased 8% year over year to approximately $2 billion.
The segment’s performance benefited from higher direct premiums and escrow fees, increased agent premiums, growth in information and other services, and stronger investment income. Commercial transactions were an important contributor, helping offset lower volumes in certain domestic residential title operations.
Pretax income for the segment increased to $244.1 million from $236.2 million a year earlier. The reported pretax margin, however, declined to 12.4% from 12.9%. On an adjusted basis, the pretax margin was 12.7%, compared with 12.9% in the prior-year period.
The results reflect the interaction between higher revenue and rising operating costs. Personnel expenses, software costs, production expenses, and interest costs all increased during the quarter, affecting profitability despite stronger revenue.
Direct Premiums and Escrow Fees Increase
Direct premiums and escrow fees reached $643 million, an increase of 7% compared with the third quarter of 2025.
The increase was primarily driven by a 13% rise in average revenue per closed order. This improvement was partially offset by a 5% decline in the number of direct title orders closed in domestic operations.
Average revenue per direct title order increased to $4,304. The improvement reflected higher average revenue from commercial and purchase transactions, together with a shift toward a greater proportion of higher-premium commercial transactions.
This trend illustrates the importance of transaction mix to title insurance performance. Revenue does not depend solely on the number of transactions completed. The type, size, complexity, and value of properties involved can also affect the premiums and fees generated by each order.
Agent premiums reached $868 million, increasing 9% year over year. These premiums are recorded with approximately a one-quarter lag relative to direct premiums, meaning that the current quarter’s agent premium results reflect earlier business activity.
Commercial Revenue Records Strong Growth
Commercial operations continued to be a significant source of growth for First American.
Commercial revenue totaled $297.4 million in the third quarter, up 21% from $245.9 million in the same quarter of 2025. Open commercial orders increased to 28,900 from 28,200, while closed orders rose to 16,300 from 15,300.
Average revenue per commercial order increased to $18,200, compared with $16,100 a year earlier.
The increase in commercial revenue and average order value helped support the broader Title Insurance and Services segment. Commercial real estate transactions can generate different revenue profiles from residential transactions because of differences in property values, transaction structures, and underwriting requirements.
Continued commercial growth could therefore remain an important factor in the company’s results, particularly if residential real estate activity remains constrained by higher mortgage rates.
Across U.S. direct title insurance operations, title open orders totaled 175,600, compared with 191,300 in the third quarter of 2025. Title closed orders declined to 134,900 from 141,800, reflecting softer overall order volumes.
Information Services and Investment Income Contribute to Growth
Information and other revenue totaled $292 million during the quarter, increasing by $16 million, or approximately 6%, from the prior-year period.
The growth was primarily driven by a 31% increase in the company’s subservicing business. Subservicing and related information services can provide additional revenue opportunities beyond traditional title insurance activities, helping the company diversify its sources of income within the broader real estate and mortgage ecosystem.
Investment income in the Title Insurance and Services segment reached $169 million, up $16 million, or 11%, year over year.
Higher interest income generated by the company’s investment portfolio was the primary driver of the increase. This benefit was partially offset by lower interest income from escrow balances.
Investment income is an important component of title insurance economics because companies maintain investment portfolios and hold funds associated with real estate transactions. The income generated can vary with interest rates, investment balances, portfolio composition, and the timing of customer transactions.
Net investment gains within the segment were approximately $0.2 million in the current quarter, compared with $6 million a year earlier. The prior-year gains were primarily associated with changes in the fair value of marketable equity securities.
These segment-level investment results should be distinguished from the company’s overall net investment performance, which included the broader investment gains and losses reflected in consolidated results.
Operating Expenses Rise Amid Technology and Compensation Costs
First American experienced higher operating expenses during the quarter, reflecting increases in personnel compensation, software spending, production costs, and interest expense.
Personnel costs in the Title Insurance and Services segment rose to $574 million, up $31 million, or 6%, from the third quarter of 2025. The increase was primarily attributable to higher salary and incentive compensation expenses.
Other operating expenses increased to $306 million, up $31 million, or 11%, year over year. Higher software expenses and production-related costs were the principal contributors.
These increases highlight the cost considerations associated with operating a large title insurance and settlement services business. Maintaining technology infrastructure, processing real estate transactions, supporting employees, and meeting compliance requirements all contribute to the company’s expense base.
Depreciation and amortization expense remained unchanged at $53 million.
Interest expense increased by $7 million, or 27%, to $31 million. The increase was primarily attributable to higher interest expense on deposit balances at the company’s bank subsidiary.
The provision for policy losses and other claims totaled $45 million, equivalent to 3.0% of title premiums and escrow fees, unchanged from the prior-year period. The third-quarter rate reflected an ultimate loss rate of 3.75% for the current policy year and a net $11 million decrease in the estimated loss reserves for prior policy years.
These claims provisions are a significant component of title insurance operations because the business involves assessing and managing risks associated with property ownership, title defects, and related claims.
Home Warranty Segment Maintains Revenue but Faces Margin Pressure
First American’s Home Warranty segment reported revenue of $114.7 million in the third quarter, essentially unchanged from $114.6 million in the prior-year period.
Pretax income declined to $11.3 million from $16.2 million, representing a decrease of approximately 30%. The segment’s reported pretax margin fell to 9.9% from 14.1%, while its adjusted pretax margin was 9.7%, compared with 13.5% a year earlier.
The decline in profitability was primarily attributable to higher marketing expenses associated with continued growth in the company’s direct-to-consumer sales channel.
Marketing investments can support customer acquisition and expand direct distribution, but they can also put pressure on margins before the benefits of additional business volume become evident. The segment’s performance will therefore depend partly on its ability to convert marketing spending into sustainable customer growth and revenue.
The claims loss rate was 47% during the quarter, virtually unchanged from the prior-year period. This suggests that the principal reported pressure on segment profitability came from higher expenses rather than a material deterioration in the claims loss rate.
With revenue remaining stable, managing customer acquisition costs and operating expenses will be important to improving Home Warranty profitability.
Corporate Segment Reports a Higher Pretax Loss
First American’s Corporate segment recorded a pretax loss of $28 million in the third quarter, compared with a loss of $5 million in the same period of 2025.
Excluding net investment gains and losses, the Corporate segment’s pretax loss was $26 million, compared with $24 million a year earlier.
The corporate results added to the difference between consolidated revenue growth and overall pretax income. While the Title Insurance and Services segment generated higher pretax income, weaker Corporate segment results and lower consolidated investment performance influenced the company’s overall earnings comparison.
The company’s financial performance should therefore be assessed across all its business segments, rather than through revenue growth alone.
Capital Management, Share Repurchases and Dividend Increase
First American continued returning capital to shareholders during the quarter while maintaining a focus on its balance sheet.
The company increased its common stock dividend by 11%, raising the annualized dividend rate to $2.44 per share. The increase represents a higher level of cash distributions to shareholders and signals management’s decision to raise the regular dividend despite ongoing uncertainty in the residential real estate market.
During the third quarter, First American repurchased 23,149 shares for approximately $1 million at an average price of $64.24 per share.
The company also continued its share repurchase activity in the fourth quarter. Through October 21, 2026, it repurchased 143,254 shares for approximately $9 million at an average price of $62.40 per share.
Cash flow from operations totaled $238 million in the third quarter, compared with $273 million in the prior-year period.
The company’s debt-to-capital ratio stood at 30.3%. Excluding $808 million in secured financings payable, the ratio was 22.2%.
These measures provide context for the company’s capital position and shareholder-return strategy. Operating cash flow, debt levels, investment income, and future business conditions will remain relevant factors in assessing its financial flexibility.
First American’s technology investments form a key part of its strategy for navigating a challenging residential real estate environment.
The company plans to continue rolling out AI-native title and settlement platforms intended to improve the customer experience, increase operational efficiency, and support stronger earnings growth as market conditions recover.
Title and settlement processes rely on property information, transaction documentation, risk assessment, and coordination between buyers, sellers, lenders, agents, and other participants. AI-enabled systems may help organizations process information, support workflows, and improve service delivery. The financial benefits will depend on implementation, adoption, system performance, and the ability to maintain appropriate safeguards for sensitive information.
Meanwhile, higher mortgage rates continue to pose a challenge for residential originations and refinancing activity. Reduced transaction volumes can affect order counts and operating leverage across title insurance businesses.
First American’s third-quarter results demonstrate how growth in commercial transactions, investment income, and information services can help offset some of these pressures. However, higher operating expenses and continued weakness in residential order volumes remain important considerations.
First American Financial Corporation delivered 5% year-over-year revenue growth in the third quarter of 2026, supported by commercial business expansion, higher investment income, and growth in information services. Adjusted net income and adjusted diluted earnings per share also increased, even as reported net income declined compared with the prior-year period.
The Title Insurance and Services segment remained the company’s primary growth driver, with commercial revenue increasing 21%. At the same time, lower domestic title order volumes, higher operating expenses, and reduced investment gains influenced the broader financial picture. The Home Warranty segment maintained stable revenue but experienced margin pressure from higher marketing expenses.
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