First American Financial Corporation announced financial results for the second quarter ended June 30, 2026, reporting total revenue of $2.117 billion, up 14.99 percent compared with the second quarter of 2025. The company reported quarterly sales of $2.117 billion which beat the analyst consensus estimate of $2.033 billion by 4.14 percent. Net income attributable to the company was $218.5 million, or $2.12 per diluted share, compared with $146.1 million, or $1.41 per diluted share, in the prior year period. Adjusted net income was $214.4 million, or $2.08 per diluted share, beating the analyst consensus estimate of $1.82 by 14.29 percent. This represents a 35.95 percent increase over earnings of $1.53 per share from the same period last year.

Key Financial Highlights

The following table summarizes selected consolidated financial results for the three months ended June 30:

Net investment gains in the current quarter were $12 million, or 9 cents per diluted share, compared with net investment losses of $10 million, or 7 cents per diluted share, in the second quarter of last year. Purchase-related intangible amortization in both the current and prior year quarters was $7 million, or 5 cents per diluted share. The effective tax rate for the quarter was 22.8 percent.

"Our earnings momentum continued in the second quarter, with adjusted earnings per share up 36 percent compared with the prior year," said Mark Seaton, chief executive officer at First American Financial Corporation. "Our results were driven by our commercial business, which is on pace for a record year in 2026. In addition, investment income in our title segment grew 11 percent, despite a decline in the federal funds rate. Our adjusted pretax title margin was 14 percent for the quarter, a strong result given continued weakness in the residential market."

Title Insurance and Services Segment

The Title Insurance and Services segment delivered strong results for the quarter, with total revenues of $2,014.6 million, up 17 percent compared with the same quarter of 2025. The following table presents key segment metrics:

Direct premiums and escrow fees were $689 million, an increase of 15 percent compared with the second quarter of last year, driven by a 17 percent increase in the average revenue per order closed, partially offset by a 1 percent decline in the number of direct title orders closed in domestic operations. The average revenue per direct title order rose to $4,572, primarily due to an increase in the average revenue per order for commercial transactions, partially offset by a shift in the mix to lower premium refinance transactions.

Agent premiums, which are recorded on approximately a one-quarter lag relative to direct premiums, were $820 million, up 14 percent compared with last year. Information and other revenues were $295 million during the quarter, up $31 million, or 12 percent, compared with last year, driven primarily by revenue growth in the company's subservicing business, higher demand for non-insured information products and services, and refinance activity in the company's Canadian operations.

Investment income was $164 million in the second quarter, up $17 million, or 11 percent, compared with the same quarter last year, driven primarily by higher interest income from the company's investment portfolio. Net investment gains were $47 million in the current quarter, primarily attributable to increases in the fair values of marketable equity securities, compared with losses of $5 million in the same quarter last year.

U.S. Commercial Performance

Commercial revenues were $314 million, up 34 percent compared with last year. The following table highlights U.S. Commercial order metrics:

Expense Overview

Personnel costs were $572 million in the second quarter, up $49 million, or 9 percent, compared with the same quarter of 2025, primarily attributable to incentive compensation expense resulting from higher revenue and profitability, and higher salary expense. Other operating expenses of $319 million were up $41 million, or 15 percent, compared with the second quarter of 2025, primarily due to higher production expense driven by higher volumes and an increase in software expense.

The provision for policy losses and other claims was $45 million in the second quarter, or 3.0 percent of title premiums and escrow fees, unchanged from the prior year. The second quarter rate reflects an ultimate loss rate of 3.75 percent for the current policy year and a net decrease of $11 million in the loss reserve estimate for prior policy years. Depreciation and amortization expense was $52 million, up $1 million, or 1 percent, compared with the same period last year. Interest expense was $30 million in the current quarter, up $8 million, or 33 percent, compared with last year, primarily due to higher interest expense on deposit balances at the company's bank subsidiary.

Home Warranty Segment

The Home Warranty segment reported total revenues of $113.8 million in the second quarter, up 3 percent compared with last year. The following table presents segment performance:

The segment posted pretax income of $24 million this quarter, up 9 percent compared with last year. The claim loss rate declined to 40 percent in the second quarter, compared with 41 percent last year, primarily due to lower claim frequency, partially offset by higher claim severity.

Corporate Segment

The Corporate segment pretax loss was $56 million in the second quarter, compared with a loss of $44 million last year. Excluding net investment gains and losses, the Corporate pretax loss was $20 million in the current quarter, compared with a $40 million loss in the second quarter of last year. The current quarter benefited from a $7 million insurance recovery, while the prior period included a $13 million one-time expense related to executive separation costs.

Balance Sheet Highlights

The following table presents selected consolidated balance sheet information as of June 30, 2026 and December 31, 2025:

The debt-to-capital ratio was 31.4 percent, or 21.5 percent excluding secured financings payable of $1.0 billion. During the quarter, the company repurchased 330,405 shares for a total of $20 million at an average price of $61.99. Cash dividends declared per share were $0.55 in the second quarter of 2026, compared with $0.54 in the second quarter of 2025.

AI Integration and Strategic Focus

Seaton also highlighted the company's strategic direction: "Our primary strategic focus is to leverage AI across our business. We are integrating this technology into our workflows to enhance our employees' effectiveness, deliver a better experience for customers, and improve the way we operate. As these capabilities evolve, we will continue investing in our people, platforms, and products to drive innovation and reinforce our leadership in the markets we serve."

First American Financial Corporation's second quarter 2026 results will be discussed in more detail on Thursday, July 23, 2026, at 11 a.m. EDT, via teleconference. The toll-free dial-in number is +1-877-407-8293. Callers from outside the United States may dial +1-201-689-8349. The live audio webcast of the call will be available on First American's investor website at www.firstam.com/investor .

Benchmark analyst Michael Rindos has initiated coverage on First American Financial with a Buy rating and announced a price target of $85. The rating reflects a positive outlook on the company's performance and market position.

Analyst Rating and Price Target

The coverage initiation by Benchmark highlights confidence in First American Financial's future prospects. The Buy rating suggests that the stock is expected to outperform the market.

First American Financial operates in the financial sector, providing title insurance and settlement services. The company's stock is listed on the NYSE under the ticker symbol FAF.