First American Corporation (New)

Greetings and welcome to the First American Financial Corporation First 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 forward slash investor. Please note that this 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 enter the conference ID 13745815. And we will now turn the call over to Craig Barbario, Vice President, Investor Relations, to make an introductory statement.

thank you operator good morning everyone and welcome to first americans earnings conference call for the first quarter of 2024. joining us today on the call will be our chief executive officer ken di giorgio and mark seaton executive vice president and chief financial officer some of the statements made today may contain forward-looking statements that do not relate strictly to historical or current facts 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 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 widths and reconciliation to the most directly comparable GAAP financials, please refer to yesterday's earnings release, which is available on our website at I will now turn the call over to Ken DiGiorgio.

Thank you, Craig. Market conditions in the real estate and mortgage industries continue to be a challenge in the seasonally weak first quarter. Elevated mortgage rates and low, albeit growing, inventory levels have caused transaction volumes to remain near historically low levels. During this period, we've maintained our focus on managing operating expenses while continuing to invest in long-term strategic initiatives, such as expanding our title plant assets and building technology solutions to increase efficiency, reduce risk, and enhance our customers' experience. Although our financial results this quarter were a function of the tough mortgage origination market, we have recently started to see signs of a measured recovery. In March, our open resale orders per day were up 5% and that positive trend has continued so far in April with open resale orders up 2%. Growth in our resale orders so far this year is the first positive change we've seen in this key market since June of 2021. We are also seeing improvement in our commercial business with open orders up 1% in the first quarter and we have seen further growth in April with open orders up 5%. Our home warranty segment had another strong quarter delivering a pre-tax margin of 19% and is positioned well for future growth. On our last earnings call, we stated that we expect modest revenue growth this year and that we can achieve title margins similar to what we posted in 2023. After closing the books on the first quarter and looking at the order pipeline in April, our expectations remain unchanged. I'd like to take a moment to address the recent attention our industry has received from Washington, D.C. This attention is the product of a broader effort, an effort which all of us at First American wholeheartedly support to make the purchase of a home more affordable. The focus on our industry as part of this effort reveals, however, that as an industry, we need to do a better job educating policymakers and other stakeholders about the critical role title insurance plays in protecting people's investments in their homes, which are the primary vehicle for wealth creation for a majority of Americans. This role includes not only paying claims when they arise, but also the extensive work we do to correct title defects before the transaction closes, the cost of which is not reflected in our industry's claims rate. This important curative work protects consumers and lenders, among others, from hundreds of billions of dollars of title risk exposure per year. Moreover, title and settlement fees are among the smallest cost components over the life of a mortgage and, as a result, are not a barrier to homeownership. The discussions in Washington are still in early stages, and we believe that ultimately our industry will be successful in reaffirming the value of title insurance to policymakers. But irrespective, we are uniquely positioned to meet the demands of an evolving market because of our growing leadership in title data, which is fueled by our proprietary data extraction technology, our national closing platform, and deep distribution relationships. our extensive underwriting expertise, our commitment to and continued investment in cutting-edge technology such as Endpoint, our digital settlement platform, and automated underwriting for purchase transactions, and most importantly, our world-class workforce and culture, which recently resulted in our recognition as one of the 100 best companies to work for by Great Place to Work and Fortune magazine for the ninth consecutive year. Though we are the leader in the digital transformation of our industry, fundamentally we are a people business, and it is the quality, talent, and dedication of our people that ensure our company's long-term success. Now I'd like to turn the call over to Mark for a more detailed discussion of our financial results.