8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of report (Date of earliest event reported) February 24, 2011

FIRST AMERICAN FINANCIAL CORPORATION

(Exact Name of the Registrant as Specified in Charter)

Delaware	001-34580	26-1911571
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)
1 First American Way, Santa Ana, California		92707-5913
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code (714) 250-3000

Not Applicable.

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

On February 24, 2011, First American Financial Corporation issued a press release announcing its financial results for the quarter and fiscal year ended December 31, 2010. The full text of the press release is attached hereto as Exhibit 99.1.

The information in this Item 2.02, including Exhibit 99.1 hereto, is being “furnished” in accordance with General Instruction B.2 of Form 8-K. As such, this information is not deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act, or otherwise subject to the liabilities of that section, and is not incorporated by reference into any filings with the SEC unless it shall be explicitly so incorporated in such filings.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

Exhibit No.	Description
99.1	Press Release, dated February 24, 2011.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.

		FIRST AMERICAN FINANCIAL CORPORATION
Date:	February 24, 2011	By:	/s/    KENNETH D. DEGIORGIO
			Name: Kenneth D. DeGiorgio
			Title:   Executive Vice President

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EX-99.1

Exhibit 99.1

NEWS FOR IMMEDIATE RELEASE  

FIRST AMERICAN FINANCIAL CORPORATION REPORTS RESULTS

FOR THE FOURTH QUARTER AND FULL YEAR OF 2010

—Reports Earnings per Diluted Share of 44 Cents for the Fourth Quarter—

SANTA ANA, Calif., Feb. 24, 2011 – First American Financial Corporation (NYSE: FAF), a leading global provider of title insurance and settlement services for real estate transactions, today announced financial results for the fourth quarter and year ended Dec. 31, 2010.

Selected Financial Information

($ in millions, except share data)

	For the Three Months Ended December 31
	2010		2009
Total revenues	$	1,024.7	$	1,032.8
Income before taxes		74.6		61.1
Net income	$	47.1	$	50.1
Earnings per diluted share		0.44		0.48

Total revenues for the fourth quarter of 2010 were $1.0 billion, a decline of 1 percent relative to the fourth quarter of 2009. Income before taxes was $74.6 million, an increase of 22 percent relative to the fourth quarter of 2009. Net income was $47.1 million, or 44 cents per diluted share, compared with $50.1 million, or 48 cents per diluted share, in the fourth quarter of 2009. Net income and earnings per share for the fourth quarter of 2009 benefitted from a low effective income tax rate, which reflected the release of certain tax liabilities associated with uncertain tax positions. The current quarter results include net realized investment losses of $2.8 million, or 2 cents per diluted share, compared with net realized investment losses of $8.3 million, or 5 cents per diluted share, in the fourth quarter of 2009.

Total revenues for the full year of 2010 were $3.9 billion, a 3 percent decline relative to the prior year. Net income was $127.8 million, or $1.20 per diluted share, compared with $122.4 million, or $1.18 per diluted share, in 2009. The results for the full year of 2010 include $2.2 million of net realized investment gains, or 1 cent per diluted share, compared with net realized investment losses of $25.2 million, or 15 cents per diluted share, in 2009.

Current Quarter Highlights

• Title Insurance and Services segment pretax margin of 8.6 percent

• Total commercial revenues of $97.7 million, up 49 percent relative to the prior year

• Specialty Insurance segment pretax margin of 14.3 percent

• Cash flow from operations of $130.1 million

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First American Financial Reports Results for the Fourth Quarter and Full Year of 2010

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“The company achieved strong results in 2010 given the continued weakness in the mortgage and real estate markets and the general economy,” said Dennis J. Gilmore, chief executive officer of First American Financial Corporation. “Earnings improved in both our Title Insurance and Services and Specialty Insurance segments compared with last year. During the year, we also completed a seamless transition to a standalone public company following the June 1 spin-off transaction.

“During the fourth quarter, the Title Insurance and Services segment results were the strongest since the fourth quarter of 2006. We achieved a pretax margin of 8.6 percent primarily driven by improved operational efficiency, ongoing expense management, strong commercial activity and a robust refinance market. Commercial title, which continues to improve across most markets, achieved its strongest quarter since the peak year of 2007.

“Our Specialty Insurance segment also had good fourth quarter results, with a pretax margin of 14.3 percent. The home warranty business continued its strong performance due to improved cost and operations management. Our property and casualty business maintained good performance in the quarter, despite incurring higher claim losses associated with a severe hailstorm in Arizona.

“While the 2011 outlook for the mortgage and real estate markets remains uncertain, we are positioning the company for a significantly lower mortgage origination market. For 2011, we expect to maintain a conservative balance sheet that reflects challenging market conditions, while pursuing organic growth and capitalizing on strategic investment opportunities in our core business.”

Title Insurance and Services

($ in millions, except average revenue per order)

	For the Three Months Ended December 31
	2010			2009
Total revenues	$	949.9		$	961.0
Income before taxes	$	81.3		$	58.4
Pretax margin		8.6	%		6.1	%
Direct open orders		345,000			365,500
Direct closed orders		292,200			286,700
Commercial*
Total revenue	$	97.7		$	65.5
Open orders		16,900			14,300
Closed orders		9,800			8,100
Average revenue per order	$	8,100		$	6,000

* Includes commercial activity from the National Commercial Services division only

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First American Financial Reports Results for the Fourth Quarter and Full Year of 2010

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During the fourth quarter of 2010, total revenues for the Title Insurance and Services segment were $949.9 million, a 1 percent decline from the same quarter of 2009. The lower total revenues were driven by an 11 percent decline in agent premiums, largely offset by higher direct premiums and escrow fees and information and other revenues. The relative weakness in agent revenues is primarily due to the normal reporting lag of approximately one quarter. As a result, agent revenues in the fourth quarter reflect weaker third quarter origination activity in 2010, as compared with 2009. Direct revenue grew by 10 percent, driven by a 2 percent increase in the number of direct title orders closed and higher average revenue per order. Average revenue per direct title order was $1,382, an increase of 8 percent, compared with the fourth quarter of 2009, due to the increase in the mix of higher premium commercial transactions relative to lower premium refinance transactions. Information and other revenues were up 3 percent, compared with the same quarter last year, reflecting increased demand for title plant information and other non-insurance products in the company’s commercial and international divisions, offset by reduced activity in the company’s default business.

Personnel costs and other operating expenses were $487.3 million in the fourth quarter, up $14.7 million, or 3 percent, compared with the fourth quarter of 2009. These expenses were up due to higher costs associated with the company’s pension and other retirement plans, and increased production and other costs as a result of higher revenues in the commercial and international divisions.

The loss provision in the current quarter was 5.4 percent of title insurance premiums and escrow fees, compared with 5.9 percent in the fourth quarter of 2009. The current quarter loss provision rate reflects an expected ultimate loss ratio of 4.9 percent for policy year 2010 and a net increase in the loss reserve estimates for prior policy years, primarily 2007.

Pretax income for the Title Insurance and Services segment was $81.3 million in the fourth quarter of 2010, compared with $58.4 million in the fourth quarter of 2009, or an increase of 39 percent. Pretax margin was 8.6 percent in the fourth quarter, compared with 6.1 percent in the fourth quarter of 2009. The current quarter includes net realized investment losses that reduced the pretax margin by 20 basis points, while the fourth quarter of 2009 includes net realized investment losses that reduced the pretax margin by 90 basis points.

Specialty Insurance

($ in millions)

	For the Three Months Ended December 31
	2010			2009
Revenues	$	72.1		$	71.8
Income before taxes	$	10.3		$	12.6
Pretax margin		14.3	%		17.5	%

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First American Financial Reports Results for the Fourth Quarter and Full Year of 2010

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Total revenues for the Specialty Insurance segment were $72.1 million in the fourth quarter of 2010, essentially flat, compared with the fourth quarter of 2009. Higher revenues in the home warranty business were offset by lower revenues in the property and casualty business. Pretax margin was 14.3 percent, down from 17.5 percent in the fourth quarter of 2009. Pretax margin was lower compared with the prior year due to higher property and casualty claim losses as the result of a severe hailstorm in Phoenix, partly offset by a higher pretax margin in the home warranty business.

Teleconference/Webcast

First American’s fourth quarter results will be discussed in more detail on Thursday, Feb. 24, 2011, at 11 a.m. ET, via teleconference. The toll-free dial-in number is (888) 989-4494. Callers from outside the United States may dial (210) 234-0047. The pass code for the event is FIRST AMERICAN.

The live audio webcast of the call will be available on First American’s website at www.firstam.com/investor. An audio replay of the conference call will be available through March 3, 2011, by dialing (203) 369-0604. An audio archive of the call will also be available on First American’s investor website.

About First American

First American Financial Corporation (NYSE: FAF) is a leading provider of title insurance and settlement services to the real estate and mortgage industries, that traces its heritage back to 1889. First American and its affiliated companies also provide title plant management services; title and other real property records and images; valuation products and services; home warranty products; property and casualty insurance; and banking, trust and investment advisory services. With revenues of $3.9 billion in 2010, the company offers its products and services directly and through its agents and partners in all 50 states and abroad. More information about the company can be found at www.firstam.com.

Website Disclosure

First American posts information of interest to investors at www.firstam.com/investor. This includes opened and closed title insurance order counts for its direct title insurance operations, which are posted approximately 15 days after the end of each month.

Forward-Looking Statements

Certain statements made in this press release and the related management commentary and responses to investor questions, including but not limited to those related to the uncertain outlook for the real estate and mortgage markets; the company’s positioning for a significantly lower mortgage origination market; maintenance of a conservative balance sheet and pursuit of organic growth and strategic investment opportunities; and continued operational efficiencies, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements may contain the words “believe,” “anticipate,” “expect,” “plan,” “predict,” “estimate,” “project,” “will be,” “will continue,” “will likely result,” or other similar words and phrases. Risks and uncertainties exist that may cause results to differ materially from those set forth in these forward-looking statements. Factors that could cause the anticipated results to differ from those described in the forward-looking statements include: interest rate fluctuations; changes in the performance of the real estate markets; limitations on access to public records and

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First American Financial Reports Results for the Fourth Quarter and Full Year of 2010

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other data; general volatility in the capital markets; changes in applicable government regulations; heightened scrutiny by legislators and regulators of the company’s Title Insurance and Services segment and certain other of the company’s businesses; increases in the size of the company’s customers; unfavorable economic conditions; impairments in the company’s goodwill or other intangible assets; losses in the company’s investment portfolio; expenses of and funding obligations to the pension plan; weakness in the commercial real estate market and increases in the amount or severity of commercial real estate transaction claims; regulation of title insurance rates; and other factors described in the company’s information statement attached as Exhibit 99.1 to the company’s current report on Form 8-K dated May 26, 2010, as updated in part I, Item 1A of the company’s quarterly reports on form 10-Q for the quarters ended June 30, 2010, and Sept. 30, 2010, each as filed with the Securities and Exchange Commission. The forward-looking statements speak only as of the date they are made. 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.

Media Contact:	Investor Contacts:
Carrie Navarifar Corporate Communications First American Financial Corporation (714) 250-3298	Craig Barberio Investor Relations First American Financial Corporation (714) 250-5214

(Additional Financial Data Follows)

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First American Financial Reports Results for the Fourth Quarter and Full Year of 2010

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First American Financial Corporation

Summary of Consolidated Financial Results and Selected Information

(in thousands, except per share amounts and title orders)

(unaudited)

	For the Three Months Ended December 31				For the Twelve Months Ended December 31
	2010		2009		2010		2009
Total revenues	$	1,024,740	$	1,032,793	$	3,906,612	$	4,046,834
Income before income taxes	$	74,583	$	61,144	$	212,106	$	204,345
Income taxes		26,839		8,541		83,150		70,068
Net income		47,744		52,603		128,956		134,277
Less: Net income attributable to noncontrolling interests		650		2,533		1,127		11,888
Net income attributable to the Company	$	47,094	$	50,070	$	127,829	$	122,389
Net income per share attributable to stockholders:
Basic	$	0.45	$	0.48	$	1.23	$	1.18
Diluted	$	0.44	$	0.48	$	1.20	$	1.18
Cash dividends per share	$	0.06	$	—	$	0.18	$	—
Weighted average common shares outstanding:
Basic		104,330		104,006		104,134		104,006
Diluted		106,413		104,006		106,177		104,006
Selected Title Information
Title orders opened		345,000		365,500		1,458,300		1,769,000
Title orders closed		292,200		286,700		1,066,700		1,305,000
Paid title claims	$	78,499	$	79,219	$	314,046	$	306,536

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First American Financial Reports Results for the Fourth Quarter and Full Year of 2010

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First American Financial Corporation

Selected Balance Sheet Information

(in thousands)

(unaudited)

	December 31, 2010		December 31, 2009
Cash and cash equivalents	$	728,746	$	631,297
Investment portfolio		2,647,151		2,428,344
Goodwill and other intangible assets		882,081		879,878
Total assets		5,821,826		5,530,281
Reserve for claim losses		1,108,238		1,227,757
Notes payable		293,817		119,313
Allocated portion of The First American Corporation (“TFAC”) debt		—		140,000
Total stockholders’ equity/TFAC’s invested equity		1,980,017		2,019,800

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First American Financial Reports Results for the Fourth Quarter and Full Year of 2010

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First American Financial Corporation

Segment Information

(in thousands)

(unaudited)

For the Three Months Ended December 31, 2010	Consolidated			Title Insurance			Specialty Insurance		Corporate (incl. Elims.)
Revenues
Direct premiums and escrow fees	$	473,100		$	403,798		$	69,302	$	—
Agent premiums		384,979			384,979			—		—
Information and other		146,469			146,459			—		10
Investment income		22,982			17,592			2,721		2,669
Net realized investment (losses) gains*		(2,790	)		(2,954	)		67		97
		1,024,740			949,874			72,090		2,776
Expenses
Personnel costs		323,660			300,299			12,076		11,285
Premiums retained by agents		308,567			308,567			—		—
Other operating expenses		202,475			186,969			9,860		5,646
Provision for policy losses and other claims		80,438			42,625			37,813		—
Depreciation and amortization		20,847			18,982			1,135		730
Premium taxes		9,491			8,588			903		—
Interest		4,679			2,494			4		2,181
		950,157			868,524			61,791		19,842
Income (loss) before income taxes	$	74,583		$	81,350		$	10,299	$	(17,066	)
For the Three Months Ended December 31, 2009	Consolidated			Title Insurance			Specialty Insurance		Corporate (incl. Elims.)
Revenues
Direct premiums and escrow fees	$	434,229		$	367,323		$	66,906	$	—
Agent premiums		433,140			433,140			—		—
Information and other		142,605			142,605			—		—
Investment income		31,086			27,875			3,218		(7	)
Net realized investment (losses) gains*		(8,267	)		(9,949	)		1,709		(27	)
		1,032,793			960,994			71,833		(34	)
Expenses
Personnel costs		305,272			289,105			12,642		3,525
Premiums retained by agents		352,279			352,279			—		—
Other operating expenses		198,830			183,501			10,075		5,254
Provision for policy losses and other claims		80,970			46,959			34,011		—
Depreciation and amortization		21,818			19,800			1,511		507
Premium taxes		9,719			8,732			987		—
Interest		2,761			2,172			7		582
		971,649			902,548			59,233		9,868
Income (loss) before income taxes	$	61,144		$	58,446		$	12,600	$	(9,902	)

* Includes other-than-temporary impairment (OTTI) losses recorded in earnings.

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First American Financial Reports Results for the Fourth Quarter and Full Year of 2010

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First American Financial Corporation

Segment Information

(in thousands)

(unaudited)

For the Twelve Months Ended December 31, 2010	Consolidated			Title Insurance			Specialty Insurance			Corporate (incl. Elims.)
Revenues
Direct premiums and escrow fees	$	1,694,651		$	1,422,619		$	272,032		$	—
Agent premiums		1,517,704			1,517,704			—			—
Information and other		597,809			597,799			—			10
Investment income		94,262			75,517			11,876			6,869
Net realized investment gains (losses)*		2,186			782			1,827			(423	)
		3,906,612			3,614,421			285,735			6,456
Expenses
Personnel costs		1,216,050			1,133,133			51,477			31,440
Premiums retained by agents		1,222,274			1,222,274			—			—
Other operating expenses		803,718			735,424			41,980			26,314
Provision for policy losses and other claims		320,874			180,821			140,053			—
Depreciation and amortization		78,911			70,852			5,324			2,735
Premium taxes		37,780			33,645			4,135			—
Interest		14,899			8,803			18			6,078
		3,694,506			3,384,952			242,987			66,567
Income (loss) before income taxes	$	212,106		$	229,469		$	42,748		$	(60,111	)
For the Twelve Months Ended December 31, 2009	Consolidated			Title Insurance			Specialty Insurance			Corporate (incl. Elims.)
Revenues
Direct premiums and escrow fees	$	1,780,895		$	1,511,264		$	269,631		$	—
Agent premiums		1,524,120			1,524,120			—			—
Information and other		646,791			646,791			—			—
Investment income		120,249			104,551			13,431			2,267
Net realized investment losses*		(25,221	)		(18,534	)		(5,523	)		(1,164	)
		4,046,834			3,768,192			277,539			1,103
Expenses
Personnel costs		1,218,192			1,147,539			54,907			15,746
Premiums retained by agents		1,229,229			1,229,229			—			—
Other operating expenses		909,576			849,740			41,601			18,235
Provision for policy losses and other claims		346,714			205,819			140,895			—
Depreciation and amortization		82,475			74,321			4,275			3,879
Premium taxes		36,484			32,138			4,346			—
Interest		19,819			14,336			25			5,458
		3,842,489			3,553,122			246,049			43,318
Income (loss) before income taxes	$	204,345		$	215,070		$	31,490		$	(42,215	)

* Includes other-than-temporary impairment (OTTI) losses recorded in earnings.

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