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Accumulated Other Comprehensive Income (Loss) ("AOCI")
 9 Months Ended
Sep. 30, 2020
Accumulated Other Comprehensive Income Other Comprehensive Income [Abstract]  
Accumulated Other Comprehensive Income (Loss) ("AOCI")

Note 16 – Accumulated Other Comprehensive Income (Loss) (“AOCI”)

The following table presents a summary of the changes in each component of AOCI for the nine months ended September 30, 2020:

 

 

First American Financial Corporation

 

 

NCI

 

 

 

 

 

(in thousands)

Unrealized
gains (losses)
on debt securities

 

 

Foreign
currency
translation
adjustment

 

 

Pension
benefit
adjustment

 

 

Accumulated
other
comprehensive
income (loss)

 

 

Accumulated
other
comprehensive
income (loss)

 

 

Balance

 

 

Balance at December 31, 2019

$

83,117

 

 

$

(51,668

)

 

$

(72,941

)

 

$

(41,492

)

 

$

1

 

 

$

(41,491

)

 

Change in unrealized gains (losses) on debt securities

 

97,031

 

 

 

—

 

 

 

—

 

 

 

97,031

 

 

 

—

 

 

 

97,031

 

 

Change in unrealized gains (losses) on debt securities for which credit-related portion was recognized in earnings

 

186

 

 

 

—

 

 

 

—

 

 

 

186

 

 

 

—

 

 

 

186

 

 

Change in foreign currency translation adjustment

 

—

 

 

 

(9,498

)

 

 

—

 

 

 

(9,498

)

 

 

—

 

 

 

(9,498

)

 

Amortization of net actuarial loss

 

—

 

 

 

—

 

 

 

3,961

 

 

 

3,961

 

 

 

—

 

 

 

3,961

 

 

Amortization of prior service credit

 

—

 

 

 

—

 

 

 

(2,331

)

 

 

(2,331

)

 

 

—

 

 

 

(2,331

)

 

Tax effect

 

(24,000

)

 

 

389

 

 

 

(433

)

 

 

(24,044

)

 

 

—

 

 

 

(24,044

)

 

Balance at September 30, 2020

$

156,334

 

 

$

(60,777

)

 

$

(71,744

)

 

$

23,813

 

 

$

1

 

 

$

23,814

 

 

 

The following table presents the other comprehensive income (loss) reclassification adjustments for the three months ended September 30, 2020 and 2019:

 

(in thousands)

 

Unrealized

gains (losses)

on debt securities

 

 

Foreign

currency

translation

adjustment

 

 

Pension

benefit

adjustment

 

 

Total

other

comprehensive

income (loss)

 

Three Months Ended September 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pretax change before reclassifications

 

$

9,110

 

 

$

10,817

 

 

$

—

 

 

$

19,927

 

Reclassifications out of AOCI

 

 

(6,627

)

 

 

—

 

 

 

544

 

 

 

(6,083

)

Tax effect

 

 

(499

)

 

 

(743

)

 

 

(145

)

 

 

(1,387

)

Total other comprehensive income (loss), net of tax

 

$

1,984

 

 

$

10,074

 

 

$

399

 

 

$

12,457

 

Three Months Ended September 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pretax change before reclassifications

 

$

19,348

 

 

$

(7,614

)

 

$

—

 

 

$

11,734

 

Reclassifications out of AOCI

 

 

(2,165

)

 

 

—

 

 

 

(102

)

 

 

(2,267

)

Tax effect

 

 

(3,690

)

 

 

241

 

 

 

26

 

 

 

(3,423

)

Total other comprehensive income (loss), net of tax

 

$

13,493

 

 

$

(7,373

)

 

$

(76

)

 

$

6,044

 

 

The following table presents the other comprehensive income (loss) reclassification adjustments for the nine months ended September 30, 2020 and 2019:

 

(in thousands)

 

Unrealized

gains (losses)

on debt securities

 

 

Foreign

currency

translation

adjustment

 

 

Pension

benefit

adjustment

 

 

Total

other

comprehensive

income (loss)

 

Nine Months Ended September 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pretax change before reclassifications

 

$

102,392

 

 

$

(9,498

)

 

$

—

 

 

$

92,894

 

Reclassifications out of AOCI

 

 

(5,175

)

 

 

—

 

 

 

1,630

 

 

 

(3,545

)

Tax effect

 

 

(24,000

)

 

 

389

 

 

 

(433

)

 

 

(24,044

)

Total other comprehensive income (loss), net of tax

 

$

73,217

 

 

$

(9,109

)

 

$

1,197

 

 

$

65,305

 

Nine Months Ended September 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pretax change before reclassifications

 

$

166,647

 

 

$

3,146

 

 

$

—

 

 

$

169,793

 

Reclassifications out of AOCI

 

 

(1,830

)

 

 

—

 

 

 

(307

)

 

 

(2,137

)

Tax effect

 

 

(38,645

)

 

 

(187

)

 

 

80

 

 

 

(38,752

)

Total other comprehensive income (loss), net of tax

 

$

126,172

 

 

$

2,959

 

 

$

(227

)

 

$

128,904

 

 

The following table presents the effects of the reclassifications out of AOCI on the respective line items in the condensed consolidated statements of income:

 

 

 

Amounts reclassified from AOCI

 

 

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

Affected line items

(in thousands)

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

Unrealized gains (losses) on debt securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net realized gains (losses) on sales of debt securities

 

$

6,694

 

 

$

2,165

 

 

$

12,749

 

 

$

1,830

 

 

Net realized investment gains

Credit losses recognized on debt securities

 

 

(67

)

 

 

—

 

 

 

(7,574

)

 

 

—

 

 

Net realized investment gains

Pretax total

 

$

6,627

 

 

$

2,165

 

 

$

5,175

 

 

$

1,830

 

 

 

Tax effect

 

$

(1,322

)

 

$

(465

)

 

$

(1,278

)

 

$

(429

)

 

 

Pension benefit adjustment (1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of net actuarial loss

 

$

(1,321

)

 

$

(916

)

 

$

(3,961

)

 

$

(2,746

)

 

Other operating expenses

Amortization of prior service credit

 

 

777

 

 

 

1,018

 

 

 

2,331

 

 

 

3,053

 

 

Other operating expenses

Pretax total

 

$

(544

)

 

$

102

 

 

$

(1,630

)

 

$

307

 

 

 

Tax effect

 

$

145

 

 

$

(26

)

 

$

433

 

 

$

(80

)

 

 

 

 

(1)

These components of AOCI are components of net periodic cost.  See Note 12 Employee Benefit Plans for additional details.