First American earnings declined in the third quarter of 2026 despite higher revenue, as weaker investment results offset growth in its title insurance business. The company announced on October 21 that revenue reached $2.08 billion for the three months ended September 30, up 5% from a year earlier, while net income attributable to the company fell to $177.0 million from $189.6 million.
Key Takeaways
- Reported diluted earnings fell to $1.72 per share, while adjusted earnings rose to $1.78.
- Commercial revenue increased 21%, helping offset fewer closed domestic title orders.
- Higher expenses narrowed the title segment’s pretax margin despite revenue growth.
Table of Contents
- First American earnings diverge on reported and adjusted bases
- Commercial transactions lift revenue despite fewer orders
- Management prepares for prolonged residential weakness
- Conclusion
First American earnings diverge on reported and adjusted bases
First American’s third-quarter 2026 results announcement showed reported diluted earnings of $1.72 per share, down from $1.84 a year earlier. Adjusted diluted earnings, a company-defined non-GAAP measure, increased to $1.78 from $1.70.
Investment results explain an important part of that difference. The company recorded net investment losses of approximately $2 million in the quarter, compared with gains of $26 million a year earlier. Adjusted earnings exclude those investment gains and losses and purchase-related intangible amortization.
The quarterly decline contrasted with stronger year-to-date performance. For the first nine months of 2026, revenue reached $6.04 billion, compared with $5.40 billion a year earlier, and net income attributable to the company increased to $520.6 million from $409.9 million.
| Item | Details |
|---|---|
| Operating cash flow | $238 million in Q3 2026, compared with $273 million a year earlier. |
| Common dividend | Raised 11% to an annual rate of $2.44 per share. |
| Third-quarter buybacks | 23,149 shares repurchased for approximately $1 million. |
| Fourth-quarter buybacks through October 21 | 143,254 shares repurchased for approximately $9 million. |
| Debt-to-capital ratio | 30.3%, or 22.2% excluding $808 million of secured financings payable. |
Commercial transactions lift revenue despite fewer orders
Title Insurance and Services revenue increased 7% to $1.97 billion. Direct premiums and escrow fees within that segment rose 7% to approximately $643 million, supported by a 13% increase in average revenue per closed order, even as domestic direct title orders closed declined 5%.
That combination matters: the revenue increase did not reflect a broad rise in transaction volumes. Higher revenue per order and a greater share of higher-premium commercial transactions helped compensate for fewer closings.
U.S. commercial revenue increased 21% to $297.4 million. Agent premiums reached $868.4 million, up 9%; these are recorded on approximately a one-quarter lag relative to direct premiums. Title-segment investment income also rose 11% to approximately $169 million.
Expenses absorbed part of those gains. Title-segment personnel costs increased 6% and other operating expenses rose 11%, with the company citing higher salary and incentive compensation, software expense and production costs. The segment’s pretax margin narrowed to 12.4% from 12.9%, although pretax income increased to $244.1 million from $236.2 million.
Management prepares for prolonged residential weakness
Chief Executive Officer Mark Seaton said higher mortgage rates reinforced management’s expectation of a “lower-for-longer residential origination market.” He identified commercial growth and higher investment income as earnings drivers.
First American plans to continue rolling out AI-native title and settlement platforms. Management expects those systems to improve customer experience and operating efficiency; those benefits remain forward-looking expectations rather than established financial results.
Elsewhere, Home Warranty revenue was essentially flat at $114.7 million, while pretax income fell to $11.3 million from $16.2 million. The company attributed the decline primarily to higher marketing spending intended to expand its direct-to-consumer sales channel.
Conclusion
First American earnings show commercial growth supporting the business without fully offsetting weaker investment results and expense pressure. The company’s regular monthly U.S. direct title-order disclosures, published approximately 10 to 12 days after month-end, will provide the next operating-volume update.
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