Title firm swings to a profit
Shares of title insurer First American Corp. jumped 12% after the company reported second-quarter profit that beat analysts’ estimates.
The Santa Ana company had net income of $42 million, or 45 cents a share, contrasted with a loss of $66 million, or 68 cents, a year earlier. Profit excluding an investment loss was about 48 cents a share, beating the 43-cent estimate of analysts surveyed by Bloomberg.
“We reserved more than our competitors, so we’re seeing claims come in in line with our expectations,” Chief Executive Parker Kennedy said.
The company reserved about $500 million for claims over the last eight or nine quarters, he said. “We don’t need a rebound, we just need things to level off. As volumes decline, we just keep cutting expenses.”
Kennedy is focusing on cutting jobs amid a housing slump that is limiting sales of title insurance, its largest source of revenue. The company said it was delaying a previously announced spinoff that would have separated the title insurance unit from the businesses that supply data on mortgages, properties and credit.
First American shares rose $2.64, or 12%, to $25.24.
Revenue at First American’s title insurance unit fell 25% to $1.1 billion. First American cut about 700 jobs in the quarter and an additional 300 in July after eliminating 4,600 positions in the previous 12 months. The company had about 37,000 employees as of Dec. 31, according to a regulatory filing.