Headquarters: 1 First American Way, Santa Ana
Employees: 31,411; 2,548 in OC
Business: title insurer, business information
Market Value as of April 1: $2.5 billion
Revenue for 12 months ended Dec. 31: $6.3 billion, down 22%
Net loss for 12 months ended Dec. 31: $26.3 million, widened from a loss of $3 million
Year in review: Orange County’s oldest company made cost-cutting a priority in 2008 as it tried to weather the ongoing turmoil in the housing and mortgage markets. First American, which vies with Jacksonville, Fla.-based Fidelity National Financial Inc. as the country’s largest title insurer, spent much of 2008 slimming down operations across the U.S.
For all of 2008, the company posted revenue of $6.3 billion, a 24% drop from 2007.
Revenue at the company’s dominant title division,which makes up about two-thirds of the business,was down nearly 30% for the year as fewer policies were issued and prices fell.
The company cut some 5,700 jobs during the past year, or about 20% of its workforce. About 4,300 of last year’s job cuts were in First American’s core title business.
About 500 offices were closed across the country as the company looked to consolidate operations and cut costs. Those cuts represented 26% of the company’s operations.
The personnel and office closures saved First American nearly $300 million last year.
What’s Ahead: Executives hope First American’s retooled business,which it believes is now more efficient,will be better poised to take advantage of refinancing work, foreclosure-related business and government-mandated loan modification work.
“The result of the reorganization is enhanced operating leverage for when volumes turn around,” Chief Executive Parker Kennedy said.
First American expects things to remain challenging in 2009. On the upside, company officials say they’re encouraged by the federal government’s efforts to shore up the housing market and by an uptick in new title orders.
First American’s still not ready to pull the trigger on its biggest-ever corporate move.
In early 2008, the company announced plans to separate its core business providing title insurance from its growing data division.
The company’s title and other insurance businesses are set to become one public company called First American Financial Corp. First American’s remaining businesses, including its property and mortgage information services, are set to stay with the existing holding company, which is to be renamed. Both companies will stay in Santa Ana.
The plan is still on, but right now the company’s focused more on managing its business through the rough market, Kennedy said. It will take several months or more of stability before the spin-off is completed, officials said.
Wall Street’s Take: First Ameri-can’s shares have slumped in 2008, like those of most real estate businesses. Shares are off about 20% for the past 12 months, cutting about $500 million off its market value.
The good news is that it could be much worse. First American’s stock has rebounded since its nadir in late 2008, rising nearly 40%.
The title company’s still standing strong, in contrast to some of its competitors.
Another big title company, Virginia’s LandAmerica Financial Group Inc., filed for bankruptcy in November. It ended up selling much of its business to Fidelity National.
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Mark Mueller
WHO’S IN CHARGE
PARKER KENNEDY
Chairman, chief executive, First American Corp.
chairman, First American Title Insurance Co.
Joined company: 1977, great-grandfather started company
Education: bachelor’s in economics from University of Southern California; law degree from University of California, Hastings College of the Law, San Francisco
Career: Before joining First American, spent four years with Beverly Hills law firm Levinson & Lieberman. Became First American vice president in 1979, executive vice president in 1983. Became president in 1993. Added chairman’s title in 1999 upon retirement of father Donald Kennedy.
Notable: Has run Los Angeles Marathon. Likes fly-fishing and golf.
