Old and new are on display at First American Corp.
Take the company’s 500,000-square-foot, eight-building campus in Santa Ana. Domed buildings and columns give off a decidedly neoclassical, Jeffersonian vibe, even though the landmark campus just finished completion a few years ago.
Meeting rooms are austere. Executive offices are uniform and uncluttered. The dress is formal, reflecting a company that has been in business since 1889 and likely is the oldest in Orange County.
Yet within the campus is one of the most technologically advanced buildings in Southern California,a 53,000-square-foot “fortress” housing close to 500 terabytes of real estate and other data. It would take 13 years to download all that data using a cable modem.
The meshing of old and new also pervades the upper ranks of First American’s management.
Chairman and Chief Executive Parker Kennedy, great-grandson of the company’s founder, runs First American, a provider of title insurance and business data. His dad, 88-year-old chairman emeritus Donald Kennedy, still works down the hall in the campus’ main building, along with most of the company’s top executives.
Many of First American’s executives have been on board since the 1980s. That’s by design.
The company has been undergoing some rare management changes in the past year.
Most notably, it added Chief Financial Officer Frank McMahon, a Wall Street veteran, and named a new president for its dominant title insurance business, Curt Johnson.
The changes come as First American is working to expand beyond its mainstay title business,the country’s second largest after Florida’s Fidelity National Financial Inc.,with a growing stable of data and tech businesses that are among the most advanced in the country.
The result: a mixture of grizzled title insurance veterans and doctorate-level techies.
“Technology has driven change here, no doubt,” Parker Kennedy said.
The chief executive straddles both worlds. He’s a big part of the company’s history. He’s named for founder C.E. Parker. At the same time, he’s driven First American’s diversification and modernization.
First American’s meshing of old and new isn’t always the easiest for outsiders to grasp, executives said.
“I’ve often said that we don’t have any peers. That’s both a blessing and a curse,” said McMahon, who came to First American from Lehman Brothers Holdings Inc.
Leadership
First American is led by a core team of about 10 executives.
There’s no open talk of an heir apparent for 59-year-old Parker Kennedy, known as Park.
Craig DeRoy is the company’s 54-year-old president. Other notables include McMahon, who’s also vice chairman alongside Park Kennedy, and Chief Operating Officer Dennis Gilmore.
One thing is for sure: First American’s next chief executive won’t be from the Kennedy clan.
President DeRoy is a lawyer by training (like Kennedy), with expertise in corporate and environmental risk management.
Chief Operating Officer Gilmore oversees data and technology operations. Executive Vice President Gary Kermott is the company’s title insurance expert. McMahon is the go-to guy for finance and M & A; issues.
Beyond the core team, five presidents run First American’s businesses: title insurance, specialty insurance, mortgage information, property information and risk mitigation.
The presidents are given a large amount of autonomy, Kennedy said. They all are in charge of identifying potential acquisitions and integrating them.
“The company is very centered on its people,” Kennedy said. “We try to pick the best people, and then give them autonomy, so they think of it as their own company.”
McMahon is a recent addition. He joined the company last year after the early 2006 death of former financial chief Thomas Klemens.
He’s hardly an outsider, though.
“I’ve known Don and Park since the late ’80s and had worked with them a number of times,” he said.
His experience at Lehman includes a lot of mergers and acquisitions. At First American, McMahon oversees much of the company’s acquisition plans.
Expect to see fewer buys of smaller title companies and more tech deals such as February’s $100 million acquisition,the company’s biggest yet,of Sacramento’s CoreLogic Systems Inc., which provides fraud detection software to mortgage lenders, investors and insurers, he said.
McMahon also has been tasked with selling investors and analysts on the value of First American’s other businesses besides title insurance.
Kennedy long has felt that part of the business is undervalued, despite a recent run-up in First American’s stock.
“It takes a lot of work to (educate)” investors about the non-title operations, McMahon said.
Part of the need for education is due to the company’s culture, Kennedy admitted.
“We’re somewhat quiet,” he said. “We don’t brag about what we do. But we’re proud of our history.”
Kennedy is likely to focus his time on the title operations, especially as Johnson, the unit’s president since December, gets fully acclimated.
“Park still has an emphasis on the title side,” Johnson said. “It’s part of (his) culture.”
Meetings
Meetings are frequent and mostly informal, McMahon said.
“Park is the quarterback,” he said. “His office is just next door. We’ll meet on a topic two or three times a day.”
Johnson, according to executives, may have taken on the toughest job: overseeing the company’s immense title operations nationally at a time when the business is slowing with the housing market and profits are harder to come by.
Part of the company since 1996, Johnson took over the title insurance company president role from Kermott, who held the position for eight years. Kermott remains as vice chairman of the title division, along with his executive vice president role for First American. He’s also president elect of the American Land Title Association, a Washington, D.C.-based trade group.
The title division’s goal now is to improve profits, Johnson said.
“We are working hard to change how the (title) product is produced,” he said. “We haven’t realized (the benefits) yet.”
The effort has resonated with Wall Street. First American’s shares are near a five-year high in recent months, after the company reiterated its title company plans. It had a market value of $5 billion last week.
Gilmore heads up First American’s tech operations. Unlike most of the other top execs, his office is in a different building, one of the newer additions to the Santa Ana campus. His building houses more techies than real estate professionals.
“It’s a fairly unique role,” Gilmore said. “We’re hiring Ph.D.s for these positions.”
Inside Gilmore’s office, you wouldn’t know he heads up tech operations. It’s as formal as those of Kennedy, Kermott and McMahon.
With an emphasis on growing First American’s data business, Gilmore plays a major part in how the company’s future will look.
After the CoreLogic buy earlier this year, Wall Street is predicting First American will spin off part of its tech division, which operates under the First American Real Estate Solutions name.
A potential spinoff could see a market value of $1 billion or more, according to analysts.
If there’s an up-and-comer, Kennedy points to George Livermore, president of First American’s property information business segment.
Livermore was tapped to serve as president of the expanded First American Real Estate Solutions following the CoreLogic deal. If a spinoff were to happen, others assume he would head up the new company.
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THE TEAM
– Donald Kennedy: 88, chairman emeritus. Also vice chairman of principal subsidiary, First American Title Insurance. Joined in 1948, company then called Orange County Title. Named president of First American in 1963, chairman in 1993, chairman emeritus in 2003. Member of Stanford University’s 1939 NCAA champion golf team.
– Parker Kennedy: 59, chairman, chief executive. Named CEO in 2003, served as president for nearly 12 years when company didn’t use CEO title. President of title company from 1989 until he turned the presidency over to Gary Kermott in 1999. Lawyer by training. Son of Donald Kennedy, great-grandson of founder C.E. Parker.
– Craig DeRoy: 54, president. Started with company in 1992 as a consultant on regulatory issues. Took job as vice president, general counsel in 1993, promoted to executive vice president three years later. Named president in 2004. Expert on corporate, environmental risk management.
– Frank McMahon: 47, vice chairman, chief financial officer. Responsible for financial reporting division, capital markets activities, investor relations. Also oversees operations of First American Trust, First Security Thrift. Joined in early 2006. Previously served as managing director with Lehman Brothers Holdings, where he managed company’s West Coast financial institutional practices for six years. Also managed a similar group for Merrill Lynch & Co.
– Dennis Gilmore: 48, chief operating officer, newly created position. Responsible for company’s technology initiatives, manages offshore operations. Started career in lending industry. In 1988 joined TRTS Data Services, acquired by First American in 1991. Gilmore named vice president, area manager. Moved up ranks, became first president of First American Real Estate Solutions in 1998.
– Gary Kermott: 53, executive vice president for parent company, vice chairman of First American Title Insurance. Moved to new role with title company in November, following eight-year term as president. Began working at company while in law school, moved up ranks in Arizona division. Moved to Santa Ana in 1996. In 1997, named chief operating officer. In 1999, was named president of company’s largest business, title.
– Curt Johnson: 52, president of First American Title Insurance since December. Responsible for overseeing company’s title operations nationally. Began career with First American in 1996 as vice president, builder/commercial services for Phoenix office. Two years later, transferred to Santa Ana, named vice president, California subdivision. In 2000, named senior vice president, national subdivision director. In 2001, assumed position of senior vice president, director for company’s national commercial services group.
– George Livermore: 46, president of property information & services group, also serves as president of First American Real Estate Solutions. Oversees all aspects of $450 million property information businesses, including strategic planning, acquisitions, product development, sales, marketing, operations. Joined company in 1997 when he was named president of Real Estate Solutions, following company’s formation as a venture of Experian Group, First American.
