The First American Corporation Reports Financial Results for the Third Quarter of 2009

The First American Corporation Reports Financial Results for the Third Quarter
of 2009
-- Reports Earnings Per Diluted Share of 59 Cents --

SANTA ANA, Calif., Oct. 29 /PRNewswire-FirstCall/ -- The First American
Corporation (NYSE: FAF), America's largest provider of business information,
today announced financial results for the third quarter ended Sept. 30, 2009.

Total revenues for the third quarter of 2009 were $1.6 billion, an increase of
3 percent relative to the third quarter of 2008. Net income was $55.4 million,
or 59 cents per diluted share, compared with a net loss of $8.3 million, or 9
cents per diluted share, in the third quarter of 2008. Adjusted net income was
$60.2 million, or 64 cents per diluted share, compared with adjusted net
income of $17.6 million, or 19 cents per diluted share, in the third quarter
of 2008. The current quarter results include, on an after-tax basis,
intangible impairments of $6.5 million, or 7 cents per diluted share; employee
separation and lease termination costs of $4.0 million, or 4 cents per diluted
share; and spin-off-related costs of $2.4 million, or 2 cents per diluted
share; offset in part by net realized investment gains of $3.1 million, or 3
cents per diluted share; and a reduction in the reserve for policy year 2009
claims losses of $5.0 million, or 5 cents per diluted share. Results for the
third quarter of 2008 included net realized investment losses, employee
separation and other restructuring costs, a reduction in employee benefit
costs and a reduction in the reserve for estimated tax exposures totaling
$26.3 million, or 28 cents per diluted share, net of tax.

Amendment to Joint Venture Agreement with Experian Information Solutions, Inc.
First American has executed a letter of intent with Experian Information
Solutions, Inc. that would facilitate the purchase of Experian's interest in
the First American Real Estate Solutions LLC (FARES) joint venture by, among
other matters, fixing the exercise price for 2010. The letter of intent
provides for:
-- The buy-out of Experian's indirect interest in FARES' plant management
and imaged document business for $48.0 million in cash (which is
anticipated to occur in the fourth quarter);
-- Amending the buy-out arrangement to provide that, if exercised by
either
party in 2010, the exercise price will be $313.8 million in cash and
would close on Dec. 31, 2010; and

-- The ability to substantially eliminate Experian's veto rights if the
buy-out option is exercised by either party.

The arrangement remains subject to customary closing conditions, including the
execution of definitive agreements. For the nine months ended Sept. 30, 2009,
the noncontrolling interest expense related to Experian's interest in the
joint venture was approximately $43.8 million before taxes.

Current Quarter Highlights
-- Adjusted earnings per diluted share of 64 cents, or 59 cents before
adjusting for intangible impairments, employee separation costs and
lease termination costs, spin-off-related costs, net realized
investment
gains, and a reduction in the reserve for claim losses described above
-- Financial Services and Information Solutions Groups experienced pretax
margin improvement relative to the third quarter of 2008
-- Cash flow from operations was $158.1 million in the third quarter,
versus $115.4 million in the prior year
-- Debt-to-capital ratio was 20.1 percent as of Sept. 30, 2009
-- Letter of intent signed with Experian to amend joint venture agreement

-- Exchange offer commenced to acquire minority interest in First
Advantage
Corporation

"The company has made significant progress in our efforts to improve the
flexibility of the organization and to effect our spin-off transaction,"
stated Parker S. Kennedy, chairman and chief executive officer of The First
American Corporation. "We have substantially finalized the capital structures
of both companies, commenced an exchange offer to acquire the minority
interest in First Advantage and signed a letter of intent with Experian to fix
the exercise price of the buy-out option for 2010. We are on track to meet our
previously announced spin-off target of the first half of 2010 and, if all
regulatory approvals come in timely, we expect to close on April 1."

FINANCIAL SERVICES GROUP
"Throughout the year we made significant progress restructuring our company
and we remain committed to continued improvement in our pretax operating
margin," said Dennis J. Gilmore, chief executive officer of the company's
Financial Services Group. "Our strategic plan calls for us to focus in 2010 on
a number of concrete value creation opportunities, including agency
profitability, increasing market share in under-penetrated markets, continued
leveraging of our unique offshore capabilities, optimization of our investment
portfolio, rationalizing our domestic footprint and capitalizing on a gradual
recovery in commercial and international markets."

Current Quarter Highlights:
-- Title Insurance and Services segment pretax income was $58.5 million,
compared with pretax loss of $33.7 million in the prior year
-- Specialty Insurance segment pretax income was $7.4 million, compared
with $0.3 million in the prior year

-- Title Insurance and Services ultimate loss ratio for policy year 2009
reduced from 6.5 percent to 6.0 percent due to improved claims
experience in policy year 2009

Title Insurance and Services. During the third quarter of 2009, total revenues
in the Title Insurance and Services segment were $997.0 million, a 2 percent
increase from the same quarter of 2008. The increase reflected the relatively
high number of remittances received from agents during the current quarter and
an increase in investment income, offset by lower direct revenue. The
company's direct operations closed 362,200 title orders for the third quarter
of 2009, an increase of 12 percent, when compared with 323,200 title orders
closed in the third quarter of 2008. Average revenue per direct title order
continued to increase throughout the year, rising to $1,423 in the third
quarter of 2009.

Salary and other personnel costs were $276.7 million, an 11 percent decrease,
compared with the third quarter of 2008, primarily due to a reduction in base
salary expense and bonus expense resulting from staff reductions. Other
operating expenses were $220.7 million, a decrease of 9 percent, compared with
the third quarter of 2008. The decrease was primarily due to lower occupancy
costs as a result of the consolidation of certain title branches and other
cost-containment programs.

The loss provision for title claims during the third quarter of 2009 was 5.1
percent of operating revenues, compared with 7.4 percent in the third quarter
of 2008. The current quarter rate reflects the ultimate loss ratio for policy
year 2009, which was reduced from 6.5 percent to 6.0 percent, with no reserve
estimate adjustments required for prior policy years. Management lowered the
expected claims rate for 2009 to 6.0 percent as a result of better than
anticipated claims experience for the 2009 policy year.

Pretax income for the Title Insurance and Services segment was $58.5 million
in the third quarter of 2009, compared with a pretax loss of $33.7 million in
the third quarter of 2008. Results for the current quarter include net
realized investment gains of $5.5 million and a reduction in reserve for claim
losses of $8.4 million offset by employee separation costs of $1.5 million and
lease termination costs of $2.5 million. Results for the third quarter of 2008
include net realized investment losses, employee separation costs and lease
termination costs totaling $58.9 million.

Specialty Insurance. Total revenues at First American's Specialty Insurance
segment were $71.1 million in the third quarter of 2009, a 2 percent decrease
relative to the third quarter of 2008, reflecting a decline in business volume
at both the property and casualty insurance business and the home warranty
business. Pretax income was $7.4 million in the third quarter of 2009,
compared with $0.3 million in the third quarter of 2008. Results for the third
quarter of 2008 include net realized investment losses of $3.1 million.

INFORMATION SOLUTIONS GROUP
"The Information Solutions Group increased revenue, pretax earnings and pretax
margins relative to the third quarter of 2008," said Frank V. McMahon, chief
executive officer of the company's Information Solutions Group. "Additionally,
the amendment of our joint venture with Experian and our exchange offer to
First Advantage shareholders are expected to provide enhanced operating and
financial flexibility going forward. Our strong year-to-date sales and
marketing activity contributed to our third quarter results, and we expect our
ongoing investment in new product development to generate top-line growth in
future periods."

Current Quarter Highlights:
-- Information Solutions Group generated revenues of $526.3 million, a
5.1
percent increase relative to the prior year
-- Information Solutions Group pretax income was $83.5 million, a 23.0
percent increase relative to the prior year
-- Letter of intent signed with Experian to amend joint venture agreement

-- Exchange offer commenced to acquire minority interest in First
Advantage
Corporation

Information and Outsourcing Solutions. Total revenues at the Information and
Outsourcing Solutions segment were $227.7 million in the third quarter of
2009, a 25 percent increase from the prior year. The increase primarily
reflected market share gains in many lines of business and an increase in
volume of appraisal and the default-related businesses due to the higher level
of loan loss mitigation and foreclosure-related activity in the market. Pretax
income during the quarter was $43.9 million, a 40 percent increase from the
prior year.

Data and Analytic Solutions. Total revenues at the Data and Analytic Solutions
segment were $129.3 million in the third quarter of 2009, a 1 percent decrease
relative to the third quarter of 2008. Revenues associated with sales of
property information (including custom fulfillment projects) and Multiple
Listing Service (MLS) software products were down relative to the same period
in the prior year. These decreases were primarily due to the impact of market
conditions on mortgage banking and real estate clients. In addition, the
segment's revenues were impacted by the consolidation of several large
clients. These decreases were offset in part by increased demand for title and
document products due to improved loan origination activity. Continued
emphasis on cost containment also offset the impact of the overall decrease in
revenues. Pretax income was $21.3 million in the third quarter of 2009, a 41
percent increase relative to the third quarter of 2008.

Risk Mitigation and Business Solutions. Total revenues at the Risk Mitigation
and Business Solutions segment were $169.3 million in the third quarter of
2009, a 10 percent decrease relative to the third quarter of 2008. The
decrease is directly related to the downturn in domestic and international
hiring, weakness in the credit markets and the overall economic slowdown,
which led to declines in revenues in the employer, multi-family and
investigative/litigation support lines of business. These declines were offset
to an extent by increased revenues in 2009 due to improvements in the
segment's lead generation business. Pretax income was $18.3 million in the
third quarter of 2009, compared with $21.4 million in the third quarter of
2008.

Teleconference/Webcast
First American's third quarter results will be discussed in more detail on
Thursday, Oct. 29, 2009, at 11 a.m. ET, via teleconference. The toll-free
dial-in number is (888) 469-1088. Callers from outside the United States may
dial (517) 308-9315. The pass code for the event is FIRST AMERICAN.

The live audio webcast of the call and the accompanying slide presentation
will be available on First American's Web site at www.firstam.com/investor. An
audio replay of the conference call will be available through Nov. 5, 2009, by
dialing (203) 369-3077. An audio archive of the call and the accompanying
financial presentation will also be available for replay on First American's
investor Web site.

About First American
The First American Corporation (NYSE: FAF) is a FORTUNE 500(®) company that
traces its history to 1889. With total revenues of approximately $6.2 billion
in 2008, it is America's largest provider of business information. First
American combines advanced analytics with its vast data resources to supply
businesses and consumers with valuable information products to support the
major economic events of people's lives, such as getting a job, renting an
apartment, buying a car or house, securing a mortgage and opening or buying a
business. The First American Family of Companies, many of which command
leading market share positions in their respective industries, operate within
five primary business segments, including: Title Insurance and Services,
Specialty Insurance, Information and Outsourcing Solutions, Data and Analytic
Solutions, and Risk Mitigation and Business Solutions. More information about
the company and an archive of its press releases can be found at
www.firstam.com.

Web Site Disclosure
First American posts information of interest to investors at
www.firstam.com/investor. This includes opened and closed title insurance
order counts for its direct title insurance operations, which are posted
approximately 20 days after the end of each month.

Additional Information
First American has filed a Registration Statement on Form S-4 and Schedule TO
and may file other documents with the Securities and Exchange Commission (SEC)
in connection with the proposed First Advantage transaction. First Advantage
stockholders should read those filings, and any other filings made by the
company with the SEC in connection with the transaction, as they contain
important information. These documents, as well as the company's other public
SEC filings, can be obtained without charge at the SEC's Web site at
www.sec.gov and at the company's Web site at www.firstam.com.

Forward-Looking Statements
Certain statements made in this press release, including but not limited to
those related to the company's potential acquisition of the minority
interests in First American Real Estate Solutions LLC and First Advantage
Corporation, and the effects of each on the Information Solutions Group's
operating and financial flexibility, the consummation and timing of the
company's previously announced spin-off, the Financial Services Group's
strategic plan for 2010, and growth due to the Information Solutions Group's
investment in new product development, are forward looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. These
forward-looking statements may contain the words "believe," "anticipate,"
"expect," "plan," "predict," "estimate," "project," "will be," "will
continue," "will likely result," or other similar words and phrases. Risks and
uncertainties exist that may cause results to differ materially from those set
forth in these forward-looking statements. Factors that could cause the
anticipated results to differ from those described in the forward-looking
statements include: interest rate fluctuations; changes in the performance of
the real estate markets; limitations on access to public records and other
data; general volatility in the capital markets; changes in applicable
government regulations; heightened scrutiny by legislators and regulators of
the company's title insurance and services segment and certain other of the
company's businesses; the inability to consummate the spin-off transaction or
to consummate it in the form originally proposed as a result of, among other
factors, the inability to obtain necessary regulatory approvals, the failure
to obtain the final approval of the company's board of directors, the
inability to obtain third party consents or undesirable concessions or
accommodations required to be made to obtain such consents, the landscape of
the real estate and mortgage credit markets, market conditions, the inability
to transfer assets into the entity being spun-off or unfavorable reactions
from customers, ratings agencies, investors or other interested persons; the
inability to realize the benefits of the proposed spin-off transaction as a
result of the factors described immediately above, as well as, among other
factors, increased borrowing costs, competition between the resulting
companies, unfavorable reactions from employees, the inability of the
Financial Services company to pay the anticipated level of dividends, the
triggering of rights and obligations by the transaction or any litigation
arising out of or related to the separation; consolidation among the company's
significant customers and competitors; changes in the company's ability to
integrate businesses which it acquires; unfavorable economic conditions;
impairments in the company's goodwill or other intangible assets; losses in
the company's investment portfolio; expenses of and funding obligations to the
company's pension plan; weakness in the commercial real estate market and
increases in the amount or severity of commercial real estate transaction
claims; and other factors described in Part I, Item 1A of the company's annual
report on Form 10-K for the year ended Dec. 31, 2008, as updated in Part II,
Item 1A of the company's quarterly reports on Form 10-Q for the quarters ended
March 31 and June 30, 2009, in each case as filed with the Securities and
Exchange Commission. The forward-looking statements speak only as of the date
they are made. The company does not undertake to update forward-looking
statements to reflect circumstances or events that occur after the date the
forward-looking statements are made.

Use of Non-GAAP Financial Measures
This news release contains certain financial measures that are not presented
in accordance with generally accepted accounting principles (GAAP), including
adjusted net income and adjusted earnings per diluted share, which are
adjusted to exclude net realized investment gains or losses, employee
separation costs, facilities and other restructuring charges, reserve
strengthening and adjustments and certain intangible impairments. Although
these exclusions represent actual gains, losses or expenses to the company,
they may mask the periodic income and financial and operating trends
associated with the company's business. To compensate for the inherent
limitations of these non-GAAP measures, the company uses them in conjunction
with the corresponding GAAP measures.

The company is presenting these non-GAAP financial measures because they
provide the company's management and investors with additional insight into
the operational performance of the company relative to earlier periods and
relative to the company's competitors. The company does not intend for these
non-GAAP financial measures to be a substitute for any GAAP financial
information. In this news release, these non-GAAP financial measures have been
presented with, and reconciled to, the most directly comparable GAAP financial
measures. Investors should use these non-GAAP financial measures only in
conjunction with the comparable GAAP financial measures.

Media Contact: Investor Contact:
Carrie Gaska Mark Seaton
Corporate Communications Investor Relations
The First American Corporation The First American Corporation
(714) 250-3298 - cgaska@firstam.com (714) 250-4264 - mseaton@firstam.com

The First American Corporation
Summary of Financial Results and Selected Information
(in thousands, except per share amounts and title orders)
(unaudited)

For the Three Months For the Nine Months
Ended Ended
September 30 September 30
--------------- ---------------
2009 2008 2009 2008
---- ---- ---- ----

Total revenues $1,565,482 $1,518,970 $4,480,676 $4,863,146
Income before income taxes $113,001 $823 $348,427 $134,006
Income taxes provision
(benefit) $41,719 $(1,033) $128,252 $47,960
Net income $71,282 $1,856 $220,175 $86,046
Less: Net income Attributable
to noncontrolling interests 15,920 10,196 58,516 45,463
------ ------ ------ ------
Net income (loss)
attributable to The First
American Corporation (FAC) $55,362 $(8,340) $161,659 $40,583
======= ======= ======== =======
Net income (loss) attributable
to FAC stockholders:
Basic $0.59 $(0.09) $1.73 $0.44
Diluted $0.59 $(0.09) $1.72 $0.44
Weighted average common shares
outstanding:
Basic 93,448 92,659 93,243 92,388
Diluted 94,525 92,659 94,075 93,172

Title orders opened 446,800 438,600 1,576,100 1,566,200

Title orders closed 362,200 323,200 1,169,500 1,114,000

Paid title claims 78,409 76,307 227,317 218,237

The First American Corporation
Condensed Consolidated Balance Sheets
(in thousands, except share data)
(unaudited)

September 30, December 31,
2009 2008
---------- ----------
Assets
Cash and cash equivalents $1,095,922 $934,945
---------- --------
Accounts and accrued income receivable, net 511,508 558,946
------- -------
Income tax receivable 20,825 61,678
------ ------
Investments:
Deposits with savings and loan
associations and banks 122,826 182,117
Debt securities 1,661,523 1,718,320
Equity securities 119,004 110,126
Other long-term investments 380,930 371,157
------- -------
2,284,283 2,381,720
--------- ---------
Loans receivable, net 162,240 151,692
------- -------
Property and equipment, net 605,549 665,305
------- -------
Title plants and other indexes 692,963 685,090
------- -------
Deferred income taxes 100,923 149,473
------- -------
Goodwill 2,614,209 2,594,738
--------- ---------
Other intangible assets, net 271,256 298,411
------- -------
Other assets 257,682 248,057
------- -------
$8,617,360 $8,730,055
========== ==========

Liabilities and Stockholders' Equity
Demand deposits $1,175,249 $1,298,221
Accounts payable and accrued liabilities 925,051 994,093
Deferred revenue 710,053 728,844
Reserve for known and incurred but not
reported claims 1,286,221 1,355,392
Notes and contracts payable 809,589 868,274
Deferrable interest subordinated notes 100,000 100,000
------- -------
5,006,163 5,344,824
--------- ---------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $1 par value
Authorized - 500,000 shares;
outstanding - none
Common stock, $1 par value
Authorized - 180,000,000 shares
Outstanding - 93,357,000 and
92,963,000 shares 93,579 92,963
Additional paid-in capital 815,458 801,228
Retained earnings 2,200,501 2,099,654
Accumulated other comprehensive loss (193,776) (296,195)
-------- --------
Total FAC stockholders' equity 2,915,762 2,697,650
--------- ---------
Noncontrolling interests 695,435 687,581
------- -------
Total equity 3,611,197 3,385,231
--------- ---------
$8,617,360 $8,730,055
========== ==========

The First American Corporation
Condensed Consolidated Statement of Income and Comprehensive Income
(in thousands, except per share amounts)
(unaudited)

For the Three Months For the Nine Months
Ended Ended
September 30 September 30
--------------- ----------------
2009 2008 2009 2008
---- ---- ---- ----

Revenues
Operating revenues $1,510,181 $1,513,073 $4,333,149 $4,776,890
Investment and other income 50,195 56,098 163,150 182,346
Gain on stock issued by
subsidiary - - - 1,325
Net realized investment
losses 5,106 (50,201) (15,623) (97,415)
----- ------- ------- -------
1,565,482 1,518,970 4,480,676 4,863,146
--------- --------- --------- ---------
Expenses
Salaries and other
personnel costs 466,320 513,710 1,405,123 1,654,224
Premiums retained by agents 363,408 347,379 881,571 1,088,492
Other operating expenses 439,326 445,102 1,316,367 1,373,722
Provision for policy
losses and other claims 97,181 121,903 291,188 343,885
Depreciation and
amortization 62,260 59,993 165,794 177,219
Premium taxes 10,350 12,487 26,766 36,773
Interest 13,636 17,573 45,440 54,825
------ ------ ------ ------
1,452,481 1,518,147 4,132,249 4,729,140
--------- --------- --------- ---------

Income before income taxes 113,001 823 348,427 134,006
Income taxes provision
(benefit) 41,719 (1,033) 128,252 47,960
------ ------ ------- ------
Net income 71,282 1,856 220,175 86,046
Less: Net income
attributable to
noncontrolling interests 15,920 10,196 58,516 45,463
------ ------ ------ ------
Net income (loss)
attributable to FAC 55,362 (8,340) 161,659 40,583
------ ------ ------- ------

Net income (loss) attributable
to FAC stockholders:
Basic $0.59 $(0.09) $1.73 $0.44
===== ====== ===== =====
Diluted $0.59 $(0.09) $1.72 $0.44
===== ====== ===== =====
Cash dividends per share $0.22 $0.22 $0.66 $0.66
===== ===== ===== =====
Weighted average number
of shares:
Basic 93,448 92,659 93,243 92,388
====== ====== ====== ======
Diluted 94,525 92,659 94,075 93,172
====== ====== ====== ======

Net Income $71,282 $1,856 $220,175 $86,046
------- ------ -------- -------
Other comprehensive income
(loss), net of tax
Unrealized gain
(loss) on
securities 14,733 (27,942) 66,022 (78,751)
Unrealized gain on
securities for which
credit-related
portion was
recognized in net
realized investment
gains 2,369 - 130 -
Foreign currency
translation
adjustments 13,859 (23,221) 31,434 (19,321)
Minimum pension
liability
adjustment 3,690 2,049 11,068 6,215
----- ----- ------ -----
Total other
comprehensive income
(loss), net of tax 34,651 (49,114) 108,654 (91,857)
------ ------- ------- -------
Comprehensive income 105,933 (47,258) 328,829 (5,811)
Less: Comprehensive income
attributable to
noncontrolling interests 17,278 8,101 64,751 34,341
------ ----- ------ ------
Comprehensive income
(loss) attributable to FAC $88,655 $(55,359) $264,078 $(40,152)
======= ======== ======== ========

The First American Corporation
Segment Information
(in thousands, except percentages)
(unaudited)

For the Three Months Ended September 30
-----------------------------------------------
Total revenues Pretax (A) Margins
--------------- ------------- ----------
2009 2008 2009 2008 2009 2008
---- ---- ---- ---- ---- ----
Financial Services

Title Insurance
and Services $996,998 $977,857 $58,523 $(33,716) 5.9% -3.4%
Specialty
Insurance 71,086 72,758 7,438 316 10.5% 0.4%
------ ------ ----- --- ---- ---
$1,068,084 $1,050,615 $65,961 $(33,400) 6.2% -3.2%
========== ========== ======= ======== === ====

Information Solutions

Information and
Outsourcing
Solutions $227,659 $181,845 $43,900 $31,407 19.3% 17.3%
Data and
Analytic
Solutions 129,317 130,936 21,319 15,136 16.5% 11.6%
Risk Mitigation
and Business
Solutions 169,309 188,064 18,313 21,365 10.8% 11.4%
------- ------- ------ ------ ---- ----
$526,285 $500,845 $83,532 $67,908 15.9% 13.6%
======== ======== ======= ======= ==== ====

For the Nine Months Ended September 30
-----------------------------------------------
Total revenues Pretax (A) Margins
--------------- ------------- ----------
2009 2008 2009 2008 2009 2008
---- ---- ---- ---- ---- ----

Financial Services

Title Insurance
and Services $2,724,335 $3,159,233 $120,877 $(27,519) 4.4% -0.9%
Specialty
Insurance 205,705 225,376 16,862 17,491 8.2% 7.8%
------- ------- ------ ------ --- ---
$2,930,040 $3,384,609 $137,739 $(10,028) 4.7% -0.3%
========== ========== ======== ======== === ====

Information Solutions

Information and
Outsourcing
Solutions $686,043 $566,695 $165,033 $128,870 24.1% 22.7%
Data and
Analytic
Solutions 402,630 411,393 77,175 55,834 19.2% 13.6%
Risk Mitigation
and Business
Solutions 550,465 588,327 58,689 64,453 10.7% 11.0%
------- ------- ------ ------ ---- ----
$1,639,138 $1,566,415 $300,897 $249,157 18.4% 15.9%
========== ========== ======== ======== ==== ====

(A) - (Loss) income before income tax, minority interest and corporate
expenses

SOURCE The First American Corporation

Media, Carrie Gaska, Corporate Communications, +1-714-250-3298,
cgaska@firstam.com; or Investors, Mark Seaton, Investor Relations,
+1-714-250-4264, mseaton@firstam.com, both of The First American Corporation