FAF 10-K & 10-Q changes, risk factors and insider trading

In an effort to speed the delivery of its products, increase efficiency, improve quality, improve the customer experience and decrease risk, the Company is utilizing innovative technologies, processes and techniques, including artificial intelligence, in the production and delivery of its products and services. These efforts include converting certain manual processes into automated ones to streamline searches, examinations and other underwriting functions in connection with the issuance of title insurance policies, building and maintaining title plants and other data assets, and digitizing and automating components of the settlement process. The Company believes these innovations will improve the customer experience by simplifying and reducing the time it takes to close a transaction, improve accuracy of our services, reduce risk and improve communication, and expects to continue expanding its use of these technologies. Risks from these and other innovative initiatives include those associated with potential defects in the design and development of the technologies used to automate processes; misapplication of technologies; the reliance on data, rules or assumptions that may prove inadequate; increased costs from third parties on whose technologies we are dependent; information security vulnerabilities; and failure to meet customer expectations, among others. As a result of these risks, the Company could experience increased claims, reputational damage or other adverse effects, which could be material to the Company.

when real estate affordability is declining or low;

Severe weather conditions, health crises, terrorist attacks and other catastrophe eventscatastrophes could adversely affect the Company

Severe weather conditions, global or extensive health crises, terrorist attacks and other catastrophe eventscatastrophes and responses to these events could adversely affect the Company. The extent to which these catastrophe eventscatastrophes and responses to them impact the Company’s business, operations and financial results will depend on numerous factors that the Company may not be able to accurately predict, including: the duration and scope of the catastrophe event and restrictions and responses to it; the impact of the catastrophe event on economic activity and actions taken in response, including the efficacy of governmental and other relief efforts or countermeasures; the effect on participants in real estate transactions and the demand for the Company’s products and services.

In addition, the Company manages its financial exposure for losses in its title insurance business with third-party reinsurance. Catastrophe eventsCatastrophes could adversely affect the cost and availability of that reinsurance. Moreover, to the extent severe weather conditions, health crises, terrorist attacks and other catastrophe eventscatastrophes impact companies or municipalities whose securities the Company invests in, the value of its investments may also decrease due to these factors.

The frequency, severity, duration, and geographic location and scope of such health crises, catastrophe and severe weather events are inherently unpredictable, and, therefore, the Company is unable to predict the ultimate impact these events and responses to them will have on its businesses. The impacts of catastrophe eventscatastrophes and responses to them may also exacerbate the risks discussed elsewhere in Part I, Item 1A of this Annual Report.

Certain data used and supplied by the Company are subject to regulation by various federal, state and local regulatory authorities. Compliance with existing federal, state and local laws and regulations with respect to such data has not had a material adverse effect on the Company’s results of operations to date. Nonetheless, federal, state and local laws and regulations in the United States designed to prohibit disclosure of personal information or to protect the public from the misuse of personal information in the marketplace and adverse publicity or potential litigation concerning the commercial use of such information may affect the Company’s operations and could result in substantial regulatory compliance expense, litigation expense and a loss of revenue. The suppliers of data to the Company face similar burdens. As a result of these and other factors, the Company may find it financially burdensome to acquire necessary data.

Certain of the Company’s customers use measurements of the financial strength of the Company’s title insurance underwriters, including, among others, ratings provided by ratings agencies and levels of statutory capital and surplus maintained by those underwriters,underwriters in determining the amount of a policy they will accept and the amount of reinsurance required. Each of the major ratings agencies currently rates the Company’s title insurance operations. These ratings provide the agencies’ perspectives on the financial strength, operating performance and cash generating ability of those operations. These agencies continually review these ratingsratings, and the ratings are subject to change. Statutory capital and surplus, or the amount by which statutory assets exceed statutory liabilities, is also a measure of financial strength. Accordingly, if the ratings or statutory capital and surplus of these title insurance underwriters are reduced from their current levels, or if there is a deterioration in other measures of financial strength, the Company’s results of operations, competitive position and liquidity could be adversely affected. In addition, a downgrade in the ratings or rankings for the Company’s federal savings bank subsidiary or its mortgage servicing business could have an adverse effect on that particular business.

These systems have been subject to, and are likely to continue to bebe, the target of,of malware, cyberattacks and cyberterrorism, ransomware attacks, phishing attacks, unauthorized access, online and offline fraud and other malicious activity. These attacks are prevalent, continue to increase in frequency and sophistication, and are increasingly difficult to prevent or detect. These systems also have known and unknown vulnerabilities. Once identified, the Company’s information technology and information security personnel seek to remediate these vulnerabilities based, in part, on the level of risk presented and the burden of remediation. For a number of reasons, including the introduction of new vulnerabilities, resource constraints, competing business demands and dependence on third parties, a number of unremediated vulnerabilities will always exist. Remediation of some vulnerabilities are outside of the control of the Company and third-party remediation efforts may not be timely provided or implemented or otherwise adequate, even when the level of risk is critical or high. Further, certain other potential causes of system damage or other negative system-related events are wholly or partially beyond the Company’s control, such as natural disasters, vendor failures to satisfy service level requirements, third party negligence or intentional acts, and power or telecommunications failures. These circumstances could expose the Company to system-related damages, failures, interruptions, cyberattacks, as the Company experienced in December 2023 (as described further in Item 1C. Cybersecurity),2023, and other negative events or could otherwise disrupt the Company’s business and could also result in the loss or unauthorized release, gathering, monitoring or destruction of confidential, proprietary and other information pertaining to the Company, its customers, employees, agents or suppliers.

The Company utilizes lower cost labor in countries such as India and the Philippines, among others. These countries are subject to relatively high degrees of political and social instability and may lack the infrastructure to withstand natural disasters, health crises and other catastrophe events.catastrophes. Such disruptions could decrease efficiency and increase the Company’s costs. Weakness of the United States dollar in relation to the currencies used in these countries may also reduce the savings achievable through this strategy. Laws, regulations, business requirements or social or political pressures may require the Company to use labor based in the United States or may otherwise effectively increase the Company’s labor costs abroad. The Company may not be able to pass on these increased costs to its customers.

Most of the Company’s businesses are regulated by various federal, state, local and foreign governmental agencies. These and other of the Company’s businesses also operate within statutory guidelines, which can include requirements to maintain certain licenses at the federal, state and/or local levels. The industry in which the Company operatesoperates, and the markets into which it sells its productsproducts, are also regulated and subject to statutory guidelines. In general, in recent years, the Company experienced increasing regulatory oversight and became subject to increasingly complex statutory guidelines.

An increasing number of federal, state,state and international laws and regulations apply to the collection, use, retention, protection, disclosure, transfer,transfer and other processing of personal data. The effects of these privacy and data protection laws, including the cost of compliance and required changes in the manner in which the Company conducts its business, are not fully known and are potentially significant, and the failure to comply could adversely affect the Company. The Company has incurred costs to comply with these laws and to respond to inquiries about its compliance with them.

In addition, changes in the applicable regulatory environment, statutory guidelines or interpretations of existing regulations or statutes; reformrestructuring of government-sponsored enterprises such as the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”); enhancedchanges in governmental oversight or efforts by governmental agencies to cause customers to refrain from using the Company’s products or services could prohibit or limit its future operations or make it more costly or burdensome to conduct such operations or result in decreased demand for the Company’s products and services or a change in its competitive position. The impact of these changes would be more significant if they involve jurisdictions in which the Company generates a greater portion of its title premiums, such as the states of Arizona, California, Florida, New York, and Texas.premiums. These changes may compel the Company to reduce its prices, may restrict its ability to implement price increases or acquire assets or businesses, may limit the manner in which the Company conducts its business or otherwise may have a negative impact on its ability to generate revenues, earnings and cash flows.

Governmental entities have routinely inquired into certain practices in the real estate settlement services industry and the mortgage servicing and subservicing industry to determine whether certain of the Company’s businesses or its competitors have violated applicable laws, which include, among others, the insurance codes of the various jurisdictions, the Real Estate Settlement Procedures Act, the Truth in Lending Act and similar state, federal and foreign laws. The CFPB, for example, has actively utilized its regulatory authority over the mortgage and real estate markets by bringing enforcement actions against various participants in the mortgage and settlement industries. Departments of insurance in the various states, attorneys general in the various states, the Consumer Financial Protection Bureau (“CFPB”) and other federal regulators and applicable regulators in international jurisdictions, either separately or together, also periodically conduct targeted inquiries into the practices of title insurance companies, other settlement services providers and mortgage servicers in their respective jurisdictions. Currently, the Company is the subject of regulatory inquiries.

Title insurance rates are subject to extensive regulation, which varies from state to state. In many states the approval of the applicable state insurance regulator is required prior to implementing a rate change. In addition, in certain states, insurance rates are promulgated by the applicable state insurance regulator. These regulations could hinder or prevent the Company’sCompany ability tofrom promptly adaptadapting to changing market dynamics through price adjustments, which could adversely affect its results of operations, particularly in a rapidly declining market.

The Company relies on a combination of patents, trademarks, copyrights, trade secret laws, non-disclosure agreements, contractual provisions and systems of internal safeguards to protect its intellectual property. As the Company expands its utilization of innovative technologies, processes and techniques in the production and delivery of its products and services, the Company may increasingly have to litigate to enforce and protect its intellectual property rights, which may divert Company resources, cause reputational harm to the Company or result in other adverse consequences, including a loss of competitive advantage, and there is no guarantee that such protection and enforcement efforts would be successful. In addition, third parties may allege that the Company’s operations or activities infringe on their intellectual property rights, including through the Company’s use of software containing open source code, which may expose the Company to third-party claims of ownership of,non-compliance or demandsrequests forto theenforce releaselicense of,terms theor requirements to make available certain source code,code theunder applicable licenses of open source software and/or derivative works that were developed using such software, or otherwise seeking to enforce the terms of the applicable open source license. Many of the risks associated with usage of open source cannot be eliminated, and could, if not properly addressed, adversely affect the Company’s business. Infringement claims may give rise to litigation, which could result in damages, injunctions prohibiting the Company from providing certain products or services, entry into costly licensing arrangements or other adverse consequences.

This Management’s Discussion and Analysis contains the financial measure adjusted debt to capitalization ratio that is not presented in accordance with generally accepted accounting principles (“GAAP”) as it excludes the effects of secured financings payable and accumulated other comprehensive loss.payable. The Company is presenting this non-GAAP financial measure because it provides the Company’s management and readers of this Annual Report on Form 10-K with additional insight into the financial leverage of the Company. The Company does not intend for this non-GAAP financial measure to be a substitute for any GAAP financial information. In this Annual Report on Form 10-K, this non-GAAP financial measure has been presented with, and reconciled to, the most directly comparable GAAP financial measure. Readers of this Annual Report on Form 10-K should use this non-GAAP financial measure only in conjunction with the comparable GAAP financial measure. Because not all companies use identical calculations, the presentation of adjusted debt to capitalization ratio may not be comparable to other similarly titled measures of other companies.

The title insurance and services segment issues title insurance policies on residential and commercial property in the United States and offers similar or related products and services internationally. This segment also provides closing and/or escrow services; accommodates tax-deferred exchanges of real estate; provides products, services and solutions designed to mitigate risk or otherwise facilitate real estate transactions; maintains, manages and provides access to title plant data and records; provides appraisals and other valuation-related products and services; provides lien release, document custodial and default-related products and services; provides document generation services; provides warehouse lending services; subservices mortgage loans; and provides banking, trust and wealth management services. The Company, through its principal title insurance subsidiary and such subsidiary’s affiliates, transacts its title insurance business through a network of direct operations and agents. Through this network, the Company issues policies in the 49 states that permit the issuance of title insurance policies, the District of Columbia and certain United States territories. The Company also offers title insurance, closing services and similar or related products and services, either directly or through third parties in other countries, including Canada, the United Kingdom, various countries in Europe, South Korea, Australia,Australia and New Zealand and various other established and emerging markets.Zealand.

For recent policy years at early stages of development (generally the last threefour to five years), IBNR is generally estimated using a combination of expected loss rate and multiplicative loss development factor calculations. For more mature policy years, IBNR generally is estimated using multiplicative loss development factor calculations. The expected loss rate method estimates IBNR by applying an expected loss rate to total title insurance premiums and escrow fees and by adjusting for policy year maturity using estimated loss development patterns. Multiplicative loss development factor calculations estimate IBNR by applying factors derived from loss development patterns to losses realized to date. The expected loss rate and loss development patterns are based on historical experience and the relationship of the history to the applicable policy years.

The Company’s management uses the IBNR point estimate from the in-house actuary’s analysis and other relevant information concerning claimsclaims, including a range of IBNR reserve estimates, to determine what it considers to be the best estimate of the total amount required for the IBNR reserve.

The provisions for title insurance losses, expressed as a percentage of title insurance premiums and escrow fees, were 3.0%, 3.25% and 4.0%3.0% for the years ended December 31, 2024, 20232025 and 2022,2024 respectively.and 3.25% for the year ended December 31, 2023. The 3.0% loss provision rate in the current year reflects an ultimate loss rate of 3.75% for the current policy year and a reserve release of 0.75%, or $34.6$39.8 million andmillion, for prior policy years, all of which are based on title insurance premiums and escrow fees for the year ended December 31, 2024.2025.

The Company is required to perform an annual goodwill impairment assessment for each reporting unit for which goodwill has been allocated. The reporting units that have been allocated goodwill include title insurance and home warranty. The Company’s trust and other services and corporate reporting unitunits hashave no allocated goodwill and is,are, therefore, not assessed for impairment. The Company has elected to perform this annual assessment in the fourth quarter of each fiscal year or sooner if circumstances indicate possible impairment. Based on accounting guidance, the Company has the option to perform a qualitative assessment to determine if the fair value is more likely than not (i.e., a likelihood of greater than 50%) less than the carrying amount as a basis for determining whether it is necessary to perform a quantitative impairment test, or may choose to forego a qualitative assessment and perform a quantitative impairment test. The qualitative factors considered in this assessment may include macroeconomic conditions, industry and market considerations, overall financial performance as well as other relevant events and circumstances as determined by the Company. The Company evaluates the weight of each factor to determine whether it is more likely than not that impairment may exist. If the results of a qualitative assessment indicate the more likely than not threshold was not met, the Company may choose not to perform a quantitative impairment test. If, however, the more likely than not threshold is met, the Company will perform a quantitative test as required and discussed below.

The Company recognizes the effect of income tax positions only if sustaining those positions is considered more likely than not. Changes in recognition or measurement of uncertain tax positions are reflected in the period in which a change in judgment occurs. The Company recognizes interest and penalties,penalties related to uncertain tax positions in income tax expense.

The Company’s total revenues for 20242025 were $6.1$7.5 billion, which reflected an increase of $124.6$1.3 million,billion, or 2.1%,21.6%, when compared with $6.0$6.1 billion for 2023.2024. This increase was primarily attributable to increases in direct premiums and escrow fees of $193.9$316.7 million, or 8.6%,12.9%, agent premiums of $112.6$397.5 million, or 4.6%,15.5%, and information and other revenue of $22.3$127.4 million, or 2.4%.13.3%. The Company’s total revenues for 20242025 also included $401.6$20.9 million of net investment lossesgains compared to $206.4$401.6 million of net investment losses for the prior year. The increase in direct premiums and escrow fees attributable to the title insurance and services segment for 20242025 totaled $191.9$299.2 million, or 10.3%,14.6%, which included increases from domestic commercial and residential refinance transactions,transactions of $241.4 million, or 31.7%, and $39.7 million, or 42.1%, respectively, in 2025 when compared to 2024. Direct premiums and escrow fees from domestic residential purchase transactions anddecreased domestic commercial transactions of $13.0$21.5 million, or 15.9%, $56.6 million, or 6.3% and $103.8 million, or 15.8%, respectively,2.2%, in 2024,2025 when compared to 2023.2024.

According to the Mortgage Bankers Association’s January 19,21, 20252026 Mortgage Finance Forecast (the “MBA Forecast”), based on the total dollar value of the transactions, residential mortgage originations in the United States increased 22.0%,21.6%, purchase originations increased 4.0%1.3% and refinance originations increased 124.2%99.4% in 2024,2025, when compared to 2023.2024. This volume of domestic residential mortgage origination activity contributed to an increase in direct premiums and escrow fees for the Company’s direct title operations of 6.3%42.1% from domestic residential refinance transactions and a decrease of 2.2% from domestic residential purchase transactions and a decrease of 15.9% from domestic refinance transactions in 2024,2025, when compared to 2023.2024.

During 2024,2025, the level of domestic title orders opened per day by the Company’s direct title operations wereincreased flat11.0% when compared to 2023.2024. Also, during 2024,2025, residential refinance opened orders per day, residential purchase opened orders per day and commercial opened orders per day increased by 20.2%, 1.4%,47.1% and 2.7%,9.5%, respectively, while residential purchase opened orders per day decreased 3.1% when compared to 2023.2024.

Direct premiums and escrow fees increased $299.2 million, or 14.6%, in 2025 from 2024 and $191.9 million, or 10.3%, in 2024 from 20232023. andThe decreased $806.5 million, or 30.3%,increases in 20232025 from 2022. The increase in direct premiums2024 and escrow fees in 2024 from 2023 waswere primarily due to increases in both domestic average revenue per order and the number of domestic title orders closed by the Company’s direct title operations. The decrease in 2023 from 2022 was primarily due to a reduction in the number of domestic title orders closed byand the Company’s direct title operations, partially offset by an increase in domestic average revenuerevenues per order. The domestic average revenues per order closed were $3,914,$3,961, $3,651$3,817 and $3,498$3,502 for 2024,2025, 20232024 and 2022,2023, respectively. The 7.2%3.8% increase in average revenues per order closed in 2025 from 2024 was due to an increase in average revenues per order on commercial and purchase transactions, partially offset by a shift in the mix from higher premium commercial transactions to lower premium refinance and default transactions. The 9.0% increase in average revenues per order closed in 2024 from 2023 was primarily due to increases in average revenues per order on commercial and purchase transactions, partially offset by a shift in the mix from higher premium commercial transactions to lower premium refinance transactions. The 4.4% increase in average revenues per order closed in 2023 from 2022 was due to a shift in the mix from lower premium residential refinance and default transactions to higher premium commercial transactions, partially offset by a decrease in the average revenues per order from commercial transactions. The Company’s direct title operations closed 468,800,531,900, 455,500480,700 and 695,900474,900 domestic title orders during 2024,2025, 20232024 and 2022,2023, respectively. The 2.9%10.7% increase in orders closed in 2025 from 2024 and the 1.2% increase in orders closed in 2024 from 2023 and the 34.5% decrease in orders closed in 2023 from 2022 were generally consistent with the changes in residential mortgage origination activity in the United States as reported in the MBA Forecast.

Agent premiums increased $397.5 million, or 15.5%, in 2025 from 2024 and $112.6 million, or 4.6%, in 2024 from 2023 and decreased $1.1 billion, or 31.0%, in 2023 from 2022.2023. Agent premiums are recorded when notice of issuance is received from the agent, which is generally when cash payment is received by the Company. As a result, there is generally a delay between the agent’s issuance of a title policy and the Company’s recognition of agent premiums. Therefore, full year agent premiums typically reflect mortgage origination activity from the fourth quarter of the prior year through the third quarter of the current year. The increase in agent premiums in 2025 from 2024 was generally consistent with the 17.0% increase in the Company’s direct premiums and escrow fees in the twelve months ended September 30, 2025 as compared with the twelve months ended September 30, 2024. The increase in agent premiums in 2024 from 2023 was generally consistent with the 2.6% decrease in the Company’s direct premiums and escrow fees in the twelve months ended September 30, 2024 as compared with the twelve months ended September 30, 2023. The decrease in agent premiums in 2023 from 2022 was generally consistent with the 34.0% decrease in the Company’s direct premiums and escrow fees in the twelve months ended September 30, 2023 as compared with the twelve months ended September 30, 2022.

Net investment income increased $60.5 million, or 11.3%, in 2025 from 2024 and decreased $5.9 million, or 1.1%, in 2024 from 20232023. The increase in 2025 from 2024 was primarily attributable to increases in interest income from the Company’s investment portfolio, partially offset by lower interest income from operating cash due to lower balances and increasedthe $181.1impact million,of orlower 50.4%,short-term ininterest 2023 from 2022.rates. The decrease in 2024 from 2023 was primarily attributable to declines in the Company’s escrow and tax-deferred property exchange balances, partially offset by an increase in interest income from the Company’s warehouse lending business and investment portfolio. The increase in 2023 from 2022 was primarily attributable to the positive impact of higher interest rates on the Company’s cash balances, tax-deferred property exchange and escrow balances and investment portfolio. The increase was also driven by an increase in interest income from the company’s warehouse lending business.

Net investment gains of $25.5 million in 2025 were primarily attributable to changes in the fair values of marketable equity securities and an unrealized gain on a non-marketable equity investment within the Company’s venture investment portfolio, partially offset by impairments on capitalized internal-use software and losses recognized on sales of debt securities. Net investment gains/losses totaled losses of $345.4 million forin 2024 and were primarily attributable to losses realized from the Company’s investment portfolio rebalancing project discussed above and asset impairments, partially offset by an increase in the fair values of marketable equity securities. Net investment losses of $38.2 million forin 2023 were primarily attributable to losses recognized on sales of debt securities, partially offset by changes in the fair values of marketable equity securities. Net investment losses of $149.8 million for 2022 were primarily attributable to losses recognized on sales of debt securities and changes in the fair values of marketable equity securities, partially offset by a $51.1 million gain realized on the sale of an investment in a title insurance business.

Personnel costs increased $178.2 million, or 9.1%, in 2025 from 2024 and $77.2 million, or 4.1%, in 2024 from 20232023. The increase in personnel costs in 2025 from 2024 was primarily attributable to higher incentive compensation expense due to higher revenue and decreasedprofitability $396.9and million,higher orsalaries, 17.5%,employee inbenefits, 2023payroll fromtaxes 2022.and share-based compensation expenses. The increase in personnel costs in 2024 from 2023 was primarily attributable to higher salarysalaries expense,and incentive compensation expense due to higher revenue and profitability, employee benefits and payroll tax expense. The decrease in personnelPersonnel costs in 2023 from 2022 was primarily attributable to lower incentive compensation as a result of lower revenue and profitability, declines in salary, payroll tax and employee benefit expense driven by lower headcount, lower overtime and temporary labor expense on lower volumes and lower severance expense. Personnel costsalso included severance expenses of $8.3$11.7 million, $12.6$8.3 million, and $34.7$12.6 million for 2025, 2024, and 2023, and 2022, respectively.

The provisions for policy losses and other claims, expressed as a percentage of title insurance premiums and escrow fees, were 3.0%,3.0% 3.25%,for 2025 and 4.0%2024 and 3.25% for 2024, 2023, and 2022, respectively.2023.

The 3.0% loss provision rate in the current year reflects an ultimate loss rate of 3.75% for the current policy year and a reserve release of 0.75%, or $34.6$39.8 million andmillion, for prior policy years, all of which are based on title insurance premiums and escrow fees for 2024.2025.

The 2024 loss provision rate of 3.0% reflected an ultimate loss rate of 3.75% for the 2024 policy year and a reserve release of 0.75%, or $34.6 million, for prior policy years, all of which are based on title insurance premiums and escrow fees for 2024. The 2023 loss provision rate of 3.25% reflected thean ultimate loss rate of 3.75% for the 2023 policy year 2023 of 3.75% and a reserve release of 0.5%, or $21.6 millionmillion, for prior policy years, all of which are based on title insurance premiums and escrow fees for 2023. The 2022 loss provision rate of 4.0% reflected the ultimate loss rate for policy year 2022 and no change in loss reserve estimates for prior policy years.

Depreciation and amortization expense increased $8.6 million, or 4.3%, in 2025 from 2024 and $18.6 million, or 10.1%, in 2024 from 2023 and $21.3 million, or 13.1%, in 2023 from 2022.2023. The increaseincreases in depreciation and amortization expense in 2025 from 2024 and in 2024 from 2023 waswere primarily attributable to higher amortization of capitalized internal-use software from recently deployed digital settlement products, partially offset by lower purchase-related amortization. The increase in depreciation and amortization expense in 2023 from 2022 was primarily attributable to higher amortization of capitalizedpurchase-related software.intangible assets.

Insurers generally are not subject to state income or franchise taxes. However, in lieu thereof, a premium tax is imposed on certain operating revenues, as defined by statute. Tax rates and bases vary from state to state; accordingly, the total premium tax burden is dependent upon the geographical mix of operating revenues. The Company’s noninsurance subsidiaries are subject to state income tax and do not pay premium tax. Accordingly, the Company’s total tax burden at the state level for the title insurance and services segment is composed of a combination of premium taxes and state income taxes. Premium taxes as a percentage of title insurance premiums and escrow fees were 1.5% for 2025 and 1.4% for 2024, 20232024 and 2022.2023.

Interest expense decreased $0.4 million, or 0.4%, in 2025 from 2024 and increased $14.3 million, or 17.4%, in 2024 from 20232023. andThe $48.1 million, or 140.6%,decrease in 20232025 from 2022.2024 was primarily attributable to lower interest expense in the Company’s warehouse lending business due to a decline in interest rates. The increasesincrease in 2024 from 2023 and 2023 from 2022 werewas primarily attributable to higher interest expense in the Company’s warehouse lending business. The increase in 2023 from 2022 was also attributable to higher deposit balances at the Company's banking operations.

Direct premiums increased $17.4 million, or 4.4%, in 2025 from 2024 and $2.2 million, or 0.6%,0.6% in 2024 from 2023 and decreased $17.5 million, or 4.2% in 2023 from 2022.2023. The increaseincreases in direct premiums in 2025 from 2024 and 2024 from 2023 waswere primarily attributable to an increaseincreases in the average price per policy. The decrease in direct premiums in 2023 from 2022 was primarily attributable to a decline in real estate transactions.

Personnel costs and other operating expenses increased $7.3 million, or 4.4%, in 2025 from 2024 and $6.6 million, or 4.1%, in 2024 from 20232023. The increase in 2025 from 2024 was primarily attributable to higher marketing, salaries and $7.6incentive million,compensation orexpenses, 5.0%,partially inoffset 2023by fromlower 2022.deferred policy acquisition expense. The increase in 2024 from 2023 was primarily attributable to higher advertising, postage, salary and employee benefits expense, partially offset by lower sales tax, technology,technology and deferred policy acquisition expense. The increase in 2023 from 2022 was primarily attributable to higher advertising expense.

The provision for home warranty claims, expressed as a percentage of home warranty premiums, was 41.4% in 2025, 46.4% in 2024,2024 and 48.8% in 20232023. andThe 51.3%decrease in 2022.the claims rate in 2025 from 2024 was primarily attributable to lower claims frequency. The decrease in the claims rate in 2024 from 2023 was primarily attributable to lower severity, partially offset by higher frequency. The decrease in the claims rate in 2023 from 2022 was primarily attributable to lower claims severity, partially offset by higher claims volume.

A large partportion of the revenues for the home warranty segment are generated by renewals and are not dependent on the level of real estate activity in the year of renewal. With the exception of the provision for losses, the majority of the expenses for this segment are variable in nature and, therefore, generally fluctuate with revenue. Accordingly, pretax margins (before provision for losses) are relatively constant, although, as a result of some fixed expenses, profit margins (before provision for losses) should nominally improve as premium revenues increase. Pretax margins are also impacted by net investment income and net investment gains or losses, which may not move in the same direction as premium revenues. The home warranty segment recorded pretax margins of 15.1%,19.5%, 15.1% and 13.0% and 10.6% for 2024,2025, 20232024 and 2022,2023, respectively.

Net investment losses totaledtotaling $4.3 million, $57.5 million,million and $162.3 million andfor $353.4 million for2025, 2024, 2023, and 2022,2023, respectively, resultingprimarily resulted from unrealized losses and impairment charges and observable pricing changes on non-marketable equity investments within the Company’s venture investment portfolio and included unrealized losses and gains resulting from fluctuations in the fair value of the Company’s investment in Offerpad Solutions Inc.

Personnel costs and other operating expenses totaled $82.9 million, $60.1 million,million and $81.8 million in 2025, 2024 and $30.62023, millionrespectively. The increase in 2024,2025 2023when compared to 2024 was primarily attributable to higher severance and 2022,share-based respectively.compensation expenses, fluctuations in returns on participant investments within the Company’s deferred compensation plan and the lack of a reinsurance credit received in 2024. The decrease in 2024 when compared to 2023 and the increase in 2023 when compared to 2022 werewas primarily attributable to fluctuations in returns on participant investments within the Company’s deferred compensation plan.plan, Thereceipt decrease in 2024 also includedof a reinsurance credit relatedin to the wind down of the property and casualty insurance business2024 and lower legal and incentive compensation expenseexpenses, which were recorded in 2023 related to the cybersecurity incident in 2023.event.

Interest expense increased $6.5 million, or 12.0%, in 2025 from 2024 and $2.9 million, or 5.6%, in 2024 from 20232023. andThe decreased $9.8 million, or 16.0%,increases in 20232025 from 2022.2024 The increase inand 2024 from 2023 waswere primarily due to the issuance of $450 million 5.45% senior unsecured notes in September 2024, partially offset by the repayment of the Company's $300 million 4.60% senior unsecured notes, upon maturity, in November 2024. The decrease in 2023 from 2022 was primarily attributable to the repayment of the Company's $250 million 4.30% senior unsecured notes, upon maturity, in February 2023.

The Company's actual income tax expense differs from the expense computed by applying the federal income tax rate of 21% for 2024,2025, 20232024 and 2022.2023. A reconciliation of these differences is summarized as follows:

The Company’s effective income tax rates (income tax expense as a percentage of income before income taxes) were 24.3% for 2025, 19.8% for 2024,2024 and 21.5% for 2023 and 18.7% for 2022.2023. The differences in the year over year effective tax rates year over year are typically due to changes in state and foreign income taxes resulting from fluctuations in the Company’s noninsurance and foreign subsidiaries’ contributions to pretax income and changes in the ratio of permanent differences tobetween amounts reported for financial statement purposes and amounts reported for income beforetax incomepurposes. taxes.In addition, the effective tax rates reflect tax credits claimed in current and prior years. The effective income tax rates for 2024 and 2023 also reflect the impact on pretax earnings from impairment losses on the Company’s venture investment portfolio and adjustments to the valuation allowance resulting from losses on certain equity investments and, for 2024, realized losses from sales of debt securities in an unrealized loss position in connection with the Company’s portfolio rebalancing project. InSee addition,Note 14 Incomes Taxes to the effectiveconsolidated taxfinancial ratesstatements for 2024 and 2023 reflect tax credits claimed in current and prior years and a valuationdetailed allowance recorded against losses on certain equity investments. The effective tax rate for 2022 also reflects the benefits from the resolution of state tax matters from prior years.reconciliation.

Cash requirements. The Company generates cash primarily from sales of its products and services and from investment income. The Company’s current cash requirements include operating expenses, taxes, payments of principal and interest on its debt, capital expenditures, dividends on its common stock, and may include business acquisitions, investments in and loans into private companies and repurchases of its common stock. Management forecasts the cash needs of the holding company and its primary subsidiaries and regularly reviews their short-term and long-term projected sources and uses of funds, as well as the asset, liability, investment and cash flow assumptions underlying such forecasts. Based on the Company’s ability to generate cash flows from operations, its liquid-asset position and amounts available on its revolving credit facility, management believes that its resources are sufficient to satisfy its anticipated operational cash requirements and obligations for at least the next twelve months.

Cash provided by operating activities totaled $950.8 million, $897.5 million,million and $354.3 million and 777.6 million for 2024,2025, 20232024 and 2022,2023, respectively, after claim payments, net of recoveries, of $397.8$358.4 million, $381.8$397.8 million and $434.3$381.8 million, respectively. The principal nonoperating uses of cash and cash equivalents for 2024,2025, 20232024 and 20222023 were advances and repayments under secured financing agreements, purchases of debt and equity securities, dividends to common stockholders, capital expenditures and repurchases of company common shares. Principal nonoperating uses of cash and cash equivalents also included decreases in deposits at the Company’s banking operations for 2024,2024 repaymentand repayments of senior unsecured notes for 2024 and 2023, and acquisitions for 2022.2023. The most significant nonoperating sources of cash and cash equivalents for 2024,2025, 20232024 and 20222023 were borrowings and collections under secured financing agreements, and proceeds from the sales and maturities of debt and equity securities. Principal nonoperating sources of cash and cash equivalents also included proceeds from issuance of unsecured senior notes in 2024 and increases in deposits at the Company’s banking operations for 2025 and 2023 and 2022.proceeds from issuance of unsecured senior notes in 2024. The net effect of all activities on total cash and cash equivalents were decreases of $330.8 million and $1.9 billion and $4.5 million for 20242025 and 2022,2024, respectively, and an increase of $2.4 billion for 2023. The increases to cash and cash equivalents and deposits in 2023 related to the cybersecurity incident are further discussed below.

TheIn CompanyJuly maintains2025, the Company’s board of directors approved a stocknew share repurchase plan withwhich authorizationauthorizes the repurchase of up to $400.0$300 million,million of whichthe $145.4Company’s millioncommon remainedstock asand ofterminated Decemberits 31,prior 2024.share repurchase plan. Purchases may be made from time to time by the Company in the open market at prevailing market prices or in privately negotiated transactions. During the year ended December 31, 2024,2025, the Company repurchased and retired 1.22.1 million shares of its common stock for a total purchase price of $68.5$122.3 million and, as of December 31, 2024,2025, the Company has repurchased and retired 4.76.8 million shares of its common stock under the currentprevious authorization for a total purchase price of $254.6$377.0 million.

Financing. The Company maintains a senior unsecured credit agreement with JPMorgan Chase Bank, N.A., in its capacity as administrative agent, and the lenders party thereto that provides for a $900.0 million revolving credit facility. The credit agreement includes an expansion option that permits the Company, subject to satisfaction of certain conditions, to increase the revolving commitments and/or add term loan tranches in an aggregate amount not to exceed $450.0 million. The obligations of the Company under the credit agreement are neither secured nor guaranteed. Proceeds from borrowings made from time to time under the credit agreement may be used for general corporate purposes. Unless terminated earlier, the credit agreement will terminate on May 17, 2028. At December 31, 2024,2025, the Company had no outstanding borrowings under the facility.

The Company’s debt to capitalization ratios were 30.8%30.7% and 28.6%30.8% at December 31, 20242025 and 2023,2024, respectively. The Company’s adjusted debt to capitalization ratios, excluding secured financings payable of $643.8$906.5 million and $553.3 million and accumulated other comprehensive loss of $496.4 million and $655.8$643.8 million at December 31, 20242025 and 2023,2024, were 22.2%21.9% and 20.2%,23.9%, respectively.

The Company facilitates tax-deferred property exchanges for customers pursuant to Section 1031 of the Internal Revenue Code and tax-deferred reverse exchanges pursuant to Revenue Procedure 2000-37. As a facilitator and intermediary, the Company holds the proceeds from sales transactions and takes temporary title to property identified by the customer to be acquired with such proceeds. Upon the completion of each such exchange, the identified property is transferred to the customer or, if the exchange does not take place, an amount equal to the sales proceeds or, in the case of a reverse exchange, title to the property held by the Company is transferred to the customer. Like-kind exchange funds administered by the Company totaled $2.3$2.7 billion and $1.8$2.3 billion at December 31, 20242025 and 2023,2024, respectively. In 2025, FA Trust began administering like-kind exchange funds and, at December 31, 2025, held $93.6 million of such deposits. The like-kind exchange deposits are held at third-party financial institutions and,are duenot toincluded in the structureaccompanying utilizedconsolidated tobalance facilitatesheets these transactions,as the proceeds and property are not considered assets of the Company and,due therefore, are not included into the accompanyingstructure consolidatedutilized balanceto sheets.facilitate these transactions. All such amounts are placed in deposit accounts insured, up to applicable limits, by the Federal Deposit Insurance Corporation. The Company could be held contingently liable to the customer for the transfers of property, disbursements of proceeds and the returns on such proceeds.

In conducting its residential mortgage loan subservicing operations, the Company administers cash deposits on behalf of its clients. Cash deposits totaled $901.0$1.6 millionbillion and $830.5$901.0 million at December 31, 20242025 and 2023,2024, respectively, of which $606.5$1.0 millionbillion and $485.7$606.5 million, respectively, were held at FA Trust. The remaining deposits were held at third-party financial institutions. Cash deposits held at third-party financial institutions are not considered assets of the Company and, therefore, are not included in the accompanying consolidated balance sheets. All such amounts are placed in deposit accounts insured, up to applicable limits, by the Federal Deposit Insurance Corporation. The Company could be held contingently liable for the disposition of these assets. In connection with certain accounts, the Company has ongoing programs for realizing economic benefits with various financial institutions whereby it earns economic benefits either as income or as a reduction in expense. In 2025, the Company agreed to provide a secured interest in certain debt securities with a fair value of $54.9 million as collateral to be maintained on deposit in connection with a new mortgage loan subservicing agreement.

ThereWith the exception of the revised Risk Factor 28 below, there have been no material changes as of the date of this report to the risk factors disclosed in “Item 1A. Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2025.

A substantial portion of the revenues for the Company’s title insurance and services segment result from sales of, and refinancings of loans on, residential and commercial real estate. In the home warranty segment, revenues associated with the initial year of coverage are impacted by volatility in residential purchase transactions. Traditionally, the greatest volume of real estate activity, particularly residential purchase activity, has occurredoccurs in the spring and summer months. However, changes in interest rates, as well as other changes in general economic conditions in the United States and abroad, can cause fluctuations in the traditional pattern of real estate activity.

The Company’s total revenues for the firstsecond quarter of 2026 were $1.8$2.1 billion, which reflected an increase of $255.7$276.0 million, or 16.2%,15.0%, when compared with $1.6$1.8 billion for the firstsecond quarter of 2025. This increase was primarily attributable to increases in agent premiums of $104.8$103.2 million, or 16.0%, and14.4%, direct premiums and escrow fees in the title insurance business of $97.5$88.8 million, or 21.2%.14.8%, and net investment gains of $12.0 million in the current quarter compared to $9.7 million of losses recognized in the second quarter of 2025. In the title insurance and services segment, direct premiums and escrow fees from domestic commercial and residential refinance and purchase transactions increased $87.5$79.9 million, or 47.6%,34.1%, and $18.4$5.7 million, or 76.5%,18.2%, and $5.2 million, or 2.0% respectively, in the firstsecond quarter of 2026 when compared to the firstsecond quarter of 2025. Direct premiums and escrow fees from domestic residential purchase transactions decreased $7.0 million, or 3.5%, in the first quarter of 2026 when compared to the first quarter of 2025.

According to the Mortgage Bankers Association’s AprilJune 20,22, 2026 Mortgage Finance Forecast (the “MBA Forecast”), residential mortgage originations in the United States (based on the total dollar value of the transactions) are forecasted to increase 43.5%10.1% in the firstsecond quarter of 2026 when compared to the firstsecond quarter of 2025. According to the MBA Forecast, the dollar amount of purchase originations are forecasted to increasedecrease 22.1%1.9% and refinance originations are forecasted to increase 95.5%.39.9%. This volume of domestic residential mortgage origination activity contributed to aan decreaseincrease of 3.5%2.0% in direct premiums and escrow fees for the Company’s direct title operations from domestic residential purchase transactions and an increase of 76.5%18.2% from domestic refinance transactions in the firstsecond quarter of 2026 when compared to the firstsecond quarter of 2025.

During the firstsecond quarter of 2026, the level of domestic title orders opened per day by the Company’s direct title operations increased 8.3%0.7% when compared with the firstsecond quarter of 2025. Commercial and refinance opened orders per day increased 3.5%6.5% and 48.1%,6.4%, respectively, while residential purchase opened orders per day decreased 4.1%2.4% in the firstsecond quarter of 2026 when compared with the firstsecond quarter of 2025.

Direct premiums and escrow fees were $557.1$689.2 million and $1.2 billion for the three and six months ended MarchJune 31,30, 2026, anrespectively, increaseincreases of $97.5$88.8 million, or 21.2%,14.8%, and $186.3 million, or 17.6%, when compared with the samerespective periodperiods of the prior year. The increaseincreases waswere due to increases in domestic average revenues per order and in the number of domestic title orders closed by the Company’s direct title operations.order. Domestic average revenues per order closed waswere $4,229$4,572 and $4,412 for the three and six months ended MarchJune 31,30, 2026, an increaseincreases of 12.9%17.3% and 15.2% when compared with $3,747$3,897 and $3,831 for the threerespective monthsperiods endedof Marchthe 31,prior 2025,year. whichThe wasincreases in the average revenue per order closed were primarily due to an increase in average revenues per order on commercial and purchase transactions, partially offset by a shift in mix from higher premium purchase transactions to lower premium refinance transactions. The Company’s direct title operations closed 119,900137,300 and 257,200 domestic title orders during the three and six months ended MarchJune 31,30, 2026, a decrease of 0.7% and an increase of 8.8%3.5% when compared with 110,300138,324 and 248,576 domestic title orders closed during the samerespective periodperiods of the prior year, which were generally consistent with the changes in residential mortgage origination activity in the United States as reported in the MBA Forecast. Domestic residential purchaserefinance orders closed per day increased by 12.3% and refinance31.4% and domestic residential purchase orders closed per day decreased by 6.0%3.4% and increased by 56.6%, respectively,4.6% for the three and six months ended MarchJune 31,30, 20262026, respectively, when compared to the samerespective periodperiods of the prior year.

Agent premiums were $759.4$819.7 million and $1.6 billion for the three and six months ended MarchJune 31,30, 2026, anrespectively, increaseincreases of $104.8$103.2 million, or 16.0%,14.4%, and $208.0 million, or 15.2%, when compared with the samerespective periodperiods of the prior year. Agent premiums are recorded when notice of issuance is received from the agent, which is generally when cash payment is received by the Company. As a result, there is generally a delay between the agent’s issuance of a title policy and the Company’s recognition of agent premiums. Therefore, current quarter agent premiums typically reflect prior quarter mortgage origination activity. The increase in agent premiums for the three months ended MarchJune 31,30, 2026 is generally consistent with the 19.1%21.2% increase in the Company’s direct premiums and escrow fees in the fourthfirst quarter of 20252026 as compared with the fourthfirst quarter of 2024.2025.

Information and other revenues were $269.2$295.0 million and $564.2 million for the three and six months ended MarchJune 31,30, 2026, anrespectively, increaseincreases of $33.2$30.7 million, or 14.1%,11.6%, and $63.9 million, or 12.8%, when compared with the samerespective periodperiods of the prior year. The increaseincreases waswere primarily due to revenue growth in the Company’s subservicing business, higher demand for non-insured information products and services and growth in refinance activity in the Company’s Canadian operations.

Net investment income totaled $154.2$164.0 million and $318.2 million for the three and six months ended MarchJune 31,30, 2026, anrespectively, increaseincreases of $16.5$16.9 million, or 12.0%,11.5%, and $33.4 million, or 11.7%, when compared with the samerespective periodperiods of the prior year. The increaseincreases in investment income waswere primarily driven by an increase in interest income from the Company’s investment portfolio and its warehouse lending business.

Net investment lossesgains were $7.6$46.7 million and $3.5$39.1 million for the three and six months ended MarchJune 31,30, 2026 and 2025,2026, respectively. The lossesgains for the three and six months ended MarchJune 31,30, 2026 were primarily attributable to decreasesincreases in the fair values of marketable equity securities. TheNet investment losses of $5.4 million and $8.9 million for the three and six months ended MarchJune 31,30, 20252025, respectively, were primarily attributable to asset impairments.impairments totaling $35.5 million, which were partially offset by increases in the fair values of marketable equity securities.

Personnel costs were $546.4$572.5 million and $1.1 billion for the three and six months ended MarchJune 31,30, 2026, anrespectively, increaseincreases of $61.6$49.5 million, or 12.7%,9.5%, and $111.1 million, or 11.0%, when compared with the samerespective periodperiods of the prior year. The increaseincreases waswere primarily attributable to higher incentive compensation expense due to higher revenue and profitability, and higher salaries andsalaries, employee benefits and payroll tax expenses.

Agents retained $602.2$658.6 million and $1.3 billion of title premiums generated by agency operations for the three and six months ended MarchJune 31,30, 2026, respectively, which compares with $525.5$573.5 million and $1.1 billion for the samerespective periodperiods of the prior year. The percentage of title premiums retained by agents was 79.3%80.3% and 80.3%79.8% for the three and six months ended MarchJune 31,30, 20262026, respectively, compared to 80.0% and 2025,80.2% respectively.for the respective periods of the prior year.

Other operating expenses were $277.4$319.0 million and $596.4 million for the three and six months ended MarchJune 31,30, 2026, anrespectively, increaseincreases of $31.0$41.2 million, or 12.6%,14.8%, and $72.2 million, or 13.8%, when compared with the samerespective periodperiods of the prior year. The increaseincreases waswere primarily due to higher production expenses on higher volumes,volumes increasesand an increase in software andexpense. travelThe expenses,increase andfor the six months ended June 30, 2026, was also due to the lack of a prior year credit related to the release of an acquisition-related incentive obligation, partially offset by a reduction in legal expense.

The provision for policy losses and other claims, expressed as a percentage of title insurance premiums and escrow fees, was 3.0% for the three and six months ended MarchJune 31,30, 2026 and 2025. The 3.0% loss provision rate for the three and six months ended MarchJune 31,30, 2026 reflects an ultimate loss rate of 3.75% for the 2026 policy year and reserve releases of 0.75%, or $9.9$11.3 million and $21.2 million, respectively, for prior policy years, all based on title insurance premiums and escrow fees for the three and six months ended MarchJune 31,30, 2026. The 3.0% loss provision rate for the three and six months ended MarchJune 31,30, 2025 reflected an ultimate loss rate of 3.75% for the 2025 policy year and reserve releases of 0.75%, or $8.4$9.9 million and $18.3 million, respectively, for prior policy years, all based on title insurance premiums and escrow fees for the three and six months ended MarchJune 31,30, 2025.

Depreciation and amortization expense was $53.1$52.3 million and $105.4 million for the three and six months ended MarchJune 31,30, 2026, anrespectively, increaseincreases of $1.9$0.7 million, or 3.7%,1.4%, and $2.6 million, or 2.5%, when compared with the samerespective periodperiods of the prior year. The increaseincreases waswere primarily due to higher amortization of capitalized internal-use software from recently deployed digital settlement products.products and higher amortization of internal-use software licenses.

Premium taxes were $20.0$20.6 million and $40.6 million for the three and six months ended MarchJune 31,30, 2026, anrespectively, increaseincreases of $3.7$2.6 million, or 22.7%,14.4%, and $6.3 million, or 18.4%, when compared with the samerespective periodperiods of the prior year. Premium taxes as a percentage of title insurance premiums and escrow fees were 1.5%1.4% for the three and six months ended MarchJune 31,30, 2026 and 2025.2025, respectively.

Interest expense was $26.7$30.4 million and $57.1 million for the three and six months ended MarchJune 31,30, 2026, anrespectively, increaseincreases of $6.7$7.6 million, or 33.5%,33.3%, and $14.3 million, or 33.4%, when compared with the samerespective periodperiods of the prior year. The increaseincreases waswere primarily attributable to higher interest expense on depositor funds and higher interest paid in the Company’s warehouse lending business and higher interest paid on depositor funds.business.

Pretax margins for the title insurance business reflect the high cost of performing the essential services required before insuring title, whereas the corresponding revenues are subject to regulatory and competitive pricing restraints. Due to the relatively high proportion of fixed costs in the title insurance business, pretax margins generally improve as closed order volumes increase. Pretax margins for the segment are also impacted by (1) net investment income and net investment gains or losses, which may not move in the same direction as closed order volumes, (2) the composition (residential or commercial) and type (resale, refinancing or new construction) of real estate activity and (3) the percentage of title insurance premiums generated by agency operations as margins from direct operations are generally higher than from agency operations due primarily to the large portion of the premium that is retained by the agent. The title insurance and services segment recorded pretax margins of 9.6%15.7% and 7.2%12.9% for the three and six months ended MarchJune 31,30, 20262026, respectively, compared with 12.6% and 2025,10.1% respectively.in the respective periods of the prior year.

Direct premiums were $103.1$104.8 million and $207.9 million for the three and six months ended MarchJune 31,30, 2026, anrespectively, increaseincreases of $1.5$1.1 million, or 1.5%,1.1%, and $2.6 million, or 1.3%, when compared with the samerespective periodperiods of the prior year. The increaseincreases waswere primarily attributable to an increase in the average price per policy.

Personnel costs and other operating expenses totaled $44.3$45.3 million and $89.6 million for the three and six months ended June 30, 2026, respectively, increases of $2.7 million, or 6.3%, and $4.0 million, or 4.7%, when compared with the respective periods of the prior year. The increases were primarily attributable to higher advertising, software, salary and incentive compensation expenses. The increase for the three months ended MarchJune 31,30, 2026, an increase of $1.3 million, or 3.0%, when compared with the same period of the prior year. The increase2026 was primarilyalso attributabledue to higher softwarepostage expenses, deferred acquisition costs, and salaries and severance expenses.expense.

The provision for home warranty claims,losses, expressed as a percentage of home warranty premiums, was 36.1%39.8% and 37.1%38.0% for the three and six months ended MarchJune 31,30, 20262026, respectively, compared with 41.3% and 2025,39.2% respectively.for the respective periods of the prior year. The decreasedecreases in the claimsloss rateprovision wasrates were primarily attributable to lower claims severityfrequency, andpartially loweroffset numberby ofhigher claims.claims severity.

A large part of the revenues for the home warranty segment are generated by renewals and are not dependent on the level of real estate activity in the year of renewal. With the exception of the provision for losses, the majority of the expenses for this segment are variable in nature and, therefore, generally fluctuate with revenue. Accordingly, pretax margins (before provision for losses) are relatively constant, although, as a result of some fixed expenses, profit margins (before provision for losses) should nominally improve as premium revenues increase. Pretax margins are also impacted by net investment income and net investment gains or losses, which may not move in the same direction as premium revenues. The home warranty segment recorded pretax margins of 23.5%21.3% and 22.9%22.4% for the three and six months ended MarchJune 31,30, 20262026, respectively, compared with 20.2% and 2025,21.6% respectively.in the respective periods of the prior year.

PersonnelNet costsinvestment and other operating expensesincome totaled $10.6$18.4 million and $10.9$15.3 million for the three and six months ended MarchJune 31,30, 20262026, respectively, compared with $12.0 million and 2025,$8.6 respectively. The decreasemillion in the currentrespective yearperiods wasof the prior year. The increases were primarily attributable to lowerfluctuations returnsin earnings on participant investments withinassociated with the Company’s deferred compensation plan.

The Company’s inter-segment eliminations were not material for the three and six months ended MarchJune 31,30, 2026 and 2025.

The Company’s effective income tax rates (income tax expense as a percentage of income before income taxes) were 22.9% and 22.6%22.8% for the three and six months ended MarchJune 31,30, 20262026, respectively, compared with 24.6% and 2025,24.0% respectively.for the respective periods of the prior year. The differences in the effective tax rates are primarily due to the impact on state income taxes resulting from the relative proportion of income derived from the Company’s insurance and non-insurance businesses as well as permanent differences between amounts reported for financial statement purposes and amounts reported for income tax purposes.

Net income for the three and six months ended MarchJune 31,30, 2026 and 2025 was $124.8$219.1 million and $74.8$343.9 million, respectively.respectively, compared with $147.1 million and $221.9 million for the respective periods of the prior year. Net income attributable to the Company for the three and six months ended MarchJune 31,30, 2026 and 2025 was $125.1$218.5 million, or $1.21$2.12 per diluted share, and $74.2$343.6 million, or $0.71$3.33 per diluted share, respectively.respectively, compared with $146.1 million, or $1.41 per diluted share, and $220.3 million, or $2.12 per diluted share, for the respective periods of the prior year.

Cash provided by operating activities totaled $5.6$362.2 million and cash used for operating activities totaled $52.8$309.0 million for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively, after claim payments, net of recoveries, of $77.7$180.3 million and $76.3$164.5 million, respectively. The principal nonoperating uses of cash and cash equivalents for the threesix months ended MarchJune 31,30, 2026 and 2025 were advances and repayments related to secured financing transactions, purchases of debt and equity securities, dividends to common stockholders, capital expenditures and repurchases of company common shares. The principal nonoperating sources of cash and cash equivalents for the threesix months ended MarchJune 31,30, 2026 and 2025 were borrowings and collections related to secured financing transactions, proceeds from the sales and maturities of debt and equity securities and increases in the deposit balances at the Company’s banking operations. The net effect of all activities on cash and cash equivalents were increases of $1.0$1.2 billion and $327.0$313.1 million for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively.

The Company continually assesses its capital allocation strategy, including decisions relating to dividends, stock repurchases, capital expenditures, acquisitions and investments. In MarchJune 2026, the Company paid a first quarter cash dividend of 55 cents per common share. Management expects that the Company will continue to pay quarterly cash dividends at or above the current level. The timing, declaration and payment of future dividends, however, falls within the discretion of the Company’s board of directors and will depend upon many factors, including the Company’s financial condition and earnings, the capital requirements of the Company’s businesses, restrictions imposed by applicable law and any other factors the board of directors deems relevant from time to time.

The Company maintains a stock repurchase plan with authorization up to $300 million of the Company’s common stock, of which $266.5$246.0 million remained as of MarchJune 31,30, 2026. Purchases may be made from time to time by the Company in the open market at prevailing market prices or in privately negotiated transactions. During the threesix months ended MarchJune 31,30, 2026, the Company repurchased and retired 0.60.9 million shares of its common stock for a total purchase price of $33.5$54.0 million.

Holding Company. First American Financial Corporation is a holding company that conducts all of its operations through its subsidiaries. The holding company’s current cash requirements include payments of principal and interest on its debt, taxes, payments in connection with employee benefit plans, dividends on its common stock and other expenses. The holding company is dependent upon dividends and other payments from its operating subsidiaries to meet its cash requirements. The Company’s target is to maintain a cash balance at the holding company equal to at least twelve months of estimated cash requirements. At certain points in time, the actual cash balance at the holding company may vary from this target due to, among other factors, the timing and amount of cash payments made and dividend payments received. Pursuant to insurance and other regulations under which the Company’s insurance subsidiaries operate, the amount of dividends, loans and advances available to the holding company is limited, principally for the protection of policyholders. As of MarchJune 31,30, 2026 under such regulations, the maximum amount available to the holding company from its insurance subsidiaries for the remainder of 2026, without prior approval from applicable regulators, was dividends of $420.4$427.8 million and loans and advances of $113.6 million. However, the timing and amount of dividends paid by the Company’s insurance subsidiaries to the holding company falls within the discretion of each insurance subsidiary’s board of directors and will depend upon many factors, including the level of total statutory capital and surplus required to support minimum financial strength ratings by certain rating agencies. Such restrictions have not had, nor are they expected to have, an impact on the holding company’s ability to meet its cash obligations.

As of MarchJune 31,30, 2026 the holding company’s sources of liquidity included $251.5$239.4 million of cash and cash equivalents and $900.0 million available on the Company’s revolving credit facility. Management believes that liquidity at the holding company is sufficient to satisfy anticipated cash requirements and obligations for at least the next twelve months.

Financing. The Company maintains a senior unsecured credit agreement with JPMorgan Chase Bank, N.A., in its capacity as administrative agent, and the lenders party thereto that provides for a $900.0 million revolving credit facility. The credit agreement includes an expansion option that permits the Company, subject to satisfaction of certain conditions, to increase the revolving commitments and/or add term loan tranches in an aggregate amount not to exceed $450.0 million. The obligations of the Company under the credit agreement are neither secured nor guaranteed. Proceeds from borrowings made from time to time under the credit agreement may be used for general corporate purposes. Unless terminated earlier, the credit agreement will terminate on May 17, 2028. At MarchJune 31,30, 2026, the Company had no outstanding borrowings under the facility.

FirstFunding, Inc., a specialized warehouse lender to correspondent mortgage lenders, maintains secured warehouse lending facilities with several banking institutions. At MarchJune 31,30, 2026, outstanding borrowings under these facilities totaled $1.1$1.0 billion.

First American Trust, FSB (“FA Trust”), a federal savings bank, maintains a secured line of credit with the Federal Home Loan Bank and maintains access to the Federal Reserve's Discount Window. At MarchJune 31,30, 2026, no amounts were outstanding under any of these facilities.

First Canadian Title Company Limited, a Canadian title insurance and services company, maintains credit facilities with certain Canadian banking institutions. At MarchJune 31,30, 2026, no amounts were outstanding under these facilities.

The Company’s debt to capitalization ratios were 32.2%31.4% and 30.7% at MarchJune 31,30 2026 and December 31, 2025, respectively. The Company’s adjusted debt to capitalization ratio,ratios, excluding secured financings payable of $1.1$1.0 billion and $906.5 million at MarchJune 31,30, 2026 and December 31, 2025, respectively,were was21.5% 21.9%.and 21.9%, respectively.

Investment Portfolio. The Company maintains a high quality, liquid investment portfolio that is primarily held at its insurance and banking subsidiaries. As of MarchJune 31,30, 2026, 95% of the Company’s investment portfolio consisted of debt securities, of which 72%73% were either United States government-backed or rated AAA and 98% were either rated or classified as investment grade or better. Percentages are based on the estimated fair values of the securities. Credit ratings reflect published ratings obtained from globally recognized securities rating agencies. If a security was rated differently among the rating agencies, the lowest rating was selected. For further information on the credit quality of the Company’s debt securities portfolio at MarchJune 31,30, 2026, see Note 3 Debt Securities to the condensed consolidated financial statements.

Off-balance sheet arrangements. The Company administers escrow deposits as a service to customers in its direct title operations. Escrow deposits totaled $10.5$12.2 billion and $9.3 billion at MarchJune 31,30, 2026 and December 31, 2025, respectively, of which $4.1$4.9 billion and $3.7 billion, respectively, were held at FA Trust. The remaining deposits were held at third-party financial institutions. Escrow deposits held at third-party financial institutions are not considered assets of the Company and, therefore,and are not included in the accompanying condensed consolidated balance sheets. All such amounts are placed in deposit accounts insured, up to applicable limits, by the Federal Deposit Insurance Corporation. The Company could be held contingently liable for the disposition of these assets.

Trust assets administered by FA Trust totaled $5.8$6.0 billion and $5.6 billion at MarchJune 31,30, 2026 and December 31, 2025, respectively, of which $243.8$196.8 million and $173.9 million, respectively, were held at FA Trust. The remaining trust assets were held at third-party financial institutions. Trust assets administered by FA Trust and held at third-party institutions are fiduciary client assets,assets whichthat are not considered assets of the Company and, therefore,and are not included in the accompanying condensed consolidated balance sheets. The Company could be held contingently liable if FA Trust were to breach any of its fiduciary duties.

The Company facilitates tax-deferred property exchanges for customers pursuant to Section 1031 of the Internal Revenue Code and tax-deferred reverse exchanges pursuant to Revenue Procedure 2000-37. As a facilitator and intermediary, the Company holds the proceeds from sales transactions and takes temporary title to property identified by the customer to be acquired with such proceeds. Upon the completion of each such exchange, the identified property is transferred to the customer or, if the exchange does not take place, an amount equal to the sales proceeds or, in the case of a reverse exchange, title to the property held by the Company is transferred to the customer. Like-kind exchange funds administered by the Company totaled $2.6$2.8 billion and $2.7 billion at MarchJune 31,30, 2026 and December 31, 2025, respectively, of which $588.3$833.5 million and $93.6 million, respectively, were held at FA Trust. The like-kind exchange deposits held at third-party financial institutions are not included in the accompanying condensed consolidated balance sheets as the proceeds and property are not considered assets of the Company due to the structure utilized to facilitate these transactions. All such amounts are placed in deposit accounts insured, up to applicable limits, by the Federal Deposit Insurance Corporation. The Company could be held contingently liable to the customer for the transfers of property, disbursements of proceeds and the returns on such proceeds.

In conducting its residential mortgage loan subservicing operations, the Company administers cash deposits on behalf of its clients. Cash deposits totaled $2.5$2.2 billion and $1.6 billion at MarchJune 31,30, 2026 and December 31, 2025, respectively, of which $1.7$1.5 billion and $1.0 billion, respectively, were held at FA Trust. The remaining deposits were held at third-party financial institutions. Cash deposits held at third-party financial institutions are not considered assets of the Company and, therefore, are not included in the accompanying condensed consolidated balance sheets. All such amounts are placed in deposit accounts insured, up to applicable limits, by the Federal Deposit Insurance Corporation. The Company could be held contingently liable for the disposition of these assets. In connection with certain accounts, the Company has ongoing programs for realizing economic benefits with various financial institutions whereby it earns economic benefits either as income or as a reduction in expense. TheIn connection with a mortgage loan subservicing agreement, the Company maintains certain debt securities on deposit with a fair value of $54.3$53.8 million at MarchJune 31,30, 2026 for which it has provided a secured interest as collateral in connection with a mortgage loan subservicing agreement.collateral.