FirstAm Delays Split of Business Divisions
The First American Corp., Santa Ana, Calif., is delaying the split of its financial services and information solutions businesses. The company had planned to spin off the financial services business into a new company, which would have taken the First American name back in January.
The announcement came in First American's second-quarter earnings report in which the company said it was profitable; two of its competitors reported second-quarter losses.
Parker S. Kennedy, chairman and chief executive of First American, said the company remains committed to doing the split. "We still firmly believe that splitting our businesses will unlock the unrealized value of the information solutions businesses and strengthen the competitive position of both companies.
However, given the uncertainty in the real estate and mortgage credit markets, we believe it is prudent to delay the split. Our primary focus at this time is expense management, product development and maximizing profitability. We will split the companies when we see more stability in our markets and when the outlook becomes clearer," he said.
First American had net income of $42 million ($0.45 per share), compared with a net loss of $66 million (-$0.68 per share) for the same period last year. However, current results could be revised downward by a possible impairment of $37.3 million related to an investment in a title agent by First American Title Insurance Company.
During the second quarter of 2008, operating revenue in First American's title insurance segment was $1.1 billion, a 25% decrease from the same quarter of 2007. Factors contributing to these results were a decline in the number of title orders closed, a decrease in the average revenue per order closed and the termination of certain agency relationships. (c) 2008 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com/ http://www.sourcemedia.com/