First American Financial Corporation, through its subsidiaries, provides financial services. It operates through Title Insurance and Services, and Specialty Insurance segments. The Title Insurance and Services segment issues title insurance policies on residential and commercial property, as well as offers related products and services. This segment also provides closing and/or escrow services; accommodates tax-deferred exchanges of real estate; maintains, manages, and provides access to title plant records and images; evidence of title; and offers banking, trust, document custodial, and investment advisory services, as well as provides products, services, and solutions for the use of real property related data designed to mitigate risk or otherwise facilitate real estate transactions. It offers its products through a network of direct operations and agents in 49 states and in the District of Columbia, as well as in Canada, the United Kingdom, Australia, South Korea, and internationally. The Specialty Insurance segment provides property and casualty insurance, including coverage to residential homeowners and renters for liability losses and typical hazards, such as fire, theft, vandalism, and other types of property damage in 47 states. It also sells home warranty products comprising residential service contracts that cover residential systems, such as heating and air conditioning systems, and appliances against failures that occur as the result of normal usage during the coverage period in 39 states and the District of Columbia; and offers auto insurance products. This segment markets its property and casualty insurance products through direct distribution channels, including cross-selling through its existing closing-service activities, as well as through a network of independent brokers. First American Financial Corporation was incorporated in 2008 and is based in Santa Ana, California.
Business Analysis of First American Financial
The Insurance Sector is witnessing a major shakeup, new age business models in the industry are transforming both customers and businesses. Faced with this uncertainity, companies are investing resources to transform their business. An in-depth business analysis is a valuable resource to identify and articulate the need for a business model change. At R&P Research we believe, the starting point for a business analysis is Benchmarking. Business benchmarking can be done at various levels: 1) Industry Benchmarking 2) Peer Benchmarking 3) Disruptors Benchmarking. In this report, we share the snapshot of how First American Financial compares against the industry on the major performance indicators. This analysis, along with peer group/disruptors benchmarking and revenue model understanding can help identify growth and cost optimization opportunities to maximize the value delivered by First American Financial to its stakeholders. R&P Research Industry Intelligence Platform provides historical data for last 15 years with an easy to use benchmarking interface for an in-depth comparative business analysis.
Here is the performance snapshot of First American Financial with an interactive chart.
- Revenue Growth: First American Financial reported a revenue growth of 7.7% year-on-year during 2016. Property & Casualty Insurance Industry grew at 6.6% in the same period
- COGS share of Revenues: As a percentage of revenue, First American Financial spent 8.8% of its total revenues on COGS. Property & Casualty Insurance industry average (COGS share of revenue) in the same period was 65.6%
- R&D share of Revenues: First American Financial R&D share of Revenues details are not available because either company does not share the data or we do not have it
- SG&A share of Revenues: As a percentage of revenue, First American Financial spent 31.5% of its total revenues on Sales, Marketing, and General Administration (SG&A). Property & Casualty Insurance industry average SG&A spending in the same period was 14.9%
- Inventory share of Revenues: First American Financial Inventory share of Revenues details are not available because either company does not share the data or we do not have it
- Accounts Payable share of Revenues: As a percentage of revenue, First American Financial invested 14.2% of its total revenues on Accounts Payable (A/P) Property & Casualty Insurance industry average Accounts Payable investment in the same period was 18.9%
- Accounts Receivable share of Revenues: As a percentage of revenue, First American Financial invested 5.4% of its total revenues on Accounts Receivable (A/R). Property & Casualty Insurance industry average Accounts Receivable investment in the same period was 33.0%
- PP&E share of Revenues: As a percentage of revenue, First American Financial invested 17.9% of its total revenues on Property, Plants, and Equipments (PP&E). Property & Casualty Insurance industry average PPE investment in the same period was 30.9%
- Intangibles share of Revenues: As a percentage of revenue, First American Financial invested 19.7% of its total revenues on Intangibles. Property & Casualty Insurance industry average Intangibles investment in the same period was 29.7%
- Net Margins: First American Financial Net Margins in the year 2016 were 6.2%. Property & Casualty Insurance industry average Net Margins in the same period were 8.2%
Sector and Industry Association of First American Financial
For the purpose of performance benchmarking of a company with a sector or industry average, R&P Research associates every company with one sector and one industry. An industry consists of companies with related/similar business models. A sector comprises of a group of related/similar industries. For high-level analysis purposes, related/similar sectors are grouped into sector groups.
First American Financial is associated with Financials Sector Group, Insurance Sector, and Property & Casualty Insurance Industry.
Insurance sector is comprised of the following industries: Life Insurance; Property & Casualty Insurance; Surety & Title Insurance; Insurance Brokerage; Diversified Insurance. The definitions for each of the industries is as follows:
- Life Insurance industry includes companies engaged principally in life insurance.
- Property & Casualty Insurance industry includes companies engaged principally in accident, fire, automotive, marine, malpractice and other classes of non-life insurance.
- Surety & Title Insurance industry includes companies providing title & surety insurance.
- Insurance Brokerage industry includes insurance brokers and agencies.
- Diversified Insurance industry includes companies with life, health, property & casualty, and reinsurance interests, none of which predominates.
Industry Ranking of First American Financial
With $5.6 billion revenues, First American Financial ranked number 18 of all the companies in the US Property & Casualty Insurance industry. There were a total of 66 public companies in the US Property & Casualty Insurance industry that had revenues greater than $50 million during 2016.
The top-10 companies in the US Property & Casualty Insurance industry by revenues during 2016 were:
Business Model Analysis (BMA) Framework
We use the following framework to assess the business model of a company. Business Model Analysis framework can be used by organizations to articulate growth strategies and identify cost optimization opportunities. Technology and consulting companies can use this framework to identify the value drivers and pain points of their targeted customers. Entrepreneurs can use this framework to understand the language of business and identify promising business opportunities. This framework can be used by any professional aspiring to take up a leadership role to better understand the businesses challenges, articulate growth strategy, and monitor the business improvement requirements for the organization.
- Conduct a holistic benchmarking; to identify and target additional sources of value
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- Get free data, charts, and analysis of First American Financialand its peers on select key performance indicators by clicking the reports provided below