Title Insurer First American to Exit P/C Insurance with Transfers to Safeco, Heritage

Title insurer First American Financial Corp. reported recently that its property/casualty insurance subsidiaries have entered into book transfer agreements with Safeco Insurance and Heritage Insurance Holdings.

The agreements are the result of the initiation of a process by the company, announced in October of last year, to exit its property/casualty business and to maintain focus on its core business.

First American’s P/C insurance business includes homeowners, condo, landlord, renters, auto and personal umbrella. The business generated $101 million in revenue and a pretax loss of $91.5 million for the first nine months of 2020.

The company is retaining its home warranty business.

In an October call with analysts, CEO Dennis Joseph Gilmore said the P/C insurance business has been a “good business over the years, but it’s been very volatile. It’s a little drag on earnings over the last couple of years. And we’re just going to redeploy back into more of our core business where we have a more consistent higher return profile.”

The agreements provide qualifying First American property/casualty insurance agents and customers an opportunity to transfer their policies to Safeco or, in certain circumstances, Heritage.

“Safeco and Heritage are leaders in book transfer arrangements and have a strong commitment to serving independent agents,” said Gilmore. “These agreements allow us to exit our property and casualty operations, while providing a valuable option for many of our agents and customers to move forward with established and well-respected carriers.”

The company expects the transfer to be completed by the end of the third quarter of 2022.

Merger & Acquisition Services Inc. served as the sole financial advisor to First American Financial Corp.