Businessmodel of First American

Customer Segments

First American serves a broad network of clients a diverse portfolio of insurance products related principally to property. The Company’s core customers can be arranged broadly into the following categories:

• Banking and Lending Institutions, comprising mortgage loan originators, banks, and specialist lending institutions;
• Commercial Property Owners, including commercial and corporate owners of properties across multiple business sectors; and
• General Consumers, including residential home owner and renters. According to its annual report, First American provides title insurance policies and other products and services to many of the largest credit institutions in the US, including high-profile names such as Wells Fargo and Company, JPMorgan Chase and Company, US Bancorp, Quicken Loans Inc, and Bank of America Corporation, together with their affiliates.

First American principally serves customers in its home market of the US. The Company, however, also serves an international customers base, including clients in certain international markets.

Value Propositions

First American provides value to its customers in the following ways:

• Its industry standing and reputation, with the Company established as one of the largest and most well-regarded providers of title insurance products and related services in the US, having a positive track record for providing reliable and effective solutions;
• Its financial strength, with the Company controlling substantial financial reserves that provide comfort to its clients and stability to the Company operations enterprise wide;
• Its portfolio of products, with the Company providing a range of title insurance, property insurance, and casualty insurance products, as well as certain related services, that are tailored to suit the needs of each individual client;
• Its accessibility, with the Company providing products and services through multiple channels, including certain online services and third party issued products; and
• Its industry expertise and experience, with the Company employing highly-trained, specialist personnel across its two operating segments, led by a team of experienced industry executives ### Channels

First American operates a website at www.firstam.com, through which it provides information on its products, services, and corporate activities. The Company also operates several online platforms through which customers are able to access certain products, services, resources, and tools. This includes the Company’s myFirstAm, FASTWeb, and AgentNet portals, which facilitate title ordering, order tracking and various other services.

First American operates its own n-house direct sales force, which deals directly with clients around the world. This sales force is organised by geographic region and by product and service line, allowing its personnel to provide a more focused service. First American’s policies and related products and services are distributed via sales representatives located at its various offices across the US, including in major cities such as New York, Los Angeles, Atlanta, and Boston.

First American also provides services through a range of intermediaries, notably its network of independent sales agents located across the US. These agents work closely with the Company in order to ensure quality of service.

Customer Relationships

First American provides a range of services and products to its customers on a self-service basis. The Company’s above-mentioned online platforms allow customers to place title orders, track orders, search records, and calculate fees without interacting directly with members of the Company’s sales and service teams.

First America, however, primarily serves its customers through its dedicated sales and service representatives, who consult directly with clients in order to fully establish their needs and circumstances and provide personalised products and solutions. Its services are typically provided for fixed terms, often spanning multiple years. The Company endeavours to provide effective coverage and services, with a view to encouraging recurring business.

First American provides ongoing care to its customers after sales have been made. Customers are able to contact dedicated support personnel over the phone or via an online contact form in order to obtain personalised responses to queries, complaints, and enquiries. The Company additionally provides certain online support resources, such as guides to submitting claims, as well as news coverage of the Company’s activities.

Alternatively, customers are able to interact directly with representatives of First America, and receive updates on its operations, through its social media accounts, including with Facebook, Twitter, LinkedIn, and YouTube.

Key Activities

First American operates as a holding company. Through its subsidiaries, the Company is engaged in the provision of various financial and insurance services.

The Company operates primarily through two reportable segments: Title Insurance and Services, which issues title insurance policies on residential and commercial property in the US and offers similar or related products to customers in certain international markets; and Specialty Insurance, which issues property and casualty insurance policies and sells home warranty products to customers in the US.

The Company also operates a corporate segment, which consists primarily of certain financing facilities, as well as the corporate services that support the Company’s business operations. First American provides products and services to many of the largest lending institutions in the US, including Wells Fargo and Company, JPMorgan Chase and Company, and US Bancorp.

Key Partners

First American works in conjunctions with various partner companies and organisations around the world in order to provide effective and reliable services. These partners can be organised broadly into the following categories:

• Supplier and Vendor Partners, including suppliers of professional services, equipment, technologies, and tools that are utilised across the Company to ensure its efficient and reliable operations, as well as companies to which certain no-technical functions can be outsourced;
• Channel and Distribution Partners, comprising the Company’s network of independent agents and sales representatives that help to extend the sales and marketing reach of the Company’s in-house sales force;
• Community and Sustainability Partners, including various non-profits and charitable organisations with which the Company collaborates on community and sustainability projects, primarily in the US; and
• Strategic and Alliance Partners, including a range of market leading companies across multiple sectors with which the Company collaborates on various marketing, branding, development, and other joint projects. First American has launched a number of partnerships in recent years. This includes a branding partnership with BrandingBusiness, and a community partnership with Operation HOPE and the National Centre for Human and Civil Rights.

Key Resources

First American’s key resources are its trademarks and intellectual properties, its financial reserves, its online platforms, its IT and communications infrastructure, its sales and distribution channels, its partnerships, and its personnel.

First American owns a number of intellectual properties that are key to its activities, including customer relationships, non-compete agreements, trademarks and patents. Searches of records published by the US Patent and Trademark Office identified a number of patent applications filed in First American’s name, including an application entitled ‘System and method for extracting information from documents’.

First American also owns and leases a number of physical properties, notably including its network of offices across the US.

Cost Structure

First American incurs costs in relation to the development of its intellectual properties, the development of its online platform, the maintenance of its IT and communications infrastructure, the operation of its sales and distribution channels, the implementation of marketing and advertising campaigns, the procurement of professional services, the management of its partnerships, and the retention of its personnel.

In 2015 First American recorded total expenses in the amount of $4.30 billion. This included personnel costs totalling $1.49 billion, premiums retained by agents totalling $1.66 billion, and other operating expenses totalling $745.28 million.

Revenue Streams

First American generates revenue through the sale of various insurance and financial services products, as well as the provision of related services and products. The Company derives revenue in the form of premium payments form its clients, as well as from the sale and refinancing of residential and commercial real estate assets.

In 2015 First American generated revenue for the year in the amount of $5.18 billion, up slightly on the $4.68 billion recorded by the Company in 2014. The bulk of this revenue was generated by the Company’s Title Insurance and Services segment, which alone generated revenue for the year of $4.79 billion.