First American Financial Corp (FAF) 2024 Q3 法說會逐字稿

Greetings, and welcome to First American Financial Corporation third-quarter earnings conference call. (Operator Instructions)

您好，歡迎參加第一美國金融公司第三季財報電話會議。（操作員說明）

A copy of today's press release is available on First American's website at www.firstam.com/investors. Please note that this call is being recorded, and we will available for replay from the company's investor website and for a short time by dialing 877-660-6853 or 201-612-7415 and enter the conference ID 13749447.

今天新聞稿的副本可在第一美國公司網站 www.firstam.com/investors 上取得。請注意，本次通話正在進行錄音，我們可以透過公司的投資者網站進行重播，也可以撥打 877-660-6853 或 201-612-7415 並輸入會議 ID 13749447 進行短時間重播。

We will now turn the call over to Craig Barberio, Vice President, Investor Relations, to make an introductory statement. Please go ahead.

我們現在將電話轉給投資者關係副總裁克雷格·巴貝裡奧（Craig Barberio）做介紹性演講。請繼續。

Good morning, everyone, and welcome to First American's earnings conference call for the third quarter of 2024. Joining us today on the call will be our Chief Executive Officer, Ken DeGiorgio; and Mark Seaton, Executive Vice President and Chief Financial Officer.

大家早安，歡迎參加第一美國航空 2024 年第三季財報電話會議。今天加入我們電話會議的將是我們的執行長 Ken DeGiorgio；執行副總裁兼財務長馬克‧西頓 (Mark Seaton)。

Some of the statements made today may contain forward-looking statements that do not relate strictly to historical or current facts. These forward-looking statements speak only as of the date they are made, and the company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.

今天發表的一些聲明可能包含與歷史或當前事實並不嚴格相關的前瞻性聲明。這些前瞻性陳述僅代表截至其作出之日的情況，本公司不承諾更新前瞻性陳述以反映前瞻性陳述作出之日後發生的情況或事件。

Risks and uncertainties exist that may cause results to differ materially from those set forth in these forward-looking statements.

存在的風險和不確定性可能導致結果與這些前瞻性陳述中提出的結果有重大差異。

For more information on these risks and uncertainties, please refer to yesterday's earnings release and the risk factors discussed on our Form 10-K and subsequent SEC filings. Our presentation today also contains certain non-GAAP financial measures that we believe provide additional insight into the operational efficiency and performance of the company relative to earlier periods and relative to the company's competitors.

有關這些風險和不確定性的更多信息，請參閱昨天的收益報告以及我們的 10-K 表格和隨後向 SEC 提交的文件中討論的風險因素。我們今天的演示還包含某些非公認會計原則財務指標，我們認為這些指標可以讓我們更深入地了解公司相對於早期時期以及相對於公司競爭對手的營運效率和績效。

For more details on these non-GAAP financial measures, including presentation with and reconciliation to the most directly comparable GAAP financials, please refer to yesterday's earnings release, which is available on our website at www.firstam.com.

有關這些非 GAAP 財務指標的更多詳細信息，包括與最直接可比的 GAAP 財務數據的列報和調節，請參閱昨天的收益報告，該報告可在我們的網站 www.firstam.com 上獲取。

I would now like to turn the call over to Ken DeGiorgio.

我現在想把電話轉給 Ken DeGiorgio。

Thank you, Craig. In the third quarter, we benefited from measured improvement in market conditions. Our adjusted revenue was up 4%, the first year-over-year growth we've experienced since the second quarter of 2022. And our adjusted earnings per diluted share were $1.34, an increase of 10%.

謝謝你，克雷格。第三季度，我們受惠於市場狀況的明顯改善。我們的調整後營收成長了 4%，這是自 2022 年第二季以來我們首次實現同比成長。調整後每股攤薄收益為 1.34 美元，成長 10%。

Title premiums and escrow revenues were up across all key business lines, but most notably in our commercial division where revenues were up 19%, also the first increase since the second quarter of 2022. Growth in commercial revenue was driven by a sharp increase in the fee per file to which an 80% increase in large transactions contributed.

所有關鍵業務線的產權保費和託管收入均有所增長，但最引人注目的是我們的商業部門，收入增長了 19%，這也是自 2022 年第二季度以來的首次增長。商業收入的成長是由每個文件的費用急劇增加推動的，其中大額交易增加了 80%。

In the purchase market, demand started to pick up late in the quarter with a decline in mortgage rates to around 6% ahead of the Fed's 50 basis points cut in mid-September. Demand, however, softened as mortgage rates backed up 50 basis points soon after the Fed meeting and other factors impacting affordability persisted.

在購買市場，需求在本季末開始回升，在聯準會 9 月中旬降息 50 個基點之前，抵押貸款利率下降至 6% 左右。然而，隨著聯準會會議後抵押貸款利率上升 50 個基點以及其他影響負擔能力的因素持續存在，需求減弱。

As a result, our closed purchase orders per day this quarter declined 2% compared with last year. While continued, albeit moderating, home price appreciation was one of the factors that negatively impacted affordability. It did drive an increase in our average revenue per order and a resulting 3% increase in our purchase revenue.

因此，本季我們的日結採購訂單比去年下降了 2%。雖然房價持續上漲，但有所放緩，但它是對負擔能力產生負面影響的因素之一。它確實推動了我們每個訂單的平均收入的增加，從而使我們的購買收入增加了 3%。

Closed refinance orders were up 12% in the third quarter with transaction activity increasing as the quarter progressed. The improved order flow combined with a higher fee per file resulted in a 20% increase in our refinance revenue.

第三季已結清的再融資訂單增加了 12%，交易活動隨著季度的進展而增加。改進的訂單流加上更高的每個文件費用使我們的再融資收入增加了 20%。

Although our title segment investment income declined this quarter compared with last year, it grew sequentially as we began to realize the benefit of our investment portfolio rebalancing project.

儘管本季我們的產權部門投資收入與去年相比有所下降，但隨著我們開始意識到投資組合再平衡項目的好處，該收入連續增長。

Mark will discuss that in greater detail in his remarks. Our Home Warranty segment delivered an adjusted pre-tax margin of 7.7%, down from 9.3% last year. Though a slight improvement in the claims rate helped the margin, we deliberately increased marketing spend in our direct-to-consumer channel.

馬克將在他的演講中更詳細地討論這一點。我們的家庭保固部門調整後的稅前利潤率為 7.7%，低於去年的 9.3%。儘管索賠率略有改善有助於提高利潤率，但我們還是有意增加了直接面向消費者管道的行銷支出。

This direct-to-consumer investment is expected to drive increased profitability as the lifetime value of new contracts is realized over time. As we've discussed on prior calls, we are committed to developing innovative proprietary technologies that promise to boost our productivity and enhance the customer experience in ways that will create a sustainable competitive advantage.

隨著新合約的生命週期價值隨著時間的推移而實現，這種直接面向消費者的投資預計將提高獲利能力。正如我們在先前的電話會議中所討論的那樣，我們致力於開發創新的專有技術，這些技術有望提高我們的生產力並增強客戶體驗，從而創造可持續的競爭優勢。

We believe however that an opportunity exists to reduce our technology spend without compromising on this commitment by centralizing, standardizing and simplifying our technology operations. We have already implemented certain changes that have reduced costs and we expect to realize additional benefits as we make further progress in this effort.

然而，我們相信，存在一個機會，可以透過集中、標準化和簡化我們的技術運作來減少我們的技術支出，同時又不影響這項承諾。我們已經實施了某些降低成本的變革，並且隨著我們在這方面取得進一步進展，我們預計將實現更多收益。

Turning to the outlook for the remainder of the year. We expect challenging conditions in the purchase market to persist. For the first three weeks of October, our open purchase orders are down 3% though our open resale orders are up 1.4%.

轉向今年剩餘時間的展望。我們預計採購市場的挑戰狀況將持續存在。10 月的前三週，我們的未平倉採購訂單下降了 3%，但我們的未平倉轉售訂單增加了 1.4%。

The refinance market should continue to improve though off a low base. Our refinance business accelerated in the first three weeks of October with open orders up 76%. And we remain optimistic that the commercial business will perform well in the fourth quarter given higher term refinancing demand, continued progress on price discovery and our own robust pipeline of large transactions.

儘管基數較低，但再融資市場應該會繼續改善。我們的再融資業務在 10 月的前三週加速，未平倉訂單增加了 76%。鑑於較高期限的再融資需求、價格發現的持續進展以及我們自身強勁的大型交易管道，我們仍然樂觀地認為商業業務將在第四季度表現良好。

As we indicated last quarter, we expect that modest revenue growth for the full year of 2024 will enable us to achieve title margins similar to what we posted in 2023. We now have stronger conviction in that outcome given the recent performance of our commercial business and the increase in interest income resulting from our portfolio rebalancing project.

正如我們上季度所表示的那樣，我們預計 2024 年全年營收的溫和成長將使我們能夠實現與 2023 年類似的標題利潤率。鑑於我們商業業務最近的表現以及我們的投資組合再平衡項目帶來的利息收入的增加，我們現在對這一結果更有信心。

The first year-over-year growth in revenue in nine quarters that I mentioned earlier coupled with our expectation that affordability challenges will gradually abate also make us cautiously optimistic that we are in the beginning stage of a new cycle that will drive further improvement in 2025.

我之前提到的九個季度以來收入首次同比增長，加上我們對負擔能力挑戰將逐漸減弱的預期，也讓我們謹慎樂觀地認為，我們正處於新周期的開始階段，這將推動2025 年進一步改善。

While we have been operating through a cyclical downturn since the Fed began its historic interest rate hike cycle in early 2022. Our operating strength and strong balance sheet has enabled us to make meaningful investments in our business while maintaining our commitment to return capital to shareholders.

自從聯準會於 2022 年初開始歷史性升息週期以來，我們一直在經歷週期性低迷。我們的營運實力和強大的資產負債表使我們能夠對我們的業務進行有意義的投資，同時保持我們向股東返還資本的承諾。

Since the beginning of 2022 we have repurchased 10 million shares for a total of $574 million at an average price of $57.74 per share. During the same period we have also increased the common stock dividend by 6% to an annual rate of $2.16 per share.

自 2022 年初以來，我們已回購 1,000 萬股股票，總金額為 5.74 億美元，平均價格為每股 57.74 美元。同期，我們也將普通股股息提高了 6%，達到每年每股 2.16 美元。

In closing, I would like to comment on the widespread damage and devastation that the recent hurricanes inflicted across several Southeastern states. Many of our employees and the communities in which they live have endured profound hardships. While we are grateful that all of our people are safe. We know that many now face the difficult task of recovery.

最後，我想對最近颶風在東南部幾個州造成的廣泛破壞和破壞發表評論。我們的許多員工和他們所居住的社區都經歷了深刻的苦難。我們很慶幸我們所有人都安全。我們知道，許多人現在面臨著康復的艱鉅任務。

I want to thank our people for all they have done to lend a hand to those impacted and to reiterate our company's commitment to support our people and their communities.

我要感謝我們的員工為幫助受影響的人所做的一切，並重申我們公司對支持我們的員工及其社區的承諾。

Now I'd like to turn the call over to Mark for a more detailed discussion of our financial results.

現在我想將電話轉給馬克，以便更詳細地討論我們的財務表現。

Thank you, Ken. This quarter we generated a GAAP loss of $1 per diluted share. Our adjusted earnings, which excludes the impact of net investment losses and purchase related amortization was $1.34 per diluted share.

謝謝你，肯。本季度，我們的 GAAP 攤薄每股虧損為 1 美元。我們的調整後收益（不包括淨投資損失和購買相關攤銷的影響）為稀釋後每股 1.34 美元。

During the third quarter we rebalanced our investment portfolio by selling certain debt securities in an unrealized loss position. Our net realized investment losses of $312 million this quarter were primarily due to this rebalancing.

在第三季度，我們透過出售某些未實現虧損的債務證券來重新平衡我們的投資組合。本季我們實現的淨投資損失為 3.12 億美元，主要是由於這種再平衡。

As a result, we expect to save $90 million of cash taxes in the near term and we expect to increase investment income by approximately $67 million per year beginning in Q4 by reinvesting the proceeds in higher-yielding securities. The average duration and credit quality of the portfolio is unchanged as a result of this rebalancing.

因此，我們預計短期內可節省 9,000 萬美元的現金稅，並預計從第四季度開始，透過將收益再投資於高收益證券，每年投資收入將增加約 6,700 萬美元。此次再平衡後，投資組合的平均久期和信用品質都沒有改變。

Turning to our title segment. Revenue was $1.3 billion down 15% compared with the same quarter of 2023. Excluding net investment losses revenue increased 4% from last year. Purchase revenue was up 3% during the quarter all driven by an improvement in our fee per file.

轉向我們的標題部分。營收為 13 億美元，較 2023 年同季下降 15%。不計淨投資損失，營收較去年增長 4%。本季購買收入成長了 3%，這主要得益於我們每個文件費用的提高。

Commercial revenue was $190 million, a 19% improvement over last year. Though our closed commercial orders fell 5% the average revenue per order for commercial transactions surged 23%. Refinance revenue climbed 20% relative to last year. Despite growth in order activity, refinance still accounts for just 5% of our direct revenue.

商業收入為 1.9 億美元，比去年增長 19%。儘管我們已完成的商業訂單下降了 5%，但商業交易的每筆訂單平均收入卻激增了 23%。再融資收入較去年增長 20%。儘管訂單活動有所成長，但再融資仍僅占我們直接收入的 5%。

In the agency business, revenue was $684 million, up 3% from last year. Given the reporting lag in agent revenues of approximately one quarter these results primarily reflect remittances related to Q2 economic activity. Information and other revenues were $242 million during the quarter, up 1% compared with last year due to an uptick in the demand for the company's information products.

代理業務收入為6.84億美元，比去年成長3%。鑑於代理收入的報告落後約四分之一，這些結果主要反映了與第二季經濟活動相關的匯款。由於對公司資訊產品的需求增加，本季資訊和其他收入為 2.42 億美元，比去年增長 1%。

Investment income was $136 million in the third quarter, down $5 million compared with the same quarter last year due to lower average interest-bearing escrow and tax-deferred property exchange balances.

第三季投資收入為1.36億美元，比去年同期減少500萬美元，原因是平均計息託管和遞延稅財產交換餘額下降。

However, our investment income was up $11 million on a sequential basis. As I mentioned earlier we expect our investment portfolio rebalancing to generate approximately $67 million of additional interest income per year beginning in the fourth quarter. We estimate that the third quarter benefited by $8 million related to this initiative as we ramped up fixed income security purchases throughout the quarter.

然而，我們的投資收入則是環比增加了 1,100 萬美元。正如我之前提到的，我們預計從第四季開始，我們的投資組合再平衡每年將產生約 6,700 萬美元的額外利息收入。我們估計，隨著我們在整個季度增加固定收益證券的購買量，第三季將受益於與此計劃相關的 800 萬美元。

We'd like to provide a little more visibility into our investment income line item going forward. In Q4, we now expect between $140 million and $145 million of investment income in the title segment. This includes the full run rate of our portfolio rebalancing projects.

我們希望對未來的投資收入項目提供更多的了解。第四季度，我們預計產權細分市場的投資收入將在 1.4 億至 1.45 億美元之間。這包括我們投資組合再平衡項目的全部運作率。

It also assumes a 25 basis points Fed cut in November and a second 25 basis points cut in December. Based on current average cash and escrow balances, we estimate that each 25 basis points cut in the Fed funds rate will reduce annual investment income in the title segment by $15 million.

它還假設聯準會在 11 月降息 25 個基點，並在 12 月第二次降息 25 個基點。根據目前平均現金和託管餘額，我們估計聯邦基金利率每調低 25 個基點，產權部門的年投資收入將減少 1,500 萬美元。

The provision for policy losses and other claims was $37 million in the third quarter or 3.0% of title premiums and escrow fees unchanged from the prior year. The third quarter rate reflects an ultimate loss rate of 3.75% for the current policy year and a net decrease of $9 million in the loss reserve estimate for prior policy years. Adjusted pre-tax margin in the title segment was 11.6% excluding both net realized losses and purchase-related amortization.

第三季保單損失和其他索賠準備金為 3,700 萬美元，佔產權保費和託管費的 3.0%，與去年持平。第三季的利率反映出目前保單年度的最終損失率為 3.75%，以及先前保單年度的損失準備金估計淨減少 900 萬美元。調整後的標題部門稅前利潤率為 11.6%，不包括已實現淨虧損和與購買相關的攤銷。

Total revenue in our Home Warranty business totaled $111 million, up 2% compared with last year. Pre-tax income in Home Warranty was $9 million down 4% from the prior year. The loss ratio in Home Warranty was 54% down from 55% in 2023 due to lower claim frequency that was partially offset by higher claim severity. Adjusted pre-tax margin in the Home Warranty segment was 7.7% compared to 9.3% last year.

我們的家庭保固業務總收入為 1.11 億美元，比去年成長 2%。家庭保固稅前收入為 900 萬美元，比前一年下降 4%。由於索賠頻率較低，但索賠嚴重程度較高部分抵消了房屋保固損失率，較 2023 年的 55% 下降了 54%。家庭保固部門調整後的稅前利潤率為 7.7%，而去年為 9.3%。

The effective tax rate for the quarter was 28.4%. Excluding the impact of net realized investment losses and purchase related amortization, the tax rate was 20.5% lower than our normalized rate of 24% due to $6 million of research and development and foreign tax credits recognized during the quarter.

該季度的有效稅率為28.4%。排除淨已實現投資損失和購買相關攤銷的影響，由於本季度確認了 600 萬美元的研發和外國稅收抵免，稅率比我們的標準化稅率 24% 低了 20.5%。

Our debt-to-capital ratio as of September 30 was 34.8%. Excluding secured financings payable our debt-to-capital ratio was 26.6%. In September, we raised $450 million in a public offering of 10-year senior notes. $300 million of the proceeds will go toward paying off notes that mature on November 15 of this year.

截至 9 月 30 日，我們的負債與資本比率為 34.8%。不包括應付擔保融資，我們的債務資本比率為 26.6%。9 月，我們透過公開發行 10 年期優先票據籌集了 4.5 億美元。其中 3 億美元的收益將用於償還今年 11 月 15 日到期的票據。

Now I would like to turn the call back over to the operator to take your questions.

現在我想將電話轉回給接線員回答您的問題。

(Operator Instructions)

（操作員說明）

Bose George, KBW.

博斯·喬治，KBW。

Hi, everyone. Good morning. I wanted to start with just a question on margins. In the past, you guys did give ranges for what you thought margins could be. Can you just give us an update where you think where that range is? And what do you see as kind of a normalized margin if home sales sort of get back to some normal level?

大家好。早安.我想從一個關於利潤的問題開始。過去，你們確實給了你們認為的利潤範圍。您能否向我們提供您認為該範圍的最新情況？如果房屋銷售恢復到正常水平，您認為正常化利潤率是多少？

Yeah. Bose thanks for the question. I mean, I'll start by saying as I indicated in my remarks, we've got a strong conviction on our margin outlook for this year, given especially the performance of our commercial business. And we expect further improvement in 2025. But I think, I'm not even sure what a normal market is anymore. I guess what I would say is let's -- we would revisit the margin probably once we see what -- how 2025 shapes out.

是的。博斯感謝您的提問。我的意思是，我首先要說的是，正如我在演講中所指出的那樣，我們對今年的利潤前景充滿信心，特別是考慮到我們商業業務的表現。我們預計 2025 年將有進一步改善。但我認為，我甚至不再確定什麼是正常市場。我想我想說的是，一旦我們看到 2025 年的情況，我們可能會重新審視利潤率。

Okay. Great. And then actually just the comment, I think Ken you mentioned earlier on tech spend. So it sounds like there could be some cost saves. Can you sort of discuss that and tie that into the impact that at the endpoint in instant titling had this quarter. Are those two kind of related in terms of the tech spend?

好的。偉大的。然後實際上只是評論，我想肯你之前提到過關於技術支出的問題。所以聽起來可以省一些成本。您能否對此進行討論，並將其與本季即時標題端點的影響聯繫起來。這兩者在技術支出上是否相關？

Yeah. As I mentioned, we're not going to -- we think there's a real opportunity to reduce tech spend without compromising on any of the innovative work that we've been doing and we are making great progress on. We do think there's an opportunity though to centralize, standardize and simplify and that will bring costs down.

是的。正如我所提到的，我們不會——我們認為有一個真正的機會來減少技術支出，同時又不影響我們一直在做的任何創新工作，並且我們正在取得巨大進展。我們確實認為有機會進行集中化、標準化和簡化，這將降低成本。

In fact, we've already seen some cost reduction in large part at this stage from -- shifting from high-cost outside third parties to in-house developers. And we're in the process of doing a zero-based budgeting review. We're looking at all of our projects and again, looking for opportunities to make ourselves -- make the process more efficient and assess the return on the investments we're making.

事實上，現階段我們已經看到了成本的大幅降低——從高成本的外部第三方轉向內部開發人員。我們正在進行零基預算審查。我們正在審視我們所有的項目，並再次尋找機會讓自己更有效率，並評估我們正在進行的投資回報。

But we're not slowing down. We're not slowing down on our escrow efficiency initiatives. We're not slowing down on Sequoia. And we're going to continue to press ahead and make progress on those initiatives.

但我們並沒有放慢腳步。我們不會放慢我們的託管效率計劃。我們並沒有放慢對紅杉的腳步。我們將繼續推動這些措施並取得進展。

John Campbell, Stephens Inc.

約翰坎貝爾，史蒂芬斯公司

Hey guys, good morning. On the rebalancing efforts so $67 million annualized impact. That's obviously a really good addition to the P&L, so great work there. I'm thinking that this uptick does not have a corresponding effect to interest expense, but I wanted to check on that first.

嘿夥計們，早安。再平衡努力的年化影響為 6,700 萬美元。這顯然是損益表的一個非常好的補充，所以這方面的工作非常出色。我認為這種上升不會對利息支出產生相應的影響，但我想先檢查一下。

Yeah, you got that right, John. No effect.

是的，你說得對，約翰。沒有效果。

Okay. And then it sounds like you guys are, as you mentioned, cautiously optimistic about a turn in the cycle of our beginning stages of a turnaround cycle. I think we typically agree with you guys there. But if we assume enough growth next year with the success ratio is going to actually matter, would you guys expect to manage to that historical success ratio, is it possible you might be able to move a little bit higher than that next year.

好的。正如你所提到的，聽起來你們對週轉週期開始階段的周期轉折持謹慎樂觀的態度。我認為我們通常同意你們的觀點。但是，如果我們假設明年有足夠的成長，而成功率實際上很重要，那麼你們是否期望能夠達到歷史成功率，是否有可能比明年更高一點。

I think in general, John, as a general statement I mean we stand by the 60% target. Of course, there's a lot of differences and a lot of it depends on how much our revenue will grow next year. We've got tailwinds in commercial. We've got tailwinds in purchase.

約翰，我認為總的來說，作為一般性聲明，我的意思是我們堅持 60% 的目標。當然，存在著許多差異，很大程度上取決於我們明年的收入成長多少。我們在商業方面有順風車。我們在購買方面有順風車。

We've got tailwinds in refi. We've got tailwinds in investment income. And so, if there's, in theory, if there's small changes in revenue, then you get some funky outcomes with success ratio. But if revenue grows more than let's say 5% or so, then I think the success ratio really comes into play. And so, we stand by that at least heading into next year.

我們在再融資方面有順風。我們在投資收入方面有順風車。因此，從理論上講，如果收入發生微小變化，那麼您會得到一些成功率的奇怪結果。但如果收入成長超過 5% 左右，那麼我認為成功率才真正發揮作用。因此，我們至少在明年之前堅持這一點。

Okay, that's great. If I could squeeze in one more. I'm just curious about the direct-to-consumer efforts within Home Warranty. If maybe you could size up the higher marketing spend. I don't know, if you can maybe talk to the LTV-to-CAC framework. And then, just maybe more broadly the long-term opportunity you see for Home Warranty.

好的，太好了。如果我能再擠進一張就好了。我只是對家庭保固中直接面向消費者的努力感到好奇。也許您可以衡量一下更高的行銷支出。我不知道您能否談談 LTV-to-CAC 框架。然後，也許更廣泛地說，您看到了家庭保固的長期機會。

Yeah. As I mentioned, we made an investment this quarter. We've made investments in the past on direct-to-consumer spend. And we're opportunistic about when we make that. Obviously, there's the costs associated with generating leads and the conversion rates from those leads factor in.

是的。正如我所提到的，我們本季進行了投資。我們過去在直接面向消費者的支出上進行了投資。當我們做到這一點時，我們會投機取巧。顯然，存在與產生潛在客戶相關的成本以及這些潛在客戶的轉換率。

But we think that fundamentally, it's a good investment over the long term. But it takes a year or so to realize the value of those investments. So it's early days for us to realize the value and comment on the value of the recent investments we've made in DTC. But we look at it very, very carefully and we think it makes -- we think it's at least at this point given the current pricing of these leads it's prudent to continue investing in.

但我們認為從根本上來說，從長遠來看，這是一項很好的投資。但需要一年左右的時間才能實現這些投資的價值。因此，我們現在就意識到 DTC 近期投資的價值並對其進行評論還為時過早。但我們非常非常仔細地看待它，我們認為至少在這一點上，考慮到這些線索的當前定價，繼續投資是謹慎的。

Okay. And if I could just squeeze in one more. On the -- I guess how you gauge success in that venture. I mean is it -- do you think it's meaningful enough where it will kind of turbocharge or supercharge growth over the next couple of years?

好的。如果我能再擠進一顆就好了。關於——我猜你如何衡量那次冒險的成功。我的意思是——你認為這是否足夠有意義，它將在未來幾年內推動成長？

Are you talking about in the direct-to-consumer channel in Home Warranty?

您指的是家庭保固中的直接面向消費者的管道嗎？

Right.

正確的。

We think that's where the opportunity is particularly given that the purchase market is under such pressure. So in our real estate channel where we're selling through real estate agents in connection with home transactions given the pressure in that market, we think there's real opportunity in the direct-to-consumer channel.

我們認為，考慮到採購市場面臨如此大的壓力，這就是特別有機會的地方。因此，在我們的房地產管道中，考慮到市場的壓力，我們透過房地產經紀人進行與房屋交易相關的銷售，我們認為直接面向消費者的管道存在真正的機會。

Keeping in mind, there's a lot of open space in the Home Warranty business. Not many homes have home warranties on them. So, there's a we don't have to go chase down customers from our competitors in order to realize a competitive advantage in that business because there's a lot of open space.

請記住，家庭保固業務有很多開放空間。沒有多少房屋有房屋保固。因此，我們不必為了在該業務中實現競爭優勢而追逐競爭對手的客戶，因為有許多開放空間。

Okay, great. Thanks guys.

好的，太好了。謝謝你們。

Terry Ma, Barclays.

馬特里，巴克萊銀行。

Sorry, I was on mute. Thank you. Good morning. So, it seems like the reinvestment of the repositioning of the investment portfolio the $67 million benefit will mostly just kind of offset the first 50 basis point rate cut and then the two more anticipated ones. Is that a fair way to kind of think about it?

抱歉，我當時處於靜音狀態。謝謝。早安.因此，投資組合重新定位的再投資似乎將帶來 6,700 萬美元的收益，這將在很大程度上抵消第一次 50 個基點的降息，然後是兩個更預期的降息。這是一種公平的思考方式嗎？

And then as we kind of look forward to 2025 are there any other actions that you can kind of take to optimize or get more out of your investment portfolio to maybe offset any additional rate cuts?

然後，當我們展望 2025 年時，您是否可以採取任何其他行動來優化或從您的投資組合中獲得更多收益，以抵消任何額外的降息？

First of all, Terry, yeah, that's the right way to think about it. I mean for every 25 basis points in the Fed funds rate, right now given where our current balances are, we expect a $15 million reduction in investment income. So, really the $67 million benefit we're going to get will basically fund at least 4-plus Fed cuts.

首先，特里，是的，這是正確的思考方式。我的意思是，鑑於我們目前的餘額，聯邦基金利率每上升 25 個基點，我們預計投資收入將減少 1,500 萬美元。因此，實際上我們將獲得的 6,700 萬美元福利基本上將為聯準會至少 4 次以上的降息提供資金。

Now, there's a lot of other factors too. I mean one thing that could offset that is if we have rising commercial volumes next year and purchase volumes that will generate additional investment income and that could insulate some of these Fed cuts that might come our way next year. So, that's kind of how we think about our investment income.

現在，還有很多其他因素。我的意思是，可以抵消這一影響的一件事是，如果我們明年的商業量和採購量不斷增加，這將產生額外的投資收入，並且可以避免明年可能出現的聯準會降息。所以，這就是我們對投資收益的看法。

Got it. Okay, that's helpful. And then any other color you can provide on what you're seeing in commercial so far this quarter? Anything that kind of gives you confidence that the momentum you saw in the third quarter will continue?

知道了。好的，這很有幫助。那麼，對於本季迄今為止在廣告中看到的內容，您可以提供任何其他顏色嗎？有什麼能讓您相信第三季看到的勢頭將持續下去嗎？

Yeah. Well, I think the -- thanks for the question Terry. I think -- really I think the results we saw in the third quarter are one of the biggest indicators. I mean to have the first year-over-year increase in revenue in our commercial business is a real positive indicator.

是的。嗯，我想──謝謝特里提出的問題。我認為——實際上，我認為我們在第三季看到的結果是最大的指標之一。我的意思是，我們的商業業務收入首次同比增長是一個真正的積極指標。

We're seeing strong demand in the business. We're seeing a lot of progress on price discovery. And then we have and our own pipeline of deals give us a lot of confidence. And then for the first three weeks of October we've actually seen an increase in revenue as well. So, we feel pretty good. Obviously, things can change it's a volatile market, but we feel pretty good about the rest of the year in our commercial business.

我們看到業務需求強勁。我們看到價格發現方面取得了巨大進展。然後我們自己的交易管道給了我們很大的信心。在十月的前三週，我們實際上也看到了收入的成長。所以，我們感覺很好。顯然，事情可能會改變這是一個動盪的市場，但我們對今年剩餘時間的商業業務感覺非常好。

That's helpful. Thank you.

這很有幫助。謝謝。

Mark DeVries, Deutsche Bank.

馬克‧德弗里斯，德意志銀行。

Yeah. Thanks. First question on the securities reposition, is there more that you might look to do in 2025 or are you kind of positioned now the way you want to be?

是的。謝謝。關於證券重新定位的第一個問題，您在 2025 年是否會考慮做更多的事情，或者您現在的定位是否符合您想要的方式？

We -- I would say the bulk of it is done. There is still some that we could do that we're considering. But the scope of that the most would be about $100 million of losses. And we haven't really decided if we're going to do that yet. But that would be the scope of it; most of it has been done.

我們——我想說大部分工作已經完成。我們仍在考慮一些可以做的事情。但損失最大的範圍約為 1 億美元。我們還沒有真正決定是否要這樣做。但這就是它的範圍；大部分工作已經完成。

Okay. And then I think you alluded to some potential offsets on investment income from higher commercial and or purchase. Can you help us think through which is more impactful, if either one is, in terms of like incremental volume from commercial versus purchase?

好的。然後我認為您提到了更高的商業和/或購買對投資收入的一些潛在抵消。您能否幫助我們思考一下，就商業與購買帶來的增量而言，哪一個更有影響力（如果其中之一是）？

In terms of investment income, commercial is more valuable to us. I mean just because the deals are larger in size, they typically take longer to close than a residential purchase transaction typically, so we hold the deposits longer.

從投資收益來看，商業對我們來說更有價值。我的意思是，由於交易規模較大，它們通常比住宅購買交易需要更長的時間才能完成，因此我們持有存款的時間更長。

And we estimate that -- it fluctuates, but I would say the rule of thumb is that about 60% of our escrow deposits at the company are commercial real estate, but commercial is a big driver in terms of what our escrow deposits are.

我們估計——它會波動，但我想說的經驗法則是，我們在公司的託管存款中約 60% 是商業房地產，但就我們的託管存款而言，商業房地產是一個很大的推動因素。

Okay. Got it. And then just last question. Are you seeing any signs that efforts by certain lenders to kind of use AOLs as an alternative title is gaining traction in the market?

好的。知道了。然後是最後一個問題。您是否看到任何跡象表明某些貸方使用 AOL 作為替代標題的努力正在市場上獲得關注？

I think we've seen probably a slight tick-up in usage of AOLs, but it's pretty small. And I think fundamentally, I think when lenders and others realize that AOLs are not -- they're not faster, for an attorney to write an opinion, it actually is a lot slower than underwriting a title policy.

我認為我們已經看到 AOL 的使用量略有上升，但幅度很小。我認為從根本上來說，當貸款人和其他人意識到 AOL 並不——他們並不更快時，律師撰寫意見的速度實際上比承保產權保單要慢得多。

They're not better because of coverage limitations, fraud, having to sue your lawyer for malpractice. And given the loan-level price adjustments that often accompany an AOL, they're not cheaper. So I think that we might see some -- continue to see some slight take-up on AOLs, but so far, it hasn't been too meaningful.

它們並沒有因為承保範圍限制、詐欺、不得不起訴律師的不當行為而變得更好。考慮到美國在線通常會進行貸款級別的價格調整，它們並不便宜。所以我認為我們可能會看到一些——繼續看到美國在線的一些輕微的採用，但到目前為止，這還沒有太大意義。

Got it. And ALTA obviously is making quite an effort in DC to kind of educate policymakers around the value of title versus AOLs. Ken, any sense on how much traction they're getting and how effective they are in kind of moving perceptions?

知道了。顯然，ALTA 在華盛頓做出了相當大的努力，讓政策制定者了解產權與 AOL 的價值。肯，你知道他們獲得了多大的吸引力以及他們在改變人們的看法方面有多有效嗎？

Well, I think the telltale sign will be what happens the election. But I think there's been a lot of -- they've gotten some traction with AOLs and title waivers and other alternatives in the administration. But there's been a lot of pushback with -- from regulators and legislators, including members of Congress. I think our trade group has done a good job.

嗯，我認為最能說明問題的跡象就是選舉中發生的事情。但我認為有很多——他們已經通過美國在線、頭銜豁免和政府的其他替代方案獲得了一些支持。但來自監管機構和立法者（包括國會議員）的強烈反對。我認為我們的貿易小組做得很好。

And I think that, frankly, legislators and regulators themselves have already appreciated -- already had appreciated the value of title insurance relative to these alternatives. So we've got to remain ever vigilant and continue to get out the message on the value of title insurance. And I think, frankly, that we're -- the industry is winning that battle.

坦白說，我認為立法者和監管者本身已經認識到產權保險相對於這些替代方案的價值。因此，我們必須始終保持警惕，並繼續傳達有關產權保險價值的訊息。坦白說，我認為我們行業正在贏得這場戰鬥。

Mark Hughes, Truist Securities.

馬克休斯，Truist 證券公司。

Yeah. Thank you. Good morning. On the commercial side, any particular end-markets or property types where you're seeing the price discovery proceed? Or you talked about a healthy pipeline of larger transactions, any more on the mix of that?

是的。謝謝。早安.在商業方面，您看到價格發現正在進行的任何特定終端市場或房地產類型？或者您談到了大型交易的健康管道，還有更多有關這方面的內容嗎？

Yeah. We're seeing price discovery, and a lot of this is anecdotal, but we're seeing it across the board. Obviously, the one asset class that continues to struggle, as you'd expect, is office, particularly CBD office. Suburban office is probably doing a little better.

是的。我們看到了價格發現，其中許多都是軼事，但我們看到的是全面的。顯然，如您所料，繼續陷入困境的資產類別是辦公室，尤其是中央商務區的辦公室。郊區辦公室的情況可能會好一點。

But the one thing I'll point out, that the nice thing about our commercial business markets, we're pretty diversified. We have a strong presence in all asset classes. So we're not buffeted for better or for worse by any one asset class. We're in the mall and we're in the mall pretty deep.

但我要指出的一件事是，我們的商業市場的好處是我們相當多元化。我們在所有資產類別中都擁有強大的影響力。因此，我們不會受到任何一種資產類別的影響，無論好壞。我們在商場裡，而且我們在商場裡很深。

Yeah. When you see kind of an uptick in the size of transactions like this, is it just the normal variability, or were these deals that are hanging on the sidelines waiting for a little better interest rate environment? What do we make of that?

是的。當您看到這樣的交易規模上升時，這只是正常的波動，還是這些交易處於觀望狀態，等待利率環境好一點？我們對此有何看法？

It's a hard thing to determine in terms of what our future fee per file is. I mean year-to-date through June, our commercial revenue was down 2% and we just saw it surge here 19% in Q3. And so sometimes those things are difficult to forecast. But we're seeing broad-based strength, and as Ken said, we're really optimistic heading into Q4.

確定我們未來每個文件的費用是多少是一件很難的事情。我的意思是，從年初至今到 6 月份，我們的商業收入下降了 2%，而第三季我們的商業收入激增了 19%。所以有時這些事情很難預測。但我們看到了廣泛的實力，正如肯所說，我們對進入第四季非常樂觀。

But we don't really know what our fee per file is until we get the deals in the door on the open size, and then we can somehow predict. But predicting anything further than a quarter is tough to do in commercial, in terms of the fee per file.

但我們並不真正知道每個文件的費用是多少，直到我們獲得公開尺寸的交易，然後我們才能以某種方式進行預測。但就每個文件的費用而言，在商業領域很難預測超過四分之一的內容。

Yeah. Anything on the CFPB front from a regulatory perspective? Anything there?

是的。從監管角度來看，CFPB 方面有何進展？那裡有什麼嗎？

We haven't heard much on the CFPB front. I don't think they've forgotten. And I think we'll probably, as I mentioned in response to the earlier question, I think after the election, we may see a tick-up in activity with the CFPB. But that the RFI is still out there, our industry responded to it. But we've -- I think for now, they're focused on other areas, but I don't think for a minute that they've forgotten.

我們還沒有聽到太多關於 CFPB 方面的消息。我認為他們沒有忘記。我認為，正如我在回答之前的問題時提到的那樣，我認為選舉之後，我們可能會看到 CFPB 的活動增加。但 RFI 仍然存在，我們的行業對此做出了回應。但我們——我認為目前他們專注於其他領域，但我認為他們一刻也沒有忘記。

Yeah. Okay. Thank you very much.

是的。好的。非常感謝。

Geoffrey Dunn, Dowling & Partners.

傑弗瑞‧鄧恩 (Geoffrey Dunn)，道林合夥人事務所。

Thanks. Good morning. Given the change in the sales approach in Home Warranty, can you talk a bit about how you think about the strategic value of the platform to the company?

謝謝。早安.鑑於Home Warranty銷售方式的變化，您能否談談您如何看待該平台對公司的策略價值？

Yeah. And I wouldn't say it's a change in the sales platform. I think it's an evolution. And some of -- one competitor, in particular, I think, has been pretty aggressive with it, has done a good job with DTC. But we've working on it -- we've been working on it too. And I think we're just ramping up the investment.

是的。我不會說這是銷售平台的變化。我認為這是一種進化。我認為，其中一些競爭對手在 DTC 方面表現得非常出色，尤其是其中一家競爭對手。但我們一直在努力——我們也一直在努力。我認為我們只是在增加投資。

So I call it more of an evolution than a change. We like the business. I mean, it's furthest -- it's clearly furthest from our core title and settlement business, but we like it. We think there's a lot of opportunity in it, particularly given what I, as I mentioned earlier, how under penetrated the market is.

所以我稱之為進化而不是改變。我們喜歡這個行業。我的意思是，它是最遠的——它顯然距離我們的核心產權和結算業務最遠，但我們喜歡它。我們認為其中存在著許多機會，特別是考慮到我之前提到的市場滲透率有多低。

And then even though the real estate channel of that business is suffering right now alongside the purchase business and the title company, for example, I think once the purchase market turns around, and it will turn around, I think that our expertise and deep penetration in the real estate market and the real estate channel is going to be helpful for that business as well.

然後，即使該業務的房地產管道現在與購買業務和產權公司一起受到影響，例如，我認為一旦購買市場好轉，它就會好轉，我認為我們的專業知識和深度滲透房地產市場和房地產管道也將對該業務有所幫助。

Alright, thank you.

好的，謝謝。

(Operator Instructions) There are no additional questions at this time. That concludes this morning's call. If you'd like to remind listeners that today's call will be available for replay on company's website or by dialing 877-660-6853 or 201-612-7415 and enter the conference ID 13749447.

（操作員說明） 目前沒有其他問題。今天早上的電話會議到此結束。如果您想提醒聽眾，今天的電話會議可以在公司網站上重播，或撥打 877-660-6853 或 201-612-7415 並輸入會議 ID 13749447。

The company would like to thank you for your participation. This concludes today's conference call. You may now disconnect.

本公司衷心感謝您的參與。今天的電話會議到此結束。您現在可以斷開連線。