First American Corporation: history and overview

¶ … American Title Insurance Company's primary business model is dependent on several product offerings. Primarily it is service that offers title insurance to consumers within a variety of industries. They claim to the world's most efficient and cost-effective title and settlement solutions. Their strongest stakeholders are within the arena of residential and commercial real estate, with the majority of their profits in the last five years coming as a result of the real estate boom. This year, the company has suffered in its overall growth, because of the real estate slump which has left them without tremendous revenue growth.

The majority of First American customers are within the real estate industry, First American controls about 35% of the overall title insurance marketshare within commercial and residential real estate. However, they also have strong holdings in many different service provisions. Their escrow and vendor services are also an important revenue source. Customers who rely on First American for their title insurance usually also choose the company for transaction closing services as well. Therefore First American's customer base are also encapsulated within their escrow services. The real estate title insurance and settlements market can be further broken down into many different subsidiaries. First American capitalizes on the market for transportation title insurance, with aircraft and vehicle title insurance being one of the key stakeholders for profit. Other strong customer retention arenas include international real estate services, documentation services, vacation ownership services, etc.

The main competition for First American within the arena of title insurance and settlements come from a few key competitors. Fidelity National Financial is their biggest direct competition. Due to various acquisitions, Fidelity now surpasses First American in terms of marketshare within the industry. While First American has focused on providing sub-prime credit information, Fidelity has expanded its scope to outsourcing. They company now takes on back office operations such as payment processing and escrow services. Thus, they help smaller financial institutions cut costs while allowing more focus on new loan origination. As a result, Fidelity has taken up more of the marketshare than they previously owned by expanding into commercial sectors where their formerly was no market. Another key competitor is the PMI Group, which has gained increased marketshare because of their strong software development. The company sells a model that helps predict default risks for consumers with different credit histories, this information service helps banks price their loans more effectively. Competition within this sector is unique because it takes place on both the local and national level. On the local level, First American must compete with small players within the market for the title insurance market share as well as the larger companies. However, on the national level, First American must manage a strong information service that focuses on more commercial and professional services in order to negotiate partnerships on a national level. In both cases the inevitable result is that they must constantly fight a two front war for customers.