1. 98
ANNUAL
REPORT
STRATEGIC
ACTION
The First American Financial Corporation

2. First American Profile
The First American Financial Corporation,
based in Santa Ana, California, is the nation’s
leading provider of real estate-related information
products and services. The Corporation’s segments
include title insurance, which is offered nationally
and internationally; real estate information,
TABLE which includes tax monitoring, mortgage
OF CONTENTS credit reporting, property data services, flood
certification, field inspection services, appraisal
CAREFULLY EXECUTED STRATEGIES BENEFIT
services, loss mitigation services, mortgage loan
OUR ENTIRE CORPORATION.
origination and servicing systems, and mortgage
Letter to Stockholders ................................. 2
document preparation nationally; home warranty;
Our Strategic Plans Are Creating Corporate Successes . . . . . . . . . . . 4
The First American Family of Services ...................... 5
consumer risk management, which includes
Title Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
automotive and direct-to-consumer credit
Real Estate Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Home Warranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 reporting, multi-family resident screening and
Consumer Risk Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
pre-employment screening; and investment, trust
Trust and Banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
and banking operations. First American Financial
RECORD-BREAKING FINANCIAL RESULTS SIGNIFY
has nearly 20,000 employees in over 400 branches
OUR STRATEGIC SUCCESS.
in the United States and abroad.
Management’s Discussion and Analysis . . . . . . . . . . . . . . . . . . . . . 22
Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Common Stock and Quarterly Data . . . . . . . . . . . . . . . . . . . . . . . 27
First American is dedicated to leading our industry —
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Consolidated Statements of Income . . . . . . . . . . . . . . . . . . . . . . . . 30 in customer satisfaction by providing consistently
Consolidated Statements of Stockholders’ Equity . . . . . . . . . . . . . . . 31
high-quality service; in innovation by developing
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . 32
and marketing new systems, products and services; in
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . 33
Report of Independent Accountants . . . . . . . . . . . . . . . . . . . . . . . . 41
profitability by demanding efficiency; and in growth by
FIRST AMERICAN PEOPLE WORLDWIDE ARE searching out domestic and international opportunities.
CARRYING OUT OUR STRATEGIES.
Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Primary Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Shareholder Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Carefully planned, strategic actions have generated positive results throughout time.
The following pages note some of those successes.

3. FINANCIAL highlights
T H E F I R S T A M E R I CA N F I NA N C I A L C O R P O R AT I O N A N D S U B S I D I A RY C O M PA N I E S
Percent
1998 1997 Change
(in thousands, except percentages, per share amounts and employee data)
Revenues $2,877,328 $ 1,908,923 51
Expenses 2,515,906 1,799,248 40
Income before income taxes and minority interests 361,422 109,675 230
Income taxes 127,700 41,500 208
Income before minority interests 233,722 68,175 243
Minority interests 35,012 3,676 852
Net income $ 198,710 $ 64,499 208
Stockholders’ equity $ 731,915 $ 415,003 76
Return on average stockholders’ equity 34.7% 16.7% 108
Cash dividends $ 12,628 $ 8,931 41
Per share of common stock (Note A) —
Net income:
Basic $ 3.46 $ 1.18 193
Diluted $ 3.32 $ 1.16 186
Stockholders’ equity $ 12.13 $ 7.62 59
Cash dividends $ .22 $ .16 38
Number of common shares outstanding (Note A) —
Weighted average during the year:
Basic 57,450 54,448 6
Diluted 59,822 55,717 7
End of year 60,332 54,484 11
Number of employees 19,669 13,156 50
All consolidated results have been restated to reflect the 1998 acquisitions accounted for under the pooling-of-interests method of accounting.
Note A — After adjustment for 3-for-1 stock split effected July 17, 1998.
Operating Revenues Income Before Income Taxes
by Business Segment and Minority Interests
Title Insurance – 74% Title Insurance – 63%
Real Estate Information – 21% Real Estate Information – 28%
Home Warranty – 2% Home Warranty – 3%
Consumer Risk Management – 2% Consumer Risk Management – 4%
Trust and Banking – 1% Trust and Banking – 2%
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01

4. LETTER to stockholders
T H E F I R S T A M E R I CA N F I NA N C I A L C O R P O R AT I O N A N D S U B S I D I A RY C O M PA N I E S
Parker S. Kennedy, president
D.P. Kennedy, chairman of the board
The First American Financial Corporation
1998 was a phenomenal year for First American. Revenues
grew 51 percent from $1.91 billion to $2.88 billion and earnings
before income taxes and minority interests grew 200 percent from
$109.7 million to $329.0 million (excluding a $32.4 million
investment gain).
Our superior performance was highlighted in the First American the largest owner of imaged recorded documents.
February 25, 1999, issue of The Wall Street Journal, where Now, records can be searched in many of the highly populated
First American Financial was included among the top 30 areas of the country on a centralized basis. Many of the back-office
performing public companies, based on return to shareholders functions of the escrow closing process can also be centralized.
during the last 10 years. We are especially proud to be recognized We are several steps closer to the day when orders can be placed,
for our success over a sustained period. searches can be performed and policies can be delivered
This year was punctuated by a very strong real estate market. completely electronically on a nationwide basis.
Transaction volumes, which reached record levels, were driven by Our strategy to lead the transformation process of the title
low interest rates and a strong national economy. But the robust industry adds new urgency and meaning to our title acquisition
market tells only a part of the story. Our success in 1998 was a activities. Our technology strategy increases the value of the
confirmation of three of our most important strategies: acquisitions we make. Traditionally in buying a title agency, we
analyze the profits of the agency and consider the strong leadership
1. Technology is clearly changing the real estate industry and
and entrepreneurial spirit of its people. Now, agency purchases
First American is on the leading edge of these developments;
take on a new importance. An agency improves our future ability
2. Marketing multiple products to the real estate industry provides
to centralize title processing by expanding the geographic reach
opportunities to gain new customers and increase market share;
of our searching capabilities, of our network of policy production
and of our system of integrated title plants. For these reasons, we
3. The new Consumer Risk Management segment shows that
added 44 title offices in 1998 and, as time goes by, we hope to
First American can successfully leverage its expertise in real
accelerate this pace.
estate-related information products and services to provide
While our title division is by far our oldest, the dynamics
specialized reports to other industries, offering new growth
of rapid change represent great opportunities for the future.
opportunities in future years.
Our Menu of Products and Services
Technology Leadership
1998 made clear the potency of combining multiple products
To date, title information has largely been produced on a
and marketing them together. Our real estate information division
county-by-county basis. With the technological capability to
had operating revenues of just $3.6 million in 1990, which by
centralize this process, we will continue to realize greater cost
1998 had ballooned to $598.8 million. Earnings before income
efficiencies and opportunities to provide a larger menu of
taxes and minority interests were up 170 percent from 1997 to
services to more customers.
$103.1 million. We have stayed ahead of the game and we
New technology enabled us to close transactions faster and
continue to move ahead aggressively.
to better control expenses, as evidenced by a retention level that
Our menu of products and services continued to expand
rose to 12 percent from 6 percent last year. Bottom line —
during 1998. Our strategy to amass all the information products
1998 title profits were up 186 percent from last year.
required to close a real estate transaction continues. We have
The Company’s venture with Experian brought to First
done this by acquisitions rather than by strategic alliances.
American the largest database of title chains in the world. Our
Because we now own nearly all such products, we can control
1998 acquisition of Data Tree, combined with Experian, makes
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02

5. Also retiring from our board during 1998, for health
their delivery. The First American menu of information services
reasons, was Rudy Munzer. Rudy joined our board in 1962 and
stands alone in the industry.
was instrumental in charting the Company’s growth and transition
The recently announced acquisition of National Information
to a national company. We will miss his incredible support,
Group (NAIG), which is due to close in the near future, will
leadership and wise counsel.
strengthen our current information products as well as add new
We are extremely pleased to announce the promotion of
offerings. NAIG is a significant provider of flood certifications
and tax service, and these products will be combined with First Gary Kermott, formerly Chief Operating Officer, to the position
American’s, leading to greatly improved margins. NAIG will also of President of First American Title Insurance Company. Gary
bring the business of insurance tracking to the First American is a very popular and effective leader who has already made an
menu. We are very excited about the NAIG transaction and the important mark on our company. His leadership will be a
future benefits it will afford our customers and shareholders. significant factor in our future growth.
Three distinct divisions were created during 1998 within
Consumer Risk Management
First American Real Estate Information Services, Inc., under
Established in September 1998, the new Consumer Risk
the leadership of President John Long. Each is headed up by
Management segment is an outgrowth of our existing mortgage
a proven First American leader: Barry Sando will lead the loan
credit business. As our mortgage credit business grew and
administration division, Don Robert is heading up the loan
broadened its horizons, we developed an expertise in providing
origination division and Dennis Gilmore directs the database
specialty information reports. Our first significant step outside
products and services division.
the mortgage industry was in the area of tenant screening where
we issue reports to landlords relative to their prospective tenants. Outlook
These reports include an eviction notice summary in addition to 1998 was a year of strong market share improvement in
credit information. In 1997, First American was the third largest virtually every business in which we operate. We look for this to
tenant screening company in the country. Last year we took over continue in 1999. While interest rates have increased somewhat,
the industry’s leading position in the United States when we and refinance activity has slowed slightly, order volumes are still
purchased The Registry. Also in 1998, we purchased CIC, Inc., very strong by historical standards. Many experts expect the real
a company that produces reports about prospective employees estate market to continue at a healthy pace during 1999. We will
for employers. The reports include a criminal record search, as monitor order levels closely and react quickly in the event of
well as credit information. Also included in our Consumer Risk further interest rate hikes and decreasing order volumes. We
Management segment is an automotive credit information look to the future with great confidence.
department and merged credit reports for consumers. In June 1998, the board approved a three-for-one stock split,
Our total revenues for this segment should exceed $80 million which was effective on July 17, 1998. This came on the heels of a
in 1999. This success proves that our Company can grow at a rapid three-for-two stock split, which was effective on January 15, 1998.
clip as a producer of specialty information reports. Results in this After these two splits, the shares outstanding totaled approximately
segment are not dependent on interest rates and real estate activity. 60 million. At our August 1998 meeting, the board increased
Consumer Risk Management will lead us in many new directions the quarterly dividend 20 percent, from 5 cents a share to
and help assure healthy growth for many years to come. 6 cents a share.
On behalf of the officers and directors of First American,
Transitions
we thank you for your continued support.
It is with great sadness that we report the passing of Jack
Derloshon, our long-time Chief Financial Officer. Jack started
with the Company in 1960, and retired in 1993 after 34 years
of incredible growth for our Company. He played a vital role in D.P. Kennedy
Chairman of the Board
steering First American through these crucial years, and we will
miss his guidance and friendship.
Dale Frey retired from his position on our board of
directors. Dale joined our board after a long and distinguished Parker S. Kennedy
President
career at General Electric. His helpful perspective will be missed.
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03

6. OUR STRATEGIC
PLANS ARE
CREATING
CORPORATE
S U C C E S S E S.
Acquisitions and new start-ups have been a FIRST AMERICAN COMBINES PRODUCTS TO SERVE THE CUSTOMER.
central focus at First American for decades. Some
First American is the first company to create a complete menu
add to existing businesses while others move us in of products for the lender customer. This chart details how some
of our groups have come together to provide these products:
new directions. Most allow us to combine resources
to provide more products, more quickly. Many MAKING TITLE SEARCHING MORE EFFICIENT:
are small, and some are quite large. All add new First American Title Insurance Company
Smart Title Solutions’ Title Plant Information
people and freshen the entrepreneurial spirit that
Data Tree Corporation
has fueled First American’s amazing growth. SMS
The pace of acquisitions accelerated Title Acquisitions
Wide Area Networks
dramatically during 1998. Each acquisition or
FASTSearch
start-up fits into a simple game plan designed
LEADING THE INTERNATIONAL TITLE INSURANCE MARKET:
to improve First American’s earnings. Several
Title operations in: Australia, the Bahama Islands, Canada, England,
of our primary strategies are detailed in the Guam, Ireland, Mexico, Puerto Rico, Scotland, South Korea and
pages to come. the U.S. Virgin Islands
By combining many of our products, ENABLING ELECTRONIC ORDERING AND DELIVERING
First American’s strategy is to cross-market and OF ALL PRODUCTS:
First American Title Insurance Company
deliver them as a package. This strategy is
First American Real Estate Information Services, Inc.
paying off. Title insurance, a vital part of this RAPID System
package, produced historic gains in 1998. FASTWeb
Contour Software, Inc.
And, First American’s gross revenues for the
Wide Area Networks
nontitle products listed here were approximately
MARKETING AND DELIVERING PRODUCTS TOGETHER:
$740 million, more than nine times that of its
First American Real Estate Information Services – more than
nearest competitor. 20 acquisitions over the past 10 years
Our strategy is
CREATING AUTOMATED APPRAISAL SYSTEMS:
working, but is still First American Appraisal Services
in the early stages. First American Real Estate Solutions
ValuePoint Software
In addition to
Market Data Center
assembling and
BECOMING THE FIRST COMPLETE DEFAULT MANAGEMENT COMPANY:
bundling these
First American Loss Mitigation Services
products, we are First American Field Services
adding progressive First American Title Insurance Company’s REO Disposal
First American Lenders Advantage
technology solutions
Barrett Burke Wilson Castle Daffin & Frappier, L.L.P.
that allow us to First American Excelis
deliver these products as our customers want them DAISY Technology
delivered. We are a step ahead in this strategy.
EXPANDING TO LESS CYCLICAL CREDIT AND
If we execute well, the results will be very INFORMATION-RELATED BUSINESSES:
First American CREDCO
significant. We will continue to keep our eye
First American Consumer Products
squarely on the future. CIC, Inc.
First American Registry, Inc.
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04

7. THE FIRST AMERICAN FAMILY OF SERVICES
The Single Source in the Real Estate Transaction Process
OPENING THE SALE
Property Information and Map Image Products First American Real Estate Solutions
Credit Reporting First American CREDCO
Appraisals/Property Reports First American Appraisal Services
Automated Property Valuations First American Real Estate Solutions
Flood Determination First American Flood Data Services
Title Search Smart Title Solutions
Document Imaging Data Tree Corporation
Mortgage Document Preparation First American Nationwide Documents
Loan Origination Software Contour Software, Inc.
Equity Loan Services First American Equity Loan Services
CLOSING THE SALE
Title Insurance First American Title Insurance Company
Title and Escrow Software Systems SMS
Tax Certification First American Real Estate Tax Service
Closing and Escrow Services First American Title Insurance Company
Home Warranty First American Home Buyers Protection Corp.
SERVICING THE LOAN
Tax Reporting and Outsourcing First American Real Estate Tax Service
Tax Valuation First American Tax Valuation
Flood Compliance First American Flood Data Services
Property Inspection and Field Services First American Field Services
Loan Servicing Systems First American Excelis
Loss Mitigation Services First American Loss Mitigation Services
A Preferred Source for Consumer-Related Risk and Investment Services
MANAGING RISK
Automotive Credit Reporting First American Consumer Products
Resident Screening First American Registry, Inc.
Employment Screening CIC, Inc.
Consumer Credit Reporting First American Consumer Products
INVESTING
Trust Services First American Trust Company
Investment Services First American Capital Management
Banking Services First Security Thrift
At only age 15, Bobby Fischer used his strategic abilities to challenge the
world’s best players at the Interzonal tournament in Portoroz, Yugoslavia.
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05

8. TITLE information
T H E F I R S T A M E R I CA N F I NA N C I A L C O R P O R AT I O N A N D S U B S I D I A RY C O M PA N I E S
Parker S. Kennedy, chairman
Gary L. Kermott, president
First American Title Insurance Company
In 1998, as in the previous year, vast numbers of American
families realized the dream of home ownership. Great numbers
also found the opportunity to move to larger or smaller homes,
to buy second homes or income properties, or to refinance their continued. Healthy title order increases of 26 percent in both the
present mortgages at lower rates. Commercial real estate activity second and third quarters produced revenue gains of 49 percent
and new home construction were also strong throughout the and 44 percent, respectively. In the year’s final quarter, our title
year. 1998’s economic scene was dominated by a continuation of company opened 410,000 title orders, an increase of 37 percent
low interest rates, high employment and high consumer from the year-earlier period, as quarterly operating revenues rose
confidence, all of which combined to maintain a robust real 37 percent.
estate market. Our title company continues to be in excellent financial
These factors, along with our continued efficiency goals and condition. Reflecting the company’s positive claims-paying
aggressive expansion strategy, enabled First American Title ability, its rating was upgraded from A- to A by Duff & Phelps
Insurance Company to establish records throughout our business Credit Rating Co. First American also earns high ratings from
in every fiscal period. Income before income taxes and minority other leading rating agencies, including an A (Excellent) rating
interests rose 186 percent, to $227.9 million, from the previous from A.M. Best Company, an A´ (Unsurpassed) rating from
year’s $79.6 million. Title insurance operating revenues increased Demotech, Inc., and an A3 (Exceptional) rating from Moody’s
41 percent, from $1.46 billion in 1997 to $2.06 billion in 1998. Investors Service.
Our title company’s strong business momentum continued To protect and build both our market share and financial
from the previous year, producing a remarkable string of record- results, First American Title continued strategies involving
breaking quarter-to-quarter increases in operating revenues and expanded geographic coverage, broadened product offerings and
order volume throughout 1998. Title orders surged 54 percent in improved customer service. These factors allowed us to maintain
the year’s first quarter as compared with the same period 1997, as our number one position among the nation’s title insurance
the pressure of fast-paced home purchases and refinancings companies in 1998.
Expansion of our geographic presence continued in 1998, as
we added 44 offices from Alaska to the Florida Keys. Continuing a
strategy that began more than four decades ago, we are acquiring
FA
Tetracycline was the first antibiotic made by chemically modifying a naturally produced
06 drug, a discovery that initiated the creation of other antibiotics commonly used today.

9. Acquisitions help us
lead title industry efficiency.
It is our goal to dramatically improve the margins
within the title insurance industry. Our strategy to do so is
designed to directly benefit our title company, and indirectly
augment related First American companies.
Traditionally, real property title is searched locally on a
county-by-county basis, accessed through conventional
records. To streamline
this process, three
components are needed:
automated land title
records (referred to as
title indexes), automated
real property tax
databases and imaged
records of all recorded
property documents.
Once this data for major U.S. counties is computerized,
title searching can be done from a centralized source,
eliminating the need for most local title production.
In 1997 First American endeavored to help our industry
,
gain control of the process. Our first step in this strategy
was our venture with Experian, which brought us the
nation’s largest repository of title indexes, real property tax
databases and imaged records. Smart Title Solutions, our
group developed from this venture, added this content to
our existing databases, making First American the
largest owner of title data in the world. This brought
control of the information back to our industry. Other
industry members control important databases, and
collectively we control our destiny.
Our second step was to acquire Data Tree, owner of
the largest database of imaged property documents. First
American then combined these records with those of Smart
Title Solutions, and is now moving quickly to image
documents in major metropolitan areas throughout the nation.
The key to these acquisitions is that they will play
a major role in transforming the way title business is done.
O U R S T R AT E G I C P L A N Through the centralization of title production, these
IS CHANGING acquisitions could dramatically improve margins. Because of
T H E WAY T H E T I T L E this, and related developments, our industry can control the
title search and completion process as we move into
B U S I N E S S O P E R AT E S .
a new era.
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10. International start-ups
will yield big returns in the future.
First American entered Canada in 1991. That year we
issued 50 policies. In 1998, we issued more than 100,000
policies and the vast majority of the growth is still ahead
of us.
Prior to title insurance, closing expenses in Canada
were very high, delays were frequent and malpractice
insurance rates were
quite costly for the
solicitors involved in the
process. Title insurance
allows transactions to
close quickly by
substituting assurances
to the lender for
delayed paperwork and
survey information.
These same factors are present in other well-
developed nations, such as England, Scotland, Ireland
and Australia. First American’s operations in each of these
countries are leading the process of change. We are also
initiating change in South Korea, where First American
operations were recently established.
The world is ready for title insurance. Understanding
this, First American has developed a new international
policy. We have established four global underwriting
centers through which this policy can be provided, giving
real estate investors the peace of mind that any title issues
that may arise from their foreign purchases will be
handled by First American.
Our product is the perfect way to provide
guaranteed title information and to thereby “grease the
wheels” of the closing process. Lenders everywhere need
to move fast and title insurance makes that possible. One
day, title insurance will be involved in all the transactions
in countries with systems similar to those of the United
States and, thanks to our patient strategy, First American
will be there to benefit from the change.
TITLE INSURANCE
I S S AV I N G T I M E I N
P RO P E RT Y T R A N S A C T I O N S
A RO U N D T H E G LO B E .
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11. TITLE information
T H E F I R S T A M E R I CA N F I NA N C I A L C O R P O R AT I O N A N D S U B S I D I A RY C O M PA N I E S
title operations nationwide that are known for their strength in
their communities or expertise in specialized fields. We are also
continuing to open new offices in growing urban areas.
Growth in international markets continued as well, with our EAGLE Policy coverage was extended to aircraft in 1998 with
operations holding the leading position among title companies in the introduction of the EAGLE Aircraft Policy. This innovative
Canada, Australia and the United Kingdom. Early in 1999, First policy provides title coverage to the owners of general aviation
American Title Company of Korea was incorporated to provide aircrafts and to their lenders. In addition to traditional coverage
specific title services for commercial property transactions. The against claims that arise when ownership interests filed with the
company also developed a standardized policy of title insurance — Federal Aviation Administration are missed in record searches,
the first of its kind — that allows us to underwrite international the new EAGLE Aircraft Policy covers other situations that could
transactions out of one of four global underwriting centers. threaten the loss of title. These involve filed-but-unrecorded
Many nations worldwide are beginning to look to title insurance claims, forged documents and various frauds. The coverage
to help make the real estate transaction process more efficient. protects lenders and owners not only in the current transaction,
As they do so, First American continues to pursue opportunities but also for all previous transactions involving the insured aircraft.
in those countries where real estate conveyancing systems are As a product not tied to the cycles of the real estate industry, we
similar to those in the U.S. look forward to the EAGLE Aircraft Policy’s continued growth.
Product expansion included enhancements to First American’s An important customer-service enhancement was created in
popular EAGLE Policy, which had an extremely successful start- 1998 when our title company became the first in the nation to
up in 1997. This remarkable product offers an array of coverages accept credit cards as payment for certain services. Covered items
and other features never before provided in a include the escrow and title services portion of
Share of Total U.S.
standard title policy. The enhancements made last-minute closing costs. This program was
Title Insurance Market
(percent)
in 1998 further increased the policy’s launched in California in September.
25
popularity by adding to its ability to meet the In 1998, our title company announced
needs of our customers. Availability of the a joint venture with Norwest Mortgage
20
EAGLE Policy was expanded to 33 states by (a division of Wells Fargo & Co.).
the end of 1998.
15
93 94 95 96 97
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The Panama Canal shortened the seagoing distance
09
from New York to San Francisco by 7,873 miles.

12. TITLE information
T H E F I R S T A M E R I CA N F I NA N C I A L C O R P O R AT I O N A N D S U B S I D I A RY C O M PA N I E S
This venture, which is owned equally by First American and
Norwest, expands our opportunity to provide title and escrow
services to this lending leader. Two other Norwest companies
involved in the venture are adding to the service offerings of First Smart Title Solutions, Data Tree provides stand-alone services to
American Real Estate Information Services as well. title companies with their own or unaffiliated title plants.
In addition to the expansion and improvement of its The second change was the integration of our newly
product and service offerings, our title company made changes acquired Contour loan origination system with First American
aimed at creating efficiencies that benefit both the company and Strategic Technologies Web, called FASTWeb. An Internet-based
its customers. These changes included additional applications of service, FASTWeb makes title and escrow ordering and delivery
electronic information technology to the industry. available electronically for mortgage originators such as banks
One change involved merging the databases of Smart Title and mortgage brokers.
Solutions with those of the recently acquired Data Tree. The Changes such as these keep First American at the forefront
Smart Title Solutions title information repository is the largest in of title industry technology. The increasing speed, variety and
the United States. Combining it with Data Tree’s database of utility of electronic information have raised customer expectations
imaged recorded title documents, also the largest in the nation, in many kinds of businesses, including the real estate and related
gives First American improved efficiencies and greater control of service industries. To be effective in our markets, First American
its future as owner of the world’s largest collection of title data. must meet and exceed these higher expectations with the
In addition to capturing, storing and delivering recorded industry’s most innovative services. The company’s solid financial
document images to title companies in collaboration with footing has made possible the investments required to do so. And
now, under the guidance of newly appointed
President Gary Kermott, First American will
Total Title Insurance Revenues
($ in millions)
continue to make these investments to keep
2,500
2,250
the company at the cutting edge of its
2,000
1,750
industry’s technological leadership.
1,500
1,250
1,000
750
500
250
0
89 90 91 92 93 94 95 96 97 98
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The 1937 completion of the Golden Gate Bridge, spanning 4,200 feet,
10 connected the San Francisco metropolis to California regions farther north.

13. Electronic product delivery
increases efficiencies and opportunities.
One of First American’s primary strategies is to
facilitate the ordering and delivery of our products
electronically and through a single system. How this is
done is important — that it is done is critical.
Hundreds of First American offices nationwide are
linked through Wide Area Networks (WANs). We have
also created numerous
customer links to allow
users to access our
products electronically.
Some are Internet-
based and some utilize
dedicated lines. An
important part of this
strategy involves First
American’s presence on
the user’s “desktop.”
In pursuing this, First American acquired Contour Software,
the nation’s largest supplier of loan origination software
to the mortgage broker industry. Thirty percent of all
mortgages originated in the United States in 1998
were originated through Contour Software. Since its
acquisition, Contour has developed links with our title,
flood certification and appraisal products. Credit
information will be added in 1999. Now, for the first time,
mortgage brokers can order all of these products with a
simple “click.”
Contour provides this service through First American’s
FASTWeb system. Contour, as well as First American Title
Insurance Company and First American Flood Data
Services, uses this Internet-based order and delivery
service as one of the means to provide their products.
More than 22,000 registered users directly access these
services through FASTWeb, fully operational since late
1997. First American’s credit groups are working to have
their services available soon through FASTWeb, as well.
OUR TECHNOLOGY
I S R A P I D LY C O N N E C T I N G
O U R C O M PA N I E S TO
OUR CUSTOMERS.
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14. Our appraisal company will benefit
from the First American Real Estate Solutions
database as electronic appraisal services grow.
It is clear that the way appraisals are done will
change dramatically in the next five years. First American,
the nation’s largest appraisal company, is at the forefront
of the progress toward the paperless property valuation.
In 1997, First American acquired SMS and combined
it with its existing
operations to become
the nation’s largest
appraisal company.
Property Financial
Appraisal Services was
acquired later that year
to round out coverage
in the New England
states. These companies
provide and coordinate
appraisals utilizing a network of independent and
employee appraisers who visit each property and collect
the relevant data.
In late 1997 our venture with Experian, which
,
resulted in the formation of First American Real Estate
Solutions, brought us the nation’s largest property
characteristic database. This marked the first time that
a massive database of this type was combined with an
existing national appraisal network. Market Data Center,
a 1998 First American acquisition, brought additional
printed and online appraisal information services to our
group. And our state-of-the-art computer valuation
program, ValuePoint, delivers online property valuations
in seconds. Together, these advances are working to our
benefit as the adoption of electronic appraisals accelerates.
Discussions with Fannie Mae and Freddie Mac are
ongoing as they also move toward greater acceptance of
automated appraisal products. And while conventional
on-site appraisals will always be needed to meet the
needs of many property transactions, the widespread use
of electronic appraisals will continue to grow. Through
WE’RE COMBINING
our leadership in providing both appraisal types,
R E S O U RC E S TO First American will be a major beneficiary of this trend.
STRENGTHEN OUR
O P P O RT U N I T I E S .
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15. R E A L E S TAT E i n f o r m a t i o n
T H E F I R S T A M E R I CA N F I NA N C I A L C O R P O R AT I O N A N D S U B S I D I A RY C O M PA N I E S
John W. Long,
president and chief executive officer
First American Real Estate Information Services, Inc.
Less than a decade ago, The First American Financial
Corporation began assembling a collection of enterprising
companies engaged in real estate information services. At the time,
management forecasted that the need for consistently accurate, This group’s individual companies also continued to prosper,
high-speed real estate-related information would grow very rapidly with our appraisal services, credit services, flood data services,
before the turn of the century. In the years since then, this field services and mortgage document preparation companies
prediction has been more than fulfilled as the electronic searching, leading their respective fields. We also own the largest supplier of
collection, storage, transmission and imaging of this information mortgage origination software and services to the mortgage
has grown explosively. Increasingly, electronic means have overtaken industry, as well as the nation’s leading provider of real estate
the manual methods previously applied in these operations. data. Our real estate tax company ranks second in its industry.
Today, First American operates the industry’s leading The other companies in this group are also continuing to grow
organization dedicated to the gathering, packaging and distribution through increased services, efficiencies and acquisition.
of real estate-related information. First American Real Estate In 1997, based on surveys and analyses of customer needs,
Information Services also is a leader in the application of this group separated its origination services — those needed to
information technology to the services associated with mortgage create a mortgage loan — from its loan administration
origination and administration. operations, which provide the services needed to service loans.
First American Real Estate Information Services had an During 1998, we grew these operations further by creating a
excellent year. Operating revenues in 1998 rose 92 percent, to Database Products and Services division.
$598.8 million, from the $311.8 million reported for 1997. This Database Products and Services offers its varied clientele a
operation’s income before income taxes and minority interests wide selection of packaged real estate-related information. This
rose 170 percent, to $103.1 million, from the previous year’s was the first full year of operation for our joint venture with
reported $38.1 million. Experian, which brought us these databases.
This new division includes First American Real Estate Solutions,
which provides property information, imaged maps, automated
property valuation and similar products to Realtors, lenders,
appraisers and others. This group was enhanced in 1998 through
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A “sweep,” the football play that legendary coach Vince Lombardi called
13
his “number one play,” requires that all 11 players act in precise unison.

16. R E A L E S TAT E i n f o r m a t i o n
T H E F I R S T A M E R I CA N F I NA N C I A L C O R P O R AT I O N A N D S U B S I D I A RY C O M PA N I E S
the acquisition of Market Data Center, which provides additional
real estate information services for appraisers and real estate agents.
The Database Products and Services division’s offerings also particularly attractive to mortgage brokers, who now generate
include the title plant and document imaging services provided half of the nation’s mortgage loans.
to the title industry by its Smart Title Solutions and Data Tree As mentioned in the review of title operations, Contour
companies. Data Tree Corporation, another 1998 acquisition, is integrating its technology with that of First American. Flood
provides database management and document imaging systems and appraisal products, as well as title, are now available through
to the title industry, county recorders and government agencies. its systems. Contour also brought to market some innovative
It was the first company in the nation to offer electronic Internet-based products last year. These included tools for use
recording — cutting document recording time from days to by consumers in analyzing their mortgage needs and helping
minutes. Smart Title Solutions’ services were further enhanced in to determine how a mortgage would affect a family’s financial
1998 through the acquisition of S.D. Technologies, known as situation. Contour also introduced FAST-AU, providing mortgage
Spatial Data, a developer of desktop software products used by brokers with electronic point-of-sale access to Freddie Mac’s Loan
title insurance companies and real estate agents. Prospector system.
Other acquisitions and alliances continue to be important In 1998, we also completed the purchase of BJF Group.
to First American Real Estate Information Services. In 1998, the This company now provides loss mitigation assistance to lenders
group added a number of companies with complementary services. as First American Loss Mitigation Services. Sister companies
As the year began, for example, we completed our Executive Reporting Services and CreditNet Communications
acquisition of Contour Software, Inc., an enterprising company were also acquired, adding to the services of First American
that has become the largest supplier of mortgage origination CREDCO. First American Executive Reporting Services retrieves
software and services to the mortgage loan industry. It provides a credit file information to create reports, while lenders use
modular array of software for every facet of mortgage lending, CreditNet’s software to access these reports.
from qualification through servicing. These products are ShadowNet Mortgage Technologies, acquired in 1998, is a
provider of electronic alternatives to the delivery of closing
documents to mortgage lenders, mortgage brokers, commercial
banks, credit unions and other mortgage lending entities. One of
FA
Bach’s Second Brandenburg Concerto exhibits his command
14 of multiple instruments, and their resulting seamless sound.

17. Acquisitions, start-ups and partnerships have
created a comprehensive unified
default management solution.
When a mortgage loan goes into default, many
activities are set in motion to cure the delinquency
and minimize investor credit risk. It is First American’s
strategy to combine these activities into a comprehensive
solution for loan servicers.
When a borrower
misses a payment, the
servicing software
system utilized by the
lender begins to
generate late notice
letters to the borrower.
Excelis, purchased by
First American in April
1996, is such a system.
If the default ages, a
field services company begins to inspect the property
monthly to alert the lender to the property’s occupancy
status and assess the general condition of the asset securing
the mortgage. First American Field Services, the nation’s
leading company of its type, provides a full range of
property inspection and preservation services.
Prior to final action to foreclose, First American Loss
Mitigation can provide lenders and borrowers alternatives
to foreclosure, in order to reduce the losses associated
with mortgage default and to keep borrowers in their
homes. If foreclosure is necessary, this process can be
completed by the law firm of Barrett Burke Wilson Castle
Daffin & Frappier, L.L.P., a First American partner.
Delinquent loan portfolios can also be managed through
the DAISY software system, owned jointly by First American
and Barrett Burke. DAISY provides loan servicers a
powerful and cost-effective tool to gain a competitive
advantage and reduce their overall costs. Title information
connected to the delinquency is issued by First American
Lenders Advantage through a nationwide network created
specifically for delinquent loan processing. If the
A P OW E R F U L T E A M
delinquency results in foreclosure and the property goes
COMBINES TO into inventory with the lender, the title insurance on the
P ROV I D E C O M P L E T E Real Estate-Owned property can also be provided by
First American.
SOLUTIONS.
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18. R E A L E S TAT E i n f o r m a t i o n
T H E F I R S T A M E R I CA N F I NA N C I A L C O R P O R AT I O N A N D S U B S I D I A RY C O M PA N I E S
its software programs enables mortgage lenders in any of the 50
states to order and receive closing documents in 15 minutes or less.
ShadowNet now operates as a part of First American Nationwide
Documents, placing us in the leading market share position in real estate tax monitoring. Another, a data management
the mortgage document industry. subsidiary, allows loan servicers and vehicle lessors to monitor
First American’s joint venture with Norwest — mentioned the insurance coverage on collateral that secures residential
in the review of title insurance operations — added expanded mortgages, vehicle loans, and other consumer loans and vehicle
appraisal services, as well as income and employment leases. A fourth subsidiary underwrites short-term fire,
verification services. automobile physical damage, and flood insurance.
Finally, First American entered into a merger agreement in Our current industry leadership in real estate-related
November 1998 with National Information Group, which will information services notwithstanding, First American will
add insurance tracking and outsourcing for mortgage lenders to continue to build and refine the company’s abilities and
our menu of services. One of National Information Group’s especially its information technology infrastructure. As the
subsidiaries provides flood zone and census tract information to need for information rises, and as the world increasingly
the mortgage lending industry, and a second subsidiary provides turns to technological solutions for exacting, labor-intensive
activities, First American Real Estate Information Services
will be ready with the latest and best systems to meet these
accelerating demands.
Total Real Estate
Information Revenues
($ in millions)
650
600
550
500
450
400
350
300
250
200
150
100
50
0
94 95 96 97 98
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19. HOME warranty
T H E F I R S T A M E R I CA N F I NA N C I A L C O R P O R AT I O N A N D S U B S I D I A RY C O M PA N I E S
Martin R. Wool, president
Philip B. Branson, chairman
First American Home Buyers Protection Corporation
First American Home Buyers Protection Corporation had an
excellent year. The company reached $61.6 million in premiums
written, an increase of 16 percent from the previous year’s results.
Operating revenues rose 24 percent, to a record $58.2 million, First American Home Buyers Protection also became one of
and pretax profits totaled $11.4 million, an increase of 29 percent. the first home warranty companies in the nation to provide
Equity, a critical measurement of the strength and claims-paying online ordering. In 1998, this efficient system began giving
ability of a warranty operation, rose 15 percent to a total of consumers and real estate professionals the ability to order initial
$54.8 million. warranties electronically.
This company continues to be a leader in home warranties Our state-of-the-art call center, which opened in 1997,
covering major operating systems and appliances in resale homes. became operational on a “24/7” basis in 1998, providing around-
Repairs and replacements of items under warranty are carried out the-clock service every day of the year. This technologically
by a nationwide network of qualified, licensed contractors. advanced service increases our company’s response capabilities and
Our company ended the year with more than 187,000 is designed, in turn, to produce greater customer satisfaction,
warranties in force — 25,000 more than at year-end 1997. positive referrals and increased warranty renewals.
Thanks to successful marketing strategies, nearly one-third of our Solid growth was achieved in several states where we do
warranty revenues is now derived from renewals. These renewals business, with revenue increases led by our operations in Texas,
represent an important segment of our business, because they are where we recognized a 47 percent sales gain. Sales activities also
much less dependent on real estate market cycles than are new started well in Utah during the company’s first full year of
contracts written at the close of escrow. operation there, as they did in Georgia where
the company became licensed during 1998.
Total Home Warranty Equity
($ in millions)
60
50
40
30
20
10
0
94 95 96 97 98
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20. CREDCO acquisitions lead
to a new First American division.
First American’s acquisition of CREDCO is a great
success story. When purchased in early 1995, CREDCO
was doing about 100,000 credit reports a month,
primarily servicing the mortgage industry. During several
single months in 1998, CREDCO produced more than
two million credit reports.
CREDCO has solid
expertise in creating
specialized credit reports,
drawing information
from numerous credit
sources. It became clear
that this expertise could
be used in many ways
and that our volume-
driven cost efficiencies
(as incredible as the volumes themselves) could help in
new businesses. With this strategy in mind, First American
expanded its product offerings to consumers, landlords
and auto lenders. By early 1998, more than one-half of
CREDCO’s reports were issued to nonmortgage users.
In 1998, we pursued two more very important
acquisitions. The first, CIC, Inc., provides pre-employment
screening reports to employers. In addition to credit
information, the reports include criminal records, as well
as educational and employment history verifications. The
Registry, our second such acquisition, offers resident
screening reports. In addition to credit information, these
reports provide landlords with the rent payments and
eviction notice history of a prospective tenant. The Registry
is the largest resident screening company in the United
States.
This strategy of utilizing our credit information
resources to serve new markets has led to the creation
of the Consumer Risk Management segment of First
American. Already, this segment is contributing greatly
to First American and will provide strong margins and
WE’RE ADDING
low cyclicality of earnings.
S E RV I C E S T O
C R E AT E N E W
O P P O RT U N I T I E S .
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21. CONSUMER risk management
T H E F I R S T A M E R I CA N F I NA N C I A L C O R P O R AT I O N A N D S U B S I D I A RY C O M PA N I E S
Donald A. Robert
president
First American Consumer Risk Management Group
The vast majority of First American companies serve
customers within real estate-related industries. Our depth in
these areas has allowed us to become a single-source provider in
the real estate transaction process, resulting in the efficient and reports tailored to the specific needs of the automotive market.
profitable sale of our services to this ever-growing market. Accessing this group’s multibureau reports, applicant profile
In 1998, however, the company created a division to services and portfolio analysis tools allows those providing auto
provide services to a customer base outside First American’s loans to make better-informed lending decisions. First American
traditional clientele. This diversification strategy, initiated in Consumer Products also offers credit reports directly to the
1995, offers services not tied to the ebb and flow of real estate consumer, accessing information from the nation’s three largest
cycles. It is designed to expand our opportunities for revenue credit bureaus.
consistency and allows us to further accumulate valuable The Consumer Risk Management segment provides
consumer data. We chose consumer-directed services related to resident screening services through First American Registry. This
those already offered by other First American groups, which company was formed by merging the services of The Registry
allows us to leverage client relationships, as well as expertise, and First American Information Reporting. Our 1998
data and technology. acquisition of The Registry, the nation’s largest resident screening
Our new segment, Consumer Risk Management, markets a company, allows us to take the lead in meeting the specialized
variety of services including automotive credit reporting, direct- risk management needs of landlords. This group provides
to-consumer credit reporting, multifamily resident screening and information regarding a housing applicant’s rental payment
pre-employment screening. history, occupancy responsibilities, eviction actions, credit
Automotive and subprime automotive credit reporting information and similar background data.
services are offered through First American Consumer Products, This segment also offers pre-employment screening services
a group originally formed through First American CREDCO. This through CIC, Inc., another 1998 acquisition. CIC offers
operation provides auto dealers and lenders with consumer credit employers a variety of reports on prospective employees,
providing information on criminal records, warrants, motor
vehicle reports, credit reports, drug screens, education, prior
employment, professional licenses and more.
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The technology of the first successful high-speed electronic
19
digital computer paved the way for future possibilities.

22. TRUST and banking
T H E F I R S T A M E R I CA N F I NA N C I A L C O R P O R AT I O N A N D S U B S I D I A RY C O M PA N I E S
T RU S T O P E R AT I O N S
Jerald P. Lewis,
First American Trust Company has specialized in trust
president and chief executive officer
First American Trust Company
administration for corporations, nonprofit organizations and
individuals for four decades. Last year, this respected company
increased the assets under its administration to a total of The trust company last year
$1.8 billion, an increase of 38 percent from the previous improved customer service by
year’s amount. assigning client contact teams to
Operating revenues rose to $13.5 million, an increase of each customer, which helps to
31 percent, and pretax profits amounted to $2.7 million, rising ensure rapid response to client needs.
145 percent from the 1997 result. In line with other First American operations, First American
First American Trust opened two offices in northern San Trust also made customer-service improvements related to
Diego County during 1998, in recognition of the opportunities information technology. One involved the use of integrated
afforded by rapid growth in the territory software technology to enable the immediate
between our downtown San Diego and identification of all aspects of a client’s account.
Fiduciary Assets at Market Value
($ in millions)
Orange County offices. First American This speeds responsiveness in ways that are
2,000
1,800
Trust also began providing wire services for highly visible to the trust company’s clientele.
1,600
1,400
First American Title Insurance Company, Another improvement that was put into place in
1,200
1,000
wiring funds to customers as fast as the early 1999 enables 401(k) participants to change
800
600
400
Federal Reserve, and at a lower cost. This investments and view account balances online.
200
0
service also has the effect of keeping funds First American Trust also began offering certain
94 95 96 97 98
under First American administration. customers the ability to access statements via a
fully secured Web site.
INVESTMENT SERVICES
excellent year. In 1998, it introduced online, interactive access
William C. Conrad,
president and chief executive officer
First American Capital Management, Inc. to both the company and its funds. By year’s end, this investment
group had approximately $1.4 billion in assets under management
First American Capital and advisement, and a variety of new services at work for the
Management, Inc., which is individuals, corporations, pension funds, municipalities and banks
registered with the Securities and that form its clientele. The group also manages First American’s
Exchange Commission, had an pension plan, 401(k) plan and corporate cash.
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