First american revisits web strategy to increase margins. (Investments & Finance).FIRST American First American may refer to:
Earlier this year, First American's title insurance arm began rolling out a Web-based software system dubbed the FAST Transaction System. The Santa Ana-based company wants the system, which automates title searches, policy production and escrow escrow Instrument, such as a deed, money, or property, that constitutes evidence of obligations between two or more parties and is held by a third party. It is delivered by the third party only upon fulfillment of some condition. closings, to transform operations over the next three years. Parker Kennedy, First American's president, calls it "the most strategic initiative we have taken since we started expansion out of Orange County back in the 1950s." The title insurer has spent five years developing and rolling out the system across the company. By early July, FAST was in 668 First American Title Insurance Co. offices. The goal for the third quarter is to have the system up and running in 800 of the title insurer's 1,000 offices. The rollout is slated to be done by year's end or early 2003. FAST, short for First American Software Technology, sits on company servers nationwide, from Santa Ana Santa Ana, city, El Salvador Santa Ana (sän'tä ä`nä), city (1993 pop. 129,873), W El Salvador. It is the second largest city in the country and the commercial and processing center for a sugarcane, coffee, and cattle region. to Atlanta. The software centralizes title processing and escrow closings, the main lines of business for First American. The system allows workers do title searches and process paperwork using a Web browser The program that serves as your front end to the Web on the Internet. In order to view a site, you type its address (URL) into the browser's Location field; for example, www.computerlanguage.com, and the home page of that site is downloaded to you. - instead of 50-some different applications they now use. Later this year, real estate agents are expected to start using the system to do title searches via First American's Web site. They'll also be able to check the status of their orders with First American online. "The key of cuffing cost is how you route your order with as few hands touching it as possible," said Chris Buonafede, an analyst at Fox-Pitt, Kelton Inc., an investment bank that tracks the financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. industry. In First American's second quarter conference call, Parker said the company expects to start seeing productivity gains from FAST early next year. Rollout and training costs - running at about $10 million a quarter - are expected to start declining by year's end. A key goal behind the software overhaul: gaining market share. The company is betting higher productivity and better service will steer more business First American's way. For years, First American held the largest share of the title insurance business until Irvine-based rival Fidelity National Financial Inc. bought Chicago Title Corp. in 2000. Today, Fidelity holds 30 percent of the title market, vs. First American's 23 percent. Kennedy and other senior managers came up with the idea of centralizing cen·tral·ize v. cen·tral·ized, cen·tral·iz·ing, cen·tral·iz·es v.tr. 1. To draw into or toward a center; consolidate. 2. data processing data processing or information processing, operations (e.g., handling, merging, sorting, and computing) performed upon data in accordance with strictly defined procedures, such as recording and summarizing the financial transactions of a in 1997. They decided to move information to a main bank of servers and link the database to as many counties as possible. FAST culls culls the animals extracted from a herd or flock by culling. together different types of software used by First American. Bringing them together cuts down on the work hours needed to process insurance and escrow closings, said John Hollenbeck John Hollenbeck is a jazz drummer and composer from New York City, USA. He also has interests in klezmer, classical music, and other musical forms. He is linked to free jazz and avant garde forms of jazz. , executive vice president of technology at First American. Searching title on just one property takes a worker an hour now, Hollenbeck said. With FAST, virtually no manual labor is needed for a search, he said. FAST searches First American's database in about six minutes. The added efficiency is projected to cut costs and double title operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: in the next three years. Last year, First American's operating margins were 6 percent in its title business. "It will enable them to reduce their expenses per order, improve their service and hopefully reduce their work force," Buonafede said. "You won't see that happening tomorrow, or next quarter. It is going to be a five-year process." First American's software makeover has had its hitches. The initial run at developing the system flopped, officials said, and was scrapped in 1999 after two years of work and millions of dollars in development costs. "We threw it away the first time we built it," Hollenback said. "We did not have the right people in the company. We hired the wrong vendor." First American has crossed most major hurdles as far as software development, analysts said. The challenge now lies in installing the system in all of its title offices and getting it up to speed. As with any big tech project, refinements are likely, officials said. "We are changing the pistons on the motor as we are driving down the highway," Hollenback said. "We have all the stability issues behind us. Now we have to add features that people want - bells and whistles A slang English term for exceptional features in some product. In the computer field, it typically refers to functions in software that may be greatly appreciated by some users, even though they may not be necessary most of the time. ." [GRAPH OMITTED] [GRAPH OMITTED] First American Corp. YEAR (Dec. 31) 2001 2000 Revenue (billions) $3.7 $2.9 Operating Expenses (billions) 3.4 2.7 Operating Income (millions) 329.5 153.8 Net Income (millions) 167.2 82.2 Earnings Per Share $2.20 $1.20 RELATED ARTICLE: SUMMARY Business: Title insurance and real estate services Headquarters: Santa Ana President: Parker S. Kennedy Market Cap: $ 1.5 billion Dividend Yield: 1.5% Total Liabilities: $ 1.8 billion P/E Ratio P/E ratio Current stock price divided by trailing annual earnings per share or expected annual earnings per share. Assume XYZ Co. sells for $25.50 per share and has earned $2.55 per share this year; $25.50 = 10 times $2.55. XYZ stock sells for ten times earnings. : 9.13 Long-Term Debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. : $436 million |
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