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First American Financial Corp (FAF -0.69%)
Q3Â 2020 Earnings Call
Oct 22, 2020, 11:00 a.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Greetings. And welcome to the First American Financial Corporation Third Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions].
A copy of today's press release is available on First American's website at www.firstam.com/investor. Please note that the call is being recorded and will be 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 13711297.
We will now turn the call over to Craig Barberio, Vice President, Investor Relations, to make an introductory statement.
Craig Barberio -- Vice President, Investor Relations
Good morning, everyone, and welcome to First American's Earnings Conference call for the third quarter of 2020. Joining us today will be our Chief Executive Officer, Dennis Gilmore, and Mark Seaton, Executive Vice President and Chief Financial Officer.
Some of the statements made today may contain forward-looking statements that do not relate strictly to historical or current fact. 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. Risks and uncertainties exist that may cause results to differ materially from those set forth in these forward-looking statements. For more information on these risks and uncertainties, please refer to this morning's earnings release and the risk factors discussed in our Form 10-K and subsequent SEC filings.
Our presentation today 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. For more information on these non-GAAP financial measures, including presentation with and reconciliation, to the most directly comparable GAAP financials, please refer to this morning's earnings release which is available on our website at www.firstam.com.
I will now turn the call over to Dennis Gilmore.
Dennis Gilmore -- Chief Executive Officer
Good morning and thank you for joining our call. I'll start with a review of our third quarter results, provide perspective on the actions we are taking with our property and casualty business, and discuss our outlook for the remainder of 2020. Mark will discuss our earnings in greater detail and provide an update on our company's capital position.
We delivered strong financial results in the third quarter. Revenues were $1.9 billion, up 15%, and earnings per share of $1.62. Our pre-tax margin in our title segment hit a record 19%. As volumes increased, we also kept our focus on cost efficiency, achieving a 40% success ratio, well ahead of our 60% target.
Purchase revenues were up 20% in the third quarter, driven by closed order growth and higher fee per file. Low mortgage rates are driving substantial demand. And given the limited inventory of houses for sale, price appreciation has been with us.
Our pipeline is strong heading into the fourth quarter as purchase open orders were up 14% in the third quarter and this trend continues in October.
Refinance revenues were up 92% in the third quarter, driven by strong growth in closed orders. Low rates continue to support elevated open orders which were averaging 3,200 per day in the third quarter. So far, in October, we are opening 2800 orders per day.
In our commercial business, revenues in the third quarter declined 29%, improving from the 39% decline of the second quarter. The overall commercial market continues its recovery with improvements varying by asset class.
This quarter, we started to see a return of large transactions. We are encouraged that our open orders improved throughout the third quarter, with orders down only 7% year-over-year. Commercial orders over the last six weeks are flat to last year.
Turning to our Specialty Insurance segment, we have initiated a process to sell the property and casualty business. While this business has performed well over the years, based on recent financial results, we have decided to focus on our core business and redeploy our capital to areas with higher expected returns.
Our home warranty business delivered strong growth, improved retention rates, and effective expense management throughout the quarter. The business continued to experience an increase in claims frequency, particularly in the appliance and plumbing trades, which we believe are attributable to the pandemic. Due in part to this trend, we are in the process of making policy changes and adjusting our pricing to offset cost pressure in the business. We expect the home warranty business to continue to generate strong margin performance this year.
Going into the fourth quarter, we are optimistic that low rates and demographic tailwinds will continue to drive strong purchase and refinance activity. And as we have indicated throughout the year, we expect refinance volumes to remain elevated well into next year. While our improving commercial pipeline increases our optimism going forward, we do not anticipate the business will meet last year's record performance.
Throughout the third quarter, we experienced elevated order volumes and the vast majority of our workforce continues to work remotely. Our performance has demonstrated the strength and flexibility of our business.
And while the pandemic has greatly slowed major sectors of the economy, it has accelerated the digital innovation in our markets, validating our strategy and the investments we've made over the past few years to secure our leadership position in data, title automation and digital closings.
I'd now like to turn the call over to Mark.
Mark Seaton -- Executive Vice President, Chief Financial Officer
Thank you, Dennis. In the third quarter, we earned $1.62 per diluted share. This includes net realized investment gain totaling $45 million or $0.30 per diluted share, an impairment on assets held for sale of $73 million or $0.49 per diluted share. Excluding these two items, we earned $1.80 per share.
In the Title Insurance and Services segment, direct premium and escrow fees were up 12% compared with last year. This growth reflects a 30% increase in the number of closed orders, partially offset by a 13% decline in the average revenue per order.
The average revenue per order decreased to $2,193 due to a shift in the mix of direct title orders to lower premium refinance transactions. At a product level, we continue to see higher average revenue per order for purchase transactions, which increased 8% this quarter, as well as for refinance transactions, which increased 4%. The average revenue per order for commercial transactions declined 17% as the number of large transactions lagged the prior-year.
Agent premiums, which are recorded on approximately a one quarter lag relative to direct premiums, were up 10%. The agent split was 79.3% of agent premiums.
Information and other revenues totaled $283 million, up 38% compared with last year. A number of factors contributed to this growth, including the growth in mortgage origination that led to higher demand for the company's title information products and our acquisition of Docutech, which isn't included in the prior-year results. Additionally, we benefited from services provided to support a temporary pandemic-related government program in Canada.
Investment income within the Title Insurance and Services segment was $45 million, down 38% primarily due to the impact of the decline in short-term interest rates on the investment portfolio and cash balances.
Personnel costs were $481 million, up 8% from the prior year. This increase was primarily due to higher incentive compensation expense and salary expense and higher costs as a result of recent acquisitions, partially offset by lower employee benefit expense.
Other operating expenses were $251 million, up 15% from last year. The increase was primarily due to higher production related costs as a result of the growth in order volume.
The provision for title policy losses and other claims was $70 million or 5% of title premiums and escrow fees, an increase from the 4% loss provision rate in the prior year. Claims experience continued to be favorable relative to our expectations. Incurred title claims totaled $33 million in the third quarter, a 21% decline relative to 2019. To date, we have not seen an uptick in claims. Our intent is to maintain a 5% loss rate until we have more visibility into how the current environment will affect our claims experience.
Depreciation and amortization expense was $36 million in the third quarter, up $6 million or 21% compared with the same period last year, primarily due to higher amortization of intangibles related to recent acquisitions.
Pretax income for the Title Insurance and Services segment was $337 million in the third quarter compared with $254 million in the prior year. Pretax margin was a record 19% compared with 16.5% last year. Excluding the impact of net realized investment gains, pre-tax margin was 17.1% this quarter compared with 16.4% last year.
As Dennis mentioned, we have initiated a plan to sell our property and casualty insurance business. For the first nine months of 2020, our property and casualty business recorded a pre-tax loss of $91.5 million.
This amount includes two items. First, an impairment on assets held for sale of $73.3 million, which was recorded this quarter. And second, a $5.6 million reserve strengthening recorded in the first half of 2020. The results of the property and casualty business will continue to be recorded in the Specialty Insurance segment until a sale is completed.
Net expenses in the Corporate segment were $22 million, up $3 million compared with last year, largely due to higher interest expense associated with our $450 million senior notes transaction, which closed in May.
The effective tax rate for the quarter was 24.6%, in line with our normalized tax rate. Notes and contracts payable on our balance sheet totaled just over $1 billion as of September 30, which consists of $992 million of senior notes, $13 million of trustee notes and $6 million of other notes and [Technical Issues].
I would now like to turn the call back over to the operator to take your questions.
Questions and Answers:
Operator
[Operator Instructions] Our first question is from John Campbell with Stephens Incorporated.
John Campbell -- Stephens, Inc. -- Analyst
Hey, guys. Good morning. I just want to clarify a couple of things on the P&C business. So, you guys are just selling, I guess, just P&C and not home warranty. That's right?
Dennis Gilmore -- Chief Executive Officer
That is correct, yes.
John Campbell -- Stephens, Inc. -- Analyst
Okay. And then, Mark, thanks for the earnings breakdown. But if you could maybe provide what the P&C revenue was over the last nine months?
Mark Seaton -- Executive Vice President, Chief Financial Officer
Yes, John. So, year-to-date, it's $101 million in revenue.
John Campbell -- Stephens, Inc. -- Analyst
Okay. And I think you also said, you're going to hold that in the specialty segment. You're not moving that to discontinued ops, is that right?
Mark Seaton -- Executive Vice President, Chief Financial Officer
Yeah. We looked at that, and it's not material enough to move it to discontinued ops. So, it's just going to be recorded in specialty insurance, just like it always has been until we consummate a transaction.
Dennis Gilmore -- Chief Executive Officer
Yeah. John, I'll just give you some additional detail. The results will stay in the specialty segment and we're looking to get the transaction completed by the first half of next year. So, we'll give further update at that point.
John Campbell -- Stephens, Inc. -- Analyst
Okay. And then, on the higher home warranty claims, you guys highlighted the pandemic as maybe kind of influencing trends. How did you guys get to that conclusion? And I guess, what is it about the pandemic? Is it just people at home more and it's just kind of more wear and tear on the home?
Dennis Gilmore -- Chief Executive Officer
Exactly. It's kind of what we mentioned in the second quarter, if I'm not mistaken. And the business is doing really well. It's interesting, our sales are really strong, both consumer direct and our real estate channels. I think, John, as you know, our seasonally worst quarter or toughest quarter is always the third quarter. So, no surprise there. But inside the quarter, we saw an uptick of our appliance claims and our plumbing claims. And we can't draw a straight line back to the pandemic, but it's just logical the way you laid it out. People are home more, they're putting more stresses on their housing system. So, we're going to take a look at some of our policies right there and do some price adjustments to make sure that our returns are appropriate for that business. But all in all, that business is doing well. We think we'll have a very strong fourth quarter and 2021.
John Campbell -- Stephens, Inc. -- Analyst
Okay. That's helpful. If I can squeeze in maybe one more on the P&C business. Any kind of rough estimate about the capital being released, any kind of idea about proceeds and maybe what you would do with that?
Mark Seaton -- Executive Vice President, Chief Financial Officer
Well, the carrying value on the books as of 09/30 was $50 million. So, we're going through a process and, ultimately, we don't know what the proceeds will be, but the carrying value is $50 million right now.
Dennis Gilmore -- Chief Executive Officer
John, with regards to the proceeds, bottom line here is, we've discussed that this has been a good business for some of the years, but it's been very volatile. It's been a drag on earnings over the last couple of years. And we're just going to redeploy back into more of our core business where we have a more consistent higher return profile.
John Campbell -- Stephens, Inc. -- Analyst
Yeah, makes sense to me. Thank you, guys.
Dennis Gilmore -- Chief Executive Officer
Thanks.
Operator
Our next question is from Bose George with KBW. Please proceed with your question.
John Campbell -- Stephens, Inc. -- Analyst
Hey, guys. Good morning.
Bose George -- Keefe, Bruyette & Woods -- Analyst
Dennis, you made a comment about the performance expectations for next year. Could you just repeat that? I wasn't sure if you're comparing it versus 2020 or 2019.
Dennis Gilmore -- Chief Executive Officer
In general or any specific segment? Or both?
Bose George -- Keefe, Bruyette & Woods -- Analyst
I think your comment was in general. I think it was just overall performance.
Dennis Gilmore -- Chief Executive Officer
I just think we're optimistic actually going forward right now. It's been, as you well know, really volatile year, but when we step back and look at things right now, purchase very strong. And I'll just give a little detail. On purchase right now, we'll still come back into some of our seasonal patterns. But for example, orders right now through October are up 17% from a year ago. So, we'll still see seasonality in the fourth and first quarter, but as I said at an elevated order volume. So, that's on purchase.
On refinance, we still think the 3,000 a day order volumes are good. We've got lenders building capacity, spreads are still high. So, we think that's still a good number looking forward.
And then, probably, the area where we're probably getting more optimistic faster than we may have thought even two quarters ago is the commercial market. It's improving. And couple of things happened in the quarter that are interesting to us. Over the last six weeks or so, our order volumes were flat from a year ago. So, that's very encouraging. Although our revenue was down 29%, the business is still a very profitable business. So, it's a very strong business.
And then, inside the market, we saw a return of some large deals. So, that's good. And we're seeing some real strength in segments right now. As you probably would guess, in commercial -- excuse me, in warehouse or office buildings are starting to move. The weakness is still hotels and some retail segments.
But all in all, we're encouraged by commercial starting to heal faster than maybe we thought even two months ago.
Bose George -- Keefe, Bruyette & Woods -- Analyst
Okay, great. Thanks a lot for that. And then, actually, just curious what your thoughts are on buyback. Earnings are great. The stock is down quite a bit. It's been lackluster for a little while. So, yeah, just curious if you think that's a good use of capital here.
Mark Seaton -- Executive Vice President, Chief Financial Officer
Yeah. Bose, this is Mark. Yeah, that's something that we're always looking at. We did feel like our earnings were strong. And one thing is too, our earnings are higher than they were a year ago and yet our stock quite hasn't recovered, not anywhere near where it was pre-pandemic. So, it's something that we're continually thinking about.
Dennis Gilmore -- Chief Executive Officer
Yeah, I think we're taking a look at it right now. And just by the way, the earnings are very strong and then we're optimistic looking forward right now.
Bose George -- Keefe, Bruyette & Woods -- Analyst
Okay, great. Thanks guys.
Operator
Our next question is from Jack Micenko with Susquehanna Financial Group. Please proceed with your question.
Jack Micenko -- Susquehanna Financial Group -- Analyst
Hi, good morning. I wanted to talk through revenue per order. Normally see a nice step-up 4Q from 3Q. A lot of that is commercially driven. So, I'm thinking out loud here, you've got a purchase market that has kind of held in stronger than seasonally. Certainly, you've got the refi which is dilutive, but you've also got the commercial beginning to come back and maybe there is sort of a catch up dynamic at play here too as transactions that maybe have been postponed through the prior quarters. Is it possible -- is it you're thinking from what you see today that the revenue per order, that step up could be abnormally higher sequentially than it maybe had been in prior years?
Dennis Gilmore -- Chief Executive Officer
I would say it's -- when you look back historically, we always have had a higher fee per file in Q4 because of the reasons you mentioned. Last year was up about $100 an order Q3 to Q4. It's hard to say. But based on where we -- because a lot of it ultimately comes down to how strong commercial is going to be, and that's something that's a little bit of unknown. But where we see now is we do think there's going to be step up like there always is. So, we think fee per file will be higher in Q4. How much higher? It's just going to depend on the strength of the commercial market.
Jack Micenko -- Susquehanna Financial Group -- Analyst
Okay. And then, on the specialty loss ratio, I know the -- obviously, the severity and the volatility from the P&C business is much, much greater. But if we were to sort of back out the P&C volatility, conceptually, how should we think about that loss ratio with just home warranty on a go-forward basis?
Mark Seaton -- Executive Vice President, Chief Financial Officer
The loss ratio for home warranty is very seasonal, right? So we get a lot of claims in the summer time when air conditioners go out. We don't get many claims in the winter time. Through the cycle and on an annualized basis, typically, we're somewhere in the 52% to 54% range, somewhere in there. Obviously, that's going to be higher or lower depending on the quarter. But annually, it's about 52% to 54%.
Jack Micenko -- Susquehanna Financial Group -- Analyst
Sure. And then, you said you're putting in some changes -- policy changes. Besides price, what would that look like, maybe like a -- I don't know, like a freeze period upfront or something before you can make a claim. I'm just curious kind of some of the changes you're making to address the higher claims.
Dennis Gilmore -- Chief Executive Officer
Sure. Yeah, it's multiple things. You look at price, you look at coverage, you look at service fees, so you look at a lot of different issues to make sure you're priced appropriate for the returns.
Jack Micenko -- Susquehanna Financial Group -- Analyst
Okay. All right, thank you.
Dennis Gilmore -- Chief Executive Officer
Thank you.
Operator
Our next question is from Chad Coe with Intrinsic Edge. Please proceed with your question.
Okay. Moving on to Mark Hughes with SunTrust. Please proceed with your question.
Mark Hughes -- SunTrust Robinson Humphrey -- Analyst
Yes, thank you. Good morning. The 8% appreciation in residential ARPO, in the purchase ARPO, was that a mix shift? Or how much of that might have been just home price appreciation?
Mark Seaton -- Executive Vice President, Chief Financial Officer
The vast majority of it was home price appreciation. So, as you know, Mark, our fee per file that we report is really on our direct orders and it's really our direct operations which are on the West -- mainly the western states. But when you look at it per state, California, which is our biggest state, we had a fee-per-file increase in California of 8%. I can go along with Oregon, Washington and Arizona. They were all plus or minus in that range. So, it's really just home price appreciation and not really a big shift in the mix.
Mark Hughes -- SunTrust Robinson Humphrey -- Analyst
Your agent premium was up 10%, pretty strong number, but it was reported on a one quarter lag. Your direct was down 4% last quarter. Was that a mix shift? It seems pretty strong if I'm thinking about it properly.
Mark Seaton -- Executive Vice President, Chief Financial Officer
Yeah. I would just say that, like, most of the time, the one quarter lag is a good proxy, four out of five quarters or so. This quarter is really one. So, you're right. We would have expected kind of a lower agency growth based on what happened in Q2. But remittances came in. Refis are really strong. Commercial is really strong for agencies. It's not really a mix shift. I think it's just timing of remittances more than anything else.
Mark Hughes -- SunTrust Robinson Humphrey -- Analyst
It seemed like you closed more of the orders than you have historically. Hard to judge precisely. Any comment other than the obvious, which is -- people are pretty committed to their refi and purchase at this time, but anything on top of that?
Mark Seaton -- Executive Vice President, Chief Financial Officer
Are you talking about the direct business or the agency business?
Mark Hughes -- SunTrust Robinson Humphrey -- Analyst
I'm talking about the direct business. You seem to close a higher proportion of the orders.
Dennis Gilmore -- Chief Executive Officer
I would say we're very busy, and we're very efficient right now. So, I wouldn't go any deeper than that. We're doing a very good job and the operation is running very efficiently.
Mark Hughes -- SunTrust Robinson Humphrey -- Analyst
Thank you.
Dennis Gilmore -- Chief Executive Officer
Thank you.
Operator
[Operator Instructions] Our next question is from Mark DeVries with Barclays. Please proceed with your question.
Mark DeVries -- Barclays -- Analyst
Thanks. I had a clarifying question around commercial. I think as you alluded to, obviously, you're already seeing a return of big deals and I think that's reflected in the ARPO being up pretty materially in commercial. Are you continuing to see an increase in larger deal sizes in your pipeline? And should we expect that commercial ARPO to continue to drift higher in the fourth quarter?
Mark Seaton -- Executive Vice President, Chief Financial Officer
Yeah, thanks for the question. Yes, we are. So, kind of like I mentioned, we're starting to see the return of the large deals. You'll see the impact in the fourth quarter. I do want to caution, though, we're not going to match the fourth quarter 2019. That was a record quarter. But the market started to improve faster than we thought it would even two quarters ago. So, we're encouraged right now with what we're seeing in commercial.
Mark DeVries -- Barclays -- Analyst
Okay. Remind me what the normal lag is between the opening and closing a commercial order. Is there anything in this environment that's like pushing that out at all?
Mark Seaton -- Executive Vice President, Chief Financial Officer
No. I would say the normal lag is similar to a purchase transaction, roughly 55 to 60 days. The one thing with commercial, though, there's a lot more dispersion around the mean, right? We can open an order, we might not close it for a year. We can open an order, we can close it two weeks later. So, it doesn't follow the same open to close as purchase or refi. We've got a lot of certainty. Commercial is a lot more dispersed around the mean.
Mark DeVries -- Barclays -- Analyst
Okay, got it. And just finally, as you alluded to in your prepared comments, the success ratio came in much better than your target. Should we expect a catch up on that? Or does that reflect some expense discipline, which should keep your success ratio below target for the near term?
Dennis Gilmore -- Chief Executive Officer
There is not going to be a catch-up. We're running -- just running very efficiently. The decisions we made, by the way, earlier in this year to not allow [indecipherable] smart decision. We didn't have to hire anybody back. And then, all the efforts we're doing on title automation, both in our data strategy and our digital closing strategies, are all paying off right now. So, we're seeing the benefit in our operations right now.
Mark DeVries -- Barclays -- Analyst
Okay. Are you now running closer to full capacity, such that if you see more volume you may need to at least be closer to that 60% target to scale up?
Dennis Gilmore -- Chief Executive Officer
I can't predict the future, but we're staffed accordingly right now. So, we don't have any issues with that. We've augmented our staff slightly with some temps to deal with some of the volume surges. But we're feeling good about the business. We're feeling good about our position right now.
Mark DeVries -- Barclays -- Analyst
Got it, thank you.
Dennis Gilmore -- Chief Executive Officer
Thank you. Our next question is from Mark Hughes with SunTrust. Please proceed with your question.
Mark Hughes -- SunTrust Robinson Humphrey -- Analyst
Yeah. The Canada revenue you referenced in the release, how much was that? And is that continuing into the fourth quarter here?
Mark Seaton -- Executive Vice President, Chief Financial Officer
In the third quarter, it was $18 million. We're talking about the temporary revenue that we're getting from this government relief program that we're a subcontractor to. So, it's $18 million in the third quarter, and it really ends in October. So, there'll be a little bit in the fourth quarter, but most of it will go away in Q4.
Mark Hughes -- SunTrust Robinson Humphrey -- Analyst
Thank you.
Operator
Our next question is from John Campbell with Stephens Incorporated. Please proceed with your question.
John Campbell -- Stephens, Inc. -- Analyst
Hey, guys. Thanks. Just a quick follow-up. We haven't -- obviously, since the crisis, we haven't talked much about the default business. Obviously, for next year, everybody has got a lot of concerns. You guys are raising reserves. I think Stewart's obviously raising reserves as well kind of in anticipation of that. But there is also the positive impact, I guess, of default. But if you can maybe just kind of walk through the assets you have there now, what the revenue impact has been with the moratorium and maybe what that could look like next year if default activity kind of picks up.
Mark Seaton -- Executive Vice President, Chief Financial Officer
Yeah. Thanks, John. So, we have a really good default business, and it serves as a great hedge for us. Right? As you mentioned before, back in the last financial crisis, the default business was our highest profit center in the company by a huge margin. As things have recovered here these last 10 years or so, the volumes have really fallen off, but it's great to be there in case things -- foreclosures do spike up.
So far this year, our default business is running at about $35 million of revenue or so year-to-date. And it's basically flat versus last year. So, we haven't seen a pickup in our really default activity. But again, we haven't seen a pickup in foreclosures too. So, if we do see that, then our default business will start to come on.
Dennis Gilmore -- Chief Executive Officer
Yeah. And John, it's Dennis. Just longer term, we were the first to move our reserve rate up, thinking that we would see an uptick in default. And I still think that's a possibility going into 2001 as the moratoriums kind of roll-off and the forbearances roll off.
But countering that right now is the real strong appreciation going on in the housing market. And I think, as you know, if people have equity in their house, they're typically not going to let it go to foreclosure. So, I think the equity situation is going to, I'll say, blunt any significant real increase in defaults at this stage right now.
John Campbell -- Stephens, Inc. -- Analyst
Okay, that's helpful. And I think -- Dennis, I think we might have talked about this last quarter, but where are you guys right now as far as the -- where you're running reserves versus the actuarial estimate? And I think you said maybe over 10% you have to release, is that right?
Dennis Gilmore -- Chief Executive Officer
That is correct. And I'll let Mark give the first part of that answer.
Mark Seaton -- Executive Vice President, Chief Financial Officer
So, as of 09/30, we're about 5% over the actuary. And again, we still have -- we're not close to that 10% range. But we're in a very healthy reserve position right now.
John Campbell -- Stephens, Inc. -- Analyst
Absolutely. Okay, thank you, guys.
Dennis Gilmore -- Chief Executive Officer
Thank you.
Operator
Our next question is with Mark Hughes with SunTrust. Please proceed with your question.
Mark Hughes -- SunTrust Robinson Humphrey -- Analyst
Yeah. Thanks for indulging me. If we think about the impact in the home warranty business from the appliances and the plumbing, would it be fair to say that's kind of the 8 points you went from the loss ratio of 61 to 69? Is it fair to say that that represents the increased frequency that you saw?
Mark Seaton -- Executive Vice President, Chief Financial Officer
Yeah. No, that's definitely fair, Mark. Home warranty business, we talked about, it's really great. People are staying home. As Dennis mentioned, we're getting higher claims and that's really attributable to people staying at home more. So, appliance, plumbing trade, those are causing higher losses for us.
Mark Hughes -- SunTrust Robinson Humphrey -- Analyst
Okay, thank you very much.
Mark Seaton -- Executive Vice President, Chief Financial Officer
Thank you, Mark.
Operator
There are no additional questions at this time. That concludes this morning's call. We'd like to remind listeners that today's call will be available for replay on the company's website or by dialing 877-660-6853 or 201-612-7415 and enter the conference ID, 13711297.
[Operator Closing Remarks]
Duration: 33 minutes
Call participants:
Craig Barberio -- Vice President, Investor Relations
Dennis Gilmore -- Chief Executive Officer
Mark Seaton -- Executive Vice President, Chief Financial Officer
John Campbell -- Stephens, Inc. -- Analyst
Bose George -- Keefe, Bruyette & Woods -- Analyst
Jack Micenko -- Susquehanna Financial Group -- Analyst
Mark Hughes -- SunTrust Robinson Humphrey -- Analyst
Mark DeVries -- Barclays -- Analyst
