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First American (FAF) Signs Agreement to Acquire Docutech

Zacks Equity Research

First American Financial Corporation FAF inked an agreement to acquire Docutech, a leading entity in the U.S. document technology solutions industry. Subject to customary approval, the $350-million deal is expected to close by the end of March.

Powered by its innovative technology platform, Docutech caters to the needs of mortgage, home equity and consumer lending by offering a diverse range of regulatory-compliant document technology solutions, including document generation, eDelivery, eSign, eClose and print fulfillment.

Deal Benefits

The buyout of Docutech will leverage First American’s existing abilities as well as property and homeownership data to offer enhanced end-to-end digital mortgage and settlement services to customers.

As Docutech works closely with renowned lenders, third-party and proprietary loan origination systems; the acquisition is expected to strengthen First American’s relationship with these industry members.

Moreover, the combined entity is anticipated to accelerate digital transformation of the real estate settlement process. Notably, the deal is expected to be accretive to the company’s 2020 earnings.

First American pursues acquisitions to strengthen its core business, and expand its valuation and data businesses. In the last month, the company acquired the remaining stake in Title Security Agency, LLC. Notably, it was a minority owner of the same for five years. The buyout will likely provide First American Financial exposure to title and escrow services for residential and commercial transactions in Arizona.

First American offers financial services through Title Insurance and Services, and Specialty Insurance segments. The Docutech buyout is expected to benefit the Title Insurance and Services segment, which provides title insurance, closing and/or escrow services, and similar or related services domestically and internationally in connection with residential and commercial real estate transactions. The segment’s revenues were $1.6 billion in fourth-quarter 2019, up 21.1% year over year.

Shares of the Zacks Rank #3 (Hold) property and casualty insurer have gained 27.9% in a year, outperforming the industry's growth of 11.8%.

 

 

Stocks to Consider

Some better-ranked stocks in the same space include CNA Financial Corporation CNA, Markel Corporation MKL and American Financial Group, Inc. AFG. While CNA Financial currently sports a Zacks Rank #1 (Buy), Markel and American Financial carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

CNA Financial offers commercial property and casualty insurance products mainly across the United States. The company beat the Zacks Consensus Estimate in each of the trailing four quarters, the average beat being 9.4%.

Markel is a diverse financial holding company. It markets and underwrites specialty insurance products in the United States, the U.K., Canada and internationally. The company beat the Zacks Consensus Estimate in two of the last four quarters, the average beat being 23.14%.

American Financial engages primarily in property and casualty insurance products in the United States, with a focus on specialized commercial products for businesses. The company beat the Zacks Consensus Estimate in three of the trailing four quarters, the average beat being 5%.

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First American Financial Corporation (FAF) : Free Stock Analysis Report
 
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