10-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2005

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                                  to                                 

Commission file number 001-13585

(Exact name of registrant as specified in its charter)

Incorporated in California	95-1068610
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1 First American Way, Santa Ana, California 92707-5913

(Address of principal executive offices) (Zip Code)

(714) 800-3000

Registrant’s telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:

Common	New York Stock Exchange
Rights to Purchase Series A Junior Participating Preferred	New York Stock Exchange
(Title of each class)	(Name of each exchange on which registered)

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  x    No  ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.    Yes  ¨    No  x

Indicate by check mark whether registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (17 C.F.R. § 229.405) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ¨

Indicate by check mark if the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  x            Accelerated filer  ¨            Non-accelerated filer  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

The aggregate market value of voting stock held by non-affiliates of the Registrant as of June 30, 2005 was $3,690,207,055.

On March 8, 2006, there were 95,975,446 shares of Common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s definitive proxy statement with respect to the 2006 annual meeting of the shareholders are incorporated by reference in Part III of this report. The definitive proxy statement will be filed no later than 120 days after the close of Registrant’s fiscal year.

PART I

CERTAIN STATEMENTS IN THIS ANNUAL REPORT ON FORM 10-K, INCLUDING THOSE RELATING TO INCREASES IN THE COMPANY’S SHARE OF THE TITLE INSURANCE MARKET, THE COMPANY’S COMMERCIAL SALES PROGRAM, INTERNATIONAL SALES EFFORTS, RECURRING TRENDS THAT AFFECT THE COMPANY’S BUSINESS, THE MORTGAGE INFORMATION SEGMENT’S MOVE TO A NEW OFFICE FACILITY, THE EFFECT OF CLASS ACTIONS, OTHER LITIGATION AND REGULATORY MATTERS, THE PAYMENT OF DIVIDENDS, THE EFFECT OF THE IMPLEMENTATION OF SFAS 123R, USE OF PROCEEDS FROM THE SALE OF THE COMPANY’S UNSECURED DEBT SECURITIES, REGULATORY RESTRICTIONS ON DIVIDENDS, LOANS AND ADVANCES AVAILABLE TO THE COMPANY, CASH REQUIREMENTS, FINANCIAL POSITION, FUNDING FOR NON-QUALIFIED SUPPLEMENTAL BENEFIT PLANS AND BENEFIT PAYMENTS ARE FORWARD LOOKING. RISKS AND UNCERTAINTIES EXIST THAT MAY CAUSE RESULTS TO DIFFER MATERIALLY FROM THOSE SET FORTH IN THESE FORWARD-LOOKING STATEMENTS. FACTORS THAT COULD CAUSE THE ANTICIPATED RESULTS TO DIFFER FROM THOSE DESCRIBED IN THE FORWARD-LOOKING STATEMENTS INCLUDE: INTEREST RATE FLUCTUATIONS; CHANGES IN THE PERFORMANCE OF THE REAL ESTATE MARKETS; LIMITATIONS ON ACCESS TO PUBLIC RECORDS AND OTHER DATA; GENERAL VOLATILITY IN THE CAPITAL MARKETS; CHANGES IN APPLICABLE GOVERNMENT REGULATIONS; CONSOLIDATION AMONG THE COMPANY’S SIGNIFICANT CUSTOMERS AND COMPETITORS; THE COMPANY’S CONTINUED ABILITY TO IDENTIFY BUSINESSES TO BE ACQUIRED; CHANGES IN THE COMPANY’S ABILITY TO INTEGRATE BUSINESSES WHICH IT ACQUIRES; AND OTHER FACTORS DESCRIBED IN THIS ANNUAL REPORT ON FORM 10-K. THE FORWARD-LOOKING STATEMENTS SPEAK ONLY AS OF THE DATE THEY ARE MADE. 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.

Item 1.    Business

The Company

The First American Corporation was founded in 1894 as Orange County Title Company, succeeding to the business of two title abstract companies founded in 1889 and operating in Orange County, California. In 1924, the Company began issuing title insurance policies. In 1986, the Company began a diversification program which involved the acquisition and development of business information companies closely related to the real estate transfer and closing process. Twelve years later, the Company expanded its diversification program to include business information products and services outside of the real estate transfer and closing process. The Company is a California corporation and has its executive offices at 1 First American Way, Santa Ana, California 92707-5913. The Company’s telephone number is (714) 800-3000.

General

The First American Corporation, through its subsidiaries, is engaged in the business of providing business information and related products and services. The Company has five reporting segments that fall within two primary business groups, financial services and information technology. The financial services group includes the Company’s title insurance and services segment and its specialty insurance segment. The title insurance and services segment issues residential and commercial title insurance policies, accommodates tax-deferred exchanges and provides escrow, equity loan, investment advisory, trust, thrift and other related products and services. The specialty insurance segment issues property and casualty insurance policies and sells home warranty products. The Company’s mortgage information, property information and risk mitigation and business solutions segments comprise its information technology group. The mortgage information segment offers tax monitoring, flood zone certification, default management services, document preparation and other real estate related services. The property information segment sells and analyzes data relating to real property, and provides database management and appraisal services. The risk mitigation and business solutions segment was created as a

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result of the September 2005 contribution of the Company’s credit information segment to First Advantage Corporation, a publicly traded subsidiary which made up at the time the Company’s screening information segment. This segment provides specialty credit reports to the mortgage lending and automotive lending industries, maintains a credit reporting agency which offers credit reports on sub-prime borrowers, and provides employment background screening, drug-free workplace programs and other occupational health services, employee assistance programs, corporate tax and incentive services, resident screening, motor vehicle records, transportation business credit services, automotive lead generation services, investigative services, computer forensics and electronic discovery services, supply chain security and consumer location services. Financial information regarding each of the Company’s business segments is included in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Item 8. Financial Statements and Supplementary Data” of Part II of this report.

The Company believes that it holds the number one market share position for many of its products and services, including flood zone determinations, based on the number of flood zone certification reports issued; tax monitoring services, based on the number of loans under service; credit reporting services to the mortgage industry, based on the number of credit reports issued; credit reporting services to the automotive lending industry, based on the number of credit reports issued; property data services, based on the number of inquiries; automated appraisals, based on the number of reports sold; and resident screening, based on the number of reports issued. The Company also believes that it holds the number two market share position for title insurance, based on premiums written; home warranty services, based on the number of home warranty contracts in effect; default management services, based on the number of foreclosure/bankruptcy cases reported; and drug testing administration, based on the number of reports issued.

Substantially all of the revenues for the Company’s title insurance and services and mortgage information segments result from resales and refinancings of residential real estate and, to a lesser extent, from commercial transactions and the construction and sale of new housing. Over one-half of the revenues in the Company’s property information segment and in excess of 20% of the revenues from the Company’s risk mitigation and business solutions segment also depend on real estate activity. The remaining portion of the property information and risk mitigation and business solutions segments’ revenues, as well as the revenues of the Company’s specialty insurance segment are isolated from the volatility of real estate transactions. Real estate activity is cyclical in nature and is affected greatly by the cost and availability of long-term mortgage funds. Real estate activity and, in turn, a large portion of the Company’s revenue base, can be adversely affected during periods of high interest rates and/or limited money supply. However, this adverse effect is mitigated in part by the continuing diversification of the Company’s operations into areas outside of the traditional real estate transfer and closing process.

The Financial Services Group

Title Insurance and Services Segment

The title insurance and services segment’s principal product is policies of title insurance on residential and commercial property. This segment also provides tax-deferred exchange, escrow, equity loan, investment advisory, trust, thrift and other related products and services.

Overview of Title Insurance Industry

Title to, and the priority of interests in, real estate are determined in accordance with applicable laws. In most real estate transactions, mortgage lenders and purchasers of real estate desire to be protected from loss or damage in the event that title is not as represented. In most parts of the United States, title insurance has become accepted as the most efficient means of providing such protection.

Title Policies.    Title insurance policies insure the interests of owners and lenders against defects in the title to real property. These defects include adverse ownership claims, liens, encumbrances or other matters affecting

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such title which existed at the time a title insurance policy was issued and which were not excluded from coverage. Title insurance policies are issued on the basis of a title report, which is prepared after a search of the public records, maps, documents and prior title policies to ascertain the existence of easements, restrictions, rights of way, conditions, encumbrances or other matters affecting the title to, or use of, real property. In certain instances, a visual inspection of the property is also made. To facilitate the preparation of title reports, copies of public records, maps, documents and prior title policies may be compiled and indexed to specific properties in an area. This compilation is known as a “title plant.”

The beneficiaries of title insurance policies are generally real estate buyers and mortgage lenders. A title insurance policy indemnifies the named insured and certain successors in interest against title defects, liens and encumbrances existing as of the date of the policy and not specifically excepted from its provisions. The policy typically provides coverage for the real property mortgage lender in the amount of its outstanding mortgage loan balance and for the buyer in the amount of the purchase price of the property. In some cases the policy might provide insurance in a greater amount where the buyer anticipates constructing improvements on the property. Coverage under a title insurance policy issued to a real property mortgage lender generally terminates upon the sale of the insured property unless the owner carries back a mortgage or makes certain warranties as to the title.

Before issuing title policies, title insurers seek to limit their risk of loss by accurately performing title searches and examinations. The major expenses of a title company relate to such searches and examinations, the preparation of preliminary reports or commitments and the maintenance of title plants, and not from claim losses as in the case of property and casualty insurers.

The Closing Process.    Title insurance is essential to the real estate closing process in most transactions involving real property mortgage lenders. In a typical residential real estate sale transaction, a real estate broker, lawyer, developer, lender or closer involved in the transaction orders title insurance on behalf of an insured. Once the order has been placed, a title insurance company or an agent conducts a title search to determine the current status of the title to the property. When the search is complete, the title company or agent prepares, issues and circulates a commitment or preliminary title report to the parties to the transaction. The commitment summarizes the current status of the title to the property, identifies the conditions, exceptions and/or limitations that the title insurer intends to attach to the policy and identifies items appearing on the title that must be eliminated prior to closing.

The closing function, sometimes called an escrow in western states, is often performed by a lawyer, an escrow company or a title insurance company or agent, generally referred to as a “closer”. Once documentation has been prepared and signed, and mortgage lender payoff demands are in hand, the transaction is “closed.” The closer records the appropriate title documents and arranges the transfer of funds to pay off prior loans and extinguish the liens securing such loans. Title policies are then issued insuring the priority of the mortgage of the real property mortgage lender in the amount of its mortgage loan and the buyer in the amount of the purchase price. The time lag between the opening of the title order and the issuance of the title policy is usually between 30 and 90 days. The seller and the buyer bear the risk of loss during this time lag. Any matter affecting title which is discovered during this period would have to be dealt with to the title insurers’ satisfaction or the insurer would exclude the matter from the coverage afforded by the title policy. Before a closing takes place, however, the closer would request that the title insurer provide an update to the commitment to discover any adverse matters affecting title and, if any are found, would work with the seller to eliminate them so that the title insurer would issue the title policy subject only to those exceptions to coverage which are acceptable to the buyer and the buyer’s lender.

Issuing the Policy: Direct vs. Agency.    A title policy can be issued directly by a title insurer or indirectly on behalf of a title insurer through agents which are not themselves licensed as insurers. Where the policy is issued by a title insurer, the search is performed by or at the direction of the title insurer, and the premium is collected and retained by the title insurer. Where the policy is issued by an agent, the agent performs the search, examines the title, collects the premium and retains a portion of the premium. The agent remits the remainder of the

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premium to the title insurer as compensation for bearing risk of loss in the event a claim is made under the policy. The percentage of the premium retained by an agent varies from region to region. A title insurer is obligated to pay title claims in accordance with the terms of its policies, regardless of whether it issues its policy directly or indirectly through an agent.

Premiums.    The premium for title insurance is due and earned in full when the real estate transaction is closed. Premiums are generally calculated with reference to the policy amount. The premium charged by a title insurer or an agent is subject to regulation in most areas. Such regulations vary from state to state.

The Company’s Title Insurance Operations

Overview.    The Company, through First American Title Insurance Company and its affiliates, transacts the business of title insurance through a network of direct operations and agents. Through this network, the Company issues policies in all states (except Iowa) and the District of Columbia. In Iowa, the Company provides abstracts of title only, because title insurance is not permitted by law. The Company also offers title services, either directly or through joint ventures, in Guam, Puerto Rico, the U.S. Virgin Islands, the Bahamas, Australia, Canada, Hong Kong, Ireland, Mexico, New Zealand, South Korea, the United Kingdom, Bulgaria, Croatia, the Czech Republic, Hungary, Poland, Romania, the Slovak Republic, Turkey, Spain and other territories and countries.

The Company plans to continue increasing its share of the title insurance market through strategic acquisitions and further development of its existing branch office and agency operations. The Company also continues to focus on expanding its share of the higher margin title insurance business conducted in connection with commercial transactions. The Company believes its national commercial market share has grown through programs directed at major developers, lenders and law firms.

Sales and Marketing.    The Company markets its title insurance services to a broad range of customers. The Company believes that its primary source of business is referrals from persons in the real estate community, such as independent escrow companies, real estate agents and brokers, developers, mortgage brokers, mortgage bankers, financial institutions and attorneys. In addition to the referral market, the Company markets its title insurance services directly to large corporate customers and mortgage lenders. As title agents contribute a large portion of the Company’s revenues, the Company also markets its title insurance services to independent agents. The Company’s marketing efforts emphasize the quality and timeliness of its services, process innovation and its national presence.

While virtually all personnel in the Company’s title insurance business assist in sales efforts, the Company maintains a sales force of more than 1,000 persons dedicated solely to marketing. This sales force, which is located throughout the Company’s branch office network, not only markets the Company’s title insurance services, but also certain of the Company’s other products. The Company provides its sales personnel with training in selling techniques, and each branch manager is responsible for hiring the sales staff and ensuring that sales personnel under his or her supervision are properly trained. In addition to this sales force, the Company has approximately 125 salespeople in its national commercial services division. One of the responsibilities of the sales personnel of this division is the coordination of marketing efforts directed at large real estate lenders and companies developing, selling, buying or brokering properties on a multi-state basis. The Company also supplements the efforts of its sales force through general advertising in various trade and professional journals.

The Company has expanded its commercial business base primarily through increased commercial sales efforts. Because commercial transactions involve higher coverage amounts and yield higher premiums, commercial title insurance business generates greater profit margins than does residential title insurance business. Accordingly, the Company plans to continue to emphasize its commercial sales program.

Although sales outside of the United States account for a small percentage of the Company’s revenues, the Company believes that the acceptance of title insurance in foreign markets has increased in recent years.

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Accordingly, the Company plans to continue its international sales efforts, particularly in Canada, the United Kingdom, Australia, South Korea and Hong Kong.

Underwriting.    Before a title insurance policy is issued, a number of underwriting decisions are made. For example, matters of record revealed during the title search may require a determination as to whether an exception should be taken in the policy. The Company believes that it is important for the underwriting function to operate efficiently and effectively at all decision making levels so that transactions may proceed in a timely manner. To perform this function, the Company has underwriters at the branch level, the regional level and the national level.

Agency Operations.    The relationship between the Company and each agent is governed by an agency agreement which states the conditions under which the agent is authorized to issue title insurance policies on behalf of the Company. The agency agreement also prescribes the circumstances under which the agent may be liable to the Company if a policy loss is attributable to error of the agent. Such agency agreements typically have a term of one to five years and are terminable immediately for cause.

Due to the high incidence of agency fraud in the title insurance industry during the late 1980s, the Company instituted, and continues to employ, measures to strengthen its agent selection and audit review programs. In determining whether to engage an independent agent, the Company obtains information regarding the agent’s experience, background, financial condition and past performance. The Company maintains loss experience records for each agent and conducts periodic audits of its agents. The Company also maintains a large number of agent representatives and agent auditors. Agent representatives periodically visit agents and examine their books and records. In addition to periodic audit reviews, an expanded agent audit review will be triggered if certain “warning signs” are evident. Warning signs that can trigger an audit review include the failure to implement Company-required accounting controls, shortages of escrow funds and failure to remit underwriting fees on a timely basis.

Title Plants.    The Company’s network of title plants constitutes one of its principal assets. A title search is conducted by searching the public records or utilizing a title plant. While public title records generally are indexed by reference to the names of the parties to a given recorded document, most title plants arrange their records on a geographic basis. Because of this difference title plant records generally are easier to search. Most title plants also index prior policies, adding to searching efficiency. Many title plants are computerized. Certain offices of the Company utilize jointly owned plants or utilize a plant under a joint user agreement with other title companies. The Company believes its title plants, whether wholly or partially owned or utilized under a joint user agreement, are among the best in the industry.

The Company has significantly enhanced its investment in title plants through three business combinations. The first was the formation of a joint venture with Experian Information Solutions on January 1, 1998. Experian contributed to the joint venture its real estate information division. In June 1998 the Company acquired Data Tree Corporation, which owns the largest database of real estate document images. In July 2000 the Company and LandAmerica Financial Group formed Datatrace Information Services LLC. This business, which is 80% owned by the Company and 20% owned by LandAmerica, is a provider of comprehensive title information delivery systems.

The Company’s title plants are carried on its balance sheet at original cost, which includes the cost of producing or acquiring interests in title plants or the appraised value of subsidiaries’ title plants at dates of acquisition for companies accounted for as purchases. Thereafter, the cost of daily maintenance of these plants is charged to expense as incurred. A properly maintained title plant has an indefinite life and does not diminish in value with the passage of time. Therefore, in accordance with generally accepted accounting principles, no provision is made for depreciation of these plants. Since each document must be reviewed and indexed into the title plant, such maintenance activities constitute a significant item of expense. The Company is able to offset title plant maintenance costs at its plants through joint ownership and access agreements with other title insurers and title agents.

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Reserves for Claims and Losses.    The Company provides for title insurance losses based upon its historical experience and other factors by a charge to expense when the related premium revenue is recognized. The resulting reserve for known claims and incurred but not reported claims reflects management’s best estimate of the total costs required to settle all claims reported to the Company and claims incurred but not reported, and is considered by the Company to be adequate for such purpose.

In settling claims, the Company occasionally purchases and ultimately sells the interest of the insured in the real property or the interest of the claimant adverse to the insured. These assets, which totaled $49.0 million at December 31, 2005, are carried at the lower of cost or fair value, less costs to sell, and are included in “Other assets” in the Company’s consolidated balance sheets.

Reinsurance and Coinsurance.    The Company assumes and distributes large title insurance risks through mechanisms of reinsurance and coinsurance. In reinsurance agreements, in exchange for a portion of the premium, the reinsurer accepts that part of the risk which the primary insurer cedes to the reinsurer over and above the portion retained by the primary insurer. The primary insurer, however, remains liable for the total risk in the event that the reinsurer does not meet its obligation. As a general rule, the Company does not retain more than $40.0 million of primary risk on any single policy, though the Company may retain primary risk above $40.0 million on a case-by-case basis. Under coinsurance agreements, each coinsurer is jointly and severally liable for the risk insured, or for so much thereof as is agreed to by the parties. The Company’s reinsurance activities account for less than 1.0% of its total title insurance operating revenues.

Competition.    The title insurance business is highly competitive. The number of competing companies and the size of such companies vary in the different areas in which the Company conducts business. Generally, in areas of major real estate activity, such as metropolitan and suburban localities, the Company competes with many other title insurers. Over thirty title insurance underwriters, for example, are members of the American Land Title Association, the title insurance industry’s national trade association. The Company’s major nationwide competitors in its principal markets include Fidelity National Title Group, Inc., LandAmerica and Stewart Title Guaranty Company. In addition to these nationwide competitors, numerous agency operations throughout the country provide aggressive competition on the local level.

The Company believes that competition for title insurance business is based primarily on the quality and timeliness of service, because parties to real estate transactions are usually concerned with time schedules and costs associated with delays in closing transactions. In those states where prices are not established by regulatory authorities, the price of title insurance policies is also an important competitive factor. The Company believes that it provides quality service in a timely manner at competitive prices.

Trust, Thrift and Investment Advisory Services.    The Company offers investment advisory services through its SEC registered investment management firm that manages equity and fixed-income securities.

Since 1960, the Company has conducted a general trust business in California, acting as trustee when so appointed pursuant to court order or private agreement. In 1985, the Company formed a banking subsidiary into which its subsidiary trust operation was merged. During August 1999, this subsidiary converted from a state-chartered bank to a federal savings bank. As of December 31, 2005, the trust operation was administering fiduciary and custodial assets having a market value in excess of $2 billion.

During 1988, the Company, through a majority owned subsidiary, acquired an industrial bank (the Thrift), formerly known as an industrial loan corporation, that accepts thrift deposits and uses deposited funds to originate and purchase loans secured by commercial properties primarily in Southern California. As of December 31, 2005, the Thrift had approximately $63 million of demand deposits and $96.2 million of loans outstanding.

Loans made or acquired during the current year, by the Thrift, ranged in amount from $20 thousand to $2.7 million. The average loan balance outstanding at December 31, 2005, was $0.5 million. Loans are made only on

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a secured basis, at loan-to-value percentages no greater than 75.0%. The Thrift specializes in making commercial real estate loans. In excess of 93.6% of the Thrift’s loans are made on a variable rate basis. The average yield on the Thrift’s loan portfolio as of December 31, 2005, was 6.98%. A number of factors are included in the determination of average yield, principal among which are loan fees and closing points amortized to income, prepayment penalties recorded as income, and amortization of discounts on purchased loans. The Thrift’s primary competitors in the Southern California commercial real estate lending market are local community banks, other thrift and loan companies and, to a lesser extent, commercial banks. The Thrift’s average loan is approximately 14.0 years in duration.

The performance of the Thrift’s loan portfolio is evaluated on an ongoing basis by management of the Thrift. The Thrift places a loan on non-accrual status when two payments become past due. When a loan is placed on non-accrual status, the Thrift’s general policy is to reverse from income previously accrued but unpaid interest. Income on such loans is subsequently recognized only to the extent that cash is received and future collection of principal is probable. Interest income on non-accrual loans that would have been recognized during the year ended December 31, 2005, if all of such loans had been current in accordance with their original terms, totaled $0.

The following table sets forth the amount of the Thrift’s non-performing loans as of the dates indicated.

	Year Ended December 31
	2005		2004		2003		2002		2001
	(in thousands)
Nonperforming Assets:
Loans accounted for on a nonaccrual basis	$	—	$	—	$	53	$	65	$	94
Total	$	—	$	—	$	53	$	65	$	94

Based on a variety of factors concerning the creditworthiness of its borrowers, the Thrift determined that it had no potential problem loans in existence as of December 31, 2005.

The Thrift’s allowance for loan losses is established through charges to earnings in the form of provision for loan losses. Loan losses are charged to, and recoveries are credited to, the allowance for loan losses. The provision for loan losses is determined after considering various factors, such as loan loss experience, maturity of the portfolio, size of the portfolio, borrower credit history, the existing allowance for loan losses, current charges and recoveries to the allowance for loan losses, the overall quality of the loan portfolio, and current economic conditions, as determined by management of the Thrift, regulatory agencies and independent credit review specialists. While many of these factors are essentially a matter of judgment and may not be reduced to a mathematical formula, the Company believes that, in light of the collateral securing its loan portfolio, the Thrift’s current allowance for loan losses is an adequate allowance against foreseeable losses.

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The following table provides certain information with respect to the Thrift’s allowance for loan losses as well as charge-off and recovery activity.

	Year Ended December 31
	2005			2004			2003			2002			2001
	(in thousands, except percentages)
Allowance for Loan Losses:
Balance at beginning of year	$	1,350		$	1,290		$	1,170		$	1,050		$	1,020
Charge-offs:
Real estate—mortgage		—			—			—			—			(140	)
Assigned lease payments		—			—			—			(3	)		(2	)
		—			—			—			(3	)		(142	)
Recoveries:
Real estate—mortgage		—			—			—			—			—
Assigned lease payments		—			—			—			—			—
		—			—			—			—			—
Net (charge-offs) recoveries		—			—			—			(3	)		(142	)
Provision for losses		60			60			120			123			172
Balance at end of year	$	1,410		$	1,350		$	1,290		$	1,170		$	1,050
Ratio of net charge-offs during the year to average loans outstanding during the year		00	%		00	%		00	%		00	%		14	%

The adequacy of the Thrift’s allowance for loan losses is based on formula allocations and specific allocations. Formula allocations are made on a percentage basis, which is dependent on the underlying collateral, the type of loan and general economic conditions. Specific allocations are made as problem or potential problem loans are identified and are based upon an evaluation by the Thrift’s management of the status of such loans. Specific allocations may be revised from time to time as the status of problem or potential problem loans changes.

The following table shows the allocation of the Thrift’s allowance for loan losses and the percent of loans in each category to total loans at the dates indicated.

	Year Ended December 31
	2005			2004			2003			2002			2001
	Allowance		% of Loans	Allowance		% of Loans	Allowance		% of Loans	Allowance		% of Loans	Allowance		% of Loans
	(in thousands, except percentages)
Loan Categories:
Real estate-mortgage	$	1,410	100	$	1,349	100	$	1,289	100	$	1,159	99	$	1,036	99
Other		—	—		1	—		1	—		11	1		14	1
	$	1,410	100	$	1,350	100	$	1,290	100	$	1,170	100	$	1,050	100

Prior to January 2004 the Company’s trust, thrift and investment advisory companies made up its Trust and Other Services segment. In January 2004, the Company combined this segment with its Title Insurance and Services segment to better reflect the interaction within these businesses. This presentation is consistent with the way the operations of these businesses are evaluated by the Company’s management.

Specialty Insurance Segment

Home Warranties.    The Company’s home warranty business commenced operations in 1984, in part with the proceeds of a $1.5 million loan from the Company which was, in 1986, converted to a majority equity

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interest. The Company’s home warranty business issues one-year warranties that protect homeowners against certain defects in specified household systems and appliances, such as plumbing, water heaters and furnaces. The Company’s home warranty subsidiary currently charges approximately $245 to $420 for its basic home warranty contract. Optional coverage is available for air conditioners, pools, spas, washers, dryers, refrigerators and other items for charges ranging from approximately $25 to $160 per year. Coverage is renewable annually at the option of the homeowner upon approval by the home warranty subsidiary. Fees for the warranties are paid at the closing of the home purchase and are recognized monthly over a 12-month period. Home warranties primarily are marketed through real estate brokers and agents. This business has continually expanded nationally and is currently doing business in 46 states.

Property and Casualty Insurance.    The Company offers property and casualty insurance through its subsidiaries First American Property and Casualty Insurance Company and First American Specialty Insurance Company. First American Property and Casualty Insurance Company primarily conducts its business utilizing the Company’s distribution channels, allowing for cross selling through existing closing-service activities. First American Specialty Insurance Company conducts its business utilizing a network of brokers.

The Information Technology Group

Mortgage Information Segment

The mortgage information segment provides tax monitoring, flood zone certification, default management services, document preparation services and other real estate related services.

Tax Monitoring.    The Company’s tax monitoring service, established in 1987, advises real property mortgage lenders of the status of property tax payments due on real estate securing their loans. In October 2003, the Company enhanced this business with the acquisition of Transamerica Finance Corporation’s tax monitoring business. The Company believes that it is currently the largest provider of tax monitoring services in the United States.

Under a typical contract the Company, on behalf of a mortgage lender, monitors the real estate taxes owing on properties securing such lender’s mortgage loans for the life of such loans. In general, providers of tax monitoring services, such as the Company’s tax service, indemnify mortgage lenders against losses resulting from a failure to monitor delinquent taxes. Where a mortgage lender requires that tax payments be impounded on behalf of borrowers, the Company also may be required to monitor and oversee the transfer of these monies to the taxing authorities and provide confirmation to lenders that such taxes have been paid. The Company also may indemnify mortgage lenders against losses for any failure to make such transfers.

The Company recognizes revenues from tax service contracts over the estimated duration of the contracts. However, income taxes are paid on the entire fee in the first two years of the contract. Historically, the Company has maintained minimal reserves for losses relating to its tax monitoring service because its losses have been negligible.

Flood Zone Certification.     In January 1995, the Company entered the flood zone certification business with the acquisition of Flood Data Services, Inc. In October 2003 the Company substantially expanded this business with the acquisition of Transamerica Flood Hazard Certification, Inc., one of the Company’s primary competitors in this business. This business furnishes to mortgage lenders a report as to whether a subject property lies within a governmentally delineated flood hazard area. Federal legislation passed in 1994 requires that most mortgage lenders obtain a determination of the current flood zone status at the time each loan is originated and obtain updates during the life of the loan.

Default Services.    The Company’s default management business sells software and provides services which help mortgage servicing companies and financial institutions mitigate losses on mortgages that are in default as well as manage foreclosures, maintain and sell real estate owned properties and process claims.

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Property Information Segment

The Company’s property information segment provides data and database services to various businesses, in particular to businesses operating in the real estate industry, such as mortgage lenders and brokers, real estate agents, property and casualty insurance companies and title insurance companies. The data offered by this segment include property characteristic information, such as the square footage of a piece of property or the number of rooms in a residence, and images of publicly recorded documents relating to real property. The Company delivers such data to its customers almost exclusively through electronic means, including the Internet. This segment also owns and manages databases of title and tax records, known as title plants, which are used primarily by title insurance companies in the issuance of title insurance policies.

This segment also provides appraisal services to mortgage lenders, real estate agents, investors and other businesses requiring valuations of real property. These services include traditional appraisals, which require physical inspection and human analysis, broker price opinion services, which value real property based on the opinions of real estate brokers and agents, and automated valuation models which use data and sophisticated mathematical models and analytic tools to arrive at a valuation.

The property information segment was created in the Company’s joint venture with Experian in January 1998. Since that time this segment has grown through a number of significant acquisitions. In June 1998 the Company entered the imaged document business with the acquisition of Data Tree Corporation. In July 2000 the Company combined its title plant business with a competing business owned by the Company’s competitor, LandAmerica. The combined entity, DataTrace Information Services LLC, is owned 80% by the Company and 20% by LandAmerica. In August 2000, the Company combined its property data business with Transamerica Corporation’s competing business. At the time the Company owned 80% of the resulting entity. During 2004 the Company purchased the remaining 20%. In September 2002, the Company added broker price opinions (BPO) to its appraisal operations with the acquisition of SourceOne Services, Corp. The Company believes that SourceOne is the largest provider of BPO services to the default market and the second largest provider of BPO services in the United States. In April 2005 the Company expanded its offering of analytic products with the acquisition of LoanPerformance. This company provides mortgage information and mortgage performance and risk analytics largely to the U.S. mortgage finance and servicing market.

Risk Mitigation and Business Solutions Segment

The Company’s risk mitigation and business solutions segment is comprised entirely of First Advantage Corporation, a public company whose shares of Class A common stock trade on the NASDAQ National Market System under the ticker symbol FADV. First Advantage was formed in the 2003 merger of the Company’s screening information segment with US SEARCH.com, Inc., a provider of people location services. Since that time First Advantage has grown substantially through acquisitions. In particular, in September 2005, the Company contributed its credit information segment to First Advantage in exchange for additional Class B common stock of First Advantage. As of December 31, 2005, the Company, together with its First American Real Estate Solutions LLC joint venture with Experian, indirectly owned all of First Advantage’s outstanding Class B common stock. These Class B shares constituted approximately 83% of the economic interest and approximately 98% of the voting interest of First Advantage as of December 31, 2005.

First Advantage now operates in six primary business segments: lender services, data services, dealer services, employer services, multifamily services, and investigative and litigation support services.

First Advantage’s lender services segment provides single bureau and merged credit information reports for mortgage lenders throughout the United States. Single bureau reports involve the receipt, formatting and delivery of credit information from the database of one of the three United States credit bureaus. In preparing its merged credit reports for mortgage lenders, First Advantage obtains credit reports from at least two of the three United States primary credit bureaus, merges and summarizes the credit reports and delivers its report in a standard format acceptable to mortgage loan originators and secondary mortgage purchasers. The credit reporting service

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has grown primarily through acquisitions that took place within the Company’s credit information group prior to its contribution of that group to First Advantage. In 1994, the Company acquired all of the minority interests in its lower tier subsidiaries Metropolitan Credit Reporting Services, Inc., and Metropolitan Property Reporting Services, Inc. In 1994, the Company also acquired California Credit Data, Inc., and Prime Credit Reports, Inc., and in 1995, the Company acquired CREDCO, Inc. The Company believes that First Advantage is the largest provider of credit reports to the United States mortgage lending industry, based on the number of credit reports issued.

First Advantage’s data services segment offers motor vehicle records, transportation industry credit reporting, fleet management, supply chain theft and damage mitigation consulting, consumer location and consumer credit reporting services, criminal records reselling, and subprime credit reporting services. First Advantage’s motor vehicle record services provide customers with automated access to motor vehicle records from all 50 states and the District of Columbia. Independent insurance agents operating in the United States represent the core of the customer base for this product, which they use for underwriting purposes. As part of the offerings of this segment, First Advantage also provides trucking companies with access to a database of payment practice records on more than 60,000 transportation brokers and shippers in North America, which database is comprised of client-contributed accounts receivables and public records data. This segment also offers transportation consulting services that are designed to address and resolve asset management and compliance problems for owners and operators of truck fleets.

This segment of First Advantage also provides location, verification and screening services directly to consumers through the Internet. This business uses a proprietary software platform and web-based systems to supply customers with services such as individual location, identity verification, criminal record checks, employment verification and education verification. First Advantage also provides specialized credit reports direct to consumers. These reports may be derived from credit reports obtained from one or more of the three United States credit bureaus and may be specially formatted for ease of use by the creditor or to facilitate interpretation by a consumer.

Through its Teletrack, Inc. subsidiary, this segment of First Advantage also provides credit reports specializing in sub-prime borrowers in the United States, which reports are derived from Teletrack’s proprietary database. The Company believes Teletrack is the largest provider of such credit reports in the United States. Its primary customers include pay-day loan and check-advance stores, rent-to-own retailers and similar types of creditors.

First Advantage’s dealer services segment provides specialized credit reports to auto lenders. Reports generated by this segment of First Advantage may be derived from credit reports obtained from one or more of the three United States credit bureaus and may be specially formatted for ease of use by the creditor or to facilitate interpretation by a consumer in connection with an automobile transaction. The segment provides comprehensive solutions that help organizations meet their lending, leasing and other consumer credit automation needs.

First Advantage’s employer services segment offers employment screening services, occupational health services, and tax incentive services to employers in the United States and abroad. First Advantage’s employment screening services generate reports about a prospective employee’s criminal record, motor vehicle violations, credit standing and involvement in civil litigation. First Advantage’s occupational health products generally involve the design and management of drug free workplace programs, including provision for the collection and testing of specimens and interpretation of the results. First Advantage’s tax incentive services specialize in identifying primarily employment-related tax incentive programs available under both federal and state legislation, and processing the paperwork required to capture such tax incentives and credits. Additional tax incentive offerings include tax-consulting services to assist clients with compliance with changing laws and regulations affecting sales and use taxes.

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First Advantage’s multifamily services segment provides resident screening services to residential property managers throughout the United States. Resident screening services include the generation of reports containing information about a prospective renter’s eviction record, lease and payment performance history, credit standing, references and criminal records to residential property managers and owners operating in the United States. In providing these services, First Advantage relies upon its database of landlord-tenant records, which the Company believes is the largest of its kind in the United States, and its database of criminal conviction information, which the Company believes is one of the largest for use in resident screening in the United States.

First Advantage’s investigative and litigation support services segment provides corporate and litigation investigative services. Products and services provided by the segment include: surveillance services, field interviews, computer forensics, electronic discovery, due diligence reports and other high level investigations. Within this segment, First Advantage provides services that assist its customers in business, legal and financial matters, including investigations and litigation arising from trade secret theft, software infringement, financial fraud, employee malfeasance and unfair competition. The segment employs computer forensic and electronic discovery experts and consultants in its bi-coastal state-of-the-art laboratories.

Acquisitions

Commencing in the 1960s, the Company initiated a growth program with a view to becoming a nationwide provider of title insurance. This program included expansion into new geographic markets through internal growth and selective acquisitions. In 1986 the Company began expanding into other real estate business information services. In 1998 the Company expanded its diversification program to include business information companies outside of the real estate transfer and closing process. To date, the Company has made numerous strategic acquisitions designed to expand not only its direct title operations, but also the range of services it can provide to its customers.

Regulation

The title insurance business is heavily regulated by state insurance regulatory authorities. These authorities generally possess broad powers with respect to the licensing of title insurers, the types and amounts of investments that title insurers may make, insurance rates, forms of policies and the form and content of required annual statements, as well as the power to audit and examine title insurers. Under state laws, certain levels of capital and surplus must be maintained and certain amounts of securities must be segregated or deposited with appropriate state officials. Various state statutes require title insurers to defer a portion of all premiums in a reserve for the protection of policyholders and to segregate investments in a corresponding amount. Further, most states restrict the amount of dividends and distributions a title insurer may make to its shareholders.

In 1999, the Company entered into the property and casualty insurance business through the acquisitions of Great Pacific Insurance Company and Five Star Holdings, Inc. The property and casualty business is subject to regulation by government agencies in the states in which they transact business. The nature and extent of such regulation may vary from jurisdiction to jurisdiction, but typically involves prior approval of the acquisition of “control” of an insurance company, regulation of certain transactions entered into by an insurance company with any of its affiliates, the payment of dividends by an insurance company, approval of premium rates and policy forms for many lines of insurance, standards of solvency and minimum amounts of capital and surplus which must be maintained. In order to issue policies on a direct basis in a state, the property and casualty insurer must generally be licensed by such state. In certain circumstances, such as dealings initiated directly by citizens or placements through licensed surplus lines brokers, it may conduct business without being admitted and without being subject to rate and/or policy forms approval.

The Company’s home warranty business also is subject to regulation by insurance authorities in the states in which it conducts such business. The Company’s trust company and the Thrift are both subject to regulation by the Federal Deposit Insurance Corporation. In addition, as a federal savings bank, the Company’s trust company

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is regulated by the United States Department of the Treasury’s Office of Thrift Supervision, and the Thrift is regulated by the California Commissioner of Corporations.

Investment Policies

The Company invests primarily in cash equivalents, federal and municipal governmental securities, mortgage loans and investment grade debt and equity securities. The largely fixed income portfolio is classified in the Company’s financial statements as “available for sale.” In addition to the Company’s investment strategy, state laws impose certain restrictions upon the types and amounts of investments that may be made by the Company’s regulated subsidiaries.

Employees

As of December 31, 2005 the Company employed 35,444 people.

Available Information

The Company maintains a website, www.firstam.com, which includes financial and other information for investors. The Company’s annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available through the “Investors” page of our website as soon as reasonably practicable after the Company electronically files such material with, or furnishes it to, the Securities and Exchange Commission. The Company’s website and the information contained therein or connected thereto are not intended to be incorporated into this annual report on Form 10-K, or any other filing with the Securities and Exchange Commission unless the Company expressly incorporates such materials.

Item 1A.    Risk Factors

You should carefully consider each of the following risk factors and the other information contained in this Annual Report on Form 10-K. The Company faces risks other than those listed here, including those that are unknown to the Company and others of which the Company may be aware but, at present, considers immaterial. Because of the following factors, as well as other variables affecting the Company’s operating results, past financial performance may not be a reliable indicator of future performance, and historical trends should not be used to anticipate results or trends in future periods.

Certain recurring trends generally result in a decrease in the demand for the Company’s products

Demand for the Company’s products generally decreases as the number of real estate transactions in which the Company’s products are purchased decreases. The Company has found that the number of real estate transactions in which the Company’s products are purchased decreases in the following situations:

• when mortgage interest rates are high;

• when the mortgage fund supply is limited; and

• when the United States economy is weak.

The Company believes that this trend will recur.

Changes in government regulation could prohibit or limit the Company’s operations

The Company’s title insurance, property and casualty insurance, home warranty, thrift, trust and investment businesses are regulated by various federal, state and local governmental agencies. Many of the Company’s other businesses operate within statutory guidelines. Changes in the applicable regulatory environment or statutory

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guidelines or changes in interpretations of existing regulations or statutes could prohibit or restrict the Company’s existing or future operations. Such restrictions may restrict the Company’s ability to implement rate increases, acquire assets or businesses or otherwise have a negative impact on the Company’s ability to generate revenue and earnings.

The Company may be subject to increased regulation regarding the use of personal information

Certain data and services the Company provides are subject to regulation by various federal, state and local regulatory authorities. Compliance with existing federal, state and local laws and regulations has not had a material adverse effect on the Company’s results of operations or financial condition to date. Nonetheless, federal, state and local laws and regulations in the United States designed to protect the public from the misuse of personal information in the marketplace and adverse publicity or potential litigation concerning the commercial use of such information may affect the Company’s operations and could result in substantial regulatory compliance expense, litigation expense and a loss of revenue.

The Company may not be able to pursue its acquisition strategy

The Company intends to continue to grow through acquisitions. The Company may not be able to identify suitable acquisition candidates or complete acquisitions on satisfactory terms. A number of the Company’s competitors also have adopted the strategy of expanding and diversifying through acquisitions. The Company will continue to experience competition in its effort to execute on its acquisition strategy. As a result, the Company may be unable to continue to make acquisitions or may be forced to pay more for the acquired companies.

The integration of Company acquisitions may be difficult and may result in a failure to realize some of the anticipated potential benefits of acquisitions

When companies are acquired, the Company may not be able to integrate or manage these businesses so as to produce returns that justify the investment. Any difficulty in successfully integrating or managing the operations of the businesses could have a material adverse effect on the Company’s business, financial condition, results of operations or liquidity, and could lead to a failure to realize any anticipated synergies. The Company’s management also will be required to dedicate substantial time and effort to the integration of its acquisitions. These efforts could divert management’s focus and resources from other strategic opportunities and operational matters.

The Company’s earnings may be reduced if acquisition projections are inaccurate

The Company’s earnings have improved since 1991 in large part because of the Company’s acquisition and integration of non-title insurance businesses. These businesses generally have higher margins than the title insurance businesses. For example, pre-tax margins for the title insurance and services segment were 10.0% in 2005, while pre-tax margins for the segments in the Company’s information technology group in the same year were 22.2%. The success or failure of acquisitions in this group has depended in large measure upon the accuracy of the Company’s projections. These projections are not always accurate. Inaccurate projections have historically led to lower than expected earnings.

As a holding company, the Company depends on distributions from the Company’s subsidiaries, and if distributions from the Company’s subsidiaries are materially impaired, the Company’s ability to declare and pay dividends may be adversely affected

First American is a holding company whose primary assets are the securities of its operating subsidiaries. The Company’s ability to pay dividends is dependent on the ability of the Company’s subsidiaries to pay dividends or repay funds. If the Company’s operating subsidiaries are not able to pay dividends or repay funds,

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the Company may not be able to declare and pay dividends to its shareholders. Moreover, pursuant to insurance and other regulations under which the Company’s insurance subsidiaries operate, the amount of dividends, loans and advances available is limited. Under such regulations, the maximum amount of dividends, loans and advances available from the Company’s insurance subsidiaries in 2006 is $336.4 million.

Certain provisions of the Company’s charter and rights plan may make a takeover of our company difficult even if such takeover could be beneficial to some of the Company’s shareholders

The Company’s restated articles of incorporation authorize the issuance of “blank check” preferred stock with such designations, rights and preferences as may be determined from time to time by the Company’s board of directors. Accordingly, the Company’s board is empowered, without further shareholder action, to issue shares or series of preferred stock with dividend, liquidation, conversion, voting or other rights that could adversely affect the voting power or other rights, including the ability to receive dividends, of the Company’s common shareholders. The issuance of such preferred stock could be utilized, under certain circumstances, as a method of discouraging, delaying or preventing a change in control. In conjunction with the rights plan discussed in the paragraph immediately below, the Company has authorized the issuance of the Company’s Series A Junior Participating Preferred Shares. Although the Company has no present intention of issuing any additional shares or series of preferred stock, the Company cannot guarantee that it will not make such an issuance in the future.

The Company has adopted a rights plan which could, alone or in combination with the Company’s restated articles of incorporation, discourage transactions involving actual or potential changes of control, including transactions that otherwise could involve payment of a premium over prevailing market prices to the Company’s shareholders for their common shares.

Item 1B.     Unresolved Staff Comments

None.

Item 2.    Properties

In September 1999, the Company moved its executive offices to one of three constructed office buildings at MacArthur Place in Santa Ana, California. Later that same year, the Orange County branch and certain other operations of the Company’s title insurance segment moved into the two other buildings constructed on the site. The three buildings totaled approximately 210,000 square feet and were situated in a campus environment comprising approximately 32 acres. In the first quarter of 2004, the Company began the expansion of its office campus. This expansion was completed in the fourth quarter of 2005 with the addition of two 4-story office buildings totaling approximately 226,000 square feet, a two-story, free standing, 52,000 square foot technology center and a two-story parking structure, bringing the total square footage of the Company’s campus at MacArthur Place to approximately 490,000 square feet. The two new office buildings are occupied primarily by the Company’s property information segment and trust company. The original three office buildings, including the underlying land and the fixtures thereto, are subject to a deed of trust and security agreement securing payment of a promissory note evidencing a loan made in October 2003, to the Company’s subsidiary, First American Title Insurance Company, in the original sum of $55.0 million. This loan is payable in monthly installments of principal and interest, is fully amortizing and matures November 1, 2023. The outstanding principal balance of this loan was $51.6 million as of December 31, 2005.

The Company’s mortgage information segment houses its national operations in a leased 231,000 square foot office building in Dallas, Texas. In 2006 this segment expects to begin moving its national operations, together with certain other operations, to a leased 604,000 square foot facility in Westlake, Texas.

In 1999, the Company completed the construction of two office buildings in Poway, California. These two buildings, which are owned by the Company’s title insurance subsidiary and are leased to First Advantage for use by its lender services segment, total approximately 152,000 square feet and are located on a 17 acre parcel of land.

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Each of the office facilities occupied by the Company or its subsidiaries is in good condition and adequate for its intended use.

Item 3.    Legal Proceedings

The Company and its subsidiaries have been named in various class action lawsuits related to its title operations, including suits alleging that premiums charged to builders for title insurance policies violated the Real Estate Settlement Procedures Act and that one of our subsidiaries violated the law by failing to disclose the cost of certain services obtained from third party vendors and any related mark-up of such services. We have assessed the potential loss associated with each case based on the existing facts and estimated range of exposure. In cases where we have determined that a loss is probable, we have recorded a reserve in the amount of the estimated loss; however, actual losses may materially differ from the amounts recorded. We do not believe that the ultimate resolution of these cases, either individually or in the aggregate, will have a material adverse effect on the Company’s financial condition, results of operations or cash flows.

On January 25, 2005, a jury in the case of Chicago Title Insurance Corporation v. James A. Magnuson, et al. awarded damages in the amount of $43.2 million against a subsidiary of the Company. This matter involved claims of violation of a non-competition agreement and intentional interference with contract. The judgment comprised a compensatory award of $10.8 million and a punitive damage award of $32.4 million. In October 2005 the trial court denied our motions to set aside the damage awards, among other matters. We have filed a notice of appeal with the United States Circuit Court of Appeals. We continue to believe we have strong grounds to overturn this judgment. Pending the outcome of our appeal, we reserved in a prior quarter $10.0 million in connection with this matter.

The Company is involved in numerous routine legal proceedings related to its operations. While the ultimate disposition of each proceeding is not determinable, the Company does not believe that any of such proceedings will have a material adverse effect on its financial condition, results of operations or cash flows.

Item 4.    Submission of Matters to a Vote of Security Holders

No matters were submitted to a vote of security holders during the fourth quarter of the fiscal year covered by this report.

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PART II

Item 5.    Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Common Stock Market Prices and Dividends

The Company’s common stock trades on the New York Stock Exchange (ticker symbol FAF). The approximate number of record holders of common stock on February 28, 2006 was 3,423.

High and low stock prices and dividends declared for the last two years were as follows:

	2005				2004
Quarter Ended	High-low range		Cash dividends		High-low range		Cash dividends
March 31	$	37.67—$31.31	$	.18	$	32.01—$29.49	$	.15
June 30	$	41.31—$32.10	$	.18	$	31.30—$24.60	$	.15
September 30	$	45.78—$40.60	$	.18	$	30.83—$25.04	$	.15
December 31	$	49.02—$40.86	$	.18	$	35.14—$29.82	$	.15

While the Company expects to continue its policy of paying regular quarterly cash dividends, future dividends will be dependent on future earnings, financial condition and capital requirements. The payment of dividends is subject to the restrictions described in Note 2 to the consolidated financial statements included in “Item 8. Financial Statements and Supplementary Data” of Part II of this report.

Securities Authorized for Issuance under Equity Compensation Plans

The following table sets forth details regarding equity securities of the Company that were authorized for issuance under equity compensation plans of the Company as of December 31, 2005.

Plan Category	Number of securities to be issued upon exercise of outstanding options (a)	Weighted-average exercise price of outstanding options (b)		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
	(in thousands, except weighted-average exercise price)
Equity compensation plans approved by security holders (1)(3)	5,800	$	23.48	3,978
Equity compensation not approved by security holders (2)	141	$	21.01	—
	5,941	$	23.42	3,978

(1) Consists of The First American Corporation 1996 Stock Option Plan and The First American Corporation 1997 Directors’ Stock Plan. See Note 16 to the Company’s consolidated financial statements for additional information.

(2) Includes shares related to plans assumed by the Company in the purchase of Credit Management Solutions, Inc. See Note 16 to the Company’s consolidated financial statements for additional information.

(3) Includes 1,902,000 shares available to be issued under the Company’s stock purchase plan. See Note 15 to the Company’s consolidated financial statements for additional information.

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Purchases of Equity Securities by the Issuer and Affiliated Purchasers

The following table describes purchases by the Company of the Company’s Common shares which settled during each period set forth in the table. Prices in column (b) include commissions. Purchases described in column (c) were made pursuant to the share repurchase program announced by the Company on May 18, 2004. On May 19, 2005, the Company announced an amendment to this plan, which amendment increased the amount of shares that the Company may repurchase by $100 million. The amounts in column (d) reflect the effect of this amendment. Under this plan, which has no expiration date, the Company may repurchase up to $200 million of the Company’s issued and outstanding Common shares.

Period	(a) Total Number of Shares Purchased	(b) Average Price Paid per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
October 1 to October 31, 2005	0		0	0	$	124,094,956
November 1 to November 30, 2005	65,150	$	44.48	65,150	$	121,197,326
December 1 to December 31, 2005	217,900	$	46.90	217,900	$	110,977,800
Total	283,050	$	46.34	283,050	$	110,977,800

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Item 6.    Selected Financial Data.

The selected consolidated financial data for the Company for the five-year period ended December 31, 2005, has been derived from the audited Consolidated Financial Statements. The selected consolidated financial data should be read in conjunction with the Consolidated Financial Statements and Notes thereto, “Item 1—Business—Acquisitions,” and “Item 7—Management’s Discussion and Analysis—Results of Operations.”

The First American Corporation and Subsidiary Companies

	Year Ended December 31
	2005			2004			2003			2002			2001
	(in thousands, except percentages, per share amounts and employee data)
Revenues	$	8,061,758		$	6,722,326		$	6,213,714		$	4,704,209		$	3,750,723
Net income	$	485,266		$	349,099		$	451,022		$	234,367		$	167,268
Total assets	$	7,598,641		$	6,208,365		$	5,139,902		$	3,570,284		$	2,977,648
Notes and contracts payable	$	848,569		$	732,770		$	553,888		$	425,705		$	415,341
Deferrable interest subordinated notes	$	100,000		$	100,000		$	100,000		$	100,000		$	100,000
Stockholders’ equity	$	3,006,547		$	2,463,564		$	1,879,520		$	1,364,589		$	1,104,452
Return on average stockholders’ equity		17.7	%		16.1	%		27.8	%		19.0	%		16.9	%
Cash dividends on common shares	$	68,635		$	52,403		$	38,850		$	24,570		$	18,210
Per share of common stock (Note A)—
Net income:
Basic	$	5.14		$	4.04		$	5.89		$	3.27		$	2.51
Diluted	$	4.97		$	3.83		$	5.22		$	2.92		$	2.27
Stockholders’ equity	$	31.36		$	27.36		$	23.84		$	18.53		$	16.08
Cash dividends	$	.72		$	.60		$	.50		$	.34		$	.27
Number of common shares outstanding
Weighted average during the year
Basic		94,351			86,430			76,632			71,594			66,568
Diluted		97,795			91,895			87,765			82,580			75,876
End of year		95,860			90,058			78,826			73,636			68,694
Title orders opened (Note B)		2,700			2,519			2,511			2,184			1,930
Title orders closed (Note B)		2,017			1,909			2,021			1,696			1,405
Number of employees		35,444			30,994			29,802			24,886			22,597

Note A—Per share information relating to net income is based on weighted-average number of shares outstanding for the years presented. Per share information relating to stockholders’ equity is based on shares outstanding at the end of each year.

Note B—Title order volumes are those processed by the direct title operations of the Company and do not include orders processed by agents.

Item 7.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

Critical Accounting Policies and Estimates

The Company’s management considers the accounting policies described below to be critical in preparing the Company’s consolidated financial statements. These policies require management to make estimates and judgments that affect the reported amounts of certain assets, liabilities, revenues, expenses and related disclosures of contingencies. See Note 1 to the consolidated financial statements for a more detailed description of the Company’s accounting policies.

Revenue recognition.    Title premiums on policies issued directly by the Company are recognized on the effective date of the title policy, and for policies issued by independent agents, when notice of issuance is received from the agent. Revenues from home warranty contracts are recognized ratably over the 12-month

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duration of the contracts. Revenues from property and casualty insurance policies are recognized ratably over the 12-month duration of the policies. The Company’s tax service division defers its tax service fee and recognizes that fee as revenue ratably over the expected service period. The amortization rates applied to recognize the revenues assume a 10-year contract life and are adjusted to reflect prepayments. The Company reviews its tax service contract portfolio on a quarterly basis to determine if there have been changes in contract lives and/or changes in the number and/or timing of prepayments and adjusts the rates accordingly to reflect current trends. For all other products, revenues are recognized at the time of delivery, as the Company has no significant ongoing obligation after delivery.

Provision for title losses.    The Company provides for estimated title insurance losses by a charge to expense when the related premium revenue is recognized. The amount charged to expense (the loss rate), as well as the adequacy of the ending reserves, is determined by the Company based on historical experience and other factors, including, but not limited to, changes and trends in the type of title insurance policies issued, the real estate market and the interest rate environment. Management monitors the adequacy of the estimated loss reserves on a quarterly basis using a variety of techniques, including actuarial models, and adjusts the loss rate as necessary.

Purchase accounting and impairment testing for goodwill and other intangible assets.    Pursuant to Statement of Financial Standards No. 142, “Goodwill and Other Intangible Assets” (SFAS 142), the Company is required to perform an annual impairment test for goodwill and other indefinite-lived intangible assets by reporting unit. This annual test, which the Company has elected to perform every September 30, utilizes a variety of valuation techniques, all of which require management to make estimates and judgments, and includes discounted cash flow analysis, market approach valuations and the use of third-party valuation advisors. Certain of these valuation techniques are also utilized by the Company in accounting for business combinations, primarily in the determination of the fair value of acquired assets and liabilities. The Company’s reporting units, for purposes of applying the provisions of SFAS 142, are title insurance, home warranty, property and casualty insurance, trust and other services, mortgage origination products and services, mortgage servicing products and services, property information services, lender services, data services, dealer services, employer services, multifamily services and investigative and litigation services. In accordance with the provisions of SFAS 142, the Company completed the required annual impairment testing for goodwill and other intangible assets for the years ended December 31, 2005 and 2004, and determined that there was no impairment of value.

Income taxes.    The Company estimates its effective income tax rate based upon a variety of factors including, but not limited to, the expected revenues and resulting pretax income for the year, the composition and geographic mix of the pretax income and the ratio of permanent differences to pretax income. Any changes to the estimated rate are made prospectively in accordance with Accounting Principles Board Opinion No. 28, “Interim Financial Reporting.” Additionally, management makes estimates as to the amount of reserves, if any, that are necessary for known and potential tax exposures.

Depreciation and amortization lives for assets.    Management is required to estimate the useful lives of several asset classes, including capitalized data, internally developed software and other intangible assets. The estimation of useful lives requires a significant amount of judgment related to matters such as future changes in technology, legal issues related to allowable uses of data and other matters.

Stock-based compensation.    In December 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123R, “Share-Based Payment” (SFAS 123R). This standard is a revision of Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” and supersedes Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” and its related implementation guidance. SFAS 123R focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions. The standard requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). The cost will be recognized

21

over the period during which an employee is required to provide services in exchange for the award. In April 2005, the Securities and Exchange Commission deferred the effective date of SFAS 123R from the first interim period beginning after June 15, 2005 to the next fiscal year beginning after June 15, 2005. The Company will adopt the standard in the first quarter of 2006 and use the modified prospective method which will require the Company to use the same valuation method currently used for its pro forma disclosures for all unvested options as of December 31, 2005. The Company will be able to use the same valuation method or select a different method for any options granted after December 31, 2005. In addition to stock options, the Company has an employee stock purchase plan that allows eligible employees to purchase common stock of the Company at 85% of the closing price on the last day of each month. Under the provisions of SFAS 123R, commencing the first quarter of 2006 the Company will recognize an expense in the amount equal to the discount. For the twelve months ended December 31, 2005, the amount of the discount was $1.4 million. Based on options outstanding at December 31, 2005, the Company estimates the impact of SFAS 123R will be to reduce diluted earnings per share by $0.08 to $0.10 per share in 2006 depending on the timing of issuance of stock options and the deductibility of the stock-based compensation expense for financial reporting purposes.

Results of Operations

Overview—Substantially all of the revenues for the Company’s title insurance and services and mortgage information segments result from resales and refinancings of residential real estate and, to a lesser extent, from commercial transactions and the construction and sale of new housing. Over one-half of the revenues in the Company’s property information segment and in excess of 20% of the revenues from the Company’s risk mitigation and business solutions segment also depend on real estate activity. The remaining portion of the property information and risk mitigation and business solutions segments’ revenues, as well as the revenues of the Company’s specialty insurance segment are isolated from the volatility of real estate transactions. Traditionally, the greatest volume of real estate activity, particularly residential resale, has occurred in the spring and summer months. However, changes in interest rates, as well as other economic factors, can cause fluctuations in the traditional pattern of real estate activity.

The continuation of relatively low mortgage interest rates through the first three quarters of 2003 fueled record-setting refinance activity. Existing and new-home-sale activity also reached record levels. Mortgage originations, based on Mortgage Bankers Association statistics, totaled $3.81 trillion in 2003, with refinance activity comprising 66% of the total. The increase in mortgage interest rates that began in the fourth quarter of 2003 resulted in a low inventory of open orders going into 2004. This, together with an increasing mortgage interest rate environment during the first half of 2004, resulted in a decline in mortgage originations and a return to a more traditional, seasonal real estate pattern, where the greatest volume of real estate activity occurs in the spring and summer months. However, as a result of new acquisitions, declining mortgage interest rates in the second half of the year and an increase in the average revenues per title order closed, operating revenues increased in 2004 when compared with 2003. Mortgage originations totaled $2.86 trillion in 2004, with refinance transactions comprising 44% of the total. Mortgage interest rates declined slightly during the second half of 2004 but began to increase in 2005. The favorable interest rate environment present during the second half of 2004 resulted in a relatively high inventory of open orders going into 2005. However, as a result of an increase in interest rates in 2005, mortgage originations decreased in 2005. This decrease primarily reflected a slowdown in refinance activity. Resale transactions and commercial transactions remained relatively strong during the year. The strength in these markets, coupled with market share gains and increases in the average revenues per order closed in the Company’s title business, as well as acquisitions activity, resulted in an increase in operating revenues in 2005 when compared with 2004. Mortgage originations totaled $2.42 trillion in 2005, with refinance transactions comprising 39% of the total.

In September 2005, the Company contributed its credit information segment to its publicly traded subsidiary First Advantage, which solely made up the screening information segment. These two segments have been combined into the risk mitigation and business solutions segment. This presentation is consistent with the way management evaluates the operations of these businesses. In 2005, the Company changed the presentation of the financial results for its operating segments to include inter-segment revenues and expenses. The inter-segment

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revenues and expenses are then eliminated in an eliminations line. Prior year results have been reclassified to conform with current year presentation.

Operating revenues—A summary by segment of the Company’s operating revenues is as follows:

	2005			%	2004			%	2003			%
	(in thousands, except percentages)
Financial Services:
Title Insurance:
Direct operations	$	2,968,632		38	$	2,486,380		38	$	2,264,925		38
Agency operations		2,863,306		37		2,299,656		35		2,138,059		35
		5,831,938		75		4,786,036		73		4,402,984		73
Specialty Insurance		275,207		3		220,340		3		207,287		3
		6,107,145		78		5,006,376		76		4,610,271		76
Information Technology:
Mortgage Information		584,344		7		653,562		10		642,684		11
Property Information		511,852		7		417,758		6		383,246		6
Risk Mitigation and Business Solutions		637,411		8		509,092		8		413,417		7
		1,733,607		22		1,580,412		24		1,439,347		24
Eliminations		(24,674	)	0		(16,042	)	0		(16,975	)	0
	$	7,816,078		100	$	6,570,746		100	$	6,032,643		100

Financial Services.    Operating revenues from direct title operations increased 19.4% in 2005 over 2004 and 9.8% in 2004 over 2003. The increase in 2005 over 2004 was primarily due to an increase in the average revenues per order closed, and to a lesser extent, an increase in the number of orders closed. The increase in 2004 over 2003 was primarily due to an increase in the average revenues per order closed, offset in part by a decrease in the number of orders closed. The average revenues per order closed were $1,472, $1,303, and $1,121 for 2005, 2004, and 2003, respectively. These increases in average revenues per order closed were primarily due to a decrease in the mix of lower-premium refinance transactions, an increase in higher-premium resale and commercial transactions, and appreciating real estate values. The Company’s direct title operations closed 2,017,200, 1,908,600, and 2,021,000 title orders during 2005, 2004, and 2003, respectively, an increase of 5.7% in 2005 from 2004 and a decrease of 5.6% in 2004 from 2003. The fluctuations in closings primarily reflected decreasing mortgage origination activity, balanced against market share gains and acquisition activity. Operating revenues from agency title operations increased 24.5% in 2005 over 2004 and 7.6% in 2004 over 2003. These increases were primarily attributable to the same factors affecting direct title operations compounded by the inherent delay in the reporting of transactions by agents.

Specialty insurance operating revenues increased 24.9% in 2005 over 2004 and 6.3% in 2004 over 2003. The increase in 2005 over 2004 reflected continued geographic expansion at the Company’s home warranty division as well as market share gains and premium increases at the Company’s property and casualty insurance division. The increase in 2004 over 2003 reflected continued geographic expansion at the Company’s home warranty division, offset in part by a reduction in revenues at the Company’s property and casualty insurance division due to an increase in reinsurance ceded.

Information Technology.    Mortgage information operating revenues decreased 10.6% in 2005 over 2004 and increased 1.7% in 2004 over 2003. The decrease in 2005 over 2004 was primarily attributable to an increase in estimated servicing life of the tax service loan portfolio due to a slowdown in prepayment speeds, which results in the deferral of a larger portion of the tax service fee in early years. Also impacting operating revenues for the mortgage information segment for the year was the decline in mortgage originations year over year. The increase in 2004 over 2003 was primarily attributable to $166.4 million of operating revenues contributed by new

23

acquisitions, offset in part by the decline in mortgage originations and a $10.2 million decrease in operating revenues as a result of an increase in the estimated servicing life of the tax service loan portfolio due to a slowdown in prepayment speeds.

Property information operating revenues increased 22.5% in 2005 over 2004 and 9.0% in 2004 over 2003. These increases primarily reflected $34.7 million and $21.6 million of operating revenues contributed by new acquisitions for the respective periods and the continued growth in this segment’s less cyclical subscription-based information businesses, offset in part by the reduction in mortgage originations.

Risk mitigation and business solutions operating revenues increased 25.2% in 2005 over 2004 and 23.1% in 2004 over 2003. These increases were primarily attributable to $87.4 million and $70.8 million of operating revenues contributed by new acquisitions for the respective periods.

Investment and other income—Investment and other income totaled $210.3 million, $141.8 million, and $145.4 million in 2005, 2004 and 2003, respectively, an increase of $68.5 million, or 48.3% in 2005 from 2004, and a decrease of $3.6 million, or 2.5% in 2004 from 2003. The increase in 2005 over 2004 was primarily due to the growth in interest income resulting from a 28% increase in the average investment portfolio balance and higher yields, as well as an increase in equity in earnings of unconsolidated affiliates, which are accounted for under the equity method of accounting. The decrease in 2004 from 2003 was primarily due to a reduction in equity in earnings of unconsolidated affiliates.

Gain on issuance of subsidiary stock—Gain on issuance of subsidiary stock totaled $25.7 million in 2005, $8.5 million in 2004 and $2.3 million in 2003. These amounts represent realized gains relating to the issuance of shares by the Company’s publicly-traded subsidiary, First Advantage Corporation.

Net realized investment gains/losses—Net realized investment gains totaled $9.7 million in 2005, $1.3 million in 2004 and $33.5 million in 2003. The 2005 total included a realized gain of $9.5 million recognized by the Company’s subsidiary, First Advantage Corporation, relating to the completion of an initial public offering by DealerTrack Holdings, Inc., an entity partially owned by First Advantage. The 2003 total included the recognition of a previously deferred gain totaling $14.2 million resulting from the sale of the Company’s Contour Software, Inc. subsidiary in the first quarter of 2001. Also included in the 2003 total was a $13.1 million realized gain associated with the merger of the Company’s Credit Online business with DealerTrack Holdings, Inc.

Salaries and other personnel costs—A summary by segment of the Company’s salaries and other personnel costs is as follows:

	2005			%		2004			%		2003			%
	(in thousands, except percentages)
Financial Services:
Title Insurance	$	1,712,873		71		$	1,465,267		70		$	1,261,120		70
Specialty Insurance		55,970		2			45,479		2			38,506		2
		1,768,843		73			1,510,746		72			1,299,626		72
Information Technology:
Mortgage Information		232,122		10			247,615		12			210,033		12
Property Information		187,860		8			155,487		7			135,603		8
Risk Mitigation and Business Solutions		179,844		7			142,545		7			115,559		6
		599,826		25			545,647		26			461,195		26
Corporate		72,091		3			65,452		3			46,503		3
Eliminations		(13,991	)	(1	)		(10,630	)	(1	)		(7,771	)	(1	)
	$	2,426,769		100		$	2,111,215		100		$	1,799,553		100

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Financial Services.    The Company’s title insurance segment comprises over 95% of total salaries and other personnel costs for the Financial Services group. The title insurance segment (primarily direct operations) is labor intensive; accordingly, a major variable expense component is salaries and other personnel costs. This expense component is affected by two competing factors: the need to monitor personnel changes to match the level of corresponding or anticipated new orders, and the need to provide quality service. In addition, this segment’s growth in operations that specialize in builder and lender title business has created ongoing fixed costs required to service accounts.

Title insurance personnel expenses increased 16.9% in 2005 over 2004 and 16.2% in 2004 over 2003. The increase in 2005 over 2004 was primarily due to $105.1 million of personnel costs associated with new acquisitions as well as incremental costs incurred to service the increase in order volume. The Company’s direct title operations opened 2,700,000, 2,518,600, and 2,511,000 orders in 2005, 2004, and 2003, respectively, representing an increase of 7.2% in 2005 over 2004 and 0.3% in 2004 over 2003. The increases in orders year over year primarily reflected acquisition activity and market share increases, offset in part by declining mortgage originations. Also contributing to the increase were costs incurred to service the higher mix of more labor intensive resale and commercial title orders processed during the year. The increase in 2004 over 2003 was primarily due to $139.9 million of personnel costs associated with new acquisitions, incremental costs incurred to service the higher mix of more labor intensive resale and commercial title orders processed during the year and $25.8 million of increased employee benefit costs. The increases in employee benefit costs were primarily the result of increases in health care costs of $16.7 million in 2004 over 2003. Also contributing to the increase in employee benefit costs were increases in the Company’s discretionary match related to the 401(k) plan, which is profit driven and increases as profits escalate. This match can also increase when profits decrease if the number of participants in the plan increases or if the total amount of employee deferral increases. The match increased $8.2 million in 2004 over 2003.

Information Technology.    Personnel expenses in total for the Information Technology group increased 9.9% in 2005 over 2004 and 18.0% in 2004 over 2003. Excluding $65.5 million and $101.6 million of respective personnel costs associated with new acquisitions, personnel expenses for the information technology group decreased 2.1% in 2005 from 2004 and 4.4% in 2004 from 2003. The decrease in 2005 from 2004 reflected a decline in incremental costs associated with the decrease in business volume, offset in part by a $3.9 million increase in employee benefit costs. The decrease in 2004 from 2003 also reflected a decline in incremental costs associated with the decrease in business volume, offset in part by a $4.2 million increase in employee benefit costs and costs incurred at the Company’s tax service division to integrate new customers.

Corporate.    Corporate personnel expenses increased 10.1% in 2005 over 2004 and 40.7% in 2004 over 2003. These increases were primarily attributable to an increase in employee benefit costs, increased technology personnel costs and higher general costs associated with the support effort needed to service the Company’s expanded national and international operations. The increase in 2004 over 2003 also reflected costs associated with the implementation of the provisions of Section 404 of the Sarbanes Oxley Act, primarily consisting of internal audit costs.

Premiums retained by agents—A summary of agent retention and agent revenues is as follows:

	2005			2004			2003
	(in thousands, except percentages)
Agent retention	$	2,304,047		$	1,869,536		$	1,729,104
Agent revenues	$	2,863,306		$	2,299,656		$	2,138,059
% retained by agents		80.5	%		81.3	%		80.9	%

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The premium split between underwriter and agents is in accordance with their respective agency contracts and can vary from region to region due to divergencies in real estate closing practices, as well as rating structures. As a result, the percentage of title premiums retained by agents varies due to the geographical mix of revenues from agency operations.

Other operating expenses—A summary by segment of the Company’s other operating expenses is as follows:

	2005			%		2004			%	2003			%
	(in thousands, except percentages)
Financial Services:
Title Insurance	$	937,156		56		$	840,790		56	$	728,944		55
Specialty Insurance		33,132		2			16,646		1		23,316		2
		970,288		58			857,436		57		752,260		57
Information Technology:
Mortgage Information		172,881		10			184,603		12		177,234		14
Property Information		172,383		10			132,769		9		141,100		11
Risk Mitigation and Business Solutions		336,718		20			278,266		19		226,401		17
		681,982		40			595,638		40		544,735		42
Corporate		53,754		3			41,275		3		32,084		2
Eliminations		(10,682	)	(1	)		(5,412	)	0		(9,204	)	(1	)
	$	1,695,342		100		$	1,488,937		100	$	1,319,875		100

Financial Services.    The Company’s title insurance segment comprises over 95% of total other operating expenses for the Financial Services group. Title insurance other operating expenses (principally direct operations) increased 11.5% in 2005 over 2004 and 15.3% in 2004 over 2003. The increase in 2005 over 2004 was primarily due to $87.7 million of other operating expenses associated with new acquisitions as well as $12.5 million in charges incurred in connection with litigation and regulatory matters. The increase in 2004 over 2003 was primarily due to $79.9 million of other operating expenses associated with new acquisitions and a voluntary $24.0 million charge taken in the fourth quarter of 2004 associated with captive reinsurance agreements with residential homebuilders. The increase in 2004 over 2003 also reflected $13.3 million of litigation charges taken in the fourth quarter of 2004. These charges included $10.0 million for a litigation matter disclosed by the Company on January 26, 2005.

Information Technology.    Other operating expenses for the Information Technology group increased 14.5% in 2005 over 2004 and 10.2% in 2004 over 2003. Excluding other operating expenses of $62.6 million and $84.8 million associated with new acquisitions for the respective periods, other operating expenses for the Information Technology group increased 4.0% in 2005 over 2004 and decreased 5.6% in 2004 from 2003. The increase in 2005 over 2004 was primarily due to $11.1 million of costs related to the Company’s default division. These costs included expenses associated with relocating and consolidating operations, the write down of certain software and other related expenses. Also contributing to the increase in 2005 were $8.9 million in expenses incurred at the risk mitigation and business solutions segment primarily in connection with the Company’s contribution of its credit information group to First Advantage. The decrease in 2004 from 2003 reflected a decline in incremental costs associated with the decline in mortgage origination volume.

Corporate.    Corporate other operating expenses increased 30.2% in 2005 over 2004 and 28.6% in 2004 over 2003. These increases reflected higher general costs associated with the support effort needed to service the Company’s expanded national and international operations. Also contributing to the increase for 2004 were costs associated with the implementation of the provisions of Section 404 of the Sarbanes Oxley Act, which included increased costs associated with the Company’s independent registered public accounting firm and outside consultants.

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Provision for title losses and other claims—A summary by segment of the Company’s provision for title losses and other claims is as follows:

	2005		%	2004		%	2003		%
	(in thousands, except percentages)
Title Insurance	$	288,713	63	$	198,295	57	$	179,681	55
Specialty Insurance:
Home Warranty		90,175	20		70,562	20		56,769	18
Property and Casualty Insurance		52,442	11		52,087	15		62,777	19
		142,617	31		122,649	35		119,546	37
All other segments		25,700	6		28,674	8		25,177	8
	$	457,030	100	$	349,618	100	$	324,404	100

The provision for title insurance losses, expressed as a percentage of title insurance operating revenues, was 5.0% in 2005 and 4.1% in both 2004 and 2003. The increased rate for 2005 primarily reflected the claims intensity of policy years 2005 and 2004. The Company started 2005 with a rate of 4.1% that was applied to title insurance operating revenues for the first and second quarters of 2005. Effective July 1, 2005, the Company increased the loss provision rate to 5.0% to reflect an increase in claims intensity. During the fourth quarter 2005, the Company increased the rate to 6.2% as a result of a further increase in claims intensity, ending the year with an average annual rate of 5.0%. The Company anticipates starting the 2006 year applying a loss provision rate of 6.0%. This rate will be reviewed on a quarterly basis and may be adjusted if necessary.

The provision for home warranty claims, expressed as a percentage of home warranty operating revenues, was 51.7% in 2005, 49.0% in 2004, and 48.9% in 2003. These increases in rate primarily reflected an increase in the average number of claims per contract due to geographic expansion.

The provision for property and casualty insurance claims, expressed as a percentage of property and casualty insurance operating revenues, was 52.0% in 2005, 68.4% in 2004, and 63.6% in 2003. The decrease in rate in 2005 from 2004 was primarily due to high claims experience in 2004 resulting mostly from $6.2 million of claims associated with the Florida hurricanes. The rate for 2003 excludes $5.0 million of catastrophe losses related to the Southern California wildfires, which represents the Company’s deductible on its reinsurance treaty.

Depreciation and amortization—Depreciation and amortization increased 22.1% in 2005 over 2004 and 12.7% in 2004 over 2003. These increases were primarily due to an increase in the amortization of intangibles as a result of acquisition activity and an increase in the amortization of capitalized data and software as a result of new capital expenditures. Depreciation and amortization, as well as capital expenditures for each of the Company’s segments, are summarized in Note 22 to the consolidated financial statements.

Premium taxes—A summary by pertinent segment of the Company’s premium taxes is as follows:

	2005		%	2004		%	2003		%
	(in thousands, except percentages)
Title Insurance	$	59,269	92	$	47,662	90	$	46,211	90
Specialty Insurance		4,924	8		5,273	10		5,324	10
	$	64,193	100	$	52,935	100	$	51,535	100

Insurers are generally not subject to state income or franchise taxes. However, in lieu thereof, a “premium” tax is imposed on certain operating revenues, as defined by statute. Tax rates and bases vary from state to state; accordingly, the total premium tax burden is dependent upon the geographical mix of operating revenues. The Company’s underwritten title company (noninsurance) subsidiaries are subject to state income tax and do not pay premium tax. Accordingly, the Company’s total tax burden at the state level for the title insurance segment is

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composed of a combination of premium taxes and state income taxes. Premium taxes as a percentage of title insurance operating revenues remained relatively constant at approximately 1.0%.

Interest—Interest expense increased $9.5 million, or 21.6% in 2005 over 2004 and $7.7 million, or 21.4%, in 2004 over 2003. These increases were primarily due to an increase in acquisition-related indebtedness.

Income before income taxes and minority interests—A summary by segment is as follows:

	2005			%	2004			%	2003			%
	(in thousands, except percentages)
Financial Services:
Title Insurance	$	596,865		57	$	398,777		49	$	504,629		53
Specialty Insurance		50,544		5		41,419		5		30,125		3
		647,409		62		440,196		54		534,754		56
Information Technology:
Mortgage Information		141,620		14		174,868		21		238,508		25
Property Information		151,761		14		126,460		16		105,339		11
Risk Mitigation and Business Solutions		104,057		10		73,206		9		68,796		8
		397,438		38		374,534		46		412,643		44
		1,044,847		100		814,730		100		947,397		100
Corporate		(141,219	)			(137,446	)			(108,675	)
	$	903,628			$	677,284			$	838,722

The Company’s title insurance profit margins vary according to a number of factors, including the volume, composition (residential or commercial) and type (resale, refinancing or new construction) of real estate activity. Commercial transactions tend to generate higher revenues and greater profit margins than residential transactions. Profit margins from refinancing activities, on a per transaction basis, are lower than those from resale activities because in many states there are premium discounts on, and cancellation rates are higher for refinancing transactions. Cancellations of title orders adversely affect profits because costs are incurred in opening and processing such orders, but revenues are not generated. Also, the Company’s direct title insurance business has significant fixed costs in addition to its variable costs. Accordingly, profit margins from the Company’s direct title insurance business improve as the volume of title orders closed increases. Title insurance profit margins are also affected by the percentage of operating revenues generated by agency operations. Profit margins from direct operations are generally higher than from agency operations due primarily to the large portion of the premium that is retained by the agent.

Most of the businesses that are included in the Information Technology group are database intensive, with a relatively high proportion of fixed costs. As such, profit margins generally improve as revenues increase. Revenues for the mortgage information segment, like title insurance, are primarily dependent on the level of real estate activity and the cost and availability of mortgage funds. Revenues from the property information segment are, in part, dependent on real estate activity, but are less cyclical than title insurance and mortgage information revenues as a result of a significant subscription-based revenue stream. Most of the revenues for the risk mitigation and business solutions segment are unaffected by real estate activity, with the exception of the mortgage credit business, which is dependent on real estate activity.

In general, the title insurance business is a lower-margin business when compared with the Company’s other segments. The lower margins reflect the high fixed cost of producing title evidence, whereas the corresponding revenues are subject to regulatory and competitive pricing constraints.

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Corporate expenses include investment gains and losses, personnel and other operating expenses associated with the Company’s corporate facilities, certain corporate-wide and technology initiatives and unallocated interest expense.

Income taxes—The Company’s effective income tax rate, which includes a provision for state income and franchise taxes for noninsurance subsidiaries, was 35.9% for both 2005 and 2004, and 34.8% for 2003. The difference in the effective tax rate was primarily due to changes in the ratio of permanent differences to income before income taxes and minority interests and changes in state income and franchise taxes resulting from fluctuations in the Company’s noninsurance subsidiaries’ contribution to pretax profits. Information regarding items included in the reconciliation of the effective rate with the federal statutory rate is contained in Note 13 to the consolidated financial statements.

Minority interests—Minority interests in net income of consolidated subsidiaries increased $8.9 million in 2005 over 2004 and decreased $10.7 million in 2004 over 2003. These changes were primarily due to the fluctuations in the operating results of the Company’s joint venture with Experian, which includes certain companies in the Company’s mortgage information, property information and risk mitigation and business solutions segments.

Net income—Net income and per share information are summarized as follows (see Note 14 to the consolidated financial statements):

	2005		2004		2003
	(in thousands, except per share amounts)
Net income	$	485,266	$	349,099	$	451,022
Per share of common stock:
Net income:
Basic	$	5.14	$	4.04	$	5.89
Diluted	$	4.97	$	3.83	$	5.22
Weighted-average shares:
Basic		94,351		86,430		76,632
Diluted		97,795		91,895		87,765

Liquidity and Capital Resources

Cash provided by operating activities amounted to $921.5 million, $678.9 million, and $830.1 million for 2005, 2004, and 2003, respectively, after net claim payments of $373.0 million, $268.0 million, and $269.5 million, respectively. The principal nonoperating uses of cash and cash equivalents for the three-year period ended December 31, 2005, were for company acquisitions, additions to the investment portfolio, capital expenditures, dividends, distributions to minority shareholders, the repayment of debt and the repurchase of Company shares. The most significant nonoperating sources of cash and cash equivalents were proceeds from the issuance of debt, proceeds from the issuance of notes and capital lease, and proceeds from the sales and maturities of certain investments. The net effect of all activities on total cash and cash equivalents was an increase of $224.5 million for 2005, $168.8 million for 2004, and $220.2 million for 2003.

Notes and contracts payable, as a percentage of total capitalization, were 21.5% as of December 31, 2005, as compared with 22.7% as of the prior year-end. This decrease was primarily attributable to net income for the year, offset in part by indebtedness incurred in connection with acquisitions and a comprehensive loss associated with the Company’s debt and equity securities portfolio and its pension plans. Notes and contracts payable are more fully described in Note 10 to the consolidated financial statements.

In November 2005, the Company amended and restated its $500.0 million credit agreement that was originally entered into in August 2004 and was previously amended twice during 2005. The November 2005

29

amendment and restatement supercedes the previous credit agreement and its amendments and extends the expiration date to November 2010. Further, the amended and restated credit agreement permits the Company to increase the credit amount to $750.0 million by offering the lenders party thereto the opportunity to increase their commitments or by introducing a new lender to the credit agreement who does not currently participate. The Company is required to maintain certain minimum levels of capital and earnings and meet predetermined debt-to-capitalization ratios. The line of credit was unused at December 31, 2005. The Company’s publicly traded subsidiary, First Advantage Corporation has one bank credit agreement. This agreement provides for a $225.0 million uncollateralized revolving line of credit. Under the terms of the credit agreement, First Advantage Corporation is required to satisfy certain financial requirements. The line of credit remains in effect until September 2010 and had a balance due of $135.5 million at December 31, 2005.

On December 31, 2004, the Company entered into a sale-leaseback transaction for certain equipment and software. The transaction totaled $122.0 million and was accounted for as a capital lease in the accompanying consolidated financial statements.

In July 2004, the Company sold unsecured debt securities in the aggregate principal amount of $150.0 million. These securities, which bear interest at 5.7%, are due August 2014. The Company used the proceeds from the sale of the securities for general corporate purposes.

In the first quarter of 2004, the Company began the expansion of its office campus. This expansion was completed in the fourth quarter of 2005 with the addition of two 4-story office buildings totaling approximately 226,000 square feet, a two-story, free standing, 52,000 square foot technology center and a two-story parking structure, bringing the total square footage of the Company’s campus at MacArthur Place to approximately 490,000 square feet. The two new office buildings are occupied primarily by the Company’s property information segment and trust company. The expansion was paid for with internally generated funds.

Off-balance sheet arrangements and contractual obligations.    The Company administers escrow and trust deposits as a service to its customers. Escrow deposits totaled $6.2 billion and $5.4 billion at December 31, 2005 and 2004, respectively, of which $639.9 million and $337.4 million were held at the Company’s trust and thrift division. The escrow deposits held at the Company’s trust and thrift division are included in the accompanying consolidated balance sheets. The remaining escrow deposits were held at third party financial institutions. Trust deposits totaled $3.0 billion and $2.9 billion at December 31, 2005 and 2004, respectively, and were held at the Company’s trust division. Escrow deposits held at third party financial institutions and trust deposits are not considered assets of the Company and, therefore, are not included in the accompanying consolidated balance sheets. However, the Company remains contingently liable for the disposition of these assets.

In addition, the Company facilitates tax-deferred property exchanges for customers pursuant to Section 1031 of the Internal Revenue Code and tax-deferred reverse exchanges pursuant to Revenue Procedure 2000-37. As a facilitator and intermediary, the Company holds the proceeds from sales transactions and takes temporary title to property identified by the customer to be acquired with such proceeds. Upon the completion of such exchange the identified property is transferred to the customer or, if the exchange does not take place, an amount equal to the sales proceeds or, in the case of a reverse exchange, title to the property held by the Company is transferred to the customer. Like-kind exchange funds held by the Company for the purpose of completing such transactions totaled $2.6 billion and $1.9 billion at December 31, 2005 and 2004, respectively. Though the Company is the legal and beneficial owner of such proceeds and property, due to the structure utilized to facilitate these transactions the proceeds and property are not considered assets of the Company for accounting purposes and, therefore, are not included in the accompanying consolidated balance sheets. The Company remains contingently liable to the customer for the transfers of property, disbursements of proceeds and the return on the proceeds.

30

A summary, by due date, of the Company’s total contractual obligations at December 31, 2005, is as follows:

	Notes and contracts payable		Operating leases		Deferrable interest subordinated notes		Total
	(in thousands)
2006	$	135,738	$	212,873		—	$	348,611
2007		107,504		164,132		—		271,636
2008		111,395		108,034		—		219,429
2009		30,855		61,718		—		92,573
2010		160,080		41,669		—		201,749
Later Years		302,997		109,022	$	100,000		512,019
	$	848,569	$	697,448	$	100,000	$	1,646,017

Pursuant to various insurance and other regulations, the maximum amount of dividends, loans and advances available to the Company in 2005 from its insurance subsidiaries is $336.5 million. Such restrictions have not had, nor are they expected to have, an impact on the Company’s ability to meet its cash obligations. See Note 2 to the consolidated financial statements.

Due to the Company’s significant liquid-asset position and its consistent ability to generate cash flows from operations, management believes that its resources are sufficient to satisfy its anticipated operational cash requirements. The Company’s financial position will enable management to react to future opportunities for acquisitions or other investments in support of the Company’s continued growth and expansion.

31

Item 7A.    Quantitative and Qualitative Disclosures about Market Risk

The Company’s primary exposure to market risk relates to interest rate risk associated with certain financial instruments. Although the Company monitors its risk associated with fluctuations in interest rates, it does not currently use derivative financial instruments to hedge these risks. The table below provides information about certain assets and liabilities that are sensitive to changes in interest rates and presents cash flows and the related weighted average interest rates by expected maturity dates. The Company is also subject to equity price risk as related to its equity securities. At December 31, 2005, the Company had equity securities with a book value of $49.5 million and fair value of $47.1 million. Although the Company has operations in certain foreign countries, these operations, in the aggregate, are not material to the Company’s financial condition or results of operations.

	2006			2007		2008		2009		2010		Thereafter			Total		Fair Value
	(in thousands except percentages)
Assets
Deposits with Savings and Loans
Book Value	$	90,383													$	90,383	$	90,383
Average Interest Rate		2.18	%															100.0	%
Debt Securities
Book Value	$	83,644		60,569		64,297		83,499		50,230			763,791		$	1,106,030	$	1,100,728
Average Interest Rate		4.35	%	4.58	%	4.96	%	4.61	%	4.65	%		4.76	%				99.5	%
Loans Receivable
Book Value	$	7		871		1,267		808		27			91,832		$	94,812	$	94,799
Average Interest Rate		7.86	%	6.83	%	7.23	%	9.15	%	8.75	%		6.88	%				100.0	%
Liabilities
Interest Bearing Escrow Deposits
Book Value	$	200,766													$	200,766	$	200,766
Average Interest Rate		1.30	%															100.0	%
Variable Rate Demand Deposits
Book Value	$	24,840													$	24,840	$	24,840
Average Interest Rate		3.90	%															100.0	%
Fixed Rate Demand Deposits
Book Value	$	16,567		6,433		2,841		2,088		465					$	28,394	$	28,298
Average Interest Rate		3.31	%	4.13	%	3.86	%	4.38	%	4.50	%							99.7	%
Notes Payable
Book Value	$	135,738		107,504		111,395		30,855		160,080			302,997		$	848,569	$	862,228
Average Interest Rate		5.84	%	5.58	%	5.70	%	5.81	%	6.64	%		6.26	%				101.6	%
Deferrable Interest Subordinates Notes
Book Value												$	100,000		$	100,000	$	120,882
Average Interest Rate													8.50	%				120.9	%

Item 8.    Financial Statements and Supplementary Data

Separate financial statements for subsidiaries not consolidated and 50% or less owned persons accounted for by the equity method have been omitted because, if considered in the aggregate, they would not constitute a significant subsidiary.

32

INDEX

	Page No.
Report of Independent Registered Public Accounting Firm	34
Financial Statements:
Consolidated Balance Sheets	36
Consolidated Statements of Income and Comprehensive Income	37
Consolidated Statements of Stockholders’ Equity	38
Consolidated Statements of Cash Flows	39
Notes to Consolidated Financial Statements	40
Unaudited Quarterly Financial Data	67
Financial Statement Schedules:
I.           Summary of Investments—Other than Investments in Related Parties	68
III.        Supplementary Insurance Information	69
IV.       Reinsurance	71
V.         Valuation and Qualifying Accounts	72

Financial statement schedules not listed are either omitted because they are not applicable or the required information is shown in the consolidated financial statements or in the notes thereto.

33

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of

The First American Corporation:

We have completed integrated audits of The First American Corporation’s 2005 and 2004 consolidated financial statements and of its internal control over financial reporting as of December 31, 2005, and an audit of its 2003 consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Our opinions, based on our audits, are presented below.

Consolidated financial statements and financial statement schedules

In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of The First American Corporation and its subsidiaries at December 31, 2005 and 2004, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2005 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedules listed in the accompanying index present fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedules are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and financial statement schedules based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

Internal control over financial reporting

Also, in our opinion, management’s assessment, included in “Management’s Annual Report on Internal Control Over Financial Reporting” appearing under Item 9A, that the Company maintained effective internal control over financial reporting as of December 31, 2005 based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), is fairly stated, in all material respects, based on those criteria. Furthermore, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2005, based on criteria established in Internal Control—Integrated Framework issued by the COSO. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express opinions on management’s assessment and on the effectiveness of the Company’s internal control over financial reporting based on our audit. We conducted our audit of internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. An audit of internal control over financial reporting includes obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we consider necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting

34

includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/    PRICEWATERHOUSECOOPERS LLP

PricewaterhouseCoopers LLP

Orange County, California

March 16, 2006

35

THE FIRST AMERICAN CORPORATION

AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(in thousands)

	December 31
	2005			2004
ASSETS
Cash and cash equivalents	$	1,561,144		$	1,336,643
Accounts and accrued income receivable, less allowances ($67,473 and $62,730)		486,933			438,365
Income taxes receivable		—			34,074
Investments:
Deposits with savings and loan associations and banks		90,383			94,445
Debt securities		1,100,728			705,674
Equity securities		47,101			46,190
Other long-term investments		389,211			305,571
		1,627,423			1,151,880
Loans receivable, net		94,812			101,341
Property and equipment, net		685,522			593,401
Title plants and other indexes		539,083			497,430
Deferred income taxes		—			39,886
Goodwill		2,092,612			1,605,879
Other intangible assets, net		247,117			153,960
Other assets		263,995			255,506
	$	7,598,641		$	6,208,365
LIABILITIES AND STOCKHOLDERS’ EQUITY
Demand deposits	$	693,175		$	399,429
Accounts payable and accrued liabilities:
Accounts payable		122,082			128,214
Salaries and other personnel costs		303,894			228,393
Pension costs and other retirement plans		308,809			237,827
Other		286,769			289,327
		1,021,554			883,761
Deferred revenue		762,157			729,537
Reserve for known and incurred but not reported claims		671,054			526,516
Income taxes payable		17,386			—
Deferred income taxes		18,534			—
Notes and contracts payable		848,569			732,770
Deferrable interest subordinated notes		100,000			100,000
		4,132,429			3,372,013
Minority interests in consolidated subsidiaries		459,665			372,788
Commitments and contingencies (Note 17)
Stockholders’ equity:
Preferred stock, $1 par value
Authorized—500 shares; Outstanding—None
Common stock, $1 par value
Authorized—180,000 shares; Outstanding— 95,860 and 90,058 shares		95,860			90,058
Additional paid-in capital		923,237			757,931
Retained earnings		2,113,266			1,696,636
Accumulated other comprehensive loss		(125,816	)		(81,061	)
Total stockholders’ equity		3,006,547			2,463,564
	$	7,598,641		$	6,208,365

See Notes to Consolidated Financial Statements

36

THE FIRST AMERICAN CORPORATION

AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(in thousands, except per share amounts)

	Year Ended December 31
	2005			2004			2003
Revenues:
Operating revenues	$	7,816,078		$	6,570,746		$	6,032,643
Investment and other income		210,295			141,796			145,354
Gain on stock issued by subsidiary		25,658			8,472			2,257
Net realized investment gains		9,727			1,312			33,460
		8,061,758			6,722,326			6,213,714
Expenses:
Salaries and other personnel costs		2,426,769			2,111,215			1,799,553
Premiums retained by agents		2,304,047			1,869,536			1,729,104
Other operating expenses		1,695,342			1,488,937			1,319,875
Provision for title losses and other claims		457,030			349,618			324,404
Depreciation and amortization		157,439			128,978			114,424
Premium taxes		64,193			52,935			51,535
Interest		53,310			43,823			36,097
		7,158,130			6,045,042			5,374,992
Income before income taxes and minority interests		903,628			677,284			838,722
Income taxes		324,500			243,200			292,000
Income before minority interests		579,128			434,084			546,722
Minority interests		93,862			84,985			95,700
Net income		485,266			349,099			451,022
Other comprehensive loss, net of tax:
Unrealized gain (loss) on securities		(9,103	)		997			3,831
Minimum pension liability adjustment		(35,652	)		(19,202	)		(10,228	)
		(44,755	)		(18,205	)		(6,397	)
Comprehensive income	$	440,511		$	330,894		$	444,625
Net income per share:
Basic	$	5.14		$	4.04		$	5.89
Diluted	$	4.97		$	3.83		$	5.22
Weighted-average common shares outstanding:
Basic		94,351			86,430			76,632
Diluted		97,795			91,895			87,765

See Notes to Consolidated Financial Statements

37

THE FIRST AMERICAN CORPORATION

AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

	Shares		Common Stock			Additional paid-in capital			Retained earnings			Accumulated other comprehensive income (loss)			Total
Balance at December 31, 2002	73,636		$	73,636		$	359,644		$	987,768		$	(56,459	)	$	1,364,589
Net income for 2003										451,022						451,022
Cash dividends on common shares										(38,850	)					(38,850	)
Shares issued in connection with company acquisitions	1,067			1,067			27,413									28,480
Shares issued in connection with option, benefit and savings plans	4,123			4,123			76,553									80,676
Other comprehensive loss													(6,397	)		(6,397	)
Balance at December 31, 2003	78,826			78,826			463,610			1,399,940			(62,856	)		1,879,520
Net income for 2004										349,099						349,099
Cash dividends on common shares										(52,403	)					(52,403	)
Purchase of Company shares	(1,465	)		(1,465	)		(37,499	)								(38,964	)
Conversion of debt	7,458			7,458			198,270									205,728
Shares issued in connection with company acquisitions	1,648			1,648			45,314									46,962
Shares issued in connection with option, benefit and savings plans	3,591			3,591			88,236									91,827
Other comprehensive loss													(18,205	)		(18,205	)
Balance at December 31, 2004	90,058			90,058			757,931			1,696,636			(81,061	)		2,463,564
Net income for 2005										485,266						485,266
Cash dividends on common shares										(68,636	)					(68,636	)
Purchase of Company shares	(1,254	)		(1,254	)		(46,942	)								(48,196	)
Conversion of debt	16			16			635									651
Shares issued in connection with company acquisitions	2,379			2,379			85,626									88,005
Shares issued in connection with option, benefit and savings plans	4,661			4,661			125,987									130,648
Other comprehensive loss													(44,755	)		(44,755	)
Balance at December 31, 2005	95,860		$	95,860		$	923,237		$	2,113,266		$	(125,816	)	$	3,006,547

See Notes to Consolidated Financial Statements.

38

THE FIRST AMERICAN CORPORATION

AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Year Ended December 31
	2005			2004			2003
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	485,266		$	349,099		$	451,022
Adjustments to reconcile net income to cash provided by operating activities:
Provision for title losses and other claims		457,030			349,618			324,404
Depreciation and amortization		157,439			128,978			114,424
Minority interests in net income		93,862			84,985			95,700
Net realized investment gains		(35,385	)		(9,784	)		(35,717	)
Other, net		(53,227	)		(53,455	)		(59,789	)
Changes in assets and liabilities excluding effects of company acquisitions and noncash transactions:
Claims paid, including assets acquired, net of recoveries		(372,969	)		(268,025	)		(269,468	)
Net change in income tax accounts		150,627			81,652			(4,975	)
Increase in accounts and accrued income receivable		(7,666	)		(62,533	)		(17,443	)
Increase in accounts payable and accrued liabilities		27,727			20,373			161,140
Increase in deferred revenue		20,501			5,613			129,507
Other, net		(1,719	)		52,333			(58,685	)
Cash provided by operating activities		921,486			678,854			830,120
CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash effect of company acquisitions/dispositions		(378,620	)		(329,652	)		(499,038	)
Net increase in deposits with banks		24,661			(14,668	)		(13,768	)
Purchases of debt and equity securities		(609,468	)		(354,350	)		(388,165	)
Proceeds from sales of debt and equity securities		55,977			97,414			232,941
Proceeds from maturities of debt securities		176,060			101,425			52,857
Net decrease in other long-term investments		68,932			8,611			42,110
Net decrease in loans receivable		6,529			3,887			2,934
Capital expenditures		(200,856	)		(201,803	)		(98,963	)
Purchases of capitalized data		(21,216	)		(19,485	)		(19,866	)
Proceeds from sale of property and equipment		11,055			7,741			3,373
Cash used for investing activities		(866,946	)		(700,880	)		(685,585	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in demand deposits		293,746			75,020			67,658
Proceeds from issuance of notes and capital lease		187,081			325,933			177,117
Repayment of debt		(201,955	)		(107,180	)		(152,722	)
Purchase of Company shares		(48,196	)		(38,964	)		—
Proceeds from exercise of stock options		45,316			27,509			26,500
Proceeds from issuance of stock to employee benefit plans		8,942			6,993			5,989
Contributions from minority shareholders		10,700			12,100			58,000
Distributions to minority shareholders		(60,773	)		(58,138	)		(72,882	)
Cash dividends		(64,900	)		(52,403	)		(34,008	)
Cash provided by financing activities		169,961			190,870			75,652
Net increase in cash and cash equivalents		224,501			168,844			220,187
Cash and cash equivalents—Beginning of year		1,336,643			1,167,799			947,612
Cash and cash equivalents—End of year	$	1,561,144		$	1,336,643		$	1,167,799
SUPPLEMENTAL INFORMATION:
Cash paid during the year for:
Interest	$	51,434		$	41,679		$	36,276
Premium taxes	$	56,570		$	59,335		$	46,723
Income taxes	$	193,174		$	170,811		$	296,227
Noncash investing and financing activities:
Shares issued for benefits plans	$	76,390		$	57,325		$	48,187
Shares issued in repayment of convertible debt	$	651		$	205,728		$	—
Company acquisitions in exchange for common stock	$	88,005		$	46,962		$	28,480
Liabilities in connection with company acquisitions	$	278,793		$	202,084		$	330,599

See Notes to Consolidated Financial Statements

39

THE FIRST AMERICAN CORPORATION

AND SUBSIDIARY COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.    Description of the Company:

The First American Corporation (the Company), through its subsidiaries, is engaged in the business of providing business information and related products and services. The Company has five reporting segments that fall within two primary business groups, financial services and information technology. The financial services group includes the Company’s title insurance and services segment and its specialty insurance segment. The title insurance and services segment issues residential and commercial title insurance policies, provides escrow services, equity loan services, tax-deferred exchanges, investment advisory, trust and thrift services, and other related products and services. The specialty insurance segment issues property and casualty insurance policies and provides home warranties. The information technology group includes the Company’s mortgage information, property information and risk mitigation and business solutions segments. The mortgage information segment provides tax monitoring, flood zone certification, default management services and other real estate related services. The property information segment provides property database services, appraisal services and data analytics service. The risk mitigation and business solutions segment provides mortgage credit reporting services, specialized credit reporting services, resident screening, employment screening, drug free work place programs and other occupational health programs, consumer direct location services, corporate tax and incentive services, and motor vehicle reporting and other related services.

Significant Accounting Policies:

Principles of consolidation

The consolidated financial statements include the accounts of The First American Corporation and all controlled subsidiaries. All significant intercompany transactions and balances have been eliminated. Equity investments in which the Company exercises significant influence, but does not control, and is not the primary beneficiary are accounted for using the equity method. Investments in which the Company does not exercise significant influence over the investee are accounted for under the cost method.

Certain 2003 and 2004 amounts have been reclassified to conform to the 2005 presentation.

Cash equivalents

The Company considers cash equivalents to be all short-term investments that have an initial maturity of 90 days or less and are not restricted for statutory deposit or premium reserve requirements. The carrying amount for cash equivalents is a reasonable estimate of fair value due to the short-term maturity of these investments.

Investments

Deposits with savings and loan associations and banks are short-term investments with initial maturities of more than 90 days. The carrying amount of these investments is a reasonable estimate of fair value due to their short-term nature.

Debt securities are carried at fair value and consist primarily of investments in obligations of the United States Treasury, various corporations, certain state and political subdivisions and mortgage-backed securities.

Equity securities are carried at fair value and consist primarily of investments in marketable common stocks of corporate entities.

40

THE FIRST AMERICAN CORPORATION

AND SUBSIDIARY COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Other long-term investments consist primarily of investments in affiliates, which are accounted for under the equity method of accounting or the cost method of accounting, and notes receivable and other investments, which are carried at the lower of cost or fair value less costs to sell.

The Company classifies its debt and equity securities portfolio as available-for-sale. This portfolio is continually monitored for differences between the cost and estimated fair value of each security. If the Company believes that a decline in the value of a debt or equity security is temporary in nature, it records the decline as an unrealized loss in stockholders’ equity. If the decline is believed to be other than temporary, the debt or equity security is written down to fair value and a realized loss is recorded on the Company’s statement of income. Management’s assessment of a decline in value includes, among other things, its current judgment as to the financial position and future prospects of the entity that issued the security. If that judgment changes in the future, the Company may ultimately record a realized loss after having initially concluded that the decline in value was temporary.

Property and equipment

Property and equipment includes computer software acquired or developed for internal use and for use with the Company’s products. Software development costs, which include capitalized interest costs and certain payroll-related costs of employees directly associated with developing software, in addition to incremental payments to third parties, are capitalized from the time technological feasibility is established until the software is ready for use.

Depreciation on buildings and on furniture and equipment is computed using the straight-line method over estimated useful lives of 25 to 40 and 3 to 10 years, respectively. Capitalized software costs are amortized using the straight-line method over estimated useful lives of 3 to 10 years.

Title plants and other indexes

Title plants and other indexes include the Company’s title plants, flood zone databases and capitalized real estate data. Title plants and flood zone databases are carried at original cost, with the costs of daily maintenance (updating) charged to expense as incurred. Because properly maintained title plants and flood zone databases have indefinite lives and do not diminish in value with the passage of time, no provision has been made for depreciation or amortization. Capitalized real estate data, which is primarily used by the Company’s property information segment, is amortized using the straight-line method over estimated useful lives of 5 to 15 years. The Company continually analyzes its title plant and other indexes for impairment. This analysis includes, but is not limited to, the effects of obsolescence, duplication, demand and other economic factors.

Assets acquired in connection with claim settlements

In connection with settlement of title insurance and other claims, the Company sometimes purchases mortgages, deeds of trust, real property or judgment liens. These assets, sometimes referred to as “salvage assets,” are carried at the lower of cost or fair value less costs to sell and are included in “Other assets” in the Company’s consolidated balance sheets. The balance for these assets was $49.0 million and $40.1 million at December 31, 2005 and 2004, respectively.

Goodwill

On January 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets” (SFAS 142). This statement addresses financial accounting and

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reporting for goodwill and other intangible assets. In accordance with the provisions of SFAS 142, goodwill is no longer amortized but is rather tested at least annually for impairment. The Company has selected September 30 as the annual valuation date to test goodwill for impairment.

Other Intangible Assets

The Company’s intangible assets consist of covenants not to compete, customer lists, trademarks and licenses. Each of these intangible assets, excluding licenses, are being amortized on a straight-line basis over their useful lives ranging from 2 to 10 years and are subject to impairment tests on a periodic basis. Licenses are an intangible asset with an indefinite life and are therefore not amortized but rather tested annually for impairment by comparing the fair value of the license with its carrying value.

The Company has determined that its flood zone certification database, which is included in “Title plants and other indexes,” is an intangible asset with an indefinite life. Accordingly, this asset is not amortized but rather tested annually for impairment by comparing the fair value of the database with its carrying value.

Impairment of long-lived assets and loans receivable

On January 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 144, “Accounting for Impairment or Disposal of Long-Lived Assets” (SFAS 144). This standard requires that the Company test long-lived assets for impairment whenever there are recognized events or changes in circumstances that could affect the carrying value of the long-lived assets. In accordance with SFAS 144, management uses estimated expected future cash flows (undiscounted and excluding interest costs) to measure the recoverability of long-lived assets held and used. As of December 31, 2005 and 2004, no indications of impairment were identified. SFAS 144 also requires that long-lived assets classified as held for sale be carried at the lower of cost or market as of the date the criteria established by SFAS 144 have been met. As of December 31, 2005 and 2004, no long-lived assets were classified as held for sale.

Loans receivable are impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. Impaired loans receivable are measured at the present value of expected future cash flows discounted at the loan’s effective interest rate. As a practical expedient, the loan may be valued based on its observable market price or the fair value of the collateral, if the loan is collateral-dependent. No indications of impairment of loans receivable were identified during the three year period ended December 31, 2004.

Reserve for known and incurred but not reported claims

The Company provides for estimated title insurance losses by a charge to expense when the related premium revenue is recognized. The amount charged to expense (the loss rate), as well as the adequacy of the ending reserves, is determined by the Company based on historical experience and other factors, including, but not limited to, changes and trends in the type of title insurance policies issued, the real estate market and the interest rate environment. Management monitors the adequacy of the estimated loss reserves on a quarterly basis using a variety of techniques, including actuarial models, and adjusts the loss rate as necessary. Title insurance losses and other claims associated with ceded reinsurance are provided for as the Company remains contingently liable in the event that the reinsurer does not satisfy its obligations.

The Company provides for property and casualty insurance losses based upon its historical experience by a charge to expense when the related premium revenue is recognized.

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The Company provides for claims losses relating to its home warranty business based on the average cost per claim as applied to the total of new claims incurred. The average cost per home warranty claim is calculated using the average of the most recent 12 months of claims experience.

The reserve for known and incurred but not reported claims reflects management’s best estimate of the total costs required to settle all claims reported to the Company and claims incurred but not reported.

Operating revenues

Financial Services Group—Title premiums on policies issued directly by the Company are recognized on the effective date of the title policy and escrow fees are recorded upon close of the escrow. Revenues from title policies issued by independent agents are recorded when notice of issuance is received from the agent.

Revenues from home warranty contracts are recognized ratably over the 12-month duration of the contracts. Revenues from property and casualty insurance policies are recognized ratably over the 12-month duration of the policies.

Interest on loans with the Company’s thrift subsidiary is recognized on the outstanding principal balance on the accrual basis. Loan origination fees and related direct loan origination costs are deferred and recognized over the life of the loan. Revenues earned by the other products in the trust and banking operations of the Company are recognized at the time of delivery, as the Company has no significant ongoing obligation after delivery.

Information Technology Group—The Company’s tax service division defers the tax service fee and recognizes that fee as revenue ratably over the expected service period. The amortization rates applied to recognize the revenues assume a 10-year contract life and are adjusted to reflect prepayments. The Company reviews its tax service contract portfolio quarterly to determine if there have been changes in contract lives and/or changes in the number and/or timing of prepayments. Accordingly, the Company may adjust the rates to reflect current trends. Revenues earned by the other products in the Information Technology group are recognized at the time of delivery, as the Company has no significant ongoing obligation after delivery.

Premium taxes

Title insurance, property and casualty insurance and home warranty companies, like other types of insurers, are generally not subject to state income or franchise taxes. However, in lieu thereof, most states impose a tax based primarily on insurance premiums written. This premium tax is reported as a separate line item in the consolidated statements of income in order to provide a more meaningful disclosure of the taxation of the Company.

Income taxes

Taxes are based on income for financial reporting purposes and include deferred taxes applicable to temporary differences between the financial statement carrying amount and the tax basis of certain of the Company’s assets and liabilities.

Earnings per share

Basic earnings per share are computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding. The computation of diluted earnings per share is

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similar to the computation of basic earnings per share, except that net income is increased by the effect of interest expense, net of tax, on the Company’s convertible debt; and the weighted-average number of common shares outstanding is increased to include the number of additional common shares that would have been outstanding if dilutive stock options had been exercised and the debt had been converted.

Stock-based compensation

Effective December 15, 2002, the Company adopted Statement of Financial Accounting Standards No. 148, “Accounting for Stock-Based Compensation—Transition and Disclosure, which amends Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation” (SFAS 148). In accounting for its plans, the Company, as allowable under the provisions of SFAS 148, applies Accounting Principles Board Opinions No. 25, “Accounting for Stock issued to Employees.” As a result of this election, the Company does not recognize compensation expense for its stock option plans.

Had the Company determined compensation cost based on the fair value for its stock options at grant date, net income and earnings per share would have been reduced to the pro forma amounts as follows:

	2005			2004			2003
	(in thousands, except per share amounts)
Net income:
As reported	$	485,266		$	349,099		$	451,022
Less: stock based compensation expense, net of tax		(7,439	)		(6,779	)		(7,317	)
Pro forma	$	477,827		$	342,320		$	443,705
Net income per share:
As reported:
Basic	$	5.14		$	4.04		$	5.89
Diluted	$	4.97		$	3.83		$	5.22
Pro forma:
Basic	$	5.06		$	3.96		$	5.79
Diluted	$	4.89		$	3.75		$	5.13

The fair value of each option grant is estimated at the grant date using the Black-Scholes option-pricing model with the following weighted-average assumptions used for grants in 2005, 2004 and 2003, respectively; dividend yield of 1.8%, 2.1% and 1.8%; expected volatility of 40.6%, 43.6% and 47.4%; risk-free interest rate of 4.3%, 3.8% and 3.6%; and expected life of six years, six years and seven years.

In December 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123R, “Share-Based Payment” (SFAS 123R). This standard is a revision of Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” and supersedes Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” and its related implementation guidance. SFAS 123R focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions. The standard requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). The cost will be recognized over the period during which an employee is required to provide services in exchange for the award. In April 2005, the Securities and Exchange Commission deferred the effective date of SFAS 123R from the first interim period beginning after June 15, 2005 to the next fiscal year beginning after June 15, 2005. The Company will adopt the standard in the first quarter of 2006 and

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

use the modified prospective method which will require the Company to use the same valuation method currently used for its pro forma disclosures for all unvested options as of December 31, 2005. The Company will be able to use the same valuation method or select a different method for any options granted after December 31, 2005. In addition to stock options, the Company has an employee stock purchase plan that allows eligible employees to purchase common stock of the Company at 85% of the closing price on the last day of each month. Under the provisions of SFAS 123R, commencing the first quarter of 2006 the Company will recognize an expense in the amount equal to the discount. For the twelve months ended December 31, 2005, the amount of the discount was $1.4 million. Based on options outstanding at December 31, 2005, the Company estimates the impact of SFAS 123R will be to reduce diluted earnings per share by $0.08 to $0.10 per share in 2006 depending on the timing of issuance of stock options and the deductibility of the stock-based compensation expense for financial reporting purposes.

Risk of real estate market

Real estate activity is cyclical in nature and is affected greatly by the cost and availability of long-term mortgage funds. Real estate activity and, in turn, the majority of the Company’s revenues can be adversely affected during periods of high interest rates and/or limited money supply.

Use of estimates

The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the statements. Actual results could differ from the estimates and assumptions used.

Escrow and trust deposits

The Company administers escrow and trust deposits as a service to its customers. Escrow deposits totaled $6.2 billion and $5.4 billion at December 31, 2005 and 2004, respectively, of which $639.9 million and $337.4 million were held at the Company’s trust and thrift division. The escrow deposits held at the Company’s trust and thrift division are included in the accompanying consolidated balance sheets, with $75.6 million and $43.3 million included in cash and cash equivalents and $564.3 million and $294.1 million included in debt securities at December 31, 2005 and 2004, respectively. The remaining escrow deposits were held at third party financial institutions. Trust deposits totaled $3.0 billion and $2.9 billion at December 31, 2005 and 2004, respectively, and were held at the Company’s trust division. Escrow deposits held at third party financial institutions and trust deposits are not considered assets of the Company and, therefore, are not included in the accompanying consolidated balance sheets. However, the Company remains contingently liable for the disposition of these assets.

Like-kind exchanges

In addition, the Company facilitates tax-deferred property exchanges pursuant to Section 1031 of the Internal Revenue Code and tax-deferred reverse exchanges pursuant to Revenue Procedure 2000-37. As a facilitator and intermediary, the Company holds the proceeds from sales transactions and takes temporary title to property identified by the customer to be acquired with such proceeds. Upon the completion of such exchange the identified property is transferred to the customer or, if the exchange does not take place, an amount equal to the sales proceeds or, in the case of a reverse exchange, title to the property held by the Company is transferred to the customer. Like-kind exchange funds held by the Company for the purpose of completing such transactions

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

totaled $2.6 billion and $1.9 billion at December 31, 2005 and 2004, respectively. Though the Company is the legal and beneficial owner of such proceeds and property, due to the structure utilized to facilitate these transactions the proceeds and property are not considered assets of the Company for accounting purposes and, therefore, are not included in the accompanying consolidated balance sheets. The Company remains contingently liable to the customer for the transfers of property, disbursements of proceeds and a return on the proceeds.

NOTE 2.    Statutory Restrictions on Investments and Stockholders’ Equity:

Investments carried at $29.7 million were on deposit with state treasurers in accordance with statutory requirements for the protection of policyholders at December 31, 2005.

Pursuant to insurance and other regulations of the various states in which the Company’s insurance subsidiaries operate, the amount of dividends, loans and advances available to the Company is limited, principally for the protection of policyholders. Under such statutory regulations, the maximum amount of dividends, loans and advances available to the Company from its insurance subsidiaries in 2006 is $336.5 million.

The Company’s title insurance subsidiary, First American Title Insurance Company, maintained statutory capital and surplus of $877.9 million and $746.0 million at December 31, 2005 and 2004, respectively. Statutory net income for the years ended December 31, 2005, 2004 and 2003, was $246.5 million, $130.5 million and $229.9 million, respectively.

NOTE 3.    Debt and Equity Securities:

The amortized cost and estimated fair value of investments in debt securities are as follows:

	Amortized cost		Gross unrealized					Estimated fair value
			gains		losses
	(in thousands)
December 31, 2005
U.S. Treasury securities	$	167,985	$	914	$	(1,774	)	$	167,125
Corporate securities		206,767		3,257		(2,865	)		207,159
Obligations of states and political subdivisions		127,267		1,754		(901	)		128,120
Mortgage-backed securities		604,012		599		(6,287	)		598,324
	$	1,106,031	$	6,524	$	(11,827	)	$	1,100,728
December 31, 2004
U.S. Treasury securities	$	112,197	$	1,442	$	(243	)	$	113,396
Corporate securities		160,174		5,593		(302	)		165,465
Obligations of states and political subdivisions		93,740		2,797		(99	)		96,438
Mortgage-backed securities		330,492		150		(267	)		330,375
	$	696,603	$	9,982	$	(911	)	$	705,674

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The amortized cost and estimated fair value of debt securities at December 31, 2005, by contractual maturities, are as follows:

	Amortized cost		Estimated fair value
	(in thousands)
Due in one year or less	$	82,647	$	82,963
Due after one year through five years		225,671		224,210
Due after five years through ten years		146,647		146,579
Due after ten years		47,054		48,652
		502,019		502,404
Mortgage-backed securities		604,012		598,324
	$	1,106,031	$	1,100,728

The cost and estimated fair value of investments in equity securities are as follows:

			Gross unrealized					Estimated fair value
	Cost		gains		losses
			(in thousands)
December 31, 2005
Preferred stock:
Other	$	1,930	$	73	$	(79	)	$	1,924
Common stocks:
Corporate securities		47,098		5,435		(7,975	)		44,558
Other		521		128		(30	)		619
	$	49,549	$	5,636	$	(8,084	)	$	47,101
December 31, 2004
Preferred stock:
Other	$	2,554	$	143	$	(217	)	$	2,480
Common stocks:
Corporate securities		47,263		4,953		(8,649	)		43,567
Other		80		68		(5	)		143
	$	49,897	$	5,164	$	(8,871	)	$	46,190

The fair value of debt and equity securities was estimated using quoted market prices. Sales of debt and equity securities resulted in realized gains of $1.7 million, $2.9 million and $7.0 million; and realized losses of $0.9 million, $0.6 million and $3.1 million for the years ended December 31, 2005, 2004 and 2003, respectively.

The Company, at December 31, 2005 had gross unrealized losses of $1.0 million from debt securities that had been in an unrealized loss position for less than 12 months and gross unrealized losses of $10.8 million from debt securities that had been in an unrealized loss position for more than 12 months. The fair value of those debt securities is $79.3 million and $669.3 million, respectively. At December 31, 2005, the Company had gross unrealized losses of $.3 million from equity securities that had been in an unrealized loss position for less than 12 months and gross unrealized losses of $7.8 from equity securities that had been in an unrealized loss position for more than 12 months. The fair value of those equity securities is $5.7 million and $19.3 million, respectively. Management has determined that the unrealized losses from debt and equity securities at December 31, 2005 are

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temporary in nature. Factors considered in determining whether a loss is temporary include the length of time and extent to which fair value has been below cost, the financial condition and near-term prospects of the issuer, and our ability and intent to hold the investment for a period of time sufficient to allow for anticipated recovery.

NOTE 4.    Loans Receivable:

Loans receivable are summarized as follows:

	December 31
	2005			2004
	(in thousands)
Real estate—mortgage	$	97,005		$	105,454
Other		13			7
		97,018			105,461
Allowance for loan losses		(1,410	)		(1,350	)
Participations sold		(615	)		(2,516	)
Deferred loan fees, net		(181	)		(254	)
	$	94,812		$	101,341

Real estate loans are collateralized by properties located primarily in Southern California. The average yield on the Company’s loan portfolio was 7.0% for the years ended December 31, 2005 and 2004. Average yields are affected by prepayment penalties recorded as income, loan fees amortized to income and the market interest rates charged by thrift and loan institutions.

The fair value of loans receivable was $94.8 million and $101.4 million at December 31, 2005 and 2004, respectively, and was estimated based on the discounted value of the future cash flows using the current rates being offered for loans with similar terms to borrowers of similar credit quality.

The allowance for loan losses is maintained at a level that is considered appropriate by management to provide for known risks in the portfolio.

The aggregate annual maturities for loans receivable are as follows:

Year	(in thousands)
2006	$	7
2007	$	871
2008	$	1,267
2009	$	808
2010	$	27
2011 and thereafter	$	91,832

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

NOTE 5.    Property and Equipment:

Property and equipment consists of the following:

	December 31
	2005			2004
	(in thousands)
Land	$	44,547		$	45,742
Buildings		292,468			241,432
Furniture and equipment		402,372			320,135
Capitalized software		506,772			417,175
Property under capital leases, net of deferred gain		74,190			74,190
		1,320,349			1,098,674
Accumulated depreciation and amortization		(634,827	)		(505,273	)
	$	685,522		$	593,401

In December 2004, the Company entered into a sale-leaseback transaction for certain equipment and capitalized software. This transaction, which totaled $122.0 million, was accounted for as a capital lease. As of December 31, 2005, equipment and capitalized software with a net book value of $36.9 million and $21.3 million, respectively, including accumulated depreciation of $12.0 million and $4.0 million, respectively, were leased under a capital lease. The assets and related obligation have been included in the accompanying consolidated financial statements.

NOTE 6.    Goodwill:

A reconciliation of the changes in the carrying amount of net goodwill, by operating segment, as of December 31, 2005, is as follows:

	Balance as of January 1, 2005		Acquired during the year		Post acquisition Adjustments			Balance as of December 31, 2005
	(in thousands)
Financial Services:
Title Insurance	$	376,936	$	191,118	$	14,488		$	582,542
Specialty Insurance		19,794		—		—			19,794
Information Technology:
Mortgage Information		583,722		6,779		(6	)		590,495
Property Information		247,438		30,921		(665	)		277,694
Risk Mitigation and Business Solutions		377,989		240,384		3,714			622,087
	$	1,605,879	$	469,202	$	17,531		$	2,092,612

The Company’s reporting units, for purposes of applying the provisions of SFAS No. 142, “Goodwill and Other Intangible Assets” (SFAS 142), are title insurance, home warranty, property and casualty insurance, trust and other services, mortgage origination products and services, mortgage servicing products and services, property information services, lender services, data services, dealer services, employer services, multifamily services and investigative and litigation services.

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The Company tests goodwill for impairment at the reporting unit level in accordance with the provisions of SFAS 142. The Company’s annual testing resulted in no impairment charges in 2005 and 2004. If an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value, goodwill will be evaluated between annual tests.

NOTE 7.    Other Intangible Assets:

Other intangible assets consist of the following:

	December 31
	2005			2004
	(in thousands)
Covenants not to compete	$	47,696		$	20,120
Customer lists		212,375			161,298
Trademarks and licenses		44,213			1,055
		304,284			182,473
Accumulated amortization		(57,167	)		(28,513	)
	$	247,117		$	153,960

Amortization expense for other finite-lived intangible assets was $28.7 million, $17.9 million and $5.8 million for the years ended December 31, 2005, 2004 and 2003, respectively.

Estimated amortization expense for other finite-lived intangible assets anticipated for the next five years is as follows:

Year
	(in thousands)
2006	$	34,818
2007	$	32,673
2008	$	29,590
2009	$	27,837
2010	$	25,946

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NOTE 8.    Demand Deposits:

Escrow, passbook and investment certificate accounts are summarized as follows:

	December 31
	2005		2004
	(in thousands except percentages)
Escrow accounts:
Interest bearing	$	200,766	$	159,776
Non-interest bearing		439,175		177,623
		639,941		337,399
Passbook accounts		24,840		18,126
Certificate accounts:
Less than one year		16,567		23,819
One to five years		11,827		20,085
		28,394		43,904
	$	693,175	$	399,429
Annualized interest rates:
Escrow deposits		1%		1%
Passbook accounts		2%-4%		2%
Certificate accounts		2%-7%		2%-7%

The carrying value of escrow and passbook accounts approximates fair value due to the short-term nature of this liability. The fair value of investment certificate accounts was $28.3 million and $44.1 million at December 31, 2005 and 2004, respectively, and was estimated based on the discounted value of future cash flows using a discount rate approximating current market for similar liabilities.

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NOTE 9.    Reserve for Known and Incurred But Not Reported Claims:

Activity in the reserve for known and incurred but not reported claims is summarized as follows:

	December 31
	2005			2004		2003
	(in thousands)
Balance at beginning of year	$	526,516		$	435,852	$	360,305
Provision related to:
Current year		457,061			348,806		324,406
Prior years		(31	)		812		(2	)
		457,030			349,618		324,404
Payments related to:
Current year		231,632			162,729		151,590
Prior years		132,564			105,559		117,896
		364,196			268,288		269,486
Other		51,704			9,334		20,629
Balance at end of year	$	671,054		$	526,516	$	435,852

“Other” primarily represents reclassifications to the reserve for assets acquired in connection with claim settlements and purchase accounting adjustments related to company acquisitions. Included in “Other” for 2005 were $48.6 million in purchase accounting adjustments related to acquisitions in the title insurance and services segment. Included in “Other” for 2003 was a $16.0 million purchase accounting adjustment related to the acquisition of Transamerica Finance Corporation’s tax monitoring and flood zone certification businesses. Claims activity associated with reinsurance is not material and, therefore, not presented separately. Current year payments include $169.0 million, $143.1 million and $133.3 million in 2005, 2004 and 2003, respectively, that relate to the Company’s non-title insurance operations.

NOTE 10.    Notes and Contracts Payable:

	December 31
	2005		2004
	(in thousands)
5.7% senior debenture, due August 2014		149,640		149,598
7.55% senior debentures, due April 2028		99,590		99,572
Trust deed notes with maturities through 2023, collateralized by land and buildings with a net book value of $74,223, weighted-average interest rate of 5.3%		78,336		64,771
Other notes and contracts payable with maturities through 2016, weighted-average interest rate of 6.1%		421,378		296,829
Capital lease obligation		99,625		122,000
	$	848,569	$	732,770

In November 2005, the Company amended and restated its $500.0 million credit agreement that was originally entered into in August 2004 and was previously amended twice during 2005. The November 2005 amendment and restatement supercedes the previous credit agreement and its amendments and extends the

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

expiration date to November 2010. Further, the amended and restated credit agreement permits the Company to increase the credit amount to $750.0 million by offering the lenders party thereto the opportunity to increase their commitments or by introducing a new lender to the credit agreement who does not currently participate. The Company is required to maintain certain minimum levels of capital and earnings and meet predetermined debt-to-capitalization ratios. The line of credit was unused at December 31, 2005. The Company’s publicly-traded subsidiary, First Advantage Corporation has one bank credit agreement. This agreement provides for a $225.0 million uncollateralized revolving line of credit. Under the terms of the credit agreement, First Advantage Corporation is required to satisfy certain financial requirements. The line of credit remains in effect until September 2010 and had a balance due of $135.5 million at December 31, 2005.

In December 2004, the Company entered into a sale-leaseback transaction for certain equipment and capitalized software. The transaction totaled $122.0 million and was accounted for as a capital lease. The capital lease bears interest at a rate of 5.7% and has a base term of two years with three one-year renewal options. The assets and related obligation have been included in the accompanying consolidated financial statements.

In July 2004, the Company sold unsecured debt securities in the aggregate principal amount of $150.0 million. These securities, which bear interest at a fixed rate of 5.7%, are due August 2014.

In April 2004, the Company redeemed for cash $1.2 million of the $210.0 million aggregate principal outstanding on its 4.5% Senior Convertible Debentures due 2008. Prior to the redemption date, holders had converted an aggregate principal amount of $208.8 million of debentures into 7,457,938 common shares of the Company at the fixed conversion price of $28 per share.

The Company has also issued debt that is convertible into shares of its common stock to finance certain acquisitions. This debt, which is included in “Other notes and contracts payable,” is convertible at the option of each note holder at a conversion price of $30 per share. The balance of this convertible debt was $18.5 million and $20.4 million at December 31, 2005 and 2004, respectively.

The aggregate annual maturities for notes and contracts payable and capital leases in each of the five years after December 31, 2005, are as follows:

Year	Notes payable		Capital lease
	(in thousands)
2006	$	112,064	$	23,674
2007	$	82,456	$	25,048
2008	$	60,492	$	50,093
2009	$	30,855	$	—
2010	$	160,080	$	—

The fair value of notes and contracts payable was $862.2 million and $742.5 million at December 31, 2005 and 2004, respectively, and was estimated based on the current rates offered to the Company for debt of the same remaining maturities. The weighted-average interest rate for the Company’s notes and contracts payable was 6.1% and 5.7% at December 31, 2005 and 2004, respectively.

NOTE 11.    Deferrable Interest Subordinated Notes:

On April 22, 1997, the Company issued and sold $100.0 million of 8.5% trust preferred securities, due in 2012, through its wholly owned subsidiary, First American Capital Trust. In connection with the subsidiary’s

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

issuance of the preferred securities, the Company issued to the subsidiary trust 8.5% subordinated interest notes due in 2012. The sole assets of the subsidiary are and will be the subordinated interest notes. The Company’s obligations under the subordinated interest notes and related agreements, taken together, constitute a full and unconditional guarantee by the Company of the subsidiary’s obligations under the preferred securities. Distributions payable on the securities are included as interest expense in the Company’s consolidated income statements.

The fair value of the Company’s deferrable interest subordinated notes was $120.9 million and $100.0 million at December 31, 2005 and 2004, respectively and was estimated based on the current rates offered to the Company for debt of the same type and remaining maturity.

NOTE 12.    Investment and Other Income:

The components of investment and other income are as follows:

	2005		2004		2003
	(in thousands)
Interest:
Cash equivalents and deposits with savings and loan associations and banks	$	36,149	$	12,034	$	10,109
Debt securities		37,788		29,006		23,930
Other long-term investments		21,819		9,153		2,877
Loans receivable		6,750		7,531		8,468
Dividends on marketable equity securities		2,361		2,895		1,435
Equity in earnings of unconsolidated affiliates		62,360		53,620		59,789
Trust and banking activities		21,374		21,564		26,496
Other		21,694		5,993		12,250
	$	210,295	$	141,796	$	145,354

NOTE 13.    Income Taxes:

Income taxes are summarized as follows:

	2005		2004		2003
	(in thousands)
Current:
Federal	$	203,692	$	124,001	$	247,779
State		29,164		7,294		43,727
Foreign		16,734		5,120		6,964
		249,590		136,415		298,470
Deferred:
Federal		64,115		87,980		(4,697	)
State		10,095		18,805		(1,773	)
Foreign		700		—		—
		74,910		106,785		(6,470	)
	$	324,500	$	243,200	$	292,000

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Income taxes differ from the amounts computed by applying the federal income tax rate of 35.0%. A reconciliation of this difference is as follows:

	2005			2004		2003
	(in thousands)
Taxes calculated at federal rate	$	283,389		$	207,305	$	260,091
Tax effect of minority interests		6,407			3,037		1,249
State taxes, net of federal benefit		29,498			22,370		28,670
Exclusion of certain meals and entertainment expenses		7,554			7,010		5,990
Foreign taxes in excess of federal rate		1,274			—		—
Other items, net		(3,622	)		3,478		(4,000	)
	$	324,500		$	243,200	$	292,000

The primary components of temporary differences that give rise to the Company’s net deferred tax assets are as follows:

	December 31
	2005			2004
	(in thousands)
Deferred tax assets:
Deferred revenue	$	86,628		$	68,246
Employee benefits		49,290			45,835
Bad debt reserves		23,722			22,064
Loss reserves		78,960			89,158
Accumulated other comprehensive income		67,246			43,183
Net operating loss carryforward		57,093			57,167
Investment in affiliates		—			5,564
Other		7,375			951
		370,314			332,168
Deferred tax liabilities:
Depreciable and amortizable assets		251,352			161,061
Investment gain		83,264			17,434
Claims and related salvage		24,368			67,518
Other		3,772			3,737
		362,756			249,750
Net deferred tax asset before valuation allowance		7,557			82,418
Valuation allowance		(26,091	)		(42,532	)
Net deferred tax (liability) asset	$	(18,534	)	$	39,886

For the years 2005, 2004 and 2003, domestic and foreign pretax income from continuing operations was $769.1 million and $40.6 million, $573.9 million and $18.4 million and $727.1 million and $15.9 million, respectively.

The exercise of stock options represents a tax benefit and has been reflected as a reduction of taxes payable and an increase to the additional paid-in capital account. The benefits recorded were $17.1 million, $6.7 million and $5.8 million for the years ended December 31, 2005, 2004 and 2003, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

At December 31, 2005, the Company had available net operating-loss carryforwards totaling approximately $210.1 million for income tax purposes, of which $10.9 million has an indefinite expiration. The remaining $199.2 million begins to expire at various times beginning in 2008 and ending in 2025.

The valuation allowance relates to deferred tax assets for federal and state net operating loss carryforwards relating to acquisitions consummated by First Advantage and foreign operations of the Company. Utilization of the pre-acquisition net operating losses is subject to limitations by the Internal Revenue Code and State jurisdictions. The Company evaluates the realizability of its deferred tax assets by assessing the valuation allowance and by adjusting the amount of such allowance, if necessary. The factors used to assess the likelihood of realization are the Company’s forecast of future taxable income and available tax planning strategies that could be implemented to realize the net deferred tax assets. Failure to achieve the forecasted taxable income in the applicable taxing jurisdictions could affect the ultimate realization of deferred tax assets and could result in an increase in the Company’s effective tax rate on future earnings. The change in the valuation allowance results from the Company’s determination that it is more likely than not that it will realize the benefits of certain net operating losses held by First Advantage. The effects of these changes in the valuation allowance have been applied to adjust goodwill arising from the acquisitions.

The Company records a liability for potential tax assessments based on its estimate of the potential exposure. New tax laws and new interpretations of laws and rulings by tax authorities may affect the liability for potential tax assessments. Due to the subjectivity and complex nature of the underlying issues, actual payments or assessments may differ from estimates. To the extent the Company’s estimates differ from actual payments or assessments, income tax expense is adjusted. The Company’s income tax return in several locations are being examined by various tax authorities. Management believes that adequate amounts of tax and related interest, if any, have been provided for any adjustments that may result from these examinations.

The Company’s effective tax rate considers the impact of undistributed earnings of subsidiary companies outside the United States. Deferred taxes have not been provided for the potential remittance of such undistributed earnings as it is the Company’s policy to permanently reinvest its retained earnings.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

NOTE 14.    Earnings Per Share:

The Company’s potential dilutive securities are stock options and convertible debt. Stock options are reflected in diluted earnings per share by application of the treasury-stock method and convertible debt is reflected in diluted earnings per share by application of the if-converted method. A reconciliation of net income and weighted average shares outstanding is as follows:

	2005		2004		2003
	(in thousands, except per share data)
Numerator:
Net income—numerator for basic net income per share	$	485,266	$	349,099	$	451,022
Effect of dilutive securities:
Convertible debt—interest expense (net of tax)		847		2,597		6,823
Numerator for diluted net income per share	$	486,113	$	351,696	$	457,845
Denominator:
Weighted-average shares—denominator for basic net income per share		94,351		86,430		76,632
Effect of dilutive securities:
Employee stock options		2,793		2,586		2,744
Convertible debt		651		2,879		8,389
Denominator for diluted net income per share		97,795		91,895		87,765
Net income per share:
Basic	$	5.14	$	4.04	$	5.89
Diluted	$	4.97	$	3.83	$	5.22

For the three years ended December 31, 2005, 2004 and 2003, 0.05 million, 0.5 million and 0.3 million options, respectively, were excluded from the weighted-average diluted common shares outstanding due to their antidilutive effect.

NOTE 15.    Employee Benefit Plans:

The Company has benefit plans covering substantially all employees, including a 401(k) savings plan (the Savings Plan), an employee stock purchase plan and a defined benefit pension plan.

The Savings Plan allows for employee-elective contributions up to the maximum deductible amount as determined by the Internal Revenue Code. The Company makes discretionary contributions to the Savings Plan based on profitability, as well as contributions of the participants. The Company’s expense related to the Savings Plan amounted to $66.3 million, $58.3 million and $48.4 million for the years ended December 31, 2005, 2004 and 2003, respectively. The Savings Plan allows the participants to purchase the Company’s stock as one of the investment options. The Savings Plan held 11,611,000 and 10,689,000 shares of the Company’s common stock, representing 12.9% and 11.9% of the total shares outstanding at December 31, 2005 and 2004, respectively.

The employee stock purchase plan allows eligible employees to purchase common stock of the Company at 85% of the closing price on the last day of each month. There were 240,000, 289,000 and 283,000 shares issued in connection with the plan for the years ending December 31, 2005, 2004 and 2003, respectively. At December 31, 2005, there were 1,902,000 shares reserved for future issuances.

The Company’s defined benefit pension plan is a noncontributory, qualified, defined benefit plan with benefits based on the employee’s years of service. The Company’s policy is to fund all accrued pension costs. Contributions are intended to provide not only for benefits attributable to past service, but also for those benefits expected to be earned in the future. The Company also has nonqualified, unfunded supplemental benefit plans covering certain key management personnel. Benefits under these plans are anticipated to be funded with proceeds from life insurance policies purchased by the Company on the lives of the executives.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table provides a reconciliation of the changes in the defined benefit plan and supplemental benefit plan obligations, fair value of assets, a statement of the funded status and a summary of the amounts recognized in the consolidated financial statements as of December 31, 2005 and 2004:

	December 31
	2005						2004
	Defined benefit pension plans			Unfunded supplemental benefit plans			Defined benefit pension plans			Unfunded supplemental benefit plans
	(in thousands)
Change in projected benefit obligation:
Benefit obligation at beginning of year	$	283,521		$	117,867		$	252,150		$	92,218
Service costs		12,116			5,097			12,282			3,870
Interest costs		16,971			8,594			15,684			6,781
Plan amendments		—			—			—			—
Actuarial losses		12,647			54,651			17,778			18,491
Benefits paid		(13,117	)		(3,721	)		(14,373	)		(3,493	)
Projected benefit obligation at end of year		312,138			182,488			283,521			117,867
Change in plan assets:
Plan assets at fair value at beginning of year		189,210			—			153,476			—
Actual return on plan assets		6,081			—			6,892			—
Company contributions		22,700			3,721			43,215			3,493
Benefits paid		(13,117	)		(3,721	)		(14,373	)		(3,493	)
Plan assets at fair value at end of year		204,874			—			189,210			—
Reconciliation of funded status:
Funded status of the plans		(107,264	)		(182,488	)		(94,311	)		(117,867	)
Unrecognized net actuarial loss		136,684			102,480			119,972			52,589
Unrecognized prior service cost		241			4			(3,631	)		153
Unrecognized net transition asset		—			—			—			—
Prepaid (accrued) pension cost		29,661			(80,004	)		22,030			(65,125	)
Amounts recognized in the consolidated financial statements consist of:
Accrued benefit liability		(107,264	)		(132,604	)		(91,173	)		(86,504	)
Intangible asset		241			4			—			153
Minimum pension liability adjustment		136,684			52,596			113,203			21,226
	$	29,661		$	(80,004	)	$	22,030		$	(65,125	)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Net periodic pension cost for the Company’s defined benefit pension and supplemental benefit plans includes the following components:

	2005			2004			2003
	(in thousands)
Expense:
Service cost	$	17,268		$	16,152		$	14,937
Interest cost		25,565			22,465			20,324
Actual return on plan assets		(17,680	)		(14,488	)		(14,046	)
Amortization of net transition obligation		—			(6	)		(22	)
Amortization of prior service cost		(1,773	)		(3,851	)		(3,802	)
Amortization of net loss		12,239			9,766			6,309
Curtailment loss		(1,950	)		—			—
	$	33,669		$	30,038		$	23,700

Unrecognized prior service costs are being amortized over the average remaining period of benefit service of participants at the time of the plan change. The benefit obligation and related assets have been measured as of December 31, 2005 for all plans.

Weighted average actuarial assumptions used to determine costs for the plans were as follows:

	December 31
	2005		2004
Defined benefit pension plan
Discount rate	6.00	%	6.25	%
Rate of return on plan assets	9.00	%	9.00	%
Unfunded supplemental benefit plans
Discount rate	6.00	%	6.25	%

Weighted average actuarial assumptions used to determine benefit obligations for the plans were as follows:

	December 31
	2005		2004
Defined benefit pension plan
Discount rate	5.88	%	6.00	%
Rate of return on plan assets	8.50	%	9.00	%
Unfunded supplemental benefit plans
Discount rate	5.88	%	6.00	%
Salary increase rate	4.50	%	4.50	%

Negative financial market returns during 2000 through 2002 resulted in a decline in the fair-market value of plan assets. This, when combined with the declining discount rate assumptions in the last several years, has resulted in a decline in the plans’ funded status. The discount-rate assumption used for pension plan accounting reflects the yield available on high-quality, fixed-income debt securities that match the expected timing of the benefit obligation payments. Consequently, the Company’s accumulated benefit obligation exceeded the fair-market value of the plan assets for the Company’s funded, defined benefit plans.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The accumulated benefit obligations for the plans were as follows:

	December 31
	2005				2004
	Defined benefit pension plans		Unfunded supplemental benefit plans		Defined benefit pension plans		Unfunded supplemental benefit plans
	(in thousands)
Accumulated benefit obligation	$	312,138	$	132,604	$	283,521	$	86,504

The Company has a pension investment policy designed to meet or exceed the expected rate of return on plan assets assumption. To achieve this, the pension plan assets are managed by investment managers that invest plan assets in equity and fixed income debt securities and cash. A summary of the asset allocation as of December 31, 2005 and 2004 and the target mix are as follows:

	Target allocation		Percentage of plan assets at December 31
	2006		2005		2004
Asset category
Domestic and international equities	50	%	50	%	52	%
Fixed income	48	%	48	%	43	%
Cash	2	%	2	%	5	%

The Company expects to make cash contributions to its pension plans of approximately $43.5 million during 2006.

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid as follows:

Year	(in thousands)
2006	$	17,151
2007	$	17,707
2008	$	18,198
2009	$	18,710
2010	$	19,150
2011-2015	$	103,781

NOTE 16.    Stock Option Plans:

On April 24, 1996, the Company implemented The First American Corporation 1996 Stock Option Plan (the Stock Option Plan). Under the Stock Option Plan, options are granted to certain employees to purchase the Company’s common stock at a price no less than the market value of the shares on the date of the grant. The maximum number of shares that may be subject to options is 14,625,000. Currently, outstanding options become exercisable in one to five years, and expire ten years from the grant date. On April 24, 1997, the Company implemented The First American Corporation 1997 Directors’ Stock Plan (the Directors’ Plan). The Directors’ Plan is similar to the employees’ Stock Option Plan, except that the maximum number of shares that may be subject to options is 1,800,000 and the maximum number of shares that may be purchased pursuant to options granted shall not exceed 6,750 shares during any consecutive 12-month period.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Transactions involving stock options are summarized as follows:

	Number outstanding		Weighted-average exercise price
	(in thousands, except weighted-average exercise price)
Balance at December 31, 2002	8,946		$	16.66
Granted during 2003	1,652		$	23.45
Exercised during 2003	(2,011	)	$	13.30
Forfeited during 2003	(241	)	$	18.66
Balance at December 31, 2003	8,346		$	18.75
Granted during 2004	967		$	29.00
Exercised during 2004	(1,622	)	$	17.03
Forfeited during 2004	(302	)	$	18.23
Balance at December 31, 2004	7,389		$	20.51
Granted during 2005	1,141		$	41.35
Exercised during 2005	(2,537	)	$	18.35
Forfeited during 2005	(52	)	$	23.63
Balance at December 31, 2005	5,941		$	25.40

Stock options outstanding and exercisable at December 31, 2005, are summarized as follows:

	Outstanding				Exercisable
Range of Exercise Prices	Options	Average remaining life in years	Average exercise price		Options	Average exercise price
	(options in thousands)
$  3.95—$13.00	780	4.0	$	10.53	780	$	10.53
$13.01—$23.57	1,583	6.1	$	19.88	769	$	18.72
$23.58—$24.00	856	2.3	$	23.58	851	$	23.58
$24.01—$47.49	2,722	7.9	$	33.45	459	$	27.68
$  3.95—$47.49	5,941	6.1	$	25.40	2,859	$	19.37

NOTE 17.    Commitments and Contingencies:

Lease Commitments

The Company leases certain office facilities, automobiles and equipment under operating leases, which, for the most part, are renewable. The majority of these leases also provide that the Company will pay insurance and taxes. In December 2005, the Company’s subsidiary, First American Real Estate Information Services, Inc. purchased, for $12.8 million, certain furniture and equipment that had been a part of a sale-leaseback transaction entered into in December 2000. In December 2004, the Company purchased, for $35.5 million, certain furniture and equipment that had been part of a sales-leaseback transaction entered into by the Company in December 1999. This equipment, along with additional equipment and software, was subsequently resold and leased back in a transaction that resulted in the Company recording a capitalized lease.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Future minimum rental payments under operating and capital leases that have initial or remaining noncancelable lease terms in excess of one year as of December 31, 2005 are as follows:

	Operating		Capital
Year	(in thousands)
2006	$	212,873	$	28,838
2007		164,132		28,838
2008		108,034		53,238
2009		61,718
2010		41,669
Later years		109,022
	$	697,448		110,914
Less: Amounts related to interest				(11,289	)
			$	99,625

Total rental expense for all operating leases and month-to-month rentals was $280.4 million; $259.0 million and $205.6 million for the years ended December 31, 2005, 2004, and 2003, respectively.

Other commitments and guarantees

In November 2002, the Financial Accounting Standards Board issued Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees Including Indirect Guarantees of Indebtedness of Others” (FIN 45). This interpretation clarifies the requirements relating to the guarantor’s accounting for, and disclosure of, the issuance of certain types of guarantees. The disclosure provisions of FIN 45 were effective for fiscal years ending after December 15, 2002. The provisions for initial recognition and measurement are effective on a prospective basis for guarantees issued or modified after December 31, 2002. The adoption of FIN 45 had no impact on the Company’s financial condition, results of operations or cash flows.

The Company and Experian Information Solutions, Inc. (Experian) are parties to a joint venture that resulted in the creation of the Company’s First American Real Estate Solutions LLC (FARES) subsidiary. Pursuant to the terms of the joint venture, Experian has the right to sell to the Company its interest in FARES at a purchase price determined pursuant to a specified formula based on the after-tax earnings of FARES. Experian may only exercise this right if the purchase price is less than $160.0 million. As of December 31, 2005, the purchase price exceeded $160.0 million and, therefore, Experian’s right was not exercisable as of such date. In addition to the agreement with Experian, the Company is also party to several other agreements that require the Company to purchase some or all of the minority shares of certain less-than-100.0% owned subsidiaries if certain conditions are met. The total potential purchase price related to those agreements that have met the necessary conditions as of December 31, 2005 was not material.

The Company also guarantees the obligations of certain of its subsidiaries. These obligations are included in the Company’s consolidated balance sheets as of December 31, 2005.

NOTE 18.    Stockholders’ Equity:

On October 23, 1997, the Company adopted a Shareholder Rights Plan (the Rights Plan). Under the Rights Plan, after the close of business on November 15, 1997, each holder of the Company’s common shares received a dividend distribution of one Right for each common share held. Each Right entitles the holder thereof to buy a

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

preferred share fraction equal to 1/100,000 of a share of Series A Junior Participating Preferred Shares of the Company at an exercise price of $265 per preferred share fraction. Each fraction is designed to be equivalent in voting and dividend rights to one common share.

The Rights will be exercisable and will trade separately from the common shares only if a person or group, with certain exceptions, acquires beneficial ownership of 15.0% or more of the Company’s common shares or commences a tender or exchange offer that would result in such person or group beneficially owning 15.0% or more of the common shares then outstanding. The Company may redeem the Rights at $0.001 per Right at any time prior to the occurrence of one of these events. All Rights expire on October 23, 2007.

Each Right will entitle its holder to purchase, at the Right’s then-current exercise price, preferred share fractions (or other securities of the Company) having a value of twice the Right’s exercise price. This amounts to the right to buy preferred share fractions of the Company at half price. Rights owned by the party triggering the exercise of Rights will be void and, therefore, will not be exercisable.

In addition, if, after any person has become a 15.0%-or-more stockholder, the Company is involved in a merger or other business combination transaction with another person in which the Company’s common shares are changed or converted, or if the Company sells 50.0% or more of its assets or earning power to another person, each Right will entitle its holder to purchase, at the Right’s then-current exercise price, common stock of such other person (or its parent) having a value of twice the Right’s exercise price.

NOTE 19.    Other Comprehensive Income:

Comprehensive income is a more inclusive financial reporting methodology that includes disclosure of certain financial information that historically has not been recognized in the calculation of net income.

Components of other comprehensive income are as follows:

	Unrealized gains on securities			Minimum pension liability adjustment			Accumulated other comprehensive income (loss)
	(in thousands)
Balance at December 31, 2002	$	1,490		$	(57,949	)	$	(56,459	)
Pretax change		4,709			(15,810	)		(11,101	)
Tax effect		(878	)		5,582			4,704
Balance at December 31, 2003		5,321			(68,177	)		(62,856	)
Pretax change		1,534			(29,329	)		(27,795	)
Tax effect		(537	)		10,127			9,590
Balance at December 31, 2004		6,318			(87,379	)		(81,061	)
Pretax change		(14,754	)		(54,849	)		(69,603	)
Tax effect		5,651			19,197			24,848
Balance at December 31, 2005	$	(2,785	)	$	(123,031	)	$	(125,816	)

The change in unrealized gains on debt and equity securities includes reclassification adjustments of $0.8 million, $2.3 million and $3.9 million of net realized gains (losses) for the years ended December 31, 2005, 2004 and 2003, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

NOTE 20.    Litigation and Regulatory Contingencies:

The Company and its subsidiaries have been named in various class action lawsuits related to its title operations, including suits alleging that premiums charged to builders for title insurance policies violated the Real Estate Settlement Procedures Act and that one of our subsidiaries violated the law by failing to disclose the cost of certain services obtained from third party vendors and any related mark-up of such services. The Company has assessed the potential loss associated with each case based on the existing facts and estimated range of exposure. In cases where the Company has determined that a loss is probable, the Company has recorded a reserve in the amount of the estimated loss; however, actual losses may materially differ from the amounts recorded. The Company does not believe that the ultimate resolution of these cases, either individually or in the aggregate, will have a material adverse effect on its financial condition, results of operations or cash flows.

On January 25, 2005, a jury in the case of Chicago Title Insurance Corporation v. James A. Magnuson, et al. awarded damages in the amount of $43.2 million against a subsidiary of the Company. This matter involved claims of violation of a non-competition agreement and intentional interference with contract. The judgment comprised a compensatory award of $10.8 million and a punitive damage award of $32.4 million. In October 2005 the trial court denied the Company’s motions to set aside the damage awards, among other matters. The Company has filed a notice of appeal with the United States Circuit Court of Appeals. The Company continues to believe it has strong grounds to overturn this judgment. Pending the outcome of our appeal, the Company reserved in a prior quarter $10.0 million in connection with this matter.

The Company’s title insurance, property and casualty insurance, home warranty, thrift, trust and investment businesses are regulated by various federal, state and local governmental agencies. Many of the Company’s other businesses operate within statutory guidelines. Consequently, the Company may from time to time be subject to audit or investigation by such governmental agencies. Currently, governmental agencies are auditing or investigating certain of the Company’s operations. While the ultimate disposition of each audit or investigation is not determinable, the Company does not believe that any such investigations or audits will have a material adverse effect on its financial condition, results of operations or cash flows.

The Company is involved in numerous routine legal proceedings related to its operations. While the ultimate disposition of each proceeding is not determinable, the Company does not believe that any of such proceedings will have a material adverse effect on its financial condition, results of operations or cash flows.

NOTE 21.    Business Combinations:

During the year ended December 31, 2005, the Company completed 50 acquisitions. Individually, these acquisitions were not material. Of these acquisitions, 31 have been in the Company’s title insurance segment, 1 in the Company’s mortgage information segment, 3 in the Company’s property information segment and 15 in the Company’s risk mitigation and business solutions segment. The aggregate purchase price of the 35 acquisitions included in the Company’s title insurance, mortgage information and property information segments was $225.2 million in cash, $44.7 million in notes payable and 2.0 million shares of the Company’s common stock valued at $73.3 million. The operating results of these acquired companies were included in the Company’s consolidated financial statements from their respective acquisition dates. The 15 acquisitions included in the Company’s risk mitigation and business solutions segment were completed by the Company’s publicly-traded subsidiary, First Advantage Corporation. The aggregate purchase price of these acquisitions was $108.6 million in cash, $54.9 million in notes payable and 2.0 million shares, valued at $51.0 million, of First Advantage’s Class A common stock. The purchase price of each acquisition was allocated to the assets acquired and liabilities assumed using a variety of valuation techniques including discounted cash flow analysis. As a result of the 50

64

THE FIRST AMERICAN CORPORATION

AND SUBSIDIARY COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

acquisitions, the Company recorded approximately $443.8 million of goodwill and $100.1 million of intangible assets with definite lives. The Company is awaiting information necessary to finalize the purchase accounting adjustments for certain of these acquisitions and the final purchase price allocations could change the recorded intangible asset and goodwill amounts. In accounting for the First Advantage shares issued in these acquisitions, the Company, whose ownership interest is approximately 80 percent, recorded a pretax gain of $25.7 million.

In addition to the acquisitions discussed above, the Company also purchased the remaining minority interests in 6 companies already included in the Company’s consolidated financial statements and an equity interest in 15 companies. The total purchase price of these transactions was $34.4 million in cash, $16.3 million in notes payable and ..4 million in shares of the Company’s common stock valued at $12.4 million. As a result of these transactions, the Company recorded $25.4 million in goodwill.

On September 14, 2005, the Company contributed its credit information group to First Advantage in exchange for approximately 29.1 million shares of First Advantage Class B common stock. All of the parties involved were under common control and accordingly, the transaction was accounted for using historical values and no gain or loss was recognized. First Advantage also issued approximately 1 million Class B shares to the Company in a $20 million debt-to-equity conversion. These transactions increased the Company’s economic ownership interest in First Advantage from 67 percent to 80 percent. The Credit Information Group includes the Company’s mortgage, automotive, consumer and sub-prime credit businesses.

NOTE 22.    Segment Financial Information:

During 2005, the Company combined its credit information and screening information business segments into risk mitigation and business solutions to reflect the Company’s current operating structure. This presentation is consistent with the way these businesses are evaluated by the Company’s management. All previously reported segment information has been restated to reflect the combination of these businesses. After the change, the Company has five reporting segments that fall within two primary business groups, financial services and information technology. The financial services group includes the Company’s title insurance and services segment and its specialty insurance segment. The title insurance and services segment issues residential and commercial title insurance policies, accommodates tax-deferred exchanges and provides escrow, equity loan, investment advisory, trust, thrift and other related products and services. The specialty insurance segment issues property and casualty insurance policies and sells home warranty products. The Company’s mortgage information, property information and risk mitigation and business solutions segments comprise its information technology group. The mortgage information segment offers tax monitoring, flood zone certification, default management services, document preparation and other real estate related services. The property information segment sells and analyzes data relating to real property, and provides database management and appraisal services. The risk mitigation and business solutions segment was created as a result of the September 2005 contribution of the Company’s credit information segment to First Advantage Corporation, a publicly traded subsidiary which made up at the time the Company’s screening information segment. This segment provides specialty credit reports to the mortgage lending and automotive lending industries, maintains a credit reporting agency which offers credit reports on sub-prime borrowers, and provides employment background screening, drug-free workplace programs and other occupational health services, employee assistance programs, corporate tax and incentive services, resident screening, motor vehicle records, transportation business credit services, automotive lead generation services, investigative services, computer forensics and electronic discovery services, supply chain security and consumer location services.

The Company provides its title services through both direct operations and agents throughout the United States. It also offers title services, either directly or through joint ventures, in Guam, Puerto Rico, the U.S. Virgin Islands, the Bahamas, Australia, Canada, Hong Kong, Ireland, Mexico, New Zealand, South Korea, the United

65

THE FIRST AMERICAN CORPORATION

AND SUBSIDIARY COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Kingdom, Bulgaria, Croatia, the Czech Republic, Hungary, Poland, Romania, the Slovak Republic, Turkey, Spain and other territories and countries. The international operations account for less than 1% of the Company’s income before income taxes and minority interests. Home warranty services are provided in 46 states throughout the United States. Property and casualty insurance is offered nationwide. The products offered by the three segments included in the Information Technology group are provided nationwide.

Corporate consists primarily of investment gains and losses, personnel and other operating expenses associated with the Company’s corporate facilities, certain technology initiatives, unallocated interest expense. Eliminations consist of inter-segment revenues included in the results of the operating.

Selected financial information about the Company’s operations by segment for each of the past three years is as follows:

	Revenues			Depreciation and amortization		Income (loss) before income taxes and minority interests			Assets		Investment in affiliates		Capital expenditures
	(in thousands)
2005
Title Insurance and Services	$	5,980,221		$	61,306	$	596,865		$	4,256,874	$	155,772	$	102,482
Specialty insurance		290,511			2,243		50,544			461,738		—		3,200
Mortgage Information		593,049			24,222		141,620			867,673		2,901		15,206
Property Information		544,013			28,903		151,761			833,533		51,874		36,607
Risk Mitigation and Business Solutions		654,753			27,519		104,057			994,248		36,281		15,737
Corporate		23,885			13,246		(141,219	)		184,575		63,611		27,741
Eliminations		(24,674	)		—		—			—		—		—
	$	8,061,758		$	157,439	$	903,628		$	7,598,641	$	310,439	$	200,973
2004
Title Insurance and Services	$	4,875,524		$	43,821	$	398,777		$	3,360,417	$	130,192	$	121,863
Specialty insurance		234,708			2,153		41,419			393,130		—		1,857
Mortgage Information		660,780			26,613		174,868			1,024,896		1,989		22,223
Property Information		443,276			24,987		126,460			741,190		39,154		20,541
Risk Mitigation and Business Solutions		518,774			22,331		73,206			616,574		63,336		8,769
Corporate		5,306			9,073		(137,446	)		72,158		—		26,550
Eliminations		(16,042	)		—		—			—		—		—
	$	6,722,326		$	128,978	$	677,284		$	6,208,365	$	234,671	$	201,803
2003
Title Insurance and Services	$	4,494,883		$	39,987	$	504,629		$	2,527,356	$	112,604	$	39,184
Specialty insurance		219,837			1,929		30,125			380,663		—		1,305
Mortgage Information		668,765			19,296		238,508			1,117,825		2,313		15,941
Property Information		407,126			22,847		105,339			539,882		9,337		19,798
Risk Mitigation and Business Solutions		433,610			22,004		68,796			473,396		54,528		9,689
Corporate		6,468			8,361		(108,675	)		100,780		—		13,046
Eliminations		(16,975	)		—		—			—		—		—
	$	6,213,714		$	114,424	$	838,722		$	5,139,902	$	178,782	$	98,963

66

THE FIRST AMERICAN CORPORATION

AND SUBSIDIARY COMPANIES

QUARTERLY FINANCIAL DATA

(Unaudited)

	Quarter Ended
	March 31		June 30		September 30		December 31
	(in thousands, except per share amounts)
Year Ended December 31, 2005
Revenues	$	1,704,484	$	1,983,975	$	2,168,182	$	2,205,117
Income before income taxes and minority interests	$	153,702	$	265,560	$	275,361	$	209,005
Net income	$	79,162	$	139,493	$	149,122	$	117,489
Net income per share:
Basic	$	0.86	$	1.47	$	1.56	$	1.23
Diluted	$	0.83	$	1.43	$	1.51	$	1.19
Year Ended December 31, 2004
Revenues	$	1,473,771	$	1,724,053	$	1,721,485	$	1,803,017
Income before income taxes and minority interests	$	111,130	$	219,191	$	202,005	$	144,958
Net income	$	54,956	$	116,526	$	107,215	$	70,402
Net income per share:
Basic	$	0.69	$	1.32	$	1.21	$	0.78
Diluted	$	0.62	$	1.27	$	1.17	$	0.76
Year Ended December 31, 2003
Revenues	$	1,341,975	$	1,542,931	$	1,716,742	$	1,612,066
Income before income taxes and minority interests	$	163,493	$	239,753	$	260,759	$	174,717
Net income	$	87,580	$	127,476	$	141,847	$	94,119
Net income per share:
Basic	$	1.18	$	1.67	$	1.83	$	1.20
Diluted	$	1.05	$	1.47	$	1.62	$	1.07

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SCHEDULE I

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SUMMARY OF INVESTMENTS—OTHER THAN INVESTMENTS IN RELATED PARTIES

(in thousands)

December 31, 2005

Column A	Column B		Column C		Column D
Type of investment	Cost		Market value		Amount at which shown in the balance sheet
Deposits with savings and loan associations and banks:
Registrant—None
Consolidated	$	90,383	$	90,383	$	90,383
Debt securities:
U.S. Treasury securities
Registrant—None
Consolidated	$	167,985	$	167,125	$	167,125
Corporate securities
Registrant—None
Consolidated	$	206,767	$	207,159	$	207,159
Obligations of states and political subdivisions
Registrant—None
Consolidated	$	127,267	$	128,120	$	128,120
Mortgage-backed securities
Registrant—None
Consolidated	$	604,012	$	598,324	$	598,324
Total debt securities:
Registrant—None
Consolidated	$	1,106,031	$	1,100,728	$	1,100,728
Equity securities:
Registrant—None
Consolidated	$	49,548	$	47,101	$	47,101
Other long-term investments:
Registrant	$	10,094	$	10,094	$	10,094
Consolidated	$	389,211	$	389,211	$	389,211
Total investments:
Registrant	$	10,094	$	10,094	$	10,094
Consolidated	$	1,635,173	$	1,627,423	$	1,627,423

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SCHEDULE III

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AND SUBSIDIARY COMPANIES

SUPPLEMENTARY INSURANCE INFORMATION

(in thousands)

BALANCE SHEET CAPTIONS

Column A	Column B		Column C		Column D
Segment	Deferred policy acquisition costs		Claims reserves		Deferred revenues
2005
Title Insurance and Services		—	$	595,533	$	2,074
Specialty Insurance	$	26,674		42,617		152,247
Mortgage Information		—		27,818		566,940
Property Information		—		5,086		30,136
Risk Mitigation and Business Solutions		—		—		10,760
Corporate		—		—		—
Total	$	26,674	$	671,054	$	762,157
2004
Title Insurance and Services		—	$	450,309	$	1,896
Specialty Insurance	$	21,259		40,524		139,680
Mortgage Information		—		30,620		568,517
Property Information		—		5,063		13,638
Risk Mitigation and Business Solutions		—		—		5,806
Corporate		—		—		—
Total	$	21,259	$	526,516	$	729,537

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SCHEDULE III

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AND SUBSIDIARY COMPANIES

SUPPLEMENTARY INSURANCE INFORMATION

(in thousands)

INCOME STATEMENT CAPTIONS

Column A	Column F			Column G		Column H			Column I			Column J			Column K
Segment	Operating revenues			Net investment income		Loss provision			Amortization of deferred policy acquisition costs			Other operating expenses			Net premiums written
2005
Title Insurance and Services	$	5,831,938		$	148,283	$	288,729					$	937,156
Specialty Insurance		275,207			15,304		142,617		$	(1,195	)		34,327		$	117,581
Mortgage Information		584,344			8,705		24,759						172,881
Property Information		511,852			32,161		929						172,383
Risk Mitigation and Business Solutions		637,411			17,342		(4	)					336,718
Corporate		—			23,885		—						53,754
Eliminations		(24,674	)		—		—						(10,682	)
Total	$	7,816,078		$	245,680	$	457,030		$	(1,195	)	$	1,696,537		$	117,581
2004
Title Insurance and Services	$	4,786,036		$	89,491	$	198,295					$	840,790
Specialty Insurance		220,340			14,368		122,649		$	1,371			15,275		$	127,513
Mortgage Information		653,562			7,218		27,314						184,603
Property Information		417,758			25,517		1,435						132,769
Risk Mitigation and Business Solutions		509,092			9,680		(75	)					278,266
Corporate		—			5,306		—						41,275
Eliminations		(16,042	)		—		—						(5,412	)
Total	$	6,570,746		$	151,580	$	349,618		$	1,371		$	1,487,566		$	127,513
2003
Title Insurance and Services	$	4,402,984		$	91,899	$	179,843					$	728,944
Specialty Insurance		207,287			12,550		119,546		$	2,885			20,431		$	139,012
Mortgage Information		642,684			26,081		24,229						177,234
Property Information		383,246			23,880		786						141,100
Risk Mitigation and Business Solutions		413,417			20,193		—						226,401
Corporate		—			6,468		—						32,084
Eliminations		(16,975	)		—		—						(9,204	)
Total	$	6,032,643		$	181,071	$	324,404		$	2,885		$	1,316,990		$	139,012

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SCHEDULE IV

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REINSURANCE

(in thousands, except percentages)

Segment	Insurance operating revenues before reinsurance	Ceded to other companies	Assumed from other companies	Insurance operating revenues	Percentage of amount assumed to operating revenues
Title Insurance
2005	5,832,570	9,474	8,842	5,831,938	0.2	%
2004	4,795,776	18,033	8,293	4,786,036	0.2	%
2003	4,406,746	9,223	5,461	4,402,984	0.1	%
Specialty Insurance
2005	122,340	21,418	—	100,922	0.0	%
2004	135,238	59,143	—	76,095	0.0	%
2003	141,456	50,572	—	90,884	0.0	%

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SCHEDULE V

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THE FIRST AMERICAN CORPORATION

AND SUBSIDIARY COMPANIES

VALUATION AND QUALIFYING ACCOUNTS

(in thousands)

Year Ended December 31, 2005

Column A	Column B		Column C					Column D			Column E
			Additions
Description	Balance at beginning of period		Charged to costs and expenses		Charged to other accounts			Deductions from reserve			Balance at end of period
Reserve deducted from accounts receivable:
Registrant—None
Consolidated	$	62,730	$	23,089				$	18,346	(A)	$	67,473
Reserve for title losses and other claims:
Registrant—None
Consolidated	$	526,516	$	457,030	$	51,704	(B)	$	364,196	(C)	$	671,054
Reserve deducted from loans receivable:
Registrant—None
Consolidated	$	1,350	$	60							$	1,410
Reserve deducted from assets acquired in connection with claim settlements:
Registrant—None
Consolidated	$	1,253	$	142				$	331	(D)	$	1,064
Reserve deducted from other assets:
Registrant—None
Consolidated	$	3,468	$	0				$	411	(E)	$	3,057
Reserve deducted from deferred income taxes:
Registrant—None
Consolidated	$	42,532						$	16,602	(F)	$	26,091

Note A—Amount represents accounts written off, net of recoveries.

Note B—Amount represents net $51,704 in purchase accounting adjustments.

Note C—Amount represents claim payments, net of recoveries.

Note D—Amount represents elimination of reserve in connection with disposition and/or revaluation of the related asset.

Note E—Amount represents elimination of reserve in connection with disposition and/or revaluation of the related asset.

Note F—Amount represents elimination of reserve in connection with the realizability of its deferred tax assets.

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SCHEDULE V

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THE FIRST AMERICAN CORPORATION

AND SUBSIDIARY COMPANIES

VALUATION AND QUALIFYING ACCOUNTS

(in thousands)

Year Ended December 31, 2004

Column A	Column B		Column C					Column D			Column E
			Additions
Description	Balance at beginning of period		Charged to costs and expenses		Charged to other accounts			Deductions from reserve			Balance at end of period
Reserve deducted from accounts receivable:
Registrant—None
Consolidated	$	55,112	$	18,289				$	10,671	(A)	$	62,730
Reserve for title losses and other claims:
Registrant—None
Consolidated	$	435,852	$	349,618	$	10,146	(B)	$	269,100	(C)	$	526,516
Reserve deducted from loans receivable:
Registrant—None
Consolidated	$	1,290	$	60							$	1,350
Reserve deducted from assets acquired in connection with claim settlements:
Registrant—None
Consolidated	$	1,202	$	119				$	68	(D)	$	1,253
Reserve deducted from other assets:
Registrant—None
Consolidated	$	3,570	$	0				$	102	(E)	$	3,468
Reserve deducted from deferred income taxes:
Registrant—None
Consolidated	$	43,429						$	897	(F)	$	42,532

Note A—Amount represents accounts written off, net of recoveries.

Note B—Amount represents net $10,146 in purchase accounting adjustments

Note C—Amount represents claim payments, net of recoveries

Note D—Amount represents elimination of reserve in connection with disposition and/or revaluation of the related asset.

Note E—Amount represents elimination of reserve in connection with disposition and/or revaluation of the related asset.

Note F—Amount represents elimination of reserve in connection with the realizability of its deferred tax assets.

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AND SUBSIDIARY COMPANIES

VALUATION AND QUALIFYING ACCOUNTS

(in thousands)

Year Ended December 31, 2003

Column A	Column B		Column C					Column D			Column E
			Additions
Description	Balance at beginning of period		Charged to costs and expenses		Charged to other accounts			Deductions from reserve			Balance at end of period
Reserve deducted from accounts receivable:
Registrant—None
Consolidated	$	50,782	$	25,723				$	21,393	(A)	$	55,112
Reserve for title losses and other claims:
Registrant—None
Consolidated	$	360,305	$	324,404	$	20,629	(B)	$	269,486	(C)	$	435,852
Reserve deducted from loans receivable:
Registrant—None
Consolidated	$	1,170	$	120							$	1,290
Reserve deducted from assets acquired in connection with claim settlements:
Registrant—None
Consolidated	$	1,066	$	155				$	19	(D)	$	1,202
Reserve deducted from other assets:
Registrant—None
Consolidated	$	2,489	$	1,081							$	3,570
Reserve deducted from deferred income taxes:
Registrant—None
Consolidated	$	10,526			$	32,903	(E)				$	43,429

Note A—Amount represents accounts written off, net of recoveries.

Note B—Amount represents net $20,629 in purchase accounting adjustments

Note C—Amount represents claim payments, net of recoveries

Note D—Amount represents elimination of reserve in connection with disposition and/or revaluation of the related asset.

Note E—Amount represents allowance against recognition of future tax benefits related to net operating loss carryforwards.

74

Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None

Item 9A.    Controls and Procedures

The Company’s Chief Executive Officer and Chief Accounting Officer, after evaluating the effectiveness of the Company’s disclosure controls and procedures, as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended, have concluded that, as of the end of the fiscal year covered by this report on Form 10-K, the Company’s disclosure controls and procedures were effective to provide reasonable assurances that information required to be disclosed in the reports filed or submitted under such Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

There was no change in the Company’s internal control over financial reporting during the quarter ended December 31, 2005 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Management’s Annual Report on Internal Control Over Financial Reporting

Management of The First American Corporation is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting has been designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with accounting principles generally accepted in the United States of America.

The Company’s internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets of the Company; provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures are being made only in accordance with authorization of management and directors of the Company; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the Company’s consolidated financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2005. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework. Based on that assessment under the framework in Internal Control—Integrated Framework, management determined that, as of December 31, 2005, the Company’s internal control over financial reporting was effective.

Management’s assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2005 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears herein on page 34 in Item 8, above.

75

Item 9B.    Other Information

None

PART III

The information required by Items 10 through 14 of this report is set forth in the sections entitled “Election of Directors,” “Executive Officers,” “Section 16(a) Beneficial Ownership Reporting Compliance,” “Executive Compensation,” “Stock Option Grants and Exercises,” “Pension Plan,” “Supplemental Benefit Plan,” “Deferred Compensation Plan,” “Change of Control Arrangements,” “Directors’ Compensation,” “Codes of Ethics,” “Compensation Committee Interlocks and Insider Participation,” “Report of the Compensation Committee on Executive Compensation,” “Comparative Cumulative Total Return to Shareholders,” “Report of the Audit Committee,” “Who are the largest principal shareholders outside of management?,” “Security Ownership of Management,” “Principal Accounting Fees and Services” and “Transactions with Management and Others” in the Company’s definitive proxy statement, which sections are incorporated in this report and made a part hereof by reference. The definitive proxy statement will be filed no later than 120 days after the close of Registrant’s fiscal year.

76

PART IV

Item 15.    Exhibits and Financial Statement Schedules

(a) 1. & 2.	Financial Statements and Financial Statement Schedules
	The Financial Statements and Financial Statement Schedules filed as part of this report are listed in the accompanying index at page 33 in Item 8 of Part II of this report.
3.	Exhibits. See Exhibit Index. (Each management contract or compensatory plan or arrangement in which any director or named executive officer of The First American Corporation, as defined by Item 402(a)(3) of Regulation S-K (17 C.F.R. §229.402(a)(3)), participates that is included among the exhibits listed on the Exhibit Index is identified on the Exhibit Index by an asterisk (*).)

77

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

THE FIRST AMERICAN CORPORATION
(Registrant)
By	/s/    PARKER S. KENNEDY
	Parker S. Kennedy Chairman and Chief Executive Officer (Principal Executive Officer)
	Date: March 16, 2006
By	/s/    MAX O. VALDES
	Max O. Valdes Vice President, Chief Accounting Officer (Principal Financial Officer)
	Date: March 16, 2006

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/    PARKER S. KENNEDY         Parker S. Kennedy	Chairman, CEO and Director	March 16, 2006
/s/    MAX O. VALDES         Max O. Valdes	Vice President, Chief Accounting Officer (Principal Financial Officer) (Principal Accounting Officer)	March 16, 2006
/s/    GEORGE L. ARGYROS         George L. Argyros	Director	March 16, 2006
/s/    GARY J. BEBAN         Gary J. Beban	Director	March 16, 2006
/s/    J. DAVID CHATHAM         J. David Chatham	Director	March 16, 2006
/s/    WILLIAM G. DAVIS         William G. Davis	Director	March 16, 2006
/s/    JAMES L. DOTI         James L. Doti	Director	March 16, 2006

78

Signature	Title	Date
/s/    LEWIS W. DOUGLAS, JR.         Lewis W. Douglas, Jr.	Director	March 16, 2006
/s/    PAUL B. FAY, JR.         Paul B. Fay, Jr.	Director	March 16, 2006
/s/    D. P. KENNEDY         D. P. Kennedy	Director	March 16, 2006
/s/    FRANK O’BRYAN         Frank O’Bryan	Director	March 16, 2006
/s/    ROSLYN B. PAYNE         Roslyn B. Payne	Director	March 16, 2006
/s/    D. VAN SKILLING         D. Van Skilling	Director	March 16, 2006
/s/    HERBERT B. TASKER         Herbert B. Tasker	Director	March 16, 2006
/s/    VIRGINIA UEBERROTH         Virginia Ueberroth	Director	March 16, 2006

79

Exhibit No.	Description
(3)(a)	Restated Articles of Incorporation of The First American Financial Corporation dated July 14, 1998, incorporated by reference herein from Exhibit 3.1 of Amendment No. 1, dated July 28, 1998, to the Company’s Registration Statement No. 333-53681 on Form S-4.
(3)(b)	Certificate of Amendment of Restated Articles of Incorporation of The First American Financial Corporation dated April 23, 1999, incorporated by reference herein from Exhibit (3) of Quarterly Report on Form 10-Q for the quarter ended March 31, 1999.
(3)(c)	Certificate of Amendment of Restated Articles of Incorporation of The First American Financial Corporation dated May 11, 2000, incorporated by reference herein from Exhibit 3.1 of Report on Form 8-K dated June 12, 2000.
(3)(d)	Bylaws of The First American Corporation, as amended, incorporated by reference herein from Exhibit (3) of Quarterly Report on Form 10-Q for the quarter ended September 30, 2005.
(4)(a)	Rights Agreement, dated as of October 23, 1997, incorporated by reference herein from Exhibit 4 of Registration Statement on Form 8-A dated November 7, 1997.
(4)(b)	Junior Subordinated Indenture, dated as of April 22, 1997, incorporated by reference herein from Exhibit (4.2) of Quarterly Report on Form 10-Q for the quarter ended June 30, 1997.
(4)(c)	Form of New 8.50% Junior Subordinated Deferrable Interest Debenture, incorporated by reference herein from Exhibit 4.2 of Registration Statement No. 333-35945 on Form S-4 dated September 18, 1997.
(4)(d)	Certificate of Trust of First American Capital Trust I, incorporated by reference herein from Exhibit 4.3 of Registration Statement No. 333-35945 on Form S-4 dated September 18, 1997.
(4)(e)	Amended and Restated Declaration of Trust of First American Capital Trust I dated as of April 22, 1997, incorporated by reference herein from Exhibit (4.3) of Quarterly Report on Form 10-Q for the quarter ended June 30, 1997.
(4)(f)	Form of New 8.50% Capital Security (Liquidation Amount $1,000 per Capital Security), incorporated by reference herein from Exhibit 4.6 of Registration Statement No. 333-35945 on Form S-4 dated September 18, 1997.
(4)(g)	Form of New Guarantee Agreement, incorporated by reference herein from Exhibit 4.7 of Registration Statement No. 333-35945 on Form S-4 dated September 18, 1997.
(4)(h)	Senior Indenture, dated as of April 7, 1998, between The First American Financial Corporation and Wilmington Trust Company as Trustee, incorporated by reference herein from Exhibit (4) of Quarterly Report on Form 10-Q for the quarter ended June 30, 1998.
(4)(i)	Form of Underwriting Agreement, incorporated by reference herein from Exhibit 1.1 of Pre-effective Amendment No. 2 to Registration Statement No 333-116855 on Form S-3 dated July 19, 2004.
(4)(j)	Form of First Supplemental Indenture, incorporated by reference herein from Exhibit 4.2 of Registration Statement 333-116855 on Form S-3 dated June 25, 2004.
(4)(k)	Form of Senior Note, incorporated by reference herein from Exhibit 4.3 of Registration Statement 333-116855 on Form S-3 dated June 25, 2004.
*(10)(a)	Description of Stock Bonus Plan, as amended, incorporated by reference herein from Exhibit (10)(a) of Annual Report on Form 10-K for the fiscal year ended December 31, 1992.
*(10)(b)	Executive Supplemental Benefit Plan dated April 10, 1986, and Amendment No. 1 thereto dated October 1, 1986, incorporated by reference herein from Exhibit (10)(b) of Annual Report on Form 10-K for the fiscal year ended December 31, 1988.
*(10)(c)	Amendment No. 2, dated March 22, 1990, to Executive Supplemental Benefit Plan, incorporated by reference herein from Exhibit (10)(c) of Annual Report on Form 10-K for the fiscal year ended December 31, 1989.

80

Exhibit No.	Description
*(10)(d)	Amendment No. 3, dated July 7, 1998, to Executive Supplemental Benefit Plan, incorporated by reference herein from Exhibit (10)(d) of Annual Report on Form 10-K for the fiscal year ended December 31, 1998.
*(10)(e)	Amendment No. 4, dated March 22, 2000, to Executive Supplemental Benefit Plan, incorporated by reference herein from Exhibit (10)(c) of Annual Report on Form 10-K for the fiscal year ended December 31, 1999.
*(10)(f)	Amendment No. 5, dated July 19, 2000, to Executive Supplemental Benefit Plan, incorporated by reference herein from Exhibit (10)(e) of Quarterly Report on Form 10-Q for the quarter ended June 30, 2000.
*(10)(g)	Amendment No. 6, dated September 1, 2005, to Executive Supplemental Benefit Plan, incorporated by reference herein from Exhibit 10(b) of Quarterly Report on Form 10-Q for the quarter ended September 30, 2005.
*(10)(h)	Management Supplemental Benefit Plan dated July 20, 1988, incorporated by reference herein from Exhibit (10) of Quarterly Report on Form 10-Q for the quarter ended June 30, 1992.
*(10)(i)	Amendment No. 1, dated July 7, 1998, to Management Supplemental Benefit Plan, incorporated by reference herein from Exhibit (10)(f) of Annual Report on Form 10-K for the fiscal year ended December 31, 1998.
*(10)(j)	Amendment No. 2, dated March 22, 2000, to Management Supplemental Benefit Plan, incorporated by reference herein from Exhibit (10)(h) of Annual Report on Form 10-K for the fiscal year ended December 31, 1999.
*(10)(k)	Amendment No. 3, dated July 19, 2000, to Management Supplemental Benefit Plan, incorporated by reference herein from Exhibit (10)(f) of Quarterly Report on Form 10-Q for the quarter ended June 30, 2000.
*(10)(l)	Amendment No. 4, dated September 1, 2005, to Management Supplemental Benefit Plan, incorporated by reference herein from Exhibit (10)(a) of Quarterly Report on Form 10-Q for the quarter ended September 30, 2005.
*(10)(m)	Pension Restoration Plan (effective as of January 1, 1994), incorporated by reference herein from Exhibit (10)(c) of Annual Report on Form 10-K for the fiscal year ended December 31, 1996.
*(10)(n)	Amendment No. 1, dated July 19, 2000, to Pension Restoration Plan, incorporated by reference herein from Exhibit (10)(a) of Quarterly Report on Form 10-Q for the quarter ended June 30, 2000.
*(10)(o)	Amendment No. 2, dated August 1, 2001, to Pension Restoration Plan, incorporated by reference herein from Exhibit (10)(a) of Quarterly Report on Form 10-Q for the quarter ended September 30, 2001.
*(10)(p)	1996 Stock Option Plan, incorporated by reference herein from Exhibit 4 of Registration Statement No. 333-19065 on Form S-8 dated December 30, 1996.
*(10)(q)	Amendment No. 1, dated February 26, 1998, to 1996 Stock Option Plan, incorporated by reference herein from Exhibit (10)(i) of Annual Report on Form 10-K for the fiscal year ended December 31, 1998.
*(10)(r)	Amendment No. 2, dated June 22, 1998, to 1996 Stock Option Plan, incorporated by reference herein from Exhibit (10)(j) of Annual Report on Form 10-K for the fiscal year ended December 31, 1998.
*(10)(s)	Amendment No. 3, dated July 7, 1998, to 1996 Stock Option Plan, incorporated by reference herein from Exhibit (10)(k) of Annual Report on Form 10-K for the fiscal year ended December 31, 1998.
*(10)(t)	Amendment No. 4, dated April 22, 1999, to 1996 Stock Option Plan, incorporated by reference herein from Exhibit (10)(a) of Quarterly Report on Form 10-Q for the quarter ended June 30, 1999.

81

Exhibit No.	Description
*(10)(u)	Amendment No. 5, dated February 29, 2000, to 1996 Stock Option Plan, incorporated by reference herein from Exhibit (10)(o) of Annual Report on Form 10-K for the fiscal year ended December 31, 1998.
*(10)(v)	Amendment No. 6, dated July 19, 2000, to 1996 Stock Option Plan, incorporated by reference herein from Exhibit (10)(b) of Quarterly Report on Form 10-Q for the quarter ended June 30, 2000.
*(10)(w)	Amendment No. 7, dated June 4, 2002, to 1996 Stock Option Plan, incorporated by reference herein from Exhibit (10)(a) of Quarterly Report on Form 10-Q for quarter ended June 30, 2002.
*(10)(x)	Change in Control Agreement (Executive Form) dated November 12, 1999, incorporated by reference herein from Exhibit (10)(p) of Annual Report on Form 10-K for the fiscal year ended December 31, 1999.
*(10)(y)	Change in Control Agreement (Management Form) dated November 12, 1999, incorporated by reference herein from Exhibit (10)(q) of Annual Report on Form 10-K for the fiscal year ended December 31, 1999.
*(10)(z)	1997 Directors’ Stock Plan, incorporated by reference herein from Exhibit 4.1 of Registration Statement No. 333-41993 on Form S-8 dated December 11, 1997.
*(10)(aa)	Amendment No. 1 to 1997 Directors’ Stock Plan, dated February 26, 1998, incorporated by reference herein from Exhibit (10)(m) of Annual Report on Form 10-K for the fiscal year ended December 31, 1998.
*(10)(bb)	Amendment No. 2 to 1997 Directors’ Stock Plan, dated July 7, 1998, incorporated by reference herein from Exhibit (10)(n) of Annual Report on Form 10-K for the fiscal year ended December 31, 1998.
*(10)(cc)	Amendment No. 3, dated July 19, 2000, to 1997 Directors’ Stock Plan, incorporated by reference herein from Exhibit (10)(c) of Quarterly Report on Form 10-Q for the quarter ended June 30, 2000.
*(10)(dd)	The First American Financial Corporation Deferred Compensation Plan dated March 10, 2000, incorporated by reference herein from Exhibit (10)(v) of Annual Report on Form 10-K for the fiscal year ended December 31, 1999.
*(10)(ee)	Amendment No. 1, dated July 19, 2000, to Deferred Compensation Plan, incorporated by reference herein from Exhibit (10)(d) of Quarterly Report on Form 10-Q for the quarter ended June 30, 2000.
*(10)(ff)	Amendment No. 2, dated February 1, 2003, to Deferred Compensation Plan, incorporated by reference herein from Exhibit (10) of Quarterly Report on Form 10-Q for the quarter ended March 31, 2003.
*(10)(gg)	The First American Financial Corporation Deferred Compensation Plan Trust Agreement dated March 10, 2000, incorporated by reference herein from Exhibit (10)(w) of Annual Report on Form 10-K for the fiscal year ended December 31, 1999.
*(10)(hh)	Employment offer letter dated February 21, 2006 from The First American Corporation to Frank V. McMahon, incorporated by reference herein from Exhibit 99.2 of Report on Form 8-K dated February 21, 2006.
*(10)(ii)	Letter dated July 16, 2003 regarding the retirement of D.P. Kennedy.
(10)(jj)	Contribution and Joint Venture Agreement By and Among The First American Financial Corporation and Experian Information Solutions, Inc., et al., dated November 30, 1997, incorporated by reference herein from Exhibit (10)(a) of Quarterly Report on Form 10-Q for the quarter ended March 31, 1998.
(10)(kk)	Agreement of Amendment, dated June 30, 2003, by and between The First American Corporation and Experian Information Solutions, Inc., incorporated by reference herein from Exhibit (10)(a) of Quarterly Report on Form 10-Q for the quarter ended September 30, 2003.

82

Exhibit No.	Description
(10)(ll)	Second Agreement of Amendment, dated September 23, 2003, by and between The First American Corporation and Experian Information Solutions, Inc., incorporated by reference herein from Exhibit (10)(b) of Quarterly Report on Form 10-Q for the quarter ended September 30, 2003.
(10)(mm)	Omnibus Agreement, dated as of March 22, 2005, by and between The First American Corporation, Experian Information Solutions, Inc. and First American Real Estate Solutions LLC, incorporated by reference herein from Exhibit (10) of Quarterly Report on Form 10-Q for the quarter ended March 31, 2005.
(10)(nn)	Amended and Restated Omnibus Agreement, dated as of June 22, 2005, by and between The First American Corporation, Experian Information Solutions, Inc. and First American Real Estate Solutions LLC, incorporated by reference herein from Exhibit (10)(a) of Quarterly Report on Form 10-Q for the quarter ended June 30, 2005.
(10)(oo)	Operating Agreement for First American Real Estate Solutions LLC, a California Limited Liability Company, By and Among First American Real Estate Information Services, Inc., and Experian Information Solutions, Inc., et al., dated November 30, 1997, incorporated by reference herein from Exhibit (10)(b) of Quarterly Report on Form 10-Q for the quarter ended March 31, 1998.
(10)(pp)	Data License Agreement dated November 30, 1997, incorporated by reference herein from Exhibit (10)(d) of Quarterly Report on Form 10-Q for the quarter ended March 31, 1998.
(10)(qq)	Reseller Services Agreement dated as of November 30, 1997, incorporated by reference herein from Exhibit (10)(g) of Quarterly Report on Form 10-Q for the quarter ended March 31, 1998.
(10)(rr)	Amendment to Reseller Services Agreement For Resales to Consumers, dated as of November 30, 1997, incorporated by reference herein from Exhibit (10)(h) of Quarterly Report on Form 10-Q for the quarter ended March 31, 1998.
(10)(ss)	Trademark License Agreement between Experian Information Solutions, Inc. and First American Real Estate Solutions LLC, dated as of November 30, 1997, incorporated by reference herein from Exhibit (10)(i) of Quarterly Report on Form 10-Q for the quarter ended March 31, 1998.
(10)(tt)	Credit Agreement, dated as of August 4, 2004 between The First American Corporation, JP Morgan Chase Bank, as Administrative Agent, and certain other Lenders party thereto, incorporated by reference herein from Exhibit (10) of Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2004.
(10)(uu)	Amendment No. 2, dated as of July 18, 2005 to the Credit Agreement dated as of August 4, 2004 between The First American Corporation, JP Morgan Chase Bank, as Administrative Agent, and certain other Lenders party thereto, incorporated by reference from Exhibit (10)(b) of Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2005.
(10)(vv)	Amended and Restated Credit Agreement, dated as of November 7, 2005, between The First American Corporation, JP Morgan Chase Bank, as Administrative Agent, and certain other Lenders party thereto.
(10)(ww)	Master Lease Financing Agreement, dated as of December 29, 2004, between General Electric Capital Corporation, for Itself and as Agent for Certain Participants, and First American Title Insurance Company, together with Equipment Schedule No. 1 and Equipment Schedule No. 2, incorporated by reference from Exhibit (10)(ss) of Annual Report on Form 10-K for the fiscal year ended December 31, 2004.
(21)	Subsidiaries of the registrant.
(23)	Consent of Independent Registered Public Accounting Firm.
(31)(a)	Certification by Chief Executive Officer Pursuant to Rule 13a-14(a) under the Securities Act of 1934.

83

Exhibit No.	Description
(31)(b)	Certification by Chief Accounting Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
(32)(a)	Certification by Chief Executive Officer Pursuant to 18 U.S.C. Section 1350.
(32)(b)	Certification by Chief Accounting Officer Pursuant to 18 U.S.C. Section 1350.

* Indicates a management contract or compensatory plan or arrangement in which any director or named executive officer participates.

84

EX-10.(II)

Exhibit (10)(ii)

July 16, 2003

Mr. Don Kennedy

The First American Corporation

1 First American Way

Santa Ana, CA 92707

Re: Change in Employment Status

Dear Mr. Kennedy:

The purpose of this letter is to discuss your transition as an active employee of First American to retirement.

You will continue receiving your regular bi-weekly salary of $14,423.08 through July 1, 2005. Your monthly car deduction of $350 will be withheld on an after-tax basis, in addition to all legally required taxes. Deductions for life and disability benefits will not be withheld as these benefits ceased July 1, 2003. You may, however, convert your life insurance to an individual policy. If interested, we will request the appropriate paperwork be sent to you for completion. You have 31 days from the date your coverage ceased to convert it to an individual policy.

You will also receive a final paycheck for all accrued but unused vacation. Deductions for your health benefits, for the month of July, will be withheld on a pre-tax basis from this paycheck, in addition to all legally required taxes.

Notification of your retirement will be sent to The First American Service Center July 17, 2003. Benefits enrollment information will be mailed the following week. You should receive enrollment information by the end of July. It will be necessary for you to contact Jim Hayes, Retirement Benefits Coordinator at 1-877-208-0866 to enroll you and your wife, Dorothy, in retiree health benefits. Jim is available to assist you with your elections and any questions you have. It is my understanding, you have enrolled in Medicare Parts A & B. As such, you will be eligible to enroll in the Medicare Supplemental Retiree Traditional Choice plan for you and Dorothy. You should enroll no later than August 31, 2003, to prevent disruption of coverage. Currently, the 2003 monthly rate is $561.00. You should receive your first coupon statement within 1 – 2 weeks after you enroll. If you elect to commence your monthly pension benefits, you will also be given an option to have retiree health benefits withheld directly from your monthly pension checks.

Page 2

Mr. Don Kennedy

July 16, 2003

If interested, you are entitled to receive a distribution/rollover of your 401(k) funds. You will automatically receive distribution information by the end of July. No action is necessary unless you decide to elect a distribution or rollover.

You will also receive a retirement kit providing you with the various options available for commencement of your pension benefits. You should receive this kit by the end of July. If you also want to commence your SERP benefit, you will need to contact Kelly Hoffman. She can be reached at (714) 800-3189.

We hope to have provided you with information to successfully transition to retirement. If you experience any difficulties with your transition, please contact Laquita Kelm, Sr. Director, Benefits at 1-800-229-8426, ext. 4333 or feel free to call me.

We extend best wishes to you and Dorothy, for a joyous and healthy retirement.

Very truly yours,

/s/ Elizabeth M. Brandon

Elizabeth M. Brandon

Vice President, HR Administration

(714) 800-3182

EMB/llk

cc: Cathy Oliver

Laquita Kelm

Kelly Hoffman

Sharon Kendrick

EX-10.(VV)

Exhibit (10)(vv)

EXECUTION COPY

$500,000,000

AMENDED AND RESTATED CREDIT AGREEMENT

dated as of

November 7, 2005

between

THE FIRST AMERICAN CORPORATION

The Lenders Party Hereto

and

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent

J.P. MORGAN SECURITIES INC.,

as Sole Lead Arranger and Sole Bookrunner

COMERICA BANK, UNION BANK OF CALIFORNIA, N.A., US BANK and

WELLS FARGO BANK NATIONAL ASSOCIATION,

as Syndication Agents

TABLE OF CONTENTS

	Page
ARTICLE I DEFINITIONS	1
SECTION 1.01. Defined Terms.	1
SECTION 1.02. Terms Generally.	16
SECTION 1.03. Accounting Terms and Determinations.	16
ARTICLE II THE CREDITS	17
SECTION 2.01. The Commitments.	17
SECTION 2.02. Loans and Borrowings.	17
SECTION 2.03. Requests for Borrowings.	18
SECTION 2.04. Funding of Borrowings.	19
SECTION 2.05. Interest Elections.	19
SECTION 2.06. Termination, Reduction and Increase of the Commitments.	20
SECTION 2.07. Repayment of Loans; Evidence of Debt.	22
SECTION 2.08. Prepayment of Loans.	23
SECTION 2.09. Fees.	24
SECTION 2.10. Interest.	24
SECTION 2.11. Alternate Rate of Interest.	25
SECTION 2.12. Increased Costs.	25
SECTION 2.13. Break Funding Payments.	26
SECTION 2.14. Taxes.	27
SECTION 2.15. Payments Generally; Pro Rata Treatment; Sharing of Set-offs.	28
SECTION 2.16. Mitigation Obligations; Replacement of Lenders.	29
ARTICLE III REPRESENTATIONS AND WARRANTIES	30
SECTION 3.01. Organization; Powers.	30
SECTION 3.02. Authorization; Enforceability.	30
SECTION 3.03. Governmental Approvals; No Conflicts.	31
SECTION 3.04. Financial Condition, Etc.	31
SECTION 3.05. Properties.	32
SECTION 3.06. Litigation and Environmental Matters.	32
SECTION 3.07. Compliance with Laws and Agreements.	32
SECTION 3.08. Investment and Holding Company Status.	33
SECTION 3.09. Taxes, Etc.	33
SECTION 3.10. ERISA.	33
SECTION 3.11. Disclosure.	33
SECTION 3.12. Use of Credit.	33
SECTION 3.13. Indebtedness and Liens.	33
ARTICLE IV CONDITIONS	34
SECTION 4.01. Closing Date.	34
SECTION 4.02. Each Credit Event.	35

- i -

ARTICLE V AFFIRMATIVE COVENANTS		35
	SECTION 5.01. Financial Statements and Other Information.	36
	SECTION 5.02. Notices of Material Events.	39
	SECTION 5.03. Existence; Conduct of Business.	40
	SECTION 5.04. Payment of Obligations.	40
	SECTION 5.05. Maintenance of Properties.	40
	SECTION 5.06. Books and Records; Inspection Rights.	40
	SECTION 5.07. Compliance with Laws and Agreements.	40
	SECTION 5.08. Insurance.	40
ARTICLE VI NEGATIVE COVENANTS		41
	SECTION 6.01. Indebtedness.	41
	SECTION 6.02. Liens.	42
	SECTION 6.03. Fundamental Changes.	43
	SECTION 6.04. Transactions with Affiliates.	43
	SECTION 6.05. Financial Covenants.	44
	SECTION 6.06. Foreclosure on Subject Property.	44
	SECTION 6.07. Sale/Leaseback Transactions and Synthetic Leases.	45
ARTICLE VII EVENTS OF DEFAULT		45
ARTICLE VIII THE ADMINISTRATIVE AGENT		48
ARTICLE IX MISCELLANEOUS		50
	SECTION 9.01. Notices.	50
	SECTION 9.02. Waivers; Amendments.	51
	SECTION 9.03. Expenses; Indemnity; Damage Waiver.	51
	SECTION 9.04. Successors and Assigns.	52
	SECTION 9.05. Survival.	55
	SECTION 9.06. Counterparts; Integration; Effectiveness.	56
	SECTION 9.07. Severability.	56
	SECTION 9.08. Right of Setoff.	56
	SECTION 9.09. Governing Law; Jurisdiction; Etc.	56
	SECTION 9.10. WAIVER OF JURY TRIAL.	57
	SECTION 9.11. Headings.	57
	SECTION 9.12. Treatment of Certain Information; Confidentiality.	57
	SECTION 9.13. USA PATRIOT Act.	58

EXHIBIT A	-	Form of Assignment and Assumption
EXHIBIT B	-	Form of Opinion of Counsel to the Borrower
EXHIBIT C	-	Form of Opinion of Special New York Counsel to JPMCB

- ii -

AMENDED AND RESTATED CREDIT AGREEMENT dated as of November 7, 2005, between THE FIRST AMERICAN CORPORATION, the LENDERS party hereto, and JPMORGAN CHASE BANK, N.A., as Administrative Agent.

The Borrower (as hereinafter defined), certain lenders and JPMorgan Chase Bank, N.A. (f/k/a JPMorgan Chase Bank), as the administrative agent thereunder are parties to a Credit Agreement dated as of August 4, 2004, as amended by Amendment No. 1 dated as of March 18, 2005 and Amendment No. 2 dated as of July 18, 2005 (as so amended and in effect immediately prior to the effectiveness of this Agreement, the “Existing Credit Agreement”);

The Borrower and certain of the lenders party to the Existing Credit Agreement desire to amend the Existing Credit Agreement in certain respects, including the extension of the availability of the commitments thereunder, and to restate in its entirety the Existing Credit Agreement, as so amended, and accordingly, the Borrower and such lenders hereby agree to amend the Existing Credit Agreement and the parties hereto hereby agree to restate the Existing Credit Agreement, as so amended, in its entirety, effective as of the Closing Date (as hereinafter defined), and otherwise agree as follows:

ARTICLE I

DEFINITIONS

SECTION 1.01. Defined Terms. As used in this Agreement, the following terms have the meanings specified below:

“ABR”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans constituting such Borrowing, are bearing interest at a rate determined by reference to the Alternate Base Rate.

“Adjusted LIBO Rate” means, for the Interest Period for any Eurodollar Borrowing, an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate for such Interest Period.

“Administrative Agent” means JPMCB, in its capacity as administrative agent for the Lenders hereunder.

“Administrative Questionnaire” means an Administrative Questionnaire in a form supplied by the Administrative Agent.

“Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified. Without limiting the generality of the foregoing,

Credit Agreement

- 2 -

each of the following Persons shall, at all times, be Affiliates of the Borrower: Donald P. Kennedy, Parker S. Kennedy, any member of their immediate families (including parents, spouses, children and siblings), any trust whose principal beneficiary is Donald P. Kennedy or Parker S. Kennedy or one of more members of their immediate families and any Person who is controlled by such member or trust. Notwithstanding the foregoing, (a) no individual (other than any Person specified in the preceding sentence) shall be an Affiliate solely by reason of his or her being a director, officer or employee of the Borrower or any of its Subsidiaries and (b) none of the Subsidiaries of the Borrower (other than FAC and its Subsidiaries) shall be Affiliates.

“Alternate Base Rate” means, for any day, a rate per annum equal to the greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds Effective Rate for such day plus 1/2 of 1%. Any change in the Alternate Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective from and including the effective date of such change in the Prime Rate or the Federal Funds Effective Rate, as the case may be.

“Applicable Additional Margin” means, for any Commitment Utilization Day, 0.10%.

“Applicable Bank Regulatory Authority” means, for any Bank Subsidiary, the Federal Deposit Insurance Corporation and all other relevant bank or thrift regulatory authorities (including, without limitation, relevant state bank or thrift regulatory authorities) having jurisdiction over such Bank Subsidiary.

“Applicable Insurance Regulatory Authority” means, when used with respect to any Insurance Company, the insurance department or similar administrative authority or agency of the State in which such Insurance Company is domiciled.

“Applicable Percentage” means, with respect to any Lender, the percentage of the total Commitments represented by such Lender’s Commitment. If the Commitments have terminated or expired, the Applicable Percentages shall be determined based upon the Commitments most recently in effect, giving effect to any assignments.

“Applicable Rate” means, for any day, with respect to any Eurodollar Loan or ABR Loan, or with respect to the commitment fees payable hereunder, as the case may be, the applicable rate per annum set forth below under the caption “Eurodollar Spread”, “ABR Spread” or “Commitment Fee Rate”, respectively, based upon the Moody’s Rating and S&P Rating, respectively, applicable on such date:

Credit Agreement

- 3 -

Index Debt Ratings
Moody’s Rating	S&P Rating	Eurodollar Spread		ABR Spread		Commitment Fee Rate
A3 or above	A-or above	0.35	%	0	%	0.07	%
Baa1	BBB+	0.40	%	0	%	0.08	%
Baa2	BBB	0.45	%	0	%	0.09	%
Baa3	BBB-	0.55	%	0	%	0.125	%
Below Baa3	Below BBB-	0.75	%	0	%	0.175	%

For purposes of the foregoing, (i) if any of Moody’s or S&P shall not have in effect a Moody’s Rating or S&P Rating, as the case may be (other than by reason of the circumstances referred to in the last sentence of this definition), then such rating agency shall be deemed to have established a rating equivalent to the rating provided by the rating agency then having a rating in effect; (ii) if the Moody’s Rating and S&P Rating established or deemed to have been established shall fall within different rating categories, the Applicable Rate shall be based on the lower of the two ratings, provided that if one of the two ratings is two or more categories lower than the other, the Applicable Rate shall be determined by reference to the category next above that of the lower of the two ratings; and (iii) if the Moody’s Rating and S&P Rating established or deemed to have been established by Moody’s and S&P shall be changed (other than as a result of a change in the rating system of Moody’s or S&P), such change shall be effective as of the date on which it is first announced by the applicable rating agency. Each change in the Applicable Rate shall apply during the period commencing on the effective date of such change and ending on the date immediately preceding the effective date of the next such change. If the rating system of Moody’s or S&P shall change, or if either such rating agency shall cease to be in the business of rating corporate debt obligations, the Borrower and the Lenders shall negotiate in good faith to amend this definition to reflect such changed rating system or the unavailability of ratings from such rating agency and, pending the effectiveness of any such amendment, the Applicable Rate shall be determined by reference to the rating most recently in effect prior to such change or cessation.

“Approved Fund” means any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of its business and that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

“Arbitrage Loans” means loans made by any financial institution (a “lender”) which is, at the time of the making of such loan, a depository of the Borrower or any Subsidiary of the Borrower, to the Borrower or any such Subsidiary in an amount not exceeding the amount of the deposits of the Borrower or any such Subsidiary held by such depository, the proceeds of

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which are invested in U.S. Government securities and/or certificates of deposit rated A-1 or P-1 and/or commercial paper rated not lower than A-1 or P-1 and having a term not exceeding the maturity date of such loan (but in no event longer than 92 days), provided that (i) the relevant borrower shall have a right of offset against such investment (in the case of certificates of deposit) and (ii) all such loans must be off the balance sheet of the Borrower and its Subsidiaries at the last day of any quarterly fiscal period.

“Assignment and Assumption” means an assignment and assumption entered into by a Lender as assignor and an assignee (with the consent of each Person whose consent is required by Section 9.04(b)), and accepted by the Administrative Agent, in the form of Exhibit A or any other form approved by the Administrative Agent.

“Assuming Lender” has the meaning assigned to such term in Section 2.06(d).

“Availability Period” means the period from and including the Closing Date to but excluding the earlier of the Commitment Termination Date and the date of termination of the Commitments.

“Bank Subsidiary” means First Security Thrift, First American Trust and any other Subsidiary of the Borrower which is a federally- or state-chartered thrift, bank or trust company.

“Board” means the Board of Governors of the Federal Reserve System of the United States of America.

“Borrower” means The First American Corporation, a California corporation.

“Borrowing” means (a) all ABR Loans made, converted or continued on the same date or (b) all Eurodollar Loans that have the same Interest Period. For purposes hereof, the date of a Borrowing comprising one or more Loans that have been converted or continued shall be the effective date of the most recent conversion or continuation of such Loan or Loans.

“Borrowing Request” means a request by the Borrower for a Borrowing in accordance with Section 2.03.

“Business Day” means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed; provided that, when used in connection with a Eurodollar Loan, the term “Business Day” shall also exclude any day on which banks are not open for dealings in Dollar deposits in the London interbank market.

“Capital Lease Obligations” of any Person means the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.

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“Capital Securities” means preferred securities issued by a Subsidiary of the Borrower organized as a Delaware business trust that are redeemable, at the option of such issuer, ten years or more after the issuance thereof, which securities are guaranteed by the Borrower and the proceeds of which are invested in junior subordinated securities of the Borrower.

“Change in Law” means (a) the adoption of any law, rule or regulation after the date of this Agreement, (b) any change in any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the date of this Agreement or (c) compliance by any Lender (or, for purposes of Section 2.12(b), by any lending office of such Lender or by such Lender’s holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement.

“Change of Control” means that during any period of 25 consecutive calendar months, a majority of the board of directors of the Borrower shall no longer be composed of individuals (a) who were members of said board on the first day of such period, (b) whose election or nomination to said board was approved by individuals referred to in clause (a) above constituting at the time of such election or nomination at least a majority of said board or (c) whose election or nomination to said board was approved by individuals referred to in clauses (a) and (b) above constituting at the time of such election or nomination at least a majority of said board.

“Closing Date” means the date on which the conditions specified in Section 4.01 are satisfied (or waived in accordance with Section 9.02).

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

“Combined Earnings” means, for any period, the sum of the following: (a) consolidated earnings (calculated before income taxes, Interest Expense and minority interest expense) of the Borrower and its Consolidated Subsidiaries (determined on a consolidated basis without duplication in accordance with GAAP) for such period plus depreciation and amortization (to the extent deducted in determining such consolidated earnings) for such period plus (b) Deferred Revenues (or, in the case of a Deferred Revenue deficit, minus an amount equal to such deficit) for such period.

“Commitment” means, with respect to each Lender, the commitment of such Lender to make Loans hereunder, expressed as an amount representing the maximum aggregate amount of such Lender’s Revolving Credit Exposure hereunder, as such commitment may be (a) reduced or increased from time to time pursuant to Section 2.06 and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 9.04. The initial amount of each Lender’s Commitment is set forth on Schedule I, or in the Assignment and Assumption (or, in the case of any Assuming Lender, the agreement entered into by such Assuming Lender under Section 2.06(d)) pursuant to which such Lender shall have assumed its Commitment, as applicable. The initial aggregate amount of the Lenders’ Commitments is $500,000,000 as of the Closing Date.

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“Commitment Termination Date” means November 7, 2010; provided that if such date is not a Business Day, the Commitment Termination Date shall be the immediately preceding Business Day.

“Commitment Utilization Day” means any day on which the aggregate outstanding principal amount of Loans shall exceed 50% of the total Commitments.

“Consolidated Subsidiary” means, for any Person, each Subsidiary of such Person (whether now existing or hereafter created or acquired) the financial statements of which shall be (or should have been) consolidated with the financial statements of such Person in accordance with GAAP. Notwithstanding anything herein to the contrary, for purposes of the definition of “Total Stockholders’ Equity” and Section 6.05 (and all defined terms as used therein) only, “Consolidated Subsidiary” shall not include FAC or any Subsidiary of FAC.

“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto.

“Default” means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.

“Deferred Revenues” means, with respect to the Borrower and its Consolidated Subsidiaries, for any fiscal period, the amount of revenue received but not recognized (in accordance with GAAP) during such fiscal period minus the amount of revenue recognized (in accordance with GAAP) but not received during such fiscal period.

“Disclosed Matters” means the actions, suits, proceedings and environmental matters disclosed in Schedule III.

“Dollars” or “$” refers to lawful money of the United States of America.

“Environmental Laws” means all laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by any Governmental Authority, relating in any way to the environment, preservation or reclamation of natural resources, the management, release or threatened release of any Hazardous Material or to health and safety matters.

“Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the Borrower or any Subsidiary directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

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“Equity Issuance” means (a) any issuance or sale by the Borrower of (i) any capital stock, (ii) any warrants or options exercisable in respect of capital stock (other than any warrants or options issued to directors, officers or employees of the Borrower or any of its Subsidiaries in their capacity as such and any capital stock of the Borrower issued upon the exercise of such warrants) or (iii) any other security or instrument representing an equity interest (or the right to obtain any equity interest) in the Borrower or (b) the receipt by the Borrower of any contribution to its capital (whether or not evidenced by any equity security).

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.

“ERISA Affiliate” means any trade or business (whether or not incorporated) that, together with the Borrower, is treated as a single employer under Section 414(b) or (c) of the Code, or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.

“ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived); (b) the existence with respect to any Plan of an “accumulated funding deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the Borrower or any of its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA.

“Eurodollar”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans constituting such Borrowing, are bearing interest at a rate determined by reference to the Adjusted LIBO Rate.

“Event of Default” has the meaning assigned to such term in Article VII.

“Excluded Taxes” means, with respect to the Administrative Agent, any Lender or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, (a) income or franchise taxes imposed on (or measured by) its net income by the United States of America, or by the jurisdiction under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located, (b) any branch profits taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction in which the Borrower is located and (c) in the case of a Foreign Lender (other than an assignee pursuant to a request by the

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Borrower under Section 2.16(b)), any withholding tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party to this Agreement or is attributable to such Foreign Lender’s failure or inability to comply with Section 2.14(e), except to the extent that such Foreign Lender’s assignor (if any) was entitled, at the time of assignment, to receive additional amounts from the Borrower with respect to such withholding tax pursuant to Section 2.14(a).

“Existing Credit Agreement” means the Credit Agreement dated as of August 4, 2004 among the Borrower, the lenders party thereto and JPMorgan Chase Bank, N.A. (f/k/a JPMorgan Chase Bank), as administrative agent for such lenders, as amended and in effect immediately prior to the Closing Date.

“FAC” means First Advantage Corporation, a Delaware corporation and a Subsidiary of the Borrower.

“FAREISI” means First American Real Estate Information Services, Inc., a California corporation and a Wholly Owned Subsidiary of the Borrower.

“FATICO” means First American Title Insurance Company, a California corporation and a Wholly Owned Subsidiary of the Borrower.

“Federal Funds Effective Rate” means, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.

“First American Title & Trust Company” means First American Title & Trust Company, an Oklahoma corporation and a Subsidiary of the Borrower.

“First American Trust” means First American Trust FSB, a federal stock savings bank and a Wholly Owned Subsidiary of the Borrower.

“First Security Thrift” means First Security Thrift Company, a California corporation and an indirect Subsidiary of FATICO.

“Foreign Lender” means any Lender that is organized under the laws of a jurisdiction other than that in which the Borrower is located. For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.

“Funded Debt” means, for any Person, (a) all Indebtedness for such Person that should be reflected on a balance sheet of such Person in accordance with GAAP, (b) all Indebtedness of any other Person that should be reflected on a balance sheet of such other Person in accordance with GAAP and that is secured by a Lien on the property of such Person, is

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supported by a letter of credit issued for account of, or is Guaranteed by, such Person and (c) all Capital Lease Obligations of such Person; provided that Funded Debt shall include (i) the aggregate liquidation preference of all preferred securities that are mandatorily redeemable, exchangeable or convertible into debt at the option of the holder or redeemable at the option of the holder, less than ten years after issue and (ii) the aggregate liquidation preference of all Capital Securities but only that portion of such aggregate liquidation preference that is on such date in excess of 15% of Total Capitalization on such date.

“GAAP” means generally accepted accounting principles in the United States of America.

“Governmental Authority” means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

“Guarantee” of or by any Person (the “guarantor”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or obligation; provided that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business.

“Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.

“Indebtedness” of any Person means, without duplication, (a) all obligations of such Person for borrowed money or with respect to deposits or advances of any kind that in accordance with GAAP would be shown on the liability side of the balance sheet of such Person, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments (including surplus debentures or notes whether or not characterized as liabilities for purposes of GAAP or SAP and non-perpetual preferred stock requiring redemption or repurchase and any option exercisable in respect thereof to the extent of such redemption or repurchase), (c) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person that in accordance with GAAP would be shown on the liability side of the balance sheet of such Person, (d) all obligations of such Person in respect of the

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deferred purchase price of property or services (excluding current accounts payable incurred in the ordinary course of business) that in accordance with GAAP would be shown on the liability side of the balance sheet of such Person, (e) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed, (f) all Guarantees by such Person of Indebtedness of others, (g) all Capital Lease Obligations of such Person, (h) all obligations, contingent or otherwise of such Person as an account party in respect of letters of credit and letters of guaranty and (i) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor.

“Indemnified Taxes” means Taxes other than Excluded Taxes.

“Index Debt” means senior, unsecured, long-term indebtedness for borrowed money of the Borrower that is not guaranteed by any other Person or subject to any other credit enhancement; provided that if such indebtedness is not rated by Moody’s or S&P, “Index Debt” means indebtedness in respect of Capital Securities.

“Insurance Company” means, collectively, FATICO, First American Home Buyers Protection Corporation and any other Subsidiary of the Borrower which is a licensed insurance company or a licensed underwritten title company.

“Interest Election Request” means a request by the Borrower to convert or continue a Borrowing in accordance with Section 2.05.

“Interest Expense” means, for any period, the sum, for the Borrower and its Consolidated Subsidiaries (determined on a consolidated basis without duplication in accordance with GAAP), of the following: (a) all interest in respect of Indebtedness accrued during such period (whether or not actually paid during such period) plus (b) the net amounts payable (or minus the net amounts receivable) under Swap Agreements accrued during such period (whether or not actually paid or received during such period).

“Interest Payment Date” means (a) with respect to any ABR Loan, each Quarterly Date and (b) with respect to any Eurodollar Loan, the last day of each Interest Period therefor and, in the case of any Interest Period that is more than three months long, each day prior to the last day of such Interest Period that occurs at intervals of three months after the first day of such Interest Period.

“Interest Period” means (a) for any Borrowing (other than an ABR Borrowing), the Interest Period of the Loan or Loans constituting such Borrowing; and (b) for any Eurodollar Loan, the period commencing on the date of such Loan and ending on the numerically corresponding day in the calendar month that is one, two, three or six months thereafter, as specified in the applicable Borrowing Request or Interest Election Request; provided that (i) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be

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extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day and (ii) any Interest Period that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period. For purposes hereof, the date of a Loan initially shall be the date on which such Loan is made and thereafter shall be the effective date of the most recent conversion or continuation of such Loan.

“JPMCB” means JPMorgan Chase Bank, N.A.

“Lenders” means the Persons listed on Schedule I and any other Person that shall have become a party hereto pursuant to an Assignment and Assumption or an instrument executed by such Person pursuant to Section 2.06(d), other than any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption.

“LIBO Rate” means, for the Interest Period for any Eurodollar Borrowing, the rate appearing on Page 3750 of the Telerate Service (or on any successor or substitute page of such Service, or any successor to or substitute for such Service, providing rate quotations comparable to those currently provided on such page of such Service, as determined by the Administrative Agent from time to time for purposes of providing quotations of interest rates applicable to Dollar deposits in the London interbank market) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, as the rate for the offering of Dollar deposits with a maturity comparable to such Interest Period. In the event that such rate is not available at such time for any reason, then the LIBO Rate for such Interest Period shall be the arithmetic mean of the rates (rounded upwards, if necessary, to the next 1/16 of 1%) at which Dollar deposits of $5,000,000 and for a maturity comparable to such Interest Period are offered by the principal London office of the Administrative Agent in immediately available funds in the London interbank market at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period.

“Licenses” means any licenses or certificates of authority from any Applicable Insurance Regulatory Authority, or permits or authorizations to transact title insurance business.

“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset and (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset.

“Loan” means a Loan made pursuant to Section 2.01.

“Loans” means the loans made by the Lenders to the Borrower pursuant to this Agreement.

“Margin Stock” means “margin stock” within the meaning of Regulations T, U and X of the Board.

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“Material Adverse Effect” means a material adverse effect on (a) the business, assets, operations, prospects or condition, financial or otherwise, of the Borrower and its Subsidiaries taken as a whole, (b) the ability of the Borrower to perform any of its obligations under this Agreement or (c) the rights of or benefits available to the Lenders under this Agreement.

“Material Indebtedness” means Indebtedness, or obligations in respect of one or more Swap Agreements, of any one or more of the Borrower and its Subsidiaries in an aggregate principal amount exceeding $50,000,000. For purposes of determining Material Indebtedness, the “principal amount” of the obligations of the Borrower or any Subsidiary in respect of any Swap Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that the Borrower or such Subsidiary would be required to pay if such Swap Agreement were terminated at such time.

“Material Subsidiary” means, at any time, (a) FATICO, (b) FAREISI and (c) any other Subsidiary of the Borrower with a net book value that equals or exceeds 5% of the Borrower’s consolidated shareholders’ equity (determined as of the last day of the most recently ended fiscal quarter for which financial statements are available).

“Moody’s” means Moody’s Investors Service, Inc.

“Moody’s Rating” means the Moody’s rating in respect of the Index Debt, provided that if such rating is in respect of Index Debt consisting of Capital Securities, “Moody’s Rating” means the rating that is one grade higher than the rating of the Index Debt.

“Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

“Other Taxes” means any and all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement.

“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions.

“Permitted Encumbrances” means (a) Liens imposed by law for taxes, assessments or other governmental charges that are not yet due or are being contested in compliance with Section 5.04; (b) carriers’, warehousemen’s, mechanics’, materialmen’s, landlords’, repairmen’s and other like Liens imposed by law, arising in the ordinary course of business and securing obligations that are not overdue by more than 30 days or are being contested in compliance with Section 5.04; (c) pledges and deposits made in the ordinary course of business in compliance with workers’ compensation, unemployment insurance and other social security laws or regulations; (d) deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature, in each case in the ordinary course of business; (e) judgment liens in respect of judgments that do not constitute an Event of Default under clause (j) of Article VII; and (f) easements, zoning restrictions, rights-of-way and similar encumbrances on real property

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imposed by law or arising in the ordinary course of business that do not secure any monetary obligations and do not materially detract from the value of the affected property or interfere with the ordinary conduct of business of the Borrower or any Subsidiary; provided that the term “Permitted Encumbrances” shall not include any Lien securing Indebtedness.

“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

“Plan” means any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

“Prime Rate” means the rate of interest per annum publicly announced from time to time by JPMCB as its prime rate in effect at its principal office in New York City; each change in the Prime Rate shall be effective from and including the date such change is publicly announced as being effective.

“Quarterly Dates” means the 7th day of February, May, August and November in each year, the first of which shall be the first such day after the date hereof; provided that if any such day is not a Business Day, then such Quarterly Date shall be the next succeeding Business Day (unless such succeeding Business Day falls in a subsequent calendar month, in which event such Quarterly Date shall be the next preceding Business Day).

“Register” has the meaning set forth in Section 9.04.

“Related Parties” means, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers, employees, agents and advisors of such Person and such Person’s Affiliates.

“Required Lenders” means, at any time, Lenders having Revolving Credit Exposures and unused Commitments representing more than 50% of the sum of the total Revolving Credit Exposures and unused Commitments at such time.

“Reserves” means , for any Insurance Company, as at any date, the aggregate reserves for undetermined title losses of such Insurance Company (which amount is shown at the date hereof on the most recent annual Statutory Statement of such Insurance Company at page 3, line 2, column 1) as at the last day of the fiscal year of such Insurance Company ending on or most recently ended prior to such date.

“Revolving Credit Exposure” means, with respect to any Lender at any time, the aggregate outstanding principal amount of such Lender’s Loans at such time.

“S&P” means Standard & Poor’s Ratings Services.

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“S&P Rating” means the S&P rating in respect of the Index Debt, provided that if such rating is in respect of Index Debt consisting of Capital Securities, “S&P Rating” means the rating that is one grade higher than the rating of the Index Debt.

“Sale/Leaseback Transaction” means any arrangement with any Person whereby the Borrower or any of its Subsidiaries shall sell or otherwise transfer any of its property and thereafter rent or lease such property or similar property for substantially the same use or uses as the property sold or transferred.

“SAP” means, for any Insurance Company, the statutory accounting procedures or practices required by the Applicable Insurance Regulatory Authority applied on a basis consistent with those which, in accordance with the last sentence of Section 1.03(a), are to be used in making the calculations for purposes of determining compliance with certain terms of this Agreement.

“SEC” has the meaning set forth in Section 5.01(i).

“Statutory Reserve Rate” means, for the Interest Period for any Eurodollar Borrowing, a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the arithmetic mean, taken over each day in such Interest Period, of the aggregate of the maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Board to which the Administrative Agent is subject for eurocurrency funding (currently referred to as “Eurocurrency liabilities” in Regulation D of the Board). Such reserve percentages shall include those imposed pursuant to such Regulation D. Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under such Regulation D or any comparable regulation. The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.

“Statutory Statement” means, for any Insurance Company, for any fiscal year of such Insurance Company, the most recent annual statement required to be filed with the Applicable Insurance Regulatory Authority and, for any fiscal quarter of such Insurance Company, the quarterly statement required to be filed with the Applicable Insurance Regulatory Authority, which annual and quarterly statements shall be prepared in accordance with statutory accounting practices or generally accepted accounting principles as specified by the Applicable Insurance Regulatory Authority.

“Subject Property” has the meaning assigned to such term in Section 6.06.

“Subsidiary” means, with respect to any Person (the “parent”) at any date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity (a) of which securities or other ownership interests representing more than 50% of the

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equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, controlled or held, or (b) that is, as of such date, otherwise Controlled, by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent. Unless otherwise specified, “Subsidiary” means a Subsidiary of the Borrower. “Wholly Owned Subsidiary” means any such corporation, partnership or other entity of which all of the equity securities or other ownership interests (other than, in the case of a corporation, directors’ qualifying shares) are so owned or controlled. Notwithstanding anything herein to the contrary, for purposes of Article VI only (other than Section 6.06), “Subsidiary” shall not include FAC or any Subsidiary of FAC.

“Swap Agreement” means any agreement with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions; provided that no phantom stock or similar plan providing for payments only on account of services provided by current or former directors, officers, employees or consultants of the Borrower or the Subsidiaries shall be a Swap Agreement.

“Synthetic Lease” means a lease of property or assets designed to permit the lessee (a) to claim depreciation on such property or assets under U.S. tax law and (b) to treat such lease as an operating lease or not to reflect the leased property or assets on the lessee’s balance sheet under GAAP.

“Taxes” means any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any Governmental Authority.

“Total Capitalization” means, as at any date, the sum of Total Debt plus Total Stockholders’ Equity.

“Total Debt” means, as at any date, the sum for the Borrower and its Consolidated Subsidiaries of all Funded Debt.

“Total Stockholders’ Equity” means, as at any date, the aggregate stockholders’ equity (including minority interests in subsidiaries) for the Borrower and its Consolidated Subsidiaries; provided that the aggregate liquidation preference of Capital Securities shall be included in the calculation of Total Stockholders’ Equity only with respect to that portion of such aggregate liquidation preference that is less than 15% of Total Capitalization on such date; provided further that, for purposes of determining compliance with Section 6.05(a), Total Stockholders’ Equity shall not include any amount with respect to Capital Securities.

“Transactions” means the execution, delivery and performance by the Borrower of this Agreement, the borrowing of Loans and the use of the proceeds thereof.

“Type”, when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans constituting such Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate Base Rate.

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“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.

SECTION 1.02. Terms Generally. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

SECTION 1.03. Accounting Terms and Determinations.

(a) Except as otherwise expressly provided herein, all accounting terms used herein shall be interpreted, and all financial statements and certificates and reports as to financial matters required to be delivered to the Lenders hereunder shall (unless otherwise disclosed to the Lenders in writing at the time of delivery thereof in the manner described in subsection (b) below) be prepared, in accordance with (in the case of the Borrower and its Subsidiaries on a consolidated basis) GAAP or (in the case of certain of the Insurance Companies) statutory accounting practices, as the case may be, applied on a basis consistent with those used in the preparation of the latest financial statements furnished to the Lenders hereunder (which, prior to the delivery of the first financial statements (after the date hereof) under Section 5.01, shall mean the financial statements as at December 31, 2004 referred to in Section 3.04(a)). All calculations made for the purposes of determining compliance with this Agreement shall (except as otherwise expressly provided herein) be made by application of (in the case of the Borrower and its Subsidiaries on a consolidated basis) GAAP or (in the case of certain of the Insurance Companies) statutory accounting practices, as the case may be, applied on a basis consistent with those used in the preparation of the latest annual or quarterly financial statements furnished to the Lenders pursuant to Section 5.01 (or, prior to the delivery of the first financial statements (after the date hereof) under Section 5.01, used in the preparation of the financial statements as at December 31, 2004 referred to in Section 3.04(a)) unless (i) the Borrower shall have objected to determining such compliance on such basis at the time of delivery of such financial statements or (ii) the Required Lenders shall so object within 30 days after delivery of such financial statements, in either of which events such calculations shall be made on a basis consistent with those used in the preparation of the latest financial statements as to which such objection shall not have been made (which, if objection is made in respect of the first financial statements delivered under Section 5.01, shall mean the financial statements referred to in Section 3.04(a)).

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(b) The Borrower shall deliver to the Lenders at the same time as the delivery of any annual or quarterly financial statement under Section 5.01 (i) a description in reasonable detail of any material variation between the application of accounting principles or practices employed in the preparation of such statement and the application of accounting principles or practices employed in the preparation of the next preceding annual or quarterly financial statements as to which no objection has been made in accordance with the last sentence of subsection (a) above and (ii) reasonable estimates of the difference between such statements arising as a consequence thereof.

(c) Notwithstanding anything to the contrary herein, the Borrower and the Lenders agree that, if after the date hereof, changes to GAAP become effective so as to require the reduction of the carrying amount of goodwill upon impairment (including, without limitation, as a result of the establishment of a benchmark), disposition of assets, discontinuance of operations or other similar events, then, for purposes of calculating compliance with the covenants set forth in Section 6.05, each such reduction shall be treated as an extraordinary non-cash item and shall be disregarded.

(d) The Borrower will not change the last day of its fiscal year from December 31 of each year, or the last days of the first three fiscal quarters in each of its fiscal years from March 31, June 30 and September 30 of each year, respectively.

ARTICLE II

THE CREDITS

SECTION 2.01. The Commitments. Subject to the terms and conditions set forth herein, each Lender agrees to make Loans to the Borrower from time to time during the Availability Period in an aggregate principal amount that will not result in (a) such Lender’s Revolving Credit Exposure exceeding such Lender’s Commitment or (b) the total Revolving Credit Exposures exceeding the total Commitments. Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, prepay and reborrow Loans.

SECTION 2.02. Loans and Borrowings.

(a) Obligations of Lenders. Each Loan shall be made as part of a Borrowing consisting of Loans of the same Type made by the Lenders ratably in accordance with their respective Commitments. The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided that the Commitments of the Lenders are several and no Lender shall be responsible for any other Lender’s failure to make Loans as required.

(b) Type of Loans. Subject to Section 2.11, each Borrowing shall be constituted entirely of ABR Loans or Eurodollar Loans as the Borrower may request in accordance herewith.

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Each Lender at its option may make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement.

(c) Minimum Amounts; Limitation on Number of Borrowings. At the commencement of the Interest Period for any Eurodollar Borrowing, such Borrowing shall be in an aggregate amount of $5,000,000 or a larger multiple of $1,000,000. At the time that each ABR Borrowing is made, such Borrowing shall be in an aggregate amount equal to $3,000,000 or a larger multiple of $500,000; provided that an ABR Borrowing may be in an aggregate amount that is equal to the entire unused balance of the total Commitments. Borrowings of more than one Type may be outstanding at the same time; provided that there shall not at any time be more than a total of five Eurodollar Borrowings outstanding.

(d) Limitations on Lengths of Interest Periods. Notwithstanding any other provision of this Agreement, the Borrower shall not be entitled to request, or to elect to convert to or continue as a Eurodollar Borrowing, any Borrowing if the Interest Period requested therefor would end after the Commitment Termination Date.

SECTION 2.03. Requests for Borrowings. To request a Borrowing, the Borrower shall notify the Administrative Agent of such request by telephone (a) in the case of a Eurodollar Borrowing, not later than 1:00 p.m., New York City time, three Business Days before the date of the proposed Borrowing or (b) in the case of an ABR Borrowing, not later than 1:00 p.m., New York City time, two Business Days before the date of the proposed Borrowing. Each such telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a written Borrowing Request in a form approved by the Administrative Agent and signed by the Borrower. Each such telephonic and written Borrowing Request shall specify the following information in compliance with Section 2.02:

(i) the aggregate amount of the requested Borrowing;

(ii) the date of such Borrowing, which shall be a Business Day;

(iii) whether such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;

(iv) in the case of a Eurodollar Borrowing, the Interest Period therefor, which shall be a period contemplated by the definition of the term “Interest Period”; and

(v) the location and number of the Borrower’s account to which funds are to be disbursed, which shall comply with the requirements of Section 2.04.

If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be an ABR Borrowing. If no Interest Period is specified with respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration. Promptly following receipt of a Borrowing Request in accordance with this Section, the Administrative Agent shall advise each Lender of the details thereof and of the amount of such Lender’s Loan to be made as part of the requested Borrowing.

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SECTION 2.04. Funding of Borrowings.

(a) Funding by Lenders. Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds by 12:00 noon, New York City time, to the account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders. The Administrative Agent will make such Loans available to the Borrower by promptly crediting the amounts so received, in like funds, to an account of the Borrower maintained with the Administrative Agent in New York City and designated by the Borrower in the applicable Borrowing Request.

(b) Presumption by the Administrative Agent. Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with paragraph (a) of this Section and may, in reliance upon such assumption, make available to the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (i) in the case of such Lender, the Federal Funds Effective Rate or (ii) in the case of the Borrower, the interest rate applicable to ABR Loans. If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender’s Loan included in such Borrowing.

SECTION 2.05. Interest Elections.

(a) Elections by the Borrower for Borrowings. Each Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a Eurodollar Borrowing, shall have the Interest Period specified in such Borrowing Request. Thereafter, the Borrower may elect to convert such Borrowing to a Borrowing of a different Type or to continue such Borrowing as a Borrowing of the same Type and, in the case of a Eurodollar Borrowing, may elect the Interest Period therefor, all as provided in this Section. The Borrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans constituting such Borrowing, and the Loans constituting each such portion shall be considered a separate Borrowing.

(b) Notice of Elections. To make an election pursuant to this Section, the Borrower shall notify the Administrative Agent of such election by telephone by the time that a Borrowing Request would be required under Section 2.03 if the Borrower were requesting a Borrowing of the Type resulting from such election to be made on the effective date of such election. Each such telephonic Interest Election Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a written Interest Election Request in a form approved by the Administrative Agent and signed by the Borrower.

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(c) Information in Interest Election Requests. Each telephonic and written Interest Election Request shall specify the following information in compliance with Section 2.02:

(i) the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) of this paragraph shall be specified for each resulting Borrowing);

(ii) the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;

(iii) whether the resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and

(iv) if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period therefor after giving effect to such election, which shall be a period contemplated by the definition of the term “Interest Period”.

If any such Interest Election Request requests a Eurodollar Borrowing but does not specify an Interest Period, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration.

(d) Notice by the Administrative Agent to Lenders. Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each Lender of the details thereof and of such Lender’s portion of each resulting Borrowing.

(e) Failure to Elect; Events of Default. If the Borrower fails to deliver a timely Interest Election Request with respect to a Eurodollar Borrowing prior to the end of the Interest Period therefor, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be converted to an ABR Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing and the Administrative Agent, at the request of the Required Lenders, so notifies the Borrower, then, so long as an Event of Default is continuing (i) no outstanding Borrowing may be converted to or continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of the Interest Period therefor.

SECTION 2.06. Termination, Reduction and Increase of the Commitments.

(a) Scheduled Termination. Unless previously terminated, the Commitments shall terminate on the Commitment Termination Date.

(b) Voluntary Termination or Reduction. The Borrower may at any time terminate, or from time to time reduce, the Commitments; provided that (i) each reduction of the

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Commitments shall be in an amount that is $3,000,000 or a larger multiple of $500,000 and (ii) the Borrower shall not terminate or reduce the Commitments if, after giving effect to any concurrent prepayment of the Loans in accordance with Section 2.08, the total Revolving Credit Exposures would exceed the total Commitments.

(c) Notice of Voluntary Termination or Reduction. The Borrower shall notify the Administrative Agent of any election to terminate or reduce the Commitments under paragraph (b) of this Section at least three Business Days prior to the effective date of such termination or reduction, specifying such election and the effective date thereof. Promptly following receipt of any notice, the Administrative Agent shall advise the Lenders of the contents thereof. Each notice delivered by the Borrower pursuant to this Section shall be irrevocable; provided that a notice of termination of the Commitments delivered by the Borrower may state that such notice is conditioned upon the effectiveness of other credit facilities, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied. Any termination or reduction of the Commitments shall be permanent. Each reduction of the Commitments shall be made ratably among the Lenders in accordance with their respective Commitments.

(d) Increase of the Commitments. The Borrower may, at any time by notice to the Administrative Agent, propose an increase in the total Commitments hereunder (each such proposed increase being a “Commitment Increase”) either by having a Lender increase its Commitment then in effect (each an “Increasing Lender”) or by adding as a Lender with a new Commitment hereunder a Person which is not then a Lender (each an “Assuming Lender”) in each case with the approval of the Administrative Agent (not to be unreasonably withheld), which notice shall specify the name of each Increasing Lender and/or Assuming Lender, as applicable, the amount of the Commitment Increase and the portion thereof being assumed by each such Increasing Lender or Assuming Lender, and the date on which such Commitment Increase is to be effective (a “Commitment Increase Date”) (which shall be a Business Day at least three Business Days after delivery of such notice and 30 days prior to the Commitment Termination Date); provided that no Lender shall have any obligation hereunder to become an Increasing Lender and any election to do so shall be in the sole discretion of each Lender; provided further that:

(i) the amount of any Commitment Increase, and the amount of the Commitment of any Assuming Lender as part of any Commitment Increase, shall be in a minimum amount of $10,000,000 and in multiples of $5,000,000;

(ii) immediately after giving effect to any Commitment Increase, the total Commitments hereunder shall not exceed $750,000,000;

(iii) no Default shall have occurred and be continuing on the relevant Commitment Increase Date or shall result from any Commitment Increase; and

(iv) the representations and warranties of the Borrower set forth in this Agreement shall be true and correct on and as of the relevant Commitment Increase Date as if made on and as of such date (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date).

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Each Commitment Increase (and the increase of the Commitment of each Increasing Lender and/or the new Commitment of each Assuming Lender, as applicable, resulting therefrom) shall become effective as of the relevant Commitment Increase Date upon receipt by the Administrative Agent, on or prior to 9:00 a.m., New York City time, on such Commitment Increase Date, of (A) a certificate of a duly authorized officer of the Borrower stating that the conditions with respect to such Commitment Increase under this paragraph (d) have been satisfied and (B) an agreement, in form and substance satisfactory to the Borrower and the Administrative Agent, pursuant to which, effective as of such Commitment Increase Date, the Commitment of each such Increasing Lender shall be increased or each such Assuming Lender, as applicable, shall undertake a Commitment, duly executed by such Increasing Lender or Assuming Lender, as the case may be, and the Borrower and acknowledged by the Administrative Agent. Upon the Administrative Agent’s receipt of a fully executed agreement from each Increasing Lender and/or Assuming Lender referred to in clause (B) above, together with the certificate referred to in clause (A) above, the Administrative Agent shall record the information contained in each such agreement in the Register and give prompt notice of the relevant Commitment Increase to the Borrower and the Lenders (including, if applicable, each Assuming Lender). On each Commitment Increase Date the Borrower shall simultaneously (i) prepay in full the outstanding Loans (if any) held by the Lenders immediately prior to giving effect to the relevant Commitment Increase, (ii) if the Borrower shall have so requested in accordance with this Agreement, borrow new Loans from all Lenders (including, if applicable, any Assuming Lender) such that, after giving effect thereto, the Loans are held ratably by the Lenders in accordance with their respective Commitments (after giving effect to such Commitment Increase) and (iii) pay to the Lenders the amounts, if any, payable under Section 2.13.

SECTION 2.07. Repayment of Loans; Evidence of Debt.

(a) Repayment. The Borrower hereby unconditionally promises to pay to the Administrative Agent for account of the Lenders the outstanding principal amount of the Loans on the Commitment Termination Date.

(b) Manner of Payment. Prior to any repayment or prepayment of any Borrowings hereunder, the Borrower shall select the Borrowing or Borrowings to be paid and shall notify the Administrative Agent by telephone (confirmed by telecopy) of such selection not later than 1:00 p.m., New York City time, three Business Days before the scheduled date of such repayment; provided that each repayment of Borrowings shall be applied to repay any outstanding ABR Borrowings before any other Borrowings. If the Borrower fails to make a timely selection of the Borrowing or Borrowings to be repaid or prepaid, such payment shall be applied, first, to pay any outstanding ABR Borrowings and, second, to other Borrowings in the order of the remaining duration of their respective Interest Periods (the Borrowing with the shortest remaining Interest Period to be repaid first). Each payment of a Borrowing shall be applied ratably to the Loans included in such Borrowing.

(c) Maintenance of Loan Accounts by Lenders. Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.

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(d) Maintenance of Loan Accounts by the Administrative Agent. The Administrative Agent shall maintain accounts in which it shall record (i) the amount of each Loan made hereunder, the Type thereof and each Interest Period therefor, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder for account of the Lenders and each Lender’s share thereof.

(e) Effect of Entries. The entries made in the accounts maintained pursuant to paragraph (c) or (d) of this Section shall be prima facie evidence of the existence and amounts of the obligations recorded therein; provided that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to repay the Loans in accordance with the terms of this Agreement.

(f) Promissory Notes. Any Lender may request that Loans made by it be evidenced by a promissory note. In such event, the Borrower shall prepare, execute and deliver to such Lender a promissory note payable to the order of such Lender (or, if requested by such Lender, to such Lender and its registered assigns) and in a form approved by the Administrative Agent. Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 9.04) be represented by one or more promissory notes in such form payable to the order of the payee named therein (or, if such promissory note is a registered note, to such payee and its registered assigns).

SECTION 2.08. Prepayment of Loans.

(a) Optional Prepayments Right to Prepay Borrowings. The Borrower shall have the right at any time and from time to time to prepay any Borrowing in whole or in part, subject to the requirements of this Section.

(b) Notices, Etc. The Borrower shall notify the Administrative Agent by telephone (confirmed by telecopy) of any optional prepayment hereunder (i) in the case of prepayment of a Eurodollar Borrowing, not later than 1:00 p.m., New York City time, three Business Days before the date of prepayment or (ii) in the case of prepayment of an ABR Borrowing, not later than 1:00 p.m., New York City time, two Business Days before the date of prepayment. Each such notice shall be irrevocable and shall specify the prepayment date and the principal amount of each Borrowing or portion thereof to be prepaid; provided that, if a notice of prepayment is given in connection with a conditional notice of termination of the Commitments as contemplated by Section 2.06, then such notice of prepayment may be revoked if such notice of termination is revoked in accordance with Section 2.06. Promptly following receipt of any such notice relating to a Borrowing, the Administrative Agent shall advise the Lenders of the contents thereof. Each partial prepayment of any Borrowing shall be in an amount that would be permitted in the case of a Borrowing of the same Type as provided in Section 2.02. Each prepayment of a Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the extent required by Section 2.10 and shall be made in the manner specified in Section 2.07(b).

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SECTION 2.09. Fees.

(a) Commitment Fee. The Borrower agrees to pay to the Administrative Agent for account of each Lender a commitment fee, which shall accrue at a rate per annum equal to the Applicable Rate on the average daily unused amount of the Commitment of such Lender during the period from and including the date hereof to but excluding the earlier of the date such Commitment terminates and the Commitment Termination Date. Accrued commitment fees shall be payable on each Quarterly Date and on the earlier of the date the Commitment terminates and the Commitment Termination Date, commencing on the first such date to occur after the date hereof. All commitment fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).

(b) Administrative Agent Fees. The Borrower agrees to pay to the Administrative Agent, for its own account, fees payable in the amounts and at the times separately agreed upon between the Borrower and the Administrative Agent.

(c) Payment of Fees. All fees payable hereunder shall be paid on the dates due, in immediately available funds, to the Administrative Agent for distribution, in the case of commitment fees, to the Lenders entitled thereto. Fees paid shall not be refundable under any circumstances.

SECTION 2.10. Interest.

(a) ABR Loans. The Loans constituting each ABR Borrowing shall bear interest at a rate per annum equal to the Alternate Base Rate plus the Applicable Rate plus the Applicable Additional Margin (if any).

(b) Eurodollar Loans. The Loans constituting each Eurodollar Borrowing shall bear interest at a rate per annum equal to the Adjusted LIBO Rate for the Interest Period for such Borrowing plus the Applicable Rate plus the Applicable Additional Margin (if any).

(c) Default Interest. Notwithstanding the foregoing, if any principal of or interest on any Loan or any fee or other amount payable by the Borrower hereunder is not paid when due, whether at stated maturity, upon acceleration or otherwise, such overdue amount shall bear interest, after as well as before judgment, at a rate per annum equal to (i) in the case of overdue principal of any Loan, 2% plus the rate otherwise applicable to such Loan as provided above or (ii) in the case of any other amount, 2% plus the rate applicable to ABR Loans as provided in paragraph (a) of this Section.

(d) Payment of Interest. Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan and upon termination of the Commitments; provided that (i) interest accrued pursuant to paragraph (c) of this Section shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan (other than a prepayment of an ABR Loan prior to the Commitment Termination Date), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of any conversion of any Eurodollar Borrowing prior to the end of the Interest Period therefor, accrued interest on such Borrowing shall be payable on the effective date of such conversion.

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(e) Computation. All interest hereunder shall be computed on the basis of a year of 360 days, except that interest computed by reference to the Alternate Base Rate at times when the Alternate Base Rate is based on the Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The applicable Alternate Base Rate or Adjusted LIBO Rate shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error.

SECTION 2.11. Alternate Rate of Interest. If prior to the commencement of the Interest Period for a Eurodollar Borrowing:

(a) the Administrative Agent determines (which determination shall be conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining the Adjusted LIBO Rate for such Interest Period; or

(b) the Administrative Agent is advised by the Required Lenders that the Adjusted LIBO Rate for such Interest Period will not adequately and fairly reflect the cost to such Lenders of making or maintaining their Loans included in such Borrowing for such Interest Period;

then the Administrative Agent shall give notice thereof to the Borrower and the Lenders by telephone or telecopy as promptly as practicable thereafter and, until the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, (i) any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such Borrowing shall be made as an ABR Borrowing.

SECTION 2.12. Increased Costs.

(a) Increased Costs Generally. If any Change in Law shall:

(i) impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for account of, or credit extended by, any Lender (except any such reserve requirement reflected in the Adjusted LIBO Rate); or

(ii) impose on any Lender or the London interbank market any other condition affecting this Agreement or Eurodollar Loans made by such Lender;

and the result of any of the foregoing shall be to increase the cost to such Lenders of making or maintaining any Eurodollar Loan (or of maintaining its obligation to make any such Loan) or to reduce the amount of any sum received or receivable by such Lender hereunder (whether of principal, interest or otherwise), then the Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender for such additional costs incurred or reduction suffered.

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(b) Capital Requirements. If any Lender determines that any Change in Law regarding capital requirements has or would have the effect of reducing the rate of return on such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of this Agreement or the Loans made by such Lender to a level below that which such Lender or such Lender’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s policies and the policies of such Lender’s holding company with respect to capital adequacy), then from time to time the Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender or such Lender’s holding company for any such reduction suffered.

(c) Certificates from Lenders. A certificate of a Lender setting forth the amount or amounts necessary to compensate such Lender or its holding company, as the case may be, as specified in paragraph (a) or (b) of this Section shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within 10 days after receipt thereof.

(d) Delay in Requests. Failure or delay on the part of any Lender to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender pursuant to this Section for any increased costs or reductions incurred more than six months prior to the date that such Lender notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s intention to claim compensation therefor; provided further that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the six-month period referred to above shall be extended to include the period of retroactive effect thereof.

SECTION 2.13. Break Funding Payments. In the event of (a) the payment of any principal of any Eurodollar Loan other than on the last day of an Interest Period therefor (including as a result of an Event of Default), (b) the conversion of any Eurodollar Loan other than on the last day of an Interest Period therefor, (c) the failure to borrow, convert, continue or prepay any Loan on the date specified in any notice delivered pursuant hereto (regardless of whether such notice is permitted to be revocable under Section 2.08(b) and is revoked in accordance herewith), or (d) the assignment of any Eurodollar Loan other than on the last day of an Interest Period therefor as a result of a request by the Borrower pursuant to Section 2.16, then, in any such event, the Borrower shall compensate each Lender for the loss, cost and expense attributable to such event. In the case of a Eurodollar Loan, the loss to any Lender attributable to any such event shall be deemed to include an amount determined by such Lender to be equal to the excess, if any, of (i) the amount of interest that such Lender would pay for a deposit equal to the principal amount of such Loan for the period from the date of such payment, conversion, failure or assignment to the last day of the then current Interest Period for such Loan (or, in the case of a failure to borrow, convert or continue, the duration of the Interest Period that would have resulted from such borrowing, conversion or continuation) if the interest rate payable on such deposit were equal to the Adjusted LIBO Rate for such Interest Period, over (ii) the amount of interest that such Lender would earn on such principal amount for such period if such Lender were to invest such principal amount for such period at the interest rate that would be bid by such Lender (or an affiliate of such Lender) for Dollar deposits from other banks in the eurodollar market at the commencement of such period. A certificate of any Lender setting forth any

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amount or amounts that such Lender is entitled to receive pursuant to this Section shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within 10 days after receipt thereof.

SECTION 2.14. Taxes.

(a) Payments Free of Taxes. Any and all payments by or on account of any obligation of the Borrower hereunder shall be made free and clear of and without deduction for any Indemnified Taxes or Other Taxes; provided that if the Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Administrative Agent or Lender (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.

(b) Payment of Other Taxes by the Borrower. In addition, the Borrower shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.

(c) Indemnification by the Borrower. The Borrower shall indemnify the Administrative Agent and each Lender, within 10 days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) paid by the Administrative Agent or such Lender, as the case may be, and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender, or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.

(d) Evidence of Payments. As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

(e) Foreign Lenders. Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which the Borrower is located, or any treaty to which such jurisdiction is a party, with respect to payments under this Agreement shall deliver to the Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable law or reasonably requested by the Borrower, such properly completed and executed documentation prescribed by applicable law as will permit such payments to be made without withholding or at a reduced rate.

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SECTION 2.15. Payments Generally; Pro Rata Treatment; Sharing of Set-offs.

(a) Payments by the Borrower. The Borrower shall make each payment required to be made by it hereunder (whether of principal, interest or fees, or under Section 2.12, 2.13 or 2.14, or otherwise) prior to 12:00 noon, New York City time, on the date when due, in immediately available funds, without set-off or counterclaim; provided that if a new Loan is to be made by any Lender on a date the Borrower is to repay any principal of an outstanding Loan of such Lender, such Lender shall apply the proceeds of such new Loan to the payment of the principal to be repaid and only an amount equal to the difference between the principal to be borrowed and the principal to be repaid shall be made available by such Lender to the Administrative Agent as provided in Section 2.04 or paid by the Borrower to the Administrative Agent pursuant to this paragraph, as the case may be. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to the Administrative Agent at its offices at 270 Park Avenue, New York, New York, except that payments pursuant to Sections 2.12, 2.13, 2.14 and 9.03 shall be made directly to the Persons entitled thereto. The Administrative Agent shall distribute any such payments received by it for account of any other Person to the appropriate recipient promptly following receipt thereof. If any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. All payments hereunder shall be made in Dollars.

(b) Application of Insufficient Payments. If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, interest and fees then due hereunder, such funds shall be applied (i) first, to pay interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (ii) second, to pay principal then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal then due to such parties.

(c) Pro Rata Treatment. Except to the extent otherwise provided herein: (i) each Borrowing shall be made from the Lenders, each payment of commitment fees under Section 2.09 shall be made for account of the Lenders, and each termination or reduction of the amount of the Commitments under Section 2.06 shall be applied to the respective Commitments of the Lenders, pro rata according to the amounts of their respective Commitments; (ii) each Borrowing shall be allocated pro rata among the Lenders according to the amounts of their respective Commitments (in the case of the making of Loans) or their respective Loans (in the case of conversions and continuations of Loans); (iii) each payment or prepayment of principal of Loans by the Borrower shall be made for account of the Lenders pro rata in accordance with the respective unpaid principal amounts of the Loans held by them; and (iv) each payment of interest on Loans by the Borrower shall be made for account of the Lenders pro rata in accordance with the amounts of interest on such Loans then due and payable to the respective Lenders.

(d) Sharing of Payments by Lenders. If any Lender shall, by exercising any right of set-off or counterclaim or otherwise, obtain payment in respect of any principal of or interest

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on any of its Loans resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Loans and accrued interest thereon then due than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Loans of other Lenders to the extent necessary so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans; provided that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this paragraph shall not be construed to apply to any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans to any assignee or participant, other than to the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions of this paragraph shall apply). The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of set-off and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation.

(e) Presumptions of Payment. Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for account of the Lenders hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the Federal Funds Effective Rate.

(f) Certain Deductions by the Administrative Agent. If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.04(b) or 2.15(e), then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by the Administrative Agent for account of such Lender to satisfy such Lender’s obligations under such Sections until all such unsatisfied obligations are fully paid.

SECTION 2.16. Mitigation Obligations; Replacement of Lenders.

(a) Designation of a Different Lending Office. If any Lender requests compensation under Section 2.12, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for account of any Lender pursuant to Section 2.14, then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.12 or 2.14, as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and

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would not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

(b) Replacement of Lenders. If (i) any Lender requests compensation under Section 2.12, (ii) the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for account of any Lender pursuant to Section 2.14, (iii) any Lender defaults in its obligation to fund Loans hereunder or (iv) any Lender is subject to a conservatorship or a receivership with, or is otherwise directly or indirectly under the control of, the Federal Deposit Insurance Corporation (or any successor thereto) or the Resolution Trust Company (or any successor thereto), then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 9.04), all its interests, rights and obligations under this Agreement to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (x) the Borrower shall have received the prior written consent of the Administrative Agent, which consent shall not unreasonably be withheld, (y) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts) and (z) in the case of any such assignment resulting from a claim for compensation under Section 2.12 or payments required to be made pursuant to Section 2.14, such assignment will result in a reduction in such compensation or payments. A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

The Borrower represents and warrants to the Lenders that:

SECTION 3.01. Organization; Powers. Each of the Borrower and its Material Subsidiaries is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, has all requisite power and authority to carry on its business as now conducted and, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required.

SECTION 3.02. Authorization; Enforceability. The Transactions are within the Borrower’s corporate powers and have been duly authorized by all necessary corporate and, if required, by all necessary shareholder action. This Agreement has been duly executed and delivered by the Borrower and constitutes a legal, valid and binding obligation of the Borrower, enforceable in accordance with its terms, except as such enforceability may be limited by (a) bankruptcy, insolvency, reorganization, moratorium or similar laws of general applicability

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affecting the enforcement of creditors’ rights and (b) the application of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

SECTION 3.03. Governmental Approvals; No Conflicts. The Transactions (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except such as have been obtained or made and are in full force and effect, (b) will not violate any applicable law or regulation or the charter, by-laws or other organizational documents of the Borrower or any of its Subsidiaries or any order of any Governmental Authority, (c) will not violate or result in a default under any indenture, agreement or other instrument binding upon the Borrower or any of its Material Subsidiaries or assets, or give rise to a right thereunder to require any payment to be made by any such Person, and (d) will not result in the creation or imposition of any Lien on any asset of the Borrower or any of its Subsidiaries.

SECTION 3.04. Financial Condition, Etc.

(a) Financial Condition. The Borrower has heretofore furnished to the Lenders each of the following:

(i) its consolidated balance sheet and statements of income, stockholders equity and cash flows (a) as of and for each of the fiscal years ended December 31, 2003 and December 31, 2004, reported on by PricewaterhouseCoopers LLP, independent public accountants, and (b) as of and for the fiscal quarter and the portion of the fiscal year ended June 30, 2005, certified by its chief financial officer. Such consolidated financial statements present fairly, in all material respects, the financial position and results of operations and cash flows of the Borrower and its Consolidated Subsidiaries as of such date and for such period in accordance with GAAP, subject to year-end adjustments and the absence of footnotes in the case of the statements referred to in clause (b) above;

(ii) the Statutory Statements for the year ended December 31, 2004 of each Insurance Company that is a Material Subsidiary and that is required by any Applicable Insurance Regulatory Authority to file such Statutory Statements, and such Statutory Statements have been prepared in accordance with statutory accounting practices and filed with the Applicable Insurance Regulatory Authorities, and present fairly, in all material respects, the financial condition of such Insurance Company as at said date and its results of operations for the fiscal year ended on said date in accordance with statutory accounting practices; and

(iii) consolidated balance sheets of each Material Subsidiary which is not an Insurance Company described in paragraph (ii) above and its Consolidated Subsidiaries as at December 31, 2004, and the related consolidated statements of income, stockholders’ equity and cash flows of such Material Subsidiary and its Consolidated Subsidiaries for its fiscal year ended on said date, and all such financial statements present fairly, in all material respects, the consolidated financial condition of such Material Subsidiary and its Consolidated Subsidiaries as at the applicable date and the consolidated results of their operations for the fiscal year ended on said date, all in accordance with GAAP and practices applied on a consistent basis.

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(b) No Material Adverse Change. Since December 31, 2004, there has been no material adverse change in the business, assets, operations, prospects or condition (financial or otherwise) of the Borrower and its Subsidiaries, taken as a whole.

SECTION 3.05. Properties.

(a) Property Generally. Each of the Borrower and its Subsidiaries has good title to, or valid leasehold interests in, all its real and personal property material to its business, subject only to Liens permitted by Section 6.02 and except for minor defects in title that do not interfere with its ability to conduct its business as currently conducted or to utilize such properties for their intended purposes.

(b) Intellectual Property. Each of the Borrower and its Subsidiaries owns, or is licensed to use, all trademarks, tradenames, copyrights, patents and other intellectual property material to its business, and the use thereof by the Borrower and its Subsidiaries does not infringe upon the rights of any other Person, except for any such infringements that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

SECTION 3.06. Litigation and Environmental Matters.

(a) Actions, Suits and Proceedings. There are no actions, suits or proceedings by or before any arbitrator or Governmental Authority now pending against or, to the knowledge of the Borrower, threatened against or affecting the Borrower or any of its Subsidiaries (i) that, if adversely determined, could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect (other than the Disclosed Matters) or (ii) that involve this Agreement or the Transactions.

(b) Environmental Matters. Except for the Disclosed Matters and except with respect to any other matters that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, neither the Borrower nor any of its Subsidiaries (i) has failed to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law, (ii) has become subject to any Environmental Liability, (iii) has received notice of any claim with respect to any Environmental Liability or (iv) knows of any basis for any Environmental Liability.

(c) Disclosed Matters. Since the date of this Agreement, there has been no change in the status of the Disclosed Matters that, individually or in the aggregate, has resulted in, or materially increased the likelihood of, a Material Adverse Effect.

SECTION 3.07. Compliance with Laws and Agreements.

Each of the Borrower and its Subsidiaries is in compliance with all laws, regulations and orders of any Governmental Authority applicable to it or its property and all indentures, agreements and other instruments binding upon it or its property, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

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SECTION 3.08. Investment and Holding Company Status. Neither the Borrower nor any of its Subsidiaries is (a) an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940 or (b) a “holding company” as defined in, or subject to regulation under, the Public Utility Holding Company Act of 1935.

SECTION 3.09. Taxes, Etc. The Borrower and its Subsidiaries have timely filed or caused to be filed all Federal income tax returns and all other material tax returns and reports required to have been filed and have paid or caused to be paid all taxes required to have been paid by it, except (a) taxes that are being contested in good faith by appropriate proceedings and for which such Person has set aside on its books adequate reserves or (b) to the extent that the failure to do so could not reasonably be expected to result in a Material Adverse Effect.

SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events for which liability is reasonably expected to occur, could reasonably be expected to result in a Material Adverse Effect.

SECTION 3.11. Disclosure. The Borrower has disclosed to the Lenders all agreements, instruments and corporate or other restrictions to which it or any of its Subsidiaries is subject, and all other matters known to it, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. None of the reports, financial statements, certificates or other information furnished by or on behalf of the Borrower to the Lender in connection with the negotiation of this Agreement or delivered hereunder (as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading as of the date made; provided that, with respect to projected financial information, the Borrower represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time.

SECTION 3.12. Use of Credit. Neither the Borrower nor any of its Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose, whether immediate, incidental or ultimate, of buying or carrying Margin Stock, and no part of the proceeds of any Loan hereunder will be used to buy or carry any Margin Stock.

SECTION 3.13. Indebtedness and Liens.

(a) Indebtedness. Part A of Schedule II is a list of all Material Indebtedness (other than Indebtedness created pursuant to this Agreement) of the Borrower and its Subsidiaries on the date hereof. Material Indebtedness of the Borrower and its Consolidated Subsidiaries existing on the date hereof does not exceed an aggregate principal or face amount of $750,000,000.

(b) Liens. Part B of Schedule II is a list of all Liens of the Borrower and its Subsidiaries existing on the date hereof, to the extent any such Lien secures Material Indebtedness. Liens of the Borrower and its Consolidated Subsidiaries existing on the date hereof and not set forth on Schedule II secure Indebtedness in an aggregate principal or face amount not exceeding $250,000,000.

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ARTICLE IV

CONDITIONS

SECTION 4.01. Closing Date. The effectiveness of this Agreement (and the amendment and restatement of the Existing Credit Agreement to be effected hereby) and of the obligations of the Lenders to make Loans hereunder shall not become effective until the date on which the Administrative Agent shall have received each of the following documents, each of which shall be satisfactory to the Administrative Agent (and to the extent specified below, to each Lender) in form and substance (or such condition shall have been waived in accordance with Section 9.02):

(a) Executed Counterparts. From each party hereto (i) a counterpart of this Agreement signed on behalf of such party (or written evidence satisfactory to the Administrative Agent, which may include telecopy transmission of a signed signature page to this Agreement, that such party has signed a counterpart of this Agreement) and (ii) with respect to a Lender, if any, under (and as defined in) the Existing Credit Agreement that does not have a Commitment hereunder on the Closing Date, a written confirmation from such Lender that its commitment under the Existing Credit Agreement shall terminate effective as of the Closing Date.

(b) Opinion of Counsel to the Borrower. A favorable written opinion (addressed to the Administrative Agent and the Lenders and dated the Closing Date) of the Borrower’s general counsel, substantially in the form of Exhibit B, and covering such other matters relating to the Borrower, this Agreement or the Transactions as the Required Lenders shall reasonably request (and the Borrower hereby instructs such counsel to deliver such opinion to the Lenders and the Administrative Agent).

(c) Opinion of Special New York Counsel to JPMCB. An opinion, dated the Closing Date, of Milbank, Tweed, Hadley & McCloy LLP, special New York counsel to JPMCB, substantially in the form of Exhibit C (and JPMCB hereby instructs such counsel to deliver such opinion to the Lenders).

(d) Corporate Documents. Such documents and certificates as the Administrative Agent or its counsel may reasonably request relating to the organization, existence and good standing of the Borrower, the authorization of the Transactions and any other legal matters relating to the Borrower, this Agreement or the Transactions, all in form and substance satisfactory to the Administrative Agent and its counsel.

(e) Officer’s Certificate. A certificate, dated the Closing Date and signed by the President, a Vice President or a senior financial officer of the Borrower, confirming compliance with the conditions set forth in the lettered clauses of the first sentence of Section 4.02.

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(f) Existing Credit Agreement. Evidence satisfactory to the Administrative Agent that the Borrower shall have paid in full all unpaid principal and interest on any outstanding Loan under (and as defined in) the Existing Credit Agreement, and any fees, expenses and any other amounts due and payable to the Closing Date to the administrative agent and the lenders under the Existing Credit Agreement.

(g) Other Documents. Such other documents as the Administrative Agent or any Lender or special New York counsel to JPMCB may reasonably request.

The obligation of any Lender to make its initial Loan hereunder is also subject to the payment by the Borrower of such fees as the Borrower shall have agreed to pay to any Lender or the Administrative Agent in connection herewith, including the reasonable fees and expenses of Milbank, Tweed, Hadley & McCloy LLP, special New York counsel to JPMCB, in connection with the negotiation, preparation, execution and delivery of this Agreement and the Loans hereunder (to the extent that statements for such fees and expenses have been delivered to the Borrower).

The Administrative Agent shall notify the Borrower and the Lenders of the Closing Date, and such notice shall be conclusive and binding. Notwithstanding the foregoing, the obligations of the Lenders to make Loans hereunder shall not become effective unless each of the foregoing conditions is satisfied (or waived pursuant to Section 9.02) on or prior to 3:00 p.m., New York City time, on November 8, 2005 (and, in the event such conditions are not so satisfied or waived, the Commitments shall terminate at such time).

SECTION 4.02. Each Credit Event. The obligation of each Lender to make a Loan on the occasion of any Borrowing is subject to the satisfaction of the following conditions:

(a) the representations and warranties of the Borrower set forth in this Agreement shall be true and correct on and as of the date of such Borrowing (or, if any such representation or warranty is expressly stated to have been made as of a specified date, as of such specified date); and

(b) at the time of and immediately after giving effect to such Borrowing, no Default shall have occurred and be continuing.

Each Borrowing shall be deemed to constitute a representation and warranty by the Borrower on the date thereof as to the matters specified in the preceding sentence.

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ARTICLE V

AFFIRMATIVE COVENANTS

Until the Commitments have expired or been terminated and the principal of and interest on each Loan and all fees payable hereunder shall have been paid in full, the Borrower covenants and agrees with the Lenders that:

SECTION 5.01. Financial Statements and Other Information. The Borrower will furnish to the Administrative Agent and each Lender:

(a) within 75 days after the end of each fiscal year of the Borrower (or such lesser number of days within which the Borrower shall be required to file its Annual Report on Form 10-K for such fiscal year with the SEC, without regard to any extension of the SEC’s filing requirements), the audited consolidated balance sheets and related statements of operations, stockholders’ equity and cash flows of the Borrower and its Subsidiaries as of the end of and for such year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on by PricewaterhouseCoopers LLP or other independent public accountants of recognized national standing (without a “going concern” or like qualification or exception and without any qualification or exception as to the scope of such audit) to the effect that such consolidated financial statements present fairly in all material respects the financial condition and results of operations of the Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP consistently applied;

(b) within 40 days after the end of each of the first three fiscal quarters of each fiscal year of the Borrower (or such lesser number of days within which the Borrower shall be required to file its Quarterly Report on Form 10-Q for such fiscal quarter with the SEC, without regard to any extension of the SEC’s filing requirements), the consolidated balance sheets and related statements of operations, stockholders’ equity and cash flows of the Borrower and its Subsidiaries as of the end of and for such fiscal quarter and the then elapsed portion of the fiscal year, setting forth in each case in comparative form the figures for (or, in the case of the balance sheet, as of the end of) the corresponding period or periods of the previous fiscal year, all certified by a senior financial officer of the Borrower as presenting fairly in all material respects the financial condition and results of operations of the Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes;

(c) concurrently with any delivery of financial statements under clause (k) or (l) of this Section, a certificate of a senior financial officer of the Borrower (i) certifying as to whether a Default has occurred and, if a Default has occurred, specifying the details thereof and any action taken or proposed to be taken with respect thereto and (ii) setting forth reasonably detailed calculations demonstrating compliance with Section 6.05;

(d) upon request of any Lender, a copy of any final financial examination report (including, without limitation, any report in respect of any tri-annual examination conducted by any Applicable Insurance Regulatory Authority) or market conduct examination report issued by or prepared for any Governmental Authority (including any Applicable Insurance Regulatory Authority) with respect to any Insurance Company that is a Material Subsidiary; and to the extent disclosure to the Lenders is permitted by law, a copy of any financial examination report issued by or prepared for any Governmental Authority (including any Applicable Bank Regulatory Authority) with respect to the Borrower, First American Trust or First Security Thrift;

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(e) within 45 days after the end of each of the first three quarterly fiscal periods of each fiscal year of FATICO, Statutory Statements of FATICO (prepared in accordance with statutory accounting practices required or permitted by the Applicable Insurance Regulatory Authority) for such fiscal period, accompanied by a certificate of a senior financial officer of FATICO which certificate shall state that such financial statements present the financial condition of FATICO in accordance with statutory accounting practices required or permitted by the Applicable Insurance Regulatory Authority;

(f) within 90 days after the end of each fiscal year of FATICO, the annual Statutory Statement of FATICO (prepared in accordance with statutory accounting practices required or permitted by the Applicable Insurance Regulatory Authority) for such year and as filed with the Insurance Department of the State of California, accompanied by (i) a certificate of a senior financial officer of FATICO stating that said Statutory Statement presents the financial condition of FATICO in accordance with the statutory accounting practices required or permitted by the Applicable Insurance Regulatory Authority, (ii) a certificate of a senior financial officer of FATICO, affirming the adequacy of Reserves of FATICO as at the end of such fiscal year and (iii) a report by Milliman & Robertson, Inc., or such other actuarial firm of nationally recognized professional standing, affirming the adequacy of Reserves of FATICO as at the end of such fiscal year;

(g) within 75 days after the end of each fiscal year of FAC (or such lesser number of days within which FAC shall be required to file its Annual Report on Form 10-K for such fiscal year with the SEC, without regard to any extension of the SEC’s filing requirements), the audited consolidated balance sheets and related statements of operations, stockholders’ equity and cash flows of FAC and its Subsidiaries as of the end of and for such year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on by PricewaterhouseCoopers LLP or other independent public accountants of recognized national standing (without a “going concern” or like qualification or exception and without any qualification or exception as to the scope of such audit) to the effect that such consolidated financial statements present fairly in all material respects the financial condition and results of operations of FAC and its Subsidiaries on a consolidated basis in accordance with GAAP consistently applied;

(h) within 40 days after the end of each of the first three fiscal quarters of each fiscal year of FAC (or such lesser number of days within which FAC shall be required to file its Quarterly Report on Form 10-Q for such fiscal quarter with the SEC, without regard to any extension of the SEC’s filing requirements), the consolidated balance sheets and related statements of operations, stockholders’ equity and cash flows of FAC and its Subsidiaries as of the end of and for such fiscal quarter and the then elapsed portion of the fiscal year, setting forth in each case in comparative form the figures for (or, in the case of the balance sheet, as of the end of) the corresponding period or periods of the previous fiscal year, all certified by a senior financial officer of FAC as presenting fairly in all material respects the financial condition and results of operations of FAC and its Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes;

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(i) promptly after the same become publicly available, copies of all periodic and other reports, proxy statements and other materials filed by the Borrower or any of its Subsidiaries with the Securities and Exchange Commission (the “SEC”), or any Governmental Authority succeeding to any or all of the functions of said Commission, or with any national securities exchange, or distributed by the Borrower to its shareholders generally, as the case may be, provided that if any such report, statement or other material is electronically filed by the Company with the SEC and is publicly available through the internet or other electronic means, the Company will notify the Lenders promptly following such filing and, only upon the request of any Lender, furnish a copy of such report, statement or other material to such Lender;

(j) promptly following any request therefor, such other information regarding the operations, business affairs and financial condition of the Borrower or any of its Subsidiaries, or compliance with the terms of this Agreement, as the Administrative Agent or any Lender may reasonably request (including accountants’ letters);

(k) within 80 days after the end of each fiscal year of the Borrower (but in any event not later than five days after the delivery of the Borrower’s financial statements under clause (a) of this Section for such fiscal year), the audited consolidated balance sheets and related statements of operations, stockholders’ equity and cash flows of the Borrower and its Subsidiaries (excluding FAC and its Subsidiaries) as of the end of and for such year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on by PricewaterhouseCoopers LLP or other independent public accountants of recognized national standing (without a “going concern” or like qualification or exception and without any qualification or exception as to the scope of such audit) to the effect that such consolidated financial statements present fairly in all material respects the financial condition and results of operations of the Borrower and such Subsidiaries on a consolidated basis in accordance with GAAP consistently applied (and accompanied by a reasonably detailed statement of such accountants with respect to the adjustments made as a result of the exclusion of FAC and its Subsidiaries from such financial statements); and

(l) within 45 days after the end of each of the first three fiscal quarters of each fiscal year of the Borrower (but in any event not later than five days after the delivery of the Borrower’s financial statements under clause (b) of this Section for such fiscal quarter), the consolidated balance sheets and related statements of operations, stockholders’ equity and cash flows of the Borrower and its Subsidiaries (excluding FAC and its Subsidiaries) as of the end of and for such fiscal quarter and the then elapsed portion of the fiscal year, setting forth in each case in comparative form the figures for (or, in the case of the balance sheet, as of the end of) the corresponding period or periods of the previous fiscal year, all certified by a senior financial officer of the Borrower as presenting fairly in all material respects the financial condition and results of operations of the Borrower and such Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes (and accompanied by a reasonably detailed statement of such senior financial officer with respect to the adjustments made as a result of the exclusion of FAC and its Subsidiaries from such financial statements).

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SECTION 5.02. Notices of Material Events. The Borrower will furnish to the Administrative Agent and each Lender prompt written notice of the following:

(a) the occurrence of any Default;

(b) the filing or commencement of any action, suit or proceeding by or before any arbitrator or Governmental Authority against or affecting the Borrower or any of its Affiliates that, if adversely determined, could reasonably be expected to result in a Material Adverse Effect;

(c) the occurrence of any ERISA Event that, alone or together with any other ERISA Events that have occurred, could reasonably be expected to result in liability of the Borrower and its Subsidiaries in an aggregate amount exceeding $25,000,000;

(d) the assertion of any environmental matter by any Person against, or with respect to the activities of, the Borrower or any of its Subsidiaries and any alleged violation of or non-compliance with any Environmental Laws or any permits, licenses or authorizations, other than any environmental matter or alleged violation that, if adversely determined, would not (either individually or in the aggregate) have a Material Adverse Effect;

(e) immediately, notice of actual (or threatened action that could reasonably be expected to lead to the) suspension, termination or revocation of any License of any Insurance Company which is a Material Subsidiary by any Governmental Authority (including any Applicable Insurance Regulatory Authority), including any notice by any Governmental Authority of the commencement of any proceeding, hearing or administrative action to suspend, terminate or revoke any such License as a result of the failure by any such Insurance Company to take or refrain from taking, any action which could reasonably be expected to materially adversely affect the authority of such Insurance Company to conduct its business after notice thereof by such Governmental Authority (including any such Applicable Insurance Regulatory Authority);

(f) promptly after the Borrower knows or has reason to believe that any insurance, banking or other regulator having jurisdiction over the Borrower or any of its Material Subsidiaries has commenced any proceeding, issued any order, given notice of a formal hearing, sought relief from any court or taken any similar action with respect to the Borrower or any of its Material Subsidiaries that seeks to, or would, result in the revocation of any license or authorization of the Borrower or any of its Material Subsidiaries or materially restrict the ability of the Borrower or any of its Material Subsidiaries to do business in any jurisdiction, a notice describing in reasonable detail such proceeding, order, hearing or similar action; and

(g) any other development that results in, or could reasonably be expected to result in, a Material Adverse Effect.

Each notice delivered under this Section shall be accompanied by a statement of a senior financial officer or other executive officer of the Borrower setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.

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SECTION 5.03. Existence; Conduct of Business. The Borrower will, and will cause each of its Material Subsidiaries to, do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence and the rights, licenses, permits, privileges and franchises material to the conduct of its business; provided that the foregoing shall not prohibit any merger, consolidation, liquidation or dissolution permitted under Section 6.03.

SECTION 5.04. Payment of Obligations. The Borrower will, and will cause each of its Material Subsidiaries to, pay its obligations, including Tax liabilities, that, if not paid, could result in a Material Adverse Effect before the same shall become delinquent or in default, except where (a) the validity or amount thereof is being contested in good faith by appropriate proceedings, (b) the Borrower or such Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with GAAP and (c) the failure to make payment pending such contest could not reasonably be expected to result in a Material Adverse Effect.

SECTION 5.05. Maintenance of Properties. The Borrower will, and will cause each of its Material Subsidiaries to, keep and maintain all property material to the conduct of its business in good working order and condition, ordinary wear and tear excepted.

SECTION 5.06. Books and Records; Inspection Rights. The Borrower will, and will cause each of its Material Subsidiaries to, keep proper books of record and account in which full, true and correct entries are made of all dealings and transactions in relation to its business and activities. The Borrower will, and will cause each of its Material Subsidiaries to, permit any representatives designated by the Administrative Agent or any Lender, upon reasonable prior notice, to visit and inspect its properties, to examine and make extracts from its books and records, and to discuss its affairs, finances and condition with its officers and independent accountants, all at such reasonable times and as often as reasonably requested.

SECTION 5.07. Compliance with Laws and Agreements. The Borrower will, and will cause each of its Material Subsidiaries to, comply with all laws, rules, regulations and orders of any Governmental Authority applicable to it or its property and all indentures, agreements and other instruments binding upon it or its property, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

SECTION 5.08. Insurance. The Borrower will, and will cause each of its Subsidiaries to, keep insured by financially sound and reputable insurers all property of a character usually insured by corporations engaged in the same or similar business similarly situated against loss or damage of the kinds and in the amounts customarily insured against by such corporations and carry such other insurance as is usually carried by such corporations.

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ARTICLE VI

NEGATIVE COVENANTS

Until the Commitments have expired or terminated and the principal of and interest on each Loan and all fees payable hereunder have been paid in full, the Borrower covenants and agrees with the Lenders that:

SECTION 6.01. Indebtedness. The Borrower will not permit any of its Subsidiaries to create, incur, assume or permit to exist any Indebtedness, except:

(a) Indebtedness outstanding on the date hereof;

(b) Indebtedness of a Person that becomes a Subsidiary after the date hereof, provided that (i) such Indebtedness was not incurred in connection with, or in contemplation of, such Person becoming a Subsidiary and (ii) the aggregate principal amount of Indebtedness permitted under this clause (b) shall not exceed $500,000,000 at any one time outstanding;

(c) Indebtedness of any Subsidiary of the Borrower to the Borrower or to any other Subsidiary of the Borrower;

(d) Arbitrage Loans;

(e) Indebtedness of FAREISI and FATICO to the Borrower representing intercompany loans made by the Borrower from net proceeds received by the Borrower from its Equity Issuances;

(f) additional Indebtedness of the Insurance Companies in respect of letters of credit (or similar instruments) and Guarantees issued in the ordinary course of the title insurance business, so long as the aggregate amount of all such Indebtedness does not exceed $50,000,000 at any one time outstanding;

(g) Indebtedness of Subsidiaries in respect of letters of credit (or similar instruments) and guarantees issued in connection with settlement or administration of claims made against any of its Subsidiaries under insurance policies of the type usually carried by corporations engaged in businesses or activities that are the same as or similar to those of the Borrower and its Subsidiaries;

(h) Indebtedness of any Subsidiary secured by a Lien upon real property and/or related fixtures and personal property including insurance and condemnation proceeds, if any, and assignment of leases and rents, with respect thereto (which Indebtedness may be guaranteed by the Borrower), provided that (i) the holder of such Indebtedness has recourse only to such real property (and/or such fixtures and other property) or (ii) the aggregate principal amount of Indebtedness permitted under this clause (h) shall not exceed $100,000,000 at any one time outstanding;

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(i) additional Indebtedness of Subsidiaries not exceeding 20% of Total Stockholders’ Equity;

(j) obligations under Sale/Leaseback Transactions and Synthetic Leases permitted by Section 6.07;

(k) so long as no Default has occurred and is continuing, other unsecured Indebtedness in an aggregate principal amount not to exceed $150,000,000 at any one time outstanding; and

(l) any extension, renewal or refinancing of the foregoing;

provided that, notwithstanding anything herein to the contrary, the aggregate amount of Guarantees by the Borrower or any of its Subsidiaries in respect of Indebtedness of FAC or any Subsidiary of FAC (other than any such Guarantees not exceeding an aggregate amount of $57,500,000 existing as of the date hereof) shall not exceed 10% of Total Stockholders’ Equity.

SECTION 6.02. Liens. The Borrower will not, nor will it permit any of its Subsidiaries to, create, incur, assume or permit to exist any Lien on any property or asset now owned or hereafter acquired by it, or assign or sell any income or revenues (including accounts receivable) or rights in respect of any thereof, except:

(a) Liens in existence on the date hereof;

(b) Permitted Encumbrances;

(c) Liens upon property of any Person which becomes a Subsidiary of the Borrower after the date hereof, provided that such Liens are in existence at the time such Person becomes a Subsidiary of the Borrower and were not created in anticipation thereof;

(d) Liens upon tangible personal property used primarily in the ordinary course of the business of the Borrower and its Subsidiaries and acquired after the date hereof;

(e) Liens upon real property securing Indebtedness permitted by Section 6.01(h);

(f) Liens upon the property of First American Trust and First American Title & Trust Company which are created in the ordinary course of their respective financial services businesses as such businesses are conducted as of the date hereof;

(g) Liens upon property of the Borrower or any Subsidiary which are created pursuant to real estate exchange transactions (benefiting from the tax treatment of Section 1031 of the Code) in the ordinary course of their respective financial services businesses as such businesses are conducted as of the date hereof;

(h) Liens upon property of any Subsidiary of the Borrower securing Indebtedness of such Subsidiary to the Borrower or another Subsidiary of the Borrower that is the direct or indirect parent entity of such Subsidiary permitted by Section 6.01;

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(i) Liens upon property of the Borrower or any of its Subsidiaries securing Arbitrage Loans; provided that no such Lien shall extend to or cover any such property other than the securities and/or other investments in which the proceeds of such Arbitrage Loans have been invested;

(j) Liens under Sale/Leaseback Transactions and Synthetic Leases permitted by Section 6.07; provided that no such Lien shall extend to or cover any property other than the property subject to such Sale/Leaseback Transactions and/or Synthetic Leases;

(k) so long as no Default has occurred and is continuing, other Liens securing obligations in an aggregate amount not to exceed $175,000,000 at any time outstanding; and

(l) any extension, renewal or replacement of the foregoing, provided that the Liens permitted under this clause (l) shall not be spread to cover any additional Indebtedness or obligations or property (other than a substitution of like property).

SECTION 6.03. Fundamental Changes.

(a) Mergers, Consolidations, Disposal of Assets, Etc. The Borrower will not, nor will it permit any of its Material Subsidiaries to, merge into or consolidate with any other Person, or permit any other Person to merge into or consolidate with it, or sell, transfer, lease or otherwise dispose of (in one transaction or in a series of transactions) all or substantially all of its assets, or all or substantially all of the stock of any of its Material Subsidiaries (in each case, whether now owned or hereafter acquired), or liquidate or dissolve, except that, if at the time thereof and immediately after giving effect thereto no Default shall have occurred and be continuing, (i) any Material Subsidiary may merge into the Borrower in a transaction in which the Borrower is the surviving corporation, (ii) any Material Subsidiary may merge into any Person in a transaction in which the surviving entity is a Subsidiary and (iii) any Material Subsidiary may sell, transfer, lease or otherwise dispose of its assets to the Borrower or to another Subsidiary.

(b) Lines of Business. The Borrower will not, nor will it permit any of its Material Subsidiaries to, engage to any material extent in any business other than the businesses of the type conducted by the Borrower and its Material Subsidiaries on the date of execution of this Agreement and businesses reasonably related thereto.

SECTION 6.04. Transactions with Affiliates. The Borrower will not, nor will it permit any of its Subsidiaries to, sell, lease or otherwise transfer any property or assets to, or purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other transactions with, any of its Affiliates, except (a) transactions in the ordinary course of business at prices and on terms and conditions not less favorable to the Borrower or such Subsidiary than could be obtained on an arm’s-length basis from unrelated third parties, (b) transactions between or among the Borrower and its Wholly Owned Subsidiaries not involving any other Affiliate and (c) customary fees paid to members of the board of directors of the Borrower or any of its Subsidiaries.

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Notwithstanding anything herein to the contrary, the Borrower will not, nor will it permit any of its Subsidiaries, to make any loan or advance to FAC or any Subsidiary of FAC or purchase or otherwise acquire any capital stock, assets, obligations or other securities of, make any capital contribution to, or invest in, or acquire any interest in, or to transfer assets (other than at fair market value for cash consideration) to, FAC or any Subsidiary of FAC, except (i) loans or advances, and agreements or commitments to make loans or advances, by the Borrower or any of its Subsidiaries to FAC or any Subsidiary of FAC outstanding or in effect on the date hereof not exceeding an aggregate amount of $30,000,000 and (ii) the Borrower and its Subsidiaries may implement the agreements and proposed transactions described or referred to in the preliminary proxy statement of FAC filed on June 30, 2005 with the SEC (including (x) a short-term line of credit by the Borrower or any of its Subsidiaries to FAC for working capital purposes in the amount of approximately $45,000,000 and (y) the services to be provided by the Borrower or any of its Subsidiaries to FAC or any Subsidiary of FAC in connection with such agreements and proposed transactions and all fees and expenses payable by FAC and its Subsidiaries for such services).

SECTION 6.05. Financial Covenants.

(a) Total Stockholders’ Equity. The Borrower will not permit Total Stockholders’ Equity at any time to be less than the sum of (i) $1,000,000,000 plus (ii) 100% of the net cash proceeds from the issuance of any capital stock of the Borrower or any of its Consolidated Subsidiaries after the date hereof, excluding any proceeds received from the exercise of stock options held by officers, directors, employees, or consultants of the Borrower or any of its Subsidiaries.

(b) Total Debt to Total Capitalization. The Borrower will not permit Total Debt at any time to exceed 40% of Total Capitalization.

(c) Combined Earnings. The Borrower will not permit Combined Earnings for any period of eight consecutive rolling fiscal quarters to be less than $225,000,000 at any time.

(d) Aggregate Funded Debt. The Borrower will not permit the aggregate amount of Funded Debt of all of its Subsidiaries at any time to exceed 25% of Total Stockholders’ Equity.

SECTION 6.06. Foreclosure on Subject Property. The Borrower will not, nor will it permit any of its Subsidiaries to, acquire ownership or control of any commercial real property with a fair market value of $2,000,000 or more and which is used for commercial purposes by means of the exercise of any right of foreclosure, power of sale or similar remedy it may avail itself of by way of any indenture of mortgage or similar instrument relating to such commercial real property (the “Subject Property”), or accept a deed to the Subject Property in lieu of foreclosure or in settlement of any title insurance claim against it, unless the Borrower shall have theretofore caused a Phase I Environmental Review (as defined below) with respect to the Subject Property to be conducted. The Borrower agrees to provide to any Lender a copy of such Environmental Review within 60 days of any request by such Lender therefor. As used herein, “Phase I Environmental Review” means an environmental survey and assessment prepared by an independent engineer selected by the Borrower expert in the identification and

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analysis of environmental risks (such engineer and his agents being referred to as the “Environmental Consultant”), such survey and assessment to (a) estimate current liabilities and assess potential sources of future liabilities of any owner or operator of, or any other Person having control of, the Subject Property arising under the Comprehensive Response, Compensation and Liability Act, the Superfund Amendments and Reauthorization Act of 1986, the Resource Conservation and Recovery Act, in each case as amended, and any other act or regulation of any Federal, state or local environmental authority having authority in respect of the Subject Property and (b) be based upon (i) a physical on-site inspection by the Environmental Consultant of the Subject Property (without any excavation of the Subject Property), (ii) interviews by the Environmental Consultant of individuals who have direct managerial responsibility for operations on the Subject Property, (iii) a review by the Environmental Consultant of records relating to current and historical operations conducted at the Subject Property and (iv) as deemed appropriate by the Environmental Consultant, interviews by the Environmental Consultant of individuals in the area in which the Subject Property is located who may have knowledge of current and historical operations conducted at the Subject Property.

SECTION 6.07. Sale/Leaseback Transactions and Synthetic Leases. The Borrower will not, nor will it permit any of its Subsidiaries to, enter into any Sale/Leaseback Transaction or Synthetic Lease, if, as a result thereof, the aggregate amount of rent and lease payments payable in any fiscal year by the Borrower and its Subsidiaries under all such arrangements would exceed $50,000,000.

ARTICLE VII

EVENTS OF DEFAULT

If any of the following events (“Events of Default”) shall occur:

(a) the Borrower shall fail to pay any principal of any Loan when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or otherwise;

(b) the Borrower shall fail to pay any interest on any Loan or any fee or any other amount (other than an amount referred to in clause (a) of this Article) payable under this Agreement, when and as the same shall become due and payable, and such failure shall continue unremedied for a period of three or more Business Days;

(c) any representation or warranty made or deemed made by or on behalf of the Borrower in or in connection with this Agreement or any amendment or modification hereof, or in any report, certificate, financial statement or other document furnished pursuant to or in connection with this Agreement or any amendment or modification hereof, shall prove to have been incorrect in any material respect when made or deemed made;

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(d) the Borrower shall fail to observe or perform any covenant, condition or agreement contained in Section 5.02(a), Section 5.02(g) or in Article VI (other than Section 6.07);

(e) the Borrower shall fail to observe or perform any covenant, condition or agreement contained in this Agreement (other than those specified in clause (a), (b) or (d) of this Article) and such failure shall continue unremedied for a period of 30 or more days after notice thereof from the Administrative Agent (given at the request of any Lender) to the Borrower;

(f) the Borrower or any of its Subsidiaries shall fail to make any payment (whether of principal or interest and regardless of amount) in respect of any Material Indebtedness, when and as the same shall become due and payable (beyond any applicable grace period expressly set forth in the governing documents); or any event or condition occurs that results in any Material Indebtedness becoming due prior to its scheduled maturity or that enables or permits (after taking into account any applicable grace period) the holder or holders of any such Material Indebtedness or any trustee or agent on its or their behalf to cause such Material Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity;

(g) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, reorganization or other relief in respect of the Borrower or any of its Subsidiaries or its debts, or of a substantial part of its assets, under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any of its Subsidiaries or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for a period of 60 or more days or an order or decree approving or ordering any of the foregoing shall be entered;

(h) the Borrower or any of its Subsidiaries shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (g) of this Article, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any of its Subsidiaries or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing;

(i) the Borrower or any of its Subsidiaries shall become unable, admit in writing its inability or fail generally to pay its debts as they become due;

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(j) one or more judgments for the payment of money in an aggregate amount in excess of $50,000,000 shall be rendered against the Borrower or any of its Subsidiaries or any combination thereof and the same shall remain undischarged for a period of 30 consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to attach or levy upon any assets of the Borrower or any of its Subsidiaries to enforce any such judgment;

(k) an ERISA Event shall have occurred that, in the opinion of the Required Lenders, when taken together with all other ERISA Events that have occurred, could reasonably be expected to result in a Material Adverse Effect;

(l) a reasonable basis shall exist for the assertion against the Borrower or any of its Subsidiaries, or any predecessor in interest of the Borrower or any of its Subsidiaries, of (or there shall have been asserted against the Borrower or any of its Subsidiaries) any claims or liabilities, whether accrued, absolute or contingent, based on or arising from the generation, storage, transport, handling or disposal of Hazardous Materials by the Borrower or any of its Subsidiaries or predecessors that, in the judgment of the Required Lenders, are reasonably likely to be determined adversely to the Borrower or any of its Subsidiaries, and the amount thereof (either individually or in the aggregate) is reasonably likely to have a Material Adverse Effect (insofar as such amount is payable by the Borrower or any of its Subsidiaries but after deducting any portion thereof that is reasonably expected to be paid by other creditworthy Persons jointly and severally liable therefor);

(m) a Change of Control shall occur; or

(n) the Borrower or any of its Material Subsidiaries shall be required by any Applicable Bank Regulatory Authority, any Applicable Insurance Regulatory Authority or any other similar governmental regulatory authority to enter into, after the date hereof, any indenture, agreement, instrument or other arrangement (including, without limitation, any capital maintenance agreement) that, (x) directly or indirectly, prohibits or restrains, or has the effect of prohibiting or restraining, or imposes materially adverse conditions upon, the incurrence or payment of Indebtedness, the granting of Liens, the declaration or payment of dividends, the making of loans or advances or the sale, assignment, transfer or other disposition of property or (y) requires the making of capital contributions to any Subsidiary in an aggregate amount exceeding $100,000,000;

then, and in every such event (other than an event with respect to the Borrower described in clause (g) or (h) of this Article), and at any time thereafter during the continuance of such event, the Administrative Agent may, and at the request of the Required Lenders shall, by notice to the Borrower, take either or both of the following actions, at the same or different times: (i) terminate the Commitments, and thereupon the Commitments shall terminate immediately, and (ii) declare the Loans then outstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall become due and payable immediately, without presentment, demand, protest or

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other notice of any kind, all of which are hereby waived by the Borrower; and in case of any event with respect to the Borrower described in clause (g) or (h) of this Article, the Commitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall automatically become due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower.

ARTICLE VIII

THE ADMINISTRATIVE AGENT

Each of the Lenders hereby irrevocably appoints the Administrative Agent as its agent and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof, together with such actions and powers as are reasonably incidental thereto.

The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent, and such Person and its Affiliates may accept deposits from, lend money to and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if it were not the Administrative Agent hereunder.

The Administrative Agent shall not have any duties or obligations except those expressly set forth herein. Without limiting the generality of the foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing, (b) the Administrative Agent shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby that the Administrative Agent is required to exercise in writing by the Required Lenders and (c) except as expressly set forth herein, the Administrative Agent shall not have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Subsidiaries that is communicated to or obtained by the bank serving as Administrative Agent or any of its Affiliates in any capacity. The Administrative Agent shall not be liable for any action taken or not taken by it with the consent or at the request of the Required Lenders or in the absence of its own gross negligence or willful misconduct. The Administrative Agent shall be deemed not to have knowledge of any Default unless and until written notice thereof is given to the Administrative Agent by the Borrower or a Lender, and the Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement, (ii) the contents of any certificate, report or other document delivered hereunder or in connection herewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement or any other agreement, instrument or document, or (v) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.

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The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing believed by it to be genuine and to have been signed or sent by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to be made by the proper Person, and shall not incur any liability for relying thereon. The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

The Administrative Agent may perform any and all its duties and exercise its rights and powers by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any and all its duties and exercise its rights and powers through their respective Related Parties. The exculpatory provisions of the preceding paragraphs shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent.

The Administrative Agent may resign at any time by notifying the Lenders and the Borrower. Upon any such resignation, the Required Lenders shall have the right, in consultation with the Borrower, to appoint a successor. If no successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent’s resignation shall nonetheless become effective and (1) the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and (2) the Required Lenders shall perform the duties of the Administrative Agent (and all payments and communications provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender directly) until such time as the Required Lenders appoint a successor agent as provided for above in this paragraph. Upon the acceptance of its appointment as Administrative Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring (or retired) Administrative Agent and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder (if not already discharged therefrom as provided above in this paragraph). The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the Administrative Agent’s resignation hereunder, the provisions of this Article and Section 9.03 shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as Administrative Agent.

Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any related agreement or any document furnished hereunder or thereunder.

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Notwithstanding anything to the contrary contained herein, the Sole Lead Arranger and Sole Bookrunner and the Syndication Agents named on the cover page of this Agreement shall not have any duties or liabilities under this Agreement, except in their capacity, if any, as Lenders.

ARTICLE IX

MISCELLANEOUS

SECTION 9.01. Notices. Except in the case of notices and other communications expressly permitted to be given by telephone, all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy, as follows:

(a) if to the Borrower, to it at The First American Corporation, 1 First American Way, Santa Ana, California 92707, Attention of Thomas A. Klemens (Telecopier No.: (714) 800-3325; Telephone No.: (714) 800-3000);

(b) if to the Administrative Agent, to JPMorgan Chase Bank, N.A., 1111 Fannin Street, 10^th Floor, Houston, Texas 77002-8069, Attention of Eleanor Fiore, Loan and Agency Services (Telephone No. (713) 750-3523; Telecopy No. (713) 750-2223), JPMorgan Chase Bank, N.A., 270 Park Avenue, New York 10017, Attention of Lawrence Palumbo (Telecopy No. (212) 270-1511; Telephone No. (212) 270-7525); and

(c) if to a Lender, to it at its address (or telecopy number) set forth in its Administrative Questionnaire.

Any party hereto may change its address or telecopy number for notices and other communications hereunder by notice to the other parties hereto (or, in the case of any such change by a Lender, by notice to the Borrower and the Administrative Agent). All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt.

Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communications pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices pursuant to Article II unless otherwise agreed by the Administrative Agent and the applicable Lender. The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications.

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SECTION 9.02. Waivers; Amendments.

(a) No Deemed Waivers; Remedies Cumulative. No failure or delay by the Administrative Agent or any Lender in exercising any right or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Administrative Agent and the Lenders hereunder are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or consent to any departure by the Borrower therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan shall not be construed as a waiver of any Default, regardless of whether the Administrative Agent or any Lender may have had notice or knowledge of such Default at the time.

(b) Amendments. Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Borrower and the Required Lenders or by the Borrower and the Administrative Agent with the consent of the Required Lenders; provided that no such agreement shall (i) increase the Commitment of any Lender without the written consent of such Lender, (ii) reduce the principal amount of any Loan or reduce the rate of interest thereon, or reduce any fees payable hereunder, without the written consent of each Lender affected thereby, (iii) postpone the scheduled date of payment of the principal amount of any Loan, or any interest thereon, or any fees payable hereunder, or reduce the amount of, waive or excuse any such payment, or postpone the scheduled date of expiration of any Commitment, without the written consent of each Lender affected thereby, (iv) alter the manner in which payments or prepayments of principal, interest or other amounts hereunder shall be applied as among the Lenders or Types of Loans, without the written consent of each Lender, or (v) change any of the provisions of this Section or the definition of the term “Required Lenders” or any other provision hereof specifying the number or percentage of Lenders required to waive, amend or modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender; and provided further that no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent hereunder without the prior written consent of the Administrative Agent.

SECTION 9.03. Expenses; Indemnity; Damage Waiver.

(a) Costs and Expenses. The Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the Administrative Agent and its Affiliates, including the reasonable fees, charges and disbursements of counsel for the Administrative Agent, in connection with the syndication of the credit facilities provided for herein, the preparation and administration of this Agreement or any amendments, modifications or waivers of the provisions hereof (whether or not the transactions contemplated hereby or thereby shall be consummated) and (ii) all out-of-pocket expenses incurred by the Administrative Agent or any Lender, including the fees, charges and disbursements of any counsel for the Administrative Agent, or any Lender, in connection with the enforcement or protection of its rights in connection with this Agreement, including its rights under this Section, or in connection with the Loans made hereunder, including in connection with any workout, restructuring or negotiations in respect thereof.

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(b) Indemnification by the Borrower. The Borrower shall indemnify the Administrative Agent and each Lender, and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including the fees, charges and disbursements of any counsel for any Indemnitee, incurred by or asserted against any Indemnitee arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement or any agreement or instrument contemplated hereby, the performance by the parties hereto of their respective obligations hereunder or the consummation of the Transactions or any other transactions contemplated hereby, (ii) any Loan or the use of the proceeds therefrom, (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by the Borrower or any of its Subsidiaries, or any Environmental Liability related in any way to the Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee.

(c) Reimbursement by Lenders. To the extent that the Borrower fails to pay any amount required to be paid by it to the Administrative Agent under paragraph (a) or (b) of this Section, each Lender severally agrees to pay to the Administrative Agent such Lender’s Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent in its capacity as such.

(d) Waiver of Consequential Damages, Etc. To the extent permitted by applicable law, the Borrower shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or any agreement or instrument contemplated hereby, the Transactions, any Loan or the use of the proceeds thereof.

(e) Payments. All amounts due under this Section shall be payable promptly after written demand therefor.

SECTION 9.04. Successors and Assigns.

(a) Assignments Generally. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null and void). Nothing in

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this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b) Assignments by Lenders. Any Lender may assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it); provided that (i) except in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, each of the Borrower and the Administrative Agent must give their prior written consent to such assignment (which consent shall not be unreasonably withheld or delayed), (ii) except in the case of an assignment to a Lender or an Affiliate of a Lender or an assignment of the entire remaining amount of the assigning Lender’s Commitment, the amount of the Commitment of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent) shall not be less than $5,000,000 unless each of the Borrower and the Administrative Agent otherwise consent (which consent shall not be unreasonably withheld or delayed), (iii) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement, (iv) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500, and (v) the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire; provided further that any consent of the Borrower otherwise required under this paragraph shall not be required if an Event of Default under clause (a), (b), (g) or (h) of Article VII has occurred and is continuing. Upon acceptance and recording pursuant to paragraph (d) of this Section, from and after the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.12, 2.13, 2.14 and 9.03). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this paragraph shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (e) of this Section.

Notwithstanding anything to the contrary contained herein, any Lender (a “Granting Lender”) may grant to a special purpose vehicle (an “SPV”) of, or administered by, such Granting Lender, identified as such in writing from time to time by the Granting Lender to the Administrative Agent and the Borrower, the option to provide to the Borrower all or any part of any Loan that such Granting Lender would otherwise be obligated to make to the Borrower pursuant to Section 2.01, provided that (i) nothing herein shall constitute a commitment by any SPV to make any Loan, (ii) if an SPV elects not to exercise such option or otherwise fails to timely provide all or any part of such Loan, the Granting Lender shall be obligated to make such Loan pursuant to the terms hereof and (iii) the Borrower may bring any proceeding against either or both of the Granting Lender and the SPV in order to enforce any rights of the Borrower hereunder. The making of a Loan by an SPV hereunder shall utilize the Commitment of the

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Granting Lender to the same extent, and as if, such Loan were made by the Granting Lender. Each party hereto hereby agrees that nothing contained in this paragraph shall relieve any Granting Lender of its obligations under this Agreement and that no SPV shall be liable for any payment under this Agreement for which a Lender would otherwise be liable, for so long as, and to the extent, the related Granting Lender makes such payment in accordance with the terms of this Agreement. In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that is one year and one day after the payment in full of all outstanding commercial paper or other senior indebtedness of any SPV, it will not institute against, or join any other person in instituting against, such SPV any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or similar proceedings under the laws of the United States or any State thereof arising out of any claim against such SPV under this Agreement. In addition, notwithstanding anything to the contrary contained in this Section, any SPV may with notice to, but without the prior written consent of, the Borrower or the Administrative Agent and without paying any processing fee therefor, assign all or a portion of its interests in any Loans to its Granting Lender or to any financial institutions (consented to by the Borrower and the Administrative Agent, which consents shall not be unreasonably withheld) providing liquidity and/or credit support (if any) with respect to commercial paper issued by such SPV to fund such Loans and such SPV may disclose, on a confidential basis in accordance with Section 9.12, confidential information with respect to the Borrower and its Subsidiaries to any rating agency, commercial paper dealer or provider of a surety, guarantee or credit liquidity enhancement to such SPV. Each Granting Lender shall provide the Borrower with notice of each grant made by it under this paragraph to an SPV. Except for its obligation to make payments directly to an SPV in respect of any Loan (or any part thereof) made by such SPV, the Borrower shall continue to deal solely and directly with the Granting Lender. This paragraph may not be amended without the consent of any SPV at the time holding Loans under this Agreement.

(c) Maintenance of Register by the Administrative Agent. The Administrative Agent, acting for this purpose as an agent of the Borrower, shall maintain at one of its offices in New York City a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and principal amount of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive, and the Borrower, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

(d) Effectiveness of Assignments. Upon its receipt of a duly completed Assignment and Assumption executed by an assigning Lender and an assignee, the assignee’s completed Administrative Questionnaire (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) of this Section and any written consent to such assignment required by paragraph (b) of this Section, the Administrative Agent shall accept such Assignment and Assumption and record the information contained therein in the Register. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph.

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(e) Participations. Any Lender may, without the consent of the Borrower or the Administrative Agent, sell participations to one or more banks or other entities (a “Participant”) in all or a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Administrative Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in the first proviso to Section 9.02(b) that affects such Participant. Subject to paragraph (f) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.12, 2.13 and 2.14 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section.

(f) Limitations on Rights of Participants. A Participant shall not be entitled to receive any greater payment under Section 2.12 or 2.14 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower’s prior written consent. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 2.14 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with Section 2.14(e) as though it were a Lender.

(g) Certain Pledges. Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any such pledge or assignment to a Federal Reserve Bank, and this Section shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such assignee for such Lender as a party hereto.

(h) No Assignments to the Borrower or Affiliates. Anything in this Section to the contrary notwithstanding, no Lender may assign or participate any interest in any Loan held by it hereunder to the Borrower or any of its Affiliates or Subsidiaries without the prior consent of each Lender.

SECTION 9.05. Survival. All covenants, agreements, representations and warranties made by the Borrower herein and in the certificates or other instruments delivered in connection with or pursuant to this Agreement shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of this Agreement and the making of any Loans, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any

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accrued interest on any Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid and so long as the Commitments have not expired or terminated. The provisions of Sections 2.12, 2.13, 2.14 and 9.03 and Article VIII shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans, the expiration or termination of the Commitments or the termination of this Agreement or any provision hereof.

SECTION 9.06. Counterparts; Integration; Effectiveness. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement and any separate letter agreements with respect to fees payable to the Administrative Agent constitute the entire contract between and among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Section 4.01, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Delivery of an executed counterpart of a signature page to this Agreement by telecopy shall be effective as delivery of a manually executed counterpart of this Agreement.

SECTION 9.07. Severability. Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

SECTION 9.08. Right of Setoff. If an Event of Default shall have occurred and be continuing, each Lender is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Lender to or for the credit or the account of the Borrower against any of and all the obligations of the Borrower now or hereafter existing under this Agreement held by such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement and although such obligations may be unmatured. The rights of each Lender under this Section are in addition to other rights and remedies (including other rights of setoff) which such Lender may have.

SECTION 9.09. Governing Law; Jurisdiction; Etc.

(a) Governing Law. This Agreement shall be construed in accordance with and governed by the law of the State of New York.

(b) Submission to Jurisdiction. The Borrower hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement, or for recognition or

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enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that the Administrative Agent or any Lender may otherwise have to bring any action or proceeding relating to this Agreement against the Borrower or its properties in the courts of any jurisdiction.

(c) Waiver of Venue. The Borrower hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any court referred to in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(d) Service of Process. Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 9.01. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

SECTION 9.11. Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

SECTION 9.12. Treatment of Certain Information; Confidentiality.

(a) Treatment of Certain Information. The Borrower acknowledges that from time to time financial advisory, investment banking and other services may be offered or provided to the Borrower or one or more of its Subsidiaries (in connection with this Agreement or otherwise) by any Lender or by one or more subsidiaries or affiliates of such Lender and the Borrower hereby authorizes each Lender to share any information delivered to such Lender by the Borrower and its Subsidiaries pursuant to this Agreement, or in connection with the decision of such Lender to enter into this Agreement, to any such subsidiary or affiliate, it being

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understood that any such subsidiary or affiliate receiving such information shall be bound by the provisions of paragraph (b) of this Section as if it were a Lender hereunder. Such authorization shall survive the repayment of the Loans, the expiration or termination of the Commitments or the termination of this Agreement or any provision hereof.

(b) Confidentiality. Each of the Administrative Agent, the Lenders and each SPV agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (i) to its and its Affiliates’ directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (ii) to the extent requested by any regulatory authority, (iii) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (iv) to any other party to this Agreement, (v) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or the enforcement of rights hereunder, (vi) subject to an agreement in writing containing provisions substantially the same as those of this paragraph and for the benefit of the Borrower, to (a) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (b) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower and its obligations, (vii) with the consent of the Borrower or (viii) to the extent such Information (A) becomes publicly available other than as a result of a breach of this paragraph or (B) becomes available to the Administrative Agent or any Lender on a nonconfidential basis from a source other than the Borrower. For the purposes of this paragraph, “Information” means all information received from the Borrower relating to the Borrower, its Subsidiaries or their business, other than any such information that is available to the Administrative Agent or any Lender on a nonconfidential basis prior to disclosure by the Borrower; provided that, in the case of information received from the Borrower after the date hereof, such information is clearly identified at or prior to the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

SECTION 9.13. USA PATRIOT Act. Each Lender hereby notifies the Borrower that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)), such Lender may be required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender to identify the Borrower in accordance with said Act.

Credit Agreement

- 59 -

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

THE FIRST AMERICAN CORPORATION
By	/s/ Paul W. Knutson
Name:	Paul W. Knutson
Title:	Vice President and Controller
By	/s/ Max O. Valdes
Name:	Max O. Valdes
Title:	Vice President and Chief Accounting Officer
U.S. Federal Tax Identification No.: 95-1068610

Credit Agreement

- 60 -

LENDERS
JPMORGAN CHASE BANK, N.A., individually and as Administrative Agent
By	/s/ Lawrence Palumbo
Name:	Lawrence Palumbo
Title:	Vice President

Credit Agreement

- 61 -

COMERICA BANK
By	/s/ Mark McElwain
Name:	Mark McElwain
Title:	Vice President

Credit Agreement

- 62 -

UNION BANK OF CALIFORNIA, N.A.
By	/s/ Joseph M. Argabrite
Name:	Joseph M. Argabrite
Title:	Vice President

Credit Agreement

- 63 -

US BANK
By	/s/ Denette Corrales
Name:	Denette Corrales
Title:	Senior Vice President

Credit Agreement

- 64 -

WELLS FARGO BANK, NATIONAL ASSOCIATION
By	/s/ Jeff Bailard
Name:	Jeff Bailard
Title:	Vice President

Credit Agreement

- 65 -

BANK OF AMERICA, N.A.
By	/s/ Jeffrey M. Shaver
Name:	Jeffrey M. Shaver
Title:	Vice President

Credit Agreement

- 66 -

BANK OF THE WEST
By	/s/ Dale Paterson
Name:	Dale Paterson
Title:	Vice President

Credit Agreement

- 67 -

KEYBANK NATIONAL ASSOCIATION
By	/s/ Matthew Hill
Name:	Matthew Hill
Title:	Vice President

Credit Agreement

- 68 -

HSBC BANK USA, NATIONAL ASSOCIATION
By	/s/ Lawrence Karp
Name:	Lawrence Karp
Title:	Senior Vice President

Credit Agreement

- 69 -

LASALLE BANK NATIONAL ASSOCIATION
By	/s/ Bradley J. Kronland
Name:	Bradley J. Kronland
Title:	Vice President

Credit Agreement

EXHIBIT A

[Form of Assignment and Assumption]

ASSIGNMENT AND ASSUMPTION

This Assignment and Assumption (the “Assignment and Assumption”) is dated as of the Effective Date set forth below and is entered into by and between [Insert name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the “Assignee”). Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (as amended, the “Credit Agreement”), receipt of a copy of which is hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.

For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of the Assignor’s rights and obligations in its capacity as a Lender under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of the Assignor under the respective facilities identified below (including any letters of credit, guarantees, and swingline loans included in such facilities) and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned pursuant to clauses (i) and (ii) above being referred to herein collectively as the “Assigned Interest”). Such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by the Assignor.

1.	Assignor:	_____________________________
2.	Assignee:	_____________________________
		[and is an Affiliate/Approved Fund of [identify Lender]1 ]
3.	Borrower(s):	The First American Corporation
4.	Administrative Agent:	JPMorgan Chase Bank, N.A., as the administrative agent under the Credit Agreement

¹ Select as applicable.

Assignment and Assumption

- 2 -

5.	Credit Agreement:	The $500,000,000 Amended and Restated Credit Agreement dated as of November 7, 2005 among The First American Corporation, the Lenders parties thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent
6.	Assigned Interest:

Aggregate Amount of Commitment/Loans for all Lenders	Amount of Commitment/Loans Assigned	Percentage Assigned of Commitment/Loans2
$	$	%
$	$	%
$	$	%

Effective Date:                  , 20     [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

The terms set forth in this Assignment and Assumption are hereby agreed to:

ASSIGNOR

[NAME OF ASSIGNOR]

By:

Title:

ASSIGNEE

[NAME OF ASSIGNEE]

By:

Title:

² Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder.

Assignment and Assumption

- 3 -

[Consented to and]³ Accepted:

JPMORGAN CHASE BANK, N.A.,

    as Administrative Agent

By

Title:

[Consented to:]⁴

THE FIRST AMERICAN CORPORATION

By

Title:

³ To be added only if the consent of the Administrative Agent is required by the terms of the Credit Agreement.

⁴ To be added only if the consent of the Borrower is required by the terms of the Credit Agreement.

Assignment and Assumption

ANNEX 1

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

1. Representations and Warranties.

1.1 Assignor. The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of the Credit Agreement or (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under the Credit Agreement.

1.2. Assignee. The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it satisfies the requirements, if any, specified in the Credit Agreement that are required to be satisfied by it in order to acquire the Assigned Interest and become a Lender, (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it has received a copy of the Credit Agreement, together with copies of the most recent financial statements delivered pursuant to Section 5.01 thereof, as applicable, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest on the basis of which it has made such analysis and decision independently and without reliance on the Administrative Agent or any other Lender, and (v) if it is a Foreign Lender, attached to the Assignment and Assumption is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by the Assignee; and (b) agrees that (i) it will, independently and without reliance on the Administrative Agent, the Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender.

2. Payments. From and after the Effective Date, the Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts which have accrued to but excluding the Effective Date and to the Assignee for amounts which have accrued from and after the Effective Date.

Annex 1

- 2 -

3. General Provisions. This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and Assumption by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption. This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of New York.

Annex 1

EXHIBIT B

[Form of Opinion of Counsel to the Borrower]

                    , 2005

To the Lenders party to the

Credit Agreement referred to

Below and JPMorgan Chase, N.A.

Bank, as Administrative Agent

Re: $500,000,000 Amended and Restated Credit Agreement

Ladies and Gentlemen:

I am general counsel of The First American Corporation, a California corporation (the “Borrower”), and have acted in such capacity in connection with the Amended and Restated Credit Agreement dated as of November 7, 2005 between the Borrower, the Lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent (the “Credit Agreement”). Unless otherwise defined herein, capitalized terms shall have the meanings given thereto in the Credit Agreement.

In rendering the opinions expressed below, I have examined the Credit Agreement, and the originals or conformed copies of such resolutions, corporate records, agreements and instruments of the Borrower and its Subsidiaries, certificates of public officials and of officers of the Borrower and its Subsidiaries, and such other documents and records, and such matters of law, as I have deemed appropriate as a basis for the opinions hereinafter expressed. In such examination and investigation, I have assumed the genuineness of all signatures (other than those of officers of the Borrower), the legal capacity of natural persons, the authenticity of all documents submitted as originals and the conformity to original documents of documents submitted as certified or photostatic copies. I have also assumed that the Credit Agreement has been duly authorized, executed and delivered by the parties thereto other than the Borrower and constitutes a valid, legal and binding obligation of all such other parties.

In rendering this opinion, I do not express any opinion concerning any law other than the law of the State of California and the federal law of the United States.

Based upon the foregoing and subject to the limitations, qualifications, exceptions and assumptions set forth below, I am of the opinion that:

1. The Borrower is a corporation duly incorporated, validly existing and in good standing under the laws of the State of California and has the necessary corporate power to make and perform the Credit Agreement and to borrow under the Credit Agreement.

2. The execution, delivery and performance by the Borrower of the Credit Agreement and the borrowings by the Borrower thereunder have been duly authorized by all

Opinion of Counsel to the Borrower

- 2 -

necessary corporate action, and do not and will not violate any provision of law or regulation or any provision of the Borrower’s charter or by-laws or result in the breach of, or constitute a default or require any consent (other than consents which have been obtained) under, or result in the creation of any Lien upon any of the properties, revenues or assets of the Borrower pursuant to, any indenture or other agreement or instrument of which I have knowledge (after due inquiry) to which the Borrower is a party or by which the Borrower or its properties may be bound.

3. The Credit Agreement constitutes legal, valid and binding obligations of the Borrower enforceable against it in accordance with their respective terms, except (a) as may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights of creditors generally and (b) that the enforceability of the Credit Agreement is subject to the application of general principles of equity (regardless of whether considered in a proceeding in equity or at law), including, without limitation, (i) the possible unavailability of specific performance, injunctive relief or any other equitable remedy and (ii) concepts of materiality, reasonableness, good faith and fair dealing.

4. Except as disclosed to the Lenders in Schedule III to the Credit Agreement, there are no legal or arbitral proceedings, and no proceedings by or before any governmental or regulatory authority or agency, pending or (to my knowledge after due inquiry) threatened against or affecting the Borrower, or any properties or rights of the Borrower, which, if adversely determined, would have a Material Adverse Effect.

5. No authorizations, consents, approvals, licenses, filings or registrations with, any Governmental Authority are required in connection with the execution, delivery or performance by the Borrower of the Credit Agreement.

6. Neither the Borrower nor any of its Subsidiaries is (a) an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940 or (b) a “holding company” as defined in, or subject to regulation under, the Public Utility Holding Company Act of 1935.

The foregoing opinions are also subject to the following additional limitations, qualifications, exceptions and assumptions:

a. In rendering my opinion in paragraph 3 above, I have assumed that the Credit Agreement is governed by the laws of the State of California.

b. I express no opinion as to whether or not the execution, delivery or performance by the Borrower of the Credit Agreement will conflict with or result in a breach of, or constitute a default under, any covenant, restriction or provision with respect to financial ratios or tests or any aspect of the financial ratios or tests or any aspect of the financial condition or results of operation of the Borrower (other than covenants or restrictions that relate to the incurrence of indebtedness and the incurrence of liens) under any indenture or other agreement or instruments.

c. I express no opinion as whether a federal or state court would give effect to the choice of New York law provided for in the Credit Agreement.

Opinion of Counsel to the Borrower

- 3 -

d. In rendering my opinion set forth in paragraph 4 above, I advise you that I have not conducted any search of any court docket.

e. I express no opinion as to (i) the last sentence of Section 2.15(d) of the Credit Agreement or (ii) the first sentence of Section 9.09(b) of the Credit Agreement insofar as such sentence relates to the subject matter jurisdiction of the United States District Court for the Southern District of New York to adjudicate any controversy related to the Credit Agreement.

f. The enforceability of Section 9.03 of the Credit Agreement may be limited by laws rendering unenforceable indemnification contrary to federal or state securities laws and the public policy underlying such laws.

g. The enforceability of provisions in the Credit Agreement to the effect that terms may not be waived or modified except in writing may be limited under certain circumstances.

h. I express no opinion as to the effect of the laws of any jurisdiction in which any Lender is located (other than California) that limits the interest, fees or other charges it may impose.

i. To the extent that my opinions set forth above involve factual determinations as to what may, or may not, constitute a Material Adverse Effect, I have relied with your approval upon certifications of the Borrower.

j. I am a member of the Bar of the State of California and do not hold myself out as being conversant with, and express no opinion as to, the laws of any jurisdiction other than those of the United States of America and the State of California.

k. As to Section 9.10 of the Credit Agreement, I advise you that, under California case law, a contractual waiver of trial by jury entered into before a lawsuit has been filed is unenforceable, and a party to litigation may waive its right to a trial by jury only in the ways enumerated in Section 631(d) of the California Code of Civil Procedure.

The opinions expressed herein are solely for your benefit (and for the benefit of your successors and assigns) and may not be relied upon in any manner for any purpose by any other person without my prior written consent in each instance.

Very truly yours,

Kenneth D. DeGiorgio

Senior Vice President,

General Counsel

Opinion of Counsel to the Borrower

EXHIBIT C

[Form of Opinion of Special New York Counsel to JPMCB]

                    , 2005

To the Lenders party to the

Credit Agreement referred to

below and JPMorgan Chase

Bank, N.A., as Administrative Agent

Ladies and Gentlemen:

We have acted as special New York counsel to JPMorgan Chase Bank, N.A. (“JPMCB”) in connection with the Amended and Restated Credit Agreement (the “Credit Agreement”) dated as of November 7, 2005, between The First American Corporation (the “Borrower”), the lenders party thereto and JPMCB, as Administrative Agent, amending and restating the Credit Agreement dated as of August 4, 2004 (the “Existing Credit Agreement”) and providing for loans to be made by said lenders to the Borrower in an initial aggregate principal amount not exceeding $500,000,000. Terms defined in the Credit Agreement are used herein as defined therein. This opinion letter is being delivered pursuant to Section 4.01(c) of the Credit Agreement.

In rendering the opinions expressed below, we have examined an executed counterpart of the Credit Agreement. In our examination, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals and the conformity with authentic original documents of all documents submitted to us as copies. When relevant facts were not independently established, we have relied upon representations made in or pursuant to the Credit Agreement. We have assumed that the Credit Agreement has been duly authorized, executed and delivered by, and (except, to the extent set forth below, as to the Borrower) constitutes a legal, valid, binding and enforceable obligation of, all of the parties thereto, that all signatories thereto have been duly authorized and that all such parties are duly organized and validly existing and have the power and authority (corporate or other) to execute, deliver and perform the same, and that (upon the delivery of this opinion) the conditions precedent in Section 4.01 of the Credit Agreement have been satisfied (including that all Persons specified in Section 4.01(a) of the Credit Agreement have executed and delivered the Credit Agreement or have provided a confirmation with respect thereto as contemplated thereby).

Based upon and subject to the foregoing and subject also to the comments and qualifications set forth below, and having considered such questions of law as we have deemed necessary as a basis for the opinions expressed below, we are of the opinion that the Credit Agreement constitutes a legal, valid and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or other similar laws relating to or affecting the rights of creditors generally and except as the enforceability of the Credit

Opinion of Special New York Counsel to JPMCB

- 2 -

Agreement is subject to the application of general principles of equity (regardless of whether considered in a proceeding in equity or at law), including (a) the possible unavailability of specific performance, injunctive relief or any other equitable remedy and (b) concepts of materiality, reasonableness, good faith and fair dealing.

The foregoing opinions are subject to the following comments and qualifications:

(A) The enforceability of Section 9.03 of the Credit Agreement may be limited by laws limiting the enforceability of provisions exculpating or exempting a party from, or requiring indemnification of a party for, liability for its own action or inaction, to the extent the action or inaction involves gross negligence, recklessness, willful misconduct or unlawful conduct.

(B) The enforceability of provisions in the Credit Agreement to the effect that terms may not be waived or modified except in writing may be limited under certain circumstances.

(C) We express no opinion as to (i) the effect of the laws of any jurisdiction in which any Lender is located (other than the State of New York) that limit the interest, fees or other charges it may impose for the loan or use of money or other credit, (ii) the last sentence of Section 2.15(d) of the Credit Agreement, (iii) Section 9.08 of the Credit Agreement, (iv) the first sentence of Section 9.09(b) of the Credit Agreement, insofar as such sentence relates to the subject-matter jurisdiction of the United States District Court for the Southern District of New York to adjudicate any controversy related to the Credit Agreement or (v) the waiver of inconvenient forum set forth in Section 9.09(c) of the Credit Agreement with respect to proceedings in the United States District Court for the Southern District of New York.

The foregoing opinions are limited to matters involving the Federal laws of the United States of America and the law of the State of New York, and we do not express any opinion as to the laws of any other jurisdiction.

At the request of our client, this opinion letter is, pursuant to Section 4.01(c) of the Credit Agreement, provided to you by us in our capacity as special New York counsel to JPMCB and may not be relied upon by any Person for any purpose other than in connection with the transactions contemplated by the Credit Agreement without, in each instance, our prior written consent.

                        Very truly yours,

WJM/WFC

Opinion of Special New York Counsel to JPMCB

EX-21

Exhibit 21

Subsidiaries of the Registrant

Name of Subsidiary:	State or Country Under Laws of Which Organized
1031 Corp.	Pennsylvania
1031 Facilitators, Inc.	Oregon
1031 USA, LLC	Pennsylvania
A+ Escrow Company	California
Abstracters` Information Service, Inc.	New York
Accounting Services, LLC	Minnesota
Accu-Search, Inc.	New Jersey
Advanced Collateral Solutions, LLC	Delaware
Albany County Title, Inc.	Wyoming
All American Title Agency, LLC	Arizona
All New York Title Agency, Corp.	New York
Allegiance Title Company	Texas
Alliance Home Warranty, Inc.	Utah
Alliance Title Agency, L.L.C.	Michigan
Allied Trustee Services, Inc.	California
Alstrom Title Co. Inc.	Kansas
American Driving Records, Inc.	California
American Escrow Company	Texas
American Land Title, Inc.	Texas
American Property Exchange, Inc.	Washington
American Title Corporation	Wisconsin
Androscoggin Title Company, Inc.	Maine
APEX Accommodation, Inc.	Washington
APEX Art, Inc.	Washington
APEX Park Five, LLC (OR)	Oregon
APEX Park Four, LLC (OR)	Oregon
APEX Park Four, LLC (WA)	Washington
APEX Park One, LLC	Washington
APEX Park Seven, LLC (OR)	Oregon
APEX Park Six, LLC (OR)	Oregon
APEX Park Three, LLC (OR)	Oregon
APEX Park Three, LLC (WA)	Washington
APEX Park Two, LLC (OR)	Oregon
APEX Park Two, LLC (WA)	Washington
Arbor Title Company, LLC	Michigan
ARM Financial Corporation	California
Associated Title Company	Utah
Associated Title Insurance Agency, LLC	Delaware
ATI Closing, LC	Iowa
ATI Title Agency of Arizona, Inc.	Arizona
ATI Title Agency of Ohio, Inc.	Ohio
ATI Title Company of Alabama, LLC	Alabama
ATI Title Company, LLC	Delaware
ATI Title of Arizona, Inc.	Arizona
ATI Title of Nevada, Inc.	Nevada
Atlantic Title Company, Inc.	Maine
Attorneys Abstract, Inc.	New York
Attorneys Title Agency LLC	Michigan

Name of Subsidiary:	State or Country Under Laws of Which Organized
Attorneys Title Corporation	District of Columbia
Attorneys Title Services Inc.	Massachusetts
BackTrack Reports, Inc.	New York
Bar None, Inc.	Delaware
Barton County Abstract & Title Company	Kansas
Bigfork Title Services, Inc.	Montana
Blyar Financial, Inc.	Florida
Brokers Title, Inc.	Virginia
Buckley & Associates, Inc.	California
Burton Abstract & Title Company	Michigan
Cajon Hills Escrow Co.	California
Caldwell County Abstract Company, Inc.	Texas
Camas Heights Corporation	Washington
Campbell County Abstract Company	Wyoming
Celtic Title Agency, Inc	Ohio
Censtar Title Insurance Company f/k/a First American Title Insurance Company of Texas	Texas
Certified Closing Network, Inc.	Delaware
Certified Closing Network, LLC	Maryland
Chelsea Title Agency of Alabama, LLC	Alabama
Chelsea Title Agency of Northwest Florida, Inc.	Florida
CIG Investments LLC	Delaware
Citizen's Title & Escrow Company	Montana
Citizens Title Company	Texas
CMSI Credit Services, Inc.	Maryland
CMSI Systems, Inc.	Delaware
COFCO Re Captive Insurance Company, Inc.	Arizona
Columbian National Title Insurance Company	Kansas
Columbian Title of Johnson County, Inc.	Kansas
Columbian Title of Kansas City, Inc.	Missouri
Columbian Title of Topeka, Inc.	Kansas
Columbian Title of Wichita, Inc.	Kansas
Commerce Title Agency, Inc.	Ohio
Commercial Title Company	Oregon
Compunet Credit Services, Inc.	Arizona
Connecticut Title Services, Inc.	Connecticut
Converse Land Title Company	Wyoming
Conveyancing Team Limited	England
Core Title Agency, Ltd.	Ohio
Corea Title Company fka SFA Title, Ltd.	Korea
Corefacts, LLC	Virginia
Cornerstone Title Company fka Executive Title Company	California
Credit Online, Inc.	Delaware
CreditReportPlus, LLC	Maryland
Current Status, Inc.	New Jersey
CYD Acquisition Corporation	Delaware
Data Recovery Services	Texas
Data Trace Abstractor Services, LLC	Delaware
Data Trace Information Services II LLC	Delaware
Data Trace Information Services LLC	Delaware
Data Trace LLC	Delaware
Data Tree LLC	California

Name of Subsidiary:	State or Country Under Laws of Which Organized
DataTree Corporation	California
Del Norte County Title Company	California
Del Norte Title Co., LLC	Texas
Dentex Title Company	Texas
DMKS Title Company	Texas
Docu-Search, Inc.	Kentucky
DP Data Services, Inc.	Washington
DTS Technologies, Inc.	Texas
Eagle Title and Abstract Corporation	Florida
East Coast Real Estate Services, LLC	North Carolina
Eaton County Abstract & Title Company dba Grand Valley Title Company	Michigan
EHG, Incorporated	Illinois
Eighteen Parked Place, LLC	New Jersey
Eleven Parked Place, LLC	Pennsylvania
Elite Abstract, LLC	Tennessee
Employee Health Programs (UK), Ltd.	England
Employee Health Programs, Inc.	Florida
enact Conveyancing Limited	England
enact Holdings Limited	England
enact Properties Limited	England
enact Trustees Limited	England
Escrow Transfers, Inc.	California
Esquire Title Research of Pensacola, LLC	Florida
Eureka Title Company	California
Evida	England
Excelis, Inc.	Florida
Executive Investments, LLC	Maryland
F.S.T. Financial Services	California
Factual Business Information, Inc.	Florida
FADV Holdings LLC	Delaware
Fairbanks Title Agency, Inc.	Alaska
Fastrealty.com f/k/a First American Loan Servicing Corporation	Texas
FCT Atlantic Limited	California
FCT Holdings Company Ltd.	California
FCT Insurance Company Ltd.	California
FCT Insurance Services Inc.	California
FCT Valuation Services, Inc.	California
Fidelity Title and Guaranty Company	Florida
First Advantage Background Services Corp	Florida
First Advantage Canada, Inc.	Canada
First Advantage Corporation	Delaware
First Advantage Credco LLC	Delaware
First Advantage Enterprise Screening Corp.	Delaware
First Advantage Government Services, LLC	Delaware
First Advantage Litigation Consulting, LLC	Virginia
First Advantage Occupational Health Services Corp	Florida
First Advantage Philippines, Inc	Philippines
First Advantage Public Records, LLC	Delaware
First Advantage Quest Research (Beijing) Co., Ltd.	China
First Advantage Quest Research Corporation	Cayman Islands
First Advantage Quest Research Group Ltd.	British Virgin Islands

Name of Subsidiary:	State or Country Under Laws of Which Organized
First Advantage Quest Research, Ltd.	British Virgin Islands
First Advantage Quest Research Limited	Hong Kong
First Advantage Quest Research Private Limited	India
First Advantage Quest Research PTE, Ltd.	Singapore
First Advantage Quest Research PTY, Ltd.	Australia
First Advantage SafeRent, Inc.	Delaware
First Advantage Tax Consluting Services, LLC	Delaware
First American—Real Trends National Housing Survey LLC	Delaware
First American Abstract & Title Services, Inc.	South Carolina
First American Abstract Company (Mississippi)	Mississippi
First American Abstract Company of South Carolina, Inc.	South Carolina
First American Affiliates, Inc.	Florida
First American Centralized Services, Inc.	Delaware
First American Closing Services, Inc.	California
First American Commercial Real Estate Services, Inc. fka First American Tax Valuation, Inc.	Florida
First American Credco of Puerto Rico, Inc.	Delaware
First American Credit Management Solutions, Inc.	Delaware
First American Equity Loan Services, Inc. (DE)	Delaware
First American Equity Loan Services, Inc. (OH)	Ohio
First American Escrow of Iowa f/k/a Central Iowa Escrow, LC	Iowa
First American Exchange Company, LLC	Delaware
First American Exchange Corporation (NY)	New York
First American Exchange Corporation of New England, Inc.	Massachusetts
First American Flood Hazard Certification, LLC	Delaware
First American Fulfillment Solutions fka Xsequor, LLC	Delaware
First American Holdings CBA, Inc.	Minnesota
First American Holdings, LLC	Delaware
First American Home Buyers Protection Corporation (California)	California
First American Indian Holdings LLC	Delaware
First American Intellitech, Inc.	Delaware
First American International Holdings, LLC	Delaware
First American International Title Services Inc.	California
First American Leasing Company	California
First American Management Services (UK) Limited	England
First American Membership Services, Inc.	California
First American MLS Solutions, Inc.	Tennessee
First American National Claims Outsourcing, LLC fka Baker & Brinkley Asset Mgmnt Services Co., Inc.	Texas
First American National Default Outsourcing LLC	Delaware
First American Partners, Inc.	Nevada
First American Property & Casualty Insurance Company, fka Great Pacific Insurance Company	California
First American Real Estate Information Services, Inc.	California
First American Real Estate Solutions II LLC	California
First American Real Estate Solutions LLC	California
First American Real Estate Solutions of Texas, L.P.	Texas
First American Real Estate Solutions, L.P.	Delaware
First American Real Estate Tax Service, LLC	Delaware
First American REO Servicing LLC	Delaware
First American Residential Group, Inc.	Delaware

Name of Subsidiary:	State or Country Under Laws of Which Organized
First American Services de Mexico, S. de R.L. de C.V.	Mexico
First American Servicing Solutions, LLC	Delaware
First American Specialty Insurance Company, fka Five Star Insurance Company	California
First American Title & Abstract Co.	Oklahoma
First American Title & Escrow of Dallas County, LC, fka Dallas County Abstract & Title Company, LC	Iowa
First American Title & Escrow of Iowa, L.C.	Iowa
First American Title & Escrow of Iowa, LC f/k/a Iowa State Escrow & Closing, L.C.	Iowa
First American Title & Escrow of Polk County, LC	Iowa
First American Title & Escrow of Warren County, LC	Iowa
First American Title & Trust Company	Oklahoma
First American Title Agency, Inc.	Utah
First American Title Company	California
First American Title Company (China) fka First American (China) Real Estate Consulting Ltd.	China
First American Title Company of Asotin County, Inc.	Washington
First American Title Company of Bellingham	Washington
First American Title Company of Carbon County	Wyoming
First American Title Company of Clark County	Washington
First American Title Company of Colorado	Colorado
First American Title Company of Crook County	Wyoming
First American Title Company of Florida, Inc.	Florida
First American Title Company of Hot Springs County	Wyoming
First American Title Company of Idaho, Inc.	Idaho
First American Title Company of Illinois dba First American Title Company	Illinois
First American Title Company of Korea	Korea
First American Title Company of Laramie County	Wyoming
First American Title Company of Los Angeles	California
First American Title Company of Montana, Inc.	Montana
First American Title Company of Nevada (Reno)	Nevada
First American Title Company of Nevada (Zephyr Cove)	Nevada
First American Title Company of St. Lucie County, Inc.	Florida
First American Title Company of Sublette County	Wyoming
First American Title Company of Thurston County	Washington
First American Title Company of Waco dba First Title Company of Waco	Texas
First American Title Company, Inc.	Hawaii
First American TItle Company, Inc. (Hawaii)	Hawaii
First American Title Guaranty Holding Company	California
First American Title Insurance Agency of Mohave, Inc.	Arizona
First American Title Insurance Agency, Inc.	Utah
First American Title Insurance Agency, Inc. (Navajo)	Arizona
First American Title Insurance Agency, LLC	Delaware
First American Title Insurance Company	California
First American Title Insurance Company (Mason County)	Washington
First American Title Insurance Company de Mexico, S.A. de C.V.	Mexico
First American Title Insurance Company of Australia Pty Limited	Australia
First American Title Insurance Company of Kansas, Inc.	Kansas
First American Title Insurance Company of New York	New York
First American Title Insurance Company of North Carolina	North Carolina
First American Title Kansas Agency, Inc. fka Guarantee Land Title of Leavenworth, Inc.	Kansas
First American Title Missouri Agency, Inc. fka First American Title of St. Louis, Inc.	Missouri

Name of Subsidiary:	State or Country Under Laws of Which Organized
First American Title of Alaska	Alaska
First American Tracking & Insurance Services, Inc.	California
First American Transportation Title Insurance Company fka Louisiana First Title Insurance Company	Louisiana
First American Trust, F.S.B.	California
First American UCC Insurance Services, LLC f/k/a First American UCC Services Agency, LLC	Delaware
First Australian Title Company Pty Limited	Australia
First Canadian CREDCO, Inc.	California
First Canadian Title Company Limited	California
First Exchange Corporation	Arizona
First Exchange of Idaho	Idaho
First Florida Title Insurance Agency, LLC	Florida
First Guaranty Bancorp	California
First Hong Kong Title Limited	Cayman Islands
First Indian Corporation fka Data Tree India Private Limited	India
First Land Title Company	Texas
First Land Title of Tarrant	Texas
First Metropolitan Title Company	Michigan
First Reliable, LLC	Delaware
First Security Thrift Company	California
First States, Inc.	Pennsylvania
First Title Insurance plc fka First American Title Insurance Company (UK) plc	England
First Title New Zealand Limited	New Zealand
First Title plc fka First UK Financial Corporation Plc	England
First Title Services Limited	England
First Valley Title, LLC	Arizona
Five Star Holdings, Inc.	California
Flathead County Title Company	Montana
Ford County Title Company, Inc.	Kansas
Fort Bend Title Company	Texas
FREG Financial Services, Inc.	California
Fremont County Title Company	Wyoming
FS Premium Finance Company	California
Gadsden Abstract and Appraisal Company	Florida
Gateway Pacific Insurance Agency	California
General Land Abstract Co., Inc.	New Jersey
Goshen County Abstract & Title Company	Wyoming
GPIC Holdings, Inc.	California
GR Title Services, Inc.	Rhode Island
Grass Valley Aeronautics, Inc.	Washington
Greater Louisiana Title Insurance Company	Louisiana
Guarantee Title of Johnson County, Inc.	Kansas
Guarantee Title of Wyandotte County, Inc.	Kansas
Guaranty Title Corporation	Maine
Guardian Title Company of Maryland	Maryland
Hale County Abstract Company	Texas
Hamilton Land Services, LLC	Delaware
Harder Abstract, LLC	Maryland
Heritage Title Company of Rockwall	Texas
HireCheck, Inc.	Florida
Huntington Brokerage Corporation	Texas

Name of Subsidiary:	State or Country Under Laws of Which Organized
Illini Title Services, Inc.	Illinois
Independent Title of St. Augustine, Inc.	Florida
Independent Title of St. Johns County, Inc.	Florida
Infinity Information Network, Inc.	South Carolina
Infocheck, Ltd.	Canada
Interealty Corp. (Canada)	California
Intertitle, Inc.	California
Iowa State Escrow and Closing, Inc.	Iowa
Island Title Corporation	Hawaii
Island Title Guaranty Agency, Inc.	Florida
iSymmetrics, Inc.	Colorado
ITAX Group, Inc.	Delaware
JCP Geologists, Inc.	California
Jenark Business Systems, Inc.	Maryland
Johnson County Title Company, Inc.	Wyoming
Josephine Crater Title Companies, Inc.	Oregon
JRE Four, LLC	New Jersey
JRE One, LLC	New Jersey
JRE Three, LLC	New Jersey
JRE Two, LLC	New Jersey
Kalispell Title Services, Inc.	Montana
Kaufman County Title & Abstract Company	Texas
Konstar Title Insurance Agency, L.L.C.	Michigan
L&H Abstract Corporation	New York
Land Title Company, Chelan-Douglas County, Inc.	Washington
Land Title Insurance Company of St. Louis	Missouri
Latin Title, Inc.	Florida
Lawyers Mortgage and Title Company, Inc.	Ohio
LCO VIII, LLC	Michigan
LeadClick Holding Company, LLC	Delaware
LeadClick Media, Inc.	California
LGS Reports, Inc.	California
LoanPerformance	California
LoanStar Mortgagee Services, L.L.C.	Texas
Massachusetts Abstract Company, Inc.	Massachusetts
Massachusetts Title Insurance Company	Massachusetts
Masters Abstract, LLC	Ohio
MCM Title Services, Inc.	Ohio
Metropolitan Title—Ohio, L.L.C.	Michigan
Metropolitan Title Plant Services, L.L.C.	Michigan
Metroscan, Inc.	Delaware
Mid Illinois Title Services, Inc.	Illinois
Midland Title Security, Inc.	Ohio
Mid-Valley Title and Escrow Company	California
Midwest Title Insurance Company	Illinois
Miller Abstract Company, Inc.	Missouri
Mississippi Title & Appraisal Co.	Mississippi
Modern Abstract Corporation	New York
Monroe Title Company	Florida
Montgomery County Abstract Company	Kansas
Mooser & Freibert Land Title Company, LLC	Kentucky

Name of Subsidiary:	State or Country Under Laws of Which Organized
Morgan Kennedy Limited	England
Moritz Enterprises, Inc. d/b/a California Property Disclosure, Inc.	California
Mortgage Guarantee & Title Company	Rhode Island
Multifamily Community Insurance Agency, Inc.	Maryland
Mt. Shasta Title & Escrow Company	California
MVR`s, Inc.	Louisiana
National Background Data, LLC	Delaware
National Data Registry, LLC	Delaware
National Default REO Services, LLC	Delaware
National Information Group, Inc.	California
National Land Title of Tarrant, Inc.	Texas
National Lender`s Title Guaranty Co., Inc.	Illinois
Natural Hazards Disclosure, LLC	California
NDTS Software	Texas
New Century Holidays Limited	England
New Move Conveyancing Limited	England
New York Abstract Company, Inc.	New York
Newport Wirless, Inc. d/b/a Newport Works	California
Nine Parked Place, LLC	Nevada
Nineteen Parked Place, LLC	New Jersey
North American CREDCO, Inc.	Delaware
North American Title, Inc.	Michigan
Northern Michigan Title Company of Emmet	Michigan
Norwood Slope Corporation	Washington
Ohio Bar Title Insurance Company	Ohio
Ohio Title Corporation	Ohio
Omega Insurance Services, Inc.	Florida
Omni Title of Pasco, Inc.	Florida
One Parked Place, LLC	Pennsylvania
Optima Information Solutions, LLC	Delaware
Orange Coast Exchange, LLC	Delaware
Orange Coast Holdings, Inc.	Delaware
Orange Coast Services, LLC	Delaware
Orange Coast Title Company	California
Orange County Title Company	California
Oz Title Agency, Ltd.	Ohio
Pacific Northwest Title Building, Inc.	Washington
Pacific Northwest Title Company of Alaska, Inc.	Alaska
Pacific Northwest Title Company of Kenai, Inc. d/b/a Southcentral Title Agency	Alaska
Pacific Northwest Title Company of Snohomish County, Inc.	Washington
Pacific Northwest Title Company of Spokane, Inc.	Washington
Pacific Northwest Title Company of Washington, Inc.	Washington
Pacific Northwest Title Holding Company	Washington
Pacific Northwest Title Insurance Company	Washington
Pacific Northwest Title of Lane County, LLC	Oregon
Pacific Northwest Title of Oregon, Inc.	Oregon
Paradigm	Canada
Parking Intermediary Corp.	Pennsylvania
Parking Services, Inc.	Pennsylvania
PartnerCheck, Inc.	Florida
Pearson Fort Bend Abstract Company	Texas

Name of Subsidiary:	State or Country Under Laws of Which Organized
Pekin Abstract & Title Company	Illinois
Penn Attorneys Title Insurance Co.	Pennsylvania
Peoples Abstract, L.L.C.	Iowa
Pinnacle Data Corporation	California
Pioneer Agency Acquisition Company	Pennsylvania
Pioneer of Philadelphia, Ltd., Inc.	Pennsylvania
Polk County Abstract Company	Wisconsin
Port Lawrence National Agency, Inc.	Ohio
Port Lawrence Title and Trust Company	Ohio
Potter Title Company	Michigan
Premier Claims Service, Inc.	California
Pretiem Corporation	New Jersey
PrideRock Holding Company, Inc.	Alabama
Primary Land Transfer Services, LLC	Delaware
Progressive Land Title of Bowling Green, Inc.	Kentucky
Property Data Services, Inc. fka First American Property Data Services, Inc.	California
Property Data, Inc.	Missouri
Property Specs, Inc.	California
Property Systems Integration Limited	England
Proudfoot Reports Incorporated	New York
Prune Hill Enterprises, Inc.	Washington
Public Abstract Corporation	New York
Quality Title LLC	Ohio
Quantitative Risk Solutions LLC	Arizona
Quantrix Credit Services, LLC	Delaware
Quantrix, LLC	Delaware
R.E. Services, Inc.	Ohio
Realeum, Inc.	Maryland
Recruiternet (Europe), Ltd.	United Kingdom
RELS Bundle, LLC	Delaware
RELS Reporting Services, LLC dba VIE, LLC, aka Value IT	Iowa
RELS Title Services, LLC	Delaware
RELS, LLC	Delaware
Republic Title of Texas, Inc.	Texas
RES Direct, LLC	Delaware
RES, LLC	Delaware
Russell Loan & Title, Inc.	Iowa
SAFErealestate, Inc.	California
Saia Title Company, Inc.	Kansas
San Benito Land Title Corporation	California
San Mateo County Title Company	California
Seconda, LLC	California
Security Land Title Company	Kansas
Service Standard Title and Trust, Ltd.	Virgin Islands
Settlers Abstract Company, L.P.	Pennsylvania
Settlers Title Agency, Inc.	New Jersey
Seventeen Parked Place, LLC	New Jersey
Shoshone Title Insurance and Abstract Company	Wyoming
Signature Title Corporation	New Hampshire
Sixteen Parked Place, LLC	Delaware
Skylar Aeronautics, Inc.	Washington

Name of Subsidiary:	State or Country Under Laws of Which Organized
Smart Title Solutions LLC	Delaware
Smartmove Property Services Limited	England
SMS Settlement Services, Inc.	California
Source One Services, Corporation	Utah
Southwest Title Land Company	Oklahoma
Standard Title Insurance Company, Inc.	Oklahoma
Sterling Title Company of Sandoval County	New Mexico
Stonegate Land Transfer, LLC	Delaware
T.A. Alliance Home Connect, LLC	Pennsylvania
T.A. Financial Services, Inc.	Pennsylvania
T.A. Holdings, Inc.	Pennsylvania
T.A. Insurance Alliance, LLC	Pennsylvania
T.A. of Alliance, LLC	Ohio
T.A. of Centre County, LLC	Pennsylvania
T.A. of Dauphin County, Inc.	Pennsylvania
T.A. of Dayton, LLC	Delaware
T.A. of Westmoreland, LLC	Pennsylvania
T.A. Title Agency of OH, Inc.	Ohio
T.A. Title Agency, Inc. (NJ)	New Jersey
T.A. Title Insurance Company	Pennsylvania
Teletrack Canada, Inc.	Canada
Tele-Track, Inc.	Georgia
Teton Land Title Company a/k/a First American Title Company of Wyoming	Wyoming
Texas Escrow Company	Texas
The Alameda Company, LLC	Delaware
The Closing Network, Ltd.	Pennsylvania
The Donegan Abstract Company	Texas
The Hyper-Abstract Corporation	New York
The Inland Empire Service Corporation	California
The Port Lawrence Agency, Inc.	Ohio
The Security Abstract & Title Company, Inc.	Kansas
The Security First Title Affiliates, Inc.	Florida
The Title Security Group, Inc., fka Shiels Title Company, Inc.	Puerto Rico
The Trust Company of St. Louis County	Missouri
Thirteen Parked Place, LLC	Pennsylvania
Tims Ford Title & Escrow, Inc.	Tennessee
Title Abstract Co. of PA, Inc.	Pennsylvania
Title Alliance of Cincinnati, LLC	Ohio
Title Alliance, Ltd.	Pennsylvania
Title Bond & Mortgage Company	Michigan
Title Insurance Agency of Juneau, Inc.	Alaska
Title Insurance Company of Oregon dba First American Title Insurance Company of Oregon	Oregon
Title Optics, Inc.	Washington
Title Partners of America, Inc.	Florida
Title Records, Inc.	California
Title Security of Brevard, Inc.	Florida
Title Services of New Mexico, Inc.	New Mexico
Title Software Corporation	Texas
Titlereporter Limited	England
Titleserve, Inc.	California
TransAlaska Title Insurance Agency, Inc., II	Alaska

Name of Subsidiary:	State or Country Under Laws of Which Organized
Tri-County Tax Research, Inc.	Michigan
Tuscola Title & Escrow, Inc.	Michigan
Twenty One Parked Place, LLC	Pennsylvania
Twenty Parked Place, LLC	Pennsylvania
Twenty Three Parked Place, LLC	Delaware
Twenty Two Parked Place, LLC	Delaware
Twin City Title Company, Inc.	Texas
U.S. SEARCH.com Inc.	Delaware
United General Financial Services, Inc.	Colorado
United General Holding Company, Inc.	Colorado
United General Title Insurance Company	Colorado
Universal Title, LLC	Maryland
Valuation Information Technology, L.L.C.	Iowa
Vendor Management Services, Inc.	Delaware
Virginia Title Examiners, LLC	Virginia
Warranty Title & Abstract Co., Inc.	Oklahoma
Washakie Abstract Company	Wyoming
Weatherford Title Company	Texas
Western National Title Insurance Company	Utah
Whitefish Title Services, Inc.	Montana
Woodford County Abstract & Title Company, Inc.	Illinois
Wyoming First County	Wyoming
Wyoming Land Title Company	Wyoming
Yakima County Title Company dba Yakima Title & Escrow Company	Washington
ZapApp India Private Limited	India
ZD Acquisition LLC	Delaware

EX-23

Exhibit 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-4 (Nos. 333-121617 and 333-107494), Form S-3 (Nos. 333-126545, 333-116855, 333-107644, and 333-81312) and Form S-8 (Nos. 333-113269, 333-111829, 333-74620, 333-41993 and 333-105428) of The First American Corporation of our report dated March 16, 2006 relating to the financial statements, financial statement schedules, management’s assessment of the effectiveness of internal control over financial reporting and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.

/s/    PRICEWATERHOUSECOOPERS LLP

PricewaterhouseCoopers LLP

Orange County, California

March 16, 2006

EX-31.(A)

Exhibit 31(a)

CERTIFICATIONS

I, Parker S. Kennedy, certify that:

1. I have reviewed this annual report on Form 10-K of The First American Corporation (“registrant”);

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; and

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; and

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 16, 2006

/s/    PARKER S. KENNEDY        

Parker S. Kennedy

Chief Executive Officer

(Principal Executive Officer)

EX-31.(B)

Exhibit 31(b)

CERTIFICATIONS

I, Max O. Valdes, certify that:

1. I have reviewed this annual report on Form 10-K of The First American Corporation (“registrant”);

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; and

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; and

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 16, 2006

/S/    MAX O. VALDES         

Max O. Valdes

Vice President,

Chief Accounting Officer

(Principal Financial Officer)

EX-32.(A)

Exhibit 32(a)

Certification pursuant to 18 U.S.C. Section 1350,

as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Form 10-K of The First American Corporation (the “Company”) for the period ended December 31, 2005, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Parker S. Kennedy, chief executive officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

/s/    PARKER S. KENNEDY        

Parker S. Kennedy

Chief Executive Officer and Chairman

March 16, 2006

The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. ss. 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

EX-32.(B)

Exhibit 32(b)

Certification pursuant to 18 U.S.C. Section 1350,

as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Form 10-K of The First American Corporation (the “Company”) for the period ended December 31, 2005, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Max O. Valdes, chief accounting officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

/s/    MAX O. VALDES        

Max O. Valdes

Vice President

Chief Accounting Officer

March 16, 2006

The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. ss. 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.