Accumulated Other Comprehensive Income (Loss) ("AOCI")

12 Months Ended

Dec. 31, 2021

NOTE 21. Accumulated Other Comprehensive Income (Loss) (“AOCI”):

The following table presents a summary of the changes in each component of AOCI for the years ended December 31, 2021, 2020 and 2019:

	First American Financial Corporation
(in millions)	Unrealized gains (losses) on debt securities			Foreign currency translation adjustment			Pension benefit adjustment			Accumulated other comprehensive income (loss)
Balance at December 31, 2018	$	(41	)	$	(66	)	$	(53	)	$	(160	)
Change in unrealized gains (losses) on debt securities		164			—			—			164
Change in foreign currency translation adjustment		—			15			—			15
Net actuarial loss		—			—			(27	)		(27	)
Amortization of net actuarial loss		—			—			4			4
Amortization of prior service credit		—			—			(4	)		(4	)
Tax effect		(39	)		(1	)		7			(33	)
Balance at December 31, 2019		84			(52	)		(73	)		(41	)
Change in unrealized gains (losses) on debt securities		116			—			—			116
Change in unrealized gains (losses) on debt securities for which credit-related portion was recognized in earnings		1			—			—			1
Change in foreign currency translation adjustment		—			14			—			14
Net actuarial loss		—			—			(31	)		(31	)
Amortization of net actuarial loss		—			—			5			5
Amortization of prior service credit		—			—			(3	)		(3	)
Tax effect		(29	)		—			8			(21	)
Balance at December 31, 2020	$	172		$	(38	)	$	(94	)	$	40
Change in unrealized gains (losses) on debt securities		(189	)		—			—			(189	)
Change in foreign currency translation adjustment		—			(2	)		—			(2	)
Net actuarial gain		—			—			11			11
Amortization of net actuarial loss		—			—			7			7
Amortization of prior service credit		—			—			(1	)		(1	)
Tax effect		46			1			(5	)		42
Balance at December 31, 2021	$	29		$	(39	)	$	(82	)	$	(92	)

The following table presents the other comprehensive income (loss) reclassification adjustments for the years ended December 31, 2021, 2020 and 2019:

	Unrealized gains (losses) on debt securities			Foreign currency translation adjustment			Pension benefit adjustment			Total other comprehensive income (loss)
	(in millions)
Year ended December 31, 2021
Pretax change before reclassifications	$	(169	)	$	(2	)	$	11		$	(160	)
Reclassifications out of AOCI		(20	)		—			6			(14	)
Tax effect		46			1			(5	)		42
Total other comprehensive income (loss), net of tax	$	(143	)	$	(1	)	$	12		$	(132	)
Year ended December 31, 2020
Pretax change before reclassifications	$	125		$	14		$	(31	)	$	108
Reclassifications out of AOCI		(8	)		—			2			(6	)
Tax effect		(29	)		—			8			(21	)
Total other comprehensive income (loss), net of tax	$	88		$	14		$	(21	)	$	81
Year ended December 31, 2019
Pretax change before reclassifications	$	168		$	15		$	(27	)	$	156
Reclassifications out of AOCI		(4	)		—			—			(4	)
Tax effect		(39	)		(1	)		7			(33	)
Total other comprehensive income (loss), net of tax	$	125		$	14		$	(20	)	$	119

The following table presents the effects of the reclassifications out of AOCI on the respective line items in the consolidated statements of income:

	Amounts reclassified from AOCI
	Year ended December 31,
(in millions)	2021			2020			2019			Affected line items
Unrealized gains (losses) on debt securities:
Net realized gains on sales of debt securities	$	20		$	15		$	4		Net investment gains
Credit losses recognized on debt securities		—			(7	)		—		Net investment gains
Pretax total	$	20		$	8		$	4
Tax effect	$	(5	)	$	(2	)	$	(1	)
Pension benefit adjustment (1):
Amortization of net actuarial loss	$	(7	)	$	(5	)	$	(4	)	Other operating expenses
Amortization of prior service credit		1			3			4		Other operating expenses
Pretax total	$	(6	)	$	(2	)	$	—
Tax effect	$	2		$	1		$	—

(1)	Amounts are components of net periodic cost. See Note 17 Employee Benefit Plans for additional details.