Index First American Profile Financial Highlights Letter to Stockholders First American's Strength in Numbers Title Information and Services Real Estate Information and Services Consumer Information and Services Management's Discussion and Analysis Selected Financial Data Common Stock Prices and Dividends Quarterly Financial Data Consolidated Balance Sheets Consolidated Statements of Income Consolidated Statements of Stockholders' Equity Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements Report of Independent Accountants Officers Board of Directors Primary Companies Stockholder Information Back Cover

notes to consolidated financial statements

 NOTE 6

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
(in thousands)	2001				2000		1999
Balance at beginning of year	$ 284,607		$ 273,724		$ 272,921
Provision related to:
Current year	181,346		144,103		122,311
Prior years	(700	)	(2,471	)	(6,093	)
	180,646		141,632		116,218
Payments related to:
Current year	90,442		70,985		58,915
Prior years	61,079		63,235		54,029
	151,521		134,220		112,944
Other	1,045		3,471		(2,471	)
Balance at end of year	$ 314,777		$ 284,607		$ 273,724

    “Other” primarily represents reclassifications to the reserve for assets acquired in connection with claim settlements and purchase accounting adjustments related to company acquisitions. Claims activity associated with reinsurance is not material and, therefore, not presented separately. “Payments related to current year” include $69.1 million, $61.0 million and $51.3 million in 2001, 2000 and 1999, respectively, that relate to the Company’s nontitle insurance operations.