Fidelity National Financial (FNF) 7 Nov 242024 Q3 Earnings call transcript

Good morning, and welcome to FNF's Third Quarter Earnings Call. [Operator Instructions].

I would now like to turn the call over to Lisa Foxworthy-Parker, SVP, Investor and External Relations. Please go ahead.

Great. everyone. welcome, and operator, Thanks,

F&G's Joining of me Tony to Executive and for Chris Nolan, your CFO, Young, will join call. are Chief Financial Mike us Blunt, remarks. Park, prepared forward Q&A following Chief and Officer. Wendy questions F&G's portion Officer; the our today CEO; today's We addressing look

performance. events undertake do projections Securities Litigation Private in duty on materially earnings expressed or other may or SEC information, actual not future or factors refer subsequent statements and Today's guarantee the quarterly update call not include from those details to under for forward-looking cause changes We differ important events to revise recent our to reflect or to most filings Act reports implied. that any statements Please which annual do and and could such Reform new strategy. results

Mike measures to reconciled believe where within also morning's we with SEC materials may non-GAAP call our is been to website have our And that measures call rules earnings meaningful will the fnf.com. I'll Today's be and financial be Nolan. website. to in Non-GAAP recorded, available on turn webcast accordance our This includes required discussion available a CEO, GAAP investors. at on our being now replay over

Lisa, Thank morning. and good you,

challenging together this like quarter. are by We through results deliver of estate thanking we pleased industry-leading to continuing report to to start I'd work employees set the third cycle another for performance. strong our while as real

states. these want all recent and these to those by to and been the that by major first weeks, like resilience for our thoughts people demonstrated several incredible to X natural southeastern responders unwavering hurricanes am grateful I heartfelt to landfall acknowledge response and have throughout disasters. the I who dedication would affected storms extend in the our impacting made also

turning quarter to results. third Now our

million of adjusted results in pretax title having third of navigate compared are Our margin low transactional quarter an successfully as earnings the of given Title business adjusted the pretax These in environment XX.X%, $XXX XXXX. delivered continues to environment. XX.X% industry-leading the to outstanding

third the For seasonality orders from normal we with second decline showing continue daily opened quarter. X% an see sequential the purchase quarter, to

quarter's we in opened the September purchase results, a than we atypical indicative to daily This of saw in is the for due Within demand however, rates, and orders pent-up believe August. higher decline is housing. and

to at volumes an responsive September This points mortgage at as Refinance have been $X,XXX. the quarter. per quarter, $X,XXX with third July basis opened in in decreased XX-year the average by generated XX $X,XXX third rates day increase orders at and over refinance August during $X,XXX,

the October, day increase per saw rates. mortgage to change reflecting back refinance with to can moves in we in in down how rates $X,XXX volumes opened refinance orders With

revenue and steady through $XXX with $X the be to revenue million generated XXXX direct continue and billion in volumes commercial in line X XXXX. in first Commercial of level the We we in resilient. delivered that months, XXXX annual trending

remained as very Asset classes have consistent well.

to begins XXXX, sector commercial energy in as and industrial, and continued the the others. transact multifamily to higher among ahead for the see we potential volumes Looking expect office strength sectors,

prior second month Looking of third up the at down versus quarter year. over of third more orders Daily and were from X% for the up opened volumes X% quarter purchase closely. the XXXX, of X% October quarter the XXXX

October over prior versus of XX% up of were quarter third the Our second the XX% over for the XXXX, opened month quarter per up of year. refinance and the up XX% orders XXXX, day

with per for of XXXX year. day second up the opened $XXX averaged total quarter orders X% and Overall, $X,XXX, commercial $X,XXX. at opened July total Our August October X% September down month the orders day, prior at third $X,XXX up of the at and quarter over X% per the $X,XXX were XXXX, quarter third of in from the versus

of total day, versus opened XX% down month September. October, $X,XXX the per were orders For

adjusted our pretax margin months XX.X% line for the of first first XXXX. for margin in of the Notably, X of the title with XX.X% X XXXX is months

volumes As XXXX, remainder current of was poised XXXX our we if result XX.X%, downturn. for persistent pretax to the year light which reminder, mortgage lower next purchase full capture If title higher a was move seasonal falloff housing the the scale expect in year, the outstanding efficiencies mortgage for national from margin footprint. market of and are our rates transactional levels. would remain We given at the upside of an the diversified normal rates

view annual to to not talent of basis, cyclical invest actively long-term margins. We the are in thumb, in business, XX% we due in of our a the market acquisitions value purchase normalized industry-leading to estate good normal title of firmly and low as volumes. XX% margin for the Despite recruiting the of adjusted of all a making drive range although the strategic business we and nature investing a challenging market, the regardless we insurance technology, refinance the an continued maintaining On market. to have revenue, in pretax while residential title believe real rule

technology Our across focus for initiatives and a our footprint. investment operational key are deployment

decisioning to the work product. without pioneering value are of enhancing last At we We and our time, giving transaction experience underwriting, the the same build over mitigating decade or attention automated risk diminishing instant special customer throughout fraud. while continue and to on coverage the insurance our our in

We ahead for is all of X we consumers level that XXXX, now experience residential well are our this a professionals and of InHere and be estate year. had far million into platform. our so direct powers InHere SoftPro over in use expanding and continues to InHere operations proprietary real customers. our integrated vital resource

and search and process cost time the coverage our in the the front, preserving the and exam On machine of AI In high-quality use value aspects automate learning AI of while XX the of allowed over lines years. standardize, title has and tools us product. have data our curated our many single insurance this business last platform turn, to reduced and

the aspects to Looking in business, innovation of their our tools, further settlement various are ahead, we generative investing title including processes. AI with and enhance exploring potential

contributing Turning our from has reinsurance a additional scale. accretive expanding business expansion Tony which management is benefits the to to its margin F&G details distribution improved $XX.X at on few returns. positioned F&G and to continued record executing end growth platform grown to strategies, profitability and will book now third F&G billion moments. continues quarter. is its as in-force provide for F&G are a profitably flow before and in also its owned of new well assets reinsurance flow the under diversified through business.

ownership the has of stand-alone share streams the on let turn and partial time December F&G's XXXX, and durable $X.X its Tony the earnings, With from majority FNF's me billion additional at over benefits F&G spin-off highlights. the in performance of capitalization, which growing to of and FNF of its through of market $X.X now a increased provide basis. September of from recognition financial value F&G's dividend third review at that, to to XX call billion quarter cash

the total with $X.X in Thank billion you, in revenue Starting our results, we quarter. consolidated third generated Mike.

the net losses, billion recognized million third as net $XXX $XXX and gains million versus $X.X million, our in with was net revenue billion earnings quarter $X.X compared gains recognized to losses million, third The We continued are the recognized treatment each mark-to-market in including of and in and total disposed of including of $XXX the in reported recognized primarily be quarter of quarter net of in XXXX. $XXX investment securities, whether preferred to XXXX. portfolio. net of or due quarter of our gains the accounting losses third equity were stock period securities held Excluding

net of $XX segment $XXX F&G or before $X F&G in $XXX were statements. million, the XXXX. diluted Corporate The Title million the million of or financial the Adjusted segment contributed income million, compared $X.XX the share, quarter million million dividend share contributed consolidated contributed $X.XX per for third earnings segment $XXX eliminating $XXX from per and with

Turning the the to financial specific quarter to third segment. Title highlights

in billion XXXX. increased X% net and X%. million of Our quarter increased increased Direct the excluding the recognized in fees the with X%, quarter, third of title total Title other third year Title agency billion $X adjusted pretax expenses of premiums versus escrow costs the year, related segment million generated premiums $XXX in Personnel $X.X and gains compared X% for revenue a prior $XX million the other compared operating with in, margin increased adjusted XX.X% earnings prior $XXX for versus business Title quarter increased and pretax in the All title X%. XXXX third and the quarter. of quarter generated XX.X%

and holding billion at and year million, $X from totaled XX. and Interest excluding dividends income Title the portfolio September was to $XXX investment Corporate in Corporate quarter F&G the prior segments company. decline a the investment modest from and income Title Our

million the rate of from million expect $XXX QX around in quarterly in XXXX, in and interest to anticipated ahead, next and cuts assuming basis to we income the QX QX funds investment Fed down trend $XX X over of months. points to $XX million XXX Looking

a basis As all result investment expected and an in approximate else decline Fed being decrease in equal, thumb million XX income. of $XX to point every interest and rule funds is in annualized

In January million common reflects the of This to cash of stake convertible preferred and the in XX% on segment. annual mandatory approximately $XXX to addition, return corporate stock income of we dividend, preferred XXX% our F&G's expect given FNF over issued F&G's dividend ownership majority F&G dividend from XXXX.

for $X of third higher million or our paid above The the for of claim carried were our million quarter. X% Title approximately central Title losses claims than $XX actuary reserve $XX the million million $XX is estimate. provision

provide premiums. to continue for of total at X.X% Title claims Title We

its sales for double earlier will billion, billion Retail this few up highlights specific over key gross XX% the hosted provided a Next, quarter. the prior of delivered prior quarter. to F&G year year the update, want provide. financial the $X.X sales relatively quarter. benefiting a guaranteed as turning sales call nearly to record in annuities market conditions with thorough for F&G products, Since highlights and morning higher surge a $X.X were third over and earnings tail rates, strong to Pension continued recap the protection sales in segment. F&G that the tax and favorable demand to quarter, I third secure $XXX were from risk strong quarter. transfer driven significant consumers the long principal by retail a million trend demographic growth savings retirement deferred F&G's a

the the $XX F&G million has reinsurance up billion profitably year Adjusted before under items for by or share the were and quarter. includes its below expectations F&G long-term prior This income alternative of sales $X.X significant management a of per grown assets $XX returns AUM $XXX the X% our earnings including $X.XX million share. in million per at billion, flow the third or segment retained the net quarter, were quarter. net record of $X.XX to quarter. billion end investment $XX.X over third F&G's third $XX.X in

adjusted rates consolidated or in items in expected. FNF's together, providing XX% were to gives first $X.XX quarter. the whether rising diluted segment, are from all or net X per adjusted for F&G an net earnings, $XXX business. it regardless XXXX. of up million to our cyclical first performing businesses as third The excluding The bring for combined To stability of complement title our X of the F&G of months XXXX, FNF's significant segment earnings XX% earnings contributed the share falling, months F&G are the important

up We low balance the From XX. the investments million a capital current and level are we volumes cash liquid in million the at perspective, despite is as environment. the liquidity September $XXX balanced we business. holding the maintaining quarter at strategy capital navigate sequential This company sheet a compared allocation and Title to strong in a short-term $XXX ensuring and held

Our fully September have be for In million with outstanding $XXX been proceeds general issued F&G million senior debt the XX. early to to remainder revolver at used pay billion purposes. consolidated of was notes, down $XXX $X.X its and corporate used net October, balance

long-term in our as Our to we range XX%, XX% to shareholders' target and of AOCI, equity ratio, sheet naturally expect AOCI that consolidated will grows. remains capitalization debt excluding balance line delever our excluding with

million $XXX average commitment, of now million modest priorities dividend long-term spend holding support annual $XXX level annual growth interest the support our $XX expense Our primary million business. in $XXX annual to capital company acquisition at strategic of title the the million and allocation

third quarter. continued the the uncertainty in in market, Given there no the were share repurchases

generation dividend, We annual above our we expect and resume will our once of and spend. cash both level to title and market acquisition expense up to buybacks continue picks see interest monitor building the the

to buybacks As a reminder, subject are approval. Board

and let remarks, for back This concludes call prepared our our the now operator turn questions. me to

[Operator Instructions] question from John first with The is Campbell Stephens.

rate. of margin the same and pretax total it the for On like quarter, the looks agency direct grew at kind

investment flat year-over-year. kind had that income of You was

there's about, any or incremental like think, seem about mix out. really So XX%. looks like shift I call was it It underlying XX% doesn't changes to margin the

the there at anything guys as probably to closely out you'd past. in XX% XX% factors? call as You have run limiting far Is

I third about quarter. XX-point comparing of year, difference had bit Mike. $X it's last quarter of in to direct and third a mean, both actually last to the in million we John, third outperformance terms We That's to margin actual the in year. had a difference. agency quarter of

billion much year. segment, in So good. It a when that's the a $X see the was not performance not that But in performance about nontitle below slightly -- revenue, quarter, in just some third in our better was of little think you the difference. businesses we last not of Title bit did

my we commercial So both takeaway agency. national is outperformance had really, in and

margin. with a comes agency course, Of lower the

could revenue, and being equal. a lower because margins good you of So -- the agency but you that's that can thing, other more get things have can also

a That's XX% talked -- is, on whatever if incremental it margin, revenue operations. It's point. that you direct our that's very about direct at the Yes. look good or we on

So to in agent the the actually, you Agency that better XX% on incremental agency know, as business side, do probably the if goes range. is because much on somewhere so back margins we

you hear more Okay. going and be outlook you as Commercial driven like XQ? file on your fee in per in I on And super do it again, take, as to about you bit the you now, you Got what little -- in quarter. as growth file that it that the by expect the think on And seem Commercial. this to then see was then does year, or far your orders likely maybe it. file? commentary that's back of you based think now, bullish next based encouraging was But overall to some Commercial a guess kind for fee pipeline for helped see what upbeat

Yes, it's John. great a question, again. It's Mike

for $X.X billion we to office an classes annual by asset commercial around We of number in market. a see direct really One, much of reasons. somewhere to are revenues without generating various are encouraged strength billion just continue and in $X commercial

when net So of and will, it's a as begins matter market we it we a that transact, think that positive. see to as

last And are October, When our at XX% we up up through X%, through up open about our XX% national were look national our orders -- our orders are September, our September. orders but in orders October. over

right? the this it it we're And in in X%. strength ] was at [ national real quarter per around So bigger you when deals, seeing fee the look in and local was file, third was -- excess of XX.X%

So not of into have still I nice flattish really year quarter, that a well bigger to year. got last for only think these inventory kind but fourth that we've and transactions local the of bodes next

Hughes with The next Mark from question Truist is Securities.

The you number year-over-year. October commercial what, up gave X%

the with start that that seems kind hold? is were up basis, it of trends year-over-year? kind you when do earlier you an easy out kind it from steady think September in of be like monthly comp on of a I Or describing if Was to quarter. XQ, a current think will was little sustained down progression October the

October, -- a we at Yes. from opened was and Last [indiscernible]. that [indiscernible] down day, September

and rate And so see typically I in the know in quarter much gets comprehend, year. off The Mark, little in as October, you it didn't open commercial know if an off then but bit higher. fall fourth call as you see closings. don't last more I fall orders easy think it we This closing we a

net positive. I think so a And that's

commercial think again, helped the that I And October. well. out open orders X% activity that in significantly as in the up increase overall I in shows were think order And more create it national strength pointing that commercial.

some $X.XX the the if called think line, I I -- would you of had $X.XX about other $X.XX. expectations ex in think I the When below they said were then I perhaps. a progression been Yes. earnings F&G, out gave that $X.XX on we think the [indiscernible] properly? portfolio, you there? hear maybe the I items, at to the Did you number right that that Is -- $X.XX you add guess, the overall And -- in think

Yes.

at right about expectation. $X.XX. little the other a that it the were adjusts that basically those -- short and items a various big number, And then for into F&G That things the the very long-term direction. of go You're alts there the that significant that although bucket, are wasn't other go

the underperformance alt you where get So and sense. then add slight you reverse when -- that's back to that $X.XX, out you the the if other, makes underperformance

And spreads. on the Yes, then outlook missed and Okay. for earlier that. of the do I F&G, call, curious, just sort I see sales

Just that helpful. be would business thoughts kind in of a quick

This is Chris. Sure. Yes.

New to robust. be quite sales continue

that Some share has new policies before today. is been of than that which getting we've when X% people good. of talked this And were exchanging great we've policies been about rates to refinancing more fair written that, our

the demographics place. it of long-term taking Some that is are just

And so quite sales growth. optimistic in we're of terms yes, still

spreads So there. expansion kicking [indiscernible] distribution nicely, have held is up flow we activity see in. coming anything owned And we've don't down got and reinsurance, from

So lines are I know good. quite trend the

The next from question Bank. DeVries comes Mark Deutsche with

more transactions on XXXX? accelerate Just picking I loosening transact. office least some in seeing or either to on just it terms up an expectation starting Or that think Commercial, things that you up? the optimism already is pipeline? a Are that you of in the follow-up just should in kind activity is Or to built alluded and actually are that is of Mike, at

but some margin. of would it's the trend a say based think seeing on couple more things, not on a I I Mark. We're transactions,

who hearing there's we're from an there and activity So then starting 'XX. talking we our on some into go that to commercial we're evidence more be that expectation see as and customers that what could team leadership to we've are based seen clients transactions,

it. And Okay. for a then Got Chris. question

in kind seeing? as press to a enough for discuss support think capital the . Or to some you I question Tony, be FNF? another you're and in QX. infusion at the strength it's in Maybe FG? pipeline of you that could some [indiscernible] the for opportunity Is alluded actually from release, just need could ones early current the capital but there opportunity

pretty No, requiring we did sales in $XXX an the comfortable transactions is managing short We answer. PRT FNF that equity do about of from the without growth we're million infusion Yes. October. have

of we're self-sufficient. now capital being year, months XX PRT with But business $X billion intention through we the this of the of So over run sales.

it. X Any the quick Okay. from just QX And one. Got on hurricanes? more impact closings

it's There some think it's would have -- our a as revenue don't a I It million in of months, some be of could I think $X Mike, quarter. we'll impact, for direct say it significant. will the about particularly Mark. market. of I magnitude would month Florida a be think we but be anything couple in maybe don't significance

question from of next the line George The [Operator with Instructions] is Bose KBW.

you meaningful it nationwide the Can the in office market? How guys for is terms acquisition? talk could in first about that what do of you

I not the are all done question, say acquisitions. major like along, Bose. these good agency acquisition we've another Yes, space, would it's in

pay New us York matter a share market and have You're talking just New agencies well-established when, that acquisition build the off it York to there, we're $XX market player New that's will and very $XX another another the for team revenue. a to to million it's well the buying the known kind And very there join that will, and as us have think York we're really in group may excited have market, give just to market. back, They're accessing of them million brand generally upon. in comes in just I really of that

landscape. then question Great. X just on Okay. And post-election actually, the

-- and things efforts, things FHAP happen, post hold? the changes updates with election? like likely that are GSE, CFPB Or are to of on the put the likely like pilot any think do you get I the and mean the Just to sort thoughts

to most environment overall. helpful will it businesses. sure, Republican But regulatory think people that with think Yes. less the It's [indiscernible] to administration, will for And think hard Bose. be I a maybe I know be

to got through year went But less the anticipation be awfully like so quiet granted. impetus things we not of pilot, in which there for may anything as this behind push election. taking probably anyway, And the waiver we're

waiver all but front better work of to the it's why value administration. with on we very overall environment like things a We Title hard stakeholders probably on and continue ideas, this kind are bit with pilots think that insurance a bad new of little

the Nolan, Ladies and Mike to that this the I -- over gentlemen, will our question-and-answer conclude session. conference closing was turn -- remarks. back for now will CEO,

you. Thank

Title pleased has expand the the levels, and for and a We our expansion the drive is Likewise, margin in we poised continuing returns. build are The growth, market, deliver to opportunities very rebound for outperforming term. ahead F&G performance. with segment current in business long and generate overall accretive transactional are to asset many

As for are you and can current growth. the in businesses both market longer-term well executing position see,

Thank appreciate you for the We quarter interest in FNF your fourth time updating you earnings this call. morning. to forward our on and look

today's for you attending Thank conference and concluded. has presentation the call

may you. now You Thank disconnect.