Fidelity National Financial, Inc. Q1 FY2025 earnings call

• Title Business: Delivered strong first quarter results with margin increase. Purchase orders had seasonality, refinance orders responsive to mortgage rates. Invested in technology like SoftPro operating platform, automated title efforts, and InHere digital transaction platform. Focus on AI investments for efficiency.
• F&G Business: Profitably grew AUM. Participated in F&G's common stock offering to maintain ownership stake above 80%.
• Capital Allocation: Resumed share repurchases, repurchased 390,000 shares in Q1 at an average price of $63.42 per share. Aim to return capital to shareholders and invest in business through M&A, talent, and technology.

Title Segment

• Adjusted pretax title earnings: $211 million; adjusted pretax title margin: 11.7% (up 100 basis points from prior year quarter). Total revenue in Q1: $1.8 billion. Direct premiums up 16%, agency premiums up 15%, escrow title related and other fees up 8%. Personnel costs up 9%, other operating expenses up 10%.
• Commercial: Direct commercial revenue $293 million in Q1, up 23% y-o-y. Four consecutive quarters of double-digit increases in national daily orders opened. Total commercial orders opened 862 per day in Q1, up 10% y-o-y.

F&G Segment

• Assets under management before flow reinsurance: $67.4 billion at March 31, up 16% y-o-y. Gross sales $2.9 billion, down 17% y-o-y primarily due to lower MYGA sales; excluding MYGA, gross sales up 5% y-o-y. Adjusted net earnings $80 million in Q1, down from $95 million in prior year quarter.

• Title segment: Expect interest and investment income of $85 million to $90 million per quarter in 2025 assuming two Fed funds rate cuts.
• F&G: Expected to continue strong results over time with AUM growth.
• Share repurchases: To continue with a regular cadence, though no specific guidance on number of shares repurchased.

• Mortgage rate volatility impacting purchase orders.
• Short-term spread pressures in F&G due to prepayments of securities and temporary distribution partner impact.
• Potential regulatory changes impacting the Title business, though minimal impact expected from current regulations.

Q: Hey guys, good morning. I just want to touch on two questions on the orders. I guess, first on the April purchase orders, I think you mentioned down 3% year-over-year. Just curious about the week-to-week phasing kind of how that looked relative to interest rates throughout the month.

A: Yes. Good question, John. I think it got a bit better as we got near the end of the month. But I would say for most part, there wasn't a lot of variation in how the month played out. I mean how the month played out.

Q: And that's helpful. And then apologies if I missed this, but I didn't -- I don't think I heard the commercial open order activity in April. Any kind of call-outs there?

A: Sure. Yes. So April of [indiscernible] commercial -- total commercial was up 4%. And I don't know if we said it in the open app, notably the national opens April rate was 15% and local was down 3% April over April.

Q: Given what you said about buybacks being opportunistic, is there a way to think about the cadence of buybacks for the remainder of the year?

A: Thanks, Bose. This is Tony. I would say we typically are just on a regular occurrence when we're not blacked out. We got started late. Our year-end call was pretty late in the quarter, and so we started after that and just kind of modest daily activity, I think that's the way we'll do it. We don't guide in terms of actual expectation of shares bought back. But I think what you'll see is a regular cadence to that and probably a stronger number than what we saw in the first quarter just because we got started so late.

Q: Hi, good morning. Actually first, just on the buybacks, given what you said about buybacks being opportunistic, is there a way to think about the cadence of buybacks for the remainder of the year?

A: Thanks, Bose. This is Tony. I would say we typically are just on a regular occurrence when we're not blacked out. We got started late. Our year-end call was pretty late in the quarter, and so we started after that and just kind of modest daily activity, I think that's the way we'll do it. We don't guide in terms of actual expectation of shares bought back. But I think what you'll see is a regular cadence to that and probably a stronger number than what we saw in the first quarter just because we got started so late.

Q: Hi, good morning. Actually first, just on the buybacks, given what you said about buybacks being opportunistic, is there a way to think about the cadence of buybacks for the remainder of the year?

A: Thanks, Bose. This is Tony. I would say we typically are just on a regular occurrence when we're not blacked out. We got started late. Our year-end call was pretty late in the quarter, and so we started after that and just kind of modest daily activity, I think that's the way we'll do it. We don't guide in terms of actual expectation of shares bought back. But I think what you'll see is a regular cadence to that and probably a stronger number than what we saw in the first quarter just because we got started so late.

Q: Hoping you could provide a little more color on the decision to invest in FG capital raise and how you size that investment kind of how you expect to return to stack up to alternatives that you might have had?

A: Yes, Mark, this is Tony. Maybe I'll start and others could add in. But I think it was just -- it was twofold. One, we believe in FG's growth opportunities and want to grow that asset base and grow that earnings base. And so that was part of it. The other part, as we've said in the past, we want to maintain an ownership stake over 80% just to preserve the optionality should we decide at some point to spin it off to our shareholders tax-free, we need to own more than 80% of F&G. And so that's kind of a combination of those two. But again, we feel -- first of all, for us, it was $150 million, so didn't really put too much of a dent in our strong cash position, and we believe that F&G can return strong returns with that equity capital.

Q: Thanks. Hoping you could provide a little more color on the decision to invest in FG capital raise and how you size that investment kind of how you expect to return to stack up to alternatives that you might have had?

A: Yes, Mark, this is Tony. Maybe I'll start and others could add in. But I think it was just -- it was twofold. One, we believe in FG's growth opportunities and want to grow that asset base and grow that earnings base. And so that was part of it. The other part, as we've said in the past, we want to maintain an ownership stake over 80% just to preserve the optionality should we decide at some point to spin it off to our shareholders tax-free, we need to own more than 80% of F&G. And so that's kind of a combination of those two. But again, we feel -- first of all, for us, it was $150 million, so didn't really put too much of a dent in our strong cash position, and we believe that F&G can return strong returns with that equity capital.