Q1 2022 Fidelity National Financial Inc Earnings Call
[music].
Good morning, and welcome to U S. M. S. N S first quarter 2022 earnings call.
Today's presentation, all parties will be in a listen only mode. Following the presentation. The conference will be opened for questions with instructions to follow at that time.
As a reminder, this conference call is being recorded.
I'd now like to turn the call over to Lisa Foxworthy, Parker Senior Vice President Investor and external relations. Please go ahead, great. Thanks, operator, and welcome again, everyone before we begin and as a reminder, today's earnings call May include forward looking statements and projections under the private Securities Litigation Reform Act, which do not guarantee.
Future events or performance.
We do not undertake any duty to revise or update such statements to reflect new information subsequent events or changes in strategy. Please.
Please refer to our most recent quarterly and annual reports and other SEC filings for a discussion of the factors that could cause actual results to differ materially from those expressed or implied.
We will be discussing certain non-GAAP measures on this call, which we believe are relevant in assessing the financial performance of the business and you'll find reconciliations of these metrics within our earnings material available on the company's website.
Yesterday, we issued a press release, which is also available on our website and today's conference call will be available for Webster webcast replay at FNF Dot com. It will also be available through telephone replay beginning at two P. M. Eastern today through May 18th 2022.
Joining me this morning to discuss the business momentum, we are seeing in F&I and F and G and our results in further detail, our Mike Nolan C E O.
Tony Park, CFO , and Chris Blunt F and G C E O.
We look forward to addressing your questions. Following conclusion of our prepared remarks, and with that I'll now turn the call over to Mike.
Thank you Lisa and good morning.
Overall, we had a great start to the year with total revenue of $3 2 billion, the best first quarter indefinite history.
Our title business is performing well as we had our second best first quarter in terms of adjusted pretax earnings and adjusted pretax margin.
Similarly F N. She continues to deliver on this diversified growth strategy and we are excited about the recently announced dividend distribution of 15% ownership stake in F. N G to FNF shareholders, which is on track to be completed in late third quarter or early fourth quarter of this year.
Focusing on the title business, we have entered a period of rising interest rates coming off the historically low mortgage rates of the last two years.
The average 30 year fixed mortgage rate has risen from roughly 3% at year end to.
To around 4% at the end of the first quarter.
And more recently to over 5% at the end of April .
We have seen steady levels of residential purchase origination demand, although given the current environment. We are not seeing the typical increase heading into the spring selling season.
While current residential purchase demand is trailing last year 2021 was a record year for the U S residential purchase market and current forecast indicate 2022 will still be one of the strongest purchase origination markets in the last decade.
We also continue to benefit.
From strength in the commercial market and home price appreciation in the residential purchase market.
Commercial fee per file increased 35% and residential purchase fee profile increased 9% versus the prior year.
Which taken together has served a buffer reduced refinance volumes.
For the first quarter total orders opened averaged 8600 per day.
The month of April total orders opened were 7400 per day.
Aside from the moderated it refinance volumes.
Commercial and residential perfect purchase activity have held up well, especially.
Especially as compared with the robust levels in early 2021.
Which benefited from low interest rates and pent up demand from the pandemic and business shutdowns that occurred in 2020.
Daily purchase orders opened were down 1% or nearly in line with the first quarter of 2021 and down 6% for the month of April versus the prior year.
Refinance orders opened per day were down 57% from the first quarter of 2021 and down 63% for the month of April versus the prior year.
Lastly, total commercial orders opened per day were higher by 6%.
Over the first quarter of 2021, and lower by 2% for the month of April versus the prior year.
For April total commercial orders opened or over 1000 per day for the fourth month in a row.
This represents positive momentum going into the second quarter, given the longer tail for closings in commercial as compared with residential.
Overall, we have seen stability entitled revenue for the quarter.
Total revenue was $2 4 billion compared with $2 5 billion in the first quarter of 2021.
Total revenue, excluding recognize gains and losses was $2 6 billion and in line with the first quarter of 2021.
For the quarter, we delivered adjusted pre tax title earnings of 437 million, a 15% decrease from the prior year.
And then adjusted pretax title margin of 17, 1% as compared with 19, 9% in the year ago quarter.
The results were driven by a 58% decrease in daily refinance orders closed partially offset by a 49% increase in average fee per file.
And a 7% increase in total commercial orders closed.
Of note total commercial revenue was $374 million compared with the year ago quarter of $257 million.
Driven by the 7% increase in closed orders and 35% increase in total commercial fee per file.
Moving forward, we will remain focused on a number of areas.
First we continue to execute on our disciplined operating strategy in the title segment.
Given our long history, and deep experience navigating various economic cycles.
We have a proven track record of evaluating real time market trends.
Effectively managing margin by adjusting expenses to align with trends in opened and closed order volumes.
Next we will also continue to make investments to ensure we maintain and extend our market leading position.
Over the last decade, we have created an innovative and scalable technology platform in our title business.
With expansive offerings to service the broader real estate industry.
We continue to make significant investments in developing enhancing and integrating technology for ourselves and our customers.
In 2021 considerable effort was put into enhancing functionality and expanding adoption of our N here experience platform.
Our differentiated end to end digital platform that transforms the experience of buying selling or refinancing our home.
Additionally over the last 12 months, we have made 10 acquisitions in the title space for approximately $92 million and we continue to review potential acquisition targets to grow our national footprint.
Last but not least turning to F and G and which Chris will discuss in more detail in a moment.
First quarter sales rose by 57% year over year to $2 6 billion with assets under management ending the quarter at $38 6 billion.
As we continue to take share while gaining momentum in new distribution channels.
<unk> contributed 21% to our adjusted earnings this quarter as compared to 17% in the year ago first quarter.
<unk> assets under management grow so too will their earnings power and contribution to F. N S. We've.
We view this as a competitive advantage as F. N cheese, primarily spread based business provides a steady and growing source of earnings that will benefit FNF over time.
Well <unk> has exceeded expectations and remains an important part of our business. The market is not yet recognize the value creation that has taken place at F. N G.
As a result, we announced our plan in March to dividend, 15% of the common stock of F. N G to FNF shareholders on a pro rata basis with the expectation that F. N. G will be publicly listed in late third quarter early our early fourth quarter of 2022.
<unk> to customary approvals.
By retaining 85% ownership of F. N G. We will continue to benefit from their growth. While also highlighting the substantial equity value that has been and will continue to be created.
Finally, I would like to wrap up by thanking our employees.
Our team has continued to perform exceptionally well and kept our operations running efficiently with a steadfast focus on our customers.
Let me now turn the call over to Chris Blunt to review <unk> first quarter highlights.
Thanks, Mike the first quarter kicked off a strong start to 2022, we achieved sales of $2 6 billion, which boosted ending assets under management to $38 6 billion as of March 31.
Our success in expanding distribution under Fnf's ownership now gives us the ability to source premiums from five distinct channels versus one at the time of the acquisition in June of 2020.
Our first quarter retail sales totaled $1 5 billion in line with the prior year quarter, the relatively flat sales from our agent bank and broker dealer channels in the quarter, reflecting pricing actions taken in response to the macro environment in the fourth quarter, which carried into early first quarter results.
We took a measured approach and reflecting the move up in rates and our pricing during the early part of 2022, but have subsequently seen record levels of submitted annuity premium in March and April and are well positioned to resume our strong growth trajectory in the second quarter.
Turning to institutional markets, which we launched in mid 2021, our first quarter sales totaled $1 1 billion.
The first quarter marked our largest single pension risk transfer transaction to date with over $500 million in premium transferred and we were ranked eighth in total market share for the full year 2021, According to Limbaugh.
This demonstrates our leadership in the large and growing addressable markets we play in.
We foresee the demographic trends will provide tailwind to give us significant room to continue growing in the untapped middle market as well as the opportunity to migrate consumers from bank Cds to attractive fixed annuity products and a rising rate environment.
Our business model gives us a sustainable competitive advantage within our markets given our long standing relationships with distribution durable investment management edge through our Blackstone partnership and a track record of attracting top talent.
We continue to deliver consistent top line growth and net spread across varying market cycles.
Adjusting for favorable investment income notable items total net investment spread was 265 basis points and FIA spread was 334 basis points. Both in line with our historical trends and consistent with our disciplined approach to pricing.
With regard to earnings <unk> adjusted net earnings for the first quarter were $82 million.
Adjusted net earnings for the quarter included net unfavorable items of $16 million.
Primarily $38 million in tax expense for a valuation allowance recorded against deferred tax assets related to the pass sale of discontinued operations.
Partially offset by 22 million of favorable items, primarily comprised of gains on collateralized loan obligation redemptions.
Adjusted net earnings excluding those notable items were $98 million in the first quarter, an increase of $32 million or 48% compared to 66 million in the prior year quarter.
Adjusted return on assets. Excluding notable items of 105 basis points was driven by our growing a U M and strong spread results from disciplined pricing actions on both new business as well as our in force book.
The financial results demonstrate the underlying earnings power of the F&B business model, particularly in a rising rate environment.
We are well positioned for future growth and feel that we are at an inflection point with fnf's announcement of its intention to take F&B public through the dividend of 15% of the common stock.
F N G to FNF shareholders as Mike mentioned.
We expect to list on the New York Stock exchange with the ticker symbol F. G. During late third quarter or early fourth quarter of this year.
We see this as a vote of confidence for our business, while maintaining benefit from the continued partnership of Fnf's majority ownership.
We anticipate that the transition back to being a standalone public company, we helped to reinforce the value of F. N G and allow investors to invest directly in <unk> to capitalize on the earnings and cash flow potential of our in force book as well as the upside potential from our new business platform.
The transaction is subject to various conditions, including final approval by the FNF Board of directors filing and effectiveness of our form 10 registration statement under the Securities Exchange Act of 1934 as amended and any applicable regulatory approvals, we look forward to providing further updates in.
The coming months.
I will now turn the call over to Tony Park to review <unk> first quarter financial highlights.
Thank you Chris.
Starting with our consolidated results, we generated $3 $2 billion in total revenue in the first quarter with the title segment, producing $2 $4 billion F. N G producing $748 million in the corporate segment generating $34 million.
First quarter net earnings were $397 million, including net recognized losses of $469 million.
Versus net earnings of $605 million, including $43 million of net recognized gains in the first quarter of 2021.
The net recognized gains and losses in each period are primarily due to mark to market accounting treatment of equity and preferred stock securities whether the securities were disposed of in the quarter were continued to be held in our investment portfolio.
Excluding net recognized gains and losses, our total revenue was $3 6 billion as compared with $3 1 billion and.
In the first quarter of 2021.
Adjusted net earnings from continuing operations was $388 million or $1 37 per diluted share compared with $455 million or $1.56 per diluted share for the first quarter of 2021.
The title segment contributed $334 million F&B contributed $82 million and the corporate segment had an adjusted net loss of $28 million.
Turning to the title segment financial highlights.
Our title segment generated $2 $6 billion in total revenue, excluding net recognized losses of $175 million in the first quarter compared with $2 6 billion in.
In the first quarter of 2021.
Direct premiums increased by 3% versus the first quarter of 2021 eight.
Agency premiums grew by 4% and escrow title related and other fees decreased by 11% versus the prior year.
Personnel costs increased by 3% and other operating expenses decreased by 2%.
All in the title business generated a 17, 1% adjusted pretax title margin for the quarter.
The decrease of 280 basis points versus the record 19, 9% in the prior year quarter.
Our title in corporate investment portfolio totaled $6 5 billion at March 31.
Interest and investment income in the title and corporate segments of $27 million declined $2 million as compared with the prior year quarter, primarily due to decreases in bond interest.
Given the rising rate environment, we would anticipate the potential for higher investment income.
To help put it in perspective for the title and corporate portfolio, we would expect approximately $5 million in annual run rate income for each 25 basis point increase in fed funds with some moderation after about 200 basis points.
Our title claims paid of $54 million were $30 million lower than our provision of $84 million for the first quarter.
The carried reserve for title claim losses is approximately $85 million or 5% above the actuary central estimate.
We continue to provide for title claims at four 5% of total title premiums.
Let me wrap up with a few thoughts on capital and liquidity.
We remain focused on ensuring our balanced capital allocation strategy as we navigate the current environment.
This encompasses making investments entitled Technology, and other strategic initiatives to support innovation and organic growth in the business.
Continuing to evaluate sensible strategic M&A opportunities in real estate related businesses title agencies and technology acquisitions.
Hang a generous quarterly dividend to our shareholders and repurchasing shares.
With regard to capital funding commitments to <unk> as shared in prior quarters ahead of the F&B dividend distribution transaction, we expect to convert the existing $400 million intercompany term loan into equity. This will conclude fnf's capital commitments to F&B.
Going forward <unk> intends to fund its continued growth with a strong and growing statutory earnings reinsurance programs and unused debt capacity.
<unk> debt to total capital ratio was 19% at March 31 <unk>.
And they expect to manage to a 25% debt to total capital ratio long term target in line with ratings.
We ended the quarter with $1 $5 billion in cash and short term liquid investments at the holding company level in line with the sequential quarter.
Fnf's consolidated debt was $3 1 billion on March 31, which includes $400 million of five 5% senior notes that will mature in September of 2022.
Our annual interest expense on debt outstanding is approximately $100 million.
During the first quarter, we paid common dividends of 44 per share for a total of $124 million.
We view, our current $500 million annual common dividend as sustainable the dividend is reviewed quarterly and expected to increase over time subject to cash flows alternative uses of capital and market conditions.
FNF continues to return excess cash to shareholders over time through share repurchases.
And has remained active throughout the first quarter and into the second quarter during.
During the first quarter, we repurchased 275 million shares for a total of $134 million at an average price of $48 68 per share.
Combined we have returned over $250 million of capital to our shareholders through common dividends and share repurchases in the first quarter.
This concludes our prepared remarks, and let me now turn the call back to our operator for questions.
Thank you ladies and gentlemen at this time, we will be conducting a question and answer session.
If you'd like to ask a question you May press star one on your telephone keypad.
Confirmation tone will indicate your line is in the question queue you.
You May press Star two if you would like to remove your question from the Q4 participants using speaker equipment. It may be necessary to pick up your handset before pressing the star key.
Our first question comes from the line of Mark Hughes with Truest. Please proceed with your question.
Yeah. Thank you good morning.
Good morning.
Yeah.
The.
The acceleration you saw in sales in March and April was that the pricing action on your part.
Was that.
Just a broader uptick in demand FIA is given the interest rate environment in the against the equity market volatility.
Yes, great Great question I think it was really a function of we were a little late to move pricing rates moved up quite quickly, particularly in the liquid credit.
Part of the market and we just wanted to make sure that that was sustainable and once we kind of moved with competitors and kind of move back to our traditional margin.
We've seen sales jump pretty pretty dramatically.
And then with this kind of a backdrop do you look to expand spread.
And they have a category of overall or is that going to be steady spread in whatever.
Additional interest rate goes to the.
Policyholder.
No I think we do look at this is an environment to take a little bit of extra spread obviously you need to remain competitive you need to have good competitive renewal rates, it's incredibly important to both policyholders, but also distribution.
<unk>, but some spread expansion just happens even if youre not attempting to do that just given the movements that we've seen on the right side, meaning where pricing product, we're bringing in premium and by the time, we actually.
Get it invested you're in most cases grabbing a couple extra basis points of spread. So I do think this is an environment. We can continue to grow we can continue to be very competitive to take market share and at the same time, probably get a little extra spread along the way.
And then one quick question, if I might on the.
Title business.
Purchased you described down 6% in April any sense of the trajectory of that given that interest rates have been moving so fast.
How stable has been what's your experience been kind of in recent week week or two.
Sure Mark it's Mike I would say it will be dependent of course on on whether rates stabilize or continue to move up but as I mentioned in the opening.
We're not seeing the typical increase as you move into <unk>.
The May June timeframe, which are typically the peak months in a year.
And we just may see.
I I would expect that we will see purchase orders kind of flattish.
Through that timeframe.
Instead of increasing and then probably start to see just the typical month over month.
Light decline as you move through the back end of the year.
Thank you for that.
Our next question comes from the line of Andrew Klingerman with Credit Suisse. Please proceed with your question.
Hey, good morning.
I'm not on that last question.
Did I hear you correctly in your opening remarks, when you said the open orders for purchased went from 8600 in April Daily 270, 400, as we kind of start may is that right.
No that's not correct Andrew that was total open orders not purchase and the decline.
Primarily on the refi side.
Got it okay. Good so things are somewhat stable in that purchase is more something.
A bit more stable, although down as I mentioned.
1% for the first quarter and 6% for April year over year.
Got it good to hear Okay, and then with respect to the adjusted pre tax margin.
17, 1% in the quarter.
From 19 nine year over year, and then sequentially down from 22, four and all the while revenue.
Just year over year the revenue as you cited is flat so.
Could you, possibly Mike or Tony helped me to dissect what are what's driving that margin down and.
And where we might expect that to be going forward.
Sure, It's Mike I'll start with the first part.
In terms of the year over year, which is really the more valid way to make a comparison you you really in our industry you can't really compare fourth quarter margins to first quarter margins at just the trajectory of that business just doesn't.
Isn't really drive that but if you look at the year over year, It's really just just three things.
We had our personnel costs up about 3% in the title segment.
On flattish revenues, so that that takes your margin down a little bit.
The higher mix of agency revenue.
To the total and as you know our our agency gross margins are industry, leading but still in the 9% to 10% range up against.
Direct pre tax margin that might be.
And then the mid Twenty's or Thirty's. So so that is a bit of an impact and then theres a few non.
Our title business is in the in the title segment that also.
Had a little bit of margin compression quarter over quarter, and then to your second question about going forward I would expect margins to be very good as you know we don't we don't give guidance, but as we look at the second quarter, we still expect to see a very healthy commercial environment.
Purchase may be not as good as the original forecast start, but still have actually a very good purchase market and in a historical context standpoint and just.
Just it should be a good quarter.
Got it.
It's good to hear and then I kind of think about the expenses and you just said Mike.
Personnel was was up 3% and then I looked at other operating expenses year over year that was actually.
Down 2%.
You know with these pressures how are you looking at both the personnel and the other operating expenses going forward.
Sure and we started.
With some modest.
Resizing of the business some staff reductions, we had a little bit in the fourth quarter.
Some more in the in the first quarter and the first quarter number.
Also includes adding approximately 250 <unk>.
Employees through acquisitions as well as industry focused.
Hiring so we continue to kind of work on both ends of it adding talented people are the company that can drive additional revenues, but also right sizing the overall size to the environment.
And as we go through the second quarter.
I would anticipate.
Maybe another 3% to 4%.
A decline in total employee counts and Andrew its Tony just maybe to add on to that.
If you look at our personnel costs were probably about two thirds fixed and one third variable in that line item, so clearly as revenue and profits move our variable.
Cost on the personnel side move with them and then the fixed or more salaries payroll taxes that sort of thing and of course that salaries.
Salaries get adjusted when you when you take head count out on the other operating expense side of things were probably a little more a variable there we have some cost of sales in there on some of our businesses like valuations and <unk>.
Maybe.
Loan care, we have with title plant cost that can be more variable certain professional fees and so that's why you see maybe a little bit more of a decline or you see a little bit of a decline on the other operating versus a little bit of an increase on the personnel.
Very helpful. Thank you.
Our next question comes from the line of John Campbell with Stephens. Please proceed with your question.
Hey, guys congrats on the quarter and good morning.
Hey, John Hey, John Hey, Chris maybe starting off with you on the over.
Over the last year it looks like that the F&B adjusted net earnings on a quarterly basis. It looks like you guys have averaged roughly $90 million I think and maybe that's a little bit.
Little overstated it sounds like maybe.
Normalized more like $80 million, but obviously you guys have built up the AUM quite a bit I imagine you're probably getting a degree of added tailwind with rates, but it's somewhere in that kind of $80 million to $90 million range per quarter is that a is that a good range to consider going forward.
Yeah, No I think it is and again if we just go back to that simple, 1% return on asset metric and you project out average assets under management, that's going to put you in the right ZIP code, but yes, I think I think that's a good starting point some positives this quarter continued to have some.
CLO refinancings, so that's kind of pulling forward some earnings that will clearly decline now given where rates are but then we also had the tax adjustment, but yes. If you strip out some of the one timers and some of the noise.
I'll point back to that 1% ROA figure, we've been doing a bit better than that given the environment, but I think that's a good estimate.
Okay. That's helpful. John .
John John its Tony just maybe to put a finer point on it when you do strip out those items that that Chris was talking about were actually closer to.
The $100 million in the quarter I think we were at 98, excluding those notable items versus $66 million just a year ago in Q1, so to Chris's point 98, as you know almost 400 million dollar run rate and Thats pretty close to a 100 basis points on assets.
Yes, it makes sense and I mean, you guys have really.
Put up some good results out of F N G. So.
Hopefully with the with a 15% spend you guys will all eventually get credit for that for sure.
On the commercial side.
That has been way ahead of it.
At least our expectations the last couple of quarters.
Looks like on the National side, it looks like open orders up 16% year over year. So continued momentum there, but maybe if you guys could talk about the.
The mix kind of what asset classes, you would point out is the drivers of momentum and how you feel about the commercial business the rest of the year.
Yes, John its Mike and you're absolutely right that the national orders were actually up closer to 18% quarter over quarter, but.
We're very optimistic on commercial you know we've now got as I mentioned in the opening of four months in a row over 1000 orders a day.
14 out of our last 15 months have been over 1000, a day, which.
From a historical standpoint is probably 20% better than the best trends we've ever had.
And from an asset class class standpoint, we continue to see <unk>.
Industrial multifamily.
Strong U C.
Gaming and energy transactions.
Come in and out.
And and.
And in some cases hospitality improving retail improving some office.
Transactions, so, it's a pretty pretty broad based assay.
Asset class.
Activity and the geographic activity continues so well.
I would just say we're bullish on commercial for the year and certainly with the pickup in national orders in particular.
We should see that average fee per file continue to be pretty strong.
Yes, that's great to hear thanks for the color guys.
Thanks, John .
Our next question comes from the line of Bose George with <unk>. Please proceed with your question.
Guys good morning.
First just in terms of the.
The trend in premiums just given home price depreciation remains strong and the benefit to <unk> profile now could we end up with premiums being fairly flat year over year on the purchase side. Despite the declines in volumes that you've highlighted.
Yeah Bose, it's Tony I think that's a real possibility, we obviously don't know.
Exactly where we're headed in terms of volumes.
And I think everyone believes that there's going to be pressure on that given whats gone on with mortgage rates, but having said that I also think that.
We'll continue to see home price depreciation, albeit probably moderating as we worked through the year, which might be a good thing because affordability will become more challenging if you have home prices continue to increase and mortgage rates continue to increase so yeah. I mean, if you had a 10% dip.
Klein in volumes and a 10.
10% increase in our home price depreciation that you might see some some sort of a wash.
Yeah, Okay that makes sense. Thanks, and then Tony could you just repeat what you said about the expectations for interest income.
As rates increase.
Yeah, absolutely and this is you know rough estimate but.
But based on our portfolio, especially given how short it is we would anticipate roughly $5 million and run rate income for each 25 basis point increase in fed funds and so we're already seeing some of that.
Maybe to put it in perspective, I think we had about.
$110 million or so in investment income and entitle and corporate last year and I could see that trend into closer to maybe 180, if the fed moves the way everyone as anticipated they will which is <unk>.
Maybe 10.
Maybe 10 25 basis point increases are 250 basis points by by first quarter of next year. So we definitely would expect to see some nice growth in investment income and most of that is going to be.
Our cash balance as well as our 10 31 exchange business South.
Also did say that.
On the 10 31 exchange side once we get to about 200 basis points of increases I think there's going to be a little bit more pressure on the customer side.
At $2 31, So you don't you don't necessarily get it dollar for dollar after that.
Okay, Great. That's helpful and then actually just one for Chris.
The volatility in the equity markets. So how does that impact just the hedging of.
The spread that you guys are offering.
Yes, those some results have actually been quite consistent keep in mind.
Big portion of the indices now our multi asset.
Indices, so we've seen our.
Hedging costs, if you will be pretty stable throughout this so it's really anticipated volatility.
Matters more so it really hasn't been a big swing factor so far.
Okay, great. Thanks.
Okay.
Thanks.
As a reminder, ladies and gentlemen, it is star one to ask a question. Our next question comes from the line of Ryan Gilbert with <unk>. Please proceed with your question.
Hi, Thanks, good morning, and thanks for taking my questions.
Just going back to what you said earlier about the sequential trends in had heading into <unk>.
It sounds like maybe we're heading towards.
Just in the purchase market any way as a maybe.
Mid teens year over year decline in closed order counts and in <unk>, and maybe <unk> as well as that.
Fair characterization.
A mid teens decline in closed order counts and purchase.
So is that what you said, yes.
On flattish flattish month over month trends.
Yeah, I don't know Ryan I'd have to probably do a little math on that but.
That sounds that sounds a little strong to me, but but I'd have to I'd have to look at it.
Okay got it.
We were in our purchase trends were down.
1% in the first quarter.
And a lot of that is going to tee up your your second quarter closings and you are saying mid teens decline. It just seems a little bit of a.
I don't know that I'd get there from a 1% decline in the first quarter.
Okay.
Got it and then we typically see a sequential increase in title pretax margin from <unk> to <unk>. It sounds like that's that's still on on.
On the on the table is that a is that correct.
Yeah, again, we don't give guidance, but I would say that certainly in the realm, it's going to depend on on how commercial comes through an end.
And maybe you know purchase as well, but certainly.
Certainly something that we think for the wall.
Okay, Great last one for me on.
On LNG, Chris can you just remind us the the return profile.
Mm bye bye each distribution channel.
Yeah, So I would say generally in our business are the independent agent channel.
Has tended to have the highest return slightly less in bank.
And broker dealer.
Our PRT business is comparable returns to the.
The business that we write in the retail channels. So when you blend it all together, it's it's really not all that dramatic I mean, it could be talking a point.
In one direction or the other so pretty consistent across the channels, obviously that can vary.
Within a year and different competitive environments, but pretty consistent.
Okay, great. Thanks, I appreciate it.
Thanks.
We have a follow up question from the line of Mark Hughes with <unk>. Please proceed with your question.
I was just going to kind of get it that the earlier issue about the closings.
Closings of the trajectory into two by.
Asking what's the normal step up you know kind of a seasonal step up in May and June .
It's not going to happen this year kind of what's the.
What's the absence of that.
We're going to go see.
Yes, well on the open side Mark.
Usually you are seeing and it can depend on the year, but as you kind of go from March may to June maybe you're seeing sequential increases in the in the three four.
5% per month, and then it starts to kind of.
Go back down the other way and so we're not.
Absent a surprise, we're not seeing that so it might be more flattish as I said earlier.
And that's on the open side, which of course feeds into the closings.
Yeah, Yeah, that's helpful to get some sort of magnitude on that that was my only question. Thank you.
Sure.
There are no further questions in the queue I'd like to hand, the call back over to Mr. Nolan for closing remarks.
We are pleased with the great start to the year, despite the uncertainty and volatility in the current macro environment.
FNF is well positioned to execute through this rising rate environment due to our disciplined operating strategy and long history of navigating market cycle fluctuations.
Likewise, <unk> is poised to benefit from the rising rate environment and is on track to list as a publicly traded company later this year.
Thanks for your time. This morning, we appreciate your interest in FNF and look forward to updating you on our second quarter earnings call.
Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation you may disconnect. Your lines at this time and have a wonderful day.
Yeah.