Q4 2022 Fidelity National Financial Inc Earnings Call
Ladies and gentlemen, greetings and welcome to the Fidelity National Financial Inc. Fourth quarter 2022 earnings conference call.
At this time all participant lines are in a listen only mode.
A brief question and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded.
It does now my pleasure to introduce you to your host Lisa Foxworthy Parker Investor Relations. Please go ahead.
Okay.
Great. Thanks, operator, and welcome everyone. Joining me today are Mike Nolan, Chief Executive Officer, and Tony Park, Chief Financial Officer, We look forward to addressing your questions. Following our prepared remarks, and Chris One F <unk>, Chief Executive Officer, and Wendy Yang <unk>, Chief Financial Officer will join us for the Q&A.
Portion of today's call.
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 refer to our most recent quarterly and annual.
Our reports and other SEC filings for a discussion of the factors that could cause actual results to differ materially from those expressed or implied.
This morning's discussion also includes non-GAAP financial measures that we believe may be meaningful to investors non-GAAP measures have been reconciled to GAAP, where required in accordance with SEC rules within our earnings materials available unencumbered. These website.
Yesterday, we issued a press release, which is also available on our website.
Today's call is being recorded and will be available for webcast replay at FNF Dot com.
It will also be available through telephone replay beginning today at three P. M. Eastern time through March 2023, and now I'll turn the call over to our CEO Mike Nolan.
Thank you Alicia and good morning.
Overall, we have delivered strong performance for the quarter and full year, while navigating a challenging landscape during.
During the quarter, we completed a dividend distribution of 15% ownership of <unk> to FNF shareholders in.
And <unk> held its first quarterly earnings call as a publicly traded company earlier this morning.
FMC continues to deliver on its diversified growth strategy and reported record sales for the year and record assets under management of nearly $44 billion at year end looking forward <unk> has reached an inflection point, where it's strong capitalization supports both organic growth.
And the distribution of a portion of their earnings to shareholders in the form of common dividends.
Which FNF will benefit from as <unk> largest shareholder.
We will provide more details on <unk> performance and its impact on <unk> consolidated results.
Our title business has continued to perform well despite the falloff in mortgage originations due to increasing mortgage rates and housing market headwinds.
Volumes in 2022 were considerably less than the record setting 2021 levels, mainly due to the precipitous increase in mortgage rates in recent months.
We responded with disciplined cost actions is opened orders began to decrease and delivered adjusted pre tax earnings in our title segment of $1 6 billion and an industry, leading adjusted pretax title margin of 16, 7% for the full year.
We are proud of this result, as this is our third best pretax title margins since 2003.
Despite the steep decline in mortgage volumes.
Looking at fourth quarter volumes more closely.
Our total commercial orders opened were 724 per day down.
Down 29% from the fourth quarter of 2021 and for January were 736 per day, lower by 30% versus the prior year.
Next daily purchase orders opened were down 31% from the fourth quarter of 2021 and down 29% for the month of January versus the prior year.
And refinance orders opened per day were down 76% from the fourth quarter of 2021 and down 72% for the month of January versus the prior year.
Overall total orders opened averaged 4300 per day in the fourth quarter with October at 4800 November at 4300 and December at 3700.
For the month of January total orders opened were 4700 per day up 27% over December .
Notably purchase orders opened per day in January increased by 33% over December and refinance orders opened per day increased 17%.
Total revenue.
Excluding recognize gains and losses was $1 8 billion, a 42% decrease compared with the fourth quarter of 2021.
Commercial revenue proved resilient at $344 million, our second best fourth quarter, only trailing our record setting fourth quarter of 2021 for.
For the year commercial revenue was $1 $5 4 billion, an all time high.
Adjusted pre tax title earnings were $227 million and adjusted pretax title margin was 12, 3% in the fourth quarter.
While the volatile market environment challenged all industry participants.
Our management team is experienced in operating through varying economic cycles.
It has a proven track record of reacting quickly to adjust to order volumes.
For the full year 2022 net of acquisitions, we have reduced title head count by approximately 26%.
And we will continue to manage the business based on market conditions.
At the same time, we continue to look for opportunities to strengthen our business through acquisitions and recruiting industry talent.
Our industry, leading position and strong balance sheet puts us in an advantageous position to not only withstand periods of dislocation, but take advantage of opportunities to strategically build and expand our title business for the long term.
Over the past year, we ended the divested over $200 million in 11 acquisitions.
And we completed the previously announced acquisition of title point in January 2023 for $225 million.
As we expand our footprint into attractive markets and enhanced our title capabilities.
We have also continued to invest in our in here experience platform that enhances the transaction experience of agents transaction coordinators and consumers.
Adoption of the entire platform has been strong this year with real estate agents and transaction coordinators registered for the platform growing to approximately 135000 in the fourth quarter, an increase of 220% over the fourth quarter of 2021.
We believe this growth demonstrates the value customers are receiving from the <unk> platform and creates both market growth and efficiency opportunities over the near and long term.
Finally, we have confidence in <unk> following its partial spin off and public listing.
<unk> spread based income delivers a steady and growing source of earnings which is counter cyclical to our title business as <unk> benefits from the rising rate environment.
Since the merger of over two years ago, <unk> has far exceeded our original expectation for growth and contributed approximately $1 $1 billion of adjusted net earnings over the last 10 quarters on a cumulative basis.
By retaining a majority interest in <unk> following the dividend distribution.
We will continue to benefit from <unk> growth, while also receiving approximately 85% of <unk> cash dividends.
<unk> Board of directors has approved initiation of a dividend program editor.
At an initial aggregate amount of approximately $100 million per year commencing in 2023.
And FNF will receive approximately 85% of <unk> quarterly cash dividend in proportion to our majority ownership.
Okay.
This provides a competitive advantage for our company and we remain committed to <unk> long term success.
Wrapping up I would also like to thank our employees for their hard work and commitment over the last year.
We could not have delivered our industry, leading performance without their incredible effort.
Let me now turn the call over to Tony Park to review <unk> fourth quarter financial highlights.
Thank you Mike.
Before I turn to our consolidated results as Mike mentioned on December <unk> FNF completed the distribution on a pro rata basis of approximately 15% of the common stock of LNG to FNF shareholders.
The purpose of the distribution is to highlight the substantial equity value of LNG that has been and will continue to be created and allow investors to invest directly in F&B.
For reporting purposes, since FNF retains control of LNG through its approximate 85% equity ownership stake we continue to consolidate the assets liabilities and results of operations of F&B and Fnf's consolidated financial statements.
The portion of equity interest of F&B that FNF does not own for the period of December one to December 31 is reflected as noncontrolling interest in <unk> consolidated financial statements.
Now turning to our consolidated results, we generated $2 $6 billion in total revenue in the fourth quarter.
Fourth quarter net earnings were $68 million, including net recognized losses of $118 million.
Versus net earnings of $533 million, including $213 million of net recognized gains in the fourth 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 or continued to be held in our investment portfolio.
Excluding net recognized gains and losses, our total revenue was $2 7 billion as compared with $4 6 billion in the fourth quarter of 2021.
Adjusted net earnings from continuing operations was $287 million or $1 <unk> per diluted share compared with $668 million or $2 34 per share for the fourth quarter of 2021.
The title segment contributed $180 million.
<unk> segment contributed $131 million in the corporate segment had an adjusted net loss of $24 million.
For the full year 2022, we saw a strong performance for the title segment, despite a difficult environment as well as strong growth for the F&B segment, which together generated solid profitability.
Total revenue, excluding gains and losses was $13 billion in full year 2022, despite the decline in title order volumes and reflects a 15% decrease from the record set in full year 2021.
This generated $1 5 billion and adjusted net earnings a decrease of 40% from $2 5 billion.
And full year 2021.
The title segment contributed $1 2 billion.
<unk> segment contributed $338 million in the corporate segment had an adjusted net loss of $83 million.
Turning to Q4 financial highlights specific to the title segment, our title segment generated $1 $8 billion in total revenue in the fourth quarter, excluding net recognized gains of $29 million compared with $3 2 billion in the fourth quarter of 2021.
Premiums decreased by 47% versus the fourth quarter of 2021.
Agency premiums decreased by 48% and escrow title related and other fees decreased by 36% versus the prior year.
Personnel costs decreased by 24% and other operating expenses decreased by 24%.
All in the title business generated a 12, 3% adjusted pretax title margin for the quarter.
Versus the record 22, 4% in the prior year quarter.
Adjusted pretax title margin decreased to 16, 7% for the full year compared with 21, 7% in full year 2021.
Our title in corporate investment portfolio totaled $5 3 billion at December 31.
Interest and investment income in the title and corporate segments of $100 million.
Increased $74 million as compared with the prior year quarter, primarily due to increases in income from our 10 31 exchange business and short term investments.
Given the rising rate environment, we would anticipate potential for higher investment income through reinvestment of our short three year duration portfolio maturities.
Looking to 2023, we expect quarterly interest and investment income to moderate in the $75 million to $80 million range.
With declining 10, 31 exchange balances and spreads and potentially declining cash and short term investment balances.
Our title claims paid of $79 million or $22 million higher than our provision of $57 million for the fourth quarter <unk>.
The carried reserve for title claim losses is approximately $90 million or five 2% above the actuary central estimate.
We continue to provide for title claims at four 5% of total title premiums.
Next turning to Q4 financial highlights specific to the F&B segment.
<unk> hosted its earnings call earlier, this morning, and provided a thorough update so I will focus on the key highlights of its quarterly performance.
Total gross sales were $2 7 billion in the fourth quarter, an increase of 23% over the fourth quarter 2021.
This reflects record retail sales, partially offset by lower institutional sales, which are expected to be lumpier and more opportunistic than in the retail channels.
Net retail sales were $1 9 billion for the fourth quarter.
The decrease of 7% from the fourth quarter of 2021, reflecting the increase in flow reinsurance to a speeder re effective September one.
Ending assets under management were $43 6 billion as of December 31, 2022.
Adjusted net earnings for the <unk> segment were $131 million for the fourth quarter compared with $142 million for the fourth quarter of 2021.
<unk> adjusted net earnings reflect volatility from the alternatives investment portfolio short term mark to market movement that differ from long term expectation.
As Mike mentioned F&B continues to generate consistent economics over time and FNF, we will continue to benefit from the <unk> segment's growth and counter cyclical performance to the title business as well as receiving cash dividends as the largest shareholder of LNG, which we.
Beth will grow with earnings.
Let me wrap up with a few thoughts on capital and liquidity.
We remain focused on ensuring a 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.
Paying a generous quarterly dividend to our shareholders and repurchasing shares.
We ended the quarter with $939 million in cash and short term liquid investments at the holding company level.
Importantly, this balance does not reflect fnf's acquisition of the title point line of business from Black Knight for $225 million, which.
Which funded on January one 2023 from a combination of $150 million of operating cash and $75 million of holding company cash.
Fnf's consolidated debt was $3 2 billion on December 31.
Up approximately $550 million from the preceding quarter due to <unk> draw on its new third party senior unsecured revolving credit facility that closed in November as a result, our debt to capitalization ratio. Excluding OCI was 26, 8% as of December .
<unk> 31.
As planned <unk> also successfully completed their first debt issuance as a public company on January 13, 2023, issuing $500 million of senior unsecured notes due in 2028.
<unk> intends to use the net proceeds from the revolver draw and senior notes to support growth of the business and for future liquidity needs on a pro forma basis, including <unk>, new notes and a $35 million partial pay down on its revolver in January 2023.
FNF debt to capitalization ratio, excluding OCI is estimated at approximately 29, 5%.
This is in line with our long term target range of 20% to 30% and we expect that our balance sheet will naturally delever as a result of growth in shareholders equity excluding OCI.
Going forward, our consolidated annual interest expense on debt outstanding is approximately $175 million comprised.
Approximately $80 million for FNF, holdco debt and $95 million for LNG debt outstanding at this time.
During the fourth quarter, we paid common dividends of 45 per share for a total of $124 million.
We view, our current annual common dividend of approximately $500 million as sustainable.
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 subject to blackout periods has remained active throughout the fourth quarter and into the first quarter.
During the fourth quarter, we repurchased 1 million shares for a total of $38 million.
At an average price of $37 87 per share. We also closed on two title acquisitions in the fourth quarter and title point in early January and we will continue to evaluate M&A opportunities as we navigate the current business environment.
For the fourth quarter, we have returned approximately $162 million of capital to our shareholders through common dividends and share repurchases.
For the full year, we have returned over $1 billion through common dividends and share repurchases. 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 would like to ask a question. Please press star one on the telephone keypad.
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Ladies and gentlemen, we will wait for a moment, while we poll for questions.
Yes.
Our first question comes from the line of both George from K.
<unk>. Please go ahead.
Hey, guys good morning.
Can I get an update on just margins by segment just curious if the trend in the margin was kind of reflected across all segments or just yes, just how has that trended.
Sure Bose this is Tony I'll highlight some of the margins by segment as we've done.
In the past just looking at the fourth quarter.
<unk> 22 up against the fourth quarter of 2021 keep in mind that the fourth quarter of 2021 was it was our best quarter ever our direct operations generated a 21% pretax margin up against over 30% in the prior year quarter agency was 6%.
<unk> up against 10% in the prior year quarter.
Some of that agency.
Margin.
In the in the prior year quarter was driven by a centralized business, we have that generates tremendous margins on refinance business and obviously, we've all seen what's happened to refinance orders over the course of 2022. So that's why agency as down as much as.
As it is national commercial operations held up at 31%, but last year with that record fourth quarter. They were at almost 43%.
And then service link, which has a combination of centralized refinance but also some default businesses.
<unk> loans of servicing and others was roughly.
10% in the quarter versus about 25% in the fourth quarter of 2021.
Okay, great. Thanks, Thanks, a lot for that detail.
And then in turn.
The non controlling interest can you just remind us apart from the F&B piece, what else flows through that line item.
Yes, not a lot to be honest, we own 100% of most of our investments, but in the title segment Youll find.
Some joint venture type businesses that we have in certain markets, but they don't really move the needle a whole lot.
And then.
The <unk> will will show up we only have a month's worth in there and I don't even think I think it's probably going to show up in the corporate segment and Youll see I don't think theres much or anything there and so you really won't see it until we make our way into 2023, but.
But thats going to be 15% of the net earnings of F&B going forward.
Okay perfect. Thank you.
Yes.
Thank you.
Our next question comes from the line of Mark Devries from Barclays. Please go ahead.
Thank you.
Hoping to get some color on what we should expect.
Buybacks.
Page 23, you had a pretty big step down in the pace in <unk> was that kind of subject committee extended blackout surround the FG distribution and should we expect the cadence to go back to closer to the $150 million a quarter that you had.
In 2022 prior to the fourth quarter.
Yes, Mark this is Tony Youre right about the.
The step back in Q4, we were blacked out for most of the quarter with the pendency of the F&B spend so we weren't very active during the during the quarter until after the December one spent in terms of going forward. It is hard for me to speak for the board, we typically don't pre announce.
Where we're headed in terms of buyback activity.
Can say and I think.
Management and the board would agree we think our shares are.
Our undervalued and certainly <unk> with with.
The Mark that we have set in terms of that spin off we don't think <unk>.
First of all we think Thats light and there might be reasons for that including limited float, but we also don't believe FNF share price got any benefit from that.
At to this point and so we do think that our shares are attractive at these prices.
But we weigh the capital allocation on all fronts, we've got our dividend.
M&A internal investment and of course buybacks and the board.
We returned over the over a $1 billion last year in terms of of dividends and buybacks and I think buybacks, where more than half of that probably $550 million or so.
And I think we'll just see how the business environment plays out over the course of the year, but I am sure that we.
We will be in the market.
During the year.
Okay. That's helpful. And then just a question on expenses is there more to do here.
On head count or Alternatively was their action that you took kind of later.
In the fourth quarter, that's not yet flowed through the results that we should expect to see.
And <unk>.
Sure Mark It's Mike I would say, there's always more to do in a market that's declining.
And yes.
Some of the work done in the fourth quarter, probably doesn't fully show up in the fourth quarter. I mean, we took out 12% of our head count in the fourth quarter net of acquisitions, which is a <unk>.
Sizable number so I think some of that will flow through to the next quarter will probably be reduced and that will reduce in the first quarter about another 3%.
Further actions will really be order dependent so as we've always done Mark and you know this will we'll kind of follow those orders.
We've done some work on our infrastructure as well relative to to branch locations.
I wouldn't say anything significant but we've had some <unk>.
<unk>, there and part of what we have to evaluate us as quickly as this market turned down.
With with some help from rates I think it could as quickly turn up and so you don't want to do.
Too much in the short term that can counter hurts you in the midterm or long term, but we're certainly going to continue to manage the costs were really very pleased with the work. We did really in the course of the year to finish with our full year margin at 16, 7% which is.
Really closer to the mid point of.
Of our 15% to 20% normalized margin that we talk about so.
A lot of good work done, but certainly there could be more to do.
Okay, great. Thank you.
Yeah.
Thank you next.
Our next question comes from the line of Andrew <unk> from Credit Suisse. Please go ahead.
Great.
Thank you.
So just kind of following up on the prior question about expenses.
And looking at the numbers it looks like you did a lot with other operating expenses sequentially from $4 37 to.
<unk> 392.
Your title margin was about 12, 3% so so.
Very low relative to that 16, plus that you cited through the year. So it does it does it look like.
That number is kind of.
Stabilizing in the 12, 13% zone.
Maybe you do some stuff around the edges.
<unk> potential.
Potential 3% reduction in staff in the first quarter, but.
Maybe that that title margins kind of stabilizing in the low double digits does that make sense.
I think it would depend on the context are you are you talking about a full year comparison or a quarterly comparison.
Whatever makes more sense I mean, if you think next year, where do you think the title margin will level out in 2023, assuming the same kind of environment.
I think it would be helpful. In responding to that as we think about 2022, and we had to as you pointed out the full year at $16 seven are really third best in almost 20 years.
But at 12 three in the fourth quarter, So we kind of had <unk>.
<unk> nation in that regard, but as you look at the year. It was really a tale of two halves. If you will.
And if you think about.
Now our existing home sale numbers and in January of 'twenty. Two there annualized number was it was over 6 million existing home sales.
If we had had that would have been one of the best existing home sale markets in the last 20 years.
And by the fourth quarter of the same year that number was down closer to $4 million.
<unk> analyzed annualized would be one of the worst homestyle markets.
In the last 20 years and that happened in the same year.
So I think that volatility.
Definitely makes it more challenging as you kind of manage your margins in a downward environment.
And then we had by the time, we got to the fourth quarter of 'twenty two.
We had one of the weakest refinance markets since 2000.
So when you think about the environment that we ended up in the fourth quarter with.
Very low refinance activity and very soft.
Existing home sale activity.
It doesn't create a lot of inventory for the industry as we go into the into the first quarter.
And I think that inventory issue also was an impact on the industry in the fourth quarter, but it's really going to show up in the first quarter. So margins will definitely be pressured and lower than we've seen in the last few years, particularly in Q1.
And then we'll just have to see how they progress.
Over over the course of the year I mean, I think we will get some help from commercial.
It doesn't look likely to be as strong as.
As in 'twenty, two but I think we still have a solid commercial market and then I would say that we're very confident that as the market returns.
That will drive margins.
In a positive direction, particularly because of our current cost structure and also encouraged by the increase in purchase orders that we saw in January being up 33% sequentially to December is certainly encouraging and I think it really points to.
The underlying demand and really tail winds around around housing, particularly if we get an environment where rates are easing and maybe prices moderate a little bit.
<unk>.
I wouldn't be surprised at all with some help from rates that we see a rebound in.
Those annualized existing home sales numbers.
That could move really quickly I think maybe similar to how it how it fell off so I'll pause there.
So that was that was very helpful and.
Yes.
I guess I feel like I have taken.
<unk> taken negative very skeptical view of the environment.
If the environment stays as it is.
Probably fidelity.
You wouldn't want to cut too much more on other op expenses and staff right because as you were saying earlier.
Things could go the other way very quickly so.
Should I not expect too much of a cut in either either staff.
Other operating expenses.
Well I think I'll start with staff I think as I said earlier, it really will be order dependent if orders continue to fall and we see pressure from rates. Then we'll have to do more work on on the staffing side and look at our infrastructure more more deeply.
But you also do that with a caveat with an eye towards this could turn around and you don't want to you don't want to hurt yourself in the mid term.
Bye Bye bye doing something in the short term is just not helpful.
In the mid and long term and we're still very bullish long term even with.
The reductions we've done on the cost moves we've made we're continuing to recruit.
Talented people into the industry, particularly revenue attach people, we continue to make acquisitions and we're going to continue to do that in 'twenty three we're not.
Not shying away from the market and again are optimistic.
The mid and long term.
Aspects for the industry and we'll just have to see what the current environment does for us in the next few months.
And Andrew This is Tony maybe I'll just weigh in.
On the actual line items, just as a refresher probably a third of our personnel costs are variable with revenue and with profits and so some of that just falls off naturally with movements.
Declines in revenue and on the other operating side of things that line item, probably about 40% of those costs are variable with volume.
That would be things like premium taxes.
And the like.
We clearly have fixed costs in both Mike's referring to fixed costs. When we're talking about head count reductions and on the other operating side of things. It's more like facilities are fairly fixed in the short run technology costs are fairly fixed in the short run insurance that sort of thing.
Got you very helpful. Thanks.
Okay.
Thank you.
Our next question comes from the line of John Campbell from Stephens, Inc. Please go ahead.
Hey, guys good morning, Hey, John John .
Thanks for the January order count updates so that was helpful. It sounds like the trends rebounded a little bit sequentially.
And what we've seen historically I guess on a historical average.
From where we sit it does look like February might reverse some of that momentum with the pickup in rates. So im hoping you guys might be able to provide some color on that and then if you've got it on hand, it would be great to get the month to month to date February order count trends in resi and commercial.
Yes.
Maybe the first part the 33% increase on purchase order sequentially.
Might be a little better than historical numbers, but I don't think it's off that much but certainly was pleased to see it.
They have that kind of a rebound.
We generally don't give out partial month order counts John .
So we've got kind of a partial month in February just because.
It could potentially mislead one way or the other if trends change as the month goes on I think that particularly in shopping and commercial order count so.
I'd, just say that as we've gone through the month that the trends have been.
Cause any concerns and.
<unk>.
But when you look at you look at mortgage rates. They certainly moved up in the past three weeks.
So we still have to see how that may impact current trends.
Okay.
For purchase.
Commercial activity.
Okay. That's helpful and then Mike just from your experience.
How much of a lead time do you typically see between mortgage REIT movement, and then the mutual closings.
Yes, that's a great question.
I would've probably answered it differently in the past.
Government, but.
We've never I don't think we've ever seen.
And you guys would know better than me, but we've ever seen rates move this fast in such a short period of time.
The fourth quarter of 'twenty, one I think average rates are like it's really in the quarter and by the fourth quarter of 'twenty. Two they were maybe six and three quarters or something like that so.
When theyre moving that rapidly.
It definitely impacted purchase orders very very quickly.
We normally see the and then the closings follow 45 days later.
So.
In a more normalized environment with more gradual.
Rate increases and that kind of environment Youre purchase orders hold up way better you don't see a dramatic falloff if rates are moving up sort of incrementally refi will shut off fairly quickly.
With a 50 75 or 100 basis point change in rates.
But but in this environment those those purchase orders got got choked fast and I think just pointing out that that annualized EHS number <unk>.
It's kind of remarkable gone from 6 million to $4 million in one year.
And again those closings are.
45 days after that.
Those falloff in purchase opens.
Yes makes sense.
I mean, just the degree of the volatility.
Volatility.
If it makes sense you guys historically have been able to manage costs.
The best of the bunch, but I feel like with the uncertainty does create some.
A little bit of I guess lag time on the expense recognition and whatnot, but I wanted to touch on F&B real fast.
Obviously, you guys got pushback when you originally announced that deal. The pushback has kind of been steady. Since then I think this quarter showed why you did it in the first place I mean, the year ago period. It looks like F&B by my math was about 20% of total title and F&B earnings combine.
It looks like the contribution doubled up this period I think it was 43% of earnings just roughly for this year I know a lot can change around the title side, but do you envision that F&B might rise to over half of total earnings this year.
Yes, John this is Tony.
Yes, it's hard to know because we'd have to know the other side I think F&D.
Earnings are a lot more predictable, which is also a reason why.
<unk> made that acquisition, but.
Talk about and Chris and when do you on the phone as well, but they talk about a 1% return on assets and assets are growing almost $44 billion I think at year end and so it's pretty easy to do the math and so as that piece increases we.
We feel very good about their contribution to the whole in 2023 as you know just trying to model the title business, it's going to be order dependent and we don't we don't know where that where that had but I guess the good news is.
Playing out like in a tough market.
And we just saw a tough market in Q4.
You can see that it's a counterbalance and a growth story.
Against something Thats, just more cyclical.
The short term on the real estate side and so we were happy with that I don't know.
I don't know if we get much credit for it right now, but but we're pleased with the balance.
Yes, it makes sense. Thank you guys.
Yes.
Thank you.
Ladies and gentlemen, a reminder, if you would like to ask a question. Please press star one.
Our next question comes from the line of Mark Hughes from Truest. Please go ahead.
Mark Your line is on mute it.
You could please on mute yourself from your rent and.
And begin with your question Okay.
Yes. Thank you I was on mute sorry about that.
Yes, Nashville commercial fee per file was.
<unk> had a very tough comp.
Do you see that trending and deployed 23 at least early on here.
Yes, Mark it's Mike.
Of course that the comp was was very difficult at 17000 I think it was.
In the fourth quarter of 'twenty, one I would think the national fee per file will stay relatively the same I mean, it could fall off some.
It tends to be a little bit of a lumpier number because it can be influenced by by <unk>.
Big deals that drop in and out but for the full year, our national commercial fee per file was right around 14000 and in 'twenty. One it was let's call. It 13 five.
I would my best guess at this point is it's in a band between those two numbers.
Okay. Good thank you.
And then any update on the attorney opinion letters.
I wouldn't say a major update I don't think we've seen much impact.
The impact in our order volumes due to it.
There is some.
Okay.
Promotion around that that it lowers cost for consumers I don't I don't know that it does that I haven't seen anybody that's shown that I think it could actually raise cost.
For people is a bit of an unknown, but what we do know about it it's a lesser product compared to the coverage and defense costs afforded under title policies and doesn't cover hidden risks doesn't cover fraud forgery doesn't cover mistakes in the public records.
It doesn't it doesn't defend insureds.
Like a title policy does sell.
I think theres a lot of questions about.
Other product and it is not regulated like the title industry is regulated we have to poach claims reserves.
Heavily regulate the state level in ALLL orange so.
But again just haven't seen much of an impact to date.
I appreciate that thank you.
Okay.
Thank you.
Ladies and gentlemen, we have reached the end of the question and answer session.
I would now like to turn the conference over to Mike Nolan for closing comments.
Well. Thank you we are pleased with our overall results despite the uncertainty and volatility in the current macro environment.
FNF is well positioned to execute through this higher mortgage rate environment due to our disciplined operating strategy and long history of navigating market cycles.
Likewise, <unk> is poised to benefit from the rising rate environment and is off to a strong start as a publicly traded company.
Thanks for your time. This morning, we appreciate your interest in FNF and look forward to updating you on our first quarter earnings call.
Thank you the conference of Fidelity National Financial Inc. Has now concluded. Thank you for your participation you may now disconnect your lines.
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