Q4 2023 Fidelity National Financial Inc Earnings Call

Speaker Change: [music].

Operator: Good morning, and welcome to FNF's fourth quarter and full year 2023 earnings presentation. During today's presentation, all parties will be in a listening mode.

Good morning, and welcome to <unk> fourth quarter and full year of 2023 earnings call.

During todays presentation, all parties will be in a listen only mode.

Operator: Following the presentation, the conference will be open for questions with instructions to follow at that time. As a reminder, this conference call is being recorded. I would now like to turn the call over to Lisa Foxworthy Park, Senior Vice President, Investor, and External Relations. Please go ahead.

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 would now like to turn the call over to Lisa Foxworthy, Parker Senior Vice President Investor and external relations. Please go ahead.

Lisa Foxworthy Park: 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. Chris Blunt, F&G CEO, and Wendy Young, F&G CFO, will join us for the Q&A portion of today's call. Today's earnings may include forward-looking statements and projections under the Private Securities Litigation Reform Act, which do not guarantee future events will occur. 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 reports and other SEC filings for a discussion of the factors that could cause actual results to differ materially from those expressed or implied.

Lisa Foxworthy: Great. Thanks, operator, and welcome everyone. Joining me today are Mike Moore, Chief Executive Officer, and Tony Park, Chief Financial Officer, We look forward to addressing your questions. Following our prepared remarks, Chris Blunt F and G. C E O and when do you F and G. CFO will join us for the Q&A portion of today's call.

Lisa Foxworthy: Today's earnings May include forward looking statements and projections under the private Securities Litigation Reform Act, which do not guarantee future events or performance we.

Lisa Foxworthy: We do not undertake any duty to revise or update such statements to reflect new information subsequent events or changes in strategy.

Lisa Foxworthy: 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.

Lisa Foxworthy Park: 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 on the company's 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.gov. It will also be available through telephone replay beginning today at 3 p.m. Eastern Time through February 29th, 2024. Now, I'll turn the call over to our CEO, Mike Nolan. Thank you, Lisa, and good morning.

Lisa Foxworthy: 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 FTC rules within our earnings materials available on the company's website.

Lisa Foxworthy: 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 fnf's dot com.

Lisa Foxworthy: It will also be available through telephone replay beginning today at three P. M. Eastern time February 29th 'twenty 'twenty four.

Lisa Foxworthy: And now I'll turn the call over to I C E O Mike Dolan.

Michael J. Nolan: Thank you Lisa and good morning.

Michael J. Nolan: I'm proud of our results and would like to thank all our employees for their accomplishments in 2023, as we delivered another industry-leading performance in the title segment and record-setting performance in the F&G segment. But before I discuss the results, I'd like to address a recently reported cyber security incident. Given the strong execution of our recovery plan, we were able to resume normal operations quickly in the quarter. As far as the minor negative impact on our fourth quarter title segment results, We estimate the incident reduced adjusted pre-tax title earnings by $8-10 million and lowered our adjusted pre-tax title margin by roughly 50 basis points, from 12.3%, which would have been in line with the prior year quarter, to 11.8% as reported. The F&G segment was not impacted. As challenging as this event was, it really showcased how our team pulls together.

Michael J. Nolan: I'm proud of our results I would like to thank all our employees for their accomplishments in 2023.

Michael J. Nolan: We delivered another industry, leading performance in the title segment and record setting performance in E F and G segment.

Michael J. Nolan: Before I cover the results I'd like to address our recently reported cyber security incidents.

Michael J. Nolan: Given the strong execution of our recovery plan, we were able to resume normal operations quickly in the quarter.

Michael J. Nolan: As far as the minor negative impact to our fourth quarter title segment results. We estimate the incident reduced adjusted pre tax title earnings by $8 million to $10 million and lowered our adjusted pretax title margin.

Michael J. Nolan: Roughly 50 basis points.

Michael J. Nolan: And 12, 3%, which would've been in line with the prior year quarter to 11, 8% as reported.

Michael J. Nolan: The F&B segment was not impacted.

Michael J. Nolan: As challenging as this event was it really showcased our chain pulls together I'd, especially like to thank our employees and advisers, who worked tirelessly around the clock to resolve the incident and our employees in the field, who worked diligently with our customers to minimize the impact.

Michael J. Nolan: I'd especially like to thank our employees and advisors who worked tirelessly around the clock to resolve the incident and our employees in the field who worked diligently with our customers to minimize the impact. FNF remains committed to protecting our client and customer information, and cybersecurity remains a top priority. Now, results for the title segment.

Michael J. Nolan: F N F remains committed to protecting our client and customer information and cyber security remains a top priority.

Michael J. Nolan: Now turning to results for the title segment.

Michael J. Nolan: Our title business continued to perform well in 2023. We delivered adjusted pre-tax earnings in our title segment of $964 million and achieved an industry-leading adjusted pre-tax title margin of 13.7% for the full year. This is an outstanding result despite the persistent housing market downturn, as home affordability has been cited as the worst in a generation due to continued higher U.S. mortgage rates, which peaked at over 8% in October, combined with limited housing supply.

Michael J. Nolan: Our title business has continued to perform well in 'twenty two 'twenty three.

Michael J. Nolan: We delivered adjusted pretax earnings in our title segment.

Michael J. Nolan: $964 million and achieved an industry, leading adjusted pretax title margin.

Michael J. Nolan: 13, 7% for the full year.

Michael J. Nolan: This is an outstanding result, despite the persistent housing market downturn is.

Michael J. Nolan: Home affordability has been cited as the worst in a generation.

Michael J. Nolan: Due to continued higher U S mortgage rates, which peaked at over 8% in October combined with limited housing supply.

Michael J. Nolan: One of the key drivers to our ability to successfully navigate the tough market is our continued focus on managing expenses. For the full year, we reduced our total field operations employee count by approximately 8%. We have also consolidated some of our direct office title locations, which has generated about $1 million per month in facilities cost savings. Commercial volumes continue to be in line with our expectations and consistent with the levels seen in years like 2015 through 2020. We generated commercial revenue of $294 million in the fourth quarter and $1.1 billion for the full year.

Michael J. Nolan: One of the key drivers to our ability to successfully navigate the tough market is our continued focus on managing expenses.

Michael J. Nolan: For the full year, we reduced total field operations employee count by approximately 8%.

Michael J. Nolan: We have also consolidated some of our direct office titled locations.

Michael J. Nolan: Which has generated about 1 million per month and facilities cost savings.

Michael J. Nolan: Commercial volumes continued to be in line with our expectations and consistent with the level seen in years like 2015 through 2020, we.

Michael J. Nolan: We generated commercial revenue of $294 million in the fourth quarter and $1 $1 billion for the full year.

Michael J. Nolan: During 2023, we saw continued strength in multifamily, industrial, and other segments, like energy and affordable housing, similar to recent years. Looking at fourth quarter volumes more closely, we saw daily purchase orders opened.

Michael J. Nolan: During 2023, we saw continued strength in multifamily industrial and other segments like energy and affordable housing similar to recent years.

Michael J. Nolan: Looking at fourth quarter volumes more closely daily purchase orders opened were up 1% over the fourth quarter of 2022.

Michael J. Nolan: We're up 1% over the fourth quarter of 2022, up 7% for the month of January versus the prior year, and up 23% for the month of January versus December. And refinance orders open per day were down 11% from the fourth quarter of 2022, down 1% for the month of January versus the prior year, and up 15% for the month of January versus December. Our total commercial orders opened were 704 per day, down 3% from the fourth quarter of 2022, flat for the month of January versus the prior year, and up 3% for the month of January versus December. Overall, total orders opened averaged 4,100 per day in the fourth quarter, with October at $4,600, November at $3,800, and December at $4,000. For the month of January, total orders opened were 4,800 per day, up 20% versus December.

Michael J. Nolan: 7% for the month of January versus the prior year and up 23% for the month of January versus December.

Michael J. Nolan: And refinance orders opened per day were down 11% from the fourth quarter of 2022 down 1% for the month of January versus the prior year and up 15% for the month of January versus December.

Michael J. Nolan: Our total commercial orders opened were 704 per day down 3% from the fourth quarter of 2022.

Michael J. Nolan: Flat for the month of January versus the prior year and up 3% for the month of January versus December.

Michael J. Nolan: Overall total orders opened averaged 4100 per day in the fourth quarter with October at 4600 November at 3800 and December at 4000.

Michael J. Nolan: For the month of January total orders opened were 4800 per day up 20% versus December.

Michael J. Nolan: While we are pleased with our strong performance and profitability, we remain cautious as we have entered the first quarter of 2024 with historic low order volume, which is expected to pressure industry margins much like last year. During 2023, we progressed from an adjusted pre-tax title margin of 10% in the first quarter to mid-teens in the middle of the year and tapering to 11.8% in the fourth quarter, which in aggregate produced a full year level of 13.7%. As always, we will manage our business according to the trend in open orders to protect our profitability. We feel that we are well positioned for the current market and poised to benefit from a potential turn in the housing market should mortgage rates drop in 2024. Beyond the near-term pressures, we remain bullish on the mid- to long-term fundamentals of the real estate market.

Michael J. Nolan: While we are pleased with our strong performance in profitability, we remain cautious as we as we have entered the first quarter of 'twenty 'twenty four with historic low order volumes.

Michael J. Nolan: Which are expected to pressure industry margins much like last year.

Michael J. Nolan: During 2023, we've progressed from an adjusted pretax title margin of 10% in the first quarter to mid teens in the middle of the year and tapering to 11, 8% in the fourth quarter, which in aggregate produced a full year level of 13, 7%.

Michael J. Nolan: As always we will manage our business to the trend in open orders to protect our profitability.

Michael J. Nolan: We feel that we are well positioned for the current market and poised to benefit from.

Michael J. Nolan: From a potential turned into housing market should mortgage rates drop in 2024.

Michael J. Nolan: Beyond the near term pressures, we remain bullish on the mid to long term fundamentals of the real estate market.

Michael J. Nolan: We will continue to develop and invest in technology, recruit top talent, and make strategic acquisitions, all while maintaining industry-leading margins. Over the past year, we have invested approximately $300 million in 10 acquisitions. Our in-ear platform is another area where we continue to invest. This is our industry-leading end-to-end real estate experience platform, which is fully deployed across our residential business and integrated within our direct operation.

Michael J. Nolan: We will continue to develop and invest in technology recruit top talent and make strategic acquisitions, all while maintaining industry leading margins over.

Michael J. Nolan: Over the past year, we have invested approximately $300 million in 10 acquisitions.

Michael J. Nolan: Our entire platform is another area, where we continue to invest this is our industry leading end to end real estate experience platform, which is fully deployed across our residential business and integrated within our direct operations.

Michael J. Nolan: Adoption of the platform has been strong, shown by the following highlights for 2023. Over 1 million agents, transaction coordinators, and consumers used it here to manage their transaction, up more than 50% over the prior year. Over 750,000, starting here, opening packages were sent to consumers, with 64% completing these packages entirely online.

Michael J. Nolan: Adoption of the platform has been strong shown by the following highlights for 2023.

Michael J. Nolan: Over 1 million agents transaction coordinators and consumers used in here to manage their transactions up more than 50% over the prior year.

Michael J. Nolan: Over 750000, starting here opening packages were sent to consumers.

Michael J. Nolan: It was 64% completing these packages entirely online.

Michael J. Nolan: Our title companies automatically published over 400,000 orders to and here, providing our customers with enhanced efficiency and transparency into their transactions. Here's performance throughout 2023 demonstrates its growing relevance and utility in the real estate sector. Its diverse offerings and accessibility through both web and mobile platforms make it a vital resource that significantly aids the processing of residential transactions.

Michael J. Nolan: Our title companies' automatically published over 400000 orders children here, providing our customers with enhanced efficiency and transparency into their transactions.

Michael J. Nolan: And here's performance throughout 2023 demonstrates its growing relevance and utility in the real estate sector.

Michael J. Nolan: Its diverse offerings and accessibility through both web and mobile platforms make it a vital resource that's significantly age processing of residential transactions.

Michael J. Nolan: We expect to add functionality and content to InHERA to further enhance the transaction experience of agents, transaction coordinators, and consumers, which in turn will create market growth and efficiency opportunities for F&F over the near and long term. Turning to the R&G business, We are pleased to see investor recognition of Apengee's success, as its market capitalization has increased from $2.4 billion at the time of the partial spinoff in December of 2022 to approximately $5.8 billion at the end of 2023. F&G has properly grown its assets under management before flow and re-insurance to a record $56.3 billion at December and comprise nearly 30% of FNS adjusted net earnings for the full year 2023. We were also pleased to see the most recent rating agency recognition of F&G's success, as AMBEST upgraded the financial strength ratings of F&G's primary operating companies to A from A- in January 2024, recognizing the financial strength and stability of F&G's business as it successfully executes on its diversified growth strategy.

Michael J. Nolan: We expect to add functionality and content to adhere to further enhance the transaction experience and agents transaction coordinators and consumers.

Michael J. Nolan: Which in turn will create market growth and efficiency opportunities for F. N F over the near and long term.

Michael J. Nolan: Turning to our <unk> business, we are pleased to see investor recognition of <unk> success as its market capitalization has increased from $2 $4 billion at the time of the partial spin off in December of 2022 to approximately $5 $8 billion at the end.

Michael J. Nolan: 2023.

Michael J. Nolan: F N G as profitably grown its assets under management for flow in reinsurance to a record $56 $3 billion at December and comprised nearly 30% of Fnf's adjusted net earnings for the full year 2023.

Michael J. Nolan: We were also pleased to see the most recent rating agency recognition of F. N. G success as an best upgraded the financial strength ratings of <unk> primary operating companies to a from a minus in January 'twenty 'twenty four.

Michael J. Nolan: Recognizing the financial strength and stability of F N cheese business, let's say successfully execute on their diversified growth strategy.

Michael J. Nolan: Given the success that F&G has achieved, combined with the many opportunities to grow and expand the business, F&F's board made the decision to invest $250 million in F&G to take advantage of the current opportunity for growth. As announced on January 16, 2024, the independent special committees of both companies agreed on a mandatory convertible preferred security, which will provide F&G additional capital to celebrate the growth of its retained AUM. With that, I now turn the call over to Tony to review F&F's fourth quarter and full year financial performance and provide additional highlights. Thank you, Mike.

Michael J. Nolan: Given the success that since she has achieved combined with the many opportunities to grow and expand the business.

Michael J. Nolan: That's board made the decision to invest $250 million and F. N G to take advantage of the current opportunity for growth.

Michael J. Nolan: As announced on January 16th 2020 for the independent special committees of both companies agreed that a mandatory convertible preferred security.

Michael J. Nolan: Which will provide F N G additional capital to accelerate growth of its retained a U N.

Michael J. Nolan: With that let me now turn the call over to Tony.

Anthony J. Park: To review <unk> fourth quarter, and full year financial performance and provide additional highlights.

Anthony J. Park: Thank you, Mike starting with our consolidated results, we generated $3 $4 billion in total revenue in the fourth quarter, and we reported a fourth quarter net loss of $69 million, including net recognized gains of $203 million versus a net loss of 5 million.

Anthony J. Park: Starting with our consolidated results. We generated $3.4 billion in total revenue in the fourth quarter, and we reported a fourth quarter net loss of $69 million, including net recognized gains of $203 million, versus a net loss of $5 million, including $118 million of net recognized losses in the fourth quarter of 2022. The title segment contributed net earnings of $228 million. The F&G segment had a net loss of $251 million, and the corporate segment had a net loss of $46 million. The net recognized gains and losses in each period are primarily due to the mark-to-market accounting treatment of equity and preferred stock security.

Anthony J. Park: Including $118 million of net recognize losses in the fourth quarter of 2022.

Anthony J. Park: The title segment contributed net earnings of $228 million E F and G segment had a net loss of $251 million and the corporate segment had a net loss of $46 million.

Anthony J. Park: 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 up in the quarter or continued to be held in our investment portfolio.

Anthony J. Park: Whether the securities were disposed of in the quarter or continue to be held in our investment portfolio, excluding net recognized gains and losses. Total revenue was $3.2 billion, as compared with $2.7 billion in the fourth quarter of 2020. Adjusted net earnings were $204 million, or $0.75 per diluted share, compared with $274 million, or $1.01 per share, for the fourth quarter of 2020. The title segment contributed $174 million.

Anthony J. Park: Excluding net recognized gains and losses, our total revenue was $3 2 billion as compared with $2 $7 billion in the fourth quarter of 2022.

Anthony J. Park: Adjusted net earnings were $204 million or <unk> 75 per diluted share compared with $274 million or $1.01 per share for the fourth quarter of 2022.

Anthony J. Park: The title segment contributed $174 million yeah.

Anthony J. Park: The F&G segment contributed $64 million, and the corporate segment had an adjusted net loss of $34 million. For the full year 2023, we saw strong performance for the title segment despite a difficult environment, as well as record growth for the F&G segment, which together generated solid profitability. Total revenue excluding gains and losses was $11.9 billion in the full year 2020 and reflected a 9% decrease from the full year 2022, primarily due to the decline in title order volume. This generated $962 million in adjusted net earnings, a decrease of 35% from $1.5 billion in the full year 2022. The title segment contributed $760 million.

Anthony J. Park: <unk> segment contributed $64 million in the corporate segment had an adjusted net loss of $34 million.

Anthony J. Park: For the full year 2023, we saw strong performance for the title segment, despite a difficult environment as well as record growth for the F&B segment, which together generated solid profitability.

Anthony J. Park: Total revenue, excluding gains and losses was $11 $9 billion in the full year 2023.

Anthony J. Park: It reflects a 9% decrease from the full year 2022, primarily due to the decline in title order volumes.

Anthony J. Park: This generated $962 million and adjusted net earnings a decrease of 35% from $1 $5 billion in full year 2022.

Anthony J. Park: The title segment contributed $760 million. The F&B segment contributed $285 million in the corporate segment had an adjusted net loss of $83 million.

Anthony J. Park: The F&G segment contributed $285 million, and the corporate segment had an adjusted net loss of $83 million. Turning to financial highlights specific to the title, our title segment generated $1.7 billion in total revenue in the fourth quarter, excluding net recognized gains of $65 million, compared with $1.8 billion in the fourth quarter of 2022. Direct premiums decreased by 10% versus the fourth quarter of 2015. Agency premiums decreased by $13.

Anthony J. Park: Turning to financial highlights specific to the title segment.

Anthony J. Park: Our title segment generated $1 $7 billion in total revenue in the fourth quarter, excluding net recognized gains of $65 million compared with $1 $8 billion in the fourth quarter of 2022.

Anthony J. Park: Direct premiums decreased by 10% versus the fourth quarter of 2022.

Anthony J. Park: Agency premiums decreased by 13% and escrow title related and other fees decreased by 4% versus the prior year.

Anthony J. Park: And escrow, title-related, and other fees decreased by 4% versus the prior year. Personnel costs decreased by 4%, and other operating expenses decreased by 10%. All in, the title business generated adjusted pre-tax title earnings of $198 million. We're paired with $227 million for the fourth quarter of 2020. And an 11.8% adjusted pre-tax title margin for the quarter, versus 12.3% in the prior year, and as Mike highlighted, excluding the one-time 50 basis point impact of the cybersecurity impact. The fourth quarter adjusted pre-tax title margin was 12.3% and was in line with the prior year quarter.

Anthony J. Park: Personnel costs decreased by 4% and other operating expenses decreased by 10%.

Anthony J. Park: All in the title business generated adjusted pretax title earnings of $198 million compared with $227 million for the fourth quarter of 2022.

Anthony J. Park: And at 11, 8% adjusted pretax title margin for the quarter versus 12, 3% in the prior year quarter.

Anthony J. Park: As Mike highlighted excluding the one time 50 basis point impact of the cyber security incident.

Anthony J. Park: Fourth quarter adjusted pretax title margin was 12, 3% and in line with the prior year quarter.

Anthony J. Park: For the full year, the title business generated adjusted pre-tax title earnings of $964 million compared with $1.6 billion for the full year 2022, and a 13.7% adjusted pre-tax title margin versus 16.7% in the full year 2022. Our title and corporate investment portfolio totaled $5 billion at December 31st. Interest and investment income in the title and corporate segments of $103 million increased $3 million as compared with the prior year quarter, primarily due to higher income from cash and short-term investments, partially offset by lower income from our 1031 exchange. Looking to 2024, we expect to generate interest and investment income of $95 to $100 million in each of the first two quarters, before falling to $75-$85 million in the second half of the year with anticipated Fed funds cuts of Our title claims paid of $64 million were $14 million higher than our provision of $50 million for the fourth quarter.

Anthony J. Park: For the full year the title business generated adjusted pretax title earnings of $964 million compared with $1 $6 billion for the full year 2022, and a 13, 7% adjusted pretax title margin versus 16, 7% in the full year 2022.

Anthony J. Park: Our title in corporate investment portfolio totaled $5 billion at December 31st.

Anthony J. Park: Interest and investment income in the title and corporate segments of $103 million increased $3 million as compared with the prior year quarter, primarily due to higher income from cash and short term investments, partially offset by lower income from our 10 31 exchange business.

Anthony J. Park: Looking to 2024, we expect to generate interest and investment income of $95 million to $100 million in each of the first two quarters before falling to $75 million to $85 million in the second half of the year with anticipated fed funds cuts of 102.

Anthony J. Park: 150 basis points.

Anthony J. Park: Our title claims paid of $64 million were $14 million higher than our provision of $50 million for the fourth quarter. The.

Anthony J. Park: The carried reserve for title claim losses is approximately $70 million, or 4.2% above the actuary's central estimate. We continue to provide for title claims at 4.5% of total title claims. Next, turning to financial highlights specific to the F&G sector. F&G hosted its earnings call earlier this morning and provided a thorough update. So I will focus on the key highlights of its quarterly and full-year performance. F&G reported record gross sales of $4.1 billion in the fourth quarter, a 52% increase from the fourth quarter of 2020. $13.2 billion for the full year 2020.

Anthony J. Park: The carried reserve for title claim losses is approximately $70 million or four 2% above the actuary central estimate.

Anthony J. Park: We continue to provide for title claims at four 5% of total title premiums.

Anthony J. Park: Next turning to financial highlights specific to the F&B segment.

Anthony J. Park: <unk> hosted its earnings call earlier, this morning, and provided a thorough update so I will focus on the key highlights of its quarterly and full year performance.

Anthony J. Park: F N G reported record gross sales of $4 $1 billion in the fourth quarter, a 52% increase from the fourth quarter of 2022.

Anthony J. Park: And $13 $2 billion for the full year, 2023% to 17% increase over the full year 2022, driven by record retail sales and robust institutional market sales.

Anthony J. Park: A 17% over the full year 2022, driven by record retail sales and robust institutional marketing. F&G's net sales retained were $2.5 billion in the fourth quarter and $9.2 billion for the full year 2020. Net sales reflect third-party flow reinsurance, which has increased from 50% to 90% of MIGA sales during 2020, as expected. F&G has successfully expanded from one to three high-quality and established flow reinsurance partners, which provides counterparty diversification benefits and more capacity, and the Higher Percentage of Flow Reinsurance, which provides a lower capital requirement on seeded new business.

Anthony J. Park: F N g's net sales retained for $245 billion in the fourth quarter and $9 $2 billion for the full year 2023.

Anthony J. Park: Net sales reflect third party flow reinsurance, which has increased from 50% to 90% of my guess sales during 2023 as expected.

Anthony J. Park: F. N G has successfully expanded from one to three high quality and established flow reinsurance partners, which provides counterparty diversification benefit and more capacity.

Anthony J. Park: And the higher percentage of flow reinsurance, which provides a lower capital requirement on ceded new business, while allocating capital to the highest returning retained business enhances cash flow provides fee based earnings and is accretive to effigies returns.

Anthony J. Park: While allocating capital to the highest-returning retained business enhances cash flow, provides fee-based earnings, and is accretive to F&G's return, F&G has profitably grown its retained assets under management to a record $49.5 billion at December 31. AUM before Flow Reinsurance was $56.3 billion, and adjusting for the approximately $7 billion of cumulative new business seeded and well ahead of our expectations at the time of acquisition. Adjusted net earnings for the F&G segment were $64 million in the fourth quarter.

Anthony J. Park: F N G has profitably grown it's retained assets under management to a record $49 5 billion at December 31st.

Anthony J. Park: AUM before flow reinsurance was $56 3 billion adjusting for the approximately $7 billion of cumulative new business ceded and well ahead of our expectations at the time of acquisition.

Anthony J. Park: Adjusted net earnings for the F&B segment were $64 million in the fourth quarter. This includes alternative investment returns below our long term expectations by $31 million or <unk> 11 per share and significant expense items of $16 million or <unk> <unk> per share.

Anthony J. Park: This includes alternative investment returns below our long-term expectations by $31 million, or $0.11 per share, and significant expense items of $16 million, or $0.06 per share. For the full year 2023, adjusted net earnings for the F&G segment were $285 million. This includes alternative investment returns below our long-term expectations, by $130 million or $0.48 per share, and significant expense items of $43 million or $0.16. To bring it all together, FNF's consolidated adjusted net earnings, excluding significant items in the F&G segment, were $251 million, or $0.92 per diluted share, in the fourth quarter, and $1.1 billion, or $4.19 per diluted share for Foley.

Anthony J. Park: For the full year 2023, adjusted net earnings for the <unk> segment were $285 million.

Anthony J. Park: This includes alternative investment returns below our long term expectations by $130 million or 48 cents per share and significant expense items of $43 million or 16 cents per share.

Anthony J. Park: To bring it all together Fnf's consolidated adjusted net earnings excluding significant significant items in the F&B segment were $251 million or <unk> 92 cents per diluted share in the fourth quarter.

Anthony J. Park: And $1.1 billion or $4.19 per diluted share for the full year.

Anthony J. Park: I will 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. We held $886 million in cash and short-term liquid investments at the holding company level at December 31, which has remained relatively steady over the course of the year despite the effect of market headwinds and historical low volumes in the title business. As a reminder, this year-end amount is prior to the $250 million investment made in F&G in January 2012. On February 16, 2024, F&F and F&G each entered into amended and restated credit. For FNF, this included an extension of the maturity of the facility from October 2025 to February 2029; for F&G, this included an increase to the size of the facility commitment.

Speaker Change: I will wrap up with a few thoughts on capital and liquidity.

Speaker Change: We remain focused on ensuring our balanced capital allocation strategy as we navigate the current environment.

Speaker Change: We held $886 million in cash and short term liquid investments at the holding company level at December 31st which has remained relatively steady over the course of the year. Despite the effect of market headwinds and historical low volumes in the title business.

Speaker Change: As a reminder, this year end amount is prior to the $250 million investment made in F and G. In January 2024.

Speaker Change: On February 16th 2020 for FNF and F. N G. Each entered into amended and restated credit agreement.

Speaker Change: Or F. N F. This included an extension of the maturity of the facility from October 2025 to February 2029.

Speaker Change: For F. N. G. This included an increase to the size of the facility commitments to $750 million from $665 million and extended the maturity of the facility by two years to November 2027, thereby enhancing our liquidity profile.

Anthony J. Park: $750 million from $665 million and extended the maturity of the facility by two years, to November 2027, thereby enhancing our liquidity profile and financial flexibility. F&G's outstanding balance is $365 million, which reflects a $150 million paydown in the fourth quarter. FNF's consolidated debt was $3.9 billion on December 31st, up approximately $200 million from the preceding quarter due to F&G's senior note issuance and Partial Revolver Paydown in December.

Speaker Change: And financial flexibility.

Speaker Change: F and G. As outstanding balance is $365 million, which reflects a $150 million pay down in the fourth quarter.

Speaker Change: <unk> consolidated debt was $3 $9 billion on December 31 up approximately $200 million from the preceding quarter due to F. N G. Senior note issuance and partial revolver pay down in December.

Anthony J. Park: As a result, FNF's Consolidated Debt to Capitalization Ratio, excluding AOCI, was 28.9% as of December 31st. This is in line with our long-term target range of 20 to 30 percent, and we expect that our balance sheet will naturally de-lever as a result of growth in shareholders' equity, excluding AOSP, going forward. The Consolidated Annual Interest Expense on Debt Outstanding is approximately $200 million.

Speaker Change: As a result, fnf's consolidated debt to capitalization ratio <unk>.

Speaker Change: <unk> a OCI.

Speaker Change: It was 28, 9% as of December 31st.

Speaker Change: 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.

Speaker Change: Going forward, our consolidated annual interest expense on debt outstanding is approximately $200 million comprised of $80 million for FNF holding company debt and $120 million for F. N G segment that.

Anthony J. Park: The FNF is comprised of $80 million for FNF's holding company debt and $120 million for F&G sector debt. Following our record level of share repurchases in 2021 and at a total combined cost of $1 billion. We prudently moderated our repurchase volume in 2020 to preserve financial flexibility through the multi-decade low volume of this market. Therefore, there were no share repurchases in the fourth quarter and only $4 million of share repurchases. The Bollinger Band, 2023.

Speaker Change: Following our record level of share repurchases in 2021, and 2022 at a total combined cost of $1 billion, we prudently moderated our repurchase volume in 2023 to preserve financial flexibility through the multi decade low.

Speaker Change: Volumes of this market cycle.

Speaker Change: Therefore, there were no share repurchases in the fourth quarter and only $4 million of share repurchases in 2023.

Anthony J. Park: During the fourth quarter, we paid common dividends of $0.48 per share for a total of $133 million. Please continue to view our current annual common dividend, of approximately $525 million, as sustainable. This concludes our prepared remarks, and let me now turn the call back to our operator for questions. Thank you. We will now conduct our question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is busy. You may press star 2 if you would like to remove your question.

Speaker Change: During the fourth quarter, we paid common dividends of 48 cents per share for a total of $133 million.

Speaker Change: We continue to view, our current annual common dividend of approximately $525 million as sustainable.

Speaker Change: This concludes our prepared remarks.

Speaker Change: Now I'll turn the call back to our operator for questions.

Speaker Change: Thank you.

Speaker Change: We will now conduct a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate that your line is in the question queue you.

Speaker Change: You May press Star two if you would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.

Bose George: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start button. One moment, please, while we pull. And our first question comes from Boza George with KBW Police Theory. Good afternoon.

Speaker Change: Yeah.

Speaker Change: And our first question comes from Bose, George with <unk> W. Please state your question.

George: Hey, guys good afternoon.

Michael J. Nolan: The first question is just on margin expectations. I know you don't really, you know, discuss this sort of guidance. But when you think about 2024, assuming volumes are up only modestly, and investment income is down a little bit based on your guidance, is there any reason to think the margin should be up very much or, you know, sort of in the same ballpark as 2020? Yeah, Bose. It's Mike. Good afternoon.

George: First question is just on the margin expectations I know you don't.

Bose George: You know, we're discussing it got sort of guidance, but when you think about 2024, assuming volumes are up only modestly.

Bose George: That's gonna income down a little bit based on your guidance.

Bose George: Any reason to think that margins should be up very much or sort of in the same ballpark as 23.

George: Yeah Bose, it's Mike and good afternoon, I would say you know cautious to margins, particularly in the first quarter, probably looks a lot like last year, given the inventory volumes in the fourth quarter or lower them.

Michael J. Nolan: I would say, you know, cautious on margins, particularly in the first quarter, probably looks a lot like last year, given the inventory volumes in the fourth quarter are lower. You know, we do have maybe a little bit of a lower expense base that helps, but we're pretty cautious about the first quarter and a bit more optimistic as we move through the year, encouraged by the increase in resale open orders in January, up 7% over last year. And the sequential improvement, I think lines up well for maybe a modestly better purchase environment as we go through through 24. But the real difference maker will just be what happens to rates if we get better rates as we go through the year, particularly in the second half. I think there's some upside to margins there.

Mike: You know, we do have baby you know a little bit of a lower expense base that helps but pretty cautious to the first quarter and are in a bit more optimistic as we as we move through the year I'm encouraged by the increase in you know resale open orders in January up 7% over last year and the sequential improvement.

Mike: I think lines up well for for maybe a modestly better a purchase environment as we go through through 'twenty four but they're the real difference maker will just be what happens to rates. If we get if we get better rates as we go through the year and particularly in the second half I think there's some upside to margins. There you know when you.

Michael J. Nolan: You know, when you think about refi, it was up sequentially 15% in January, and that was really driven by the modest decrease in rates that we saw, you know, kind of in the back half of December. So it's really going to be about the rates, but I think there is some potential for modestly better margins as we go through the year. And Boaz, maybe I'll just add on that.

Mike: [noise] about refi.

Mike: <unk> was up sequentially, 15% in January and that was really driven by the modest decrease in rates that we saw.

Mike: You know kind of in the back half of the December I guess.

Mike: So it's really going to be about the rates, but but I think there is some potential for modestly better margins as we go through the year.

Mike: And Bose, maybe I'll just I'll just add on that you mentioned the guidance on investment income and that guidance really assumes that rates come down and so when we got to the back half of the year and a $75 million to $85 million investment income number that does assume.

Anthony J. Park: You mentioned the guidance on investment income, and that guidance really assumes that rates come down. And so when we got to the back half of the year, and a $75 to $85 million investment income number, that does assume at least 100 basis points of reduction. And if that happens, then the title business will be doing a lot better, and so I think we still hold those margins. Yeah, yeah, no. That makes sense. Thanks.

Mike: At least 100 basis points of reduction and if that happens then the title business is doing a lot better and so I think we still hold those margins.

Bose George: Yeah, no that makes sense. Thanks, and then just actually on the corporate segment. It looked like the losses, a little higher than usual on the quarterly numbers is there.

Anthony J. Park: And then just actually on the corporate segment, it looked like the loss was a little higher than usual on the quarterly numbers. Is there, what's sort of a reasonable number to model for, you know, for that segment? Yeah, the way I would look at it is more your adjusted pre-tax, and I think for the fourth quarter, it was $22 million loss versus $20 million in the third quarter, and roughly that in the fourth quarter of the prior year. What you're seeing is a couple items in there that we've carved out of normal earnings. One was $10 million related to the cybersecurity event, and another item was an $8 million charge we took to terminate an old frozen pension plan that dates back more than 20 years. So that was $18 million. But again, you carve that out.

Bose George: Sort of a reasonable number to model for you know for that segment.

Bose George: Yeah, the way I would look at it as more of your adjusted pre tax and I think for the fourth quarter. It was $22 million loss versus 20 million in the in the third quarter and.

Bose George: Roughly that in the fourth quarter of the prior year, what Youre seeing is a couple of items in there that we've carved out of a normal earnings one was $10 million related to the cyber security events and another item was an 8 million dollar charge, we took to terminate it.

Bose George: Old frozen pension plan that dates back more than 20 years, and so that was $18 million, but again you carve that out Youre also seeing if youre looking at the Bottomline. Some noise in the tax rate are we we are we had a little movement around with with valuation allowances really throughout the year either.

Anthony J. Park: You're also seeing, if you're looking at the bottom line, some noise in the tax rate. We had a little movement around with valuation allowances really throughout the year, either going up or going down depending on the market, and so the tax rate may be confusing it a little bit as well. Okay, great. Thanks.

Bose George: Coming up going up or going down depending on the market and so that the tax rate, maybe maybe confusing it a little bit as well.

Speaker Change: Okay, great. Thanks.

Bose George: Okay.

Mark C. DeVries: Thank you, and our next question comes from Mark DeVries with Deutsche Bank. Please state your question. Yeah, thank you. I was hoping you could give us some more detailed thoughts on kind of, you know, why the board thought that the new $250 million investment in FG was the best use of capital here? And could you also just update us on your thoughts on the kind of prioritization for capital going forward? Yeah, Mark, maybe I'll start.

Bose George: Thank you and our next question comes from Mark Devries with Deutsche Bank. Please state your question.

Bose George: Yeah.

Mark C. DeVries: I was hoping you could give us some more detailed thoughts on kind of.

Mark C. DeVries: Why was the board thought.

Mark C. DeVries: The new $250 million investment enough G was the best use of capital here and could you also just update us on your thoughts on kind of prioritization for capital going forward.

Mark C. DeVries: Yeah, Mark maybe I'll start and others can jump in as well.

Anthony J. Park: Others can jump in as well. In terms of the $250 million, I think we may have stated this in the last call, or maybe it wasn't part of it. I don't remember if we had announced it at that point, but it was really the board looking at the performance of FG since the date of acquisition back in June of 2020, the strong leadership, the performance, the growth in assets, and thought, you know, we could, we have an opportunity here to continue to grow the asset base and retain those assets. Or we have reinsurance partners where we could, you know, utilize that and not keep as much of those assets. And I think the board thought, well, we have almost a billion dollars in holdco cash.

Speaker Change: In terms of the $250 million I think we may have stated this in the last call or maybe it wasn't part of it I don't remember if we had announced that at that point, but it was really the the board looking at the performance of F. G. Since really the date of acquisition back in June of 2020, the strong leadership that performance.

Speaker Change: The growth in assets and thought we could Oh, we have an opportunity here to continue to grow the asset base and retain those assets or we have reinsurance partners, where we could utilize that it and not keep as much of those assets in and I think the board thought well, we we have almost.

Speaker Change: $1 billion in Holdco cash.

Anthony J. Park: And $250 million was a reasonable investment, especially if you can get a 7% or roughly 7% return on that over a three-year period and get that back in equity at the end. And so I think it was just another investment, if you will, or validation of, hey, we really like what's going on at F&G, and we want to continue to invest in that and keep more of those assets. F&G, as you know, is generating about 30% of our adjusted net earnings, and the thesis that we started with, rates go up, FG outperforms, title underperforms, and that's pretty much played out. We see true value creation in that investment, and so, you know, I think it made a lot of sense. Just touching on capital allocation, I think we talked about it a little bit in the prepared remarks, but, you know, the dividend at $525 million annually is M&A of $200-300 million. Just as a normal course, absent some, you know, significant deal, I think we would expect to spend that. Not all of that shows up; it's the whole co-cash spent.

Speaker Change: And $250 million was a reasonable investment, especially if you can get a 7% or roughly 7% return on that over a three year period and get that back in and equity at the end and so I think it was just another.

Speaker Change: Now another investment if you will or a validation of hey, we really like what's going on at F and G and and and we want to continue to invest in that and and keep more of those assets F and G. As as you you know is is.

Speaker Change: Generating about 30% of our adjusted net earnings.

Speaker Change: And the the thesis that we started with rates go up F. G. Outperforms title Underperforms that that's pretty much played out weak, we see true value creation and end up in that investment and so you know I.

Speaker Change: I think it made a lot of sense just touching on capital allocation I think we've talked about it a little bit in the prepared remarks, but you know, it's the dividend that at $525 million annually.

Speaker Change: It's M&A of $2 million to $300 million, just normal course absent some significant deal I think we would expect to spend that not all of that shows up at Holdco cash spent some of that is done at the subsidiary level, but.

Anthony J. Park: Some of that is done at the subsidiary level, but... You know, you can assume that two to three hundred million is sort of our run rate. Buybacks, as you probably know, we took 2023 off in terms of being in the market for buybacks, as we just wanted to see how this title business plays out, how the macro environment goes, and how our cost cutting goes. I think it's all gone well from an expense management standpoint, but we're still at historical lows in terms of volumes, and so we're taking a look, and that's why you didn't see any buyback activity there. And then, you know, just finally, I think on the debt side of things, we feel very comfortable. Other than the revolver, which we had coming due, I think in 2025, we don't have Okay, that's that's really helpful.

Speaker Change: You know you can assume that a $2 million to $300 million sort of are our run rate buybacks. As you probably know we took a 2023 off in terms of being in the market for buybacks.

Speaker Change: As we just wanted to see how this title business plays out how the how the macro environment.

Speaker Change: Those how are our costs cutting goes I think it's all gone well from a from an expense management standpoint, but we're still at historical lows in terms of volumes and so we're taking a look and that's why you didn't see any any buyback activity. There and then just finally I think on the on the debt side of things we feel very.

Speaker Change: Comfortable other than the revolver, which we had coming due I think in 2025, we don't have any debt coming due it now that we've extended that revolver to 2029 I think we're in really good shape from a debt standpoint.

Speaker Change: Okay. That's that's really helpful and then.

Anthony J. Park: And then am I right in thinking that, you know, the board's conclusion that FG is a good place to deploy capital today is completely independent of any views they may have on whether, you know, holding FG inside of FNF is the most efficient place for those shares to ultimately reside. And, and could you just remind us of when the five-year anniversary is of the acquisition of FG? Yeah, the five-year anniversary is June of 2025. That's the point where we could spend as long as we own at least 80% of the company, which we do. We own 85% of the company; we could spend that on our F&F shareholders tax free. And so that is a date that people have certainly referenced.

Speaker Change: Am I right in thinking that.

Speaker Change: The board's conclusion that after he is a good place to deploy capital today is completely independent of any views. They may have on weather.

Speaker Change: You know.

Speaker Change: Holding F G inside of a F N app is the most efficient place.

Speaker Change: For those shares to ultimately reside in and could you just remind us on.

Speaker Change: When the five year anniversary is on the acquisition of up to you.

Speaker Change: Yeah. The five year anniversary is June of 2025, that's the point.

Speaker Change: Where we could spend as long as we own at least 80% of the company, which we do.

Speaker Change: We own 85% of the company, we could spend that to our FNF shareholders tax free and so that is a that is a date that that people have have.

Speaker Change: Certainly referenced in and we've answered the question.

Anthony J. Park: And we've answered the question. I do believe in your first comment or statement, and Mike and Chris can weigh in as well. I do believe that these are independent decisions.

Speaker Change: I do believe to your first comment or statement and Mike and Chris can weigh in as well I do believe that these are independent decisions I think at this point the board likes the investment and wants to continue to grow this asset and create value, but I don't think it's a statement around what we might.

Anthony J. Park: I think at this point the Board likes the investment and wants to continue to grow this asset and create value, but I don't think it's a statement around what we might ultimately do or not do with the asset going forward. So I think that's probably all I can say now, unless others want to make a comment. I would just agree with Tony that those are independent considerations really focused on the growth opportunities. The growth has been tremendous, doubling assets in three years, and the expansion in channels to sell has been incredible, and we want to take advantage of that. Okay, that makes a lot of sense. Thanks, guys. Our next question comes from Soham Bamsul with BTIG. Please state your... Hey guys, hope you're doing well.

Speaker Change: Ultimately do or not do with with the asset going forward. So I think that's that's probably all I can say now unless others, others want to make a comment.

Mike: I would just say I would just agree with telling you that is that those are independent considerations and are really focused on the growth opportunities. The growth's been tremendous doubling assets in three years and the expansion in channels to sell has been incredible.

Speaker Change: And we want to take advantage of that.

Speaker Change: Okay that makes a lot of sense. Thanks, guys.

Speaker Change: Thanks Mark.

Speaker Change: Our next question comes from so how bunzl with BTG. Please state your question.

BTG: Hey, guys hope you're doing well.

Soham Bamsul: Just to follow up on that last question, I mean, I guess, from your point of view, is there any concern around, you know, if we do enter sort of a lower rate environment, how that potentially affects FG's performance, right in that scenario, and it is growing as a part of your business? Or is the view that hey, look, rates go down, okay, maybe FG earnings do sort of decline a little bit, but they will get it back on the title side? Just wanted to get your thoughts there. Chris, do you want to maybe weigh in on your thoughts around FG's performance if interest rates come down? Yeah, I'm happy to do that.

Bunzl: Just a follow up on that last question I mean, I guess from your point of view is there any concern around if we do enter a sort of a lower rate environment.

Bunzl: How it potentially affects fg's performance right in that scenario and it is growing as a part of your business.

Bunzl: Or is the view that hey look rates go down Okay. Maybe M. G earnings do sort of decline a little bit, but they will get it back on the title side I just wanted to get your thoughts there.

Bunzl: Chris do you want to maybe a way on on your thoughts around Fg's performance, if if interest rates come down.

Chris: Yeah happy to do that and I guess, the first comment I would make is we've grown earnings consistently.

Chris Gamaitoni: And I guess the first comment I would make is that we've grown earnings consistently. And the past 10 years, rates have been anywhere from 39 basis points to peaking over 5%. And we've just consistently grown earnings throughout that period. So clearly, in a rising rate environment, it's easier for us to get extra spread. So I would say we get outsized earnings, um, but that does not imply that we would even necessarily see a decline in earnings. You know, as long as we continue to grow, we continue to grow AUM. It might not be the windfall that it feels like right now with the wind at the back, but we're pretty proud of our ability to deliver pretty consistent earnings, and I think that's probably an underappreciated part of the F& The others We did announce on our FG earnings call this morning that we've hedged now out about half of our floating rate exposure. That would be the one place where we would feel it relatively quickly, but I'd also remind you a good portion of our in force.

Chris: The 10 year has been anywhere from 39 basis points to peaking.

Chris: Over 5% and we've just consistently grown earnings throughout that period. So clearly in a rising rate environment, it's easier for us to get extra spread so I would say we get outsized earnings.

Chris: But that does not imply that we would even necessary.

Chris: Right.

Chris: In earnings you know as long as we continue to grow we continue to grow a U M.

Chris: It might not be the windfall that it feels like right now with wind at the back, but we're pretty proud of our ability to deliver pretty consistent earnings and I think that so.

Chris: Probably an underappreciated part.

Chris: Of the off enough stock as the positive impact probably the title when rates come down it.

Chris: We wouldn't expect a significant drop off on the <unk> side. The other is we did announce on our.

Chris: After your earnings call. This morning that we've hedged now out about half of our floating rate exposure that would be the one place where we would feel it a relatively quickly but I'd also remind you a good portion of our in force, we get to readjust, our pricing and margins every single year. So we can adapt to interest rates in either direction.

Michael J. Nolan: We get to readjust pricing and margins every single year, so we can adapt to interest rates in either direction. And so Hammett's Mike, I would just add then that we would welcome a lower rate environment, given that we don't think it's a significant impact on FG, and it would have a significant positive impact on the title position. Okay, great. And then Tony, when I was looking at the residential fee profile, it was up mid-teens this quarter, so much stronger than where HPA is today. I mean, I guess what's going on there?

Chris: And sell him it's Mike I would just add then that we would welcome a lower rate environment.

Chris: Given that we don't think it's a significant.

Mike: Impact on F G and it would be a significant positive impact on the title business.

Speaker Change: Okay great.

Speaker Change: And then Tony I like what I'm looking at the residential fee per file it was up mid teens. This quarter, so much stronger than where H P. A's today, I mean, I guess, what's going on there and then on the national commercial side looks like fee per file was up low double digits as well.

Anthony J. Park: And then on the national commercial side, it looks like the fee profile was up double digits as well. And that just sort of goes against sort of what we're seeing in the market. So I just wanted to get your thoughts on those two items. Yeah, so what I have in front of me here, and maybe I need to double check it, but I show that our purchase fee profile... was about $3350. $3,350 up against https://www.fidelity-nation.com is very negligible at this point, about 5% of total direct revenue. But nonetheless, the refinance fee-per-file is $1,000.

Anthony J. Park: And that just sort of goes again sort of what we're seeing in the market and I'm. Just wondering if you had thoughts on those two items.

Anthony J. Park: Yeah, So what I have in front of me here, and maybe I need to double check it, but but I show that our purchase fee per file.

Anthony J. Park: It was about 33 $53350 up against about 31 80 in the prior year fourth quarter, which is up about 6% and then on the refinance side and keep in mind refinances.

Anthony J. Park: It is very negligible at this point about 5% of total direct revenue, but nonetheless, the refinance.

Anthony J. Park: Fee per file.

Chris: A thousand.

Anthony J. Park: 2.89 basically, $1,289 versus $1,226, so up about 5%. So, I don't know, that blended to me residential is, you know, 5% or 6%, which I think holds up relative to what the market would show overall. In terms of the commercial, yeah, I don't know, I think that's probably more of a mixed deal.

Chris: <unk> hundred 89, basically $289 versus $12 26 up about 5%. So I don't know that blended to me residential is you know five or 6%, which I think holds up relative to what the market would show overall.

Chris: In terms of the commercial yeah, I don't know I think that's probably more a mix a deal I think we tend to to have a larger deals in Q4 are Mike I don't know if you have any thoughts on the commercial fee per file and why it was yeah.

Michael J. Nolan: I think we tend to have larger deals in Q4. Mike, I don't know if you have any thoughts on the commercial fee profile and why it was up. Yeah, on a commercial, and you're right, Solomon, it was significantly higher in the fourth quarter versus a pretty good number in the fourth quarter last year. It was heavily influenced by a couple of really large transactions that we had, and so I would expect that number to, you know, kind of reconcile to more normal as we move back into, as we move through to 24. Okay, great.

Mike: On the commercial and your I saw that was it was significantly higher in the fourth quarter versus a pretty good number in the fourth quarter last year. It was heavily influenced by a couple of really large transactions that we had.

Chris: And.

Mike: So I would I would expect that number to you know kind of reconcile to more normal as we as we move back and do as we moved through to 'twenty four.

Speaker Change: Okay, Great and then just quick last one Mike are you guys seeing any sort of fallout from just the cyber security impacting on we're hearing some potential diversification just wanted to get your thoughts on the market there.

Michael J. Nolan: And then just last one, Mike, are you guys seeing any sort of fallout from just the cybersecurity impact? You know, we're hearing some potential diversification. Just wanted to get your thoughts on the market there. Yeah, I really don't see that.

Mike: Yeah, I I really don't see that Ah I think the impact has been.

Michael J. Nolan: I think the impact has been negligible with customers. I personally talked to a number of large customers who gave no indication that there were any concerns. And I'm not really expecting so much impact from long-term customer relationships. Okay, great. Thanks.

Mike: With customers negligible I I personally talked to a number of large customers, who given no indication that there's any concerns.

Mike: And I'm not really expecting so many impact.

Mike: <unk> from long term customer relationships.

Speaker Change: Okay, great. Thanks, Thanks, a lot guys.

John Campbell: Thanks a lot, guys. Our next question comes from John Campbell with Stevens. Please state your... Hey, guys. Hey, Jack.

Speaker Change: Mhm.

Speaker Change: Our next question comes from John Campbell with Stephens. Please state your question.

John Campbell: Hey, guys.

John Campbell: Hey, Jeff.

John Campbell: Yeah.

Operator: Mr. Campbell, press star 1 on your phone again. Looks like you're not in the Q&A. This one. Go ahead, Mr. Campbell.

John Campbell: Mr. Campbell Press Star one on your phone again it looks like.

Speaker Change: Not in the queue anymore.

Speaker Change: Right.

Speaker Change: Just one moment please.

Jeremy Campbell: Go ahead, Mr Campbell.

John Campbell: Okay. Hey guys, I wanted to revisit the M&A commentary. You guys mentioned $300 million in 10 acquisitions last year. I'm hoping you can maybe help with the phasing of those deals, maybe roughly what portion of the year you captured those. And then also, if you could help with the sizing of the all-in contributions and maybe how much that's influencing your direct order count. Yeah, I'll start. Mike can probably touch on it as well.

Campbell: Okay, Hey, guys I wanted to revisit the M&A commentary you guys mentioned 300 million over 10 acquisitions last year, hoping you can maybe help with the phasing of those deals maybe roughly what portion of the year you captured those and then also if you could help with the sizing of the all in contribution and then maybe how much that's influencing your direct order count.

Speaker Change: Yeah, I'll start Mike can probably touch on it as well so a lot of that frankly was January 1st because I think the property insight.

Anthony J. Park: So a lot of that, frankly, was January 1, because I think the property insight deal was 200 ish. And that happened at the very beginning of the year. And then I think things slowed down a bit and then picked up maybe in the latter part of the year. And so a lot of the deals were smaller, not large title agent acquisitions. And so from an order count standpoint, not significant. But keep in mind, it was a kind of a strange year where there was a lot of, you know, price discovery out there in terms of trying to figure out what the right price is to buy. And of course, for sellers to figure out if they can afford to sell when their businesses are clearly off the peak. And so, you know, I think that, you know, I would expect more activity in 2024 than in 2023. In terms of title agent M&A,

Speaker Change: Deal was 200 ish.

Speaker Change: And that happened at the very beginning of the year and then I think things slowed down a bit and then picked up maybe in the latter part of the year and so a lot of the deals were smaller not large title agent acquisitions, and so from an order count standpoint, not significant but keep in mind. It was a kind of a.

Speaker Change: Range here, where there's a lot of price discovery.

Speaker Change: Out there and in terms of trying to figure out what the right price is to buy and of course for the sellers to to figure out if they can afford to sell when their businesses are clearly off the peak and so you know I think that yeah, I would I would expect more activity in 2024, then 2023.

Speaker Change: In terms of title agent M&A, Mike do you want to address that.

Michael J. Nolan: Mike, do you want to address that? Yeah, I would agree. Obviously, the dollar amount is heavily weighted by the title point deal. I'm looking at the list of acquisitions, about half for the first half and half in the second half of the year at 23, probably a modest impact on order counts, but I don't have a number to give you, John, as to how much it impacted order counts. Okay, and I felt that the earlier your acquisition, the bigger the size of it. So it seems like it's pretty immaterial. Just tuck in acquisitions across agencies. So that was what I was looking for.

Mike: Yeah, I would agree I mean, obviously the dollar amount heavily weighted by the title point deal.

Mike: I'm looking at the list of acquisitions about half for the first half and half in the second.

Mike: Half of the year at 23, probably modest impact on.

Mike: On order counts, but I don't have a number to give you John as to how much it impacted order counts.

Mike: Okay.

Mike: I don't.

Speaker Change: Recognize that.

Speaker Change: The earlier acquisition.

Mike: What was the size of it so it's and it seems like it's pretty immaterial just tuck in acquisitions across agency. So that's what I was looking for on the cyber security incident I wanted to touch on maybe two items here. So first on the November orders, obviously affected December jumped pretty sharply I think your open orders were up 15% or so of them purchase.

Michael J. Nolan: On the cybersecurity incident, I want to touch on maybe two items there. So first, the November orders, obviously affected December jumped pretty sharply. I think your open orders were up 15% or so on purchase. How much of that was stemming from a push out in order activity? Is there any way to size that up?

Mike: How much of that was stemming from a pushout in order activity is there any way to size that up.

Michael J. Nolan: I think it's difficult to say with certainty, but as we looked at the two months, it looks like, particularly when you get out of the centralized world, because it's different there because you have these electronic connections with your customers, and they kind of turn them off when you have a security event. But I would agree with you. Our November open orders were off about 10% from expectations, and that kind of lines up with the couple of days where we were really restricted from taking orders. And then December, to your point, was up 15. And I think that was definitely higher than expected.

Mike: I think it's difficult to say with certainty, but as we looked at the two months.

Mike: It looks like particularly when you get out of the centralized world because it's different there because you have these electronic connections with your customers and they kind of turn them off when you have a security event.

Mike: But I would agree with you are our November open orders were off about 10% to expectation in.

Mike: And that kind of lines up with the couple of days, where we were really restricted from taking orders.

Mike: And then December to your point was up 15, and I think that was definitely higher than expectation, so I really feel like.

Michael J. Nolan: So I really feel like, um, the business that didn't happen in November we just picked up in December, and when we looked at our revenues kind of on a per day basis, the last couple of days in November and into December, I think we were just really picking up those closings. And I think it speaks to the great work that our field employees did to work with individual customers and to move transactions off of a couple of days to the next couple of days and maybe into the next week. So I think that's why we say the impact was very, very minimal.

Mike: The business that that didn't happen in November we just picked up in December and when we looked at our revenues kind of on a per day basis.

Mike: In the last couple of days in November in India, and the end of December I think we were just really picking up those closings and I think it speaks to the great work that our our field employees did too.

Mike: To work with individual customers and end to move transactions.

Mike: Off of a couple of days to the next couple of days and maybe into the next week.

Mike: So I think that's why we say the impact was with very very minimal and I think customers.

Michael J. Nolan: And I think customers worked with us very well in dealing with the event. Yeah, it's great to hear. And then just moving down to the closing or the closed orders in December, I mean, if I look at the closing ratio, it was way, way below kind of what you've seen historically. I guess the question here is, would you expect a higher closing ratio in January as you push some of that? I'm guessing it was probably capacity issues, but maybe a higher closing ratio in January as you catch back up on those orders.

Mike: <unk> worked with us very well in in and are dealing with with the event.

Speaker Change: Yeah, that's good to hear and then just moving down to the closing or the closed orders in December I mean, if I look at the closing ratio. It was way way below kind of what you've seen historically I guess the question. Here is do you think would you expect a higher closing ratio in January as you push some of that I'm guessing it was probably capacity issues.

Speaker Change: But maybe the higher closing ratio in January as you catch back up on those orders.

Michael J. Nolan: I'd have to go back and look at those numbers, John, to give you a better answer. I would say, when we look at the full year in 23, closing ratios were probably lower than historical averages. And I think that's driven by, obviously, the rate environment. I would expect, as we normalize, potentially into the back end of 24 and beyond, that closing ratios should improve overall. I would say the same for commercials. Okay, I got it. If I could squeeze in one more, I've got questions about growing your light position. So maybe if you could talk about that, and then also the rationale behind that. The upright position, is that what you asked?

Speaker Change: I'd have to go back and look at those numbers John to give you a better answer I would say when we look at the full year in 'twenty three.

Speaker Change: Closing ratios were probably lower than historical averages and I think that's driven by obviously the rate environment.

Speaker Change: I would expect as we normalize potentially into the back end of 'twenty four and beyond the closing ratio should improve overall I would say the same for commercial.

Speaker Change: Okay got it and if I could squeeze in one more I've I've gotten questions about the growing your light position. So maybe if you could talk to that and then also the rationale behind that investment.

Speaker Change: Okay.

Speaker Change: The life position is that what you asked yes.

John Campbell: Yes. Yeah, I don't think we've grown in the like position much. If we have, I think it's been pretty...

Speaker Change: Yeah, I don't think we've grown the life position much Ah if if we have I think it's bad.

Anthony J. Park: Pretty negligible. It hasn't crossed my radar, so I'd have to double-check and get back to you on that. Okay, sounds good. Thanks, guys. Thanks, John. A reminder to the audience: if you'd like to ask a question at this time, press star 1 on your telephone keypad to remove yourself from the queue, press star 2. Our next question comes from Mark Hughes with Truist Securities. Please stay.

Speaker Change: Pretty pretty negligible it hasn't crossed my radar, so I'd have to double check and get back to you on that.

Speaker Change: Okay sounds good thanks, guys.

Speaker Change: Thanks, Sean.

Speaker Change: Thank you and a reminder to the audience if you'd like to ask a question at this time press star one on your telephone keypad to remove yourself from the queue Press star two.

Speaker Change: Okay.

Speaker Change: Our next question comes from Mark Hughes with choose Securities. Please state your question.

Mark Hughes: Yeah, thank you. With the $8 million frozen, Adjustments. With that. And you just have adjusted out for 40. The earnings number, or was that still included in the expenses? No, it was, Mark. It was adjusted out, yeah.

Mark Hughes: Yes, thank you with the $8 million frozen pension adjustment was that.

Mark Hughes: Adjusted out for.

Mark Hughes: Your earnings number or was that still included in the expenses.

Mark Hughes: No. It was a market was adjusted out yes.

Mark Hughes: Okay, all right very good and then the in here you talked about a million contacts up 50% what is the penetration now at that point, if you've got a million folks that are using it what what is the opportunity for that to continue to grow and to have an impact on our expenses.

Anthony J. Park: Okay, all right. And then in here, you talked about a million contacts going up 50%. What is the penetration now at that point if you've got a million folks that are using it? What is the opportunity for that to continue to grow and have an impact on expenses or revenue? I think Mike, Mark, I think the potential for it to continue to grow is significant. The, you know, from a kind of real estate agent transaction coordinator standpoint, I think there's still a lot of upside. And that million number includes both consumers and agents and their staff. So I think there's a lot of potential there. The consumer number is driven more just by the marketplace. So as more transactions occur, rates come down, and more transactions occur, we'll send out more packages to consumers, and more consumers will engage with us on it. And the number of students is actually suppressed given the lower number of markets.

Speaker Change: Their revenue.

Speaker Change: I think it's Mike Mark I think the potential for it to continue to grow is significant.

Speaker Change: The you know from a kind of a real estate agent transaction coordinator standpoint, I think there's still a lot of upside.

Speaker Change: And that million number includes both consumers and our agents and their staff. So I think there's a lot of potential there the consumer numbers driven more just by the marketplace. So as more transactions occur you know rates come down and more transactions occur we'll see.

Speaker Change: Send out more packages to consumers and more consumers will engage with us on it.

Speaker Change: And the numbers are actually suppressed given that the lower market itself.

Michael J. Nolan: So maybe a long-winded answer to say I think there's still quite a bit of potential. Yeah, thank you very much. Thank you, and this will conclude our question and answer session. I will now turn the conference back over to CEO Mike Nolan for closing. Thank you. We are proud of our very strong performance in 2023. We remain well positioned to navigate the market cycle and are continuing to build and expand our title business for the long term. Likewise, F&G's opportunities are compelling, with many prospects ahead to drive asset growth, deliver margin expansion, and generate accretive returns. 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 for attending today's presentation. The conference call has concluded. You may now disconnect.

Speaker Change: Maybe a long winded answer to say I said, I think theres still quite a bit of potential.

Speaker Change: Yeah. Thank you very much.

Speaker Change: Thanks Mark.

Speaker Change: Thank you and this will conclude our question and answer session I will now turn the conference back over to CEO, Mike Nolan for closing remarks.

Michael J. Nolan: Thank you we are proud of our very strong performance in 2023, we remain well positioned to navigate the market cycle and are continuing to build and expand our title business for the long term. Likewise F. N g's opportunities are compelling with many prospects ahead to drive asset growth deliver more.

Speaker Change: Arjun expansion and generate accretive returns.

Speaker Change: Thanks for your time. This morning, we appreciate your interest in F. N F and look forward to updating you on our first quarter earnings call.

Speaker Change: Thank you for attending.

Speaker Change: Pending todays presentation in the conference call has concluded you may now disconnect.