Q1 2024 Fidelity National Financial Inc Earnings Call
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Speaker Change: Ladies and gentlemen, good morning, and welcome to F N F fourth quarter earnings call.
Speaker Change: During todays presentation, all parties will be in a listen only mode.
Following the presentation the conference will be open for questions, but instructions to follow at that time.
Speaker Change: And then Michael This conference call is being recorded.
I would now like to turn the call over to Lisa Foxworthy, Parker SVP Investor and external relations. Please go ahead.
Lisa Foxworthy: Great. Thanks, operator, and welcome everyone joining.
Lisa Foxworthy: 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&B, CEO and Wendy Young F and G. CFO will join us for the Q&A portion of today's call.
Lisa Foxworthy: Today's earnings call May include forward looking statements and protection 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 report 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 FTC rule within our earnings materials are 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 F N O dot com.
It will also be available through telephone replay.
Lisa Foxworthy: Getting today at three P. M. Eastern time, you may 16th 2024.
Lisa Foxworthy: And now I'll turn the call over to our CEO, Mike Dolan.
Okay.
Michael Joseph Nolan: Thank you Lisa and good morning.
Michael Joseph Nolan: We are very pleased with our first quarter results for both the title segment and F and G, which provides a strong start to the year.
Michael Joseph Nolan: Both businesses are well positioned for the current market and for longer term growth.
Speaker Change: Our title business continues to perform well in a volatile and challenging environment.
Speaker Change: We delivered adjusted pretax earnings in our title segment of $171 million and achieved an industry, leading adjusted pretax title margin of 10, 7% for the first quarter.
Speaker Change: An increase of 70 basis points over the 10% margin in the prior year quarter.
Speaker Change: This performance is in line with our expectation that entering 2024 with historic low order volumes would pressure first quarter margins much like last year.
Speaker Change: In the first quarter, we saw normal seasonality in purchase opened orders with sequential improvement coming off the fourth quarter.
Speaker Change: In April purchase open orders per day were up 4% over last year, but higher mortgage rates may temper purchase volumes going forward.
Speaker Change: Refis are holding steady at roughly 1000 per day at the current floor.
Speaker Change: Commercial volumes continued to be resilient and consistent.
Speaker Change: We generated revenue and commercial up $238 million in the first quarter trending in line with the approximately $1 billion in annual revenue levels seen in 2023 weeks.
Speaker Change: We saw continued strength in multifamily industrial and other segments like energy and affordable housing similar to recent years.
Speaker Change: Looking at first quarter volumes more closely daily purchase orders opened were up 5% over the first quarter of 2023 up 25% over the fourth quarter of 2023 up 4% for the month of April versus the prior year and up 4% for the month of April.
Speaker Change: Versus March.
Speaker Change: Our refinance orders opened per day were down 2% from the first quarter of 2023 up 16.
Speaker Change: <unk> percent over the fourth quarter of 2023 down 2% for the month of April versus the prior year and down 2% for the month of April versus March.
Speaker Change: Our total commercial orders opened were 785 per day in line with the first quarter of 2023 up 12% over the fourth quarter of 2023 up 4% for the month of April versus the prior year and up 1% for the month of April versus March.
Speaker Change: Yeah.
Speaker Change: Overall total orders opened averaged 5100 per day in the first quarter.
Speaker Change: With January at 4800 February at 5100 and March at 5300 for.
Speaker Change: For the month of April total orders opened were 5400 per day up 2% versus March.
Speaker Change: At this time, we remain cautious and continue to view our performance in 2023 as a proxy for 2024 with some upside if rates come down later this year, however market challenges from higher mortgage rates currently running in the low to mid 7% range housing affordability.
Speaker Change: <unk> and low inventory are expected to persist in the near term.
Speaker Change: Given mortgage rate volatility, we could see adjusted pretax title margin move into the low to mid teens range over the next couple of quarters.
Speaker Change: The timing for a potential rebound in the housing market is uncertain and largely dependent on lower mortgage rates.
Speaker Change: In a scenario where more inventory comes into the market and rates come down we are well positioned to capture upside to last year's performance.
Speaker Change: Overall higher volumes above current trough levels would help to drive stronger incremental margins and showcase the scale and efficiencies that our diversified national footprint provides much like what we saw in 2019 through 2020 one.
Speaker Change: In the current environment, we remain focused on managing our business to the trend in opened orders and we will continue to monitor our head count and footprint carefully.
Speaker Change: Over the long term, we remain bullish on the real estate market.
Speaker Change: And we will continue to develop and invest in technology recruit top talent and make strategic acquisitions, all while maintaining industry leading margins.
Speaker Change: I also wanted to comment on some recent headlines emanating from Washington on Homeownership in America, and the cost associated with buying a home.
Speaker Change: While we strongly support the broader effort to make homeownership more affordable we believe the recent comments from the FHFA and the CFPB relative to title insurance or misguided.
Speaker Change: And display a misunderstanding of the vital role in value the title insurance provides consumers and the broader economy and the critical role it plays in helping to make the American dream of Homeownership a reality.
Speaker Change: The title industry, not only protects consumers property ownership rights, but also the critical integrity of land records.
Speaker Change: In addition, we are our first line of defense in helping protect buyers and sellers from real estate and wire fraud.
Speaker Change: Title insurance also provides in church, a duty to defend them in the event of a covered claim entitled insurers have state mandated reserves standing behind their policies. Unlike attorney's opinion letters or a GSC waiver.
Speaker Change: We welcome the opportunity to continue conversations with the FHFA and CFPB.
Speaker Change: We will continue to actively engage with all stakeholders and discussing the fundamental value the title insurance and settlement services delivered to America's homebuyers, and sellers lenders and other participants and what for many is their most important real estate transaction.
Speaker Change: Turning to our LNG business.
Speaker Change: She is profitably grown its assets under management before flow reinsurance to a record $58 billion at March 31.
Speaker Change: As demonstrated <unk> business performed well in a low rate environment, and even better and higher rate environments, which provides a nice counterbalance for the title business.
Speaker Change: Their growth prospects are compelling and led to our board's decision to invest $250 million in LNG during the first quarter in exchange for a mandatory convertible preferred security.
Speaker Change: This will enable F N G to take advantage of the current opportunity to accelerate growth of its retained.
Speaker Change: N.
Speaker Change: Overall, we are pleased with <unk> performance, which continues to exceed our expectations and even more pleased that this performance is being recognized by the market as seen in <unk> strong share price performance since its listing in December of 2022.
Speaker Change: We believe that the growing value of F. N. G is beginning to be recognized and fnf's shares as well.
Speaker Change: I would like to thank our employees for their outstanding efforts in delivering a solid start to the year, including another industry leading performance despite the tough market.
Speaker Change: With that let me now turn the call over to Tony to review <unk> first quarter financial performance and provide additional highlights.
Anthony John Park: Thank you, Mike starting with our consolidated results, we generated $3 $3 billion in total revenue in the first quarter exclude.
Anthony John Park: Excluding net recognized gains and losses, our total revenue was $3 billion as compared with $2 $5 billion in the first quarter of 2023.
Anthony John 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 of in the quarter or continued to be held in our investment portfolio.
Anthony John Park: We reported first quarter net earnings of $248 million, including net recognized gains of $275 million versus a net loss of $59 million, including $5 million of net recognized gains in the first quarter of 2023.
Anthony John Park: Adjusted net earnings were $206 million or <unk> 76 cents per diluted share compared with $151 million or <unk> 56 per share for the first quarter of 2023.
Speaker Change: The title segment contributed $130 million the F&B segment contributed $95 million and the corporate segment contributed $8 million before eliminating $27 million of dividend income from F and G. In our consolidated financial statements.
Speaker Change: Turning to Q1 financial highlights specific to the title segment.
Speaker Change: Our title segment generated $1 $6 billion in total revenue in the first quarter, excluding net recognized gains of $63 million compared with $1 5 billion in the first quarter of 2023.
Speaker Change: Direct premiums increased 3% versus the prior year agency premiums increased 8% and escrow title related and other fees increased 3%.
Speaker Change: Personnel costs increased 3% and other operating expenses decreased 4%.
Speaker Change: All in the title business generated adjusted pretax title earnings of $171 million compared with $153 million for the first quarter of 2023, and a 10, 7% adjusted pretax title margin for the quarter versus 10% in the prior year quarter.
Speaker Change: Our title in corporate investment portfolio totaled $4 $6 billion at March 31st.
Speaker Change: Interest and investment income in the title and corporate segments was $94 million, an increase of $2 million over the prior year quarter, primarily due to higher income from cash short term and fixed income investments, partially offset by lower income from our 10 31 exchange business, resulting from declining.
Speaker Change: <unk>.
Speaker Change: For the.
Speaker Change: Under a 2024, we expect quarterly interest and investment income to be stable at $95 million to $100 million with anticipated fed funds cuts of 50 basis points over the next 12 months.
Speaker Change: In addition, we expect approximately $27 million per quarter in dividend income from F. N G to our corporate segment.
Speaker Change: Our title claims paid of $70 million were $24 million higher than our provision of $46 million for the first quarter.
Speaker Change: The carried reserve for title claim losses is approximately $67 million or 4% above the actuary central estimate.
Speaker Change: We continue to provide for title claims at four 5% of total title premiums.
Speaker Change: Turning to financial highlights specific to the F and G segment F and G hosted its earnings call earlier. This morning, and provided a thorough update so I will focus on the key highlights of its quarterly performance.
Speaker Change: <unk> reported gross sales of $3 $5 billion in the first quarter, a 6% increase from the first quarter of 2023, driven by continued strong retail sales and robust institutional market sales.
Speaker Change: <unk> net sales retained were $2 3 billion in the first quarter in line with the prior year quarter.
Speaker Change: F N G has profitably grown its retained assets under management to a record $49 8 billion at March 31.
Speaker Change: AUM before flowing reinsurance was $58 billion.
Speaker Change: Adjusted net earnings for the F&B segment were $95 million in the first quarter. This includes alternative investment returns below our long term expectations by $44 million or <unk> 16 per share and significant income items of $5 million or <unk> <unk> per share.
Speaker Change: To bring it all together Fnf's consolidated adjusted net earnings excluding significant items in the <unk> segment were $245 million or <unk> 90 per diluted share in the first quarter.
Speaker Change: From a capital and liquidity perspective, we are maintaining a strong balance sheet at the trough of the cycle and remain focused on ensuring our balanced capital allocation strategy as we navigate the current environment.
Speaker Change: We held $618 million in cash and short term liquid investments at the holding company level at March 31. As a reminder, this amount reflects the $250 million investment made in F and G. In January 2024, given the many opportunities to grow their business.
Speaker Change: Our annual interest expense on $3 9 billion of consolidated debt outstanding is approximately $200 million comprised of $80 million for FNF holding company debt and $120 million for F&B segment that.
Speaker Change: Our consolidated debt to capitalization ratio, excluding OCI remains in line with our long term target range of 20% to 30%.
Speaker Change: We view our current annual common dividend of approximately $525 million as sustainable during the first quarter, we paid common dividends of 48 per share for a total of $130 million.
Speaker Change: We continue to invest in the business for long term growth and typically see opportunistic spend on strategic title acquisitions averaged $200 million to $300 million per year.
Speaker Change: In terms of share repurchases, we paused our activity during 2023 due to the uncertainty and one of the weakest years in industry history.
Speaker Change: As we're still in a tough market there were no share repurchases in the first quarter.
Speaker Change: This concludes our prepared remarks, and let me now turn the call back to our operator for questions.
Speaker Change: Thank you.
Speaker Change: Ladies and gentlemen, we will now be conducting a question and answer session. If.
Speaker Change: If you would like to ask a question. Please press star and one on your telephone keypad.
Speaker Change: A confirmation tone will indicate your line is in the question queue.
Speaker Change: You May press star two if you'd like to remove the question from the queue.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the stock east.
Speaker Change: Ladies and gentlemen, we will wait for a moment, while we poll for questions.
Zillow Home: Our first question is from the line of Zillow home, both late with BT I T. Backfill. Please go ahead.
Zillow Home: Hey, guys. Good morning, hope you're doing well.
Zillow Home: The first one maybe just on the comment Mike on the low to mid teens margin over the next few quarters can you maybe just elaborate a little bit more there you know should we think of that as more similar to last year or something better because you just put up a higher margin on orders that were down it looks like 1% year over year and you order the training.
Zillow Home: And so far in April so just wondering if this is just some conservatism or are there costs that are coming down the pipe that maybe we're not seeing.
Mike: Yeah sure I mean, as you know we don't we don't give guidance, but we would expect margins to be good relative to the environment and I think.
Mike: But part of the commentary reflects the fact that you know at these lower levels. These lower revenue and volume levels. It doesn't take a lot to move margins around in a particular quarter and when you think about the various segments in our refi is relatively flat. So you don't you don't see much volatility there one way or the other.
Mike: And so margins will be kind of dependent on how commercial finishes out in a particular quarter and given the lumpiness of that business that can kind of move your margins around and then secondarily.
Mike: You know if theres continued rate volatility I'm, just mortgage rates overall in either direction. So it could it could be up or down.
Mike: Sort of affect the purchase revenues. So I think I think that's where the the comments are grounded in and I would just add that.
Mike: If we have more revenue and we see improvements there and we're well positioned to drive stronger margins.
Speaker Change: Got it Okay and then.
Mike: It looks like <unk> contribution this quarter to EPS exceeded you know at least one title generated on a core basis. I mean this is the first time and just kind of place your whole thesis right of being able to ops offset title earnings in a tough environment. So I guess does this sort of performance maybe embolden you as a management team to just stay the course.
Mike: On F N G or are there other factors that we should think about when it comes to sort of owning the asset longer term.
Speaker Change: Yes Fair question I think we've been saying for a while that are staying the course is exactly what the board intends to do at least for now we can't predict.
Mike: The future and what might happen and if there's a better opportunity we've been opportunistic.
Mike: Over our history.
Mike: With various businesses and so you can't predict what might happen there, but I will tell you. The board is very pleased with <unk> performance and you're right. You know there was probably closer to I think last quarter.
Mike: F and G was like 30% of a N a and now it's closer to to have and kind of validates. The boards initial premise win when rates go up F. G. Outperforms in the title business can have its challenges.
Mike: We feel like there's there's value creation here and we feel like theres been some recognition of that value creation. So again I'm not going to comment on what the board might do ultimately with the investment, but I will tell you that they've been pleased thus far.
Speaker Change: Got it and then Tony if I could just squeeze one more in the corporate segment. It looks like it produced a profit this quarter I'm guessing, it's the 27 million related to the dividend, but should we should we expect I guess, you said expect that going forward. So does that segment turn into a profit going forward how should we think about that thank you.
Anthony John Park: Yeah. Thanks for that observation, we did add a new column.
Anthony John Park: If you will in our earnings release and really the point here was to highlight that <unk> paying now $27 million per quarter and investment income to our corporate segment and so we didn't want that to get lost.
Anthony John Park: By netting those two together in reality, our consolidated financials.
Anthony John Park: I'll have to net those together, but when you want to isolate our segments I think it's important to see that you know corporate is receiving that $27 million. So that's why yes, youll see youll see a profit and adjusted profit of.
Anthony John Park: Of our adjusted net earnings of $8 million in the corporate segment, but then you do have that elimination of $27 million. So I think that's the way we'd like to show that in the in the future.
Anthony John Park: Just to highlight that point.
Speaker Change: Great. Thank you.
Speaker Change: Thank you.
Bose Thomas George: Our next question comes from the line of Bose, George with Gabe VW. Please go ahead.
Bose Thomas George: Hey, guys good morning.
Bose Thomas George: Wanted to go back to the.
George: The margin discussion.
Bose Thomas George: You noted that your volumes are up in April segment, but when you compare it to the cadence that you guys saw last year is it more muted than what you saw last year and so when you think about the margin in <unk> versus <unk>, you know it could be.
Bose Thomas George: We see a similar improvement or it could be a little more muted than last year.
Bose Thomas George: Yeah. Good question Bose, it's Mike.
Speaker Change: The sequential improvement in the first quarter over the fourth quarter. This year was actually a little bit better than prior years it was 25%.
Mike: Up against probably an average of about 20% over the last handful of years. So that was that was actually very encouraging and then April was up 4%.
Mike: Over over.
Mike: Over over March of this year it was a little less than last year I think we were about 6% so not really much difference.
Speaker Change: And we were pleased with that given that rates were moving back up in April.
Speaker Change: We just don't know Bose the impact on May and June if rates stay elevated it may it may put more pressure as we see opens moves through the last couple of months of the quarter. So that's part of the the wildcard in and it's just hard to predict the rates I mean, they they move back down I think around six.
Speaker Change: Eight in the fourth quarter somewhere in there then they jump.
Speaker Change: Up in April had hit as high as 75, I think they are back down to seven two of them are tracking daily rates.
Speaker Change: It's just more volatile than we've typically had in prior periods. So that that's the.
Speaker Change: That's part of what's the color of the comment I think.
Speaker Change: That makes sense. Thanks, and then actually just to follow up on the F. N. G. I saw you on the corporate.
Speaker Change: As soon as well so the the corporate segment goes up actually where is the offset is that coming out of the F&B segment.
Speaker Change: Yeah, So F and G is paying.
Speaker Change: Dividend both on their common.
Speaker Change: Shares and their preferred so it's like $22 million common dividend another $5 million on the preferred dividends.
Speaker Change: Dividends actually come out of the equity section in F and G <unk>.
Speaker Change: So.
Speaker Change: It's not an expense.
Speaker Change: F and G, but it's it's real cash too to FNF corporate so we book it in the income and then we eliminated since you can't earn.
Speaker Change: You Cant show earnings from our subsidiary in a in your financials and so that's why that that's an offset and it was like that.
Speaker Change: You know absent the preferred dividend.
Speaker Change: Dividend I don't know that we had that last quarter, but in terms of just the common dividend we had it in the in the prior quarter. It's just it was netted together, okay and is the elimination in the income statement or is that sort of below the line somewhere.
Speaker Change: The elimination is in in the income statement there was actually a column that you can now see in our earnings release that shows a negative $27 million that that offsets the corporate segment okay.
Speaker Change: Okay, great. Thanks.
Speaker Change: Thank you.
Speaker Change: Ladies and gentlemen, a reminder, if you wish to ask a question. Please press star and one.
Speaker Change: Our next question is from the line of John Campbell with Stephens, Inc. Please go ahead.
Speaker Change: Yeah.
John Robert Campbell: Hey, guys good morning.
John Robert Campbell: Good morning, John.
John Robert Campbell: It looks like you ended up with more title filled staff and in the corner I think that was the first sequential increase since maybe <unk> 21, and obviously, it's a seasonally weaker period I'm just curious about how you're thinking about the staffing levels as you move throughout the year and maybe if you could talk to how much incremental capacity you might maybe you felt like.
Speaker Change: <unk> built in the last year or so I mean going back to the margin commentary it seems like you're not really.
Speaker Change: You're not signaling a big lift off of last year, but you know with the order growth and.
Speaker Change: What I think would be maybe a little bit of incremental capacity. It seems like you should do better there, but just maybe some commentary around that.
Speaker Change: Yeah, well first of all the staffing I think the increase was fairly modest it mainly relates to <unk>.
Speaker Change: Additional hours that get put on by existing staff, which isn't unusual as we head into the enter into a new year coming off the weakness in the fourth.
Speaker Change: The where we're very focused on head count still Jan and but at the same time also recruiting and you don't have to have had some ads in the acquisition space as well.
Speaker Change: So I think we're well positioned with staffing to the current environment and you know.
Speaker Change: Back to the margin question you know if we get if we see more revenue more pick up in and purchase in particular.
Speaker Change: What will drive better margins, we're very well positioned for that.
Speaker Change: It gets back to the.
Speaker Change: The volatility in mortgage rates and how quickly that could have an impact in one direction or the other.
Speaker Change: And as we go through the balance of the year I think we'll just continue to manage the staffing accordingly like like we always have I mean, I think the outperformance on margin in the first quarter.
Speaker Change: Certainly is partly due to the fact that we came into the year you know in a better position from an expense standpoint, and took advantage of that in the first quarter.
Speaker Change: Okay makes a lot of sense and then on the capital allocation framework, obviously he doesn't flatline.
Speaker Change: Backs after record years in 2021 'twenty going to I don't know if I'm reading too much into the commentary from you Tony but it sounds like maybe we should just be thinking about the return potentially to buyback activity just kind of aligning with U S housing recovery is that a fair assumption.
Anthony John Park: Yeah, I think it probably is we took a pause in 2023 in the first quarter I think from my standpoint, I'm looking to see some some positive cash flow I mean, we have positive cash flow, but a lot of it goes toward a $525 million dividend.
Anthony John Park: Commitment and a couple $2 million to $300 million in acquisition activity and so I guess I'm looking for something more than $800 million to to fund that realizing that we do have a cushion and a $600 million sitting on the balance sheet, we generated positive operating cash flow in.
Anthony John Park: Q1 of about $80 million in the title and corporate segments.
Anthony John Park: Which isn't unusual in the first quarter is always the most challenging but if we see.
Anthony John Park: You know upside to cash flow this year relative to last.
Anthony John Park: I could see us revisiting that but but to your point I think a lot of it depends on just where we feel like that the trends are headed.
Anthony John Park: And I think we all believe that things are going to get better.
Anthony John Park: Just calling that timing is probably most challenging.
Speaker Change: Okay that makes sense and if I could squeeze in maybe one more here.
Speaker Change: Yeah, Mike I agree with you I mean, the market feels like it is wanting to bounce back obviously, a lot of it hinges on rates and so just kind of related to that you know you guys gave the April numbers. So maybe if you could talk to maybe the progression week to week throughout the quarter. If you saw much of an influence from rate movements and then I don't know if you've got that.
Speaker Change: Orders for the trends for the first week of May, but maybe talk to how the market kind of turned it into me.
Speaker Change: Yeah, I don't have anything I could report on May but back to your comment you know if you look at.
Speaker Change:
Speaker Change: The pickup in our refinance business in the first quarter I think we were up a little bit 16% over the fourth race did come down in the first quarter and I think to your point Refis reacted to that still at low levels, but they I think they reacted to that.
Speaker Change: That.
Speaker Change: And then as we got into.
Speaker Change: April that's one rates went back up and and then refi was was down a little bit you know two two the prior period on the purchase side I I actually was pleased that even though rates were moving up in April like I said, they've got to seven five at one point.
Speaker Change: It wasn't that's showing up in impacting our purchase open orders in fact, they were up 4% sequentially.
Speaker Change: What we don't know is kind of how it is as I said before how it is going to play out into May and June if rates stay elevated or move higher and if they go lower then you know you could have a more positive outcome obviously.
Speaker Change: Thanks, a lot of sense, thanks for the color.
Speaker Change: Thank you.
Speaker Change: Our next question is from the line of Maxwell Fritzl, but through its securities. Please go ahead.
Maxwell Fritzl: Hi, good morning, calling in for Mark Hughes kind of in relation to that last question. I was just wondering if any internal models are showing what what would be the best equilibrium between and this is in regards to rate the best.
Speaker Change: Equilibrium for.
Maxwell Fritzl: The title business the investment net investment income and that's N G where rates would be headed for a chat.
Maxwell Fritzl: The optimal earnings.
Speaker Change: Wow, Yeah, I don't know if we have a model for that.
Speaker Change: We all are.
Maxwell Fritzl: You know, we've always said and just speaking specific to title before I, even tried to touch on.
Maxwell Fritzl: I'll, let Chris and Wendy handle the F G side, but I'm entitled We've always said more volume it trumps.
Maxwell Fritzl: Investment income and so if we can get to a rate environment, where we get over a you know.
Maxwell Fritzl: 5 million existing home sales or whatever the number is and and and and get into that normalized market. I think we'll take that any day over maybe even a couple of hundred million dollars of additional investment income having said that certainly it's a it's a bit of a hedge and we're enjoying $100 million.
Maxwell Fritzl: As of quarter end and interest and investment income from our from the portfolio, but but lower rates and more volume is certainly better.
Maxwell Fritzl: Uh huh.
Maxwell Fritzl: Did you want it yeah, I guess I, it's Mike May actual I would add just look back at you know years like 2019 and in 2020 'twenty. One we didn't have a lot of investment income because rates were low at the title business just exploded and you can look at the margins and the profitability. We drove in those years hitting an all time high of.
Maxwell Fritzl: I think it was 20, 21% and almost 22% and in in 'twenty, one and that was without very little.
Maxwell Fritzl: Investment income so I think that's probably answers your question and Chris can certainly confirm this but F. Gs business performed well regardless of the interest rate cycle the interest rates.
Maxwell Fritzl: On their floating assets or are there, but it's a small part of the story so.
Maxwell Fritzl: I'll, let Chris confirm that but I think we take.
Speaker Change: Lower rates for sure.
Christopher Owsley Blunt: Yeah, Mike that's right I mean, one of the charts. We're most proud of is you see the pretty consistent spreads from when the 10 year Treasury was at 39 basis points up to where it sits now.
Christopher Owsley Blunt: Because again once we get premiums and we're getting those invested in the ground Asap and we're locking yet that met spreads so spread matters to us credit environment matters to us, but we're largely indifferent now in a rising rate environment, it's easier to eke out more spread there is a little more demand for the product, but yeah.
Christopher Owsley Blunt: I think folks are going to be surprised that as rates fall our earnings should should hold up quite well.
Speaker Change: Yeah, there's a lot there you all know I answered it perfectly so so I appreciate that and that's all I have thanks.
Speaker Change: Thanks.
Speaker Change: Thank you.
Speaker Change: Ladies and gentlemen, this will conclude our question and answer session I will now turn the conference back over to CEO, Mike Nolan for his closing remarks.
Speaker Change: Yeah.
Michael Joseph Nolan: Thank you we are pleased with our solid start to the year, 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 margin expansion and generate accretive returns.
Michael Joseph Nolan: <unk>.
Speaker Change: Thanks for your time. This morning, we appreciate your interest in F. N S and look forward to updating you on our second quarter earnings call.
Speaker Change: Thank you the conference of F. N. F has now concluded. Thank you for your participation you may now disconnect your lines.
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