Q4 2024 Fidelity National Financial Inc Earnings Call
Greetings and welcome to the Fidelity National financial fourth quarter and full year 2024 earnings call. At this time, all participants are in a listen only mode.
If anyone should require operator assistance. Please press star zero on your telephone keypad.
A question and answer session will follow the formal presentation.
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As a reminder, this conference is being recorded.
It's now my pleasure to trouble over to your host Lisa Foxworthy Parker Senior Vice President of Investor and external relations. Please go ahead Lisa.
Speaker Change: Thanks, Operator, and welcome again, everyone to our call I'm joined today by 19 O N CEO and Tony Park CFO, we look forward to addressing your questions. Following our prepared remarks F N cheese management team, Chris Blunt CEO and Wendy Yang CFO will also be available for Q&A.
Speaker Change: Today's earnings call May include forward looking statements and projections under the private Securities Litigation Reform Act, which do not guarantee future events or performance, we do not undertake any duty to revise or update such statements to reflect new information subsequent events or changes in strategy. Please.
Please refer to our most recent quarterly and annual reports and other SEC filings for details on important factors that could cause actual results to differ materially from those expressed or implied.
Speaker Change: This morning's discussion also includes non-GAAP measures, which management believes are relevant.
Speaker Change: In assessing the financial performance of the business non-GAAP measures have been reconciled to GAAP, where required and in accordance with SEC rules within our earnings materials available on the company's Investor website. Please note that today's call is being recorded and will be available for webcast replay and with that I'll hand, the call over.
Mike Nolan: Her to Mike Nolan.
Mike Nolan: Thank you Lisa and good morning.
Mike Nolan: The fourth quarter results rounded out an exceptionally strong year for our title and F&B businesses, both in terms of results and execution.
Mike Nolan: Starting with the title segment, we delivered adjusted pre tax title earnings of $343 million and adjusted pretax title margin of 16, 6% for the fourth quarter.
Mike Nolan: And adjusted pre tax title earnings of $1 $2 billion and adjusted pretax title margin of 15, 1% for the full year 2024.
Mike Nolan: Successfully navigating a low transaction environment.
These are outstanding results and validation of the operational efficiencies that we have achieved over the last decade as well as the exceptional ability of our team who I believe is the best in the industry.
Mike Nolan: I would like to say, thank you to all of our 23000 employees for doing what they do best and that's delivering value to our clients.
Mike Nolan: I'm continually impressed with this season team's performance and ability to deliver industry, leading results year in and year out.
Mike Nolan: I would also like to extend our heartfelt thoughts and sympathy to all those impacted by the recent wildfires across the greater Los Angeles area.
Mike Nolan: We are grateful to our employees and the brave first responders for their unwavering dedication and resilience demonstrated throughout this natural disaster.
Mike Nolan: Now turning to our results on the purchase front daily purchase opened orders in the fourth quarter were up 6% over the fourth quarter of 2023 and down 16% from the sequential third quarter.
Mike Nolan: This fourth quarter seasonality was modestly better than the typical 20% sequential decline that we've seen in recent years.
Mike Nolan: On the refinance front volumes are still a fraction of the levels seen in early 2021, when mortgage rates at historic lows that said borrowers have been responsive as 30 year mortgage rates fluctuated during the course of the year.
Mike Nolan: This generated average refinance orders opened up 200 per day in 2024 as compared to 1000 per day in 2023.
Mike Nolan: We saw refinance orders opened a 1300 per day in the fourth quarter and 1100 per day in the month of January.
Speaker Change: <unk>, how refinance volumes can change with modest movement in mortgage rates.
Speaker Change: Commercial volumes ended the year strong with direct commercial revenue at near record levels for the fourth quarter and month of December.
Speaker Change: Overall, we generated a direct commercial revenue of $1 2 billion for the full year, which was our third best year on record.
Speaker Change: Notably opened orders in the first quarter held up better than the prior year quarter, which should provide good momentum going into the first quarter.
Speaker Change: Looking ahead to 2025, we expect continued strength in the industrial multifamily and energy sectors, among others and see the potential for higher commercial volumes as the office sector continues to recover.
Speaker Change: Looking at fourth quarter volumes more closely.
Speaker Change: Daily purchase orders opened were up 6% over the fourth quarter of 2023.
Speaker Change: Flat for the month of January versus the prior year and up 26% for the month of January versus December.
Speaker Change: Our refinance orders opened per day were up 46% over the fourth quarter of 2023.
Speaker Change: A 16% for the month of January versus the prior year and up 3% for the month of January versus December.
Speaker Change: Our total commercial orders opened were 754 per day.
Speaker Change: Up 7% over the fourth quarter of 2023.
Speaker Change: Up 3% for the month of January versus the prior year.
Speaker Change: About 10% for the month of January versus December.
Speaker Change: On the whole total orders opened averaged 4700 per day in the fourth quarter.
Speaker Change: With October at 5200 November at 4700 and December at 4200.
Speaker Change: For the month of January total orders opened were 5100 per day up 21% versus December.
Speaker Change: Overall, our outstanding performance in the quarter as a result of the pioneering work and investment that we've made over the past decade.
Speaker Change: We have become more efficient across our operational footprint through our soft pro integrated operating platform and enhanced our customer experience through proven tools such as our in here digital transaction platform.
Speaker Change: Our transformation can be seen in our margins, which have expanded 140 basis points over 2023.
Speaker Change: During 2023 and 2024, our margins have significantly outperformed prior cycle troughs.
Speaker Change: Additionally, we have generated a steady level of free cash flow.
Speaker Change: To invest in our business through attractive acquisitions and continued investments in technology, while increasing our dividend.
Speaker Change: As we enter 2025, we expect to see normal seasonality.
Speaker Change: Although mortgage rates persist at around 7% and could remain elevated.
Speaker Change: As always we'll manage our business to the trend in open orders and adjust our head count and footprint Accordingly.
Speaker Change: Over the next few years, we would anticipate a march back to a more normalized environment.
Speaker Change: To help put this in perspective, the National Association of Realtors are not our recently reported that home sales in 2024 were at the lowest level since 1995 due to high mortgage rates and a housing shortage.
Speaker Change: And I noted that there are 70 million more people in the U S population over the last three decades.
Speaker Change: This supports our view of the pent up demand and basic need for housing that is expected to unleash growth in existing home sales over time.
Speaker Change: That is why we remain bullish on the long term prospects for the title insurance business and continued to invest in our company.
Speaker Change: I am proud of all that we've done to achieve our industry, leading performance through reducing costs and improving the efficiency of our title search and exam process, while preserving the coverage and value of our insurance product.
Speaker Change: And we are excited about continued opportunities we continue to improve the efficiency of our operations, while exploring further innovation with generative AI tools and maintaining our focus on enhancing the title and settlement processes.
Speaker Change: We are continually striving to improve our margins like what we have achieved over the past decade.
Speaker Change: Turning now to our F&B business F N G as profitably grown assets under management of four flow reinsurance to a record $65 $3 billion at December 31st.
Speaker Change: LNG is well positioned and continues to make progress towards investor day targets of asset growth margin expansion and enhanced earnings from flow reinsurance and owned distribution.
Speaker Change: Which continues to be accretive to fnf's growth profile and earnings.
Speaker Change: In fact, LNG contributed 38% of Fnf's consolidated adjusted net earnings for the full year 2024.
Speaker Change: After she has a strong growth engine, which we expect to continue as they execute against our medium term financial goals.
Speaker Change: Additionally, essentially paid $108 million of cash dividends to F N F in 'twenty 'twenty four.
Speaker Change: With that let me now turn the call over to Tony to review <unk> fourth quarter and full year financial performance and provide additional highlights.
Tony: Thank you Mike.
Tony: Starting with our consolidated results, we generated $3 $6 billion in total revenue in the fourth quarter.
Tony: Excluding net recognized gains and losses, our total revenue was $4 billion as compared with $3 $2 billion in the fourth quarter of 2023.
Tony: We reported fourth quarter net earnings of $450 million, including net recognized losses of $373 million versus a net loss of $69 million, including $203 million of net recognized gains in the fourth quarter of 2023.
Tony: The net recognized gains and losses in each period are primarily due to mark to market accounting treatment of equity and preferred stock securities.
Tony: The securities were disposed of in the quarter or continue to be held in our investment portfolio.
Tony: Adjusted net earnings were $366 million or $1.34 per diluted share.
Tony: Compared with $204 million or <unk> 75 per share for the fourth quarter of 2023.
Tony: The title segment contributed $263 million the F and G segment contributed $123 million in the corporate segment contributed $8 million before eliminating $28 million of dividend income from F and G. In the consolidated financial statements.
Tony: For the full year 2024, we saw strong performance for the title segment, despite a difficult environment as well as record growth for the <unk> segment, which together generated solid profitability.
Tony: Total revenue, excluding gains and losses was $13 $6 billion and the full year 2024.
Tony: And reflects a 14% increase over the full year 2023.
Tony: We delivered $1 $3 billion and adjusted net earnings an increase of 31% over $962 million in full year 2023.
Tony: The title segment contributed $877 million. The F&B segment contributed $475 million in the corporate segment contributed $21 million before eliminating $108 million of dividend income from LNG in the consolidated financial statements.
Tony: Turning to fourth quarter financial highlights specific to the title segment.
Tony: Our title segment generated $2 $1 billion in total revenue in the fourth quarter.
Excluding net recognized losses of $57 million compared with $1 $7 billion in the fourth quarter of 2023.
Tony: Direct premiums increased 28% over the prior year.
Tony: Agency premiums increased 27%.
And escrow title related and other fees increased 15%.
Tony: Personnel costs increased 11% and other operating expenses increased 8%.
Tony: All in the title business generated adjusted pretax title earnings of $343 million compared with $198 million for the fourth quarter of 2023.
Tony: And a 16, 6% adjusted pretax title margin for the quarter versus 11, 8% in the prior year quarter.
Tony: For the full year the title business generated adjusted pretax title earnings of $1 $2 billion compared with $964 million for the full year 2023, and a 15, 1% adjusted pretax title margin versus 13, 7% in the full year 2023.
Tony: Our title in corporate investment portfolio totaled $4 7 billion at December 31st.
Interest and investment income in the title and corporate segments was $109 million, an increase of $6 million over the prior year quarter and excluding income from LNG dividends to the holding company.
Tony: Looking ahead, we expect to generate quarterly interest and investment income of $95 million to $100 million in each quarter. During 2025, assuming no further fed funds rate cuts during the year.
Tony: In addition, we expect over $100 million of annual dividend income from LNG to the corporate segment.
Tony: This cash return reflects approximately 85% of <unk> common dividend, given our majority ownership stake and 100% of F and G preferred dividend on the mandatory convertible preferred stock issued to FNF in January 2024.
Tony: Our title claims paid of $75 million were $11 million higher than our provision of $64 million for the fourth quarter.
Tony: The carried reserve for title claim losses is approximately $60 million or three 7% above the actuary central estimate.
Tony: We continue to provide for title claims at four 5% of total title premiums.
Tony: Next turning to financial highlights specific to the F&B segment.
Tony: Since F and G hosted its earnings call earlier, this morning, and provided a thorough update.
Tony: I will recap a few key highlights.
Tony: F N G reported gross sales of $15 $3 billion for the full year 2024 a.
Tony: A 16% increase over the full year 2023, driven by record retail and robust institutional market sales.
Tony: This included $3 5 billion of gross sales in the fourth quarter.
Tony: <unk> net sales were $10 6 billion for the full year 2024.
Tony: 15% increase over the full year 2023.
Tony: This included $2 $5 billion of net sales in the fourth quarter.
Tony: LNG has profitably grown its AUM before flow reinsurance to a record $65 $3 billion.
Tony: This includes retained assets under management of $53 8 billion at year end.
Tony: Adjusted net earnings for the F&B segment were $123 million in the fourth quarter. This.
Tony: This includes alternative investment returns below our long term expectations by $27 million or <unk> 10 per share.
And significant income items of $18 million or seven cents per share.
Tony: For the full year 2024, adjusted net earnings for the F&B segment were $475 million. This includes alternative investment returns below our long term expectations by $123 million or <unk> 45 per share.
Tony: And significant income items of $30 million or <unk> 11 per share.
Tony: To bring it all together for the fourth quarter F. N S. Consolidated adjusted net earnings excluding significant items in the <unk> segment were $374 million or $1 37 per diluted share.
For the full year Fnf's consolidated adjusted net earnings.
Tony: Excluding significant items in the F&B segment were $1 4 billion or $4 97 per diluted share.
Tony: LNG continues to provide stability to our earnings regardless of whether rates are rising or falling and provides an important complement to our title business yep.
Tony: <unk> segment contributed 38% of Fnf's adjusted net earnings for the full year 2024.
Tony: Up from 30% for the full year, 2023, and 23% and full year 2022.
Tony: From a capital and liquidity perspective, we are maintaining a strong balance sheet and ensuring a balanced capital allocation strategy.
Tony: Our consolidated debt outstanding was $4 3 billion at December 31.
In January of 2025 F N G issued $375 million of junior subordinated notes with net proceeds to be used for general corporate purposes, including the repayment of debt.
Tony: In early February of 2025 F. N G fully redeemed is $300 million of outstanding Senior notes due may 2025 at.
Tony: At a redemption price of par plus accrued and unpaid interest up to the redemption date.
Our consolidated debt to capitalization ratio, excluding a OCI remains in line with our long term target range of 20% to 30%.
Tony: And we expect that our balance sheet will naturally delever as shareholders equity grows.
Tony: Turning to share repurchases, we continue to look for signs that we are through the trough in the market with stable and sustained cash generation as indicators to resume share buybacks.
Tony: We view repurchases as opportunistic and actively evaluate against where we are with cash M&A opportunity and the market backdrop.
Tony: From a capital allocation perspective, we entered 2024 with $885 million in cash and short term liquid investments at the holding company.
Tony: During the year the business generated cash to fund our $530 million annual common dividend.
Tony: $75 million of holding company interest expense.
Tony: $60 million of strategic title acquisition spend.
And $250 million invested in the F&B preferred stock.
Tony: All while keeping pace with wage inflation and funding the continued higher spend and risk and technology required in today's landscape.
Tony: We ended 2024 with $786 million in cash and short term liquid investments at the holding company, which is about 90% of the amount held at year end 2023.
Tony: Our ability to sustain this level of cash while returning capital to shareholders and investing in the business in such a low transaction environment is certainly noteworthy and we feel differentiates us from cyclical businesses.
Tony: This concludes our prepared remarks, and let me now turn the call back to our operator for questions.
Speaker Change: Thank you without conducting a question and answer session, if you'd like to be placed in the question queue. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to move your question from the Q1 moment. Please while we poll for <unk>.
Tony: Trends.
Speaker Change: Our first question today is coming from Mark <unk> from Deutsche Bank. Your line is that life.
Speaker Change: Yeah. Thanks.
Speaker Change: I was surprised to learn that you're open orders in the title business.
Speaker Change: Our you know the growth is accelerating into January given kind of the backup in rates. We saw in the fourth quarter could you give us a little more color on kind of what you're seeing there are you taking share or what's kind of driving the strength in January.
Mike Nolan: Yeah, Mark it's Mike, it's hard to to know and.
Mike Nolan: Monthly basis, whether once taking share or not but we're certainly encouraged with purchase up 6% in the fourth quarter over last year I think purchase was relatively flat in January even with rates up.
Mike Nolan: And then the refi numbers were up 16% in January that that is very encouraging and maybe again as we said in the opening comments just points to this.
Mike Nolan: Sort of pent up demand that's existing even with these persistently higher rates.
Mike Nolan: But what relative to share probably probably got to see how that plays out a little further to see see how those numbers come out.
Mike Nolan: Okay got it.
Then my second question is for Chris.
Mike Nolan: On your earnings call for FTE earlier today, when discussing your PRT business I believe you alluded to a benefit from Fnf's majority ownership.
Mike Nolan: My question for you is is whether there are any material benefits or synergies you realized from that ownership that are critical to executing on your growth plans are or what do you believe that you would be well positioned to continue to execute as a standalone entity.
Mike Nolan: Yeah, I mean, we run the business as a standalone business really from the get go. So there's clearly been benefits hard capital support has probably been the biggest.
Mike Nolan: The benefit that we've that we've received.
Cyber security, we're much further along than we would've been without fnf's ownership, but no we havent really integrated the businesses.
Mike Nolan: Anyway.
Speaker Change: And I would add Mark it's Mike again, just the.
Speaker Change: You know the ratings upgrade was critical to channel expansion and when you look at where.
Speaker Change: Where the business was in 2020 with I am all maybe 80 plus percent of the sales and now that's in the mid Forty's and bank and broker dealer went from low double digits to mid forty's or low forties and.
Speaker Change: Sales tripled I mean, that's all tied to the fact that a lot of that had to do with the with the ratings upgrade.
Speaker Change: Yes, and the timing of those upgrades I would agree and that ratings upgrade probably at this point, where <unk> stands.
Speaker Change: It would probably even if it were an independent company probably maintain those same ratings I mean, I guess, we don't know the answer to that but it's likely that that would be the case.
Speaker Change: Okay.
Speaker Change: I think Chris I think you indicated earlier that there's a lot of the growth you're seeing now is more due to to expanding kind of your your penetration of existing channels rather than channel expansion does that is that an accurate representation of the point you're trying to make earlier.
Speaker Change: Yeah. It is I mean were you know.
Speaker Change: And we tend to think of these channels and assume that we've got 80% of the advisors channel selling up in Gs. So there's still just a lot of greenfield for us, particularly in the broker dealer channel, where our penetration is the newest and probably the soonest, but yeah, we see opportunities to gain in every channel.
Speaker Change: Okay got it thank you.
Speaker Change: Thanks.
Speaker Change: Thank you. Your next question is coming from John Campbell from Stephens. Your line is now live.
John Campbell: Hey, guys. Good morning, Congrats on a great quarter.
Speaker Change: Thanks, John.
Speaker Change: So really impressive results on the title business I'm thinking you guys are probably expecting this question, but I know, it's probably really tough to piece of Sal, but Tony What's your best guess when the impact of the data breach in the year ago period any sense for kind of the degree of our you know your year over your title margin expansion on a like for like or normalized basis.
Speaker Change: Yeah. It wasn't it wasn't major I think we talked about it a year ago. My recollection is it might've been 50 basis points on margin.
Speaker Change: That we felt like we were impacted in Q4 of 23, so call. It you know.
Speaker Change: 11, eight would have been 12 three.
Speaker Change: But is that that that sounds about right I didn't I didn't go back and look at that number but I know at the time, we felt it was pretty negligible John we really saw what we you remember we really only had two days when we really weren't closing transactions.
Speaker Change: And we felt like we picked a lot of that back up in December of last year, probably had some some revenue pushed to the first quarter, maybe yes, but but really negligible.
John Campbell: Think you know when you look at the fourth quarter John.
John Campbell: It was just a great great quarter, and we had strong revenue and margin outperformance across all of our business lines direct agency commercial also had a great quarter from our sub servicing business. They actually had a record year for pre tax in 2024 as well. So it was just great to see the business got it.
John Campbell: Humming on all cylinders.
John Campbell: Yeah absolutely.
John Campbell: And then Chris you know doing during this mornings.
Speaker Change: The earnings call you talked to the kind of a strategic decision to allocate capital to your higher returning products you guys have.
Speaker Change: Obviously, you put up really impressive gross sales growth, but that comment seem to be kind of implying or hinting that you could do more with more capital. So I'm, hoping you could maybe shed some light on the constraints you guys have now and then maybe for that's enough team is there any appetite to infuse T with more capital or is it are you doing is.
Speaker Change: Self sustaining now.
Speaker Change: Yeah. So I mean look we're a capital intensive business. So we could always do more if we had additional equity capital, but we've got a lot of other sources, primarily the use of reinsurance and our block is pretty far to know it throws off a lot of capital every year or so.
Speaker Change: Yeah. It was it was more a comment on just how we think about that relative allocation of capital but sure.
Yeah, we could productively make use of more capital and that's always the case in a business like ours and John This is Tony just on the FNF side of things I guess I, we did make the $250 million investment back in January of 2024 the prefer.
And I guess, there's no knowing for sure whether <unk> would be a capital contributor in the future to F. N G. It might depend on.
Speaker Change: The opportunities in front of us.
I'm proud that we were able to maintain our our cash position over the course of 2024, even with that $250 million.
Speaker Change: Investment in F and G and we basically maintain the $800 million holdco cash and frankly.
Speaker Change: Pretty challenging market on the on the title side I will say also that the board met yesterday and decided to resume the share buyback.
So I would anticipate us being in the market on a daily basis when were not blacked out probably modestly.
Speaker Change: The board feels that a.
Speaker Change: Given that we were able to maintain that 800 million dollar holdco cash in a tough market and again with that F. N. G. Investment you know that was a that was solid and and so yeah I would say the message takeaway as you know we can generate strong cash flow even in a relatively tough market.
Speaker Change: That's great to hear thanks, guys.
Speaker Change: Thanks.
Speaker Change: Yeah.
Speaker Change: Thank you. Our next question today is coming from Terry MA from Barclays. Your line is now live.
Speaker Change: Hey, Thank you good morning.
Speaker Change: Maybe just starting with commercial results.
Speaker Change: Our results this quarter were pretty strong and your comments were encouraging but you also had some really strong second half growth this year and it looks like it was driven a lot by national So how sustainable is that based on just the pipeline you're seeing and maybe just talk about how confident you are that you can continue to grow off that $1 2 billion dollar base.
Speaker Change: Yeah, Great Great question, Terry and Ed you're right you know when we really really starting in June on an open order basis, you know month over the prior year's month, we had very strong growth in our national orders pretty much double digit growth even looking at the last three quarters I think it averaged about <unk>.
Speaker Change: <unk> percent.
Speaker Change: Q2 over Q2 as you know you get a three over four so just sort of a really strong pipeline I think is getting built up on the national side.
Speaker Change: And as we talk to our clients and our business partners people are pretty pretty.
Speaker Change: Optimistic that that 25 will be another strong year for commercial and then the wildcard a little bit which would be very additive as if.
Speaker Change: You know the office sector begins to contribute more to the overall commercial book and I think we're all seeing headlines that point to the fact that that could be happening. One in particular I saw just very recently it was that someone reported that.
Speaker Change: Office demand in New York was getting back to pre pandemic levels.
Speaker Change: And as those things happen that will start to drive.
Speaker Change: Ultimately transactional activity I think in the office sector and again, we'll just be an additive element to 'twenty five and beyond.
Speaker Change: Yeah.
Speaker Change: Got it that's helpful. And then maybe just touch on the F. T. You spoke a little bit about the complementary nature of the business.
Speaker Change: Relatives, asking that's title business, but maybe just refresh us.
Speaker Change: Your thoughts around just the option of spend as we approach the five year anniversary.
Speaker Change: Yeah. Thanks, Terry This is Tony I'll comment I mean at this point the board has been very clear that F and G has been a great contributor in complement to our title business with 38% of our adjusted net earnings generated from the <unk> segment.
Speaker Change: And the direction from the board as is clear that grow the AUM and grow the earnings.
Speaker Change: So that's really the commentary we have to your point, our five year anniversary of the acquisition comes up in early June and so following that point, we would have the ability assuming we still own at least 80% of F. N G to spin it to our shareholders tax free but again that is.
Speaker Change: The focus right now the focus is clearly just to continue to grow F N G.
Speaker Change: Got it thank you.
Speaker Change: Thank you. Your next question is coming from Bose George from K B W. Your line is now live.
Bose George: Hey, good morning.
Bose George: I wanted to ask about the margin, obviously very impressive margin in <unk> and for the full year and I know you don't like to provide guidance on the margin, but just assuming market trends persist.
Bose George: What's a good way to think about margins in 2025 over 24, just the puts and takes in there.
Bose George: Yeah, Great question Bose and Youre right. It is it is difficult sometimes to.
Bose George: Two.
Bose George: To flush that out but you know margins are always influenced by a number of factors you've got the mix of direct and agency the mix of commercial.
Bose George: How the non title.
Bose George: Businesses that are in the title segment performed specifically our loan care sub servicing business and home warranty both add by the way record pre tax years in 'twenty four we're really.
Bose George: Cited to see that but.
Bose George: But if it's if the question is.
Bose George: Assuming that.
Bose George: 25 has more transactional volume.
Bose George: And other things being equal we would expect to have a better margin and 25% 24, we would expect to outperform.
Bose George: Prior cycles with better conditions.
Bose George: But obviously theres a range of outcomes as to what.
Bose George: What the actual volumes will be in 'twenty five in English.
Bose George: I know, there's a lot of forecasts out there that.
Bose George: Are modestly better conditions in 25, if you look at MBA and Fannie Mae I think theyre, both forecasting an uptick in refi originations, maybe maybe 20% or more.
And you.
Speaker Change: You know, maybe a nine or 10% increase in purchase originations.
Speaker Change: And but we just as you know we manage the business to to the orders not to the forecast, but we're well positioned really well positioned to drive strong margins.
Speaker Change: With more volume and you saw that in 'twenty one.
Speaker Change: Okay, Great. That's helpful. Thanks, and then just a related question.
Speaker Change: You just give us the margin by segment.
Speaker Change: Yeah.
Yeah Bose this is Tony.
Speaker Change: I've got a few numbers here.
Speaker Change: <unk> the 16, 6% Q4 of 24 versus the 11, 8%.
Speaker Change: In 'twenty three so our direct operations were a little better than 23% versus.
Speaker Change: About 19, 5% in the prior year quarter agency was about seven 5% versus about 6% in the prior year quarter, our national commercial units were about 34% versus about 29% in the prior year quarter loan care, 23% up against around 16%.
Speaker Change: In the prior year quarter, and then home warranty was pretty flat with the prior year quarter. So those are some of the some of the units obviously those numbers aren't aren't burdened by hour.
Speaker Change: Our shared services, but also don't include any of our investment income so that.
Speaker Change: That kind of recaps the segments. If you will okay, great. Thanks, guys.
Speaker Change: Thanks. Thanks. Thank.
Speaker Change: As a reminder, that star one to be placed in the question queue.
Speaker Change: Our next question today is coming from Mark Hughes from <unk> Securities. Your line is now live.
Speaker Change: Yeah. Thank you any impact in Q1 from the wildfires just in terms of clothing or is at the minimum.
Speaker Change: Yes, Mark it's Mike, it's really de Minimis, obviously, the fires on a personal level are horrific but.
Speaker Change: Those areas as you might.
Speaker Change: Think about.
Speaker Change: Like Pacific Palisades, Theres, just not a lot of transactional volume there and so it really is de Minimis I think for us.
Speaker Change: The Nars settlement I think you've said you're pretty agnostic on that front.
Speaker Change: Have you seen any change in the kind of the real estate the broker community the referral pattern and.
Speaker Change: Just the way the business is slowing as a result of the settlement.
Speaker Change: You know I can't say, we've seen any significant changes I think I've seen some notes that maybe.
Speaker Change: Commissions have modestly.
Speaker Change: Declined.
Speaker Change: All very modestly probably going to take more time, we have seen some more interest in our real estate brokers with our transaction management platform at Sky slope, they see more.
Speaker Change: Interested in learning more about that I think from a view that it might <unk>.
Speaker Change: Help them better comply with with all these changes, but other than that it seems pretty pretty business as usual.
Speaker Change: Thank you.
Speaker Change:
Speaker Change: Thank you. Your next question is coming from Geoffrey Dunn from Dowling <unk> partners. Your line is now live.
Geoffrey Dunn: Thanks, Good morning.
Speaker Change: Good morning.
Speaker Change: Mike I wanted to ask you about investing in efficiency in the business.
Speaker Change: When you think about the title segment as a front end production and back end.
Speaker Change: Sure.
Speaker Change: What have you been focused over the last couple of years of investment and efficiency gains, whereas the next three years focused.
Speaker Change: Yeah really good question, Jeff. Thank you I'd point to a couple of things.
Speaker Change: You know in 2019, but really we made the decision beforehand, but in 2019, we really went to the cloud with all of our data storage we were.
Speaker Change: We're the first to do that I'm I'm, not even sure if others have done it yet.
Speaker Change: And we thought that was very important to build efficiency and scalability and speed of.
Speaker Change: Handling volumes going up and down it also is critical to digital and ultimately a I believe.
Speaker Change: And so we did that in 2019, we also made a decision to get everybody in the company on one.
Speaker Change: Integrated operating platform shaft probe.
Speaker Change: Worked very hard over the last three years 345 years to do that.
Speaker Change: And we've got over 90% of our operations on that platform and will be close to 100 as we get through.
Speaker Change: 2025.
Speaker Change: And then a lot of focus around.
Speaker Change: How do you get.
Speaker Change: A large percentage of our title production. So I'm still kind of a lot of this is on the front end, Jeff but on our title production integrated with India integrated with our.
Speaker Change: Proprietary automated titled Technologies integrated with our title plants, our strider repository, and we have over 90% of our volume.
Speaker Change: That goes through essentially 20 <unk>.
Speaker Change: Production facilities that are all integrated as I, just described and I think that's.
Speaker Change: <unk> been very helpful.
Speaker Change: For us as we've as we've dealt with volumes up and down certainly on the upside.
Speaker Change: It really helped drive that outsized margin performance in 'twenty one.
Speaker Change: At the same time, you know we built out I think the industry's only digital transaction platform.
Speaker Change: And we've got it across the footprint of the company, we're seeing a lot of use.
Speaker Change: Use of that on the part of customers.
Speaker Change: And I think the next environment as is.
Speaker Change: Seeing that more impacting the closing side and probably also <unk>.
Speaker Change: Focusing on on AI, we named Chief AI Officer in 'twenty four we developed a working group. We've got a number of use cases, we've rolled a couple of things out to all of our employees relative to AI more from a personal productivity standpoint.
Speaker Change: But we're we're going to continue to look at the front end and get more efficient there and really now.
Speaker Change: See how we can make it a better user experience better customer experience better employee experience on the closing side.
Speaker Change: Any way to think about what the efficiency opportunity. There is on the margin from the back end.
Speaker Change: 10% to 20% upside to normalize is there anyway to quantify that.
Speaker Change: Yeah, I think at this time, Jeff I'd be reluctant to put a number to it because I you know, we'd probably just haven't.
Speaker Change: We need a little bit more rigor around the work to come up with a number but I definitely expect upside.
Speaker Change: I mean, you just think about if people are self serving on our platform. We had a million people using the technology last year for in here.
Speaker Change: That's just that's just reducing phone calls and emails and youre going to start to see some benefits but.
Speaker Change: Theres, probably more there as we get to a true.
Speaker Change: Or a higher use of a full digital transaction, meaning not just starting and tracking but starting tracking signing and closing and I think that will develop over time. It just isn't quite there yet in the industry.
Speaker Change: Okay. Thanks, Mike.
Speaker Change: Thank you we've reached end of our question and answer session I would like to turn the floor back over to Mike for any further closing comments.
We are very pleased with the exceptional performance of 2024 with both business is executing well in the current market. The title segment remains poised for a rebound in transactional levels and we continue to invest in the business for the long term, while delivering industry, leading margins likewise F&B as many opportunities.
Speaker Change: These ahead to continue to drive asset growth and deliver on its investor day targets for margin expansion and accretive returns. Thanks.
Speaker Change: Thanks for your time. This morning, we appreciate your interest in FNF and look forward to updating you on our first quarter earnings call.
Speaker Change: Thank you that does conclude today's teleconference. You may disconnect. Your lines at this time and have a wonderful day, we thank you for your participation today.
Speaker Change: Yeah.