Q1 2025 Fidelity National Financial Inc Earnings Call
Operator: Good morning and welcome to FNF's first quarter 2025 earnings call. During today's presentation, all callers will be placed in listen-only mode. Following management's prepared remarks, the conference will be open for questions with instructions to follow at that time.
Good morning, and welcome to <unk> first quarter 2025 lending Scott.
During today's presentation, all callers will be placed in listen only mode. Following management's prepared remarks. The conference will be opened for questions with instructions to follow at that time.
Lisa Foxworthy-Parker: I would now like to turn the call over to Lisa Foxworthy-Parker, SVP, investor and external relations. Please go ahead.
Speaker Change: I would now like to turn the call over to Lisa Foxworthy Parker.
Speaker Change: S&P Investor and external relations. Please go ahead.
Lisa Foxworthy-Parker: Thanks, Operator, and welcome, everyone. I'm joined today by Mike Nolan, CEO, and Tony Park, CFO. We look forward to addressing your questions following our prepared remarks.
Speaker Change: Thanks, Operator, and welcome everyone I'm joined today by Mike Nolan CEO and Tony Park CFO, we look forward to addressing your questions. Following our prepared remarks, <unk> management team, including Chris <unk>, Chief Executive Officer, Conor Murphy, Chief Financial Officer, and Wendy Yang Chief liability.
Unknown Executive: F&G's management team, including Chris Blunt, Chief Executive Officer, Connor Murphy, Chief Financial Officer, and Wendy Young, Chief Liability Officer, will also be available for Q&A. Today's earnings call may include forward-looking statements and projections under the Private Performance. We do not undertake any duty to revise or update such statements to reflect new information, subsequent events, or changes in strategy.
Speaker Change: Officer will also be available for Q&A.
Speaker Change: 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 do not undertake any duty to revise or update such statements to reflect new information subsequent events or changes in strategy.
Unknown Executive: 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. This morning's discussion also includes non-GAAP measures which management believes are relevant in assessing the financial performance of the business. Non-GAAP measures have been reconciled to GAAP where required and in accordance with SEC rule within our earnings materials available on the company's investor website.
Speaker Change: 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 in assessing the financial performance of the business.
Speaker Change: non-GAAP measures have been reconciled to GAAP, where required and in accordance with SEC rule within our earnings materials are available on the company's investor website.
Operator: Please note that today's call is being recorded and will be available for webcast replay.
Speaker Change: 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 to Mike Nolan.
Michael Nolan: And with that, I'll hand the call over to Mike Nolan. Thank you, Lisa, and good morning. Overall, the combined business continued to deliver strong financial results through the first quarter. Starting with title, we delivered an adjusted pre-tax title earnings of $211 million and achieved an industry-leading adjusted pre-tax title margin of 11.7% for the first quarter, an increase of 100 basis points over the 10.7% margin in the prior year quarter. We are pleased with our first quarter title results, which are a testament to our employees, as well as the operational efficiencies that we have achieved over the last few decades through investments in technology.
Mike Nolan: Thank you Lisa and good morning.
Mike Nolan: Overall, the combined business continued to deliver strong financial results through the first quarter, starting with title we delivered an adjusted pre tax title earnings of $211 million and achieved an industry, leading adjusted pretax title margin of 11, 7% for the first quarter.
Mike Nolan: An increase of 100 basis points over the 10, 7% margin in the prior year quarter.
Mike Nolan: We are pleased with our first quarter title results, which are a testament to our employees as well as the operational efficiencies that we've achieved over the last few decades through investments in technology.
Michael Nolan: Our investments are enabling our team to deliver margins above prior market troughs, and we believe will likewise deliver higher margins at the peak of the next cycle. We continue to generate strong free cash flows during this period of low transactional volume. This enables us to have a dynamic capital allocation strategy, focused on returning capital to shareholders through our dividend and share repurchases, and investing in our business through ongoing technology and growth investments, including M&A and talent acquisition, as well as investing in F&G's growth engine. We are well positioned to take advantage of opportunities that arise from the current market volatility and from our investments in technology and process improvement, which I will touch on more in a moment.
Mike Nolan: Our investments are enabling our team to deliver margins above prior market trough and we believe will likewise deliver higher margins at the peak of the next cycle.
Mike Nolan: We continue to generate strong free cash flows during this period of lower transactional volume.
Mike Nolan: This enables us to have a dynamic capital allocation strategy focused on returning capital to shareholders through our dividend and share repurchases and investing in our business through ongoing technology and growth investments, including M&A and talent acquisition as well as investing in <unk> growth engine.
Mike Nolan: We are well positioned to take advantage of opportunities that arise from the current market volatility and from our investments in technology and process improvement, which I will touch on more in a moment.
Michael Nolan: Looking at our first quarter title results in more detail, on the purchase front, we saw typical first quarter seasonality. For the month of April, we have seen purchased open orders down 3% due to the impact of uncertainty and mortgage rate volatility. Our daily purchase orders opened or up 3% over the first quarter of 2024, up 22% over the fourth quarter of 2024, and down 3% for the month of April versus the prior year. On the refinance front, volumes continued to respond to movement in mortgage rates. We saw daily refinance orders opened of 1300 in the first quarter and 1400 per day in the month of April.
Mike Nolan: Looking at our first quarter title results in more detail on the purchase front, we saw typical first quarter seasonality for.
Mike Nolan: For the month of April we have seen purchase opened orders down 3% due to the impact of uncertainty in mortgage rate volatility.
Mike Nolan: Our daily purchase orders opened were up 3% over the first quarter of 2024 up 22% over the fourth quarter of 2024 and down 3% for the month of April versus the prior year.
Mike Nolan: On the refinance front volumes continued to respond to movement in mortgage rates.
Mike Nolan: We saw daily refinance orders opened up <unk> hundred in the first quarter and 4500 per day in the month of April <unk>.
Michael Nolan: Our refinance orders open per day were up 33% over the first quarter of 2024 up 6% over the fourth quarter of 2024 and up 41% for the month of April versus the prior year. On the commercial front volumes continue to be strong, with direct commercial revenue of $293 million in the first quarter, up 23% over the first quarter of 2024. This was our second best commercial first quarter in history from a revenue perspective. driven by national and local revenues, which were both up over 20% versus the prior year quarter. In particular, national daily orders opened were up 19% over the first quarter of 2024 and up 33% for the month of March over March of 2024.
Mike Nolan: Our refinance orders opened per day were up 33% over the first quarter of 2024 up 6% over the fourth quarter of 2024 and up 41% for the month of April versus the prior year.
Mike Nolan: On the commercial front volumes continued to be strong with direct commercial revenue of $293 million in the first quarter up 23% over the first quarter of 2024.
Mike Nolan: This was our second best commercial first quarter in our history from a revenue perspective.
Mike Nolan: Driven by National and local revenues, which were both up over 20% versus the prior year quarter.
Mike Nolan: In particular National Daily orders opened were up 19% over the first quarter of 2024 and up 33% for the month of March over March of 2024.
Michael Nolan: Notably, we have now four consecutive quarters with double-digit increases in national daily orders open. Mobile market daily orders open up 4% over the first quarter of 2024 and up 10% for the month of March over March of 2024. On the whole, our total commercial orders opened were 862 per day, up 10% over the first quarter of 2024, up 14% over the fourth quarter of 2024, and up 19% for the month of March versus March of 2024. Bringing it all together, total orders opened average 5,600 per day in the first quarter, with January at 5,100, February at 5,700 and March at 6,100.
Mike Nolan: Notably we have now four consecutive quarters with double digit increases in national Daily orders opened.
Mike Nolan: Multiple market daily orders opened were up 4% over the first quarter of 2024 and up 10% for the month of March over March of 2024.
Mike Nolan: On the whole our total commercial orders opened were 862 per day up 10% over the first quarter of 2024 up 14% over the fourth quarter of 2024 and up 19% for the month of March versus March of 2024.
Mike Nolan: Bringing it all together total orders opened averaged 5600 per day in the first quarter with January at 5100 February at 5700 and March at 6100.
Michael Nolan: For the month of April, total ORs opened were 5800 per day, down 5% versus March.
Mike Nolan: For the month of April total orders opened were 5800 per day down 5% versus March.
Michael Nolan: As we enter the second quarter and look ahead to the remainder of 2025, there's a range of possible economic scenarios. While we don't have a crystal ball to predict, I do know that our seasoned management team has a proven track record of managing our business to the trend and open orders in varying economic conditions. As I mentioned earlier, this track record has generated a steady level of free cash flow, allowing us to continue to invest in our business through attractive acquisitions and technology as we manage the business and continue to build for the long term.
Mike Nolan: As we enter the second quarter and look ahead to the remainder of 2025, there is a range of possible economic scenarios.
Mike Nolan: While we don't have a crystal ball to predict I do know that our seasoned management team has a proven track record of managing our business to the trend and opened orders in varying economic conditions.
Mike Nolan: As I mentioned earlier this track record has generated a steady level of free cash flow, allowing us to continue to invest in our business through attractive acquisitions and technology as we manage the business and continued to build for the long term.
Michael Nolan: We have a differentiated technology foundation that is ahead of the industry and is the engine that drives our industry leading margins. This includes our integrated software operating platform that is deployed across our full footprint, our automated title efforts in both refinance and purchase that are powered by patented and pioneering technology, and our in-here digital transaction platform that is deployed nationwide and in its fourth year of providing an enhanced and reinvented customer experience. This powerful foundation, together with our robust curated data, gives us an advantage when it comes to integrating and leveraging AI capabilities over time.
Mike Nolan: We have a differentiated technology foundation that is ahead of the industry and is the engine that drives our industry leading margins.
Mike Nolan: This includes our integrated software operating platform that is deployed across our full footprint. Our automated title efforts in both refinance and purchase that are powered by patented and pioneering technology.
Mike Nolan: In here digital transaction platform that is deployed nationwide and in its fourth year of providing an enhanced and reinvented customer experience.
This powerful foundation together with our robust curated data gives us an advantage when it comes to integrating and leveraging AI capabilities over time.
Michael Nolan: We are focused on making investments in AI and particularly excited about the potential benefits that AI can provide to increase efficiency and productivity in our operations.
Mike Nolan: We are focused on making investments in AI, and particularly excited about the potential benefits that AI can provide to increase efficiency and productivity in our operations.
Michael Nolan: Turning now to our F&G business. F&G has profitably grown assets under management before flow reinsurance to $67.4 billion at March 31st, up 16% over the prior year quarter.
Mike Nolan: Turning now to our F&B business F&B is profitably grown assets under management before flow reinsurance to $67 4 billion at March 31 up.
Mike Nolan: Up 16% over the prior year quarter.
Michael Nolan: We are approaching the five year anniversary of the F&G merger on June 1st. Since mid 2020, F&G has successfully transformed from essentially being a model line business to one that is well diversified by product and channel and has a profitable, enforced book of business that is scaled considerably. F&G's performance has exceeded our expectations since the acquisition and proved to be a nice complement to our title business through the recent high interest rate environment. While rates will vary, F&G has proved that it can deliver strong results over time and is strategically positioned for long term growth.
Mike Nolan: We are approaching the five year anniversary of the <unk> merger on June <unk>.
Mike Nolan: Since mid 2020, <unk> has successfully transformed from essentially being a monoline business.
Mike Nolan: The one that is well diversified by product and channel and is a profitable enforce book of business that is scaled considerably.
Mike Nolan: <unk> performance has exceeded our expectations since the acquisition and proved to be a nice complement to our title business through the recent high interest rate environment.
Mike Nolan: While rates will vary F&B has proved that it can deliver strong results over time and is strategically positioned for long term growth.
Michael Nolan: Given our confidence in F&G's continued growth, and our desire to maintain F&F's ownership stake above 80%, our board made the decision to participate in F&G's March common stock offering. FNF purchased 4.5 million shares of the 8 million total common shares issued. As a result, FNF's majority ownership stake in FNG is approximately 82% as of March 31. Net proceeds of the equity raise will enable F&G to take advantage of the current opportunity to further its AUM growth.
Mike Nolan: Given our confidence in <unk> continued growth and our desire to maintain fnf's ownership stake above 80%. Our board made the decision to participate in <unk> March common stock offering.
Mike Nolan: FNF purchased $4 5 million shares of the $8 million total common shares issued.
Mike Nolan: As a result, Fnf's majority ownership stake in F&B is approximately 82% as of March 31.
Mike Nolan: Net proceeds of the equity raise will enable <unk> to take advantage of the current opportunity to further its AUM growth.
Michael Nolan: I'd especially like to thank our employees for all they have done to contribute to our success over time as they drive our ability to deliver value to our clients and insureds, regardless of the external environment. I am excited to build on our leadership position and continue to generate shareholder value.
Mike Nolan: I'd, especially like to thank our employees for all they have done to contribute to our success over time as they drive our ability to deliver value to our clients and ensures regardless of the external environment.
Mike Nolan: I am excited to build on our leadership position and continue to generate shareholder value.
Anthony Park: With that, let me now turn the call over to Tony to review FNS first quarter financial performance and provide additional highlights. Thank you, Mike. Starting with our consolidated results, we generated $2.7 billion in total revenue in the first quarter. Excluding net recognized gains and losses, our total revenue was $3 billion, as compared with $3 billion in the first quarter of 2024. The net recognized gains and losses in each period are primarily due to mark-to-market accounting treatment of equity and preferred stock security. whether the securities were disposed of in the quarter or continue to be held in our investment portfolio.
Mike Nolan: With that let me now turn the call over to Tony to review <unk> first quarter financial performance and provide additional highlights.
Tony Park: Thank you, Mike starting with our consolidated results, we generated $2 $7 billion in total revenue in the first quarter.
Tony Park: Excluding net recognized gains and losses, our total revenue was $3 billion cost.
Tony Park: As compared with $3 billion in the first quarter of 2024.
Tony 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 continue to be held in our investment portfolio.
Anthony Park: We reported first quarter net earnings of $83 million. including net recognized losses of $287 million. versus net earnings of $248 million, including $275 million of net recognized gains in the first quarter of 2024. Adjusted net earnings were $213 million or $0.78 per diluted share compared with $206 million or $0.76 per share for the first quarter of 2024. The title segment contributed $158 million, the F&G segment contributed $80 million, and the corporate segment contributed $3 million before eliminating $28 million of dividend income from F&G in the consolidated financial statement. Turning to first quarter financial highlights specific to the title segment, our title segment generated $1.8 billion in total revenue in the first quarter, excluding net recognized losses of $25 million, compared with $1.6 billion in the first quarter of 2024.
Tony Park: We reported first quarter net earnings of $83 million.
Tony Park: Including net recognized losses of $287 million.
Tony Park: Versus net earnings of $248 million, including $275 million.
Tony Park: Of net recognized gains in the first quarter of 2024.
Tony Park: Adjusted net earnings were $213 million or <unk> 78 per diluted share compared with $206 million or <unk> 76 per share for the first quarter of 2024.
Tony Park: The title segment contributed $158 million the.
Tony Park: The <unk> segment contributed $80 million.
Tony Park: And the corporate segment contributed $3 million before eliminating $28 million of.
Tony Park: Of dividend income from F and G in the consolidated financial statements.
Tony Park: Turning to first quarter financial highlights specific to the title segment, our title segment generated $1 $8 billion in total revenue in the first quarter, excluding net recognized losses of $25 million compared with $1 6 billion in the first quarter of 2024.
Anthony Park: Direct premiums increased 16% over the prior year. Agency premiums increased 15%, and escrow, title-related, and other fees increased 8%. Personnel costs increased 9% and other operating expenses increased 10%.
Tony Park: Direct premiums increased 16% over the prior year agency premiums increased 15% and escrow title related and other fees increased 8%.
Tony Park: Personnel costs increased 9% and other operating expenses increased 10%.
Anthony Park: All in, the title business generated adjusted pre-tax title earnings of $211 million compared with $171 million for the first quarter of 2024 and an 11.7% adjusted pre-tax title margin for the quarter versus 10.7% in the prior year quarter. Our title and corporate investment portfolio totaled $4.6 billion at March 31st. Interest and investment income in the title and corporate segments was $94 million in line with the prior year quarter and excluding income from F&G dividends to the holding company. For the remainder of 2025, we expect to generate interest and investment income of $85 to $90 million in each quarter, assuming two Fed funds rate cuts during the year.
Tony Park: All in the title business generated adjusted pretax title earnings of $211 million.
Tony Park: Compared with $171 million.
Tony Park: For the first quarter of 2024.
Tony Park: And an 11, 7% adjusted pretax title margin for the quarter versus 10, 7% in the prior year quarter.
Tony Park: Our title in corporate investment portfolio totaled $4 6 billion at March 31.
Tony Park: Interest and investment income in the title and corporate segments was $94 million in line with the prior year quarter and excluding income from <unk> dividend to the holding company.
Tony Park: For the remainder of 2025, we expect to generate interest and investment income of $85 million to $90 million in each quarter, assuming two fed funds rate cuts during the year.
Anthony Park: In addition, we expect approximately $29 million per quarter of common and preferred dividend income from F&G to the corporate segment. Our title claims paid of $65 million were $11 million higher than our provision of $54 million for the first quarter. The carried reserve for title claim losses is approximately $60 million or 3.5% above the actuary's central estimate. We continue to provide for title claims at 4.5% of total title premium.
Tony Park: In addition, we expect approximately $29 million per quarter of common and preferred dividend income from LNG to the corporate segment.
Tony Park: Our title claims paid of $65 million were $11 million higher than our provision of $54 million for the first quarter.
Tony Park: The carried reserve for title claim losses is approximately $60 million or three 5% above the actuary central estimate.
Tony Park: We continue to provide for title claims at four 5% of total title premiums.
Anthony Park: Next, turning to financial highlights specific to the F&G sector.
Tony Park: Next turning to financial highlights specific to the <unk> segment since.
Anthony Park: Since F&G hosted its earnings call earlier this morning and provided a thorough update, I will provide a few key highlights. F&G's AUM before flow reinsurance increased to $67.4 billion at March 31, driven by strong indexed annuity sales. This includes retained assets under management of $54.5 billion. F&G's gross sales were $2.9 billion, down 17% compared with $3.5 billion in the first quarter of 2024, primarily due to lower MIGA sales. F&G continues to prioritize allocating capital to the highest returning business. Specifically, indexed annuity sales and pension risk transfer sales, resulting in the reduction in MIGA sales. excluding MIGA, gross sales were up 5% over the first quarter of 2024.
Tony Park: Since F&B hosted its earnings call earlier, this morning, and provided a thorough update.
Tony Park: I will provide a few key highlights.
Tony Park: <unk> AUM before flow reinsurance increased to 67 4 billion.
Tony Park: At March 31.
Tony Park: Driven by strong indexed annuity sales. This includes retained assets under management of $54 5 billion.
Tony Park: <unk> gross sales were $2 9 billion.
Tony Park: <unk>, 17% compared with $3 5 billion in.
Tony Park: In the first quarter of 2024, primarily due to lower <unk> sales.
Tony Park: <unk> continues to prioritize allocating capital to the highest returning business.
Tony Park: Specifically indexed annuity sales and pension risk transfer sales, resulting in the reduction in <unk> sales.
Tony Park: Excluding mega gross sales were up 5% over the first quarter of 2024.
Anthony Park: Net sales retained were $2.2 billion compared to $2.3 billion in the first quarter of 2024. Adjusted net earnings for the F&G segment were $80 million in the first quarter, compared with $95 million for the first quarter of 2024. As compared to the prior year quarter, F&G segment adjusted net earnings reflect margin compression due to near-term headwinds, lower owned distribution margin, higher interest expense in line with capital markets activity, and lower investment income from alternative investments. These were partially offset by benefits from asset growth. Higher Flow Reinsurance Fee Income, Disciplined Expense Management, and More Favorable Significant Income Items. Although F&G gave up some spread in the first quarter, much of that is believed to be short-term in nature and not indicative of any longer-term challenge to the business model.
Tony Park: Net sales retained were $2 2 billion compared to $2 3 billion.
Tony Park: In the first quarter of 2024.
Tony Park: Adjusted net earnings for the F&B segment were $80 million in the first quarter compared with $95 million for the first quarter of 2024.
Tony Park: As compared to the prior year core F&B segment, adjusted net earnings reflect margin compression due to near term headwinds.
Tony Park: Lower owned distribution margin higher interest expense in line with capital markets activity and lower investment income from alternative investments.
Tony Park: These were partially offset by benefits from asset growth.
Tony Park: Higher flow reinsurance fee income disciplined expense management and more favorable significant income items.
Tony Park: Although <unk> gave up some spread in the first quarter much of that is believed to be short term in nature and not indicative of any longer term challenge to the business model.
Anthony Park: F&G's operating performance continues to be strong, and their underlying spread-based and fee-based businesses are stable with predictable earnings over time.
Tony Park: <unk> operating performance continues to be strong and their underlying spread based and fee based businesses are stable with predictable earnings over time.
Anthony Park: As Mike mentioned, F&G continues to provide a complement to the title business. In the first quarter, the F&G segment contributed 38% of F&F's adjusted net earnings, down from 46% for the first quarter of 2024.
Tony Park: As Mike mentioned F&B continues to provide a complement to the title business in the first quarter. The F&B segment contributed 38% of Fnf's adjusted net earnings down from 46% for the first quarter of 2024.
Anthony Park: From a capital and liquidity perspective, we are maintaining a strong balance sheet and ensuring a balanced capital allocation strategy. Our consolidated debt outstanding was $4.4 billion at March 31st, as compared to $4.3 billion at December 31st. The $73 million net increase reflects F&G's debt issuance and redemption activity in the Corps. Our consolidated debt-to-capitalization ratio, excluding AOCI, remains in line with our long-term target range of 20 to 30 percent, and we expect that our balance sheet will naturally delever as shareholders' equity grows.
Tony Park: From a capital and liquidity perspective, we are maintaining a strong balance sheet and ensuring a balanced capital allocation strategy.
Tony Park: Our consolidated debt outstanding was $4 4 billion at March 31, as compared to $4 3 billion at December 31.
Tony Park: $73 million net increase reflects <unk> debt issuance and redemption activity in the quarter.
Tony Park: Our consolidated debt to capitalization ratio, excluding OCI remains in line with our long term target range of 20% to 30% and we expect that our balance sheet will naturally delever as shareholders' equity grows.
Anthony Park: Turning to share repurchases following stable and sustained cash generation in 2024, FNF has resumed its share repurchases. We remained active throughout the latter part of the first quarter and into the second quarter. During the first quarter, we repurchased 390,000 shares at an average price of $63.42 per share for a total of $25 million. We view repurchases as opportunistic and actively evaluate that decision relative to our cash position, M&A opportunities, and the market backdrop.
Tony Park: Turning to share repurchases following stable and sustained cash generation in 2020 for FNF has resumed its share repurchases.
Tony Park: We remained active throughout the latter part of the first quarter and into the second quarter. During the first quarter, we repurchased 390000 shares at an average price of $63 42 per share for a total of $25 million.
Tony Park: We view repurchases as opportunistic and actively evaluate that decision relative to our cash position M&A opportunities and the market backdrop.
Anthony Park: From a capital allocation perspective, we entered 2025 with $786 million in cash and short-term liquid investments at the holding company. During the first quarter, the business generated cash to fund our $136 million quarterly common dividend paid. $25 million of holding company interest expense. $150 million investment in the F&G common equity raise. and the $25 million in share repurchase. all while keeping pace with wage inflation and funding the continued higher spend in risk and technology required in today's landscape. We ended the first quarter with $687 million in cash and short-term liquid investments at the holding company.
Tony Park: From a capital allocation perspective, we entered 2025 with $786 million in cash and short term liquid investments at the holding company.
Tony Park: During the first quarter the business generated cash to fund our $136 million quarterly common dividend paid.
Tony Park: $25 million of holding company interest expense.
Tony Park: $150 million investment in the F&B common equity raise.
Tony Park: And the $25 million in share repurchases.
Tony Park: All while keeping pace with wage inflation and funding the continued higher spend in risk and technology required in today's landscape.
Tony Park: We ended the first quarter was $687 million in cash and short term liquid investments at the holding company.
Anthony Park: This concludes our prepared remarks and let me now turn the call back to our operator for questions. Thank you.
Tony Park: This concludes our prepared remarks, and let me now turn the call back to our operator for questions.
Tony Park: Okay.
Thank you.
Operator: We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your questions from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star. One moment, please, while we poll for questions.
Speaker Change: We will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.
Tony Park: Confirmation tone will indicate your line is in the question queue human plus.
Tony Park: Start to if you would like to move to questions from the queue for participants using speaker equipment. It.
Tony Park: May be necessary to pick up your handset before pressing the star keys, one moment, please pull for questions.
John Campbell: The first question comes from the line of John Campbell with Steve Nink, please go ahead. Hey guys, good morning. Morning, Jeff. Hey, I just want to touch on two questions on the orders. I guess first on the April purchase orders, I think you mentioned down 3% year over year. Just curious about the week to week phasing kind of how that looked relative to interest rates throughout the month. Yeah, good question, John. I think it got a bit better as we got near the end of the month. But I would say, you know, for the most part, there wasn't a lot of variation in how the week played out.
Speaker Change: The first question comes from the line of John Campbell with Stephens, Inc. Please go ahead.
John Campbell: Hey, guys good morning.
John Campbell: Good morning, John I, just wanted to morning.
John Campbell: I just wanted to touch on two questions on the orders I guess first one the April purchase orders I think you mentioned down 3% year over year, just curious about.
The week to week phasing kind of how that looked relative to interest rates throughout the month.
John Campbell: Yes. Good question, John I think it got a bit better as we got near the end of the month, but.
John Campbell:
John Campbell: I would say.
John Campbell: For the most part yeah, there wasn't a lot of variation in how the week played out I mean, how the month played out.
Michael Nolan: I mean, how the month played out. Okay, that's helpful. And then apologies if I missed this, but I didn't.
John Campbell: Okay, and that's helpful. And then I apologize if I missed this but I didn't I don't think I heard the commercial open order activity in April and any kind of call outs there.
Michael Nolan: I don't think I heard the commercial open order activity in April. Any kind of call outs there? Oh, sure. Yeah. So April over April and commercial total commercial was up 4%. And I don't know if we said it in the opener or not.
John Campbell: Oh sure Yeah. So April over April in commercial total commercial was up 4%.
John Campbell: And I don't know, if we said it in the opener or not but notably the national opens April over April up 15% and local was down 3% April over April.
Michael Nolan: But the notably the national opens April over April up 15%. And local was down 3% April over April. Okay, it's helpful.
Speaker Change: Okay. That's helpful. And then one more quick one maybe for you Tony on the expectations for our quarterly investment income I think you had mentioned in the past 95 to 100 and now it's 80 595, what drove that expect a step down.
Anthony Park: And then one more quick one, maybe for you, Tony, on the expectations for quarterly investment income, you had mentioned in the past 95 to 100. And now it's 85-95.
John Campbell: What what drove that expected step? Yeah, thanks, John. 85 to 90 is my best estimate at this point. It's really driven by an expectation that we get two Fed funds cuts. I know that the market may be anticipating more than two. We just assumed two later in the year. I don't remember when exactly, but maybe even the next meeting or the meeting after that. And so really driven by that more than anything else. I think volumes are pretty stable or balance is rather pretty stable. Okay, thanks, guys. Thank you.
Speaker Change: Yes, Thanks, John 85 to 90 is my.
Speaker Change: Best estimate at this point, it's really driven by an expectation that we get to fed funds cuts I know that the market may be anticipating.
Speaker Change: More than two.
Speaker Change: We just assumed to later in the year I don't remember when exactly but but maybe even the next meeting or the meeting after that and so really driven by that more than anything else I think volumes are pretty stable or balances rather pretty stable.
Speaker Change: Okay. Thanks, guys.
Speaker Change: Thanks.
Bose George: Next question comes from the line of Bose George with KBW. Please go ahead. Good morning.
Speaker Change: Thank you next question comes from the line of Bullshot.
Speaker Change: <unk>. Please go ahead.
Speaker Change: Hi, good morning.
Anthony Park: If you persist on the buybacks, given what you said about, you know, buybacks being opportunistic, you know, is there a way to think about the cadence of buybacks for the remainder of the year? Thanks, Bose.
Speaker Change: And she purchased under the buyback just given what you said about buybacks being opportunistic and is there a way to think about the cadence of buybacks for the remainder of the year.
Tony Park: Thanks Bose. This is Tony I would say, we typically are just.
Anthony Park: This is Tony, I would say we typically are just on a regular occurrence when we're not blacked out. We got started late. You know, our You know, year end call was was pretty late in the quarter. And so we started after that and just kind of modest daily activity. I think that's the way we'll do it. We don't guide in terms of actual expectation of shares bought back. But I think what you'll see is is a regular cadence to that and probably stronger number than what we saw in the first quarter just because we got started so late.
Tony Park: On a regular occurrence when were not blacked out we got started late.
Tony Park: Or are.
Tony Park: Year end call was was pretty late in the quarter and so we started after that and just kind of modest daily activity I think thats. The way we will do it we don't guide in terms of actual expectation of shares bought back, but I think what youll see is as a regular cadence to that.
Tony Park: And probably stronger number than what we saw in the first quarter just because we got started as of late.
Bose George: Okay, great. That's helpful. Thanks.
Speaker Change: Okay, Great. That's helpful. Thanks, and then just switching over to FTE.
Chris Blunt: And then just switching over to FG, you know, the issue of the lower spreads there.
Speaker Change: The issue of the lower spreads there can you guys just talk about the headwinds when that's likely to debate.
Chris Blunt: Can you guys just talk about, you know, the headwinds, you know, when that's likely to abate? Yeah, just more color there. Yeah, sure.
Speaker Change: More color there thanks.
Speaker Change: Yes sure. This is Chris so yeah on the FG call. This morning, we actually talked about all of those pressures starting to abate. So starting with the top line, we had a very strong sales quarter in April.
Chris Blunt: This is Chris. So on the FT call this morning, we actually talked about all of those pressures starting to abate. So starting with the top line, we had a very strong sales quarter in April. The spread pressures were a fair amount of cash that had built up because of some prepayments of securities. We are in the process of getting that put to work at attractive rates and spread. So we feel good about that. There was a little bit of a decline in our own distribution income. Some of that was one of our own distribution partners made an acquisition of their own, which we were supportive of.
Speaker Change: Spread pressures were a fair amount of cash that had built up because of some prepayments on securities. We are in the process of getting that put to work at attractive.
Speaker Change: Rates and spreads so we feel good about that.
Speaker Change: There was a.
Speaker Change: A little bit of a decline in our own distribution income.
Speaker Change: Some of that was one of our own distribution partners made an acquisition of their own which we were supportive of so that was a bit of a temporary depress.
Chris Blunt: So that was a bit of a temporary depressing impact. So, yeah, we would expect that to improve and the trends are looking pretty good right now. Okay, great. Great. Thanks. Thank you.
Speaker Change: <unk> impacts so yes, we would expect that to improve and the trends are looking pretty good right now.
Speaker Change: Okay great.
Speaker Change: Great. Thanks.
Speaker Change: Thanks.
Speaker Change: Thank you next question comes from the line of Mark Devries with Deutsche Bank. Please go ahead.
Mark Devries: Next question comes from the line of Mark DeVries, Deutsche Bank. Please go ahead. Thanks.
Speaker Change: Thanks.
Anthony Park: I'm hoping you could provide a little more color on the decision to invest in FG capital raise and how you size that investment, kind of how you expect to return stack up to alternatives that you might have had. Yeah, Mark, this is Tony, maybe I'll start and others could add in, but I think it was just it was a twofold. One, we believe in FG's growth opportunities and want to grow that asset base and grow that earnings base. And so that was part of it. The other part, as we've said in the past, we want to maintain an ownership stake over 80% just to preserve the optionality, should we decide at some point to spend it off to our shareholders, tax free, we need to own more than 80% of F and G.
Speaker Change: Hoping you could provide a little more color on the decision to invest.
Speaker Change: Invest enough capital raise and how you size that investment kind of how you expect to return to stack up to alternatives that you might have had.
Tony Park: Yes, Mark this is Tony maybe I'll start and others could add in but I think it was just it was twofold, one we believe in fg's growth opportunities and.
Speaker Change: We want to grow that asset base and grow that earnings base and so that was part of it the other part.
Speaker Change: As we said in the past we want to maintain an ownership stake over 80% just to preserve the optionality should we decide at some point to spin it off to our shareholders tax free we need to own more than 80% of <unk> and so that's kind of a combination of those two but again, we feel first of.
Anthony Park: And so that's kind of a combination of those two. But again, we we feel first of all, for us, it was $150 million. So didn't really put too much of a dent in our strong cash position. And we believe that, you know, F and G can return strong, strong returns with that equity capital. Okay, great.
Speaker Change: For us it was $150 million, so didn't really put too much of a dent in our strong cash position and we believe that <unk> can return strong strong returns with that equity capital.
Speaker Change: Okay great.
Michael Nolan: Related question. I was hoping to get a better sense of kind of the opportunities in M&A. I think Mike commented on being well positioned to take advantage of opportunities created by market volatility. Are you actually, you know, seeing good opportunities? You know, could we expect maybe a little more M&A activity than last year, which was kind of a relatively inactive year for us? Yeah, Mark, it's Mike, I would think that we, we would have more activity as we go through this year than we did last year on the on the title M&A. There are definitely opportunities out there.
Speaker Change: Related question.
Speaker Change: Was hoping to get a better sense of kind of the opportunities in M&A I think Mike commented on being well positioned to take advantage of opportunities created by market volatility or are you actually.
Speaker Change: Seeing good opportunities.
Speaker Change: Could we expect maybe a little more M&A activity than last year, which was kind of a relatively inactive year for rough enough.
Speaker Change: Yeah, Mark it's Mike I would think that we would have more activity as we go through this year than we did last year on the on the title M&A.
Speaker Change: There are definitely opportunities out there, but given.
Michael Nolan: But you know, given the environment, it's still a it's still a matter of, you know, reaching expectations around value of these businesses. But, but I think I would definitely expect more more activity as we as we go through the year than last year.
Speaker Change: The environment, it's still a it's still a matter of.
Speaker Change: Reaching our expectations around value of these businesses, but I think I would definitely expect more more activity as we as we go through the year than last year.
Michael Nolan: Okay, got it.
Speaker Change: Okay got it.
Michael Nolan: And, you know, wouldn't expect for you to comment on anything specifically, but any kind of bigger transactions, you know, that, that are, you know, at contemplation here? Are you going to be more focused on on title? Yeah, I think the title M&A is definitely smaller than than, you know, the bigger transactions. But But I wouldn't, I wouldn't discount a bigger transaction if something interesting showed up in, in any of our, you know, ancillary businesses or technology businesses, etc. But the title M&A would would be more of the what we've done for the past few years, kind of the tuck in agent acquisitions.
Speaker Change: I wouldn't expect for you to comment on anything specifically, but any kind of bigger transactions.
Speaker Change: You know that that or at least in.
Speaker Change: In contemplation here or are you going to be more focused on on title M&A.
Speaker Change: Yeah, I think the title M&A is definitely smaller than than the bigger transactions, but I wouldn't I wouldn't discount a bigger transaction if something interesting showed up in.
Speaker Change: In any of our ancillary businesses, our technology businesses et cetera, but the title M&A would be more than what we've done for the past few years kind of a tuck in.
Speaker Change: Adrian acquisitions.
Michael Nolan: Okay, got it.
Speaker Change: Okay got it thank you.
Michael Nolan: Thank you.
Terry: Thank you next question comes from the line of Terry MA with Barclays. Please go ahead.
Terry MA: Next question comes from the line of Terry Ma with Barclays. Please go ahead. The Margin Expansion.
Terry MA: Hey, Thank you good morning, maybe.
Terry MA: Maybe just good morning, titled Good morning, So maybe just starting with the title margin. It was up about 100 basis points year over year.
Terry MA: Kind of any puts and takes on the margin you want to kind of highlight for the quarter and then I appreciate there's uncertainty.
Terry MA: Out there, but as we kind of think about the rest of the year across the range of kind of scenario would you kind of noted like in any way to think about how sustainable that margin is for the rest of the year.
The margin Express sure Jerry this is.
Michael Nolan: Yeah, sure, Terry. This is, yeah, I got it. Yeah, this is Mike. So, first of the quarter, we were, we were very pleased with the margin expansion of 100 basis points over last year. And we had our performance really across the board, you know, between direct agency, commercial and ancillary businesses all had better margins than they did last year. So that's, that's very, very encouraging. You know, as we think about the rest of the year, and to your point, certainly market uncertainty, you know, rates did go up in April, I think about about 20 basis points.
Terry MA: Yeah I got it yes. This is Mike so first to the quarter. We were very pleased with the margin expansion of 100 basis points over last year, and we had outperformance really across the board.
Terry MA: You know between direct agency commercial and in ancillary businesses all had.
Terry MA: Better margins than they did last year, so that's very very encouraging.
Terry MA: As we think about the rest of the year and to your point certainly market uncertainty rates did go up in April I think about about 20 basis points, but when we think about about the full year, our outlook really hasn't changed we still believe.
Michael Nolan: But when we think about about the full year, our outlook really hasn't changed. We still believe. That we, the base case is modestly better purchase. And we've seen that certainly in the 1st quarter, I think getting a bit more positive and bullish than in the past on on commercial upside, particularly with what we're seeing on the national side. I mean, 4 consecutive quarters. With double digit growth and national opens, and as a reminder, these are our, our highest fee profile orders. is really building a nice pipeline for us as we go through the year and, you know, as we, as we said, up, you know, 19% this past quarter, another 15 April over April, and we're running open orders now at a level that really is outperformed 2015 through 2020, and 23 and 24.
Terry MA: The base case is modestly better purchase and we've seen that certainly in the first quarter.
Terry MA: I think.
Terry MA: Getting a bit more positive and bullish than in the past on commercial upside, particularly with what we're seeing on the national side, I mean, four consecutive quarters with double digit growth in national opens and as a reminder, these are our highest fee per file orders.
Terry MA: It is really building a nice pipeline for us as we go through the year and as we as we said.
Terry MA: 19%.
Terry MA: This past quarter. Another 15 April over April and we're running open orders now.
Terry MA: A level that really has outperformed 2015 through 2020 in 'twenty three and 'twenty four.
Michael Nolan: So I think maybe, maybe more upside in commercial, and then refi, it's going to be about rates. And it's interesting that that refis were as strong as they were in, in April up 41% over last year, even with rates going up. moving up. And I feel that it shows the demand, I think that's out there. And if we get, we get some lower rates, I think refi also can become an upside. But you know, at the end of the day, we're well positioned to drive strong margins. You know, given our scale, you know, as we look at the second quarter, we expect margins to expand relative to the first quarter, like you would typically expect.
Terry MA: So I think maybe maybe more upside in commercial and then the refi, it's going to be about rates and.
Terry MA: It's interesting that Refis were strong as they were in April up 41% over last year, even with rates.
Terry MA: Moving up and I feel that.
Terry MA: It shows the demand I think thats out there and if we get we get some lower rates I think refi also can become upside.
Terry MA: But at the end of the day, we're well positioned to drive strong margins.
Terry MA: Given our scale.
Terry MA: As we look at the second quarter, we expect margins to expand relative to the first quarter like you would typically expect.
Michael Nolan: But given the current market drop backdrop You know, it's not clear if we'll see growth at the same rate as we experienced in the second quarter last year. Got it. Okay, that's helpful. Maybe just to follow up on commercial, it sounds like, you know, continues to be strong, despite all the volatility.
Given the current market backdrop.
Terry MA: It's not clear if we'll see growth at the same rate as we experienced in the second.
Terry MA: Quarter last year.
Terry MA: Got it okay. That's helpful.
Terry MA: And maybe just to follow up on commercial it sounds like you know continues to be strong despite all the volatility.
Michael Nolan: You gave some color on both national and local, but maybe just talk about kind of what you're seeing in the pipeline across the different kind of commercial sectors, like what's kind of the strongest versus the weakest? Yeah, good question, Terry. It's Mike again. It's very consistent with what we've been seeing for the last couple years. I mean, it continues, we continue to see strength in multifamily, industrial, affordable housing. Retail was good in the second quarter. I mean, the first quarter rather, we had some nice transactions there. Energy, you know, kind of sort of data center deals as well, with the softest still being office.
Terry MA: Gave some color on both national and local but maybe just talk about kind of what youre seeing in the pipeline across the different.
Terry MA: Commercial sectors like what's kind of the strongest versus the weakness.
Terry MA: Thank you.
Terry MA: Yeah. Good question Kerry, it's Mike again, it's very consistent with what we've been saying for the last couple of years I mean, it continues we continue to see strength in multifamily industrial affordable housing.
Terry MA: Retail was good in the second quarter, which in the first quarter, rather we had some nice.
Terry MA: Nice transactions there.
Terry MA: Energy kind of comes in and out the.
Terry MA: I'm sure others are talking about this in the industry that sort of data center deals as well.
Terry MA: With the shaft is still being office.
Operator: Although we are seeing more, I'll say anecdotal information that that's starting to transact. And as I said, on the last quarter call, we really see office as an additive to everything else we already got going on as that starts to come back. And I don't know that we'll see that in waves in 25 or not. But I do believe office will come back and we're starting to see anecdotal evidence of that. Thank you. A reminder to all the participants that you may press star and one to ask a question.
Terry MA: Although we are seeing more shaabab akshay anecdotal.
Terry MA: Information that said that starting to transact and as I said on the quarter last our last quarter call.
Terry MA: We rarely see offices additive to everything else, we already got going on as that starts to come back in.
Terry MA: I don't know that we will see that in waves.
Terry MA: 25% or not but I do believe office will come back and we're starting to see anecdotal evidence of that.
Terry MA: Alright, thank you.
Speaker Change: Thank you a reminder to all the participants about the star one to ask a question.
Mark Hughes: Next question comes from the line of Mark Hughes with Truist Securities. Please go ahead. Yeah, thank you. Good morning.
Speaker Change: Next question comes from the line of Mark Hughes with <unk> Securities. Please go ahead.
Speaker Change: Yes, Thank you and good morning.
Michael Nolan: Anything emerging positive or negative on the regulatory front with the changes in Washington? Does that mean anything for the title business? And anything from a rate perspective, state by state that's emerging? I know Texas has been up for some discussion. Just curious if you see anything more broadly there.
Speaker Change: Anything.
Speaker Change: Emerging positive or negative on the regulatory front with the changes in Washington does that mean anything for the title business.
Speaker Change: And anything from a rate perspective state by state that's emerging I know, Texas has been up for some discussion just curious if youre seeing anything more broadly there.
Michael Nolan: Sure, Mark, and it's Mike again, on the on the sort of the federal front. You know, certainly, the things we were talking about last year around the Consumer Financial Protection Bureau that that seems to have abated quite a bit. We haven't really seen much coming out of there. Relative to the waiver pilot, that's still out there. I think it's a very de minimis program with A few lenders participating, as far as I know, we are talking with the federal regulators on that and sharing why we think it's not good policy, not a good idea, and don't expect really much impact to our business from that program, really, if any.
Mike Nolan: Sure Mark it's Mike again.
Speaker Change: On the on the sort of federal front.
Certainly.
Speaker Change: The things we were talking about last year around the consumer financial Protection Bureau that seems to have abated quite a bit.
Speaker Change: We haven't really seen much coming out of there relative to the waiver pilot.
Speaker Change: That's still that's.
Speaker Change: Bill out there I think it's a very de Minimis program.
Speaker Change: With.
Speaker Change: Few lenders participating as far as I know.
Speaker Change: We are talking with with.
Speaker Change: The federal regulators on that and sharing why we think it's it's not good policy not a good idea.
Speaker Change: And don't expect really much impact.
Speaker Change: To our business from from that program really really if any on the state front.
Michael Nolan: On the state front, really nothing happening on rates that we haven't already talked about. You know, I think it has been reported Texas, you know, went through their five year process and came out with a 10 percent. rate reduction. I believe that's been in abeyance as the industry or has pressed against that and goes through an administrative procedure. So there's really no impact today of that. And then I think New Mexico came out and I forgot what the number was, very, very modest. Maybe rates were not even changed, but they changed the split. Yeah. And it was 1% or something.
Speaker Change: Really nothing.
Speaker Change: The happening on rates that we haven't already talked about.
Speaker Change: I think it's been reported Texas went through their five year process.
Speaker Change: And came out with a 10%.
Speaker Change: Rate reduction I believe.
Speaker Change: That's been in abeyance as the industry or.
Speaker Change: Has has pressed against that and go through an administrative procedure.
Speaker Change: So there is really no impact today of that and then I think new Mexico.
Speaker Change: Came out and I forgot what the number was very very modest maybe rates were not even change, but the change the split and it was at 1% or something small state too, yes. So so not really seeing any other impacts.
Michael Nolan: Small state too. Yeah.
Michael Nolan: So not really seeing any other impacts from the rate side at the state level.
Speaker Change: From the rate side at the state level, maybe I'll comment just on the Texas, if the 10% rate reduction had been in place last year. It would have impacted our gross revenue by about $70 million.
Michael Nolan: Maybe I'll comment just on the Texas. If the 10% rate reduction had been in place last year, it would have impacted our gross revenue by about $70 million and our profits by about $14 or $15 million before any cost actions we might have taken. So in the grand scheme of things, not a major impact to us, assuming that ultimately does go through at 10%.
Speaker Change: Our profit.
Speaker Change: By about 14 or $15 million before any cost actions, we might have taken so in the Grand scheme of things not a major impact to us assuming that ultimately does go through at 10%.
Michael Nolan: And when you talk about cost actions, are those things that you could contemplate, what would be the offsets, you know, as you think about it? Well, Mark, it's Mike, I would just say, you know, and you know, how we manage the business. If revenues are going down, we focus on reducing our expenses. And whether revenues are driven down by just overall transactional levels, or they're driven down by changes to, to what we can charge, we have to adapt to that. And so that might mean becoming more efficient. How do we how do we take costs out?
Speaker Change: And when you talk about cost actions.
Speaker Change: Are those.
Speaker Change: Things that you could contemplate.
Speaker Change: What would be the offset.
Speaker Change: As you think about it.
Mike Nolan: Mark It's Mike I would just say.
Speaker Change: How we manage the business if revenues are going down we focus on reducing our expenses and whether revenues are driven down by just overall transactional levels or they're driven down by changes to to what we can charge, we have to adapt to that and so that might mean.
Mike Nolan: Becoming more efficient.
Mike Nolan: How do we how do we take cost out.
Michael Nolan: Or look at other things that we could do to, you know, grow market share, enhance revenue, etc. So nothing different, really, than what we do every day is we manage a business that goes up and down with transactional levels. Very good.
Mike Nolan: Or look at other other things that we could do to grow market share enhanced revenue et cetera, So nothing different really than what we do every day as we manage the business that goes up and down with transactional levels.
Mike Nolan: Very good and then any update on the inherent platform any kind of.
Michael Nolan: Then any updates on the in here platform? The progress, penetration, financial impact, any latest thoughts here? Yeah, we're just you know, we're really proud of what we've accomplished. We've now got it rolled out on the entire footprint of the company, which really was a multi year process of getting all of our operations on soft pros. So we have one operational platform. And that's been a really nice achievement for us. And, you know, million people used it last year, including consumers and real estate agents and transaction coordinators and others. And it's poised to grow with, with more transactional volume as purchase transactions go up and other transactions go up, we'll have more and more users, we think, combined with all the other things we're doing with technology, and we've talked about it in the past.
Mike Nolan: The.
Mike Nolan: Progress penetration.
Mike Nolan: Impact.
Mike Nolan: Your latest thoughts here.
Mike Nolan: Yes, we're just.
Mike Nolan: We're really proud of what we've accomplished we've now got it rolled out on the entire footprint of the company.
Mike Nolan: Which really was a multiyear process of getting all of our operations on soft pro So we have one operational platform and that's been a really nice achievement for us.
Mike Nolan: And.
Mike Nolan: Billion people used at last year, including consumers and real estate agents and transaction coordinators and others.
Mike Nolan: And.
Mike Nolan: It's poised to grow with.
Mike Nolan: With more transactional volume as purchase transactions go up another transactions go up we will have more and more users. We think combined with all the other things we're doing with technology and we've talked about it in the past.
Michael Nolan: will create the opportunity just to improve our margins. And as we said, we expect in like-to-like environments in the future, our margins should be better. And in here's, we think, a component of that.
Mike Nolan: We will create the opportunity just to improve our margins.
Mike Nolan: And as we said, we expect in like to like environments.
Mike Nolan: Environments in the future our margins should be better and in here is we think a component of that.
Michael Nolan: Very good. Thank you.
Mike Nolan: Very good thank you.
Mike Nolan: Okay.
Mike Nolan: Thank you next question comes from the line of Geoffrey Dunn with Dowling and partners. Please go ahead.
Geoffrey Dunn: Next question comes from the line of Geoffrey Dunn with Dowling and Partners. Please go ahead. Nice. That's long.
Geoffrey Dunn: Thanks, Good morning.
Anthony Park: Tony, last quarter you went through the holding company cash flow map. This morning for Q1, and it seemed to suggest maybe $250 million of true excess cash that effectively went to the FG Preferred Information. If this year is looking similar from a macro environment, is there any reason to think that that kind of true excess opportunity is any different? And if that's the case, you know, you've already kind of $175 million into that.
Speaker Change: Alright, Tony last quarter, you went through the holding company cash flow math, just like you did this morning for Q1.
Geoffrey Dunn: This suggests maybe.
Geoffrey Dunn: $250 million of true excess cash that effectively went to the FTC you prefer them.
Geoffrey Dunn: This year looking similar from a macro environment is there any reason to think that that kind of true excess opportunity as any different.
Geoffrey Dunn: And if that's the case.
Geoffrey Dunn: <unk> already kind of a harmful environmental law.
Anthony Park: Yeah, Jeff, I'm not sure I followed entirely. We did invest $150 million in FG in the equity offering, I think it was 250 in the in the prior year preferred offering in terms of Cash flow, and it's a little hard to predict. We know what the underwriters can upstream over the course of the year. Obviously, we get a lot of cash flow, as you've heard us say, from our non or less regulated subs. And, of course, F&G contributes about $115 or $120 million. My expectation is that we'll upstream somewhere to the tune of $900 million to $1 billion of cash flow from our subs over the course of this year, including what we did in Q3, which was about $300 million.
Geoffrey Dunn: Yes, Jeff I'm not sure I, followed entirely we did invest $150 million in FG and the equity offering I think it was $2 50 in the prior year preferred offering in terms of.
Geoffrey Dunn: Cash flow and it's a little hard to predict we know what the underwriters can upstream over the course of the year.
Geoffrey Dunn: Obviously, we get a lot of cash flow as you've heard us say from from our non or less regulated subs and of course <unk> contributes to about 115 or $120 million.
Geoffrey Dunn: My expectation is that will upstream somewhere to the tune of $900 million to a $1 billion of cash flow from our subs over the course of this year, including what we did in Q3, which was about $300 million and from that we will have our you know our common dividend.
Anthony Park: And from that, we'll have our common dividend, which is about 550, our interest expense, which is about 75. The buybacks, which we've talked about. and the F&G investment, which we've already made of $150 million, so yeah, we should probably have, we'll probably maintain or grow that holding company cash number of $700-ish million over the course of the year unless we have some major M&A activity.
Geoffrey Dunn: And which is about 550 are interest expense, which is about 75.
Geoffrey Dunn: The buyback that we've talked about.
Geoffrey Dunn: And the <unk> investment, which we've already made a $150 million.
Geoffrey Dunn: Yes, we should probably have.
Geoffrey Dunn: We'll probably maintain or grow that holding company cash number.
Geoffrey Dunn: 700 ish million.
Geoffrey Dunn: Over the course of the year and last we have some major M&A activity.
Geoffrey Dunn: Okay.
Anthony Park: Okay, so just looking at that map, it seems like Well, there's an appetite for share of purchase. The resources are not necessarily overly abundant. I mean, it seems like the other side is a good area. I think it's more than that. Certainly, there's a possibility to do more, and the board hasn't determined how active will be throughout the year.
Geoffrey Dunn: Okay. So just looking at that map team.
Geoffrey Dunn: Seems like.
Geoffrey Dunn: Okay.
Geoffrey Dunn: While there is an appetite for share repurchase resources or not necessarily.
Geoffrey Dunn: Overly abundant.
Geoffrey Dunn: Okay.
Geoffrey Dunn: Yes.
Geoffrey Dunn: Good area.
Geoffrey Dunn: I think it's more than that certainly there is there is a possibility to do more and the board hasnt determined how how active will be throughout the year.
Geoffrey Dunn: But.
Anthony Park: Yeah, so we really haven't guided toward that. But But again, we have, you know, 700 ish million holding company cash as a pool. Okay. All right.
Geoffrey Dunn: Yes, so we really haven't guided towards that but again, we have 700 ish million holding company cash.
Geoffrey Dunn: As a pool.
Geoffrey Dunn: Okay alright, thank you.
Operator: Thank you. Thank you and this will conclude our question and answer session.
Geoffrey Dunn: Thank you.
Geoffrey Dunn: Thank you.
Geoffrey Dunn: And this will conclude our question and answer session.
Michael Nolan: I will now turn the conference back over to CEO Mike Nolan for closing remarks. Thank you. Together, the combined business delivered strong financial results through the first quarter. The title segment is delivering industry leading margins and remains poised for a rebound in transactional levels, as we continue to invest in the business for the long term. Likewise, F&G's business is resilient and has many opportunities ahead to continue to drive asset growth and make progress on its investor day target.
Mike Nolan: Now turn the conference back over to CEO, Mike <unk> for closing remarks.
Mike Nolan: Thank you together the combined business delivered strong financial results through the first quarter. The title segment is delivering industry, leading margins and remains poised for a rebound in transactional levels as we continue to invest in the business for the long term Likewise <unk> business is resilient and has many.
Mike Nolan: The opportunities ahead to continue to drive asset growth and make progress on its investor day targets.
Michael Nolan: For more information visit www.FEMA.gov Thanks for your time this morning. We appreciate your interest in FNF and look forward to updating you on our second quarter earnings call.
Mike Nolan: Thanks for your time. This morning, we appreciate your interest in <unk> and look forward to updating you on our second quarter earnings call.
Operator: Thank you for attending today's presentation and the conference call has concluded. You may now disconnect. Goodbye.
Mike Nolan: Thank you.
Mike Nolan: Attending today's presentation and conference call has concluded you may now disconnect.
Mike Nolan: Goodbye.
Mike Nolan: Okay.
Mike Nolan: Yeah.
Mike Nolan: Yeah.
Mike Nolan: [music].
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Mike Nolan: Yeah.
Mike Nolan: Yes.
Mike Nolan: [music].
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Mike Nolan: [music].