Q2 2025 Fidelity National Financial Inc Earnings Call
Good morning and welcome to the fnf second 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 opened for questions with instructions to follow at that time.
I would now like to turn the call over to Lisa Foxworthy. Parker SVP investor and external relations. Please go ahead.
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 fng's management team, including Chris blunt and Connor Murphy will also be available for Q&A.
Today's earnings call may include forward-looking statements and projections under the private Securities. Litigation Reform Act, which do not guarantee future events or performance.
We do not undertake any duty to revise, or update such statements to reflect new information, subsequent events or changes in strategy.
Please refer to our most recent quarterly and annual reports and other FCC filings for details on important factors that could cause action 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-cap measures have been reconciled 2, gaps, 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 to Mike Nolan.
Thank you, Lisa, and good morning. Overall, our businesses generated strong results for the second quarter.
Starting with title, we delivered adjusted pre-tax title earnings of 337 million a 13 million or 4% increase over the second quarter of 2024.
We achieved an industry-leading adjusted pretext title, margin of 15.5% for the second quarter.
Up 380 basis points from 11.7% in the first quarter of 2025 compared to the second quarter of 2024 adjusted pre-tax title margin of 16.2%.
We saw a decline of 70 basis points.
Primarily due to higher expenses, including 60 basis points or $12 million of elevated health claims.
We also had higher strategic investments in security technology and recruiting to position the business for long-term growth.
Importantly, these expense items did not impact, the direct title and agency title businesses.
Which performed well and generated healthy incremental margins.
Details later on the call.
Looking at our title, Resorts, more closely—starting with purchases. We are encouraged to see a 5% increase in daily purchase orders open over the first quarter of 2025.
although lower than the more typical increase of 10% that we have seen in recent years,
this reflects Market volatility and higher rates, which continued to impact the residential purchase Market.
Our daily purchase orders opened or in line with the second quarter of 2024 up, 5% over the first quarter of 2025 and in line for the month of July with the prior year.
For refinance, we were pleased to see a 28% increase in refinance orders opened over the second quarter of 2024 with just a modest movement in mortgage rates.
Daily refinance, orders opened or 1300 in the second quarter and remained at that level in the month of July.
Our refinance, orders open per day were up 28% over the second quarter of 2024.
Up 2% over the first quarter of 2025 and up 20% for the month of July versus the prior year.
Commercial volumes. Continue to be a bright spot with Direct commercial revenue of 626 million in the first 6 months.
23% over 511 million in the first half of 2024.
We had a very strong quarter for commercial revenue, driven by national and local revenues, which were both up more than 22% compared to the prior year quarter.
In particular, National daily orders open were up 11% over. The second quarter of 2024 and held steady for the month of June as compared to June of 2024.
Notably, we now have five consecutive quarters with double-digit increases in national daily orders opened.
Local market. Daily orders opened were up 4% over the second quarter of 2024 and up 9%, for the month of June over, June of 2024.
On the whole.
Of 58 per day.
Up 7% over the second quarter of 2024 in line with the first quarter of 2025 and up 14% for the month of July versus the prior year.
Bringing it all together, total orders opened averaged 5,800 per day in the second quarter with April, at 5800, May at 5700 and June at 5900.
For the month of July, total orders opened were 5,500 per day up. 5% versus the prior year.
Looking ahead, our title segment remains poised for a rebound and transaction volumes and we continue to invest in the business for the long term.
Over time, we see opportunities to gain efficiencies across our operations and further enhance profitability.
We continue to generate strong free, cash flows, enabling our Dynamic Capital allocation strategy, which Tony will speak to in a few minutes.
I'd like to take a moment to recognize our employees for all that they do to provide Innovative Title, Insurance, Insurance Solutions, that protect consumers and lenders, while ensuring secure and real estate transactions.
Turning now to our FNG segment f&g has profitably grown assets under management before flow reinsurance to 69.2 billion dollars at June 30th.
Up 13% over the prior year quarter.
We remain pleased with f&g performance and foresee. Plenty of opportunities, to grow and increase the value of the business.
On a standalone basis, F&G reported GAAP equity, excluding AOCI, at $5.9 billion as of June 30.
Since the 2020 acquisition by FNF,
FNG has generated a 58% increase in. Its cumulative book value per share, excluding aoci to 4339 at the end of the second quarter.
With that, let me now turn the call over to Tony to review. FNS second quarter financial performance and provide additional insights
Thank you, Mike starting with our Consolidated results. We generated 3.6 billion dollars in total revenue in the second quarter.
Excluding net recognized gains and losses. Our total revenue was 3.5 billion.
As compared with 3.2 billion dollars in the second quarter of 2024.
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.
We reported second quarter net earnings of 278 million, including net recognized gains of 98 million versus Net. Earnings of 306 million including 88 million of net, recognized losses in the second quarter of 2024.
Adjusted net earnings were 318 million or 1.6 cents per diluted share.
Compared with 338 million or 1.24 cents per share for the second quarter of 2024.
The title segment, contributed to 260 million, the f&g segment contributed, 89 million.
And the corporate segment had a net loss of 3 million before eliminating 28 million of dividend income from f and g in the Consolidated financial statements.
Turning to second quarter financial highlights specific to the title segment, our title segment generated, 2.2 billion dollars in total revenue in the second quarter.
Excluding net recognized gains of 43 million.
Compared with 2 billion dollars in the second quarter of 20124.
Direct premiums increased 12% over the prior year.
Agency premiums increase 7% and escrow title related and other fees increase 7%.
Personnel costs increased by 10%, and other operating expenses also increased by 10%.
All in the title business, generated adjusted pre-tax title earnings of 337 million.
Compared with 324 million for the second quarter of 2024.
And a 15.5% adjusted. Pre-tax title, margin for the quarter versus 16.2% in the prior year quarter.
As Mike mentioned, the second quarter margin was impacted by higher expenses. With 3 primary drivers. First, we had 60 basis points or 12 million of elevated Health claims, which we expect to remain elevated for the remainder of the year before likely normalizing in 2026.
Next, we had higher strategic investment in security and technology relative to the second quarter of 2024. Although this spend is in line with the sequential quarter and reflects our current run rate. Finally, we saw higher personnel expense as a result of active recruiting.
As we continue to build the business for the long term,
Importantly, we don't expect these incremental expenses to impact our ability to deliver a 15 to 20% pre-tax title margin once we rebound to a normalized market, although transactional volumes remain low at this time.
Our title and corporate Investment Portfolio totaled. 4.8 billion at June 30th and investment income. In the title in corporate segments was 95 million down 4% versus the prior year quarter and excluding income from FNG, dividends to the holding company, for the remainder of 2025. We expect to generate quarterly, interest and investment income of, 90 to 95 million in each quarter, assuming 2 fed funds rate Cuts later in the year.
In addition, we expect approximately 28 million per quarter of common and preferred dividend income from f and g to the corporate segment.
Our title claims paid were $66 million and in line with our provision. For the second quarter, the carried reserve for title claim losses is approximately $54 million, or 3.3% above the actuary's central estimate.
We continue to provide for Title claims at 4.5% of total title premiums.
Next turning to financial highlights specific to the f&g segment.
Since f&g hosted its earnings, call earlier this morning and provided a thorough update. I will provide a few key highlights.
Fng's AUM before flow. Reinsurance increased to a record 69.2 billion at June 3, 0.
This includes retained assets under management of 55.6 billion.
Core sales of 2.2 billion, which includes indexed, annuities indexed life, and pension risk transfer.
And 1.9 billion of Miga and funding agreements 2. Products we view as opportunistic.
Second quarter of 2024 was the all-time record with 4.4 billion dollars of gross sales.
Net sales retained were 2.7 billion dollars compared to 3.4 billion dollars in the second quarter of 2024.
This reflects third-party flow, reinsurance at varying seated amounts in line with capital targets.
Adjusted net earnings for the FNG. Segments, were 89 million in the second quarter compared with 122 million for the second quarter of 2024.
Fng's operating performance from their underlying spread-based and fee-based businesses continues to be strong.
FNG continues to provide a compliment to the title business. In the first 6 months, the FNG segment, contributed 32% of FNS adjusted net earnings down from 40% in the first half of 2024,
Yesterday FNG announced the launch of a new reinsurance vehicle in partnership with Blackstone managed funds with approximately 1 billion dollars in capital commitments.
The reinsurance sidecar provides long-term on-demand Capital to f&g through a forward flow. Reinsurance agreement of certain fixed indexed, annuity products, effective August first,
The reinsurance sidecar is another source of growth capital and will move fmg further toward a more fee-based. Higher margin and less Capital intensive, business model.
From a capital and liquidity perspective, fnf continues to maintain a strong balance sheet and balanced Capital allocation strategy.
our consolidated debt to capitalization ratio, excluding aoci remains in line with our long-term target range of 20 to 30% and we expect that our balance sheet will naturally de-lever as Equity grows
Fnf continues to return excess cash to shareholders through, share repurchases and has remained active throughout the second quarter and into the third quarter.
During the second quarter, we repurchased 2.9 Million shares for a total of 159 million at an average price of $55.20 per share.
For the second quarter, we have returned nearly million dollars of capital to our shareholders through common dividends and share repurchases.
Year to date. We have returned over 450 million through common dividends and share repurchases.
From a capital allocation perspective. We enter 2025 with 687 million in cash and short-term liquid Investments at the holding company, during the first 6 months, the business. Generated cash to fund our 271 million quarterly, common dividend paid 37 million of holding company. Interest expense 150 million investment in the FNG common, Equity raise and the 184 million in share repurchases.
All while keeping Pace with wage inflation and funding, the continued higher spend and risk, and Technology required in today's landscape.
We ended the first half of 2025 with 583 million in cash and short-term liquid Investments at the holding company.
This concludes our prepared remarks and let me now turn the call back to our operator for questions.
Thank you.
Ladies and gentlemen, we will now begin the question-and-answer session.
If you would like to ask a question, please press star and 1 on your telephone keypad.
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Ladies and gentlemen, we will wait for a moment while we pull for questions.
Our first question comes from Mark Devis with Toy Bank. Please go ahead.
Same company.
Thanks Mark, it's Tony. I'll I'll start others could weigh in, I would say.
None of the the same commentary that we've uh We've uh shared previously which is the board's been very pleased with fmg's performance and really the validation of the thesis behind the acquisition.
Um, you know, f and f and g is contributed. 32% of our, uh, adjusted earnings through the first half of the year, uh, we're getting about 100
And 120 almost million dollars of cash, uh, from uh, from f&g to holding. And uh, and so that's that's been helpful and we're, we're really excited and you probably heard with the with the launch of the sidecar and some other strategy around uh you know, core sales versus opportunistic, uh, sales. Um, we're we're excited about more fee based, you know, higher margin, less Capital, intensive, business model that uh, that f&g is pursuing. And so at this point, it's uh, you know, continue to, to run the business operate the business as they have. And, um, and that's, that's kind of the update, I don't know. Did you guys want to weigh in at all?
All right.
Okay, understood. Um, and then, um, second question, just on the personal expenses, um, it was a pretty big step up and, and, and well above kind of consensus expectations, Tony. I know you called out, you know, I, I think, um, you set up an active recruiting quarter, but I can't on my time covering the company. Remember, you know, such a big step up, particularly in in a relatively static environment, anything else to kind of call out there, um, that that kind of drove that that Personnel expense and incremental detail. You can provide
Well, Mark, it's Mike. Yeah on the recruiting I would say that that that was about a 20 basis point. Um
Impact and it really was 1 of our best recruiting Quarters Inn in a long time and significantly stronger than the second quarter. So you know we were we were trying to bridge.
The second quarter of last year to to this quarter. And, you know, when you think about recruiting it it's ultimately great for the company. And we've always been very strong in that
In that realm. But you do frontload the expenses and so as you board people that are going to bring you Revenue, they're bringing that, you know, 60 90 days after. Um, and then I think, you know, we had more spend in the, in the shared service areas, some of which is Personnel because we've added staff with, um, in the
In the risk and security areas. We're doing more in technology, so I think it was a combination of of those factors. And then I'll see if Tony had anything to add on that. Yeah, I'll just weigh in on the, on the medical claims which we called out out as a 12 million, Delta relative to the Q Q2 of of last year. And and, you know, it's it's 1 of those things where it's obviously unfortunate when you're when your employees and and dependents have uh, you know, higher medical claims most large companies. As you probably know are self-insured. And and we've been uh real consistent in our run rate on in terms of of all-in medical, you know in 2023 it was about 175 million annual spend and the same number in 2024 and frankly the year started out pretty similarly but really in in may we we started to see um uh high cost claimants uh and not a big number but but
Expensive claims come through uh and those are anywhere from call it. A hundred thousand dollars to a million dollars in in a particular you know case and and we had a number of those and so it drove up our estimate of uh of medical claims what we think will will incur uh through the balance of the year. So we added 12 million dollars this quarter and would likely uh will likely add some more in Q3 and Q4 probably not to that level.
but maybe a total of 12 million over the balance of the year and then we'll take actions, uh, next year, you know, in terms of maybe plan design and and, uh, and you know, looking at, you know, vendors to assist us with with various, uh,
Mark, I want to emphasize something on the Tonys comments that, you know, fundamentally it was really a strong quarter for our title operations. We had growth across all of our core business segments in both revenue and profit.
Industry-leading title margins generated $260 million in adjusted earnings, up from the second quarter of last year by about $20 million.
And uh, really feel like the business performed very well. But we did have some variances.
To call out relative to the second quarter margin of last year.
Okay got it. Just a couple of clarifications did did those um those Health Care claim expenses flow through the personal cost line.
Yes, they did. Okay, got it. And then just on the on the recruiting activity. What, what kind of led to to the big quarter? Were there, any kind of dislocations with competitors that created a, a unique opportunity? Or was it just trying to be opportunistic for, you know, the opportunity? You think lies ahead for the business?
I would say it, it's opportunistic. You know, we have a large footprint.
And we have a lot of people, a lot of operations that are actively recruiting, you know, we've just got more than everyone else, so we've got more more Firepower on it. Uh, I think the fact that we're doing so well on that, that category points to that, we're a company of choice, and we want to be a company of choice for talented title professionals.
And um, so I I don't know that it was any major dislocation anybody else's part, but it was just more we're very focused on it and we had a particularly good quarter uh, particularly as it related to second quarter of last year.
Got it. All right. Thank you.
Thanks Mark.
Thank you.
We have a next question from the line of Terry. Ma with buckles. Please go ahead.
Hey, thank you. Good morning. Um, just want to follow up morning, just want to follow up on kind of margin and expense commentary. I guess, you know it sounds like the impact margin from the healthcare claims of um 60 basis points would kind of peek this quarter and then maybe just subside the rest of the year is that the right interpretation and then, you know, when you kind of put everything together with the elevated Health claims, um, recruiting security and Tech Investments. Um, I guess do you have confidence in saying within that 15 to 20? Um, percent margin for this year.
yeah, absolutely Terry, you know we we um
We're we're right in line really with where we were last year. And uh you know we with the early view of July is that we had a good strong July. Um and you know we said our base case has always been uh as we've gone into the year, that 25 is going to be a lot like 24 and as we look at the second half of of 25,
We think it's going to look a lot like the second half of 2024, with the wildcards really being what happens with mortgage rates—whether they go up or down.
Uh, we've seen some optimism. There is is the daily rates come off a bit. I think it's maybe 6 6 or something like that. Yeah.
Every little bit helps, and then, you know, commercial activities—probably the other wild card. Uh, you know, I'm encouraged that.
Uh, July resale orders. You know, we're kind of in line with the last July and that we're still seeing some uplift on refi. So, yeah, we've got a little higher run rate on shared services, that that we also had in in q1. Um, the the health claims we think they'll moderate but they're still going to be probably elevated the last year. Um, and then we think that'll normalize in 26. And then the recruiting, you know, is it varies and and uh,
You know, second quarter is our typically sort of peak recruiting quarters. So we we might see that um, less than a bit in the second half, but but again, it's opportunistic and we will take advantage of getting talented people when when that's available, uh, because we're building the business for the long term.
60, open orders per day in the, the total book.
Uh, which is a nice, uh, lift from really where we've been, uh, even going back. If you look at 2015 through 2020 and and 23 and 24, you know, kind of carve out the peak years of 21 and 22. We seem to have jumped up to a new level. As we look at the back, half the pipeline and National is quite strong. I mean, we've had 5,
Consecutive quarters of double-digit growth in National Commercial, open orders, and as you know, there's a bit more of a tale as to when those closed. So,
you know, we would expect to have a strong, um,
A strong closing pipeline, their local, orders are still up. It's not like they're, they're off. Um, they're just not up as much and interestingly, uh, we've seen a nice pickup in commercial refinance orders.
Um, our our total mix.
In opens is shifted from about 75% in January.
Now, just below 72% in July, so that doesn't sound like a lot.
But in the first half, our our commercial opens on refi, we're up 21%.
And in July, they were up 35%. So it's nice to see that financing of commercial property seems to be picking up. And I think that also could bold well, for not only the back half of the year, but probably as we go into 26,
Great. Thank you.
Thanks.
Thank you.
The next question comes from Bose. George with KBW. Please go ahead.
Hey guys morning. Um actually I wanted to just ask about the uh, you know, the BuyBacks obviously in his increase in the quarterly run rate, you know the similar to what we see back. So back in 22 and 21. Uh, can we can you just discuss you know the potential Cadence of the BuyBacks going forward?
Sure, both. Thanks, it's Tony. Um, yeah, we don't give guidance in terms of our expectations, other than to say that we do expect to be in the market every day where we're not being, you know, where we're not blacked out. And I would also say that, you know, we feel.
Any weakness in our share price at these levels is a great use of of excess capital and you saw that activity in in Q2 with 159 million and BuyBacks, and 2.9 Million shares. And so, I would expect, uh, you know, that we'll, uh, we'll, you know, monitor the market be active. And again, if there's weakness there, we'll probably be more active.
Does that answer your question Bose?
Um, uh yeah. I got I have another question, though.
Please go ahead.
Hey guys. Sorry um and actually just to follow up on on that in terms of does the buyback signal anything in terms of um you know sort of incremental Capital into FNG, does it suggest that that's kind of done and you have more sort of flexibility in terms of that
yeah, I I would
Say that. Um,
I don't know that it signals anything directly, other than, you know, we don't expect.
To need incremental capital for f and g. I know that we did, uh, uh, participate in the common, uh, Equity raise of f and g earlier this year. And, uh, I think it was very early in 2024, when we, we, uh, acquired the, the preferred, uh, stock investment. Uh, but, uh, but yeah. No, I, I, I think that f and g with their Capital, like strategy, uh, is, is well positioned to take advantage of of, of capital sources that they have, uh, unrelated to to f&f. And so, I would say that kind of our uses are, you know, our common dividend, uh, m&a to the extent. There's there's m&a. Available to
To us and uh, and share BuyBacks. And and uh, you know, we're sitting on 600 million dollars of uh, of cash at at the holding company level and and we're generating strong cash flow. Okay, great. Actually 1 quick follow up on that. Did you give your number or, or how much did you repurchase in July?
We did not provide uh, a number it was and it'll be in the queue which will be filed tomorrow. Um, and I think it it was just 1 day's worth or something like that. I think it was 5 million dollars and that's because our blackout kicks in almost right after uh, the end of the quarter. Okay, great. Thanks.
ladies and gentlemen, if you would like to ask a question, please press star and 1 on your telephone keypad,
Our next question comes from the line of Mark Hughes with Trust Securities. Please go ahead.
The participant has dropped from the question queue. We will move on to the next participant. That is Jeffrey Dunn with Dowling and partners, please go ahead.
Thanks, good morning.
Hey, Jeff. Um
Tony, can you share the remaining dividend capacity from the regulated entities for the second half and also your expectation for non-regulated dose?
Yeah, I think we have about $250 million available from the regulated companies.
Uh, over the over the second half and then we have about 60 million dollars coming from f and g in the second half. The other subs, the non-regulated. It's a little more difficult because I would then need to forecast. Uh what their earnings are going to be because that's real time, cash flow. It's probably
Um, I mean we we we had $20 million in Q2 from from unregulated. Uh, it'll be a little less in the second half on a quarterly basis only because of of tax payments tend to ramp in the second half, but it could be a couple hundred million dollars. So add that back. Add that together, it's, um, 400 4 400 to 500,
okay, and then
I know how the refund versus purchase pricing works on the Direct Resi business, but how does it work on Commercial? Should we be expecting a deceleration on the commercial fee per file with the pickup and refi?
Yeah, Jeff it's Mike. I don't really think so the the, the fee per file is pretty consistent.
um, and you know our, our average total commercial
Fee per file of 11,300 in the second quarter.
You know, I I I think if if you wanted to use a number going forward, something in that range would probably be the number to model. Um,
You know, with the national, uh, overall pickup in orders, you know, they've just inherently have higher fee for files, as, you know, and, uh, we think that could could be a bit stronger, mix. Uh, as as we go in the back half of the year, just because of those, that's those strong opens that I talked about.
So, I would probably use that number, you know, 11,000.
Ish. Okay.
Great. Thank you.
Thanks.
Thank you.
My next question comes from the line of Mark use with trust Securities. Please go ahead.
Yeah, thank you. Uh, good morning.
Um, any update, uh, any update on the regulatory front uh from um fhfa or uh anything that you're seeing that actually suggests.
Any momentum in Washington. Um, that might be an impactful to the title industry.
I Mark, it's Mike. I not not really. I think that um the the pilot is intended to be limited scope. It runs through May of 26. I think the anticipation is about 15,000 loans, going through that pilot.
And I don't think there's any changes to that, and then we'll see where it goes. Um, as you might know, I had a very nice call with the Director of FHFA. It was good to talk to you; very willing to listen. And they did add Westcore as a second provider.
Of the program, um, with a, with a, a kind of a new. I don't know if it's new yet, but, but a limited title option. So it's not. It's not the waiver. It's, it's kind of a, a different product approach. We're still waiting to see what that looks like.
And I told the director that.
We're.
We believe strongly that the waiver is not a good idea.
But we've always worked collaboratively with the FHFA and with the GSEs, and we want to continue to do that. So, we remain engaged but still view it as a limited, limited scope pilot.
Slow of activity.
100%.
The ads that we've had. If you look at our our staff you know we're up in our direct title footprint about 3%. Uh over this time last year.
And it's, I, it's virtually all revenue-attached recruits. We haven't been hiring for, you know, sort of production capacity. So they bring revenue, and you can kind of think of them as like mini acquisitions, really. Um, you know, the acquisition activities have been down just because the opportunities haven't been there, but when you're hiring good people that bring revenue, you're sort of accomplishing the same thing as you do when you buy a company.
Yeah, yeah. Very good.
um,
did you give July the uh, kind of the growth in National versus local commercial?
Um, uh, yeah. I don't know if I did or I didn't. It might have been in the script, but I'm looking at the number. So on the open side,
National open orders were up 22% over July last year.
And local open orders were up 8%. So, really good both in growth, but really strong growth on the national side.
Yep, very good. Thank you.
Thanks Mark.
Thank you.
Ladies and gentlemen, this will conclude our question and answer session. I will now turn the conference back over to CEO, Mike Nolan for closing remarks.
Thanks for joining our call this morning together. The combined business delivered, strong second quarter results, 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.
Fng's new ring Insurance side car is another source of growth capital and will help move FNG further toward a more fee-based, higher margin and less Capital intensive business model to help deliver on its investor day targets.
We appreciate your interest in FNF and look forward to updating you on our third quarter earnings call.
Thank you for attending today's presentation and the conference call has concluded. You may now disconnect