Fidelity National Financial(FNF) - 2024 Q4 - Annual Report

Financial Performance - Total operating income for the U.S. title insurance industry increased from approximately $16.9 billion in 2019 to$ 23.3 billion in 2022, before decreasing to $16.5 billion in 2023[38]. - The combined statutory earnings of the title insurers were$ 587 million, $503 million, and$ 778 million for the years ended December 31, 2024, 2023, and 2022, respectively[73]. - The net investment income for the year ended December 31, 2024, was $405 million, compared to$ 396 million in 2023, reflecting a growth of 2.3%[91]. - The effective return on average cash and invested assets increased to 4.9% in 2024 from 4.3% in 2023[91]. - The company can pay dividends or make distributions of approximately $498 million during 2025, subject to regulatory approval[72]. Market Concentration - The top four title insurance groups accounted for 80% of net premiums written in 2023, indicating a highly concentrated market[40]. - Approximately 12.9% and 13.8% of the company's title insurance premiums are generated from California and Texas, respectively[231]. Operations and Services - The company operates approximately 1,300 offices throughout the U.S., primarily providing title insurance services[51]. - The company transacted business with approximately 5,100 independent agents as of December 31, 2024[52]. - Title insurance premiums from direct operations were$ 2.2 billion (42.7%) in 2024, compared to $1.982 billion (43.2%) in 2023, while agency operations generated$ 2.953 billion (57.3%) in 2024, up from $2.610 billion (56.8%) in 2023[53]. Claims Management - Claims management is a significant aspect of the business, with a large staff of attorneys employed to handle title and escrow claims[56]. - Claims can vary greatly in dollar amounts and are influenced by economic conditions, with some policies having face amounts exceeding$ 100 million[60]. Regulatory Environment - FGL Insurance and FGL NY Insurance are subject to comprehensive regulation and supervision in their domiciles and states where they operate[160]. - Regulatory approval is required for any direct or indirect change of control of FGL Insurance and its affiliates, with a 10% ownership threshold triggering additional scrutiny[178]. - The company has established a formalized risk management process to assess and mitigate risks associated with its business operations[138]. Investment Strategy - The investment policy aims to maximize total return while maintaining moderate risk and adequate liquidity[84]. - The carrying amount of total investments within the Title segment was approximately $3.3 billion and$ 3.5 billion as of December 31, 2024, and 2023, respectively[85]. - The majority of total cash and invested assets are represented by fixed maturities, equity securities, and derivatives[236]. Reinsurance and Risk Management - The company maintains a policy of being selective in choosing reinsurers, focusing on financial stability and adequate capitalization[62]. - The company has diversified its reinsurance agreements to manage risks and enhance its capital position, including agreements with multiple reinsurers[140]. - The company has entered into a Variable Note Purchase Agreement with Kubera, with a maximum funding amount of $300 million to address potential funding shortfalls related to reinsurance agreements[149]. Employee and Corporate Governance - As of December 27, 2024, the company employed 23,533 full-time equivalent employees, with a 13% increase in the F&G segment during 2024[220]. - The company’s Board of Directors has codified its commitment to diversity in selecting new director nominees[222]. - The company’s Leadership Development Program provides mentorship and professional development opportunities for employees[227]. Sustainability and Social Responsibility - The company has committed to sustainability efforts, including conducting annual climate risk assessments and reducing its environmental footprint[216]. - The company has published annual sustainability reports since 2019, enhancing its sustainability efforts over time[213]. Economic and Market Risks - The company faces significant risks from adverse changes in real estate activity, which may be influenced by high interest rates and a weak U.S. economy[231]. - Changes in general economic, business, and political conditions could adversely affect the company's financial results[231]. - The investment portfolio is exposed to economic and financial market risks, including fluctuations in interest rates and credit markets[235].