Fidelity National Financial(FNF) - 2025 Q4 - Annual Report

Financial Performance - The total operating income for the U.S. title insurance industry was approximately $17.7 billion in 2024, up from $16.5 billion in 2023, reflecting a growth of 7.3%[47] - The statutory earnings of the title insurers were $488 million, $587 million, and $503 million for the years ended December 31, 2025, 2024, and 2023, respectively[83] - The combined statutory capital and surplus of the title insurers was approximately $1,273 million as of December 31, 2025, compared to $1,223 million in 2024[83] - For the year ended December 31, 2025, net investment income was $401 million, a slight decrease from $405 million in 2024[102] - Average cash and invested assets increased to $9,309 million in 2025 from $8,298 million in 2024[102] Market Concentration - The top four title insurance groups accounted for 80% of net premiums written in 2024, indicating a high level of market concentration[49] - The title insurance industry is closely tied to macroeconomic factors such as GDP growth, interest rates, and housing market conditions, impacting overall revenues[48] Revenue Sources - Title insurance premiums from direct operations amounted to $2,574 million in 2025, representing 44.2% of total premiums, while agency operations generated $3,250 million, or 55.8%[62] - Escrow and other title-related fees represented approximately 28.0% of total Title segment revenues in 2025, down from 30.1% in 2023[63] Claims Management - Claims management is a significant aspect of the business, with a large staff of attorneys dedicated to handling title and escrow claims[66] - Claims can vary greatly in dollar amounts and are influenced by economic conditions, with some policies exceeding face amounts of $100 million[69] Reinsurance and Risk Management - The company has secured excess of loss reinsurance coverage with a maximum limit of $615 million from a single loss occurrence, with an aggregate limit of $1.2 billion across four contracts[70] - The company maintains a selective approach in choosing reinsurers, focusing on financially stable and adequately capitalized companies[71] - The company utilizes coinsurance in its commercial title business to cover amounts greater than it can individually provide[72] Investment Strategy - The investment policy aims to maximize total return while maintaining adequate liquidity and managing interest rate risk through shorter durations[95] - The carrying amount of total investments within the Title segment was approximately $3.5 billion as of December 31, 2025, up from $3.3 billion in 2024[96] - The investment ratings distribution shows that 34.2% of the portfolio is rated Aa/AA, while 27.0% is rated A, and 24.1% is rated Baa/BBB[98] Annuity Products - Fixed indexed annuities (FIAs) accounted for approximately 46% of total gross sales in 2025, with the remaining sales primarily from fixed rate annuities (26%) and pension risk transfer (PRT) solutions (15%)[106] - Approximately 39% of FIA sales in 2025 involved premium bonuses, which increase the initial annuity deposit by a specified rate of 2%[112] - 77% of FIA contracts issued in 2025 included a guaranteed minimum withdrawal benefit (GMWB) rider, allowing guaranteed payments for life without requiring annuitization[113] Regulatory Environment - The company is subject to comprehensive regulation and supervision in its domiciles and states where it operates, impacting its operational flexibility[175] - Regulatory restrictions on dividend payments are in place, requiring board approval and consideration of various factors, including financial condition and strategic plans[184] - The Dodd-Frank Act established the Federal Insurance Office to monitor the insurance industry, which may lead to increased scrutiny and regulatory changes affecting the company[205] Corporate Governance and Ethics - FNF is committed to building a diverse and inclusive workforce, reflecting the diversity of its clients[244] - The company adheres to all laws and regulations to maintain public trust and uphold strong ethical standards[245] - FNF implements robust governance practices and training to encourage high standards of business integrity[245]