Fidelity National Financial(US:FNF)2023-08-08 16:00Mortgage Market - The U.S. residential mortgage originations market is forecasted to reach $2.5 trillion in 2025, with purchase transactions at $1.8 trillion and refinance transactions at $0.7 trillion[300]. - Average interest rates for a 30-year fixed mortgage increased to 6.5% for the three and six months ended June 30, 2023, compared to 5.3% and 4.6% for the same periods in 2022[301]. - Existing-home sales decreased by 19% in June 2023 compared to June 2022, while the median existing-home sales price decreased by 1% from $413,800 in June 2022 to $410,200 in March 2023[303]. - The Federal Reserve raised the benchmark interest rate to a range between 5.0% and 5.25% as of June 2023, impacting mortgage rates and real estate activity[301]. Economic Indicators - The unemployment rate remained strong at 3.6% in June 2023, consistent with the previous year[304]. - The proportion of the U.S. population over the age of 65 is expected to grow from 18% in 2023 to 21% in 2035, increasing demand for retirement products[312]. Retirement Products - The fixed index annuity (FIA) market grew from nearly $12 billion in sales in 2002 to $79 billion in 2022, indicating significant demand for retirement savings products[313]. - The aging U.S. population and the increasing demand for retirement planning products represent a major growth opportunity for the company[313]. - As of June 30, 2023, reserves for fixed rate annuities were $6.0 billion, with an average crediting rate of 3%[310]. Financial Performance - Total revenues for the three months ended June 30, 2023, increased by $433 million to $3,068 million compared to the same period in 2022, while net earnings decreased by $300 million to $243 million[334][335]. - Direct title insurance premiums for the three months ended June 30, 2023, were $541 million, down from $859 million in the same period of 2022[334]. - Agency title insurance premiums decreased to $713 million for the three months ended June 30, 2023, compared to $1,203 million in the same period of 2022[334]. - Interest and investment income rose to $618 million for the three months ended June 30, 2023, compared to $463 million in the same period of 2022[334]. - Benefits and other changes in policy reserves increased to $817 million for the three months ended June 30, 2023, compared to a benefit of $377 million in the same period of 2022[334]. Title Insurance Segment - Total revenues for the Title segment decreased by $690 million, or 27%, in the three months ended June 30, 2023, and decreased by $1,521 million, or 31%, in the six months ended June 30, 2023 from the corresponding periods in 2022[346]. - Title premiums decreased by $808 million, or 39%, in the three months ended June 30, 2023, and decreased by $1,696 million, or 43%, in the six months ended June 30, 2023 compared to the same periods in 2022[347][348]. - Closed title insurance order volume decreased by 33% in the three months ended June 30, 2023, and by 42% in the six months ended June 30, 2023 from the corresponding periods in 2022[350]. Personnel Costs - Personnel costs for the three months ended June 30, 2023, were $755 million, down from $839 million in the same period of 2022[334]. - Personnel costs decreased by $165 million, or 20%, in the three months ended June 30, 2023, and decreased by $343 million, or 21%, in the six months ended June 30, 2023 compared to the corresponding periods in 2022[357]. - Personnel costs in the Corporate and Other segment rose by $59 million, or 369%, in Q2 2023 compared to Q2 2022, driven by increased valuations of deferred compensation plan assets[433]. Investment Portfolio - The fair value of the investment portfolio increased to approximately $46 billion as of June 30, 2023, up from $41 billion at the end of 2022[391]. - Fixed maturity available-for-sale securities accounted for $36.182 billion, representing 78% of total investments as of June 30, 2023, compared to $31.218 billion or 76% at the end of 2022[391]. - The credit quality of the fixed income portfolio showed 64% rated AAA/AA/A and 31% rated BBB as of June 30, 2023[396]. - The total fixed maturity available-for-sale securities amounted to $36.182 billion as of June 30, 2023, compared to $31.218 billion at the end of 2022[401]. Cash Flows - Cash flows provided by operations for the six months ended June 30, 2023, totaled $3,139 million, an increase of $1,644 million from $1,495 million in the same period of 2022[443]. - Cash flows used in investing activities decreased to $4,231 million in the first half of 2023 from $5,891 million in the same period of 2022, primarily due to increased cash inflows from sales and maturities of short-term investments[444]. - Cash flows provided by financing activities decreased to $1,942 million in the first half of 2023 from $2,462 million in the same period of 2022, mainly due to reduced cash inflows from contractholder deposits[446]. Dividends and Share Repurchase - The company paid dividends of $0.45 per share in Q2 2023, totaling approximately $121 million to common shareholders[436]. - The company anticipates that its title insurance subsidiaries will pay approximately $307 million in dividends for the remainder of 2023[440]. - The company repurchased 100,000 shares of common stock for approximately $4 million during the first half of 2023, with a total of 16,449,565 shares repurchased since the program's inception[448].