Fidelity National Financial(US:FNF)2022-08-03 19:04Financial Data and Key Metrics Changes - Total revenue for the second quarter was $2.6 billion, a 7% decrease compared to the second quarter of 2021 [12][28] - Adjusted net earnings from continuing operations were $530 million or $1.90 per diluted share, compared to $593 million or $2.06 per share for the same period last year [29] - The Title segment generated $2.8 billion in total revenue, down from $3 billion in the second quarter of 2021 [30] - Adjusted pretax Title margin was 18.9%, down from 22.7% in the prior year quarter [31] Business Line Data and Key Metrics Changes - Title business revenue was $2.6 billion, reflecting strong performance despite slowing mortgage originations [8] - F&G generated total group sales of $3.1 billion, with retail sales up 34% year-over-year [19][16] - Direct premiums in the Title segment decreased by 5%, while agency premiums decreased by 4% [31] Market Data and Key Metrics Changes - Daily purchase orders closed were down 11% in the second quarter compared to the prior year [9] - Refinance orders opened per day were down 67% from the second quarter of 2021 [11] - Total commercial orders opened per day were down 8% from the second quarter of 2021 [11] Company Strategy and Development Direction - The company is focused on growing its Title business and market share, actively recruiting talent and looking for Title agency acquisitions [14] - Investments in technology are ongoing to maintain a market-leading position, with the inHere Experience Platform deployed to approximately 90% of residential operations [15] - F&G's growth strategy aims to double assets to $50 billion over five years through organic growth [16] Management's Comments on Operating Environment and Future Outlook - Management expects residential purchase demand to moderate in the second half of the year but still considers 2022 one of the strongest residential purchase markets in the last 15 years [10] - The company is well-positioned to navigate the current macro environment and benefit from rising interest rates [76] - Management remains optimistic about F&G's growth potential, projecting solid double-digit growth rates going forward [41] Other Important Information - The company ended the quarter with $1.6 billion in cash and short-term liquid investments, an increase of $100 million from the previous quarter [36] - F&G has filed its confidential Form 10 registration statement with the SEC for a partial spin-off, expected to close early in the fourth quarter [24] Q&A Session Summary Question: Can you talk about the commercial pipeline? - Management confirmed that total commercial orders were down 11% in July, with local orders falling more than national orders [40] Question: What is the outlook for F&G's growth? - F&G expects to maintain a solid double-digit growth rate and continue gaining market share [41] Question: How do you see the commercial fee per file changing? - Management anticipates a marginal increase in commercial fee per file in the second half compared to the first half [44] Question: What is the outlook for residential purchase orders? - Management noted a consistent decline in residential purchase orders, particularly in Western states [45] Question: How is the company positioned in the MYGA and FIA markets? - Management expressed confidence in their competitive position in both MYGA and FIA markets, emphasizing strong relationships with distribution partners [46] Question: What is the addressable market for title agency acquisitions? - Management indicated a sizable addressable market with over 20,000 independent title agents available for acquisition [65] Question: What is the remaining dividend capacity expectation for the second half? - Management expects over $400 million from regulated companies and a potentially lower amount from unregulated businesses [72]