FNF Reports Third Quarter 2024 Financial Results
JACKSONVILLE, Fla., Nov. 6, 2024 /PRNewswire/ -- Fidelity National Financial, Inc. (NYSE:FNF) ("FNF" or the "Company"), a leading provider of title insurance and transaction services to the real estate and mortgage industries and a leading provider of insurance solutions serving retail annuity and life customers and institutional clients through its majority-owned, publicly traded subsidiary F&G Annuities & Life, Inc. (NYSE:FG) ("F&G"), today reported financial results for the third quarter ended September 30, 2024.
Net earnings attributable to common shareholders for the third quarter were $266 million, or $0.97 per diluted share (per share), compared to $426 million, or $1.57 per share, for the third quarter of 2023. Net earnings attributable to common shareholders include mark-to-market effects and non-recurring items; all of which are excluded from adjusted net earnings attributable to common shareholders.
Adjusted net earnings attributable to common shareholders (adjusted net earnings) for the third quarter were $356 million, or $1.30 per share, compared to $333 million, or $1.23 per share, for the third quarter of 2023.
The Title Segment contributed $244 million, in line with $245 million for the third quarter of 2023
The F&G Segment contributed $135 million, compared to $102 million for the third quarter of 2023, including alternative investment returns below our long-term expectations of $35 million and net significant income items of $16 million. Please see "Segment Financial Results" for F&G under "Non-GAAP Measures and Other Information" for further explanation
The Corporate Segment had adjusted net earnings of $3 million before eliminating $26 million of dividend income from F&G in the consolidated financial statements, compared to $8 million for the third quarter of 2023 before eliminating $22 million of dividend income from F&G in the consolidated financial statements
Company Highlights
Strong Title Segment revenue and margin; continue to successfully navigate current market: For the Title Segment, total revenue of $2.1 billion for the quarter, a 12% increase over $1.9 billion in the third quarter of 2023. Total revenue, excluding recognized gains and losses, of $2.0 billion for the third quarter, a 6% increase over $1.9 billion in the third quarter of 2023. Adjusted pre-tax title margin was 15.9% for the quarter, compared to 16.2% in the third quarter of 2023
F&G Segment robust sales growth across multi-channel platform drove record assets under management: For the F&G Segment, gross sales of $3.9 billion for the third quarter increased 39% over the third quarter of 2023. F&G achieved record assets under management before flow reinsurance of $62.9 billion at the end of the third quarter, an increase of 20% over the third quarter of 2023
Sustainable common dividend backed by strong balance sheet: FNF paid common dividends of $0.48 per share for $130 million and ended the third quarter with $822 million in cash and short-term liquid investments at the holding company
William P. Foley, II, Chairman, commented, "Our Title business continues to outperform in the current market and delivered an industry leading adjusted pre-tax title margin of 15.9% for the third quarter. We are well positioned for a rebound in transactional levels and we continue to build and expand the business for the long-term. F&G continues to benefit as consumers want to secure the relatively higher interest rates, guaranteed tax deferred growth and principal protection that annuities provide. As a result, F&G has profitably grown assets under management before flow reinsurance to a record $62.9 billion at the end of the third quarter, driven by gross sales of $3.9 billion, an increase of 39% over the third quarter of 2023 with a record level of retail sales. The F&G Segment's earnings contribution to FNF was 39% for the first nine months of 2024, providing an important complement to our Title business. Taken together, our business is performing at a high level reflecting both our momentum and successful execution to deliver strong results."
Summary Financial Results
(In millions, except per share data)
Three Months Ended
Year to Date
September 30, 2024
September 30, 2023
2024
2023
Total revenue
$ 3,603
$ 2,778
$ 10,060
$ 8,320
F&G total gross sales1
$ 3,878
$ 2,781
$ 11,793
$ 9,070
F&G assets under management (AUM)1
$ 52,464
$ 47,103
$ 52,464
$ 47,103
F&G AUM before flow reinsurance1
$ 62,875
$ 52,577
$ 62,875
$ 52,577
Total assets
$ 94,672
$ 74,002
$ 94,672
$ 74,002
Adjusted pre-tax title margin
15.9 %
16.2 %
14.5 %
14.3 %
Net earnings attributable to common shareholders
$ 266
$ 426
$ 820
$ 586
Net earnings per share attributable to common shareholders
$ 0.97
$ 1.57
$ 3.00
$ 2.16
Adjusted net earnings1
$ 356
$ 333
$ 900
$ 758
Adjusted net earnings per share1
$ 1.30
$ 1.23
$ 3.30
$ 2.80
Weighted average common diluted shares
273
271
273
271
Total common shares outstanding
274
272
274
272
1 See definition of non-GAAP measures below
Segment Financial Results
Title SegmentThis segment consists of the operations of the Company's title insurance underwriters and related businesses, which provide core title insurance and escrow and other title-related services including loan sub-servicing, valuations, default services, and home warranty.
Mike Nolan, Chief Executive Officer, said, "We continue to successfully navigate the low transactional environment, and delivered adjusted pre-tax earnings in Title of $323 million and an industry leading adjusted pre-tax title margin of 15.9% for the third quarter. While we saw limited impact in the third quarter from lower mortgage rates, we are poised to capture the upside when mortgage rates trend lower given the scale and efficiencies of our diversified national footprint. We have continued to invest in our business despite the challenging real estate market -- actively recruiting talent to drive revenue, making strategic acquisitions and investing in technology, all while maintaining industry leading margins. We firmly believe in the long-term value of the title insurance business, regardless of the cyclical nature of the real estate market."
Third Quarter 2024 Highlights
Total revenue of $2.1 billion, compared with $1.9 billion in the third quarter of 2023
Total revenue, excluding recognized gains and losses, of $2.0 billion, a 6% increase over the third quarter of 2023
Direct title premiums of $571 million, a 9% increase over third quarter of 2023
Agency title premiums of $789 million, an 8% increase over third quarter of 2023
Commercial revenue of $290 million, a 10% increase over third quarter of 2023
Purchase orders opened increased 1% on a daily basis over the third quarter of 2023, and purchase orders closed decreased 2% on a daily basis from the third quarter of 2023
Refinance orders opened increased 46% on a daily basis and refinance orders closed increased 17% on a daily basis over the third quarter of 2023
Commercial orders opened increased 3% and commercial orders closed increased 1% over the third quarter of 2023
Total fee per file of $3,708 for the third quarter, a 2% increase over the third quarter of 2023
Third Quarter 2024 Financial Results
Pre-tax title margin of 17.7% and industry leading adjusted pre-tax title margin of 15.9% for the third quarter of 2024, compared to 13.2% and 16.2%, respectively, for the third quarter of 2023
Pre-tax earnings from continuing operations in Title for the third quarter of $372 million, compared with $248 million for the third quarter of 2023
Adjusted pre-tax earnings in Title for the third quarter of $323 million, compared with $311 million for the third quarter of 2023
F&G SegmentThis segment consists of operations of FNF's majority-owned subsidiary F&G, a leading provider of insurance solutions serving retail annuity and life customers and funding agreement and pension risk transfer institutional clients.
Chris Blunt, Chief Executive Officer, commented, "We have profitably grown assets under management before flow reinsurance to a record $62.9 billion at the end of the third quarter. Gross sales of $3.9 billion increased 39% over the third quarter of 2023, boosted by record retail sales of $3.5 billion, nearly double the prior year quarter. Our retail sales continue to surge driven by favorable market conditions and a strong demand for retirement savings products, and we are seeing a healthy PRT pipeline with some significant early wins in the fourth quarter. I am confident in our ability to expand our margin, even in a lower rate environment, and we will continue to benefit from our accretive flow reinsurance and owned distribution strategies, setting F&G apart. Our great results through the first nine months of the year have positioned us well for the remainder of the year and we continue to make strong progress toward our Investor Day targets."
Third Quarter 2024
Robust profitable gross sales: Gross sales of $3.9 billion for the third quarter, an increase of 39% over the third quarter of 2023, primarily driven by record retail sales
Record Retail channel sales of $3.5 billion for the third quarter, an increase of 84% over the third quarter of 2023, driven by favorable market conditions and strong demand for retirement savings products
Institutional market sales of nearly $0.4 billion of pension risk transfer for the third quarter, compared to $0.9 billion of pension risk transfer and funding agreements for third quarter of 2023; institutional sales are opportunistic and volumes vary quarter to quarter
Net sales of $2.4 billion for the third quarter, an increase of 4% over the third quarter of 2023
Record AUM before flow reinsurance of $62.9 billion at the end of the third quarter increased 20% over the third quarter of 2023. This included record AUM of $52.5 billion, an increase of 11% from the third quarter of 2023, driven by retained new business flows and net debt and equity proceeds over the past twelve months
Net loss attributable to common shareholders for F&G Segment of $5 million for the third quarter due to unfavorable mark-to-market movement, compared to net earnings of $259 million for the third quarter of 2023 which included favorable mark-to-market movement
Adjusted net earnings attributable to common shareholders for F&G Segment of $135 million for the third quarter, compared to $102 million for the third quarter of 2023
F&G's adjusted net earnings reflect alternatives investment portfolio short-term mark-to-market movement that differs from long-term return expectation. The third quarter of 2024 includes short term investment income from alternative investments and $16 million of net significant income items, whereas the third quarter of 2023 included short term investment income from alternative investments and no significant income or expense items
As compared to the prior year quarter, adjusted net earnings reflect asset growth, margin diversification from accretive flow reinsurance fees and owned distribution margin, disciplined expense management and higher interest expense due to planned capital market activity
Please see "Segment Financial Results" for F&G under "Non-GAAP Measures and Other Information" for further explanation
Conference CallWe will host a call with investors and analysts to discuss FNF's third quarter 2024 results on Thursday, November 7, 2024, beginning at 11:00 a.m. Eastern Time. A live webcast of the conference call will be available on the Events and Multimedia page of the FNF Investor Relations website at fnf.com. The conference call replay will be available via webcast through the FNF Investor Relations website at fnf.com.
About Fidelity National Financial, Inc.Fidelity National Financial, Inc. (NYSE:FNF) is a leading provider of title insurance and transaction services to the real estate and mortgage industries. FNF is the nation's largest title insurance company through its title insurance underwriters - Fidelity National Title, Chicago Title, Commonwealth Land Title, Alamo Title and National Title of New York - that collectively issue more title insurance policies than any other title company in the United States. More information about FNF can be found at fnf.com.
About F&GF&G is part of the FNF family of companies. F&G is committed to helping Americans turn their aspirations into reality. F&G is a leading provider of insurance solutions serving retail annuity and life customers and institutional clients and is headquartered in Des Moines, Iowa. For more information, please visit fglife.com.
Use of Non-GAAP Financial InformationGenerally Accepted Accounting Principles (GAAP) is the term used to refer to the standard framework of guidelines for financial accounting. GAAP includes the standards, conventions, and rules accountants follow in recording and summarizing transactions and in the preparation of financial statements. In addition to reporting financial results in accordance with GAAP, this earnings release includes non-GAAP financial measures, which the Company believes are useful to help investors better understand its financial performance, competitive position and prospects for the future. These non-GAAP measures include adjusted net earnings per share, adjusted pre-tax title earnings, adjusted pre-tax title earnings as a percentage of adjusted title revenue (adjusted pre-tax title margin), adjusted net earnings attributable to common shareholders (adjusted net earnings), assets under management (AUM), average assets under management (AAUM) and sales.
Management believes these non-GAAP financial measures may be useful in certain instances to provide additional meaningful comparisons between current results and results in prior operating periods. Our non-GAAP measures may not be comparable to similarly titled measures of other organizations because other organizations may not calculate such non-GAAP measures in the same manner as we do.
The presentation of this financial information is not intended to be considered in isolation of or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. By disclosing these non-GAAP financial measures, FNF believes it offers investors a greater understanding of, and an enhanced level of transparency into, the means by which the Company's management operates the Company.
Any non-GAAP measures should be considered in context with the GAAP financial presentation and should not be considered in isolation or as a substitute for GAAP net earnings, net earnings attributable to common shareholders, net earnings per share, or any other measures derived in accordance with GAAP as measures of operating performance or liquidity. Further, FNF's non-GAAP measures may be calculated differently from similarly titled measures of other companies. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are provided below.
Forward-Looking Statements and Risk FactorsThis press release contains forward-looking statements that involve a number of risks and uncertainties. Statements that are not historical facts, including statements regarding our expectations, hopes, intentions or strategies regarding the future are forward-looking statements. Forward-looking statements are based on management's beliefs, as well as assumptions made by, and information currently available to, management. Because such statements are based on expectations as to future financial and operating results and are not statements of fact, actual results may differ materially from those projected. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. The risks and uncertainties which forward-looking statements are subject to include, but are not limited to: changes in general economic, business, political crisis, war and pandemic conditions, including ongoing geopolitical conflicts; weakness or adverse changes in the level of real estate activity, which may be caused by, among other things, high or increasing interest rates, a limited supply of mortgage funding or a weak U.S. economy; our potential inability to find suitable acquisition candidates; our dependence on distributions from our title insurance underwriters as a main source of cash flow; significant competition that F&G and our operating subsidiaries face; compliance with extensive government regulation of our operating subsidiaries, including regulation of title insurance and services and privacy and data protection laws; systems damage, failures, interruptions, cyberattacks and intrusions, or unauthorized data disclosures; and other risks detailed in the "Statement Regarding Forward-Looking Information," "Risk Factors" and other sections of FNF's Form 10-K and other filings with the Securities and Exchange Commission.
FNF-E
FIDELITY NATIONAL FINANCIAL, INC.
THIRD QUARTER SEGMENT INFORMATION
(In millions, except per share data)
(Unaudited)
Consolidated
Title
F&G
Corporate and Other
Elimination
Three Months Ended
September 30, 2024
Direct title premiums
$ 571
$ 571
$ ,
$ ,
$ ,
Agency title premiums
789
789
—
—
—
Escrow, title related and other fees
1,159
581
526
52
—
Total title and escrow
2,519
1,941
526
52
—
Interest and investment income
815
92
712
37
(26)
Recognized gains and losses, net
269
63
206
—
—
Total revenue
3,603
2,096
1,444
89
(26)
Personnel costs
810
688
80
42
—
Agent commissions
612
612
—
—
—
Other operating expenses
396
328
45
23
—
Benefits & other policy reserve changes
1,095
—
1,095
—
—
Market risk benefit (gains) losses
71
—
71
—
—
Depreciation and amortization
189
35
147
7
—
Provision for title claim losses
61
61
—
—
—
Interest expense
56
—
36
20
—
Total expenses
3,290
1,724
1,474
92
—
Pre-tax earnings (loss)
$ 313
$ 372
$ (30)
$ (3)
$ (26)
Income tax expense (benefit)
44
73
(25)
(4)
—
Earnings (loss) from equity investments
2
2
—
—
—
Non-controlling interests
5
5
—
—
—
Net earnings (loss) attributable to common shareholders
$ 266
$ 296
$ (5)
$ 1
$ (26)
EPS attributable to common shareholders - basic
$ 0.98
EPS attributable to common shareholders - diluted
$ 0.97
Weighted average shares - basic
272
Weighted average shares - diluted
273
FIDELITY NATIONAL FINANCIAL, INC.
THIRD QUARTER SEGMENT INFORMATION
(In millions, except per share data)
(Unaudited)
Consolidated
Title
F&G
Corporate and Other
Elimination
Three Months Ended
September 30, 2024
Net earnings (loss) attributable to common shareholders
$ 266
$ 296
$ (5)
$ 1
$ (26)
Pre-tax earnings (loss)
$ 313
$ 372
$ (30)
$ (3)
$ (26)
Non-GAAP Adjustments
Recognized (gains) and losses, net
(17)
(63)
46
—
—
Market related liability adjustments
145
—
145
—
—
Purchase price amortization
39
14
22
3
—
Adjusted pre-tax earnings (loss)
$ 480
$ 323
$ 183
$ ,
$ (26)
Total non-GAAP, pre-tax adjustments
$ 167
$ (49)
$ 213
$ 3
$ ,
Income taxes on non-GAAP adjustments
(33)
12
(44)
(1)
—
Non-controlling interest on non-GAAP adjustments
(29)
—
(29)
—
—
Deferred tax asset valuation allowance
(15)
(15)
—
—
—
Total non-GAAP adjustments
$ 90
$ (52)
$ 140
$ 2
$ ,
Adjusted net earnings (loss) attributable to common shareholders
$ 356
$ 244
$ 135
$ 3
$ (26)
Adjusted EPS attributable to common shareholders - diluted
$ 1.30
FIDELITY NATIONAL FINANCIAL, INC.
THIRD QUARTER SEGMENT INFORMATION
(In millions, except per share data)
(Unaudited)
Consolidated
Title
F&G
Corporate and Other
Elimination
Three Months Ended
September 30, 2023
Direct title premiums
$ 524
$ 524
$ ,
$ ,
$ ,
Agency title premiums
728
728
—
—
—
Escrow, title related and other fees
1,196
577
582
37
—
Total title and escrow
2,448
1,829
582
37
—
Interest and investment income
686
92
578
38
(22)
Recognized gains and losses, net
(356)
(46)
(309)
(1)
—
Total revenue
2,778
1,875
851
74
(22)
Personnel costs
734
654
58
22
—
Agent commissions
564
564
—
—
—
Other operating expenses
380
313
38
29
—
Benefits & other policy reserve changes
292
—
292
—
—
Market risk benefit (gains) losses ...
