Fidelity National Financial, Inc.

Fidelity National Financial, Inc.

Press Release

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Oct 24, 2018

FNF Reports Third Quarter 2018 Diluted EPS of $0.85 and Adjusted Diluted EPS of $0.78, Pre-Tax Title Margin of 16.2% and Adjusted Pre-Tax Title Margin of 15.6%

JACKSONVILLE, Fla., Oct. 24, 2018 /PRNewswire/ -- Fidelity National Financial, Inc. (NYSE: FNF), a leading provider of title insurance and transaction services to the real estate and mortgage industries, today reported operating results for the three and nine-month periods ended September 30, 2018.

  • Total revenue of approximately $2.1 billion in the third quarter versus $2.0 billion in the third quarter of 2017
  • Third quarter net earnings of $236 million and adjusted net earnings of $218 million versus net earnings from continuing operations of $156 million and adjusted net earnings from continuing operations of $174 million for the third quarter of 2017
  • Third quarter diluted EPS of $0.85 and adjusted diluted EPS of $0.78 versus diluted EPS from continuing operations of $0.57 and adjusted diluted EPS from continuing operations of $0.63 in the third quarter of 2017

Title

  • Total revenue of approximately $1.9 billion versus approximately $1.9 billion in total revenue in the third quarter of 2017
  • Pre-tax earnings of $309 million and adjusted pre-tax earnings of $297 million versus pre-tax earnings of $262 million and adjusted pre-tax earnings of $287 million in the third quarter of 2017
  • Pre-tax title margin of 16.2% and adjusted pre-tax title margin of 15.6% versus pre-tax title margin of 14.0% and adjusted pre-tax title margin of 15.3% in the third quarter of 2017
  • Third quarter purchase orders opened increased 0.3% and purchase orders closed decreased 1%, respectively, versus the third quarter of 2017
  • Total commercial revenue of $271 million, an 8% increase over total commercial revenue in the third quarter of 2017, driven by a 16% increase in total commercial fee per file and a 7% decrease in closed orders; third quarter total commercial open orders increased 1% compared to the prior year
  • Overall third quarter average fee per file of $2,623, an 11% increase versus the third quarter of 2017

Title Orders




Direct Orders Opened *



Direct Orders Closed *

Month



 / (% Purchase)



 / (% Purchase)

July 2018



158,000

70%



116,000

71%

August 2018



165,000

69%



123,000

71%

September 2018



133,000

69%



100,000

70%








Third Quarter 2018



456,000

69%



339,000

71%











Direct Orders Opened *



Direct Orders Closed *

Month



 / (% Purchase)



 / (% Purchase)

July 2017



159,000

66%



118,000

66%

August 2017



181,000

61%



131,000

65%

September 2017



161,000

59%



118,000

63%








Third Quarter 2017



501,000

62%



367,000

65%










* Includes an immaterial number of non-purchase and non-refinance orders

 


Open


Closed


Commercial




Commercial


Commercial


Revenue


Commercial


Orders


Orders


(In millions)


Fee Per File

Third Quarter 2018 - Total Commercial


48,900



31,200



$271



$8,700

Third Quarter 2017 - Total Commercial


48,300



33,400



$250



$7,500

"The third quarter was a solid performance for our title business, as we generated adjusted pre-tax title earnings of $297 million and a 15.6% adjusted pre-tax title margin, increases of $10 million and 30 basis points, respectively, over the third quarter of 2017," said Chairman William P. Foley, II.  "The commercial and residential purchase markets continued to be the main drivers of our performance in the third quarter, as total commercial revenue grew by 8% versus the third quarter of 2017, continuing a very strong year for our commercial business.  While residential purchase open orders per day increased by 0.3% and residential purchase closed orders per day declined by 1%, this was offset by an 11% increase in the fee per file that provided 3% growth in direct title premiums over the prior year.  As we enter the seasonally slower fourth quarter, we will remain focused on our operating metrics and staffing levels in order to maximize our profitability.

"We continue to work through the regulatory process for the Stewart Information Services acquisition that we announced on March 19.  We are currently engaged in the Second Request related to the FTC's HSR regulatory review of the transaction.  Responses to nearly all the FTC's requests for information and documentation have been submitted.  The Form A filings with the states of Texas and New York are being reviewed by those states.  We still anticipate a first or second quarter of 2019 closing for the transaction and continue to believe the Stewart acquisition will create meaningful long-term value for our shareholders."

Conference Call
We will host a call with investors and analysts to discuss third quarter 2018 FNF results on Thursday, October 25, 2018, beginning at 1:00 p.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.  The telephone replay will be available from 3:00 p.m. Eastern time on October 25, 2018, through November 1, 2018, by dialing 800-475-6701 (USA) or 320-365-3844 (International).  The access code will be 455027.

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.

Use of Non-GAAP Financial Information
Generally 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, FNF has provided non-GAAP financial measures, which it believes are useful to help investors better understand its financial performance, competitive position and prospects for the future. These non-GAAP measures include adjusted pre-tax earnings, adjusted pre-tax earnings from continuing operations, adjusted pre-tax earnings as a percentage of adjusted revenue (adjusted pre-tax title margin), adjusted pre-tax earnings from continuing operations as a percentage of adjusted revenue (adjusted pre-tax title margin from continuing operations). adjusted net earnings, adjusted net earnings from continuing operations, adjusted EPS and adjusted EPS from continuing operations.

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. Further, FNF's non-GAAP measures may be calculated differently from similarly titled measures of other companies. Reconciliations of these non-GAAP measures to related GAAP measures are provided below.

Forward-Looking Statements and Risk Factors
This 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 and political conditions, including changes in the financial markets; 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 our operating subsidiaries face; compliance with extensive government regulation of our operating subsidiaries; the risk that the necessary regulatory approvals of our acquisition of Stewart Information Services Corporation ("Stewart") may not be obtained or may be obtained subject to conditions that are not anticipated;  risks that any of the closing conditions to the proposed Stewart merger may not be satisfied in a timely manner; the risk that the businesses will not be integrated successfully, that such integration may be more difficult, time-consuming or costly than expected or that the expected benefits of the acquisition will not be realized; 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 ("SEC").

FNF-E

FIDELITY NATIONAL FINANCIAL, INC.

THIRD QUARTER SEGMENT INFORMATION

(In millions, except order information in thousands)

(Unaudited)







Three Months Ended





Corporate 

September 30, 2018


Consolidated


Title


and Other

Direct title premiums

$

574



$

574



$


Agency title premiums

722



722




Escrow, title related and other fees

691



566



125


Total title and escrow

1,987



1,862



125








Interest and investment income

48



46



2


Realized gains and losses, net

50



40



10


Total revenue

2,085



1,948



137








Personnel costs

654



624



30


Agent commissions

554



554




Other operating expenses

477



365



112


Depreciation and amortization

46



38



8


Claim loss expense

58



58




Interest expense

9





9


Total expenses

1,798



1,639



159








Pre-tax earnings (loss)

$

287



$

309



$

(22)








Non-GAAP adjustments before taxes






  Realized (gains) and losses, net

(50)



(40)



(10)


  Purchase price amortization

27



22



5


  Transaction costs

9





9


  Sales tax contingency

6



6




 Total non-GAAP adjustments before taxes

$

(8)



$

(12)



$

4








Adjusted pre-tax earnings (loss)

$

279



$

297



$

(18)


Adjusted pre-tax margin

13.7

%


15.6

%









Pre-tax earnings (loss)

$

287



$

309



$

(22)


  Income tax expense (benefit)

51



68



(17)


  Earnings from equity investments

1



1




  Non-controlling interests

1



3



(2)








Net earnings (loss) attributable to FNF, Inc. common shareholders

$

236



$

239



$

(3)








EPS attributable to FNF, Inc. common shareholders - basic

$

0.86






EPS attributable to FNF, Inc. common shareholders - diluted

$

0.85












FNF, Inc. weighted average shares - basic

273






FNF, Inc. weighted average shares - diluted

278






 

 

FIDELITY NATIONAL FINANCIAL, INC.

THIRD QUARTER SEGMENT INFORMATION

(In millions, except order information in thousands)

(Unaudited)











Three Months Ended






Corporate

September 30, 2018


Consolidated


Title


and Other

Net earnings (loss) attributable to FNF, Inc. common shareholders


$

236


$

239


$

(3)








 Total non-GAAP, pre-tax adjustments


$

(8)


$

(12)


$

4

  Income taxes on non-GAAP adjustments


2


3


(1)

  Noncontrolling interest on non-GAAP adjustments


(4)


(2)


(2)

  Black Knight tax contingency


(8)



(8)

Total non-GAAP adjustments


$

(18)


$

(11)


$

(7)








Adjusted net earnings (loss) attributable to FNF, Inc. common shareholders

$

218


$

228


$

(10)








Adjusted EPS attributable to FNF, Inc. common shareholders - diluted

$

0.78












Direct orders opened (000's)


456


456



Direct orders closed (000's)


339


339



Fee per file


$

2,623


$

2,623



Actual title claims paid


$

55












Cash flows provided by operations


$

321





 

 

FIDELITY NATIONAL FINANCIAL, INC.

THIRD QUARTER SEGMENT INFORMATION

(In millions, except order information in thousands)

(Unaudited)







Three Months Ended






Corporate

September 30, 2017


Consolidated


Title


and Other

Direct title premiums

$

558



$

558



$

Agency title premiums

719



719



Escrow, title related and other fees

678



563



115

Total title and escrow

1,955



1,840



115







Interest and investment income

32



32



Realized gains and losses, net

(1)





(1)

Total revenue

1,986



1,872



114







Personnel costs

627



605



22

Agent commissions

553



553



Other operating expenses

444



348



96

Depreciation and amortization

46



40



6

Claim loss expense

64



64



Interest expense

10





10

Total expenses

1,744



1,610



134







Pre-tax earnings (loss) from continuing operations

$

242



$

262



$

(20)







Non-GAAP adjustments before taxes






  Realized (gains) and losses, net

1





1

  Purchase price amortization

29



24



5

  Spin-off costs

1





1

  Other adjustments

1



1



 Total non-GAAP adjustments before taxes

$

32



$

25



$

7







Adjusted pre-tax earnings (loss) from continuing operations

$

274



$

287



$

(13)

Adjusted pre-tax margin from continuing operations

13.8

%


15.3

%








Pre-tax earnings (loss) from continuing operations

$

242



$

262



$

(20)







  Income tax expense (benefit)

88



98



(10)

  Earnings from equity investments

3



3



  Earnings from discontinued operations, net of tax

18





18

  Non-controlling interests

10



1



9







Net earnings (loss) attributable to FNF, Inc. common shareholders

$

165



$

166



$

(1)







Net (loss) earnings attributable to FNFV Group common shareholders

$

(5)



$



$

(5)

Net earnings attributable to FNF Group common shareholders

$

170



$

166



$

4

Net earnings (loss) from continuing operations attributable to FNF, Inc. common shareholders

$

156



$

166



$

(10)

EPS attributable to FNF, Inc. common shareholders - basic

$

0.63






EPS attributable to FNF, Inc. common shareholders - diluted

$

0.62






EPS from continuing operations attributable to FNF, Inc. common shareholders - diluted

$

0.57






FNF, Inc. weighted average shares - basic

272






FNF, Inc. weighted average shares - diluted

276






 

 

FIDELITY NATIONAL FINANCIAL, INC.

THIRD QUARTER SEGMENT INFORMATION

(In millions, except order information in thousands)

(Unaudited)











Three Months Ended






Corporate

September 30, 2017


Consolidated


Title


and Other

Net earnings (loss) attributable to FNF, Inc. common shareholders

$

165


$

166


$

(1)







  Earnings from discontinued operations, net of tax

18



18

  Non-controlling interests of discontinued operations

9



9







Net earnings (loss) from continuing operations attributable to FNF, Inc. common shareholders

$

156


$

166


$

(10)







 Total non-GAAP, pre-tax adjustments

$

32


$

25


$

7

  Income taxes on non-GAAP adjustments

(11)


(9)


(2)

  Noncontrolling interest on non-GAAP adjustments

(3)


(3)


Total non-GAAP adjustments

$

18


$

13


$

5







Adjusted net earnings (loss) from continuing operations attributable to FNF, Inc. common shareholders

$

174


$

179


$

(5)







Adjusted EPS from continuing operations attributable to FNF, Inc. common shareholders - diluted

$

0.63











Direct orders opened (000's)

501


501



Direct orders closed (000's)

367


367



Fee per file

$

2,368


$

2,368



Actual title claims paid

$

60


$

60









Cash flows provided by operations

$

298






 

 

FIDELITY NATIONAL FINANCIAL, INC.

YTD SEGMENT INFORMATION

(In millions, except order information in thousands)

(Unaudited)







Nine Months Ended






Corporate

September 30, 2018


Consolidated


Title


and Other

Direct title premiums

$

1,645



$

1,645



$


Agency title premiums

2,018



2,018




Escrow, title related and other fees

2,072



1,684



388


Total title and escrow

5,735



5,347



388








Interest and investment income

131



128



3


Realized gains and losses, net

35



25



10


Total revenue

5,901



5,500



401








Personnel costs

1,926



1,838



88


Agent commissions

1,546



1,546




Other operating expenses

1,406



1,062



344


Depreciation and amortization

138



116



22


Claim loss expense

165



165




Interest expense

31





31


Total expenses

5,212



4,727



485








Pre-tax earnings (loss)

$

689



$

773



$

(84)








Non-GAAP adjustments before taxes






  Realized (gains) and losses, net

(35)



(25)



(10)


  Purchase price amortization

82



66



16


  Transaction costs

13





13


  Sales tax contingency

6



6




  Other adjustments

3



1



2


 Total non-GAAP adjustments before taxes

$

69



$

48



$

21








Adjusted pre-tax earnings (loss)

$

758



$

821



$

(63)


Adjusted pre-tax margin

12.9

%


15.0

%









Pre-tax earnings (loss)

$

689



$

773



$

(84)








  Income tax expense (benefit)

104



137



(33)


  Earnings from equity investments

4



3



1


  Non-controlling interests

5



7



(2)








Net earnings (loss) attributable to FNF, Inc. common shareholders

$

584



$

632



$

(48)








EPS attributable to FNF, Inc. common shareholders - basic

$

2.14






EPS attributable to FNF, Inc. common shareholders - diluted

$

2.09












FNF, Inc. weighted average shares - basic

273






FNF, Inc. weighted average shares - diluted

279






 

 

FIDELITY NATIONAL FINANCIAL, INC.

YTD SEGMENT INFORMATION

(In millions, except order information in thousands)

(Unaudited)







Nine Months Ended






Corporate

September 30, 2018


Consolidated


Title


and Other

Net earnings (loss) attributable to FNF, Inc. common shareholders

$

584



$

632



$

(48)








 Total non-GAAP, pre-tax adjustments

$

69



$

48



$

21


  Income taxes on non-GAAP adjustments

(15)



(10)



(5)


  Noncontrolling interest on non-GAAP adjustments

(10)



(8)



(2)


  Change in tax estimate

(45)



(45)




  Black Knight tax contingency

 

(8)





(8)


Total non-GAAP adjustments

$

(9)



$

(15)



$

6








Adjusted net earnings (loss) attributable to FNF, Inc. common shareholders

$

575



$

617



$

(42)








Adjusted EPS attributable to FNF, Inc. common shareholders - diluted

$

2.06












Direct orders opened (000's)

1,439



1,439




Direct orders closed (000's)

1,014



1,014




Fee per file

$

2,521



$

2,521




Actual title claims paid

$

165












Cash flows provided by operations

$

671






 

 

FIDELITY NATIONAL FINANCIAL, INC.

YTD SEGMENT INFORMATION

(In millions, except order information in thousands)

(Unaudited)








Nine months ended






Corporate

September 30, 2017


Consolidated


Title


and Other

Direct title premiums


$

1,598



$

1,598



$


Agency title premiums


2,028



2,028




Escrow, title related and other fees


1,969



1,634



335


Total title and escrow


5,595



5,260



335









Interest and investment income


93



93




Realized gains and losses, net




6



(6)


Total revenue


5,688



5,359



329









Personnel costs


1,822



1,755



67


Agent commissions


1,557



1,557




Other operating expenses


1,312



1,042



270


Depreciation and amortization


133



117



16


Claim loss expense


181



181




Interest expense


39





39


Total expenses


5,044



4,652



392









Pre-tax earnings (loss) from continuing operations


$

644



$

707



$

(63)









Non-GAAP adjustments before taxes







  Realized (gains) and losses, net




(6)



6


  Purchase price amortization


82



69



13


  Spin-off costs


3





3


  Sales tax contingency


3



3




  Other adjustments


2



2




 Total non-GAAP adjustments before taxes


$

90



$

68



$

22









Adjusted pre-tax earnings (loss) from continuing operations


$

734



$

775



$

(41)


Adjusted pre-tax margin from continuing operations


12.9

%


14.5

%










Pre-tax earnings (loss) from continuing operations


$

644



$

707



$

(63)









  Income tax expense (benefit)


258



290



(32)


  Earnings from equity investments


7



7




  Earnings from discontinued operations, net of tax


165





165


  Non-controlling interests


25





25









Net earnings attributable to FNF, Inc. common shareholders


$

533



$

424



$

109









Net earnings attributable to FNFV Group common shareholders


$

117



$



$

117


Net earnings (loss) attributable to FNF Group common shareholders


$

416



$

424



$

(8)


Net earnings (loss) from continuing operations attributable to FNF, Inc. common shareholders

$

393



$

424



$

(31)


EPS attributable to FNF, Inc. common shareholders - basic


$

1.54






EPS attributable to FNF, Inc. common shareholders - diluted


$

1.50






EPS from continuing operations attributable to FNF, Inc. common shareholders - diluted


$

1.42






FNF, Inc. weighted average shares - basic


271






FNF, Inc. weighted average shares - diluted


277






 

 

FIDELITY NATIONAL FINANCIAL, INC.

YTD SEGMENT INFORMATION

(In millions, except order information in thousands)

(Unaudited)








Nine months ended






Corporate

September 30, 2017


Consolidated


Title


and Other

Net earnings attributable to FNF, Inc. common shareholders


$

533



$

424



$

109









  Earnings from discontinued operations, net of tax


165





165


  Non-controlling interests of discontinued operations


25





25









Net earnings (loss) from continuing operations attributable to FNF, Inc. common shareholders


$

393



$

424



$

(31)









 Total non-GAAP, pre-tax adjustments


$

90



$

68



$

22


  Income taxes on non-GAAP adjustments


(30)



(22)



(8)


  Noncontrolling interest on non-GAAP adjustments


(10)



(10)




  Nondeductible income taxes on litigation and regulatory settlements


21



21



$


Total non-GAAP adjustments


$

71



$

57



$

14









Adjusted net earnings (loss) from continuing operations attributable to FNF, Inc. common shareholders

$

464



$

481



$

(17)









Adjusted EPS from continuing operations attributable to FNF, Inc. common shareholders - diluted


$

1.68













Direct orders opened (000's)


1,497



1,497




Direct orders closed (000's)


1,071



1,071




Fee per file


$

2,320



$

2,320




Actual title claims paid


$

168



$

168











Cash flows provided by operations


$

688






 

 

FIDELITY NATIONAL FINANCIAL, INC.

QUARTERLY OPERATING STATISTICS

(Unaudited)






















Q3 2018


Q2 2018


Q1 2018


Q4 2017


Q3 2017


Q2 2017


Q1 2017


Q4 2016

Quarterly Open Orders ('000's except % data)

Total open orders*


456



505



478



445



501



524



472



474


Total open orders per day*


7.2



7.9



7.7



7.2



8.0



8.2



7.6



7.6


Purchase % of open orders


69

%


71

%


66

%


60

%


62

%


66

%


64

%


53

%

Refinance % of open orders


31

%


29

%


34

%


40

%


38

%


34

%


36

%


47

%

Total closed orders*


339



362



313



357



367



370



334



419


Total closed orders per day*


5.4



5.7



5.0



5.8



5.8



5.8



5.4



6.8


Purchase % of closed orders


71

%


71

%


62

%


61

%


65

%


67

%


58

%


51

%

Refinance % of closed orders


29

%


29

%


38

%


39

%


35

%


33

%


42

%


49

%


















Commercial (millions, except orders in '000's)

Total commercial revenue


$

271



$

276



$

230



$

288



$

250



$

261



$

224



$

285


Total commercial open orders


48.9



54.2



52.8



46.3



48.3



50.8



49.4



45.9


Total commercial closed orders


31.2



35.1



31.5



33.2



33.4



33.6



30.0



34.7



















National commercial revenue


$

150



$

147



$

122



$

165



$

138



$

148



$

127



$

167


National commercial open orders


19.8



23.0



21.1



19.0



19.9



22.0



21.1



17.9


National commercial closed orders


12.0



12.9



11.2



12.1



13.1



13.3



11.2



12.8



















Total Fee Per File

Fee per file


$

2,623



$

2,579



$

2,344



$

2,425



$

2,368



$

2,428



$

2,148



$

2,091


Residential and local commercial fee per file


$

2,261



$

2,253



$

2,027



$

2,032



$

2,066



$

2,104



$

1,829



$

1,746


Residential fee per file


$

2,008



$

2,012



$

1,789



$

1,784



$

1,856



$

1,895



$

1,623



$

1,538


Total commercial fee per file


$

8,700



$

7,900



$

7,300



$

8,700



$

7,500



$

7,800



$

7,500



$

8,200


National commercial fee per file


$

12,500



$

11,400



$

10,900



$

13,600



$

10,500



$

11,100



$

11,300



$

13,000



















Total Staffing

Total field operations employees


10,800



11,000



10,900



11,200



11,700



11,300



11,000



11,100



























* Includes an immaterial number of non-purchase and non-refinance orders














 

 

FIDELITY NATIONAL FINANCIAL, INC.

SUMMARY BALANCE SHEET INFORMATION

(In millions)








FNF, Inc.

September 30, 2018


FNF, Inc.

December 31, 2017



(Unaudited)


(Unaudited)

Cash and investment portfolio



$

4,845




$

4,481


Goodwill



2,719




2,746


Title plant



405




398


Total assets



9,371




9,151


Notes payable



836




759


Reserve for title claim losses



1,491




1,490


Secured trust deposits



835




830


Redeemable non-controlling interests



344




344


Non-redeemable non-controlling interests



(1)




20


Total equity and non-controlling interests



5,032




4,811


Total equity attributable to common shareholders



4,689




4,447


 

Cision View original content:http://www.prnewswire.com/news-releases/fnf-reports-third-quarter-2018-diluted-eps-of-0-85-and-adjusted-diluted-eps-of-0-78--pre-tax-title-margin-of-16-2-and-adjusted-pre-tax-title-margin-of-15-6-300737020.html

SOURCE Fidelity National Financial, Inc.

Daniel Kennedy Murphy, Senior Vice President and Treasurer, 904-854-8120, dkmurphy@fnf.com