FNF Reports Third Quarter 2023 Financial Results

November 7, 2023 at 4:17 PM EST

JACKSONVILLE, Fla., Nov. 7, 2023 /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, 2023.

Net earnings attributable to common shareholders for the third quarter of $426 million, or $1.57 per diluted share (per share), compared to $362 million, or $1.32 per share, for the third quarter of 2022.  Net earnings attributable to common shareholders for the third quarter of 2023 includes $155 million of net favorable mark-to-market effects and $62 million of other unfavorable 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 of $333 million, or $1.23 per share, compared to $272 million, or $0.99 per share, for the third quarter of 2022. The Title Segment contributed $245 million for the third quarter, compared to $298 million for the third quarter 2022.  The F&G Segment contributed $102 million for the third quarter, compared to an adjusted net loss of $12 million for the third quarter 2022.  The Corporate Segment had an adjusted net loss of $14 million for the third quarter, compared to an adjusted net loss of $14 million for the third quarter of 2022. The results reflect Title's considerable decline in volumes as compared to the prior year given higher mortgage rates.  In addition, F&G's adjusted net earnings include alternative investment returns below our long-term expectations by $0.09 per share.  Please see "Segment Financial Results" for F&G under "Non-GAAP Measures and Other Information" for further explanation.

Company Highlights

  • Solid Title Revenue: For the Title Segment, total revenue of $1.9 billion, an 18% decrease from $2.3 billion in the third quarter of 2022. Total revenue, excluding recognized gains and losses, of $1.9 billion for the third quarter, which, although an 18% decrease from $2.3 billion in the third quarter of 2022, is more comparable with historical levels as seen in 2018 and 2019
  • Steady F&G Segment gross sales and record assets under management: For the F&G Segment, gross sales of $2.8 billion for the third quarter, a 3% decrease from the third quarter of 2022, reflecting lower retail channel sales offset by higher institutional market sales. F&G achieved record assets under management (AUM) of $47.4 billion as of September 30, 2023
  • Ample deployable capital in a challenging market: FNF paid common dividends of $0.45 per share for $123 million and ended the third quarter with $949 million in cash and short-term liquid investments at the holding company

William P. Foley, II, commented, "Our third quarter Title results highlight the strength of our business and the competitive advantage that we continue to maintain and grow.  While residential purchase applications hit their lowest levels since 1995, we once again delivered an industry leading adjusted pre-tax title margin of 16.2%, further demonstrating our ability to navigate an extremely challenging environment.  Our results also display the increasingly important contribution of F&G's counter cyclical business whose assets under management grew to a record $47 billion in the quarter, while the F&G segment's adjusted net earnings contributed 31% of FNF's consolidated adjusted net earnings."

Mr. Foley continued, "Given the market backdrop, we have maintained excess liquidity given the impact of higher rates on the real estate market and the risk that interest rates could stay higher for a prolonged period.  As a result, we ended the third quarter with $949 million in cash and short-term liquid investments which compares to $885 million at the end of the second quarter.  We continue to be committed to our quarterly cash dividend and are well positioned to take advantage of opportunities that could arise from any market dislocation."

Summary Financial Results

(In millions, except per share data)

Three Months Ended

Year to Date

 

September 30,
2023

 

September 30,
2022

2023

 

2022

Total revenue

$            2,778

 

$            3,206

$      8,320

 

$      9,008

F&G total gross sales1

$            2,781

 

$            2,873

$      9,070

 

$      8,535

F&G assets under management1

$          47,437

 

$          41,988

$    47,437

 

$    41,988

Total assets

$          74,002

 

$          61,725

$    74,002

 

$    61,725

Adjusted pre-tax title margin

16.2 %

 

17.1 %

14.3 %

 

17.7 %

Net earnings attributable to common shareholders

$               426

 

$               362

$         586

 

$      1,299

Net earnings per share attributable to common shareholders

$              1.57

 

$              1.32

$        2.16

 

$        4.66

Adjusted net earnings1

$               333

 

$               272

$         758

 

$      1,215

Adjusted net earnings per share1

$              1.23

 

$              0.99

$        2.80

 

$        4.35

Weighted average common diluted shares

271

 

275

271

 

279

Total common shares outstanding

272

 

273

272

 

273

____________

1 See definition of non-GAAP measures below

 

Segment Financial Results 

Title Segment
This 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 products.

Mike Nolan, Chief Executive Officer, said, "We ended the third quarter in a strong position.  Over the last year, we have been reducing our expenses as residential orders have declined while continuing to invest in exceptional talent, technology and acquiring businesses that, taken together, position FNF for long term growth.  We have done this while also maintaining our market presence, industry leading profitability and our strong balance sheet.  While we expect interest rates will moderate and mortgage volumes will improve at some point, we stand ready for the difficult market conditions to persist and will be opportunistic as we strive to expand our business and capabilities now and in the future."

Mr. Nolan added, "Our scale, profitability and balance sheet provide us with the ability to invest through cycles while returning cash to our shareholders.  During the first nine months of 2023, we have continued to invest in acquisitions and technology, while returning $366 million to our shareholders through our common dividend."

Third Quarter 2023 Highlights

  • Total revenue of $1.9 billion, compared with $2.3 billion in the third quarter of 2022
  • Total revenue, excluding recognized gains and losses, of $1.9 billion, an 18% decrease from third quarter of 2022
    • Direct title premiums of $524 million, a 24% decrease from third quarter of 2022
    • Agency title premiums of $728 million, a 25% decrease from third quarter of 2022
    • Commercial revenue of $263 million, a 31% decrease from third quarter of 2022
  • Purchase orders opened decreased 7% on a daily basis and purchase orders closed decreased 13% on a daily basis from the third quarter of 2022
  • Refinance orders opened decreased 25% on a daily basis and refinance orders closed decreased 35% on a daily basis from third quarter of 2022
  • Commercial orders opened decreased 10% and commercial orders closed decreased 27% from third quarter of 2022
  • Total fee per file of $3,618 for the third quarter, in line with third quarter of 2022

Third Quarter 2023 Financial Results

  • Pre-tax title margin of 13.2% and industry leading adjusted pre-tax title margin of 16.2% for the third quarter of 2023, compared to 14.6% and 17.1%, respectively, in the third quarter of 2022
  • Pre-tax earnings from continuing operations in Title for the third quarter of $248 million, compared with $335 million for the third quarter of 2022
  • Adjusted pre-tax earnings in Title for the third quarter of $311 million compared with $400 million for the third quarter of 2022. The decrease from the prior year quarter was primarily a result of the considerable decline in residential and commercial volumes due to higher mortgage rates

F&G Segment
This 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, President and Chief Executive Officer, commented, "We generated gross sales of $2.8 billion in the third quarter driven by strength in our institutional markets.  Net sales were $2.3 billion, and we ended the quarter with $52.9 billion in assets under management before flow reinsurance, up 20% over $44.0 billion at the end of the third quarter of 2022.  Of note, we have added a second flow reinsurance partner and increased our flow reinsurance to 90% of MYGA sales starting in September.  Overall, the demand environment continues to be healthy, and we remain on track to achieve $12 to $13 billion of full year sales having delivered total gross sales of $9.1 billion thus far in 2023."

Mr. Blunt concluded, "We continue to execute on our initiatives to grow our business while delivering margin expansion and enhanced returns.  Additionally, the credit quality of our portfolio remains strong as we continue to conservatively manage our investment portfolio.  Taken together, the business is performing well as we head into the final quarter of the year."

Third Quarter 2023

  • Gross sales: Gross sales of $2.8 billion for the third quarter, a decrease of 3% from the third quarter of 2022, driven by lower retail channel sales offset by higher institutional market sales
  • Profitable Retail channel sales of $1.9 billion for the third quarter, a 17% decrease from $2.3 billion in the third quarter of 2022. Coming off record sales in the first half of the year, retail sales were intentionally lower in the quarter as we finalized our reinsurance agreements and enhanced product features to position us to finish strong in 2023 and create momentum for 2024
  • Strong Institutional market sales of $0.9 billion, comprised of $0.5 billion pension risk transfer and $0.4 billion funding agreements, compared to $0.6 billion of pension risk transfer in the third quarter of 2022
  • Net sales of $2.3 billion for the third quarter, compared to $2.2 billion in the third quarter of 2022. In addition, F&G has increased flow reinsurance to 90% of MYGA sales in September of 2023
  • Assets under management (AUM) of $47.4 billion as of September 30, 2023, an increase of 13% from $42.0 billion as of September 30, 2022, driven by net new business flows, stable inforce retention and net debt proceeds over the past twelve months. AUM before flow reinsurance was $52.9 billion as of September 30, 2023
  • Net earnings attributable to common shareholders for F&G Segment of $259 million for the third quarter due to favorable mark-to-market movement, compared to $187 million for the third quarter of 2022 which included favorable mark-to-market movement
  • Adjusted net earnings for F&G Segment of $102 million for the third quarter, compared to adjusted net loss of $12 million for the third quarter of 2022. F&G's adjusted net earnings (loss) reflect significant items and alternatives investment portfolio short-term mark-to-market movement that differs from long-term return expectation. As compared to the prior year, adjusted net earnings reflect asset growth, product margin expansion and earnings from accretive flow reinsurance. In addition, the third quarter of 2023 includes short term investment income from alternative investments, whereas the third quarter of 2022 included short term investment losses from alternative investments. Please see "Segment Financial Results" for F&G under "Non-GAAP Measures and Other Information" for further explanation.

Conference Call
We will host a call with investors and analysts to discuss FNF's third quarter 2023 results on Wednesday, November 8, 2023, 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. The telephone replay will be available from 3:00 p.m. Eastern Time on November 8, 2023, through November 15, 2023, by dialing 1-844-512-2921 (USA) or 1-412-317-6671 (International). The access code will be 13735002.

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&G
F&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 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, 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 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, political and COVID-19 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 F&G and our operating subsidiaries face; compliance with extensive government regulation of our operating subsidiaries; 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

SOURCE:  Fidelity National Financial, Inc.; F&G Annuities & Life, Inc.

 

FIDELITY NATIONAL FINANCIAL, INC.

THIRD QUARTER SEGMENT INFORMATION

(In millions, except per share data)

(Unaudited)

   

Consolidated

 

Title

 

F&G

 

Corporate and
Other

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

 

16

Recognized gains and losses, net

 

(356)

 

(46)

 

(309)

 

(1)

Total revenue

 

2,778

 

1,875

 

851

 

52

                 

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

 

(49)

 

 

(49)

 

Depreciation and amortization

 

153

 

39

 

108

 

6

Provision for title claim losses

 

57

 

57

 

 

Interest expense

 

44

 

 

24

 

20

Total expenses

 

2,175

 

1,627

 

471

 

77

                 

Pre-tax earnings (loss) from continuing operations

 

$            603

 

$            248

 

$           380

 

$                (25)

                 

  Income tax expense (benefit)

 

141

 

73

 

74

 

(6)

  Earnings (loss) from equity investments

 

15

 

15

 

 

  Non-controlling interests

 

51

 

5

 

47

 

(1)

                 

Net earnings (loss) attributable to common shareholders

 

$            426

 

$            185

 

$           259

 

$                (18)

                 

EPS attributable to common shareholders - basic

 

$          1.58

           
                 

EPS attributable to common shareholders - diluted

 

$          1.57

           
                 

Weighted average shares - basic

 

270

           

Weighted average shares - diluted

 

271

           

 

FIDELITY NATIONAL FINANCIAL, INC.

THIRD QUARTER SEGMENT INFORMATION

(In millions, except per share data)

(Unaudited)

   

Consolidated

 

Title

 

F&G

 

Corporate and
Other

Three Months Ended

       

September 30, 2023

       

Net earnings (loss) attributable to common shareholders

 

$                426

 

$                185

 

$           259

 

$                (18)

                 

Pre-tax earnings (loss) from continuing operations

 

$                603

 

$                248

 

$           380

 

$                (25)

                 

 Non-GAAP Adjustments

               

  Recognized (gains) and losses, net

 

43

 

46

 

(4)

 

1

  Market related liability adjustments

 

(237)

 

 

(237)

 

  Purchase price amortization

 

26

 

17

 

5

 

4

  Transaction costs

 

1

 

 

1

 

                 

Adjusted pre-tax earnings (loss)

 

$                436

 

$                311

 

$           145

 

$                (20)

                 

Total non-GAAP, pre-tax adjustments

 

$              (167)

 

$                  63

 

$         (235)

 

$                    5

  Income taxes on non-GAAP adjustments

 

33

 

(15)

 

49

 

(1)

  Non-controlling interest on non-GAAP adjustments

 

29

 

 

29

 

  Deferred tax asset valuation allowance

 

12

 

12

 

 

Total non-GAAP adjustments

 

$                (93)

 

$                  60

 

$         (157)

 

$                    4

                 

Adjusted net earnings (loss) attributable to common shareholders

 

$                333

 

$                245

 

$           102

 

$                (14)

                 

Adjusted EPS attributable to common shareholders - diluted

 

$               1.23

           

 

FIDELITY NATIONAL FINANCIAL, INC.

THIRD QUARTER SEGMENT INFORMATION

(In millions, except per share data)

(Unaudited)

   

Consolidated

 

Title

 

F&G

 

Corporate and
Other

Three Months Ended

       

September 30, 2022

       

Direct title premiums

 

$            688

 

$            688

 

$             —

 

$                  —

Agency title premiums

 

966

 

966

 

 

Escrow, title related and other fees

 

1,371

 

623

 

702

 

46

Total title and escrow

 

3,025

 

2,277

 

702

 

46

                 

Interest and investment income

 

411

 

62

 

340

 

9

Recognized gains and losses, net

 

(230)

 

(48)

 

(140)

 

(42)

Total revenue

 

3,206

 

2,291

 

902

 

13

                 

Personnel costs

 

796

 

725

 

46

 

25

Agent commissions

 

747

 

747

 

 

Other operating expenses

 

430

 

372

 

28

 

30

Benefits & other policy reserve changes

 

570

 

 

570

 

Market risk benefit (gains) losses

 

(68)

 

 

(68)

 

Depreciation and amortization

 

126

 

38

 

82

 

6

Provision for title claim losses

 

74

 

74

 

 

Interest expense

 

28

 

 

6

 

22

Total expenses

 

2,703

 

1,956

 

664

 

83

                 

Pre-tax earnings (loss)

 

$            503

 

$            335

 

$           238

 

$                (70)

                 

  Income tax expense (benefit)

 

136

 

93

 

51

 

(8)

  Earnings from equity investments

 

 

 

 

  Non-controlling interests

 

5

 

5

 

 

                 

Net earnings (loss) attributable to common shareholders

 

$            362

 

$            237

 

$           187

 

$                (62)

                 

EPS attributable to common shareholders - basic

 

$          1.33

           
                 

EPS attributable to common shareholders - diluted

 

$          1.32

           
                 

Weighted average shares - basic

 

273

           

Weighted average shares - diluted

 

275

           

 

FIDELITY NATIONAL FINANCIAL, INC.

THIRD QUARTER SEGMENT INFORMATION

(In millions, except per share data)

(Unaudited)

   

Consolidated

 

Title

 

F&G

 

Corporate and
Other

Three Months Ended

       

September 30, 2022

       

Net earnings (loss) attributable to common shareholders

 

$                362

 

$                237

 

$                187

 

$                (62)

                 

Pre-tax earnings (loss) from continuing operations

 

$                503

 

$                335

 

$                238

 

$                (70)

                 

Non-GAAP Adjustments

               

  Recognized (gains) and losses, net

 

65

 

48

 

(25)

 

42

  Market related liability adjustments

 

(237)

 

 

(237)

 

  Purchase price amortization

 

26

 

17

 

5

 

4

  Transaction costs

 

7

 

 

4

 

3

                 

Adjusted pre-tax earnings (loss)

 

$                364

 

$                400

 

$                (15)

 

$                (21)

                 

Total non-GAAP, pre-tax adjustments

 

$              (139)

 

$                  65

 

$              (253)

 

$                  49

  Income taxes on non-GAAP adjustments

 

27

 

(16)

 

54

 

(11)

  Non-controlling interest on non-GAAP adjustments

 

(1)

 

 

 

(1)

  Deferred tax asset valuation allowance

 

23

 

12

 

 

11

Total non-GAAP adjustments

 

$                (90)

 

$                  61

 

$              (199)

 

$                  48

                 

Adjusted net earnings (loss) attributable to common shareholders

 

$                272

 

$                298

 

$                (12)

 

$                (14)

                 

Adjusted EPS attributable to common shareholders - diluted

 

$               0.99

           

 

FIDELITY NATIONAL FINANCIAL, INC. 

YTD SEGMENT INFORMATION

(In millions, except per share data)

(Unaudited)

   

Consolidated

 

Title

 

F&G

 

Corporate and
Other

Nine Months Ended

       

September 30, 2023

       

Direct title premiums

 

$        1,493

 

$         1,493

 

$          —

 

$               —

Agency title premiums

 

1,991

 

1,991

 

 

Escrow, title related and other fees

 

3,288

 

1,629

 

1,523

 

136

Total title and escrow

 

6,772

 

5,113

 

1,523

 

136

                 

Interest and investment income

 

1,915

 

252

 

1,622

 

41

Recognized gains and losses, net

 

(367)

 

(74)

 

(257)

 

(36)

Total revenue

 

8,320

 

5,291

 

2,888

 

141

                 

Personnel costs

 

2,166

 

1,908

 

167

 

91

Agent commissions

 

1,534

 

1,534

 

 

Other operating expenses

 

1,134

 

939

 

107

 

88

Benefits & other policy reserve changes

 

1,921

 

 

1,921

 

Market risk benefit (gains) losses

 

(20)

 

 

(20)

 

Depreciation and amortization

 

438

 

115

 

302

 

21

Provision for title claim losses

 

157

 

157

 

 

Interest expense

 

129

 

 

71

 

58

Total expenses

 

7,459

 

4,653

 

2,548

 

258

                 

Pre-tax earnings (loss) from continuing operations

 

$            861

 

$            638

 

$       340

 

$          (117)

                 

  Income tax expense (benefit)

 

245

 

165

 

99

 

(19)

  Earnings (loss) from equity investments

 

16

 

16

 

 

  Non-controlling interests

 

46

 

11

 

36

 

(1)

                 

Net earnings (loss) attributable to common shareholders

 

$            586

 

$            478

 

$       205

 

$             (97)

                 

EPS attributable to common shareholders - basic

 

$          2.17

           
                 

EPS attributable to common shareholders - diluted

 

$          2.16

           
                 

Weighted average shares - basic

 

270

           

Weighted average shares - diluted

 

271

           

 

FIDELITY NATIONAL FINANCIAL, INC.

YTD SEGMENT INFORMATION

(In millions, except per share data)

(Unaudited)

   

Consolidated

 

Title

 

F&G

 

Corporate and
Other

Nine Months Ended

       

September 30, 2023

       

Net earnings (loss) attributable to common shareholders

 

$                586

 

$                478

 

$           205

 

$                (97)

                 

Pre-tax earnings (loss) from continuing operations

 

$                861

 

$                638

 

$           340

 

$              (117)

                 

Non-GAAP Adjustments

               

  Recognized (gains) and losses, net

 

210

 

74

 

100

 

36

  Market related liability adjustments

 

(95)

 

 

(95)

 

  Purchase price amortization

 

81

 

54

 

16

 

11

  Transaction costs

 

8

 

 

3

 

5

                 

Adjusted pre-tax earnings (loss)

 

$             1,065

 

$                766

 

$           364

 

$                (65)

                 

Total non-GAAP, pre-tax adjustments

 

$                204

 

$                128

 

$             24

 

$                  52

  Income taxes on non-GAAP adjustments

 

(48)

 

(31)

 

(5)

 

(12)

  Deferred tax asset valuation allowance

 

19

 

11

 

 

8

  Non-controlling interest on non-GAAP adjustments

 

(3)

 

 

(3)

 

Total non-GAAP adjustments

 

$                172

 

$                108

 

$             16

 

$                  48

                 

Adjusted net earnings (loss) attributable to common shareholders

 

$                758

 

$                586

 

$           221

 

$                (49)

                 

Adjusted EPS attributable to common shareholders - diluted

 

$               2.80

           

 

FIDELITY NATIONAL FINANCIAL, INC.

YTD SEGMENT INFORMATION

(In millions, except per share data)

(Unaudited)

           

F&G

   

Nine Months Ended

 

Consolidated

 

Title

   

Corporate and
Other

September 30, 2022

       

Direct title premiums

 

$        2,314

 

$        2,314

 

$                  —

 

$                  —

Agency title premiums

 

3,268

 

3,268

 

 

Escrow, title related and other fees 

 

3,449

 

1,994

 

1,369

 

86

Total title and escrow

 

9,031

 

7,576

 

1,369

 

86

                 

Interest and investment income

 

1,352

 

124

 

1,216

 

12

Recognized gains and losses, net

 

(1,375)

 

(472)

 

(863)

 

(40)

Total revenue

 

9,008

 

7,228

 

1,722

 

58

                 

Personnel costs

 

2,458

 

2,322

 

110

 

26

Agent commissions

 

2,521

 

2,521

 

 

Other operating expenses

 

1,329

 

1,178

 

77

 

74

Benefits & other policy reserve changes

 

396

 

 

396

 

Market risk benefit (gains) losses

 

(187)

 

 

(187)

 

Depreciation and amortization

 

361

 

105

 

238

 

18

Provision for title claim losses

 

251

 

251

 

 

Interest expense

 

89

 

 

23

 

66

Total expenses

 

7,218

 

6,377

 

657

 

184

                 

Pre-tax earnings (loss) from continuing operations

 

$        1,790

 

$            851

 

$             1,065

 

$              (126)

                 

  Income tax expense (benefit)

 

494

 

261

 

254

 

(21)

  Earnings from equity investments

 

16

 

16

 

 

  Non-controlling interests

 

13

 

14

 

 

(1)

                 

Net earnings (loss) attributable to common shareholders

 

$        1,299

 

$            592

 

$                811

 

$              (104)

                 

EPS attributable to common shareholders - basic

 

$          4.69

           

EPS attributable to common shareholders - diluted

 

$          4.66

           
                 

Weighted average shares - basic

 

277

           

Weighted average shares - diluted

 

279

           

 

FIDELITY NATIONAL FINANCIAL, INC.

YTD SEGMENT INFORMATION

(In millions, except per share data)

(Unaudited)

   

Consolidated

 

Title

 

F&G

 

Corporate and
Other

Nine Months Ended

       

September 30, 2022

       

Net earnings (loss) attributable to common shareholders

 

$             1,299

 

$                592

 

$           811

 

$              (104)

                 

Pre-tax earnings (loss) from continuing operations

 

$             1,790

 

$                851

 

$       1,065

 

$              (126)

                 

Non-GAAP Adjustments

               

  Recognized (gains) and losses, net

 

493

 

472

 

(19)

 

40

  Market related liability adjustments

 

(751)

 

 

(751)

 

  Purchase price amortization

 

70

 

43

 

16

 

11

  Transaction costs

 

4

 

 

8

 

(4)

                 

Adjusted pre-tax earnings (loss)

 

$             1,606

 

$             1,366

 

$           319

 

$                (79)

                 

Total non-GAAP, pre-tax adjustments

 

$              (184)

 

$                515

 

$         (746)

 

$                  47

  Income taxes on non-GAAP adjustments

 

23

 

(124)

 

158

 

(11)

  Deferred tax asset valuation allowance

 

78

 

67

 

 

11

  Non-controlling interest on non-GAAP adjustments

 

(1)

 

 

 

(1)

Total non-GAAP adjustments

 

$                (84)

 

$                458

 

$         (588)

 

$                  46

                 

Adjusted net earnings (loss) attributable to common shareholders

 

$             1,215

 

$             1,050

 

$           223

 

$                (58)

                 

Adjusted EPS attributable to common shareholders - diluted

 

$               4.35

           

 

FIDELITY NATIONAL FINANCIAL, INC.

SUMMARY BALANCE SHEET INFORMATION

(In millions)

 
   

September 30,
2023

 

December 31,
2022

   

(Unaudited)

 

(Unaudited)

Cash and investment portfolio

   

$         53,639

   

$         47,656

Goodwill

   

4,830

   

4,635

Title plant

   

417

   

416

Total assets

   

74,002

   

65,143

Notes payable

   

3,695

   

3,238

Reserve for title claim losses

   

1,768

   

1,810

Secured trust deposits

   

853

   

862

Accumulated other comprehensive (loss) earnings

   

(3,067)

   

(2,870)

Non-controlling interests

   

426

   

453

Total equity and non-controlling interests

   

6,584

   

6,569

Total equity attributable to common shareholders

   

6,158

   

6,116

Non-GAAP Measures and Other Information

Title Segment

The table below reconciles pre-tax title earnings to adjusted pre-tax title earnings.

 

Three Months Ended

   

Nine Months Ended

(Dollars in millions)

September 30,
2023

September 30,
2022

   

September 30,
2023

September 30,
2022

Pre-tax earnings

$                   248

$                    335

   

$                   638

$                   851

Non-GAAP adjustments before taxes

           

  Recognized (gains) and losses, net

46

48

   

74

472

  Purchase price amortization

17

17

   

54

43

Total non-GAAP adjustments

63

65

   

128

515

Adjusted pre-tax earnings

$                   311

$                    400

   

$                   766

$               1,366

Adjusted pre-tax margin

16.2 %

17.1 %

   

14.3 %

17.7 %

 

FIDELITY NATIONAL FINANCIAL, INC.

QUARTERLY OPERATING STATISTICS

(Unaudited)

 
   

Q3 2023

 

Q2 2023

 

Q1 2023

 

Q4 2022

 

Q3 2022

 

Q2 2022

 

Q1 2022

 

Q4 2021

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

Total opened orders*

 

318

 

347

 

308

 

266

 

363

 

443

 

522

 

536

Total opened orders per day*

 

5.0

 

5.4

 

5.0

 

4.3

 

5.7

 

6.9

 

8.6

 

8.5

Purchase % of opened orders

 

80 %

 

79 %

 

78 %

 

76 %

 

76 %

 

75 %

 

62 %

 

53 %

Refinance % of opened orders

 

20 %

 

21 %

 

22 %

 

24 %

 

24 %

 

25 %

 

38 %

 

47 %

Total closed orders*

 

224

 

233

 

188

 

216

 

278

 

348

 

380

 

477

Total closed orders per day*

 

3.6

 

3.6

 

3.0

 

3.5

 

4.3

 

5.4

 

6.2

 

7.6

Purchase % of closed orders

 

80 %

 

81 %

 

78 %

 

76 %

 

76 %

 

71 %

 

55 %

 

51 %

Refinance % of closed orders

 

20 %

 

19 %

 

22 %

 

24 %

 

24 %

 

29 %

 

45 %

 

49 %

                                 

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

Total commercial revenue

 

$      263

 

$      263

 

$      241

 

$      344

 

$      381

 

$      436

 

$      374

 

$      546

Total commercial opened orders

 

49.1

 

50.2

 

48.5

 

44.9

 

54.8

 

64.2

 

66.1

 

64.5

Total commercial closed orders

 

25.6

 

27.7

 

24.7

 

30.5

 

35.2

 

39.7

 

37.4

 

46.1

                                 

National commercial revenue

 

$      128

 

$      128

 

$      118

 

$      173

 

$      191

 

$      220

 

$      196

 

$      313

National commercial opened orders

 

18.9

 

19.3

 

18.5

 

17.8

 

22.1

 

26.7

 

27.5

 

26.0

National commercial closed orders

 

9.2

 

9.9

 

8.5

 

11.9

 

14.0

 

15.3

 

14.6

 

18.1

                                 

Total Fee Per File

Fee per file

 

$   3,618

 

$   3,598

 

$   3,446

 

$   3,649

 

$   3,621

 

$   3,557

 

$   2,891

 

$   3,023

Residential fee per file

 

$   2,861

 

$   2,897

 

$   2,601

 

$   2,542

 

$   2,697

 

$   2,695

 

$   2,188

 

$   2,158

Total commercial fee per file

 

$ 10,300

 

$   9,500

 

$   9,800

 

$  11,300

 

$ 10,800

 

$  11,000

 

$  10,000

 

$  11,800

National commercial fee per file

 

$ 13,900

 

$  12,900

 

$  13,900

 

$  14,600

 

$ 13,600

 

$  14,400

 

$  13,400

 

$  17,300

                                 

Total Staffing

Total field operations employees

 

10,400

 

10,600

 

10,400

 

10,700

 

12,000

 

12,700

 

13,400

 

13,600

                                 

Actual title claims paid ($ millions)

 

$       69

 

$        67

 

$        62

 

$        79

 

$       65

 

$        55

 

$        54

 

$        62

 

Title Segment (continued)

 

FIDELITY NATIONAL FINANCIAL, INC.

MONTHLY TITLE ORDER STATISTICS

 
     

Direct Orders Opened *

   

Direct Orders Closed *

Month

 

 / (% Purchase)

 

 / (% Purchase)

July 2023

   

107,000

80 %

   

74,000

81 %

August 2023 

   

114,000

79 %

   

80,000

80 %

September 2023 

   

97,000

79 %

   

70,000

80 %

Third Quarter 2023

   

318,000

80 %

   

224,000

80 %

             
     

Direct Orders Opened *

   

Direct Orders Closed *

Month

 

 / (% Purchase)

   

 / (% Purchase)

July 2022

   

119,000

76 %

   

92,000

75 %

August 2022

   

132,000

76 %

   

98,000

75 %

September 2022

   

112,000

76 %

   

88,000

76 %

Third Quarter 2022

   

363,000

76 %

   

278,000

76 %

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

 

F&G Segment

The table below reconciles net earnings (loss) attributable to common shareholders to adjusted net earnings attributable to common shareholders.  The F&G Segment is reported net of noncontrolling minority interest.

 

Three Months Ended

 

Nine Months Ended

(Dollars in millions)

September 30,
2023

 

September 30,
2022

 

September 30,
2023

 

September 30,
2022

Net earnings attributable to common shareholders

$                 259

 

$                 187

 

$               205

 

$                 811

Non-GAAP adjustments(1):

             

Recognized (gains) losses, net

(4)

 

(25)

 

100

 

(19)

Market related liability adjustments

(237)

 

(237)

 

(95)

 

(751)

Purchase price amortization

5

 

5

 

16

 

16

Transaction costs

1

 

4

 

3

 

8

Income taxes on non-GAAP adjustments

49

 

54

 

(5)

 

158

Non-controlling interest on non-GAAP adjustments

29

 

 

(3)

 

Adjusted net earnings (loss) attributable to common shareholders(1)

$                 102

 

$                 (12)

 

$               221

 

$                 223

 

  • Adjusted net earnings of $102 million for the third quarter of 2023 included $97 million, or $0.36 per share, of investment income from alternative investments. Alternative investments investment income based on management's long-term expected return of approximately 10% was $121 million, or $0.45 per share.
  • Adjusted net loss of $12 million for the third quarter of 2022 included $11 million, or $0.04 per share, of investment loss from alternative investments and $11 million, or $0.04 per share, of other net expense items. Alternative investments investment income based on management's long-term expected return of approximately 10% was $106 million, or $0.39 per share.
  • Adjusted net earnings of $221 million for the nine months ended September 30, 2023 included $250 million, or $0.92 per share, of investment income from alternative investments, $4 million, or $0.02 per share, of bond prepay income, partially offset by $31 million, or $0.12 per share, tax valuation allowance expense. Alternative investments investment income based on management's long-term expected return of approximately 10% was $349 million, or $1.29 per share.
  • Adjusted net earnings of $223 million for the nine months ended September 30, 2022 included $161 million, or $0.58 per share, of investment income from alternative investments, $66 million, or $0.24 per share, gain from actuarial assumption updates, $24 million, or $0.09 per share, income of CLO redemption gains and other investment income, partially offset by $38 million, or $0.14 per share, tax valuation allowance expense and $11 million, or $0.04 per share, of other net expense items. Alternative investments investment income based on management's long-term expected return of approximately 10% was $306 million, or $1.10 per share.

 

The table below provides a summary of sales highlights.

   

Three Months Ended

   

Nine Months Ended

(In millions)

 

September 30,
2023

 

September 30,
2022

   

September 30,
2023

 

September 30,
2022

Total annuity sales

 

$              1,858

 

$             2,217

   

$              6,870

 

$               5,853

Indexed universal life sales

 

38

 

36

   

117

 

92

Funding agreements (FABN/FHLB)

 

415

 

   

871

 

1,443

Pension risk transfer

 

470

 

620

   

1,212