Fidelity National's earnings rise as title orders increase
An increase in title orders opened helped Fidelity National Financial improve its first-quarter net income by 59% over the same period last year.
The nation's largest title underwriter — which is growing larger with the pending acquisition of Stewart Information Services — had net income of $97 million in the first quarter, up from $61 million one year prior.
The title business had pretax earnings of $163 million, compared with $151 million one year prior. Its pretax title margin grew to 10.3% from 9.6% in the same time frame.
FNF reported 478,000 residential title orders opened in the quarter, of which 66% were higher-margin purchase transactions. This was up from 472,000 in the first quarter of 2017, where 64% were for purchases.
However, in March, business slumped slightly as there were 172,000 orders opened compared with 183,000 in the prior year.
FNF has started the regulatory process to get the Stewart acquisition approved, said Chairman William Foley in a press release.
"Over the last six weeks or so, our management and Stewart management have held more than 20 town hall style meetings for Stewart employees at locations around the country," Foley said.
"At those employee meetings, we reiterated our intent to preserve the Stewart legacy as a part of our long-time, successful strategy of operating multiple title insurance brands under the FNF umbrella. The meetings were well received and we consistently heard the employee excitement of putting the prolonged uncertainty that has existed at Stewart behind them and a desire to getting back to a focus on their customers and growing their brand."
The financial news was not as good at Stewart, which had a $3.8 million net loss in the first quarter, compared with $4.1 million of net income for the same period last year.
The loss included $2.3 million of third-party advisory expenses, in part relating to its strategic alternatives review and $2.2 million of net unrealized losses as a result of an accounting change affecting the fair value of investments in equity securities.
"With respect to our first-quarter 2018 results, we saw lower home sales and weaker refinancing volumes while our commercial business continued its momentum from last year by outperforming expectations and growing 12% in what typically is the most challenging quarter seasonally," said CEO Matthew Morris in a press release.
Separately, private mortgage insurer Essent Group had net earnings of $111.1 million for the first quarter, up from $66.6 million one year prior.
It remained the fourth largest mortgage insurer by market share, with new insurance written of $9.3 billion during the quarter, up from $8 billion in the first quarter of 2017.
"We are pleased with our strong first-quarter results as we continue to build a high credit quality and profitable mortgage insurance portfolio," said Essent's Chairman and CEO Mark Casale in a press release.
"During the quarter, we grew insurance-in-force 31% compared to March 31 a year ago, while also generating a 23% annualized return on average equity. Additionally, we closed our inaugural credit risk transfer transaction, which expanded our capital sources while also providing a layer of protection against adverse credit losses."
Essent's insurance-in-force is now $115.3 billion, compared with $110.5 billion as of Dec. 31, 2017 and $88 billion as of March 31, 2017.
In its CRT, Essent obtained $424 million of reinsurance on risk relating to $41 billion of NIW in 2017.