Refis Aid FNF as Order Closings Slow, Two Units Dent Earnings

Fidelity National Financial Inc.'s business is picking up thanks to the refinance wave, but the time it is taking to close orders is slowing and losses on recent acquisitions are putting a drag on its earnings. "We saw a surge in open order volumes in the first three weeks of April, nearing their highest levels of 2009," chairman William P. Foley II said. The increase in refis has resulted in an increase in the time it takes to close an order, he said. The Jacksonville, Fla.-based company's direct orders opened rose to 746,400 in the first quarter from 562,000 during the same period a year ago. The former LandAmerica title operations now owned by FNF had pre-tax operating losses for two of the three months of the first quarter and that contributed to a net loss of $12.4 million ($0.06 per share) for the entire operation. Mr. Foley said the legacy FNF business was profitable all three months of the first quarter, but the operations of Lawyers Title and Commonwealth Title lost $17 million in January and $5 million in February on pre-tax basis. Mr. Foley added that FNF realized $231 million in run-rate cost savings from the former LandAmerica operations by the end of the quarter, up from its original estimate of $150 million and a revised estimate of $225 million. FNF recently closed a public offering of its common stock, which raised net proceeds of $331 million. While $135 million will be used to repay its existing credit facility, the company is considering using the rest to repurchase "a meaningful amount" of its bonds. If both actions are completed, FNF will reduce its debt to capital ratio from approximately 32% to near 25%.