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Florida based Fidelity National Financial, Inc. (FNF - Snapshot Report) entered into an agreement to acquire America’s leading employee benefits platform Digital Insurance, Inc. (Digital).

Administering more than 20,000 employer clients and 250 broker partnerships, Digital generates more than $1 billion in annual premiums. It specializes in providing health insurance and benefits management for small and medium sized business (SMB). Digital is expected to generate nearly $50 million and $70 million in revenue by 2012 and 2013 respectively. Digital has been successful in its operations in the SMB marketplace and also has a robust organic growth prospect which we expect will brace Fidelity National’s growth portfolio amidst the changes taking place in the industry.

The cash position of Fidelity National at the end of third quarter of 2012 improved significantly owing to reduced claim payments. We expect the solid liquidity to work as a backbone for the company to undertake acquisitions and thereby expand its existing operations.

Fidelity National has a consistent track record of acquisitions and partnerships to strengthen its existing lines of businesses. The last announcement in November, 2012 was about the partnership of FNF Green, the environmental branch of Fidelity National, with Ygrene Energy Fund, a company which provides clean energy finance programs for local governments. The third quarter of 2012 also saw a number of acquisitions by the company. In August Fidelity National bought an additional 1.5 million shares from one of its existing partners, Remy, thereby obtaining 51% stake in the company. In October, 2012, Fidelity National completed its merger with J. Alexander’s.

There has been no earnings momentum in the last seven days. We expect the estimates to move north over the optimism of the recent acquisition. The Zacks Consensus estimates for the fourth quarter and full year 2012 is pegged at 56 cents and $2.43 respectively.

Stewart Information Services (STC - Snapshot Report), which closely competes with Fidelity National, has entered into a partnership with the Canada based telecommunications company, TELUS Financial Solutions (TU - Analyst Report) in October, 2012 to function as the exclusive sales channel offering mortgage instructing and reporting solutions to the legal community.

Fidelity National, which provides insurance, mortgage services, restaurant and other diversified services currently holds a Zacks #1 Rank, translating into a Strong Buy rating. Stewart Information shares the same Zacks rank.

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