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Fidelity National (FNF) Q1 Earnings, Revenues Top Estimates

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Fidelity National Financial, Inc. (FNF - Free Report) reported first-quarter 2022 operating income per share of $1.37, which outpaced the Zacks Consensus Estimate by 5.4%.

The bottom line however decreased 12.2% on a year-over-year basis, attributable to Title’s significant decrease in refinance volume, partially offset by higher average fee per file, strong commercial orders closed and sustained levels of residential purchase orders closed.

Fidelity National Financial, Inc. Price, Consensus and EPS Surprise

 

Behind the Headlines

Operating revenues increased 2.3% year over year to $3.2 billion in the quarter, attributable to improved title and escrow revenues, F&G revenues coupled with higher interest and investment income. The top line beat the Zacks Consensus Estimate by 7%.

Interest and investment income of $537 million decreased 15.9% year over year.

Total expenses increased 11.5% year over year to $2.6 billion due to escalated personnel costs, agent commissions, other operating expenses, depreciation and amortization, claims loss expense and interest expense.

Segment Results

Total revenues at Title dropped 4% year over year to $2.4 billion. While direct title premiums improved 2.8% year over year to $767 million in the quarter, agency title premiums increased 3.9% year over year to $1.1 billion. However, escrow, title-related and other fees of $655 million dropped 10.7% year over year in the quarter under review.

This segment benefited from strong demand in the commercial market and home price appreciation in the residential purchase market, which offset the continued decline in refinance volumes in the rising interest rate environment.

Adjusted pre-tax title margin came in at 17.1%, which contracted 280 basis points (bps) year over year due to contraction in refinance volumes.

On a daily basis, while refinance orders opened declined 57% year over year, refinance orders closed declined 58% year over year. Purchase orders opened and purchase orders closed decreased 1%, respectively, year over year on a daily basis. However, the total fee per file for the quarter increased 49% year over year to $2,891 during the quarter.

Total revenues at F&G were $2.6 million during the quarter, up 57% year over year, driven by continued expansion in new channels. Total retail annuity sales remained flat year over year at $1.5 billion. Institutional sales of $1.1 billion include a $527 million pension risk transfer transaction and $600 million of funding agreement issuances versus $125 million funding agreement issuance in the year-ago quarter, reflecting expansion in new markets.

Average assets under management (AUM) amounted to $37.5 billion at quarter-end, up 29% year over year, driven by net new business asset flow.

Financial Update

Fidelity National exited the first quarter of 2022 with a cash and investment portfolio of $46.5 billion, down 1.9% from the 2021-end level. As of Mar 31, 2022, notes payable remained almost flat at $3.1 billion from the figure at 2021 end.

Stockholders’ equity of $8.1 billion decreased 14.2% from the figure as of Dec 31, 2021.

In the first quarter of 2022, Fidelity National bought back 2.8 shares worth $134 million and paid $124 million in dividends.

Partial Spin-off of F&G

On Mar 16, 2022, FNF announced a planned transaction to distribute 15% ownership of F&G to FNF shareholders.

Zacks Rank

Fidelity National currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Property & Casualty Insurers

Of the insurance industry players that have reported first-quarter results so far, The Travelers Companies (TRV - Free Report) and RLI Corporation (RLI - Free Report) beat the respective Zacks Consensus Estimate for earnings, while The Progressive Corporation (PGR - Free Report) missed the mark.

Travelers reported first-quarter 2022 core income of $4.22 per share, which beat the Zacks Consensus Estimate by 14% and increased 54.6% year over year. Total revenues increased 6.8% from the year-ago quarter to $8.8 billion, primarily due to higher premiums and fee income but missed the consensus estimate. Travelers’ combined ratio deteriorated 530 bps year over year to 91.3.

RLI’s first-quarter 2022 operating earnings of $1.43 per share beat the Zacks Consensus Estimate by 40.2% and improved 64.4% from the prior-year quarter. Operating revenues were $287 million, up 17.1% year over year and beat the Zacks Consensus Estimate by 0.8%. RLI’s gross premiums written increased 22% year over year to $359.2 million. The combined ratio improved 900 bps year over year to 77.9.

Progressive’s first-quarter 2022 earnings per share of $1.12 missed the Zacks Consensus Estimate of $1.24 and declined 34.9% from the year-ago quarter. Net premiums written were $13.2 billion in the quarter, up 12% from $11.7 billion a year ago. Progressive’s combined ratio deteriorated 520 bps from the prior-year quarter to 94.7.