Fidelity National Financial, Inc.

Good morning and welcome to FNF's first quarter 2022 earnings call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions with instructions to follow at that time. As a reminder, this conference call is being recorded. I would now like to turn the call over to Lisa Foxworthy-Parker, Senior Vice President, Investor and External Relations.

Please go ahead. Great. Thanks, Operator, and welcome again, everyone. Before we begin, and as a reminder, today's earnings call may include forward-looking statements and projections under the Private Securities Litigation Reform Act, which do not guarantee future events or performance. We do not undertake any duty to revise or update such statements to reflect new information, subsequent events, or changes in strategy. Please refer to our most recent quarterly and annual reports and other SEC filings to for a discussion of the factors that could cause actual results to differ materially from those expressed or implied. We will be discussing certain non-GAAP measures on this call, which we believe are relevant in assessing the financial performance of the business, and you'll find reconciliations of these metrics within our earnings materials available on the company's website. Yesterday, we issued a press release, which is also available on our website. And today's conference call will be available for webcast replay at FNF.com. It will also be available through telephone replay beginning at 2 p.m. Eastern today through May 18, 2022. Joining me this morning to discuss the business momentum we are seeing at FNF and F&G and our results in further detail are Mike Nolan, CEO, Tony Park, CFO, and Chris Blunt, F&G's CEO. We look forward to addressing your questions following conclusion of our prepared remarks. And with that, I'll now turn the call over to Mike.

Thank you, Lisa, and good morning. Overall, we had a great start to the year with total revenue of $3.2 billion, the best first quarter in FNF history. Our title business is performing well as we had our second best first quarter in terms of adjusted pre-tax earnings and adjusted pre-tax margins. Similarly, F&G continues to deliver on its diversified growth strategy, and we are excited about the recently announced dividend distribution of 15% ownership stake in F&G to F&F shareholders, which is on track to be completed in the late third quarter or early fourth quarter of this year. Focusing on the title business, we have entered a period of rising interest rates coming off the historically low mortgage rates of the last two years. The average 30-year fixed mortgage rate has risen from roughly 3% at year end to around 4% at the end of the first quarter, and more recently to over 5% at the end of April. We have seen steady levels of residential purchase origination demand, although given the current environment, we are not seeing the typical increase heading into the spring selling season. While current residential purchase demand is trailing last year, 2021 was a record year for the U.S. residential purchase market, and current forecasts indicate 2022 will still be one of the strongest purchase origination markets in the last decade. We also continue to benefit from strength in the commercial market and home price appreciation in the residential purchase market. Commercial fee per file increased 35%, and residential purchase fee profile increased 9% versus the prior year, which taken together has served to buffer reduced refinance volumes. For the first quarter, total orders opened averaged 8,600 per day. For the month of April, total orders opened were 7,400 per day. Aside from the moderated refinance volumes, commercial and residential purchase activity have held up well. especially as compared with the robust levels in early 2021, which benefited from low interest rates and pent-up demand from the pandemic and business shutdowns that occurred in 2020. Daily purchase orders opened were down 1% or nearly in line with the first quarter of 2021 and down 6% for the month of April versus the prior year. Refinance orders open per day were down 57% from the first quarter of 2021 and down 63% for the month of April versus the prior year. Lastly, total commercial orders open per day were higher by 6% over the first quarter of 2021 and lower by 2% for the month of April versus the prior year. For April, total commercial orders opened were over 1,000 per day for the fourth month in a row. This represents positive momentum going into the second quarter given the longer tail for closings in commercial as compared with residential. Overall, we have seen stability in title revenue for the quarter. Total revenue is 2.4 billion compared with 2.5 billion in the first quarter of 2021. Total revenue excluding recognized gains and losses was $2.6 billion and in line with the first quarter of 2021. For the quarter, we delivered adjusted pre-tax title earnings of $437 million, a 15% decrease from the prior year, and an adjusted pre-tax title margin of 17.1% as compared with 19.9% in the year-ago quarter. The results were driven by a 58% decrease in daily refinance orders closed, partially offset by a 49% increase in average fee per file, and a 7% increase in total commercial orders closed. Of note, total commercial revenue was $374 million compared with the year-ago quarter of $257 million driven by the 7% increase in closed orders and 35% increase in total commercial fee per file. Moving forward, we will remain focused on a number of areas. First, we continue to execute on our disciplined operating strategy in the title segment. Given our long history and deep experience navigating various economic cycles, we have a proven track record of evaluating real-time market trends and effectively managing margin by adjusting expenses to align with trends in opened and closed order volumes. Next, we will also continue to make investments to ensure we maintain and extend our market leading position. Over the last decade, we have created an innovative and scalable technology platform in our title business with expansive offerings to service the broader real estate industry. We continue to make significant investments in developing, enhancing and integrating technology for ourselves and our customers. In 2021, considerable effort was put into enhancing functionality and expanding adoption of our in here experience platform. A differentiated end to end digital platform that transforms the experience of buying, selling or refinancing a home. Additionally, over the last 12 months, we have made 10 acquisitions in the title space for approximately $92 million, and we continue to review potential acquisition targets to grow our national footprint. Last but not least, turning to F&G, and which Chris will discuss in more detail in a moment, first quarter sales rose by 57% year over year to $2.6 billion, with assets under management ending the quarter at $38.6 billion as we continue to take share while gaining momentum in new distribution channels. F&G contributed 21% to our adjusted earnings this quarter as compared to 17% in the year-ago first quarter. As F&G's assets under management grow, so too will their earnings power and contribution to FNF. We view this as a competitive advantage as F&G's primarily spread-based business provides a steady and growing source of earnings that will benefit FNF over time. While F&G has exceeded expectations and remains an important part of our business, the market has not yet recognized the value creation that has taken place at F&G. As a result, we announced our plan in March to dividend 15% of the common stock of F&G to F&F shareholders on a pro-rata basis with the expectation that F&G will be publicly listed in late third quarter or early fourth quarter of 2022, subject to customary approvals. By retaining 85% ownership of F&G, we will continue to benefit from their growth while also highlighting the substantial equity value that has been and will continue to be created. Finally, I would like to wrap up by thanking our employees. Our team has continued to perform exceptionally well and kept our operations running efficiently with a steadfast focus on our customers. Let me now turn the call over to Chris Blount to review F&G's first quarter highlights. Thanks, Mike. The first quarter kicked off a strong start to 2022. We achieved sales of $2.6 billion, which boosted ending assets under management to $38.6 billion as of March 31st. Our success in expanding distribution under FNF's ownership now gives us the ability to source premiums from five distinct channels versus one at the time of the acquisition in June of 2020. Our first quarter retail sales totaled $1.5 billion in line with the prior year quarter. The relatively flat sales from our agent, bank, and broker-dealer channels in the quarter reflected pricing actions taken in response to the macro environment in the fourth quarter, which carried into early first quarter results. We took a measured approach in reflecting the move up in rates in our pricing during the early part of 2022, but have subsequently seen record levels of submitted annuity premium in March and April and are well positioned to resume our strong growth trajectory in the second quarter. Turning to institutional markets, which we launched in mid-2021, our first quarter sales totaled $1.1 billion. The first quarter marked our largest single pension risk transfer transaction to date, with over $500 million in premium transferred, and we were ranked eighth in total market share for the full year 2021, according to LIMRA. This demonstrates our leadership in the large and growing addressable markets we plan. We foresee that demographic trends will provide tailwinds to give us significant room to continue growing in the untapped middle market, as well as the opportunity to migrate consumers from bank CDs to attractive fixed annuity products in a rising rate environment. Our business model gives us a sustainable, competitive advantage within our markets, given our longstanding relationships with distribution, durable investment management edge through our Blackstone partnership, and a track record of attracting top talent. We continue to deliver consistent top-line growth and net spread across varying market cycles. Adjusting for favorable investment income notable items Total net investment spread was 265 basis points, and FIA spread was 334 basis points, both in line with our historical trends and consistent with our disciplined approach to pricing. With regard to earnings, F&G's adjusted net earnings for the first quarter were 82 million. Adjusted net earnings for the quarter included net unfavorable items of 16 million. primarily $38 million in tax expense for a valuation allowance recorded against deferred tax assets related to the past sale of discontinued operations, partially offset by $22 million of favorable items primarily comprised of gains on collateralized loan obligation redemptions. Adjusted net earnings excluding those notable items were $98 million in the first quarter an increase of $32 million or 48% compared to $66 million in the prior year quarter. Adjusted return on assets, excluding notable items of 105 basis points, was driven by our growing AAUM and strong spread results from disciplined pricing actions on both new business as well as our in-force book. The financial results demonstrate the underlying earnings power of the F&G business model, particularly in a rising rate environment. We are well positioned for future growth and feel that we are at an inflection point with F&F's announcement of its intention to take F&G public through the dividend of 15% of the common stock of F&G to F&F shareholders, as Mike mentioned. We expect a list on the New York Stock Exchange with the ticker symbol FG during late third quarter or early fourth quarter of this year. We see this as a vote of confidence for our business while maintaining benefit from the continued partnership of F&F's majority ownership. We anticipate that the transition back to being a standalone public company will help to reinforce the value of F&G and allow investors to invest directly in F&G to capitalize on the earnings and cash flow potential of our in-force book, as well as the upside potential from our new business platform. The transaction is subject to various conditions, including final approval by the F&F Board of Directors, filing and effectiveness of a Form 10 registration statement under the Securities Exchange Act of 1934 as amended, and any applicable regulatory approvals. We look forward to providing further updates in the coming months. I will now turn the call over to Tony Park to review F&F's first quarter financial highlights.