Fidelity National Financial, Inc.

Good morning and welcome to FNS second quarter 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, SVP, Investor, and External Relations. Please go ahead.

Great. Thanks, Operator, and welcome, everyone. Joining me today are Mike Nolan, Chief Executive Officer, and Tony Park, Chief Financial Officer. We look forward to addressing your questions following our prepared remarks, and we will have Chris Blunt, F&G's Chief Executive Officer, and Wendy Young, F&G's Chief Financial Officer, join us for the Q&A portion of today's call. 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 for a discussion of the factors that could cause actual results to differ materially from those expressed or implied. This morning's discussion also includes non-GAAP financial measures that we believe may be meaningful to investors. Non-GAAP measures have been reconciled to GAAP where required in accordance with SEC rules within our earnings materials available on the company's website. Yesterday, we issued a press release, which is also available on our website. Today's call is being recorded and will be available for webcast replay at FNF.com. It will also be available through telephone replay beginning today at 3 p.m. Eastern Time through August 16, 2023. And now I'll turn the call over to our CEO, Mike Nolan.

Thank you, Lisa, and good morning. Overall, we have had another strong set of results at this mid-year mark as we continue to navigate a volatile and challenging environment. Starting with our title business, we delivered adjusted pre-tax earnings in our title segment of $302 million and an industry-leading adjusted pre-tax title margin of 15.8%. We are very pleased with this result, which reflects strong sequential margin improvement across our title-related businesses. This strong performance really demonstrates our approach to running the business, highlighting our ability to manage true economic cycles and react quickly to changing order volumes. It also demonstrates the expertise and discipline of our field managers and employees who are critical to our success and our ability to deliver these results. I'd like to thank all of our employees who have worked so diligently to build the field-driven business we have today and who consistently deliver an industry-leading performance quarter after quarter. Our performance this year is a direct result of the actions we took in the back half of 2022 when, in light of the steep decline in mortgage volumes, we reduced our field staff by 26% net of acquisitions, This positioned us well given the low inventories coming into 2023. In the first half of this year, we have continued to monitor expenses closely. So far, we've seen solid sequential growth with residential purchase open orders per day up in both Q1 and Q2, a typical seasonal pattern, and even holding strong in the month of July, which is not typical since orders usually crest heading into the back half of the year. We feel that the resiliency of residential purchase volumes, which have held up in a weak market and despite mortgage rates spiking to 7% at times, is a testament to the underlying demand for housing that exists in the country. Commercial volumes are still holding up well, which is positive and in line with our expectations. We have generated commercial revenue of $500 million in the first half, consistent with the first halves we saw from 2015 to 2020. Looking at sequential volumes more closely, daily purchase orders opened were up 12% over the first quarter of 2023 and up 2% for the month of July versus June. And refinance orders opened per day were up 4% over the first quarter of 2023 and down 2% for the month of July versus June. Our total commercial orders opened were 784 per day, flat for the second quarter versus the first quarter of 2023, and up 3% for the month of July versus June. Overall, total orders opened averaged 5,400 per day in the second quarter, with April at 5,300, May at 5,700, and June at 5,300. For the month of July, total orders opened were 5,300 per day in line with June. So far, 2023 has been encouraging as we have found our footing in a more typical seasonal pattern, albeit in a weak market, and with a cost structure that is aligned with this environment. From here, we remain cautious under the second half of the year, given continued higher rates and volatility. As always, we will manage to order volumes in a given environment. Beyond the near-term pressures, we remain bullish on the mid- to long-term fundamentals of the business. A clear benefit of our financial strength, scale, and profitability is our ability to invest in our business through cycles as we strive to further expand our competitive positioning in the industry. We continue to strategically build and expand our title business through acquisitions, recruiting talent, and enhancing our title capabilities. Our in-here platform is an area that we have been investing in recent years. This industry-leading end-to-end real estate experience platform is fully deployed across our residential business and integrated within our direct operations and is quickly gaining traction. In fact, over the past two years, we have had over 1.4 million users on the InHere platform, comprised of 1.2 million consumer users and 200,000 real estate professionals. and consumer engagement continues to be between 65% to 70%, a strong success rate. In the first six months of 2023 alone, our real estate agent and transaction coordinator users have logged over 1 million sessions, and nearly 90% were active in the last 30 days. We believe this strong adoption demonstrates the value customers are receiving from the InHear platform. and we expect to continue to add functionality and content targeted at further enhancing the transaction experience of agents, transaction coordinators, and consumers, partnering to help real estate professionals grow their businesses, and creating both market growth and efficiency opportunities for F&F over the near and long term. Turning to our F&G business, it has been over three years now since the 2020 merger, and we are pleased with F&G's performance, which has exceeded our expectations. F&G has successfully transformed its business from essentially being a model line at the time of acquisition to now having a robust new business platform that is well diversified by product and channel and a profitable enforced book of business that is scaled considerably. F&G has profitably grown its assets under management from $25 billion at the 2020 merger to a record $46 billion at June 30th. And the business is well-positioned to both expand its spread-based earnings and diversify through fee-based earnings from its flow reinsurance and owned distribution strategies, which will ultimately drive margin expansion and improved returns. With that, let me now turn the call over to Tony Park, to review FNS second quarter financial highlights.