Fidelity National Financial, Inc.

Ladies and gentlemen, good morning and welcome to the Fidelity National Financial Inc. Third Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star and zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, 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. Chris Blunt, F&G CEO, and Wendy Young, F&G CFO, will 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 November 15, 2023. And now I'll turn the call over to our CEO, Mike Norlin.

Thank you, Lisa, and good morning. Overall, we've had a strong quarter despite the tough market. Starting with our title business, we delivered adjusted pre-tax earnings of $311 million and an industry-leading adjusted pre-tax title margin of 16.2%. This is an outstanding result, especially given that U.S. mortgage rates have advanced to multi-decade highs, recently peaking at over 8% in October, which is the highest level since November of 2000. In turn, this is keeping a lid on residential purchase applications, which have decreased to their lowest level since 1995, almost three decades ago. As a result, we continue to be focused on managing expenses and have reduced staffing and operating expenses this year. As of September 30th, our total field operations employee count has been reduced by about 13% over the past 12 months. This has generated about $70 million in run rate personal cost savings in the third quarter as compared to the third quarter of 2022. We have also reduced our direct title office locations from approximately 1,400 to below $1,300, generating about $1 million per month in expense savings. Commercial volumes are trending in line with our expectations. We have generated commercial revenue of $263 million in the third quarter and $767 million in the first nine months, putting us on track for $1 billion for the full year and in line with levels seen in more normal years like 2015 to 2019. Looking at sequential volumes more closely, daily purchase orders opened were down 7 percent from the second quarter of 2023, down 8 percent for the month of October versus September, in line with seasonal expectations, and down 2 percent for the month of October versus the prior year. And refinance orders opened per day were down 8 percent from the second quarter of 2023, up 2 percent for the month of October versus September, and down 13% for the month of October versus the prior year. Our total commercial orders opened were 779 per day, flat for the third quarter versus the second quarter of 2023, down 7% for the month of October versus September, and down 4% for the month of October versus the prior year. Overall, total orders opened averaged 5,000 per day in the third quarter, with 5,300 in July and 4,900 in both August and September. For the month of October, total orders opened were 4,600 per day, down 6% versus September. While we are pleased with our continued strong performance and profitability, we remain cautious as we anticipate order volumes at or near historic lows as we close out the year and end of the first quarter, which in turn is expected to pressure industry margins much like last year. As always, we will manage our business to the trend in open orders to protect our profitability. Beyond the near-term pressures, we remain bullish on the mid- to long-term fundamentals of the real estate market. A clear benefit of our financial strength, scale, and profitability is our ability to continue to strategically build and expand our title business by investing in technology, recruiting talent, and making acquisitions, which we have continued to do while maintaining industry leading margins. Turning to our F&G business, we are pleased to see investor recognition of F&G's success as its market capitalization has increased from $2.4 billion at the time of the partial spinoff last December to approximately $4 billion. F&G recently held an investor day on October 3rd, which provided a deep dive into the company's proven track record of growth and highlighted strategic levers that the team is employing to create value for stakeholders and which will benefit F&F as its majority shareholder. To recap, FNG sees future potential upside from three areas. First, sustainable asset growth from its retail and pension risk transfer growth strategies. Next, margin expansion from investment opportunities, effectively managing operating expenses for operational scale benefit, and incremental fee-based earnings from flowing insurance and owned distribution. And finally, we believe there is potential for F&G's share price to more fully reflect its core business performance and the accretive nature of its flow reinsurance and owned distribution strategies as they scale over time. For the current quarter, F&G has profitably grown its assets under management of four flow reinsurance to a record $53 billion at September 30th and now comprises 31% of FNS adjusted net earnings. I'd like to wrap up by thanking all our employees for delivering another industry-leading performance this quarter despite the market headwinds. This is a seasoned team that knows how to prudently manage through tough cycles while continuing to invest in the business to take advantage of opportunities for longer-term growth. With that, let me now turn the call over to Tony Park to review FNS third quarter financial highlights.