Fidelity National Financial, Inc.

Good morning and welcome to FNF's fourth quarter and full year 2023 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, 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 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 February 29, 2024. And now I'll turn the call over to our CEO, Mike Nolan.

Thank you, Lisa, and good morning. I'm proud of our results and would like to thank all our employees for their accomplishments in 2023 as we delivered another industry-leading performance in the title segment and record-setting performance in the F&G segment. Before I cover the results, I'd like to address our recently reported cybersecurity incident. Given the strong execution of our recovery plan, we were able to resume normal operations quickly in the quarter. As far as the minor negative impact to our fourth quarter title segment results, we estimate the incident reduced adjusted pre-tax title earnings by $8 to $10 million and lowered our adjusted pre-tax title margin by roughly 50 basis points from 12.3%, which would have been in line with the prior year quarter, to 11.8% as reported. the F&G segment was not impacted. As challenging as this event was, it really showcased how our team pulls together. I'd especially like to thank our employees and advisors who work tirelessly around the clock to resolve the incident, and our employees in the field who work diligently with our customers to minimize the impact. F&F remains committed to protecting our client and customer information and cybersecurity remains a top priority. Now turning to results for the title segment, our title business has continued to perform well in 2023. We delivered adjusted pre-tax earnings in our title segment of $964 million and achieved an industry-leading adjusted pre-tax title margin of 13.7% for the full year. This is an outstanding result despite the persistent housing market downturn, as home affordability has been cited as the worst in a generation due to continued higher US mortgage rates, which peaked at over 8% in October, combined with limited housing supply. One of the key drivers to our ability to successfully navigate the tough market is our continued focus on managing expenses. For the full year, we reduced total field operations employee count by approximately 8%. We have also consolidated some of our direct office title locations, which has generated about $1 million per month in facilities cost savings. Commercial volumes continue to be in line with our expectations and consistent with the levels seen in years like 2015 through 2020. we generated commercial revenue of $294 million in the fourth quarter and $1.1 billion for the full year. During 2023, we saw continued strength in multifamily, industrial, and other segments like energy and affordable housing, similar to recent years. Looking at fourth quarter volumes more closely, daily purchase orders opened were up 1% over the fourth quarter of 2022, up 7% for the month of January versus the prior year, and up 23% for the month of January versus December. And refinance orders open per day were down 11% from the fourth quarter of 2022, down 1% for the month of January versus the prior year, and up 15% for the month of January versus December. Our total commercial orders opened were 704 per day, down 3% from the fourth quarter of 2022, flat for the month of January versus the prior year, and up 3% for the month of January versus December. Overall, total orders opened averaged 4,100 per day in the fourth quarter, with October at 4,600, November at 3,800, and December at 4,000. For the month of January, total orders opened were 4,800 per day, up 20% versus December. While we are pleased with our strong performance and profitability, we remain cautious as we have entered the first quarter of 2024 with historic low order volumes, which are expected to pressure industry margins much like last year. During 2023, We progressed from an adjusted pre-tax title margin of 10% in the first quarter to mid-teens in the middle of the year and tapering to 11.8% in the fourth quarter, which in aggregate produced a full year level of 13.7%. As always, we will manage our business to the trend in open orders to protect our profitability. We feel that we are well positioned for the current market and poised to benefit from from a potential turn in the housing market should mortgage rates drop in 2024. Beyond the near-term pressures, we remain bullish on the mid to long-term fundamentals of the real estate market. We will continue to develop and invest in technology, recruit top talent, and make strategic acquisitions, all while maintaining industry-leading margins. Over the past year, we have invested approximately $300 million in 10 acquisitions. Our in-ear platform is another area where we continue to invest. This is our industry-leading end-to-end real estate experience platform, which is fully deployed across our residential business and integrated within our direct operations. Adoption of the platform has been strong, shown by the following highlights for 2023. Over 1 million agents, transaction coordinators, and consumers used InHear to manage their transactions, up more than 50% over the prior year. Over 750,000 start-InHear opening packages were sent to consumers, with 64% completing these packages entirely online. Our title companies automatically published over 400,000 orders to InHear providing our customers with enhanced efficiency and transparency into their transactions. INHEAR's performance throughout 2023 demonstrates its growing relevance and utility in the real estate sector. Its diverse offerings and accessibility through both web and mobile platforms make it a vital resource that significantly aids processing of residential transactions. We expect to add functionality and content to Inhere to further enhance the transaction experience of agents, transaction coordinators, and consumers, which in turn will create market growth and efficiency opportunities for F&F over the near and long term. 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 in December of 2022 to approximately $5.8 billion at the end of 2023. F&G has profitably grown its assets under management before flow and reinsurance to a record $56.3 billion at December and comprised nearly 30% of F&S adjusted net earnings for the full year 2023. We were also pleased to see the most recent rating agency recognition of F&G's success as AMBEST upgraded the financial strength ratings of F&G's primary operating companies to A from A- in January 2024, recognizing the financial strength and stability of F&G's business as they successfully execute on their diversified growth strategy. Given the success that F&G has achieved, combined with the many opportunities to grow and expand the business, F&F's board made the decision to invest $250 million in F&G to take advantage of the current opportunity for growth. As announced on January 16, 2024, the independent special committees of both companies agreed on a mandatory convertible preferred security, which will provide F&G additional capital to accelerate growth of its retained AUM. With that, let me now turn the call over to Tony to review F&S' fourth quarter and full-year financial performance and provide additional highlights.