Fidelity National Financial, Inc.

Ladies and gentlemen, good morning and welcome to FNF first 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. 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 May 16, 2024. And now, I'll turn the call over to our CEO, Mike Nolan.

Thank you, Lisa, and good morning. We are very pleased with our first quarter results for both the title segment and F&G, which provides a strong start to the year. Both businesses are well positioned for the current market and for longer term growth. Our title business continues to perform well in a volatile and challenging environment. We delivered adjusted pre-tax earnings in our title segment of $171 million and achieved an industry-leading adjusted pre-tax title margin of 10.7% for the first quarter, an increase of 70 basis points over the 10% margin in the prior year quarter. This performance is in line with our expectation that entering 2024 with historic low order volumes would pressure first quarter margins much like last year. In the first quarter, we saw normal seasonality and purchase opened orders with sequential improvement coming off the fourth quarter. In April, purchase open orders per day were up 4% over last year, but higher mortgage rates may temper purchase volumes going forward. Refis are holding steady at roughly 1,000 per day at the current floor. Commercial volumes continue to be resilient and consistent. We generated revenue in commercial of $238 million in the first quarter, trending in line with the approximately $1 billion in annual revenue level seen in 2023. We saw continued strength in multifamily, industrial, and other segments like energy and affordable housing similar to recent years. Looking at first quarter volumes more closely, daily purchase orders opened were up 5% over the first quarter of 2023, up 25% over the fourth quarter of 2023, up 4% for the month of April versus the prior year, and up 4% for the month of April versus March. Our refinance orders open per day were down 2% from the first quarter of 2023, up 16% over the fourth quarter of 2023, down 2% for the month of April versus the prior year, and down 2% for the month of April versus March. Our total commercial orders opened were 785 per day, in line with the first quarter of 2023, up 12% over the fourth quarter of 2023, up 4% for the month of April versus the prior year, and up 1% for the month of April versus March. Overall, total orders opened averaged 5,100 per day in the first quarter, with January at 4,800, February at 5,100, and March at 5,300. For the month of April, total orders opened were 5,400 per day, up 2% versus March. At this time, we remain cautious and continue to view our performance in 2023 as a proxy for 2024, with some upside if rates come down later this year. However, market challenges from higher mortgage rates Currently running in the low to mid 7% range, housing affordability and low inventory are expected to persist in the near term. Given mortgage rate volatility, we could see adjusted pre-tax title margin move into the low to mid-teens range over the next couple of quarters. The timing for a potential rebound in the housing market is uncertain and largely dependent on lower mortgage rates. In the scenario where more inventory comes into the market and rates come down, we are well positioned to capture upside to last year's performance. Overall, higher volumes above current trough levels would help to drive stronger incremental margins and showcase the scale and efficiencies that our diversified national footprint provides, much like what we saw in 2019 through 2021. In the current environment, we remain focused on managing our business to the trend in opened orders and will continue to monitor our headcount and footprint carefully. Over the long term, we remain bullish on the real estate market and will continue to develop and invest in technology, recruit top talent, and make strategic acquisitions, all while maintaining industry-leading margins. I also wanted to comment on some recent headlines emanating from Washington on home ownership in America and the costs associated with buying a home. While we strongly support the broader effort to make home ownership more affordable, we believe the recent comments from the FHFA and the CFPB relative to title insurance are misguided and display a misunderstanding of the vital role and value that title insurance provides consumers and the broader economy and the critical role it plays in helping to make the American dream of home ownership a reality. The title industry not only protects consumers' property ownership rights, but also the critical integrity of land records. In addition, we are our first line of defense in helping protect buyers and sellers from real estate and wire fraud. Title insurance also provides insureds a duty to defend them in the event of a covered claim, and title insurers have state-mandated reserves standing behind their policies, unlike attorney opinion letters or a GSE waiver. We welcome the opportunity to continue conversations with the FHFA and CFPB, and we'll continue to actively engage with all stakeholders in discussing the fundamental value that title insurance and settlement services deliver to America's homebuyers and sellers lenders, and other participants in what for many is their most important real estate transaction. Turning to our F&G business, F&G has profitably grown its assets under management before flow reinsurance to a record $58 billion at March 31st. As demonstrated, F&G's business performs well in a low-rate environment and even better in higher rate environments, which provides a nice counterbalance for the title business. Their growth prospects are compelling and led to our board's decision to invest $250 million in F&G during the first quarter in exchange for a mandatory convertible preferred security. This will enable F&G to take advantage of the current opportunity to accelerate growth of its retained AUM. Overall, we are pleased with F&G's performance, which continues to exceed our expectations, and even more pleased that this performance is being recognized by the market as seen in F&G's strong share price performance since its listing in December of 2022. We believe that the growing value of F&G is beginning to be recognized in F&S shares as well. I would like to thank our employees for their outstanding efforts in delivering a solid start to the year, including another industry-leading performance despite the tough market. With that, let me now turn the call over to Tony to review FNF's first quarter financial performance and provide additional highlights.