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Edited Transcript of FNF earnings conference call or presentation 25-Apr-19 4:00pm GMT

Q1 2019 Fidelity National Financial Inc Earnings Call

JACKSONVILLE Apr 29, 2019 (Thomson StreetEvents) -- Edited Transcript of Fidelity National Financial Inc earnings conference call or presentation Thursday, April 25, 2019 at 4:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Anthony John Park

Fidelity National Financial, Inc. - Executive VP & CFO

* Brent Bannister Bickett

Fidelity National Financial, Inc. - EVP of Corporate Strategy

* Daniel Kennedy Murphy

Fidelity National Financial, Inc. - Senior VP & Treasurer

* Michael Joseph Nolan

Fidelity National Financial, Inc. - President

* Raymond Randall Quirk

Fidelity National Financial, Inc. - CEO & Director

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Conference Call Participants

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* Bose Thomas George

Keefe, Bruyette, & Woods, Inc., Research Division - MD

* Edward Christopher Gamaitoni

Compass Point Research & Trading, LLC, Research Division - MD & Head of Research

* Geoffrey Murray Dunn

Dowling & Partners Securities, LLC - Partner

* Jason Scott Deleeuw

Piper Jaffray Companies, Research Division - VP & Senior Research Analyst

* John Robert Campbell

Stephens Inc., Research Division - MD

* Mackenzie Jean Aron

Zelman & Associates LLC - VP

* Mark C. DeVries

Barclays Bank PLC, Research Division - Director & Senior Research Analyst

* Mark Douglas Hughes

SunTrust Robinson Humphrey, Inc., Research Division - MD

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Presentation

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Operator [1]

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Good morning, good afternoon, and welcome to the FNF 2019 First Quarter Earnings Call. (Operator Instructions) As a reminder, today's call is being recorded. I will now turn the call over to your host, Dan Murphy. Please go ahead, sir.

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Daniel Kennedy Murphy, Fidelity National Financial, Inc. - Senior VP & Treasurer [2]

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Thanks, and thank you, everyone, for joining us for our first quarter 2019 earnings conference call. Joining me today are our CEO Randy Quirk; President, Mike Nolan; CFO, Tony Park; and EVP, Brent Bickett. We'll begin with a brief strategic overview from Randy. Mike will review the title business, and Tony will finish with a review of the financial highlights. We'll then open the call for your questions and finish with some concluding remarks from Randy.

This conference call may contain forward-looking statements that involve a number of risks and uncertainties. Statements that are not historical facts, including statements about our expectations, hopes, intentions or strategies regarding the future are forward-looking statements. Forward-looking statements are based on management's beliefs as well as assumptions made by and information currently available to management.

Because such statements are based on expectations as to future financial and operating results and are not statements of fact, actual results may differ materially from those projected. We undertake no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise.

The risks and uncertainties which forward-looking statements are subject to include, but are not limited to, the risks and other factors detailed in our press release dated yesterday and in the statement regarding forward-looking information, risk factors and other sections of the company's Form 10-K and other filings with the SEC.

This conference call will be available for replay via webcast at our website at fnf.com and will also be available through phone replay beginning at 4 p.m. today through May 2. The replay number is (800) 475-6701, and the access code is 465966.

Let me now turn the call over to our CEO, Randy Quirk.

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Raymond Randall Quirk, Fidelity National Financial, Inc. - CEO & Director [3]

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Thank you, Dan. The first quarter was a strong start to the year for our title business as we generated adjusted pretax title earnings of $172 million and an 11.3% adjusted pretax title margin. I will let Mike Nolan go into more detail on the title business.

With respect to the acquisition of Stewart Information Services, we continue to respond to the second request of the FTC. We have also filed a new Form A application with the New York State Department of Financial Services, which disapproved a prior application to acquire control of Stewart insurance company. We will continue to respond to the FTC's second request and maintain discussions with all other relevant regulatory bodies to seek approval of the proposed acquisition. We remain confident that the Stewart acquisition will create meaningful long-term value for our shareholders. We will not be able to further comment or take questions on Stewart.

In February, our board declared a $0.31 first quarter 2019 cash dividend, a 3% increase from the fourth quarter 2018 cash dividend. We used $85 million to pay that March common stock cash dividend. Other capital uses in the first quarter included the repurchase of 510,000 shares of stock for approximately $18 million and cash interest expense on our outstanding senior notes of $22 million. Additionally, in February, Cannae Holdings drew the full $100 million under a line of credit that was established at the time of their separation from FNF. FNF receives interest of LIBOR plus 450 basis points on the outstanding loan balance.

Cash flows were $207 million, primarily from underwriter and nonunderwriter dividends that were paid up to the FNF holding company level in the first quarter. The net result was that we ended the first quarter with approximately $535 million in available holding company cash.

Let me now turn the call over to Mike Nolan to discuss the title business.

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Michael Joseph Nolan, Fidelity National Financial, Inc. - President [4]

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Thank you, Randy. We generated adjusted pretax title earnings of $172 million, a $14 million or 8% decrease from the first quarter of 2018. Our adjusted pretax title margin was 11.3%, a 40-basis point or 3% decline versus the prior year despite a 16% decrease in direct orders closed with purchase closings down 9%, refinance closings down 21% and commercial closings down 5%. Additionally, the recent decline in mortgage rates has allowed for an increase in refinance open order accounts as March refinance orders opened increased by 16% versus March of 2018. And the first 3 weeks of April saw an increase of 42% over the prior year period. The softness in the residential purchase market that we saw in the fourth quarter of 2018 did continue into the first quarter of 2019 as purchase opens -- as purchase orders opened and closed on a daily basis declined by 6% and 9%, respectively, versus the prior year. We did experience our best month of the quarter in March as purchase orders opened and closed were down 5% and 7%, respectively, versus March of 2018. For the first 3 weeks of April, purchase orders opened declined by only 2% versus the prior year period. We remain optimistic that the strong economy, stable or declining mortgage rates, slower home price appreciation and the possibility of increased residential supply will provide the backdrop for a restart of the strength in the residential purchase market as we move into the seasonally stronger spring and summer months.

For the first quarter, total orders opened averaged 7,200 per day with January at 6,800, February at 7,100 and March increasing to nearly 7,700. As I mentioned, purchase orders opened and closed were down 6% and 9%, respectively, on a daily basis and refinance orders opened and closed declined by 3% and 21%, respectively, on a daily basis versus the first quarter of 2018.

For the first 3 weeks of April, total orders opened were nearly 8,600 per day. Purchase orders opened per day declined by 2% versus the prior year period and refinanced orders opened per day increased 42% versus the prior year. Total commercial revenue of $228 million was less than a 1% decline versus the first quarter of 2018 driven primarily by a 5% decrease in closed commercial orders offset by a 4% increase in the commercial fee per file. Commercial orders opened declined by 6% in the first quarter versus the prior year.

Let me now turn the call over to Tony Park to review the financial highlights.

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Anthony John Park, Fidelity National Financial, Inc. - Executive VP & CFO [5]

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Thank you, Mike. We generated more than $1.7 billion in total revenue in the first quarter, with the Title segment generating all but $59 million of revenue in our Corporate segment. Net earnings were $206 million, which included $142 million in realized gains primarily due to the mark-to-market accounting treatment of equity and preferred stock securities in our investment portfolio. Adjusted net earnings were $118 million or $0.43 per diluted share, $0.01 better than the first quarter of 2018 despite the 16% decline in direct orders closed that Mike mentioned.

Excluding realized gains of $142 million driven by the mark-to-market accounting treatment of equity and preferred stock securities in our investment portfolio, the Title segment generated just over $1.5 billion in total revenue for the first quarter, a 4% decrease from the first quarter of 2018.

Direct premiums decreased by 7% versus the first quarter of 2018. Agency revenue declined by 2%, and escrow title-related and other fees were down 7% versus the prior year. Personnel costs and other operating expenses both declined by 5%. All in, the title business generated an 11.3% adjusted pretax title margin, a 40-basis point decrease versus the first quarter of 2018.

Similar to the mark-to-market accounting treatment for our equity and preferred stock securities, we have to mark-to-market the assets of the deferred compensation plan in which some of our employees participate. There was no adjustment in the prior year first quarter, but this quarter, we booked an $18 million valuation adjustment in our Corporate and Other segment that increased both other revenue and personnel costs due to an increase in the market value of the securities in the deferred compensation plan. There was no effect on pretax income. As a reminder, we also had an adjustment of negative $21 million in Q4 to both other revenue and personnel costs, which we are now reclassifying to our Corporate segment from our Title segment.

Interest income of $54 million was a $16 million increase over the prior year as we continued to see the positive impact of higher short-term interest rates on the interest we earn on the client exchange funds we hold in our 1031 exchange business, the reinvestment of proceeds from maturing fixed income securities and for cash and short-term investments.

FNF debt outstanding was $837 million on March 31 for a debt to total capital ratio of 14%. Our claims paid of $49 million were $4 million higher than our provision of $45 million for the first quarter. The carried reserve for claim losses is currently $47 million or 3% above the actuary central estimate. We continue to provide for claims at 4.5% of title premiums.

Finally, our investment portfolio totaled more than $4.6 billion at March 31. From a regulated standpoint, we have $1.4 billion in statutory reserves, $1.6 billion in regulated cash and investments and $700 million in secured trust deposits for a total of more than $3.7 billion in regulated cash and investments.

From an unregulated perspective, we have $535 million of unregulated cash as of March 31. There's also $200 million in cash and investments at ServiceLink and other subsidiaries, and $130 million in equity method investments, all of which are restricted primarily by minimum working capital or other regulatory requirements.

Let me now turn the call back to our operator to allow for any questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first question is from the line of Mark DeVries of Barclays.

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Mark C. DeVries, Barclays Bank PLC, Research Division - Director & Senior Research Analyst [2]

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Hello? Can you hear me?

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Michael Joseph Nolan, Fidelity National Financial, Inc. - President [3]

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Yes.

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Mark C. DeVries, Barclays Bank PLC, Research Division - Director & Senior Research Analyst [4]

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Okay. Yes, I was just hoping to get an update on what you're seeing through April on your commercial order trends, both kind of the open orders and what you're seeing on mix? Do you continue to see larger transaction sizes coming through?

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Michael Joseph Nolan, Fidelity National Financial, Inc. - President [5]

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Mark, it's Mike. We don't report commercial orders during the month, so we don't have that number to give you. As we look at the first quarter being down 6% to put that in perspective, when you think about this heightened environment that we've been in that really started in '15, if you recall, that was our best commercial year ever up until last year. The second -- the first quarter of this year was our second-best openings over that 5-year period and our second-best revenue, only down from the record of the first quarter last year. So just some perspective on that. We still see good commercial activity. Opens have increased now for the third quarter in a row. And as we came into this year, our open commercial in the fourth quarter was very consistent to the prior year. So we still feel like we have a good commercial market to participate in. We are seeing more strength. And from a mix standpoint on the resale side versus refi, that may help us on the average fee per file since resale deals typically have a little bit higher liability amount than the refi.

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Mark C. DeVries, Barclays Bank PLC, Research Division - Director & Senior Research Analyst [6]

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Okay. Got it. And I know you indicated you can't comment any more on the Stewart deal, but I'm just wondering if there's anything you can tell us around updated thoughts around timing of close. And if not, at least help us or remind us kind of what the dynamic is there with the impact of delays and the cash accumulation at the holding company and what that could mean for accretion if and when the deal eventually closes.

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Anthony John Park, Fidelity National Financial, Inc. - Executive VP & CFO [7]

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Mark, it's Tony. Just from a cash perspective, we can comment on that. And as you know, at the holding company level, at the end of the quarter, we had $535 million. So in effect, we have the cash on the balance sheet available to cover the cash portion of the purchase price. And just to give you a sense of the further cash generation expected over the course of 2019, we expect subsidiary dividends for the full year to be just under $1 billion, call it, about $950 million; dividends, common dividends to our shareholders, roughly $340 million; and senior debt interest expense of about $45 million and then right now, we've anticipated a pretty modest $125 million of share buyback which, once we have a resolution on Stewart, would likely change. But until that point, we are -- we're in the market at roughly 15,000 shares a day on days when we're not blacked out. And so we'll likely be consistent on that front until we have a resolution on Stewart. And then as we mentioned in our comments, Cannae did draw on $100 million revolver. So absent a Stewart transaction, we would have roughly $900 million in cash at the end of 2019. And then on the Stewart front, as we mentioned earlier given where we are in the process, we really can't make any comments or address any questions there.

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Operator [8]

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Next question is from the line of -- one moment, please. Please stand by. (Operator Instructions) Our next question is Mackenzie Aron, Zelman & Associates.

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Mackenzie Jean Aron, Zelman & Associates LLC - VP [9]

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My question's on the personnel costs in the Title segment. Can you just talk about what's the pickup in orders? Do you feel like you're appropriately staffed or how should we be thinking about the near-term expenses?

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Michael Joseph Nolan, Fidelity National Financial, Inc. - President [10]

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Yes. As you know, we took out about 900 positions -- this is Mike. The first quarter over first quarter generated about $28 million in personnel savings quarter-over-quarter, so we're very pleased with that. As volumes are increasing and as we mentioned, we were seeing pretty strong increases in the refi side and resale is kind of coming up a little bit, we have added about 50 positions in April, and that was after taking out about 170 in the first quarter of 2019. So we'll have some staff additions, I think, as we go through the quarter. We'll try to manage those as well as we can and it'll certainly be tied to the volume. We don't know if the refi volume continues or not. That will be very rate driven, and we'll just manage it -- we'll manage the productivity numbers like we have in the past.

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Mackenzie Jean Aron, Zelman & Associates LLC - VP [11]

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Okay. That's helpful. And then just -- in light of the commercial being down slightly and what's going on with purchase and refi, can you help us think through the trajectory of operating margins for the full year?

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Michael Joseph Nolan, Fidelity National Financial, Inc. - President [12]

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Well -- Mackenzie, it's Mike again. I think to predict the full year is a little tough. As you know, it's very difficult to forecast this industry. And as an example of that, as we came into the year, I don't think anybody was really thinking that interest rates would fall 40 or 50 basis points in March. I would say as we look into the second quarter, as long as we have continued strong commercial, we're going to get some help, I think, on the closing side from refis. We should have a pretty strong margin in the second quarter. But I would also mention that we're up against a pretty tough comp. I think we did 17.1% in the second quarter last year and we had a very strong second quarter commercial, about $276 million. So it's a tough comp, but we still expect a pretty good number in the second quarter.

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Operator [13]

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Next question is from the line of Bose George, KBW.

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Bose Thomas George, Keefe, Bruyette, & Woods, Inc., Research Division - MD [14]

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Just going back to the capital and the Stewart deal. I mean to the extent that it doesn't happen, could you use a lot of that $900 million of expected cash at year-end just to buy back shares?

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Anthony John Park, Fidelity National Financial, Inc. - Executive VP & CFO [15]

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Bose, this is Tony. Absolutely, that's one of the options. And as you know, we look at the dividend and our board has raised our dividend consistently over a number of years. And I'm sure they would relook at that especially with $900 million of cash on the balance sheet and a real low debt-to-cap at 14%, with a lot of dry powder on the balance sheet. So the dividend, certainly. M&A is always a big part of our legacy and would continue to be so, whether it's a Stewart acquisition or whether it's other opportunities in the title insurance space, agents, larger agents or smaller underwriters or maybe other areas in the real estate related space and then buybacks. I mean, as I mentioned, we're in the market today at lower levels. But with that kind of dry powder, I could see us going in a meaningful direction on the stock buyback front and actually, really, ramp that up as we go forward. So I think all of those various areas would be on the table.

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Bose Thomas George, Keefe, Bruyette, & Woods, Inc., Research Division - MD [16]

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Okay. Great. And then actually just on a related note, can you just talk about the acquisition landscape for title agents? And just actually, I don't know if you mentioned this, but did you do anything there in the first quarter?

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Brent Bannister Bickett, Fidelity National Financial, Inc. - EVP of Corporate Strategy [17]

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Bose, this is Brent. If we do, they're rather small, as you might recall. And so we did have a pipeline even during the pendency of the Stewart deal of some smaller agents. But we really toned down that effort pending that transaction. And candidly, most of the agents that are out there, we've already -- with title associates, we picked off some bigger ones. So most of them are on the smaller, [end]. But we do have a robust pipeline that we could turn up or turn down.

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Operator [18]

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Our next question is from the line of Mark Hughes, SunTrust.

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Mark Douglas Hughes, SunTrust Robinson Humphrey, Inc., Research Division - MD [19]

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Could you give us your latest thoughts on pretax earnings in the corporate segment? As we think about full year run rate, what's a good number to think about?

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Anthony John Park, Fidelity National Financial, Inc. - Executive VP & CFO [20]

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Sure, Mark. It's Tony. Roughly kind of where we are, I would say, with the $20-ish million loss. And there are some various pieces in there. We sold most of our brokerage business last year so there isn't much there. But we have the real estate technology business and then some various corporate items, including about $12 million in interest expense on our senior debt. And so that's one of the larger drivers of our results. I mentioned the deferred comp asset valuation adjustments. Those are pretax neutral because that's really just a gross up or a gross down in both revenue and personnel costs so you can really disregard that in terms of performance. But we are getting the benefit -- with the $500-plus million in cash at the parent company, we did generate about $6 million in interest income in the quarter versus only about $1 million or so in the first quarter of the prior year. And that's why you see the delta between $21 million loss in the current quarter versus a $28 million adjusted pretax loss in the first quarter of last year. But again, I think $20-ish million loss is a good way to model it.

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Mark Douglas Hughes, SunTrust Robinson Humphrey, Inc., Research Division - MD [21]

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And then I'm sorry, what did you say the dividends were in the first quarter? I think you're anticipating seeing $950 million for the full year. What was it in Q1?

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Anthony John Park, Fidelity National Financial, Inc. - Executive VP & CFO [22]

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We said roughly $210 million was upstream from our underwriter and nonunderwriters.

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Operator [23]

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(Operator Instructions) And the next question is from the line of John Campbell, Stephens.

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John Robert Campbell, Stephens Inc., Research Division - MD [24]

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I guess this is for Mike. But over the last couple of quarters, it looks like the agent commissions or I guess the remittance rates as a percent of revenue has declined. Are you guys just seeing better returns out there? Is that by design? Or is that just kind of a regional mix shift issue?

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Michael Joseph Nolan, Fidelity National Financial, Inc. - President [25]

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I think it's more of a regional mix shift issue. We've had very good performance and growth in our Florida market in particular. And as you know, Florida has promulgated rates at 70-30. We've done quite a bit of recruiting in that market in particular. I think we're just starting to see the gains from those efforts.

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John Robert Campbell, Stephens Inc., Research Division - MD [26]

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Okay. That's helpful. And then on the Corporate segment, Tony, thanks for the color on the projected, I guess, losses per quarter. But on the revenue breakdown, what was the -- can you walk through the brokerage versus technology revenue?

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Anthony John Park, Fidelity National Financial, Inc. - Executive VP & CFO [27]

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Yes, sure. So the -- I'll give you the technology revenue and then you've got the other pieces. But technology revenue for the first quarter was about $27 million and in the first quarter of last year was about $25 million. So a little bit of growth there, call it almost flat. On the broker side, we had $7 million in revenue in the first quarter of 2019. We had $76 million in broker revenue in the first quarter of 2018.

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John Robert Campbell, Stephens Inc., Research Division - MD [28]

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Okay. That's helpful. And then last one for me. Tony, if you can walk through -- I think you guys have been -- there's some initiatives there where you guys are kind of going to move some stuff to the cloud. Can you talk about kind of where you guys are in that process? How much kind of a ramp-up in spend you've seen? And kind of expectations going forward.

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Anthony John Park, Fidelity National Financial, Inc. - Executive VP & CFO [29]

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Yes, absolutely. So yes, we have -- over the last couple of years, we've been moving from an outsourced partner to a cloud environment. And as you would expect, that takes time because you have to get that exactly right. And so we really expect to wrap that project up by the end of the third quarter of this year. But during the pendency of this process, we do have some incremental spend, and it's roughly running us about $18 million or so of incremental cost, both last year and this year relative to what we would expect as we get into 2020. So we would expect, all other things being equal, that we would see a nice savings in 2020 in that area.

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Operator [30]

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Our next question is from the line of Jason of Piper Jaffray. (Operator Instructions)

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Jason Scott Deleeuw, Piper Jaffray Companies, Research Division - VP & Senior Research Analyst [31]

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Yes. This is Jason Deleeuw from Piper. Just got a question on the disruption that's going on in real estate brokerage world and just thinking -- or how FNF is thinking about how it relates to a lot of its customers and how it goes to market. Is there any change in thought? Or are there any new partners you're looking to source?

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Michael Joseph Nolan, Fidelity National Financial, Inc. - President [32]

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Jason, it's Mike. We hear a lot about disruption, and certainly we follow those things. I think what we see at least today is that the real estate agent is still at the center of the transaction. And so while there's disruption potentially in brokerage, I don't know that, that's disrupted the agent yet. Now that could change, of course. But we're really focused on real estate agents because that's who gives us the transactions and that's why we've made investments in real estate technology and lead gen and things like that because that's where we're going to continue to focus.

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Jason Scott Deleeuw, Piper Jaffray Companies, Research Division - VP & Senior Research Analyst [33]

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Got it. And what about the iBuyers and -- I mean, how are you relating to them? It seems like it's going to continue to be a growing segment of the market. Is there a change in how you're doing that? Or you're reaching out to them or you're already working with some of them? How is that working?

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Michael Joseph Nolan, Fidelity National Financial, Inc. - President [34]

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Really both. We're reaching out and working with some of them. They're a customer just like anyone else. They have transactional volume that they can control and we'd like to perform that title and closing works. So we're calling on them, we're working with them. In some cases, they might be working with our agents so by extension, we're working with them. But they're really just another type of customer from our perspective.

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Jason Scott Deleeuw, Piper Jaffray Companies, Research Division - VP & Senior Research Analyst [35]

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Got it. And then just quickly on the claims and how that's trending and provisioning and your reserve levels. Can you just give us an update as claims still seem to be pretty low, so just kind of wondering where the reserve is sitting at and how you're thinking about provisioning.

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Anthony John Park, Fidelity National Financial, Inc. - Executive VP & CFO [36]

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Sure, Jason. It's Tony. It's kind of -- the news is as it has been, we went through that period now a long time ago where we had some challenging times in the '06 and '07 policy years. We had loss ratios above 10%. Really, if you look at over the last 8 years, our projected ultimate losses on average are about 3.8%. And so even below our current provision level of 4.5%, we monitor it closely, as do our auditors and our actuaries. We're roughly $50 million over the central estimate of our actuaries at this point. That's been fairly consistent over the last, I'll call it, year and change. And as long as that stays there, we're probably comfortable at 4.5%. But if we saw any more and I would expect, given trends, the likely change from here if there was one would be for us to grow that redundancy. And if we did, then we probably have to look at the provision level and maybe knock that down a little bit potentially to 4.25% or even 4% of title premiums. But right now, we've been stable and we'll just continue to monitor our claim -- open claims inventory. It's as low as it's been for many, many years, maybe as long as we can remember. So that's encouraging. But you also have major claims that show up from time to time that are big dollars. And so those are down a lot over the last several years, but that can change, too. All it takes is a big commercial claim to maybe impact that. So we watch it, we're conservative in our approach. But that's kind of the backdrop on claims.

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Operator [37]

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Next, we have Geoffrey Dunn, Dowling.

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Geoffrey Murray Dunn, Dowling & Partners Securities, LLC - Partner [38]

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Mike, I wanted to present kind of a high-level question on margin capabilities. If you're looking at a year ahead for the remaining 3 quarters where commercial's off 1% or 2%, purchase is off 1% or 2%, refi's a wildcard, is that an environment where you think you can generate year-over-year margin improvement?

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Michael Joseph Nolan, Fidelity National Financial, Inc. - President [39]

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I think we could keep margins fairly consistent in that scenario with the wildcard being the refi activity. We do have a lower cost basis in our field operations, which is helpful. If we can sustain that as we go through the year, that should give us a little bit of lift on the margin. So I think we'd be in the ballpark of where we've been, maybe with potential for some slight upside.

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Operator [40]

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Next question is from the line of Chris Gamaitoni of Compass Point.

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Edward Christopher Gamaitoni, Compass Point Research & Trading, LLC, Research Division - MD & Head of Research [41]

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Just one clarification point on the $18 million of incremental cost. What segment is that running through?

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Anthony John Park, Fidelity National Financial, Inc. - Executive VP & CFO [42]

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I think you're referring to the deferred comp valuation adjustment.

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Edward Christopher Gamaitoni, Compass Point Research & Trading, LLC, Research Division - MD & Head of Research [43]

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No, so I was -- the cloud-related...

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Anthony John Park, Fidelity National Financial, Inc. - Executive VP & CFO [44]

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Sorry. Yes. We've got a couple different $18 million. That is running through the Title segment, and that's part of our other operating expense line item.

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Edward Christopher Gamaitoni, Compass Point Research & Trading, LLC, Research Division - MD & Head of Research [45]

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Okay. And could you give us an updated -- just as I think about dividend capacity or buyback -- sorry, buyback capacity in the future, what level of, call it, holding company cash do you want to run with at as a minimum level?

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Anthony John Park, Fidelity National Financial, Inc. - Executive VP & CFO [46]

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We probably would keep at a minimum a couple hundred million dollars. So there is definitely dry powder if we end the year at $900 million. And with debt-to-cap, I mean, typically, we try to be consistent in our buyback approach, but that wouldn't -- that doesn't mean that we wouldn't be opportunistic if we saw weakness or if we looked at the landscape and thought we have a lot more cash than really uses for it, then we could conceivably ramp up considerably on the buyback front.

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Operator [47]

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No further questions in queue. Back over to Mr. Quirk for any closing remarks.

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Raymond Randall Quirk, Fidelity National Financial, Inc. - CEO & Director [48]

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The first quarter was a strong start to the year for our title business. We continue to work through the regulatory process with the Stewart Information Services acquisition and are confident that Stewart acquisition will create meaningful long-term value for our shareholders. Thank you for joining us today.

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Operator [49]

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Thank you. Ladies and gentlemen, that does conclude your conference. We do thank you for joining. You may now disconnect.