Fidelity National (FNF) Q2 Earnings Lag Estimates, Revenues Top
Fidelity National Financial, Inc. FNF reported second-quarter 2023 operating income per share of $1.01, which missed the Zacks Consensus Estimate by 2.9%.
The bottom line decreased 46.8% on a year-over-year basis due to a significant decline in Title volume and higher average fee per file.
Fidelity National Financial, Inc. Price, Consensus and EPS Surprise
Fidelity National Financial, Inc. price-consensus-eps-surprise-chart | Fidelity National Financial, Inc. Quote
Behind the Headlines
Operating revenues increased 16.7% year over year to $3.1 billion in the quarter, driven by higher interest and investment income. The top line beat the Zacks Consensus Estimate by 13.5%.
Interest and investment income of $618 million increased 33.5% year over year.
Total expenses increased 43.7% year over year to $2.7 billion due to higher personnel costs, agent commissions, other operating expenses, depreciation and amortization, claims loss expense and interest expenses.
Segment Results
Total revenues at Title plunged 27% year over year to $1.9 billion. While direct title premiums fell 37% to $541 million in the quarter, agency title premiums decreased 30.3% year over year to $713 million. Escrow, title-related and other fees of $581 million declined 17.7% in the quarter under review.
Adjusted pre-tax title margin came in at 15.8%, which contracted 910 basis points (bps) year over year due to a fall in residential and commercial volumes.
Purchase orders opened decreased 18% on a daily basis. Purchase orders closed decreased 25% on a daily basis.
Refinance orders opened fell 36% on a daily basis and refinance orders closed decreased 56%. Commercial orders opened declined 22% and commercial orders closed decreased 30%. The total fee per file of $3,598 in the second quarter increased 1% year over year.
Gross sales at F&G were $3 billion in the second quarter, down 3% year over year owing to lower institutional market sales. Retail channel sales of $2.3 billion increased 5%, driven by continued strong consumer demand for high-yielding products with principal protection. Institutional market sales of $0.7 billion comprised $0.5 billion pension risk transfer and $0.2 billion funding agreements, down from $0.9 billion in the year-ago quarter.
Net sales of $2.2 billion decreased 12%.
Average assets under management amounted to a record $43.6 billion at quarter-end, up 14.7% year over year, driven by new business net of flow reinsurance, stable in-force retention and net debt proceeds.
Financial Update
Fidelity National exited the second quarter of 2023 with a cash and investment portfolio of $53.1 billion, up 11.4% from the 2022-end level. As of Jun 30, 2023, notes payable of $3.7 billion were up 14.1% from the figure at 2022 end.
Stockholders’ equity of $6.7 billion increased 1.6% from the figure as of Dec 31, 2022.
In the reported quarter, Fidelity National bought back shares worth $16.4 million and paid out $121 million in dividends.
Zacks Rank
Fidelity National currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Property & Casualty Insurers
The Travelers Companies TRV reported second-quarter 2023 core income of 6 cents per share, which missed the Zacks Consensus Estimate of $2.27. The bottom line decreased 97.7% year over year, primarily attributable to higher-than-expected catastrophe loss.
Travelers’ total revenues increased 9.8% from the year-ago quarter to $10.1 billion, primarily driven by higher premiums. The top-line figure was almost in line with the Zacks Consensus Estimate.
Net written premiums increased 14% year over year to a record $10.3 billion, driven by strong growth across all three segments. The figure was higher than our estimate of $9.1 billion.
Travelers witnessed an underwriting gain of $781 million, up 38% year over year, driven by record net earned premiums of $9.2 billion and a consolidated underlying combined ratio, which improved 170 basis points. The combined ratio deteriorated 820 basis points year over year to 106.5 due to higher catastrophe losses and lower net favorable prior-year reserve development, partially offset by a lower underlying combined ratio.
The Progressive Corporation’s PGR second-quarter 2023 earnings per share of 50 cents missed the Zacks Consensus Estimate of 88 cents. The bottom line declined 47.4% year over year.
Net premiums earned grew 19% to $14.5 billion and beat our estimate of $12.9 billion as well as the Zacks Consensus Estimate of $14.3 billion. The combined ratio deteriorated 480 bps from the prior-year quarter’s level to 104.
Policies in force were solid in the Personal Auto segment, increasing 17% from the year-ago month’s figure to 19.7 million. Special Lines improved 7% to 5.8 million.
W.R. Berkley Corporation’s WRB second-quarter 2023 operating income of $1.14 per share beat the Zacks Consensus Estimate by 6.5%. The bottom line increased 1.8% year over year.
Operating revenues came in at $2.9 billion, down 57.4% year over year, on the back of higher net premiums earned as well as higher net investment income. The top line missed the consensus estimate by 1.2%.
W.R. Berkley’s net premiums written were a record $2.8 billion, up 8.7% year over year, as market conditions remained favorable for most lines of business. Our estimate for the same was $2.7 billion.
Catastrophe losses totaled $53.5 million in the quarter. The consolidated combined ratio (a measure of underwriting profitability) deteriorated 100 basis points to 89.6, in line with the Zacks Consensus Estimate. Our estimate for combined ratio was 91.3.
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