Fidelity National Posts Narrowed $1.7 Million Quarterly Loss
Fidelity National Financial Inc. (FNF) on Wednesday posted a $1.7 million quarterly loss -- or 1 cent per share -- narrowed from the $44.9 million loss posted in the year-ago quarter. The Jacksonville-Fla.-based title insurer reported a total 2008 net loss of $165.8 million -- or 79 cents per share -- compared with the $129.8 million profit posted for all of 2007. Analysts polled by Thomson Reuters had predicted on average a 3 cents-per-share loss for the quarter, according to the company, which also reported that revenue fell 21 percent to $1.02 billion from the year before. "Title insurers have been pummeled in the sharp housing market downturn since the middle of last year," the company said in a media statement regarding the earnings report. "However...open door order counts more than doubled in December compared with November, and order counts in January improved significantly as well." Direct orders opened in December were at 204,100, a more than 100 percent increase from November's 101,400 direct orders opened. "We continued to operate in challenging markets during the fourth quarter as low order volumes in October and November caused us to continue to aggressively reduce expenses in our title operations," said chairman William Foley, Jr. "However, there were two positive events which occurred during the month of December that provide momentum and renewed optimism as we enter 2009." One of these events was the acquisition of various title units from now-bankrupt LandAmerica Financial Group Inc. in December, making Fidelity National the nation’s largest title insurance conglomerate with a claim loss reserve of more than $2.6 billion and an investment portfolio of more than $4.7 billion, according to Foley. "The second positive event was the significant increase in open order counts in the months of December and January," Foley said. "Absolute total open order counts more than doubled in December versus their November level, with per day open orders of 9,300 increasing by approximately 65 percent. January open order counts improved further from the significant December increase, as we opened approximately 14,200 orders per day in the month of January, more than a fifty percent increase over December." Fidelity National reported having cut 1,500 of the 5,500 employees and closed 125 of the offices it inherited through the acquisition of LandAm's Commonwealth Land Title, Lawyers Title and Unit Capital Title units. In total, the company reported having eliminated run-rate savings of approximately $180 million through the various cutback measures implemented around the merger. The acquisition had been delayed in November 2008 when LandAm filed for bankruptcy protection, but then was renegotiated around specific units of the company, which Fidelity National bought for $298 million in December. Then, in late December, Fitch Ratings said it cut its IDR on Fidelity National to ‘BB’ from ‘BBB,’ and cut all of Fidelity National’s title insurers to ‘BBB’ from ‘A-,’ on concerns that taking on such broad exposure to the title business via the LandAm acquisitions could strain capital positions at any single underwriter now owned by the nation’s largest title insurance conglomerate. Read the quarterly earnings statement. Write to Diana Golobay at firstname.lastname@example.org. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.