Fidelity National Financial (FNF) Stephens 26th Annual Investment Conference | NASH2024 summary

Macroeconomic outlook and housing trends

• Expecting U.S. housing activity to rise modestly in 2025, with existing home sales potentially moving into the mid-four million range if rates moderate.

• Mortgage rates are anticipated to moderate through 2025, but the pace is uncertain.

• Home price appreciation remains high due to limited supply, though some moderation is possible as new construction increases.

• Political and regulatory impacts on housing are unclear, with policy influence mainly through interest rates.

• Supply and employment are key drivers of housing affordability, alongside mortgage rates.

Business performance and operational efficiency

• Refinance activity is highly sensitive to rate changes, with significant volume increases seen during brief rate drops.

• The company is well-positioned for a potential doubling of refi activity in 2025, leveraging automation and offshore processing.

• Refi revenue per order is lower than purchase, but centralized refi operations deliver strong margins, with ServiceLink achieving close to 40% total margin in 2021.

• Commercial revenue is expected to reach $1.1 billion in 2024, with strong performance in national orders and asset classes like multifamily and industrial offsetting office weakness.

• Pre-tax margins are currently at 14.5% in a weak market, with expectations to reach 15-20% in a normalized environment due to efficiency gains.

Capital allocation and M&A strategy

• Share buybacks paused since early 2023 due to market uncertainty, with a focus on maintaining cash for dividends, debt service, and acquisitions.

• Dividend recently raised to $2 annually, with $550 million allocated, and M&A activity focused on smaller title agent deals.

• Large transformational M&A in title is unlikely, but ongoing opportunities exist in real estate-related and non-title businesses.