FNF's 2024 Results: A Tale of Two Segments

FNF, the nation's largest title insurance company, recently reported its financial results for the fourth quarter and full year 2024. The company's strategic diversification into the annuity and life insurance sector, through its majority-owned subsidiary F&G Annuities & Life, has significantly contributed to its overall financial performance. However, the story of FNF's 2024 results is a tale of two segments: the strong performance of the Title Segment and the mixed performance of the F&G Segment.

Title Segment Delivers Strong Outperformance

The Title Segment contributed $263 million and $877 million for the fourth quarter and full year 2024, respectively, compared to $174 million and $760 million for the fourth quarter and full year 2023, respectively. This represents a 51% increase in quarterly contributions and a 15% increase in annual contributions from the Title Segment. The segment's adjusted pre-tax title margin was 16.6% and 15.1% for the fourth quarter and full year, respectively, with the fourth quarter margin being the highest over the past nine quarters.

The strong performance of the Title Segment can be attributed to several factors:

1. Operational Efficiencies: FNF's management team has achieved operational efficiencies over the last decade, which has significantly contributed to the outstanding result. The company's industry-leading adjusted pre-tax title margin of 15.1% for the full year 2024 is a testament to these efforts.
2. Market Conditions: The Title Segment has successfully navigated the current market, delivering strong outperformance. The adjusted pre-tax title margin for the fourth quarter was the best of 2024 and the highest over the past nine quarters, indicating that the segment has effectively managed market fluctuations.
3. Revenue Growth: The Title Segment's total revenue, excluding recognized gains and losses, increased by 23% in the fourth quarter and 9% for the full year compared to the respective periods in 2023. This growth in revenue, combined with the operational efficiencies, has contributed to the strong margin.

F&G Segment: Mixed Performance

The F&G Segment contributed $123 million and $475 million for the fourth quarter and full year 2024, respectively, compared to $64 million and $285 million for the fourth quarter and full year 2023, respectively. This represents a 92% increase in quarterly contributions and a 63% increase in annual contributions from the F&G Segment. However, the segment's adjusted net earnings include alternative investment returns below our long-term expectations and significant income items, which impacted its overall performance.

F&G achieved record assets under management before flow reinsurance of $65.3 billion at the end of the fourth quarter, an increase of 17% over the fourth quarter of 2023. This growth in assets under management further demonstrates the success of FNF's diversification strategy. However, the segment's adjusted net earnings include alternative investment returns below our long-term expectations of $0.10 and $0.45 for the fourth quarter and full year 2024, respectively, as compared to $0.11 and $0.48 for the fourth quarter and full year 2023, respectively. In addition, F&G's adjusted net earnings include significant income items of $0.07 and $0.11 for the fourth quarter and full year 2024, respectively, as compared to significant expense items of $0.06 and $0.16 for the fourth quarter and full year 2023, respectively.

Sustainable Common Dividend Backed by Strong Balance Sheet

FNF paid common dividends of $0.50 per share for $141 million in the fourth quarter and ended the year with $786 million in cash and short-term liquid investments at the holding company. This strong balance sheet supports the sustainability of the company's common dividend and demonstrates its commitment to returning value to shareholders while maintaining financial stability.

In conclusion, FNF's 2024 results are a tale of two segments: the strong performance of the Title Segment and the mixed performance of the F&G Segment. While the Title Segment's operational efficiencies, market conditions, and revenue growth have contributed to its outstanding performance, the F&G Segment's mixed performance highlights the challenges of strategic diversification. Despite these challenges, FNF's strong balance sheet and commitment to returning value to shareholders through a sustainable common dividend position the company for continued success in the future.