Fidelity National Financial Aktie

Good morning, and welcome to FNF's First Quarter 2026 Earnings Call. [Operator Instructions] I would now like to turn the call over to Lisa Foxworthy-Parker, SVP, Investor and External Relations. Please go ahead.

Thanks, operator, and welcome, everyone. I'm joined today by Mike Nolan, CEO; and Tony Park, CFO. We look forward to addressing your questions following our prepared remarks. F&G's management team, including Chris Blunt, CEO; and Conor Murphy, President and CFO, will also be available for Q&A.

Today's earnings call may include forward-looking statements and projections under the Private Securities Litigation Reform Act, which do not guarantee future events or performance. We do not undertake any duty to revise or update such statements to reflect new information, subsequent events or changes in strategy. Please refer to our most recent quarterly and annual reports and other SEC filings for details on important factors that could cause actual results to differ materially from those expressed or implied.

This morning's discussion also includes non-GAAP measures, which management believes are relevant in assessing the financial performance of the business. Non-GAAP measures have been reconciled to GAAP where required and in accordance with SEC rules within our earnings materials available on the company's investor website. Please note that today's call is being recorded and will be available for webcast replay. And with that, I'll hand the call over to Mike Nolan.

Thank you, Lisa, and good morning. Our combined business continued to deliver outstanding financial results through the first quarter. Starting with Title, we delivered adjusted pretax Title earnings of $268 million, up 27% over the first quarter of 2025. This generated an industry-leading adjusted pretax title margin of 13.1% for the first quarter, an increase of 140 basis points over 11.7% in the first quarter of 2025.

Our first quarter results reflect continued strong performance across the business, highlighted by strength in our direct commercial, refinance and agency businesses. Additionally, our disciplined expense management drove strong incremental margins. Looking at our title results more closely. On the purchase front, we saw typical first quarter seasonality with sequential improvement coming off the fourth quarter, while existing home sales remained well below the historical average.

Our daily purchase orders opened were up 2% over the first quarter of 2025, up 25% over the fourth quarter of 2025 and up 4% for the month of April versus the prior year. Our refinance volumes continue to be responsive to 30-year mortgage rates. This boosted refinance orders opened to 2,000 per day in the first quarter as mortgage rates moved into the low 6% level.

Volumes subsequently moderated to 1,600 per day in the month of April as mortgage rates moved higher. Our refinance orders opened per day were up 52% over the first quarter of 2025, up 16% over the fourth quarter of 2025 and up 13% for the month of April versus the prior year. For commercial, volumes continue to be strong with direct commercial revenue of $338 million in the first quarter, up 15% over $293 million in the first quarter of 2025. This was driven by a 22% increase in national revenues and an 8% increase in local revenues.

We continue to see growth in both national and local market daily orders opened with each up 5% over the first quarter of 2025. Total commercial orders opened were 906 per day, up 5% over the first quarter of 2025, up 11% over the fourth quarter of 2025 and up 9% for the month of April versus the prior year.

We also have a strong inventory of commercial deals slated to close, diversified across a broad set of asset classes, including industrial, data centers, multifamily, affordable housing, retail and energy. To bring it all together, total orders opened averaged 6,400 per day in the first quarter, with January at 5,900, February at 6,500 and March at 6,600. For the month of April, total orders opened were 6,200 per day, which was up 7% over the prior year.

As we enter the second quarter, I want to address a question we hear frequently, how do we think about our 15% to 20% targeted annual range for adjusted pretax title margin? Let me start with what we've already demonstrated. Existing home sales have been near 4 million units for more than 3 consecutive years, among the lowest levels in 3 decades, while mortgage rates have remained elevated. And yet, we've delivered an industry-leading full year 2025 adjusted pretax Title margin of 15.9%.

That is the direct result of our scale, decades of investment in technology and automation and our disciplined operating model that have continued to strengthen the earnings power of this business. We are confident that we can continue to deliver within our 15% to 20% annual range even if total residential volumes remain at current levels over the near term.

Once mortgage rates improve, we believe residential purchase and refinance activity will accelerate and trend toward historical levels. This recovery represents additional earnings power given the operational leverage that we have built into our model. Beyond the residential volume recovery, the benefits of our continuous investments in technology and AI have the potential to further enhance our business.

I want to spend a few minutes on AI, what we are doing and what it means for our business. FNF and the Title industry hold a unique position in real estate transactions. We do not sit next to the real estate transaction. We sit inside the transactions, orchestrating complex multiparty settlements, safeguarding the movement of funds and mitigating fraud in every transaction.

By embedding AI tools into these workflows, we can drive significant value by enhancing efficiency and our customers' experience, reducing risk and strengthening fraud prevention across real estate transactions. These gains come from having highly curated deep sets of transactional data to augment AI.

We have built our proprietary data by closing and ensuring millions of transactions that cannot be replicated by simply digitizing public records regardless of how sophisticated technology becomes. As we build out our AI capabilities, we are leveraging this proprietary data alongside our deep experience and historical knowledge, and this is what sets FNF apart. Usage of AI tools by our employees is growing with more than half of our workforce using AI tools regularly, and we are deploying customized solutions across our title and escrow operations as well as within ServiceLink, LoanCare, our real estate technology companies, agency operations and software development.

Importantly, we are focused on implementing AI responsibly and compliantly with appropriate governance, human oversight and risk and regulatory controls in place. We have deliberately avoided a concentrated bet on any single model or platform. Instead, we are deploying AI directly with the data and workflows each team already owns inside or alongside the technology they already use.

While we already have a highly automated process for searching county records, we believe AI will have a meaningful benefit to other significant areas of real estate transactions as we integrate AI capabilities end-to-end throughout the entire title and settlement process. We are confident that our scale, our proprietary data, our fully deployed technology and our financial strength will continue to position FNF as an industry leader and place us at the forefront of shaping changes in our industry in a way that continues to bring value to our customers, shareholders and employees.

Turning now to our F&G segment. F&G's assets under management before reinsurance have grown to nearly $75 billion at March 31st, up 11% over the prior year. On a stand-alone basis, F&G reported GAAP equity, excluding AOCI, of $6.2 billion at quarter end and has grown its book value per share, excluding AOCI to $46.51, up 70% since the 2020 acquisition. F&G's diversified self-funding capital model is supported by its annual in-force capital generation and third-party capital through the reinsurance sidecar and strategic flow reinsurance partnerships.

Together, these sources of capital provide financial strength and flexibility to invest for growth and return capital to F&G shareholders through dividends and opportunistic share repurchases. We are very pleased with F&G as they continue to execute on their strategy toward a more fee-based, higher-margin and less capital-intensive business model with a focus on growing the core business and creating long-term shareholder value.

Before I turn the call over to Tony, I want to take a moment to recognize our employees. I'd like to extend my sincere thanks for their continued dedication to our customers, their focus on execution and their embrace of the innovation and technology that is driving this business forward. They are the foundation of everything we are building. With that, let me now turn the call over to Tony to review FNF's first quarter financial performance and provide additional insights.

Thank you, Mike. Starting with our consolidated results, we generated first quarter total revenue of $3.2 billion. Excluding net recognized gains and losses, our total revenue was $3.3 billion as compared with $3 billion in the first quarter of 2025. We reported first quarter net earnings of $243 million, including net recognized losses of $78 million compared with net earnings of $83 million, including net recognized losses of $287 million in the first quarter of 2025.

Adjusted net earnings were $249 million or $0.93 per diluted share compared with $213 million or $0.78 per share in the first quarter of 2025. The Title segment contributed $197 million. The F&G segment contributed $80 million and the Corporate segment adjusted net earnings were 0 before eliminating $28 million of dividend income from F&G in the consolidated financial statements.

Turning to first quarter financial highlights specific to the Title segment. Our Title segment generated $2.1 billion in total revenue in the first quarter, excluding net recognized losses of $46 million compared with $1.8 billion in the first quarter of 2025. Direct premiums increased 14% over the prior year. Agency premiums increased 16% and escrow title-related and other fees increased 12%.

Personnel costs increased 11% and other operating expenses increased 9%. All in, the Title business generated adjusted pretax title earnings of $268 million, up 27% over $211 million in the first quarter of 2025, and a 13.1% adjusted pretax Title margin in the quarter versus 11.7% in the prior year quarter. Our Title and Corporate Investment portfolio totaled $4.8 billion at March 31. Interest and investment income in the Title and Corporate segments was $99 million, excluding income from F&G dividends to the holding company. For the remainder of 2026, we expect a range of $90 million to $95 million in interest and investment income per quarter during 2026, assuming no Fed rate cuts in the remainder of the year and stable cash balances.

In addition, we expect approximately $28 million per quarter of common and preferred dividend income from F&G to the Corporate segment. Our title claims paid of $57 million were $5 million lower than our provision of $62 million for the first quarter. The carried reserve for title claim losses is approximately $31 million or 2% above the actuary central estimate. We continue to provide for title claims at 4.5% of total title premiums.

Next, turning to financial highlights specific to the F&G segment. Since F&G hosted its earnings call earlier this morning and provided a thorough update, I will provide a few key highlights. F&G's AUM before reinsurance increased to $74.5 billion at March 31, up 11% over the prior year. This includes retained assets under management of $56.4 billion, up 3% over the prior year.

F&G reported gross sales of $3.2 billion for the first quarter as compared with $2.9 billion in the first quarter of 2025. This reflects core sales of $2 billion for the first quarter, which includes indexed annuities, indexed life and pension risk transfer as well as $1.2 billion of funding agreements and multiyear guaranteed annuities, 2 products we view as opportunistic depending on economics and market opportunity.

F&G's net sales were $2.2 billion in the first quarter. This reflects flow reinsurance in line with capital targets for multiyear guaranteed annuities and fixed indexed annuities. Adjusted net earnings for the F&G segment were $80 million for the first quarter, reflecting our approximate 70% ownership stake compared with $80 million in the first quarter of 2025, which reflected our approximate 84% ownership stake.

F&G's operating performance from their underlying spread-based and fee-based businesses continues to be strong. F&G continues to provide an important complement to our title business. The F&G segment contributed 32% of FNF's adjusted net earnings for the first quarter as compared with 38% in the first quarter of 2025. From a capital and liquidity perspective, FNF continues to maintain a strong balance sheet and balanced capital allocation strategy.

Our track record has generated a steady level of free cash flow, allowing us to continue to invest in our business through attractive acquisitions and technology as we manage the business and continue to build for the long term. FNF has returned approximately $222 million of capital to our shareholders in the first quarter as compared with $161 million in the first quarter of 2025. This reflects $140 million of common stock dividends and $82 million of share repurchases in the current period.

We have remained active with share repurchases in the second quarter. From a capital allocation perspective, we ended 2025 with $659 million in cash and short-term liquid investments at the holding company. During the first quarter, our cash position and cash generation funded $140 million of common dividends paid, $25 million of holding company interest expense and $82 million in share repurchases, all while keeping pace with wage inflation and funding the continued higher spend in risk and technology required in today's landscape. We ended the first quarter with $495 million in cash and short-term liquid investments at the holding company.

This concludes our prepared remarks, and let me now turn the call back to our operator for questions.

[Operator Instructions] Our first question comes from Mark DeVries with Deutsche Bank.

First question, maybe for Tony. How are FG's earnings kind of tracking to your expectations? And are there any disconnects that you guys observed kind of between your expectations and where kind of we and the analyst community have been modeling FG's earnings?

Yes. Thanks for the question. I'm probably going to turn that over to the F&G guys because, yes, it's been a bit of a frustration that the analyst expectations seem to assume a return on alternative investments and yet when we report, they're maybe not picking up that piece. And so there seems to be a larger delta than what we see, which is actually earnings that were pretty close to in line with what we thought the consensus was. But maybe, Chris and Conor, you can weigh in a little bit here.

Yes, this is Chris. I'd say Tony hit it other than there's usually a little bit of first quarter seasonality. We were actually pleased with the results. I think they were on expectation as far as what we were expecting. And I do think the disconnect is around alternatives, which is -- have obviously underperformed, industry standard is to normalize for that. So I think in some cases, it's either being normalized too high or not normalized at all.

And I think our outlook there has been fairly consistent. We have redefined alts to be focused on what people actually think of with alternatives, private equity interest, anything equity related, that's about $4 billion. So it's really not that hard to model. If you look at your long-term expectation, I think we gave a range of 12% to 14% of what you think over time that should kick in from an earnings perspective. But in terms of base spread, owned distribution, reinsurance, operating leverage of driving down expenses, it's been consistent and growing. We had a little bit of noise this quarter of fixed income yield was down. Probably 2/3 of that was more timing and one-offs as opposed to anything -- any permanent degradation there. So...

Okay. Got it. And then maybe a question for Mike. [Technical Difficulty] technology. I know you're kind of optimistic this could [Technical Difficulty] longer term. But kind of how optimistic you see some margin lift over the next couple of years, even if the market size holds at current levels?

Yes, Mark, you did cut out a little bit, but I think the question is what benefits we expect to see from AI on the margin side, even if the market stays flat. Was that it?

Yes.

Yes. Thank you. I can't cite a number, but we absolutely expect margin improvement in the same size environment over time with technology tooling like AI, just like we've seen that with Title automation that we've implemented over the last couple of decades, that's been a big driver behind our margin improvement and the fact that we can get the kind of margins we're getting now in low transactional environments.

But I can't give you a number. I think that will become more apparent as we go through the balance of the year and probably see smaller wins with AI investments in AI tooling and then bigger wins as we move into '27 and get more advantage out of really embedded tooling in the more full settlement process.

Are there specific tools that you're building on that you have more optimistic -- you're more optimistic about that can more meaningfully kind of move the needle that are worth calling out?

Yes. I don't know, but -- I'll get into specific tools, but maybe as I think of parts of the business, we said from the beginning kind of a 4-part process for us relative to AI. The first begins with really building out a risk and governance framework, which we've done and worked on for the past really 1.5 years. I think that's very important to have in place given the -- both the opportunities for AI, but the risks that come with AI tooling.

Second is building literacy and diffusing the tools across the entire company. As we talked about, more than half of our employees are now using these tools regularly. Third, our individual solutions inside ServiceLink, LoanCare, et cetera, as we talked about on the call. And then the fourth is really the area that I think will have the biggest impact. And that's when you embed tools into workflows like SoftPro and inHere that we have built at scale that no one else has, and we'll get more benefit on the settlement side where you really have more of your labor and your cost in terms of the process inside the business.

Our next question comes from Bose George with KBW.

Actually, just sticking to the margin discussion, can you go through margins by segment? And just curious how the commercial margins look, especially compared to like previous peaks?

Yes. Thanks, Bose. This is Tony. As you know, we reported 13.1% pretax Title margin, up against 11.7%. If you break that down into our various, what I'll call, operations or divisions, our direct ops had roughly a 20% margin, up about 100 basis points. Agency about a 7% margin on gross, up about 100 basis points. Our National Commercial Unit, so this is just the 20 or so large operations that handle exclusively commercial transactions, a 27% margin in the quarter, up against 24% in the prior year. Our loan subservicing was down a little bit, but still had a 20% margin in that business.

Our home warranty business had a 16% margin versus 14% in the prior year. And our ServiceLink business, which is centralized refinance and default had a 23% margin up against 18% in the prior year quarter. So really almost to a unit positive improvement over the prior year quarter.

And if I just add one thing to that, Bose, in our centralized refi business inside ServiceLink, the margin lift with -- it just shows the power we have in the model, we had a 23% first quarter margin up against 9% last year. So a little bit of extra volume can go a long way inside the efficient model that we've built for the centralized platform.

That's great color. And then actually, I wanted to just ask about the buybacks. It was -- you noted it's -- I guess, in April remained strong. Just curious how we should think about that maybe relative to what you guys did last year or just ways to kind of sort of think about a range this year?

Yes. Thanks, Bose. It's hard to know exactly where we'll land in terms of buybacks. I did say that we remain active, and we will remain active. I firmly believe that. We bought $82 million of shares back in the first quarter, almost 2 million shares. Certainly, if we see signs of weakness, we're more active. But I would expect that once blackout windows lift, we'll be back in the market on a regular cadence. Last year's second quarter, we came in really strong. I wouldn't necessarily expect that. That might have been to the tune of about $250 million. But having said that, I do expect that we're going to be active throughout the year.

Our next question comes from Mark Hughes with Truist Securities.

On FG, the question about returns, and we had chatted about this on the conference call earlier, but I just wanted to make sure I'm kind of on the right track. The return on asset in the quarter, return on assets, 76 bps. If you take into account the unusual items or the underperformance on the alts, you get up to about 110 bps. When we model that on a go-forward basis, would it just make more sense at this point to model it more at the 80 basis point level and factor that into the FNF earnings rather than, I think, kind of the longer-term target, which was 110 bps, but it has been dampened here recently. Just wanted to get your sense on the best approach.

Mark, this is Chris. I think that would be a very conservative way to model it, but I don't know inappropriate way to model it. So yes, I think 80 bps, probably a little low as a jumping off point, but if you said that's a jumping off point for just pure spread income at current alts levels, then, yes, you're more likely to have tailwind coming from alts as opposed to -- we've been normalizing. And yes, it's been 5 years since we've seen meaningful realizations. And every year we come in expecting that it's going to be the year of the IPO and then something happens externally.

So I think we're still confident that we will see that when things normalize. But yes, I don't think that's an unreasonable way to think about it. It would just be a conservative way, I believe, to model it. I don't know, Conor, if you agree with that.

Yes, I think that's fair. And as we talked about some of the things that happened this quarter, there were some temporary elements this quarter, that's probably about 10 basis points that we don't expect to continue but aside from the alt differential.

And just to be clear, then kind of that difference between the 34 basis points this quarter is kind of the difference in the -- would lead to some misinterpretation or volatility perhaps thinking back to the earlier question.

I think what Conor is saying is there was probably 10 bps of some other onetime effects. But if you look at it over time, quarter-by-quarter, alt is the big, that's sort of the disconnect of how do you think about that normalization. And my guess is neither stock gets a whole lot of credit for it given how long it's been since we've had realizations. But again, still optimistic that if we do start to see transaction activity pick up, that should actually become a tailwind for us.

Yes. When we think about the purchase business moving on to title, the growth in open orders in Q1 and 4% for April, if I heard properly. It sounds like FNF, at least relative to the public peers is doing a little bit better. Is that a geographic issue, an execution issue? It may just be a few points here and there, but I'm curious if there's any driver to that a little better.

Yes, Mark, it's Mike. It's hard to know, but we were very pleased to see a 25% sequential improvement in the first quarter. That's above historical averages, even though we're still in an overall low environment, the 4% up in April. So I don't know if it's a geographic issue or not. I do know that our recruiting has been incredibly strong, and it was very strong last year. We just had a phenomenal first quarter recruiting effort, maybe our best ever. And we're attracting a lot of talented people to the company, and they bring volume with them. So whether that's playing into those numbers, I can't say for sure, but I'm very pleased with what the field is doing in terms of just building more talent inside this organization.

Is there a kind of a structural reason for that, maybe in a softer market, people want to be in a bigger organization? Is there any -- or is it just more company specific? I'm curious on that.

Yes. Again, it's hard to know. I would say our recruiting is broad-based. It's across a lot of other players in the industry. Perhaps people see that we continue to invest in the business consistently regardless of the macro environment, building technology, creating good marketing tools, inHere, digital transaction platform. I think we're doing a lot of things that lead this industry. And hopefully, people in other organizations see that and want to be a part of it.

If I could just squeeze in one more. There was a discussion about a process to look at a way to optimize value in the owned distribution within F&G. I was curious if there is any sense of timing on the process, when we might hear more about that?

Yes. This is Chris. It's probably premature to comment on the exact timing. But again, to just go back to the rationale, we've invested about $700 million in owned distribution. We see substantial opportunity to grow what we already have and make more investments. And so yes, really just an exercise of what's the best way to fund that growth opportunity. Is it still underneath FG? Is it consolidated, deconsolidated? So that's just sort of the exercise we're going through. But yes, I'd imagine in the next couple of quarters, we would probably have a bit of an update for you there.

[Operator Instructions] Our next question comes from Oscar Nieves with Stephens Inc.

My first one is on F&G. In mid-March, F&G announced the $100 million buyback program, which was right after December distribution of F&G shares to FNF shareholders. And I think during the F&G earnings call today, it was mentioned that $29 million of the program was deployed in 1Q. So one would think that if FNF has no plans to sell shares in the open market, the buyback could increase FNF's ownership stake in F&G. So how should we be thinking about this?

Yes. It's a good question, Oscar. I mean, clearly, the reason for the distribution back in December was to get more float out into the marketplace. And so we went from an 82% roughly ownership down to a 70% ownership. But F&G shares were under pressure and the float wasn't really helping at least in the early phases of having those shares out there. I think F&G saw an opportunity to buy back their shares at a discount, a real significant discount, almost a silly discount.

And so FNF doesn't have -- doesn't take a position that we need to own x number of shares. We're just trying to really have value out there for the respective shareholder bases. And so if that means that we close that gap from 70% to 80% or wherever it might be, that's very possible. But again, there's no target necessarily for where FNF might end up in that ownership percentage.

And then turning to Title. Starting with the fee per file, what can you share on what you're seeing in terms of the trajectory of fee per file for both residential and commercial?

Yes, it's Mike. Thanks for the question. I would say that the residential fee per file has been pretty consistent year-over-year, almost -- well, it's actually flat with the first quarter of last year. And I think we've seen pricing moderate to the most extent over the past few years. So we're seeing a little bit more stability there. But saw, again, a strong, particularly national commercial fee per file in the first quarter up, up almost $1,000 over the first quarter of last year. Local was up a bit as well, maybe about $500 on a fee per file basis. So I would say fairly stable in residential and still upside in commercial.

And just one last one on the outlook. Looking at the residential outlook since the last earnings call, the MBA and Fannie may have revised their forecast down, and they're now calling for existing home sales to be between 4.1 million and 4.2 million seasonally adjusted for the year in '26 and around 4.5 million in '27. What's your take on that? Do you view those assumptions as conservative? Or are they too aggressive?

Yes. I don't think they are aggressive. But our base case as we came into the year for residential was really upside in purchase and refi with the fact that we had lower more stable rates to start to the year. And then the macro environment as we got into March and into April kind of upset the apple cart a little bit. And that's probably when Fannie and MBA revised it down because, their '27 forecast now, Oscar, as you pointed out, looks a lot like their '26 forecast that they had 60 days ago.

So it's just hard to say. What we do see though is -- and I've commented on this before, just more sensitivity to lower rate movements than we probably have seen in prior vintages. And I think it really comes down to if rates -- if things stabilize, the macro environment gets a little calmer and rates stabilize maybe in that lower 6% environment, we're going to have upside in the back half of the year in residential.

And if they don't, we'll probably continue on this current trajectory. I'm very pleased we had a 4% increase in purchase opens in April. And we're still driving, we think, really strong margins. I mean our first quarter margin, absent the 3% mortgage years is really one of the best first quarters we've ever had. And so we'll perform well regardless of the environment, and we'll manage the business to kind of whatever order environment we have, but we're very confident in our position.

And if I can squeeze just one last one on capital allocation. What are you seeing in the M&A pipeline? And has there been any notable shift in activity since last quarter?

Yes. Thanks, Oscar. I'll turn it over to Mike. But my impression is even though we haven't made many acquisitions really over the course of the last 15 months or so, I get the sense there's more opportunity, especially on the title agent side. I just feel like we're hearing a lot more about it. We're having more discussions, and I would expect that we have more activity this year and next than we've seen in the last 2 years. I don't know...

Yes. I would agree with that, Tony. I think there's more conversations. I think there's more opportunities, but you never know if you're going to strike a deal. And I would say just kind of stay tuned on how that plays out over the next couple of quarters.

And this will conclude our question-and-answer session. I will now turn the conference over to CEO, Mike Nolan, for closing remarks.

Thanks for joining our call this morning. We delivered strong first quarter results with our complementary businesses executing well in a dynamic environment. The Title segment is performing well in what remains a low transactional environment and is capitalizing on stronger commercial activity. We are delivering industry-leading margins and remain well positioned to benefit from a recovery in residential volumes should mortgage rates move lower. Our focus on technology and AI is contributing to our performance today, and we see potential to further enhance our business.

Likewise, F&G is executing on its strategy that is focused on balancing continued growth in its spread-based business alongside the fee-based flow reinsurance, middle market life insurance and owned distribution strategies as they focus on delivering long-term shareholder value. Thanks for your time this morning. We appreciate your interest in FNF and look forward to updating you on our second quarter earnings call.

Thank you for attending today's presentation, and the conference call has concluded. You may now disconnect.

Good morning, and welcome to FNF's Fourth Quarter and Full Year 2025 Earnings Call. [Operator Instructions]

I would now like to turn the call over to Lisa Foxworthy-Parker, Senior Vice President, Investor and External Relations. Please go ahead.

Thanks, operator, and welcome, everyone. I'm joined today by Mike Nolan, CEO; and Tony Park, CFO. We look forward to addressing your questions following our prepared remarks. F&G's management team, including Chris Blunt, CEO and Conor Murphy, President and CFO, will also be available for Q&A.

Today's earnings call may include forward-looking statements and projections under the Private Securities Litigation Reform Act, which do not guarantee future events or performance. We do not undertake any duty to revise or update such statements to reflect no information, subsequent events or changes in strategy. Please refer to our most recent quarterly and annual reports and other SEC filings for details on important factors that could cause actual results to differ materially from those expressed or implied.

This morning's discussion also includes non-GAAP measures, which management believes are relevant in assessing the financial performance of the business. Non-GAAP measures have been reconciled to GAAP where required and in accordance with SEC rules within our earnings materials available on the company's investor website. Please note that today's call is being recorded and will be available for a webcast replay.

And with that, I'll hand the call over to Mike Nolan.

Thank you, Lisa, and good morning. The fourth quarter results rounded out an excellent year for our Title and F&G businesses, both in terms of results and execution. Our Title business delivered outstanding results in the current environment. We had adjusted pretax title earnings of $401 million in the fourth quarter and $1.4 billion for the full year. This generated industry-leading adjusted pretax title margins of 17.5% in the fourth quarter and 15.9% for the full year. Our fourth quarter results reflect strong performance across the business, highlighted by exceptional strength in our direct commercial business. Additionally, our disciplined expense management drove strong incremental margins.

Our achievements are a testament to our employees, the best title professionals in the industry. I'd like to extend a profound thanks for all that they do to consistently deliver industry-leading results provide innovative solutions to our customers and ensure secure and efficient real estate transactions.

We have transformed our business through decades of pioneering technology solutions and investments in the business, driving efficiencies and helping FNF maintain a competitive edge. As a result, we've expanded our margins over the last 3 years and significantly outperformed prior cyclical lows. 2025 was no exception, and we are excited to further enhance our industry-leading technology capabilities, which I'll speak to further in a few minutes.

Looking at our Title results more closely. On the purchase front, we are successfully navigating the low transactional environment with purchase orders opened of 3,200 per day in the fourth quarter, in line with the fourth quarter of 2024 and reflecting normal seasonality. For the month of January, our daily purchase orders opened were up 1% versus the prior year and up 31% versus December. On the refinance front, volumes continue to be responsive as 30-year mortgage rates decreased during the fourth quarter. This generated refinance orders opened of 1,700 per day in the fourth quarter up from 1,600 in the sequential quarter.

Our refinance orders opened per day were up 38% over the fourth quarter of 2024, and up 75% for the month of January versus the prior year and up 28% for the month of January versus December. On the commercial front, we delivered direct commercial revenue of nearly $1.5 billion for the full year, which was our third best year on record, trailing only the exceptional markets of 2021 and 2022.

For the fourth quarter, direct commercial revenue was $479 million, a 27% increase over the fourth quarter of 2024. This was driven by a 33% increase in national revenues and a 20% increase in local revenues. National daily orders opened were up 9% over the fourth quarter of 2024, and local market daily orders opened were up 8% over the fourth quarter of 2024.

Total commercial orders opened were 815 per day, up 8% over the fourth quarter of 2024 and up 11% for the month of January versus the prior year. We continue to see growth in commercial activity driven by a broad set of asset classes including industrial, multifamily, affordable housing, retail and energy.

This year's performance is especially notable given minimal contribution from the office sector which remains subdued, but is showing signs of improvement. We have also seen a 21% increase in commercial refinance orders opened for the full year 2025 over the prior year. Looking ahead, we have entered 2026 with a strong inventory of commercial deals to close and the office sector is a potential added element as we move throughout the year.

Overall, total orders opened averaged 5,300 per day in the fourth quarter, with October at 5,700, November at 5,600 and December at 4,600. For the month of January, total orders opened were 5,900 per day, up 29% over December.

Our Title business is performing extremely well in what is still a low transactional environment. The National Association of Realtors, or NAR, has ranked 2025 home sales among the lowest levels since 1995 due to high mortgage rates and a housing shortage. Notably, the U.S. population has grown by over 70 million people over the last 3 decades. According to NAR, home sales have been close to $4 million per year since 2020 over the last 30 years. Over the next few years, we anticipate home sales will trend back towards the historical average.

We are well positioned for the current market and poised to benefit from a potential turn in the housing market should mortgage rates drop further in 2026 and beyond. We remain bullish on the long-term prospects of the title insurance business even in the current environment. Our disciplined operating model is centered on managing our business to the trend in open orders to deliver industry-leading results. Over the long term, this discipline has generated a steady level of free cash flow allowing us to continuously invest in our business through attractive acquisitions and technology initiatives.

We have a number of accomplishments in 2025, advancing our technology and innovation. To provide a few highlights, our inHere digital transaction platform has scaled to a fully deployed enterprise solution, engaging 80% of our residential sale transactions and reaching nearly 2.8 million unique users throughout 2025, demonstrating deep integration in the daily workflows. This foundational technology drives efficiency, transparency and a superior customer experience in the escrow closing process with built in compliance and enhanced fraud protection. We also expanded our identity verification processes and technology to streamline and secure customer authentication, helping combat the rising impersonation and wire fraud and property sales.

We rolled out AI tools enterprise-wide in 2025, deploying practical tools to enhance productivity and margin efficiency. We've made significant progress in building AI literacy across the company and teams are using AI to streamline workflows, increase efficiency and unlock new ways to better serve our customers.

Finally, our curated data and technology touched over 90% of our total volume, supported by our proprietary [ title plans ] and patented title automation that is integrated into our centralized workflows. Our approach of leveraging title automation tools and data at scale has led to significant productivity improvements and been an important driver of our technology strategy. These successful investments in technology have played a critical role in our ability to maintain our industry-leading position for adjusted pretax title margin. Over time, we believe that our ongoing investments in technology, combined with our robust curated data will lead to increased efficiency and productivity in our operations that will continue to support our market-leading pretax title margin.

Turning now to our F&G segment. F&G's assets under management before flow reinsurance have grown to $73.1 billion at year-end, up 12% over the prior year. On a stand-alone basis, F&G reported GAAP equity, excluding AOCI, of $6 billion at year-end and has grown its book value per share excluding AOCI to $44.43, up 62% since the 2020 acquisition. On December 31, FNF completed the distribution of approximately 12% of the outstanding shares of F&G's common stock to FNF shareholders returning approximately $500 million of tangible value to FNF shareholders. Following the distribution, FNF retains control and majority ownership with approximately 70% of the outstanding shares in F&G.

This has increased F&G's public float from approximately 18% to approximately 30% after the distribution, strengthening F&G's positioning within the equity markets and facilitating greater institutional ownership. This distribution reflects our confidence in F&G's long-term prospects and is intended to unlock shareholder value by enhancing market liquidity and broadening investor access to F&G's shares.

F&G has increased its quarterly common stock dividend by 14% in the fourth quarter, supported by a strong and growing cash generation as it transitions to be more fee-based, higher margin and less capital intensive. Going forward, we expect F&G to be a meaningful source of capital to FNF, through its $112 million annual common and preferred dividends at the 70% ownership level, which indirectly benefits FNF shareholders.

With that, let me now turn the call over to Tony to review FNF's fourth quarter and full year financial performance and provide additional insights.

Thank you, Mike. Starting with our consolidated results. We generated fourth quarter total revenue of $4.1 billion. Excluding net recognized gains and losses, our total revenue was $4.1 billion as compared with $4billion in the fourth quarter of 2024. The net recognized gains and losses in each period are primarily due to mark-to-market accounting treatment of equity and preferred stock securities whether the securities were disposed of in the quarter or continue to be held in our investment portfolio.

We reported a fourth quarter net loss of $117 million including net recognized losses of $47 million, compared with net earnings of $450 million, including net recognized losses of $373 million in the fourth quarter of 2024.

Fourth quarter results include a $471 million noncash deferred income tax charge resulting from our year-end distribution of F&G shares to FNF shareholders which reduced our ownership of F&G below 80%. This distribution triggered an accounting requirement to recognize a deferred tax liability on the accumulative difference between our book and tax basis and F&G. This noncash charge has no impact on our current cash position, operations or liquidity and represents a potential future tax obligation that would arise only if we were to sell or distribute additional shares of F&G in the future. This item is excluded from adjusted net earnings along with other mark-to-market effects and nonrecurring items.

Adjusted net earnings were $382 million, or $1.41 per diluted share compared with $366 million or $1.34 per share for the fourth quarter of 2024. The Title segment contributed $306 million. The F&G segment contributed $104 million, and the Corporate segment contributed $4 million before eliminating $32 million of dividend income from F&G in the consolidated financial statements.

For the full year 2025, we saw strong performance for both the Title segment and the F&G segment, which together generated solid profitability. Total revenue, excluding gains and losses, was $14.5 billion in the full year 2025, and reflects a 7% increase over the full year 2024. We delivered $1.4 billion in adjusted net earnings an increase of 7% over $1.3 billion in full year 2024. The Title segment contributed over $1 billion. The F&G segment contributed $412 million, and the Corporate segment contributed $3 million before eliminating $117 million of dividend income from F&G in the consolidated financial statements.

Turning to fourth quarter financial highlights specific to the Title segment. Our Title segment generated $2.3 billion in total revenue in the fourth quarter, excluding net recognized losses of $58 million compared with $2.1 billion in the fourth quarter of 2024. Direct premiums increased 21% over the prior year. Agency premiums increased 7%, and escrow title related and other fees increased 9%. Personnel costs increased 12% and other operating expenses increased 9%. All in, the Title business generated adjusted pretax title earnings of $401 million compared with $343 million for the fourth quarter of 2024, and a 17.5% adjusted pretax title margin for the quarter versus 16.6% in the prior year quarter.

As Mike said earlier, these results were driven by strong performance across the business as well as disciplined expense management.

Our title and corporate investment portfolio totaled $4.9 billion at December 31. Interest and investment income in the Title and Corporate segments was $102 million, excluding income from F&G dividends to the holding company. This was down 6% from the prior year quarter due to the impact of the Fed funds rate cut throughout 2024 and 2025. Looking ahead, we expect a range of $95 million to $100 million in interest and investment income per quarter during 2026, assuming two 25 basis point Fed rate cuts during the year. In addition, we expect approximately $112 million of annual common and preferred dividend income from F&G to the Corporate segment.

Our title claims paid of $80 million were $8 million higher than our provision of $72 million for the fourth quarter. The carried reserve for title claim losses is approximately $34 million or 2% above the actuary central estimate. We continue to provide for title claims at 4.5% of total title premiums.

Next, turning to financial highlights specific to the F&G segment. Since F&G hosted its earnings call earlier this morning and provided a thorough update, I will provide a few key highlights.

F&G's AUM before flow reinsurance increased to $73.1 billion at December 31, up 12% over the prior year. This includes retained assets under management of $57.6 billion, up 7% over the prior year. F&G reported gross sales of $14.6 billion for the full year, including $3.4 billion in the fourth quarter. This marks one of our best sales years in history, driven by favorable market conditions and strong demand for retirement savings products. F&G generated core sales of $9 billion for the full year, which includes indexed annuities, indexed life and pension risk transfer and had $5.6 billion of funding agreements and multiyear guaranteed annuities, two products we view as opportunistic depending on economics and market opportunity.

F&G's net sales were $10 billion for the full year, including $2.3 billion in the fourth quarter. This reflects flow reinsurance at varying ceded amounts in line with capital targets for multi-year guaranteed annuities and fixed indexed annuities. Adjusted net earnings for the F&G segment were $412 million for the full year. This included $104 million of adjusted net earnings for the fourth quarter of 2025. F&G's operating performance from their underlying spread-based and fee-based businesses continues to be strong.

F&G continues to provide an important complement to our Title business. The F&G segment contributed 30% of FNF's adjusted net earnings for the full year 2025, as compared to 38% in 2024, 30% in 2023 and 23% in 2022.

From a capital and liquidity perspective, FNF continues to maintain a strong balance sheet and balanced capital allocation strategy. FNF has returned approximately $800 million of capital to shareholders during the full year 2025. This reflects common dividends of $546 million for the full year, including $140 million in the fourth quarter as well as share repurchases of $251 million for the full year, including $30 million in the fourth quarter. In November, our Board of Directors approved a 4% increase in the quarterly cash dividend to $0.52 per common share.

From a capital allocation perspective, we ended 2024 on with $786 million in cash and short-term liquid investments at the holding company. During 2025, the business generated cash to fund our $550 million common dividend paid, $75 million of holding company interest expense, $150 million investment in the F&G common equity raise and $250 million in share repurchases, all while keeping pace with wage inflation and funding the continued higher spend in risk and technology required in today's landscape.

We ended the year with $659 million in cash and short-term liquid investments at the holding company, which is about 85% of the amount held at year-end 2024.

This concludes our prepared remarks, and let me now turn the call back to our operator for questions.

[Operator Instructions] And our first question comes from Bose George with KBW.

The first question is just on the margin. Obviously, you guys did a great 15.9% margin this year. As you look into 2026, how do you see the margin trending? It looks like your guidance on interest income suggests that won't be really much of a headwind in this, given what you're seeing in commercial and residential, just your thoughts on the margin as we enter '26.

Sure, Bose, it's Mike. I think our outlook on '26 is certainly more optimistic than when we came into '25. The base case coming into '25 was pretty much like '24. And then we got outperformance in commercial and a little bit in refi and good expense management to drive a nice beat over the prior year. The positive here is we're entering a year now where rates are in the low 6s or even 6%. I think I saw a headline today that said we're at the lowest rates we've had in the last 3 or 4 years. And I think that should drive more volume and purchase, which was flat in 25% over 24%. So we'd expect to see an uptick there.

I think MBA and Fannie Mae are estimating about 10% more existing home sales in '26. And then the refi opportunity should be much better in '26 as well. And commercial should be as good or better. I think we have a lot of momentum still in commercial with orders up in the fourth quarter, up in January and a nice pipeline as we go through the year.

Okay. Perfect. And then actually on the agent split, it looks like it went up a little bit this quarter or I guess, decline in favor of the agents. So did that just reflect like a geographic mix? Or was there something else to call out there?

Yes. I don't think it moved too much. It was probably just a geography there. We've been -- we watch that pretty closely and actually have been very consistent for several years now. You might note that our agency premiums weren't up as much as our direct premiums, and that's really more a function of the mix of business, the fact that we have a very strong commercial presence on the direct side. And we do on the agency side as well, but that delta, if you will, between, I don't know, a 21% increase in direct premiums and a 7% increase in agency is primarily related to commercial. .

Your next question comes from Oscar Nieves with Stephens.

So sticking with commercial you previously outlined towards the end of last year, about $1.5 billion of commercial revenue for 2026, but you effectively exited 2025 at that level already. How should we think about commercial revenue growth in '26 versus '25? And if you could provide a specific growth range?

Yes, Oscar. It's Mike. I don't recall that we specifically had talked about '26 as we went through '25. I know we had said as we were going through '25 that we thought it could be $1.5 billion in direct commercial revenue, which we essentially hit. I don't know that I could give you a range for '26. I think there's a couple of factors to think about.

Our trends now would point to more order volume because in the fourth quarter, our commercial opens were up 8% and then they're up 11% in January. So more activity should lead to more closings and more revenue. The other factor there is the fee per file. And that's really difficult to estimate, we had pretty strong fee per file growth in commercial in '25 and really a big number in the fourth quarter, some of which was driven by just larger transactions that I think all participants in the industry have talked about data centers, energy deals, things like that. And it's just a little tougher to estimate the impact of that as you go through the year.

But again, I would expect '26 to be certainly as good, if not better than '25 in direct commercial.

Yes. That's super helpful. And one follow-up this time on the residential side. You alluded to MBA and Fannie Mae forecasts, which are effectively calling for existing home sales to be between basically 4.3 million to 4.4 million in '26 and around 4.5 million and 4.7 million and 27 million in '27. And obviously, that's against historical range closer to 5 million to 5.2 million. What's your take on that? Do you think that's conservative too aggressive and specifically on the path?

Yes. It's Mike again, Oscar. I would say it's I think it seems to be a fair estimate. Again, it's based on where rates are going to be. And I think MBA and Fannie Mae be a little different in the rate assumption for '26. But let's assume rates hold around 6%. To see a 10% lift in existing home sales, I think, would be a good number. It could be better. I still believe there's a lot of pent-up demand. And you got to build your assumptions around sort of other things being equal, right? Probably the area that just got the better lift even though it's lower fee per file is just the refinance activity and you didn't ask this directly, but if you look at the ICE Mortgage Monitor report, if you're familiar with that, they show the sensitivity around mortgages in the money at different rate scenarios and at 6%, they estimate there are 5.8 million mortgages in the money to refinance.

And to give you the difference 6% in a quarter, it's 3.5 million. So just a 25 basis point movement according to ICE puts 2.3 million more people in the money to refi. So we could see a nice refi uptick if rates stay low.

And to Mike's point, I think home prices have pretty much stabilized at this point. You really don't see much growth there. And maybe in some markets, you even see some decline. So from an affordability standpoint, it's going to be driven primarily by rates. And if you think about the lock-in effect in people with low rates that are kind of built in. As you see rates, if we see them creep into the 5s, not only do you have a refi opportunity that's pretty staggering, but you also have plenty of people who have probably put off selling homes and moving up and moving out because of that lock-in effect, and that would diminish obviously with lower rates.

Yes. And if I can ask a quick follow-up, since you just mentioned home price growth. Looking again at the forecast from MBA and Fannie Mae, they are quite different, with MBA roughly at 50 basis points and Fannie Mae closer to 2%. What's your outlook on that? Do you think that 2% is way too high?

Yes, I don't know. We don't really have anyone who studies that and tried to figure out. We try to rely on others it's more anecdotal, what you read, what you see. I mean, if you look at our fee for file trends, they're pretty modest over the course of the year. I think if I'm looking at it here, our purchase fee per file is up about 3% versus the fourth quarter of 2024. Our refi fee per file is up about 4%. And so that tells me that home prices have been pretty stable over the course of the last year. And I would think that, that's going to be pretty stable over the course of the next year as well.

Your next question comes from Mark Hughes with Truist Securities.

In the commercial fee per file in '26 that you described, do you think it's as good or better overall for the coming year. Anything about the deal size that you're seeing in the pipeline that gives you some indication about fee per file? .

Yes, Mark, it's Mike. I would say that certainly, in the fourth quarter, we saw bigger transactions that closed maybe vis-a-vis the fourth quarter of last year, and our national commercial fee per file was up significantly, as you know. I would say we still have nice deals in the pipeline that should generate strong fee for files. I don't think I said that I expect the commercial fee per file in '26 to be as good or better. I think I said that that's a bit more of a wildcard because you don't really know the mix. But there are a lot of good deals in the pipeline.

Yes. I understood. I was referring to, I think your overall guidance was or as good or better in terms of the commercial volume.

The inHere platform, you talked about, I think, 80% engagement, that's been -- I think last quarter, you might have said 85%, but assuming kind of relatively stable, do you think the engagement has kind of stabilized? Anything structural around those engagement numbers we should look for those [indiscernible] or increased brands?

Yes. Good question. I would expect it would increase. The engagement has been great. The goal is really to be over 90%. And the reason the numbers change around a bit. We were still migrating operations to the SoftPro platform as we went through the year, even through into the fourth quarter. And so as new operations get on, their engagement levels are lower. And then they build up over time. So in the operations that are a bit more mature on the platform, we're getting engagement plus 90%. .

Very good. And then finally, anything new on the regulatory front on pilot program, or anything from the FHFA, you'd throw on?

I would say it's been quiet. The pilot still exists. I haven't heard a lot about what the plans are. It's my understanding, it's set to expire in May, maybe gets extended. I don't think we know. But it just doesn't really seem to have impacted our deal flow, I would say on the refi side. .

[Operator Instructions] Your next question comes from [ Michael Dunlevy ] with Deutsche Bank.

I just wanted to follow up on Bose's question on the title margin. Just given at end of the year, so strong, do you still feel like that 15% to 20% normalized range is the right range even with the efficiencies and so in the technology piece. And then it sounds like just given the recent trends, do you still think that '26 should continue moving closer towards the midpoint of that range, if we assume Fannie and MBA forecast. Is that right?

Yes, Mike, it's Mike. So I would say, long term as we see the impacts of more efficiencies in AI and things like that, that we might we might -- maybe not even long term, but we might consider changing the range. Right now, it still seems appropriate because even though we expect the year to be better, it's still a very volatile environment. I think, as we all know. And so -- and we're still at existing home sales at 30-year lows for the last 3 years. So you've got that as a backdrop.

With improvement in volumes like the Fannie Mae and MBA forecast and more refi, I do think we could move into that -- more into that middle range of margin -- but remember, we've got to get through the first quarter, and that's the historically soft quarter for the industry -- and that always presents a little bit of a challenge around just where you can get on your full year margin.

Got it. And then I just wanted to check in on capital real quick is too. So I know you and FG both raised the dividend towards the end of the year. Could you just check on how you're thinking about capital allocation going forward and the types of businesses you might regularly be looking at from an M&A perspective.

Sure, Mike. This is Tony. I'll start and Mike can pitch in. I mean capital is pretty consistent in terms of what our normal capital allocation would be, which is the dividend, which, to your point, we raised it in the fourth quarter as we typically do. And we expect to spend probably $560 million or so in cash to pay our common dividend. Our interest expense runs about $75 million, so very modest there. Obviously, we're reinvesting in the business on a regular basis and continue to do that on the technology side and the efficiency side. That really occurs before we even upstream anything to the holding company.

And then beyond that, it becomes more opportunistic. We look at acquisitions to your question, we look at stock buybacks. I expect us to be active in both of those areas. I think you'll see more acquisition activity in '26 versus what we've seen in the last few years. I think that our cash flow has been strong. I think there's probably more opportunities in the title agent space and possibly some other areas as well.

And then on the buyback front, we like to be -- we'd like to have a consistent cadence of buybacks as we work our way through the year when we're not blacked out. But we're also opportunistic, and to the extent we see a weakness in the share price, I expect us to be more aggressive like we were back in the second quarter. I think, overall, I think I mentioned earlier, we spent we returned about $800 million to shareholders in the form of dividends and buybacks in 2025. And I would expect another very strong cash flow generation year in 2026.

Mike, I don't know if you wanted to touch on M&A at all? Are we good?

I would just agree. I think there'll be more opportunities in the M&A space as we go into '26 and beyond. Because it's been fairly quiet for the past few years. So we're excited about some opportunities there.

Your next question comes from Geoffrey Dunn with Dowling & Partners.

Tony, what are your expectations for dividends up from operations in '26, both from regulated and unregulated?

The regulated number is probably in the $400 million to $450 million range. That one, because it's related to the prior year results on a statutory basis, that one is certainly easier to estimate. The other operations is much more difficult. I think last year, it was somewhere in the 6 -- or $650 million range, and I wouldn't be surprised to see that number or better in 2026. But again, that's on real-time results, which, obviously, we would have to project that out.

Got it. And then just following up on M&A. Curious if there's any tech initiatives in the market that stand out as a [ meter ] opportunity and more attractive to buy than build.

Good question, Geoff. I would say, from a tech stack standpoint, we feel comfortable about where we're at. we will be investing more in our SoftPro platform as we go forward. And obviously, we've got the inHere really rolled out well. But if we saw things certainly in the tech space that would be helpful, we would buy it.

Then any in particular stand out on the back end? .

In terms of?

Any need -- I mean, for example, I think you've been renting your online notary services, anything like that, that make more sense to bring in-house?

I don't really think so on the notary side, you've got various plug-ins there that we can take advantage of and to own a notary company, I don't think adds a lot of value. And then you're in some notary businesses typically that aren't title related as well, and you got to think about whether you want to do that. So no, I think we're good in that space. .

And this will conclude our question-and-answer session. I will now turn the conference back over to CEO, Mike Nolan, for closing remarks.

Thanks for joining our call this morning. We have delivered outstanding performance in 2025 with our complementary businesses executing well in the current market. The Title segment is performing well in what is still a low transactional environment and is capitalizing on stronger commercial activity. We are well positioned for the current market and remain poised to benefit from a potential turn in the housing market should mortgage rates drop further in 2026 and beyond. We remain bullish and continue to invest in the business for the long term while delivering industry-leading margins.

Likewise, F&G is executing on its strategy that is focused on balancing continued growth in its spread-based business alongside the fee-based flow reinsurance, middle market life insurance and owned distribution strategies as they focus on delivering long-term shareholder value.

Thanks for your time this morning. We appreciate your interest in FNF and look forward to updating you on our first quarter earnings call.

Thank you for attending today's presentation. And the conference call has concluded. You may now disconnect.

Great. Good morning, everyone. Thanks for joining us for our next session for the KBW Title Day. Next up, we have the management team from Fidelity National Financial. With us, we have Mike Nolan, the CEO; Tony Park, the CFO; and Lisa Foxworthy-Parker, the Head of Investor Relations.

So let's kick it off with a discussion on what you're seeing in the market in terms of current order trends. So Mike, let me turn it over to you for that.

Yes. Thanks, Bose, and thanks for having us today. It's interesting when you look at this year to last year and as we went into kind of the fourth quarter of last year, we had sort of a rising rate environment, if you remember. And this year, we kind of have the opposite of that, and we can really see it in the order trends. So for November, our purchase orders on the open side are up 5% a day versus last November and also essentially flat sequentially to October. And that's really interesting because that's unusual. Usually, pretty much every month, those purchase orders are falling off in the second half of the year and then they kind of go back up starting in January. We've talked about that a lot.

On the refi side, our refinance opens were up 54% to last November. And again, we had rates rising last year, and so the refis were kind of falling off and now they're sort of the opposite. So a lot of strength there. And then on the commercial side, opens were up 14% over last November. And November on the open side with commercial per day, it was our second best open month of the year. And that's also unusual in that usually in the fourth quarter, our opens are the softest of the 4 quarters.

Okay. Great. And then can you discuss the fee per file trends as well? And can you remind us how HPA impacts the fee per file?

Yes. Thanks, Bose. Maybe I'll jump in here. Yes, the fee per file on a consolidated basis has actually been growing. We're up I don't know the exact percent, but it's trending -- been trending upward. And a lot of that has been driven by commercial, the size of the commercial deals and the volume, if you will, or the percentage of commercial revenue we have in our mix. Home price appreciation certainly has an impact on the purchase side of things, and it probably contributes about 60% of the total. So if, let's say, home prices are up 5% annually, then maybe our fee per file might be up 3%. So that's that 60%.

If you look at the third quarter, our purchase fee per file was up about 4% over the prior year third quarter. Our refinance fee per file was up about 7% over the prior year third quarter. And just looking at trends that I'm looking at now, not a lot of change really in the subsequent months. October's purchase fee per file was up about 1% over September. That could be a lot of things. It doesn't necessarily mean home prices continue to rise. It might just be the mix of business. And then in November, they purchase -- residential purchase was flat with October. So again, I get the sense that prices -- home prices are stabilizing, but it sometimes takes time and price discovery for people to figure that out. And I think that might be why things aren't as robust maybe as they might be. But I think stability in home prices is going to be helpful to -- we believe there's a lot of demand out there, and I think that will be helpful to getting more deals done.

Okay. And then in terms of the commercial fee per file, is that less sort of formulaic in terms of how much commercial -- how much of the transaction size goes up versus the fee per file itself?

It's certainly driven by transaction size, and it probably varies by state, certainly. Some of them are regulated and there's a rate sheet and others, it's just negotiated. But certainly, as property values increase, commercial fees per file increase. I don't know, Mike, if you wanted to weigh in at all on that.

I think that's absolutely correct. And Bose, and I think others have talked about this as well, some of the types of deals we're doing in the industry, particularly the data centers are just larger. And so the fee per files are getting a benefit overall from some of these larger transactions than we've really seen historically.

Okay. Great. And then switching over to margins. You guys reported a very strong margin in the third quarter of 17.8%. Can you talk about where you think commercial -- sorry, where you think overall margins could end up in 2026 relative to 2025?

Yes, yes. Well, maybe I'll start with when we came into '25, the base case was it's going to look a lot like '24, and that really held up for the first half. I mean, it was very, very similar. And then as you point out, we had that especially strong third quarter with a lot of margin expansion, and it was driven by just a better commercial environment, refi environment, stable purchase, and good expense discipline and good performance from some of our non-title businesses in the Title segment, and we talked about that on the call.

I think as we go into '26, and there's a lot of variables that go into this, as you well know. But I think the base case would be if you look at the MBA and Fannie Mae forecast, they're pretty similar. And they're projecting existing home sales to be somewhere, let's call it, in the 4.4% to 4.5% range. And maybe it's changed since the last time I looked at it, but somewhere in that range. That's about a 10% improvement over where we are right now. We're running around 4%. So if you've got some more existing home sales and a stable to a plus refi market, and a stable to a plus commercial market, our base case would be we'd have better margins in '26 vis-a-vis '25. But there's always the variables around what happens with rates. That assumes rates stay pretty stable or decline and it assumes that home affordability doesn't get worse, things like that. But that would be the base case, I would say.

Great. And then can you remind us what you've said about 2025 margins versus 2024 for the full year? And then in terms of your normalized range, which is that 15% to 20% number, what takes you back to the midpoint or higher?

Well, yes, back on '25, again, the starting point was a lot like '24 until the third quarter. And with that outperformance, we now are ahead of where we were, I think, for 9 months, correct, Tony?

Yes, yes.

And we would assume that we would, at this point, again, other things being equal, outperform '24. I don't know by what magnitude. And then in terms of -- what was the second question?

Second part was just the normalized range, the 15% to 20%...

Yes. I think that's still a good range. We're still in year 4 and we're nearing the end of a fourth year of really low transactional environment. And it's still very volatile. I mean, just look at the way rates have moved around. I already talked about it. We had rates declining in the third quarter last year, then they went back up in the fourth quarter. They stayed high for a good part of this year. Now they've come down and who knows where they go from here. So it's just with the volatility, I think the 15% to 20% is still probably a right range to think about. If we get up an environment with stronger existing home sales and lower rates and strong commercial, we can do the upper bound of that and maybe like we did in '21, exceed it.

Yes. Okay. Great. Actually, let me just remind people to submit questions through the chat.

I wanted to dig into the commercial side a little more. Can you talk about just the commercial pipeline? You noted that commercial open orders usually decline in 4Q, but they've stayed pretty elevated, which I guess bodes well for '26. And what's the -- is there a typical time line between open and close? Or does that vary quite a bit?

Yes. Well, the pipeline is really good, and we've talked about this. We're running -- I just want to get to my numbers here, but we've been running in the mid- to higher 800 a day pretty much all year. We've only had 1 month in '25 where we were under 800 a day, and that was January. So -- and in context, if you look at really the back half of '22, '23, '24, it was all mid-700 kind of ranges. So we've had a step-up in volume.

And then on the national side, it's had more strength. And we've also talked about this, I think, 6 consecutive quarters with double-digit open orders on national. So that just tells you we're building a pipeline. And to have November be the second best open month of the year at 891 a day, that tells you there's some real strength as we go into next year.

In terms of the closing time frame, it's just tough in commercial. Some close quick and some don't. And so it's hard to say what sort of the average is. What we do know is in a given year, we close and you can look back at 10 years of data, somewhere in the mid-50s to low 60s of the full year open orders. Your closing number will be 60% of whatever that full year open number. So if that's helpful, that's the model. And then you can pick your fee per file that you want to pick and you know what our revenue is going to be. And we've said this year, we expect that will be $1.4-plus billion, and we still think that. And that will be our third best year ever. And '26 could be better.

Okay. Actually, just sticking to that last comment, your record years were '21 and '22. I mean, just given the pipeline that you're seeing right now, do you think '26 could be better than '21 and '22?

I think we could certainly get to that $1.5 billion number, maybe be better, maybe be right at it. That's based on continued strength, obviously, in those open order numbers. Something else that I think can be additive is -- and we see signs of it. It's still somewhat anecdotal, but we see signs of office transactions picking up. And I think I talked about it on the call that we survey our commercial managers every quarter that run our national footprint. And they're in the action on commercial every day.

And we survey them about what asset classes are showing top to bottom the most strength in downtown office and suburban office for the first time I can remember, weren't at the bottom of a survey. I think we surveyed 12 asset classes, and I think they were 7 and 8 in this last survey, which might not sound like a lot, but they've been 11 and 12 for about 4 years. So it's anecdotal information, but encouraging.

Yes. Okay. Great. Actually, there are a couple of questions from the audience.

First, what's the relative incremental margin profile of changes in the fee per file versus the changes in the number of files. So I guess, the changes in the price versus volumes?

Yes. I don't know. I'd probably need an economist or some sort of -- someone smarter than me to help you with that. I mean, generally speaking, we guide toward a 40-plus percent incremental margin on direct revenue. And obviously, that's a combination of transaction number and transaction fee per file. We've always said we'll take numbers over price appreciation or fee per file because when volume hits, we're very efficient at processing it and our incremental margins surge even beyond that 40%. But I don't know specifically the ratio, if you will between the number of transactions versus the fee per file.

Okay. Great. And then actually another question.

You talked recently about using AI to build a new title plant more efficiently. If this becomes more standard, does it mean that smaller players can build their own title plants? And how does this impact your business across both revenues generated from selling access to your title plants as well as your agency business?

I don't know if it creates more opportunity for others to do things with title plants. We -- when we think about our proprietary data, which includes lots of things, but our title plants is a big part of that, and our starter repository is a big part of that. And we have the biggest starter repository in the industry by a lot. We really think most importantly about how does that allow us to reduce our marginal cost of producing the work. And 90% of our title volume gets touched by our proprietary title plants, our automation technology, our integration with offshore, centralized work environment and so on.

And we do sell access, but it's a smaller part of the puzzle. So whether that could have more competition, I don't know. But we focus a lot on how efficient we are in managing these plants and the quality and the cost effectiveness of using them. So I feel confident that from a competitive standpoint, we're really in a good spot.

Yes. We get that question a lot. So some people may believe that a big part of our revenue source is selling access or selling the information. And really, to Mike's point, I mean, we use our title plants to generate our title commitments and our title insurance policies. Revenue from selling to third parties is minimal. It's very -- it might be different with our competitors, but for us, it is very minimal to us.

Okay. Great. And then actually, just a follow-up on that. I mean, in terms of the competition from smaller companies, I mean, the fact that you guys have, I guess, presumably almost the largest title plants in terms of your coverage, presumably your title -- your AI agents could be trained in a way that a smaller company presumably could not, right, if they don't have the access to the data unless they buy it from you and presumably you don't sort of -- data that they purchase can't be, I would assume you should train their AI agents, right, to do that?

I mean I think it's a good point. Data is key. And if you don't have the data, it's very difficult to leverage AI, and I think anyone would probably agree with that. So you got to start with the data, and then you can use tools like AI and other tools to be more efficient and more productive. So I think if you're a player that doesn't really have the data, it's a little tougher to leverage the AI.

Yes. Okay. Great. And actually, I wanted to switch on to your expectations for purchase and refi now as you look into 2026. And can you remind us where refi stands as a percentage of the -- of total revenues and where that was sort of when refi was very strong?

Yes, Bose -- refi as a percent -- the way we measure it, refinance as a percentage of total direct revenue. So that actually would include all of our direct revenue. It was 7% in the third quarter, 7% in the second quarter of this year, 7% in the first quarter of this year. And basically, it's been at that level for a while now. I don't know what it was when rates started going up in early '22, but it dropped to single digits in a hurry. If you go back to 2020, which was the peak, certainly in terms of percentage, we were 30-ish percent of our direct revenue was residential refinance. And then in '21, also a very strong year, that dropped down into the 20s. I think the full year '21 was 22%. And so it went from 30% down to 22%. And now we're in the single digits, call it, higher single digits.

Okay. Great.

Yes. And to kind of give some color around like what could it look like as we go into '26, maybe frame kind of where we were. And I think our peak month, and it might have been '21, Tony, I don't remember, but we opened 9,000 open refinances a day. And then when we got to more of the trough like levels in the past few years, that got down to around 1,000. And 1,000 was really consistent across -- what was it, 2 years, Tony, maybe?

Right. That was the trough.

So you can kind of -- the 9,000 was ultimate peak probably for our history. I'm not saying that's a ceiling, but that was probably the ultimate peak and 1,000 was kind of the floor. And as we started '24, we were running for the most part at that 1,000 level. And then rates got a little bit better in August. And by September, we were opening 1,800 a day. That's an 80% improvement with some -- then rates went up and it went back down. And then this year, we hit 2,100 a day in September. And I'm calling out these numbers just to give some color or some context to how quickly it can change, where if you looked at just September of '25 at 2,100 a day, that's a doubling of a market if you think about that 1,000 number.

So I think into '26, I can't tell you what it's going to be, but if rates stay where they're at or come down more, a doubling of the market, I think, is certainly in scope and maybe more. I mean if rates got into the 5s, I'm sure somebody can do the analysis of how many more people get brought into a refi opportunity at 5.5% or 5.75%. You think of how many people have taken out mortgages above 6.5% in the last couple of years. It's millions of people. I don't know what the number is, but the potential opportunity is there. But I do think to really unlock it to more than a double, let's say, I think you'd need to see rates get into those 5s.

Yes, yes. Okay. Absolutely. Makes sense. And then actually switching over to your loss provision. It's been about, I think, it's 4.5% now for a couple of years. Can you talk about the outlook for taking that higher or more likely lower? It's quite a bit -- it is higher than your peers, and you just feel like you're being potentially conservative on that provision.

Yes. We've been very consistent at 4.5% of title premiums for several years now. One thing that may be a nuance, but it's important if you're comparing to our peers is we don't often talk about it the same way. So we talk about it as a percentage of title premiums. I believe our peers talk about it in terms of title revenue. And so if you're talking about a percentage, make sure we're doing the math properly.

Having said that, I think Stewart is roughly in the same number. If you use title revenue for us and for Stewart, I think we're in the ballpark of 3-ish percent or something like that. No, no. I'm sorry, I think it's 3.9% or something like that. So we're probably fairly consistent with Stewart. I would say that my look at First American is that they are releasing reserves all year long. So basically, what that means is they're not suggesting that their losses for the current year are going to be any different, but they are saying that their losses in prior years were overestimated, and so they're taking some of that back in. And it looked to me like it's about $30 million year-to-date. So that's, I think, probably helping their margin as they work through the year.

In terms of our outlook, I still feel like we're in a good spot. I think 4.5% of gross title premiums is a good number for now. Our carried up against our actuaries has been very consistent for a few years now, somewhere in the, call it, $30 million to $75 million above their central estimate. So there's a little cushion there, not a lot of cushion there. And the band is pretty wide. And so it's very immaterial that difference. And so yes, I think -- I don't know that we're being overly conservative. I think we're kind of right down the middle in terms of that number. And my outlook would probably be more of the same unless I see something different.

Okay. Great. And then can you talk about just the losses on commercial versus residential? Is there much of a difference in terms of loss ratios?

Generally speaking, our losses, whether it's commercial or purchase or refinance is probably a little lower generally in terms of ultimate loss ratio. But purchase and commercial are pretty consistent. You will have periods where with the foreclosure crisis, we had a lot more on the residential side or when you had project failures in the '08 policy year, for example, we had a spike in commercial losses. But over a long period of time, I would say they're pretty consistent.

Okay. Great. Actually, let me just -- there's another question. So I guess the question is, I can imagine on a very large data center project, you guys as the industry leader capture more than your existing share of commercial. Is that right? Whoever in the stack on that meta DC probability isn't calling one of the smaller players. So yes, I guess the question is on these big projects, do you guys get more than your pro rata share just given your size?

Yes, it's an interesting question. I would say that for the most part, you see probably the big underwriters, the bigger underwriters maybe getting a strong percentage of those transactions. But agents do get data center transactions, but then they've still got to go obviously to the underwriters to get that component done. And the reality is on these big ones, it really requires participation from -- certainly, the big 3 or 4 underwriters are all participating sometimes even a smaller one. And yes, we're getting a decent share of that given our strength, our balance sheet, our ability to take higher liabilities than others on these transactions. So I don't know if there's any data around market share of data center transactions, but we certainly feel like we're and many or all of these deals in a pretty significant way.

Okay. Actually, and then one just related question to the loss content. So on the larger deals, do you guys -- are you syndicating some of that exposure or reinsuring just given the size of some of those?

We're not. I mean, we take what we can take. Oftentimes, I would say the buyer of the title insurance, which the customer, if you will, kind of self-syndicates in a way, they bring in the rest of the industry because a lot of these deals are very large, and it takes the old industry to take on that risk. We have a reinsurance treaty separate apart from this, it's not facultative. It's a treaty. So it's not a deal-by-deal situation at all. It's basically coverage to the extent we have large losses, we go to that treaty to help cover that. But on a deal-by-deal basis, I would say there's a lot of coinsurance.

Okay. Great. And one more question from the audience.

Can you talk about the incremental margin per file versus volumes? I guess the question is existing home sales versus new home sales. Is there a margin differential there?

Yes, there really wouldn't be a difference. I mean if we've got a single transaction and it's a new home and you've got an existing home and there's the same liability in the same area, it's going to be the same. The new home segment, particularly with the large national builders, they generally have captive title agencies. And so a lot of that volume is going through an agency distribution versus direct. And so there's different margin profiles on that for that reason.

Okay. Great. Just remind people if you want to submit a question, please submit it through the chat.

So switching over to capital. Can you talk about capital currently at the holding company and then just your priorities for capital return or capital...

Yes, we reported at the end of the third quarter that we had about, I think, $735 million in holding company cash, which was up about $150 million from the prior year quarter. So we had a real strong quarter in terms of cash coming up to holdco. The priorities clearly are the common dividend, which we just raised as we typically do in the fourth quarter Board meeting, and we raised that again. And so let's call it, $560 million or $565 million of, call it, committed capital for an annual dividend. We pay about $75 million in interest expense, so pretty nominal on that front.

And then we're opportunistic with buybacks and M&A. M&A has been light over the last couple of years with price discovery, and we're always looking, and we're doing some deals, but not as many as we would normally do. And we look to spend in a normal year, maybe $200 million to $300 million in M&A activity, and it's been less than that probably the last couple of years. And then buybacks, again, opportunistic. We like to be in the market on a regular basis, sometimes more aggressively like we were in the second quarter when we felt like there was a little bit of pressure on the share price for a bit of time there. So we were more aggressive there. And then we came back in the third quarter. And again, it was more of a daily consistent approach to buybacks, but it wasn't at the same level that we did in the third quarter -- I'm sorry, in the second quarter. And that's kind of how we like to do it on the buyback front.

In a, call it, an environment like what we've seen over the past few years, we probably generate $900 million to $1 billion of cash flow to holdco through our subsidiaries. And then in a strong year, it might look more like $1.5 billion. Going back to the 2021 year, for example, I think it was more like $1.5 billion of free cash flow.

Okay. And in terms of more capital return, I mean, the main variable is to be heading closer to that range. I mean, not necessarily up in that area, but it's sort of a more normalized market generating more dividendable income up to holdco.

Yes. I mean we would expect stronger cash flows. And then with that, we kind of look at the buckets and see where we spend that. The dividend is pretty consistent, and it grows nominally over time. And then the opportunistic piece would be, are there -- is there a reason to go bigger into the buybacks and are there more opportunities on the M&A front.

Okay. Great. Actually, let's switch over to technology. Can -- I guess we touched briefly on AI, but can you discuss your investment in AI? What are the use cases for AI within the title industry? How big an impact do you think it could be over time?

Yes. I'd start with saying I think the impact could be big. It's hard to know today just how big. But our approach, and I'm really excited about the way we've approached this is you've got to build the right foundation to deploy it. And that starts with having data and knowing how to leverage it and it helps to be moved to the cloud. And then you've got to build literacy in your organization on how to use it. And that -- sometimes I think people forget about that part. But to me, it's the most important part. So we've rolled out AI tools to every single employee across the footprint. We can see each month that more people are using it, engaging in our training, engaging in things, submitting things about how they want to use it.

We've also rolled out the Microsoft GitHub tool to all of our developers. We have hundreds of developers in this company, and they're using it and learning more about it. And we're going to build this literacy to the point where everyone has these tools in their daily work life. And if nothing else, we're going to see a personal productivity lift just from that. But I think that's really to scratch the surface kind of point, when you think about -- and I think this is true for the industry, when you think about all the documents that we handle in this industry, I think AI fits nicely into that because I think it's sort of built to quickly analyze, distill, collect information that's in document repositories. And there's all kinds of use cases, I think, that will come out of this.

But at the end of the day, I think it's going to allow our employees to get to answers faster, serve customers better and become a more efficient process for our company and certainly the title industry in general.

Okay. Great. And then just sticking to technology, can you talk about the inHere digital platform? I think the recently announced partnership with CLEAR on -- to combat fraud and just broadly where that sort of fits in what you're trying to do?

Yes. Maybe I'll start with CLEAR and then jump back to inHere because they're sort of separate. When you think about fighting fraud, wire fraud, hackers, all those things, there's not one way to stop it. It takes multiple things. And at the core of all of them is are you properly authenticating the people you're doing business with. And there's lots of ways we do that. The partnership with CLEAR is really just another element of that. They have one of the best databases of identity out there. And so we will start to leverage that database to better authenticate the people we're doing business with. We think that will be very helpful in combating fraud.

But it's just one thing of many, many things, and there'll be more things to come because the bad actors get better at this. At the same time, we're all trying to defend it. It affects every business and every industry. inHere, again, is separate, although I think it has a protective element to it because one of the things we're doing is we're moving people out of e-mail to transact with us. We're having people start the transaction in the inHere platform, which starts with an authentication process that you don't have when you're dealing with e-mail.

And then once you authenticate them and then now all the communications occurring and they're tracking the transaction in the app or on the portal, if it's a desktop, you're just by definition, reducing some risk because e-mail is really one of the vectors that the bad guys and the bad people access to get people to do the wrong thing and wire the money to the wrong bank, for example. We've rolled out inHere across our entire footprint. We're the only company that's done it. We've had it now for a couple of years really across the footprint. We've got all of our operations on SoftPro, so we're on a single system.

The APIs connect directly into inHere, and we keep adding features to it and seeing more use and seeing our core customers, real estate agents and transaction coordinators really loving the technology because they can get information whenever they want it, it's self-service, on-demand 24/7, 7 days a week. And you think about a top real estate agent that's managing multiple transactions at once. They can have it all on the inHere platform regardless of what brand they're working with us. We have multiple brands.

And many times, we have agents that work with all of our brands. It's all there branded for them. And I just think it will continue to grow like we've seen already. And when the market starts to rebound, then I think we'll really see an increase in activity on the platform as well.

Great. And I think you said 85% of the users are using that platform. Is that the number you gave?

Yes. So when we -- all of our transactions now, we send out an invitation to inHere. We call it start inHere. So they're invited to go on into the portal and get authenticated and then they have that ability to be on the platform. And I think we're seeing currently about 85% take us up on the invitation and start that way. And that's been growing that number. So that tells us that consumers are adopting it and like it.

Okay. And that number, is that an agent side? Or is it on -- is it used by...

This is direct. So -- it's not -- in the way that it's deployed for our direct footprint really is specific to the direct footprint. There are some features, digital-like features that exist on the SoftPro side for agents, but it's not the same platform.

Okay. Okay. Great. We have a few minutes left. Please submit questions if you have any through the chat.

Actually, switching to the regulatory side, can you give a quick update? Anything new on the regulatory front, either at the FHFA side or at the state side, you're keeping an eye on?

Yes, I would say it's really quiet, I would say, on the federal side or the FHFA side. The pilot still exists. It's the same pilot. It really hasn't changed. I think there's very little activity in it maybe by design. So we've not seen much impact. We have a lot of engagement with Fannie and Freddie on all kinds of issues, and we work together on a lot of different things. We're not in the pilot, and that's set to end in May. We'll see if it does or it doesn't.

On the state side, there's always a lot going on. There's a lot of different bills across the country that can impact the title industry, good or bad. They're not necessarily designed to deal with the title industry, but sometimes it's just sort of collateral. And a lot of them revolve around redaction kind of statutes that have been more prominent over time. And so we have a team of people that monitor every state legislature and every potential bill that we think can impact us.

And I wouldn't say that there's a lot of alarm bells going off, but we do work very well with the states and try to take a collaborative approach like we understand what you're trying to accomplish, but here are some things you need to think about if you're going to redact some of the public recording information as an example. And we frankly had a lot of success in working with states, but it's sort of a constant monitoring process.

Okay. Great. Actually, I wanted to squeeze in a couple on FG. Actually, can you walk through the rationale for distributing the 12% of outstanding FG shares as a dividend to shareholders and just what that means going forward?

Yes. Maybe I'll jump in and Mike can weigh in as well. Yes, the bottom line really is that the Board has been very, very pleased with FG's performance and the opportunity for future growth and future cash flow and future value creation. And so a lot of people have asked if we're going to ever spin this off to our shareholders or when we're going to spin it off. There was a 5-year window or a 5-year point where we could do it after that point. And that 5 years came along in early June of this year.

But again, the bottom line, the Board is still happy with the asset. The challenge we've really had is that there wasn't enough public float out there for buyers, for shareholders to invest in F&G. And we heard that a lot from people, especially F&G heard it a lot that, hey, if we want to own F&G, it's very difficult to accumulate a position because of the public float available. And if we do accumulate a position, it's hard to sell that if we chose to do that.

And so the Board decided that we would -- we, FNF would distribute another 12% of our ownership to FNF shareholders in the form of a dividend, which would be a dividend to our shareholders, so a benefit to FNF shareholders, but at the same time, a benefit to F&G and F&G's shareholders by getting more shares out in the marketplace and increasing that 18% float to about 30%. So FNF will own -- post distribution, which happens at the end of this year, FNF will own 70%, and we'll have 30% out there in the public domain. And it increases the availability of public float to about $1 billion, which I think is meaningful because it allows people to invest.

Now the other question we've gotten, what does that mean for a tax-free spin? And it does prevent or preclude FNF from spinning the rest of F&G to FNF shareholders in a tax-free manner because you have to own at least 80% of the company to do that. So the Board looked at it and viewed it as, hey, we like this asset. We want to keep this asset. We want to grow this asset. But we want to give them a fair chance to get a real valuation in the public domain.

Okay. Great. Well, our time is up. So thanks very much to FNF for participating, and thanks to the audience for joining us today.

Thanks, Bose. Thanks, everybody.

Thank you.

Thank you.

Good morning, everyone, and welcome to day one of the Stephens Investment Conference here in Nashville. I'm Oscar Nieves, a research analyst here at Stephens, where I cover real estate services, including the title insurance industry. We're excited to kick things off this morning with Fidelity National Financial, ticker FNF, the nation's largest title insurance and a key player in the U.S. housing and real estate ecosystem.

Joining me are Mike Nolan, Chief Executive Officer; Tony Park, Chief Financial Officer; and Lisa Foxworthy-Parker, SVP of Investor and External Relations. FNF occupies a unique position across both housing and financial services through its leading title operations and its majority ownership of F&G, a growing life insurance and annuity business. We'll touch on both sides of that story today, starting with the housing and macro backdrop and then moving on into the title segment, capital allocation and finally, F&G.

So starting with the big picture, Mike, the housing market has been through quite a reset, higher rates, affordability challenges and limited supply, but there are some early signs of stabilization. How would you describe the current state of the U.S. housing and mortgage market right now? And are you seeing tangible improvement in purchase activity?

Well, I would start by saying we're kind of in year 4 of still a very low transactional environment for purchase and refinancing activity on the residential side. And I'll mention it in the middle, but there are a couple of signs that are encouraging. But when you look at existing home sales still forecasted to be around 4 million units a year, there's no way to describe that other than it's historically low. You can go back and look at 1995 when it was 4 million, and we probably have 40 million more working age population in the U.S. now. So it doesn't really make sense.

But to your point about maybe some signs of improvement, there's more inventory. So that's good. Home prices have seemed to stabilize a bit or they're not going up as fast as they were for the past 3 or 4 years. And rates are modestly lower. I know they've been bouncing around a little bit, but let's say, [indiscernible] just 3, 4 months ago. Having said all of that, our activity on the purchase side is still very flat to last year. We're still in the seasonal part of the business where the fourth quarter on the open side is the historically weakest every year, and then it builds as you start the next year, which we would expect. And so stable, but maybe it's still low levels.

Yes. Yes, absolutely. And as you look ahead, how do you see the recovery unfolding? Do you think it's going to be gradual and uneven or something sharper once rates begin to ease more meaningfully?

Yes, it's a good question. There's a lot of assumptions that you have to make around this topic because it's more than about rates. As we've talked about before, affordability, consumer sentiment, the labor market, the overall economy, life events, all these things factor into purchase activity. I was looking at Fannie Mae's most recent forecast. And for '26, they're assuming rates are at 6% might be optimistic, we don't know, but 6% and existing home sales at about 4.5%. So 4.5% is a pretty nice increase over 4%.

About 10%.

Yes, about 10%. I think that would be pretty solid. And I think that's a reasonable forecast if you're assuming the other things are staying relatively the same. In other words, labor market is still good, home prices stay stable, inventory levels are good. I think we can see a nice improvement next year, a nice step up. But for -- I think a market -- and I still believe there's a lot of pent-up demand, but I think for -- to get back maybe to a $5 million number, that might take a little bit more time and probably need to see rates getting into somewhere in those 5s.

Yes. And to that point, precisely, what do you think would have to happen just lower rates? Because I don't think lower rates alone would unlock demand. What else? Deeper supply or prices easing?

Yes. I think the broader affordability problem is probably it and prices have just gone up so much in the last 4 or 5 years. Lower rates help the affordability issue, though. And I do think if they got into the 5s, we'd see some of that pent-up demand unlock. There is more inventory. And assuming the sort of, as I said before, other things are equal, not a worsening in sentiment, not some shock in the world. There's a lot of things going on that could get worse, right?

But probably the base case for me is that we start to see this get better over the next period. If you look at what happened after the recession, depending on when you say it started, but let's say, '07 to the end of 2009, existing home sales basically went up from 2010, 2011 through -- up to 2021. So you kind of had this growth. There might have been a year it came down a little bit, but the line goes up. And then, of course, rates took off in March or April of '22, and it all changed. So I think my base case is that we see kind of a year-over-year improvement in existing home sales, other things being equal.

I don't know where we stand on the homebuilding front at this point, but it certainly seems like more homes would be better for affordability. Certainly, we went through a period of several years where we were very much underbuilding in this country. And yes, I don't know where we stand today, but that could also be an impetus to get more...

And are you seeing the increase in construction in the right geographic areas? Because that's a big problem because you can have a lot of construction where people are not looking to buy and that doesn't help much the problem.

Right. Yes, you read a lot about potential improvement in homebuilding. I'm not sure if it's happening yet.

Yes, it's certainly better than it was during the sort of recession years and the years that followed. We were probably building half or more less than we need to every single year, and we did that for a long time. But I've seen different reports that say we're short somewhere between 3 million and even 6 million homes in the U.S. under the need of homeownership, people needing homes. We are 3 million to 6 million short.

Where are those people standing?

Well, apartments.

FNF is in constant contact with lenders and real estate agents. What are you hearing from partners about transaction pipelines and just overall consumer sentiment?

Yes. I think if you talk with people on the purchase side, primarily real estate agents or brokers, they would, I think, for the most part, say there's still a lot of pent-up demand, but hit some of the same themes we've already touched on affordability, inventory, et cetera, and the need for lower rates. But I think they're generally optimistic that if prices stabilize and rates come down a little bit, that we'll definitely see more activity.

On the origination side with the nonbank lenders and even the banks, I think they're optimistic about the refinance opportunity. And you even hear that in some of the public commentary that some of the public nonbanks make in the earnings calls and whatnot, that, again, they see the same things we see. Orders react very quickly to modest decreases in rates. And while we're still at historically low levels, to envision a doubling in activity, I don't think is we're far off from that and probably more with lower rates.

Yes. And to that point, maybe for you, Tony, as mortgage rates have fallen from around 7% to the low 6s. But like you said, they've been fluctuating of late. What impact have you seen on volume so far, both residential and refi?

Certainly, on the refinance side, very -- to Mike's point, very rate sensitive and I mean orders doubled in a matter of days. Less so on the purchase side because as we've talked about, there are more things that impact that process. Having said that, certainly, rates -- lower rates help affordability, which is, I think, the key part of unlocking that pent-up demand that we have on the purchase side. I don't know what the exact magnitude of the increase on the refi side, but...

Yes. So in July and then to September of this year, rates went down about 40 basis points from July to September and September volumes were 60% higher than July volumes on the refinance side. That's significant. Still at low levels, but it's significant. And that's what the...

And refi it's not subject to the same seasonality...?

No, it's much more of a financial event. It doesn't matter if it's cold out, you can still refi, but maybe I'm looking for homes as much...

Exactly.

It's important to know, and I think our audience does is that our fee per file on refinance is much lower than on a purchase transaction, probably about 1/3, $1,200 or $1,300 versus in the high $3,000s for purchase. Having said that, we still generate strong margins when we have volume. And when we don't, obviously, then it's pretty...

And to that point, we look at ICE reports, just the distribution of locked in mortgage rates. I think if it goes below 5%, I think it is, the numbers just explode. It like it goes into like more than 3 million people being in the money. How do you see a scenario where that could happen within the next 12 or 18 months? Or are you not seeing that happening anytime soon?

I mean it's hard to predict, but a 5 -- like 5.0 seems a little far off right now for sure. But we've had periods where rates have moved drastically in short periods of time. But...

But I would think -- even in the 5s, and I don't remember, I haven't looked at the report for a while, but I have to believe between 5 and 6, you still get a lot of refinance volume.

All right. Let's turn to the business mix now. And we keep touching on some of the same points. This is just recurring. So you've often said that refi volumes are rate driven, while purchase activity depends on broader fundamentals. What are the key factors you're watching most closely on that front, particularly on the purchase side? We've said affordability is the main determinant, but how -- what are indicators that point you in that direction? Because looking at home prices may not tell you the whole story.

Yes. I mean we've said this a lot. Our best indicator of anything is our open orders. And that's how we manage the business. And we don't think a lot about forecast. We don't think a lot about assumptions or what ifs because they're just that, right? So we look at our open order activity every day, every week, and we manage the business to that activity because we know that's where our revenue is going to be in 45 to 60 days because that's when the closings occur.

And right now, what we see is, again, like I said at the beginning, a low historical transaction environment. But inside of that, a very normalized pattern of purchase activity. We're in the seasonal part but the fourth quarter is the weakest. We expect it to build back up as we go into next year, and we're basically flat to last year on our purchase orders. So that's just kind of how we think about running the business.

Yes. And turning to the commercial side, which has been a standout, 7 straight quarters of double-digit growth, including more than 20% year-over-year recently. What's driving that strength? And how sustainable do you think that is?

Well, I think a number of things are driving it, and I do think it's sustainable, and I'll give a little more on that in a second. What we're seeing is a lot of activity across multiple asset classes. and a lot of activity across multiple geographies. So it's not one place. It's really across the country on a commercial standpoint. Our open orders have been running in the mid-800s all through this year. And that's a real step up from where we have been absent what happened in '21 and the first half of '22 when we averaged about 1,000 orders a day, full year '21 and the first part of '22.

So it seems like activity stepped up. And it's things like industrial transactions, which is a broad category, but includes things like data centers, which everybody is talking about, and those are -- tend to be very large deals, higher premiums. Multifamily has been one of the strongest segments across the last 4 years. Affordable housing, another really good segment and continues to be a very strong segment. And then areas like energy kind of fill in. They're really good deals. They're not necessarily there all the time. If you think of things like solar and wind and liquefied gas and all different kinds of energy transactions.

Retail has been pretty good and hospitality. So all these segments have been pretty stable. The only ones that really haven't are -- if you think of office as 2 segments, suburban and then downtown, those have been the weakest segments for the last 4 years. And -- but what we're starting to see is anecdotal signs that office transactions are coming back a little bit. We do a quarterly survey of our 19 national commercial offices. So they're dispersed across the country. All they really do is commercial work.

So they've got good beat on the ground of what's going on. And every quarter, they rank how the segments are doing in that particular quarter. And this past quarter, office for the first time wasn't 11 and 12. We rent 12 segments. So it's anecdotal, but it's still interesting because they're right there. They're seeing it in real time. And they say, "Hey, it's 7 and 8 now." We're also seeing in October, our open orders per day did not fall off from where they had been for the previous 9 months.

And typically, when you get to the fourth quarter, if you go back and look at the last -- you can probably go back and look at the last 10 years, commercial opens fall off in the fourth quarter. And closings is usually the best closing quarter, but people kind of turn their attention more to get the deals closed. And at least for October, that held up at a really, really nice number. So we're going into '26 with a lot of inventory and a lot of strength. And if office starts to transact more, it's a really additive element to '26. So that makes us bullish.

One last point on that. We're projected to do and we've said this, maybe $1.4 billion in direct commercial revenue, maybe modestly better. And other than '21 and '22, that's a significant step-up from all the other intervening years where we were around $1 billion, give or take. And then of course, we did $1.5 billion in '21 and '22. So we're almost back to those levels, record levels. And we're just coming off our third -- our first -- our best third quarter ever for commercial revenue.

Maybe taking a step back because I think it's clear what -- on the residential side, what a transaction entails. Purchase is pretty straightforward. People are buying a home, whether it's new construction or an existing home or they're just refinancing their existing mortgage. But in the case of commercial, is that usually new construction? Is a transaction between investment funds and REITs?

All of the above. I mean it's really everything from just straight refinances and refinances are up in commercial, about 20% this year, a little bit more, maybe 22% like that. So people are getting financing, but just to refinance, someone owns a commercial building somewhere and they refi, just like they do a home. You've got sale transactions, whether it's offices or medical centers or hotels or things like that, even foreclosures in commercial. That's a transaction for us. New construction transaction.

And then there's deals where maybe it's a merger of companies and the real estate is sort of secondary in the transaction. But because of the sale, there could be a portfolio of properties that have to be title insured as that the company is selling to another company. So there's lots of ways that these transactions occur. And the good news for us is we get to participate in all of them.

There was a time, I think, when people thought that commercial real estate transactions were just office buildings and usually in big cities. Fortunately, for us, it's not that at all. And maybe it was -- I'm sure it was overweight that at one point. I remember 2015, it was a huge part of what we did. But now there are so many different segments and so many different types of transactions.

I'll give you an idea of a more sophisticated one, like let's say, a solar deal. Well, the first thing they got to do is compile and acquire a bunch of land. And many times, those are owned by multiple people. And so we're involved in all of that, researching all those properties, making sure it's transferred properly and then they assemble it all, and then they're going to put on the solar panels and do what they do there, if it's wind, whatever it is, and then that also all gets title insured. So some of these transactions can play out over long periods of time on these larger transactions.

And on the multifamily side, does the level of activity on multifamily give you an indication of what's to come on the residential side? Because one would think that if investors are buying more multifamily properties, maybe they're anticipating that affordability is not going to improve significantly. Am I reading too much into that?

I think you're probably think of it the right way. I just don't know that we have insight.

Yes, it would be hard to know that. And sometimes they're speculating as well. They're guessing that this is the way it's going to turn out and ultimately, it might not. And you have cities that overbuild in a particular sector like a multifamily because they don't have the demand.

But yes, I mean, you could ask them and they're making a bet one way. But it's filling a need right now because people need housing, they need shelter, and we talked about the underbuilding of single-family residences. And so I think they're at least providing some level. And of course, we -- I mean, we participate even if that's not a home purchase, we get that on the commercial side.

Maybe we touched on this a little bit, but as we look towards 2026, how are you thinking about the commercial outlook? You mentioned earlier that you think it's sustainable, but how do you see that momentum continuing? And do you expect it to normalize in 2026 or maybe 2027 or beyond?

Again, as I said, we're running in the high -- mid- to high 800s a day in orders, which is a nice step up from where we've been for the past few years. And if that continues through the fourth quarter, that's going to really carry us into '26. And a lot of these deals take time to close. So you can open transactions third quarter, fourth quarter that don't close until the end of next year or the middle of next year. So you've got this inventory that adds to confidence. And there doesn't appear to be slowdowns in some of these other areas like industrial and affordable housing and areas like that.

Relative to the rest of the segments or the rest of the outlook, I would just say our base case is modestly improving purchase. And refi up more than that as long as rates don't go back up. And if rates come down another 40, 50 basis points, refi could be 2 to 3x where we've been. '27, it's a little hard for us to look out that far. I pretty much focused on local orders and so to think about '27.

I was thinking more of the commercial since you mentioned that those are long cycles. So now we can turn to the core title business. FNF remains the market leader when it comes to margins, which over the last 10 years have exceeded peers by around 600 basis points on average. So how -- what's helped you maintain or grow that margin, especially now that volumes are depressed?

Yes. It's a lot of things, but we've been investing in automation and technology for decades. And we've been focusing on how to make our title operations, our title production more efficient and leverage our data, our automation, our offshore ability, centralization initiatives. And that's just been a 20-year kind of a journey as we go along. And we're at a point now where a little over 90% of our volume has the ability to touch our proprietary title plants, our starter repository, which is the largest in the industry by far, our title automation technologies. We've got a company called NextDays that we purchased...

20 years ago.

20 years ago, first company to get a patent in automated title. We're the first company to do instant decisioning and refi. I did that a long time ago. Doma never got the message, but we did it a long time ago. And we're the first company to build and distribute a digital transaction platform across the industry. So we've been doing this a long time. And I think it really shows up in the margins.

And I would point to, in particular, years like '21, which had record volumes, and we did a 21.7% and really expanded out our margins on our peers in those high-volume markets. And I think it's because of the efficiencies we've built. We're more productive. We didn't have to hire as many people. Our offshore ability is tightly woven into that 90% of orders that are touched. I told you that are touched centrally. So we've just done a lot of different things, I think, over time that have really helped the margins. And then certainly, our strength in commercial doesn't hurt either because it's probably the highest margin business.

Yes. I mean I think the #1 driver for FNF over a long period of time, we've both been here a long time, and it's never not been first which is maximized margin in whatever environment we're given. And our operators know that and they focus on that, they get paid on that. And so it's -- before technology, it was staff management and being right on that.

And to some extent, it still is, but it's always been a focus on how do we get the most out of that next dollar, even when COVID hit and nobody knew what was going to happen, but we know that our orders fell to -- fell by 50% in the day or whatever it was, we weren't going to sit around and figure out how this played out because we knew that it wasn't our money, so to speak, that belongs to the shareholders, and we're going to maximize margin. And so we got very aggressive. As it turned out, it was actually a good year, and we ended up hiring a lot of people back that we couldn't keep during that period of time. But we would do it again the same way because it's about maximizing.

And to that point, I think you reported that in 2020, you reduced your staff by 13% in 1 quarter. And then as orders came back up, you increased by another 13%. So how -- can you walk us through how can FNF be so nimble and so...

Well, it was [indiscernible] challenge. I think we went down over 20%...

Yes, it was like 18% or 20%...

2 weeks.

And then we probably hired them all back in 3 weeks. But when you think about -- one, it's just sort of how we think about the business. We're very aggressive in managing staffing. And it goes back to that we run it to the open orders. And as Tony mentioned, open orders fell like 45% to 50% in a day. And so we were very aggressive. But we have 1,300 locations across the country that do direct title work. And that's where all those employees sit. And so when you think about it from that standpoint, it's a more manageable -- I'm not diminishing doing these things because no one wants to let go a staff. But when you distribute that across a wide footprint, it's a more manageable exercise in both directions.

Yes, sure. And going back to the technology, now that volumes are relatively low, how do you balance your cost discipline to maintain margins with the continued investment in automation to maintain your leadership position, especially in the age of AI and data analytics, how is FNF incorporating AI and managing costs?

I would say that expense discipline and investing in technology and automation kind of go hand in hand. And you need expense discipline so you have the money to invest. Tony talked about our focus on getting the next incremental dollar and getting incremental margins. Our discipline around that allows us to invest.

And in our view, we'll invest in every market regardless of the size because we know how critical it is to the future. And I talked about it a minute ago, all the things we did for 10, 20 years relative to title automation and data and different things like that have really reaped the benefits as we're in the position we're in now. So they kind of go together. I think it's not one or the other. It's both.

Yes. We even called out in the second quarter that our incremental spend on tech and risk was, I think, up $10 million over the second quarter of the prior year. And it's kind of the new run rate. And -- I mean, we have been able to maintain that level. So the third was the same as the second. And I think we're at a good run rate. But yes, we -- to Mike's point, we continue to spend.

Yes. And then I'll touch on it, if you'd like. So the way we think about it is the first thing you have to do is diffuse it in your organization. You got to -- this is our view and many others, I think. You've got to build literacy. We have 24,000 employees. We need them all using AI in their daily lives, so they start to understand it better. They start to find better ways to gain personal productivity with it.

Just think if we get -- just pick a number, 15% lift in personal productivity over 24,000 people. That's going to have an impact. And so that's where a big part of our focus is. And we've rolled out -- it happens to be Microsoft's Copilot tool across the organization. We're seeing usage go up every month, people regularly doing things. We have all kinds of seminars and different training events, and we promote it. And we can see the usage going up significantly every month.

We've rolled out the development tool, the GitHub tool to all of our developers. We're starting to see that activity increase. And we've got a number of work streams in place that we're evaluating its impact. We're also very focused on doing it responsibly. And I think you've got to be really careful with AI that you have the proper governance in place and the proper checks and balances that you're not introducing risk, particularly into an insurance business. We underwrite to 0. We don't underwrite to 2%. We don't underwrite to 5%. We have claims, but we underwrite to 0. And so it's really important that you don't introduce AI tools that could change the dynamic of that core tenet in the title industry of underwriting to 0.

And what you're seeing, what are the typical use cases of AI across your workforce?

We've seen some nice use cases. We were standing up a title plant in a county, and you basically have to go back and get -- you decide how far you want to go back. But let's say you get 20 years of documents to take your plant back 20 years, you've got to assemble a lot of documents and get the right information keyed into a database. We had a nice use case with AI, helping us with that, making it much more efficient.

I think one of the places that everybody sees with AI is its ability to analyze documents and distill them very quickly. And you think about the amount of documents we touch in the title industry, I mean, you guys might not know, but it's a lot. I mean it's just a lot of documents. And so we're looking at use cases across legal, escrow, searching, really to help our employees just be able to do their jobs faster and serve customers better and more efficiently. And really with that human in the loop kind of an idea kind of behind it.

Okay. Now let's turn to capital allocation and capital priorities. Tony, FNF has been consistent in returning capital through cycles, since 2020, more than $4 billion returned to shareholders. How are you balancing dividends, buybacks and reinvesting into the business with -- in the current environment that we've been in for the past 4 years?

Yes. I mean the great thing about it is we're a cash generator. And it's probably one of the -- maybe the single greatest strength of FNF is our ability to generate cash to the holding company level. Even in a trough year, it might be $900 million or $1 billion of cash flow that comes up to Holdco, which is important because we pay a very generous dividend. It costs us about -- with the new dividend increase, it's about $560 million, $565 million annually. So we need to start there and make sure that we have enough cash that pays that dividend.

After that, it's easier because our debt service, our interest expense is about $75 million a year, very manageable, nothing coming due for until at least '28, I think. And so from that standpoint, we're in very good shape. After that, it becomes more opportunistic between buybacks and M&A. We've been very acquisitive over 40 years, but we pick our spots. And the last few years has been pretty quiet. We still buy title agents and we still look at a lot of title agents, and there are some great ones out there, and we'll buy those or buy some of those over time.

But it's been pretty quiet as the dust has settled on a trough market and people try to figure out what the right price is to transact. So that's been pretty slow the last couple of years. Buybacks are opportunistic as well. We look at our cash flow. We look at our share price. We like to be in the market regularly at kind of modest levels. We were aggressive in Q2. We felt like the stock had gotten beaten up a little bit, and we had the cash. And so we were aggressive.

And then we dialed it back a little bit in Q3. But we do like to be an active participant in the buyback. I can't remember the total. Yes, one other thing I wanted to say, we ended the third quarter with $733 million of holding company cash. So we still have quite a lot there, and that's up $150 million from the second quarter. So it was a very strong quarter.

And FNF authorized the repurchase program, I think, over 20 million shares.

We renewed that. I think it might have even been this year. But yes, we have over 20 million share authorization still available. And I mean, if that -- if for whatever reason we use that, it's pretty easy to go to the Board and have that re-upped.

All right. There's been a lot of regulatory focus on title fees, maybe not lack of information there and how things are being interpreted. But how is FNF preparing for potential changes? And do you see any major policy shifts ahead? And we've heard also about portable mortgages and 50-year mortgages. What do you have to say to all of that?

Well, maybe we'll just start with the title waiver because that's kind of what you're referring to or the title acceptance pilot. And periodically, there's noise around it or what have you. But the reality is it's a very small program. It was intended to be a very small program, and it continues to be a very small program. So we've seen very little impact on any volumes really related to that.

You've got some companies out promoting alternatives like attorney opinion letters, and we've seen almost no impact from that. It's really a product that just doesn't stand up to the value of title insurance in really any way even from a pricing standpoint. In some cases, it's significantly more expensive than title insurance. So we'll see where this goes when this pilot ends. But right now, it's kind of a small impact. And other than that, what was the second part of the question, I'm sorry?

Those things that we keep hearing about 50-year mortgage...

50-year...

Affordable mortgages.

Well, we got already. I think it's good in the sense that people are trying to come up with ideas to help. Whether those are the right ones, though, I think creates questions. The portability issue, I think, is not easily implemented. Changes would need to be made in order for that to even be possible. So I don't know that, that's going to really do anything. And kind of similarly with the 50-year mortgage, it's -- I mean, what's the rate going to be on a 50-year mortgage? Is it going to be lower than a 30-year mortgage?

I don't think so.

Maybe not. I mean a 15-year mortgage is less than a 30-year mortgage. So should a 50-year mortgage? I don't know. So the whole claim around savings might not be there if rates -- and I don't know what the rates would be on a 50-year mortgage. And then you've got the issue of can people build any equity with a 50-year mortgage. Do lenders want to offer...

And on the portability side, do you think that opens the potential for just a bubble from a credit quality perspective? Because I'm transferring my mortgage to someone who I don't know has the same creditworthiness.

Yes, it could. I think there's probably a lot of things that would have to be flushed out. There have been assumable mortgages in the past under certain conditions, but it's not the rule. It's much more the exception.

All right. Let's touch a little bit on F&G. You recently announced the distribution of 12% of F&G's common stock to FNF shareholders. If you can walk us through the rationale for that decision and why 12% instead of the full spin and how that positions both companies going forward?

Do you want to start or?

Yes, I can start. Yes. I mean, really, the bottom line, the Board loves the asset. They love the contributions. We've grown F&G from a $26 billion portfolio to over $70 billion portfolio. It contributes 32% of our adjusted earnings this year. So it's been a nice complement in a trough title market. We've expanded our sales channels from independent agents, which was just one channel to broker-dealers and own distribution and sales have gone from $3 billion to $15 billion annually. And so all that's been very positive.

We recently transformed or at least adjusted to a more capital-light strategy where instead of selling as much as we can, it's more opportunistic about, okay, let's sell our core products because we know the return we can generate on those core products. And the other ones, we have to -- let's look at it and make sure that we're getting the right return right now. Otherwise, we don't have to sell that. We don't have to grow sales, every single quarter.

And with the reinsurance sidecar, that's also capital-light, we earn fees on that, and we can move some of that obligation off our balance sheet. We have an own distribution investment where we buy portions or majority ownership of these distributors, and that's also fee income. That's all been very positive. The challenge we've had, and we unlocked a little of it when we spun off 15% of it, we wanted to highlight the value of F&G because it seemed to get lost in a wholly owned -- being wholly owned by FNF. And so a few years back, we spun off 15%. And we got some recognition. So I think that worked.

But lately, we're hearing and it feels like there just wasn't enough shares in the marketplace for people to own. We had interested buyers who said, yes, we really can't accumulate what we'd like to or need to under our rules own. And if we could, I'm not sure we could sell it if we wanted to. And that's a challenge. And so the Board looked at that, obviously, weighed the idea of a full spin because you give up that if you drop below an 80% ownership stake.

But the Board has been very happy with the asset. They love the asset. They're not intending a full spin. So it was really about how do we unlock F&G's share price and landed on 16 million shares, drops FNF to about a 70% ownership stake. It doubles the float opportunity to $1 billion or thereabouts. And so people will now be able to buy F&G shares.

And has the distribution been effective? Or when is that scheduled?

So that's scheduled. I think it's shareholders of record in mid-December, and the distribution will happen on December 31.

All right. And looking ahead, speaking of F&G, how do you see F&G fitting strategically within the broader FNF platform? And what does the long-term relationship between the 2 look like? You touched on that. The Board likes the asset. So there -- it seems like there's no intention of divesting anytime soon.

I think the foreseeable future is assuming this works and that float gets enough shares out there that matter because that could be a variable, right? What if we find out, well, that wasn't enough shares. But the expectation or at least mine would be right now, business as usual, capital-light strategy, F&G generating strong cash flow like FNF and FNF participates in dividends that F&G would pay. And so continue business as usual as we grow both of the businesses...

And I would add -- I agree with Tony. I would add also, when you think about like own distribution strategy and with the sidecar with Blackstone, I don't know if you mentioned that or not, but that's more of a fee-based model with that piece of the business. F&G starts to feel a little bit more like FNF in terms of how it's structured and the business that's running. It still has the balance sheet, of course, but we like that aspect of it.

Right. And so before we turn it over to the audience in case anyone has any questions, one last one is, what do you think is the most misunderstood aspect of FNF's business or strategy right now? I think I have a clue, but I'll let you answer that.

And maybe I'll start, and then you can jump in. I don't feel that really misunderstood. I think investors know us pretty well that follow us. Probably just the biggest overhang is just the market itself. It's a volatile, uncertain market. We're in year 4 of a downturn. When does that end? And no one really knows. And so I think that just creates questions around the business a little bit. And then probably with any business, it's what does technology do? Is it disruptive and things like that. But I don't know that we're fundamentally misunderstood. But you may think differently.

No, I would agree with that. I think there are a couple of points we like to emphasize, and I mentioned it earlier, our cash flow generation ability I think that probably gets underappreciated or overlooked from time to time. Our investment in F&G, I think we probably don't get full value or even close to full value for that. This could change with more float out there. And then kind of to Mike's point, the incremental margin that we can generate on an upside or an uptick in direct volume is significant. I mean it's 40% plus. And we're in a trough market, generating a very strong margin, but it can be a lot better with more volume.

So there's been a tremendous amount of talk about blockchain, [indiscernible] how do you guys view that? I mean, we've looked at that internally when we see the impact in the industry. Can you talk about the blockchain?

Yes. We -- I mean, we've looked at blockchain from when it first came out 10 years ago, I think, when we first started hearing about it back in 2016. And the initial thesis with blockchain was it was going to sort of replace all the title plants and all the data that the industry uses to sort of process the title production and title commitments. And that turned out to not really be a real opportunity, more expensive than the data banks that were already there.

And a number of counties even looked at it, and I don't think you saw anybody really adopt blockchain at that level. This idea of smart contracts could play out, I think, in the title industry. I think it's very early stage. But potentially could get used on the closing side. And I don't know that we've seen really an impact from things like cryptocurrency as an acceptable form of cash for transactions. Could that change? I suppose it could, but that has not happened at this time. And there's not really a lot we could do about it. We would really just adapt if that changed in the overall ecosystem.

So what I'm hearing is you have no...

Other than looking at it and seeing what the developments are, we do not.

All right. Maybe just to close, what gives you most confidence in FNF's positioning as we move into the next phase of the housing cycle?

Well, I would say it's a number of things. Our go-to-market strategy is a multi-brand company. No one else has that. We have a significant multi-brand go-to-market strategy. It's very impactful. It allows us to have the market share we have to pull more transactions out of individual key markets. Our scale is a significant competitive advantage. This is a community-based business where you kind of win or lose based on your position in local communities across the U.S. We have more of that than anyone else by a lot. And that scale really comes into play in a rising market. Tony kind of touched on the leverage we have and our ability to drive incremental margins, and that's really where that scale comes into play.

Anything you'd add to that?

No. I think that's good.

All right. I just want to say thank you again to Mike, Tony and Lisa for joining us today and helping us start the day. And thanks for everyone for being part of the discussion and enjoy the rest of the conference.

Thanks, Oscar.

Thank you.

Thank you.

Good morning, and welcome to FNF's Third Quarter 2025 Earnings Call. [Operator Instructions]

I would now like to turn the call over to Lisa Foxworthy-Parker, SVP, Investor and External Relations. Please go ahead.

Thanks, operator, and welcome, everyone. I'm joined today by Mike Nolan, CEO; and Tony Park, CFO. We look forward to addressing your questions following our prepared remarks. F&G's management team, including Chris Blunt, CEO; and Conor Murphy, President and CFO, will also be available for Q&A.

Today's earnings call may include forward-looking statements and projections under the Private Securities Litigation Reform Act which do not guarantee future events or performance. We do not undertake any duty to revise or update such statements to reflect new information, subsequent events or changes in strategy. Please refer to our most recent quarterly and annual reports and other SEC filings for details on important factors that could cause actual results to differ materially from those expressed or implied.

This morning's discussion also includes non-GAAP measures which management believes are relevant in assessing the financial performance of the business. Non-GAAP measures have been reconciled to GAAP where required and in accordance with SEC rules within our earnings materials available on the company's investor website. Please note that today's call is being recorded and will be available for webcast replay.

And with that, I'll hand the call over to Mike Nolan.

Thank you, Lisa, and good morning. We delivered strong third quarter results across both our Title business and F&G segment, demonstrating the power of our complementary businesses and our ability to execute in dynamic market conditions. Our Title business delivered outstanding results given the low transactional environment. I'd like to start by thanking our employees for their unwavering focus on meeting our customers' needs regardless of the environment while continuing to deliver industry-leading performance.

We delivered adjusted pretax title earnings of $410 million, an $87 million or 27% increase over the third quarter of 2024, and an adjusted pretax title margin of 17.8%, up 190 basis points from 15.9% in the third quarter of 2024. These results reflect strong performance across the business, including commercial and refinance, as well as our centralized and home warranty operations. Additionally, our disciplined expense management drove strong incremental margins.

Looking at our Title results more closely, starting with purchase, we continue to see normal seasonality in daily purchase orders opened with an 8% sequential decline. Within the quarter's results, however, we saw daily purchase orders opened in September higher than August. This is atypical and due to the modest downward trend in mortgage rates during the quarter, which we believe is indicative of the pent-up demand for housing. Our daily purchase orders opened were, in line with the third quarter of 2024, down 8% from the second quarter of 2025, and for the month of October, down 2% versus the prior year.

Refinance volumes have been responsive, as 30-year mortgage rates decreased by 30 basis points during the third quarter. This generated an increase in refinance orders opened to $1,600 per day in the third quarter, up from $1,300 in the sequential quarter. Our refinance orders opened surged to $2,100 per day in the month of September, reflecting how refinance volumes can change with moves in rates. Our refinance orders opened per day were up 15% over the third quarter of 2024, up 22% over the second quarter of 2025, and for the month of October, up 27% versus the prior year.

For commercial activity, we delivered direct commercial revenue of more than $1 billion in the first 9 months of 2025, up 27% over $801 million in the first 9 months of 2024. We have a strong inventory of deals to close and are on track to deliver our third best commercial year ever, trailing only the exceptional markets of 2021 and 2022. Notably, this was our best third quarter in history, with a 34% increase in commercial revenue over the third quarter of 2024. This was driven by a 38% increase in national revenues and a 29% increase in local revenues. In particular, national daily orders opened were up 11% over the third quarter of 2024. We now have 6 consecutive quarters with double-digit growth in national daily orders opened. Local market daily orders opened were up 5% over the third quarter of 2024. Total commercial orders opened were 856 per day, up 8% over the third quarter of 2024, in line with the second quarter of 2025, and for the month of October, up 8% versus the prior year.

Diving deeper into commercial. We continue to see broad-based activity across several asset classes that are driving growth, including industrial, multifamily, affordable housing, retail and energy. What makes this year even more remarkable is that we're achieving these results with minimal contribution from the office sector, which remains subdued, but is showing signs of improvement. We have also seen a 22% increase in commercial refinance orders opened in the first 9 months of 2025 over the prior year. Overall, we remain bullish on commercial, and office is a potential added element into 2026.

Bringing it all together, total orders opened averaged 5,800 per day in the third quarter, with July and August each at 5,500 and September at 6,300. For the month of October, total orders opened were over 5,600 per day, up 8% versus the prior year.

Overall, our Title business is performing well in what is still a low transactional environment. Our seasoned management team has a proven track record of managing our business to the trend in open orders and varying economic conditions. This discipline has generated a steady level of free cash flow, allowing us to continue to invest in our business through attractive acquisitions and technology as we manage the business and continue to build for the long term.

Turning now to some updates on our technology initiatives. Our Inhere digital transaction platform provides an enhanced and reinvented customer experience as it continues to scale. During the third quarter, Inhere engaged 85% of residential sales transactions and reached more than 860,000 unique users, demonstrating deep integration into daily workflows. We continue to enhance our identity verification processes and technology to streamline and secure customer authentication. These initiatives help combat the rise in impersonation and wire fraud in property sales, and they complement our existing efforts to deliver the most trusted, efficient and fully digital closing experience nationwide.

We have deployed AI tools enterprise-wide, integrating practical tools into daily workflows to enhance productivity and margin efficiency. With thousands of employees now actively engaging with AI through structured training, pilot programs and targeted departmental adoption, we are building a sustainable AI fluency across our organization. At the same time, we strengthened our governance, privacy and security foundation, helping to ensure that our innovation agenda continues to be executed with discipline, scalability and long-term value creation in mind. Over time, we believe that our ongoing investments in technology, combined with our robust curated data, will lead to increased efficiency and productivity in our operations that will continue to support our market-leading pretax title margin.

Turning now to our F&G segment. F&G's assets under management before flow reinsurance have crossed the $70 billion milestone at the end of the third quarter and were up 14% over the prior year quarter. We remain pleased with F&G's performance and foresee plenty of opportunities to grow and increase the value of the business. On a stand-alone basis, F&G reported GAAP equity, excluding AOCI, of $6 billion at September 30 and has grown its book value per share, excluding AOCI, to $44.07, up 61% since the 2020 acquisition.

With that, let me now turn the call over to Tony to review FNF's third quarter financial performance and provide additional insights.

Thank you, Mike. Starting with our consolidated results. We generated $4 billion in total revenue in the third quarter. Excluding net recognized gains and losses, our total revenue was $3.9 billion as compared with $3.3 billion in the third quarter of 2024. The net recognized gains and losses in each period are primarily due to mark-to-market accounting treatment of equity and preferred stock securities, whether the securities were disposed of in the quarter or continued to be held in our investment portfolio.

We reported third quarter net earnings of $358 million, including net recognized gains of $176 million versus net earnings of $266 million, including $269 million of net recognized gains in the third quarter of 2024. Adjusted net earnings were $439 million or $1.63 per diluted share compared with $356 million or $1.30 per share for the third quarter of 2024. The Title segment contributed $330 million, the F&G segment contributed $139 million and the Corporate segment had a net loss of $1 million before eliminating $29 million of dividend income from F&G in the consolidated financial statements.

Turning to third quarter financial highlights specific to the Title segment. Our Title segment generated $2.3 billion in total revenue in the third quarter, excluding net recognized losses of $38 million, compared with $2 billion in the third quarter of 2024. Direct premiums increased 19% over the prior year, agency premiums increased 13% and escrow, title-related and other fees increased 9%. Personnel costs increased 11%, and other operating expenses increased 4%.

All in, the Title business generated adjusted pretax title earnings of $410 million compared with $323 million for the third quarter of 2024 and a 17.8% adjusted pretax title margin for the quarter versus 15.9% in the prior year quarter. As Mike said earlier, these results were driven by strong performance across the business as well as disciplined expense management. Our Title and Corporate Investment portfolio totaled $4.8 billion at September 30. Interest and investment income in the Title and Corporate segments was $109 million, up 6% versus the prior year quarter and excluding income from F&G dividends to the holding company. The current period includes growth in 1031 Exchange and other escrow balances and a benefit from a legal settlement.

Looking ahead, we expect quarterly interest and investment income to trend down from the $109 million in the third quarter to around $100 million in the fourth quarter and then decline around $5 million in each subsequent quarter through 2026, assuming an additional 75 basis points of Fed rate cuts over the next 9 months. In addition, we expect approximately $30 million per quarter of common and preferred dividend income from F&G to the Corporate segment. Our title claims paid of $58 million were $12 million lower than our provision of $70 million for the third quarter. The carried reserve for title claim losses [indiscernible] to provide for title claims at 4.5% of total title premiums.

Next, turning to financial highlights specific to the F&G segment. Since F&G hosted its earnings call earlier this morning and provided a thorough update, I will provide a few key highlights. F&G's AUM before flow reinsurance increased to $71.4 billion at September 30. This includes retained assets under management of $56.6 billion. F&G's gross sales were $4.2 billion. F&G generated core sales of $2.2 billion, which includes indexed annuities, indexed life and pension risk transfer, and had $2 billion of MYGA and funding agreements, two products we view as opportunistic, depending on economics and market opportunity.

Net sales retained were $2.8 billion compared to $2.4 billion in the third quarter of 2024. This reflects flow reinsurance to third parties, as well as F&G's new reinsurance sidecar, which was effective August 1. Adjusted net earnings for the F&G segment were $139 million in the third quarter compared with $135 million for the third quarter of 2024. F&G's operating performance from their underlying spread-based and fee-based businesses continues to be strong. F&G continues to provide a complement to the Title business, with the F&G segment contributing 32% of FNF's adjusted net earnings for the first 9 months of 2025.

From a capital and liquidity perspective, FNF continues to maintain a strong balance sheet and balanced capital allocation strategy. FNF continues to return excess cash to shareholders through share repurchases and has remained active throughout the third quarter and into the fourth quarter. During the third quarter, we repurchased 631,000 shares for a total of $37.5 million at an average price of $59.37 per share. We have returned capital to our shareholders through common dividends and share repurchases combined of $627 million year-to-date, including $172 million in the third quarter.

From a capital allocation perspective, we entered 2025 with $786 million in cash and short-term liquid investments at the holding company. During the first 9 months, the business generated cash to fund our $406 million quarterly common dividend paid, $62 million of holding company interest expense, $150 million investment in the F&G common equity raise and $221 million in share repurchases, all while keeping pace with wage inflation and funding the continued higher spend in risk and technology required in today's landscape. We ended the quarter with $733 million in cash and short-term liquid investments at the holding company, up 26% from $583 million at the end of the second quarter.

This concludes our prepared remarks, and let me now turn the call back to our operator for questions.

Thank you. Before opening for questions, I'd like to turn the call back over to Mike Nolan for some additional remarks.

Thanks, operator. We issued a press release this morning announcing that our Board of Directors has approved a change in FNF's equity ownership stake in F&G, our majority-owned subsidiary. We plan to distribute approximately 12% of the outstanding shares of F&G's common stock to FNF shareholders. Following the distribution, FNF will retain control and majority ownership with approximately 70% of the outstanding shares in F&G. This will increase F&G's public float from approximately 18% today to approximately 30% after the distribution, strengthening F&G's positioning within the equity markets and facilitating greater institutional ownership.

This distribution reflects our confidence in F&G's long-term prospects and is intended to unlock shareholder value by enhancing market liquidity and broadening investor access to F&G's shares. Additionally, we view the stock distribution as a tangible and meaningful return of value to FNF shareholders, along with our announced increase in our cash dividend.

Operator, please open the call for questions.

[Operator Instructions] Our first questions come from the line of Bose George with KBW.

In terms of the spend of the 12% to F&G, could you have spun the whole piece out tax free? And then does this spend at this 12% is a taxable dividend change your ability to dividend the remainder tax free?

Yes, Bose, this is Tony. The short answer is, yes, we could have spun the entire company to FNF shareholders tax-free. Clearly, we didn't do that. And by dropping below 80%, that option is off the table. Having said that, other options are, certainly, we could do other distributions in the future. But you heard what Mike said, and he can add to that. But the idea is that the Board has been very pleased with F&G, and we wanted to accomplish two things: One, continue to benefit from FG's performance and the expected future performance, but at the same time, getting more shares out there so that people could buy in a meaningfully way -- a meaningful way they could buy shares in F&G.

Yes. And I'll just add real quick, Bose. Again, to review what Tony said, I think it's a clear indication that the Board recognized the need to get additional float and liquidity. But I think it's also an affirmation of our confidence in the business and its future growth. And when we look at things like the movement to a more capital-light fee-based structure, that, I think, leads to a lot of opportunities for us and in some ways, starts to make F&G more like FNF from a capital light standpoint.

Okay. Great. And then actually, just switching to the -- just the commercial business. Just given the strength there and what you guys saw this quarter and just looking out based on your pipeline, et cetera, I mean, do you think 2026 could end up matching the peak years, '21, '22?

Well, it's Mike. Bose, it's a great question. I mean, certainly, when you think a range of outcomes, I would say yes. We just had the best third quarter in our history. Which is amazing. And when you look at 10 consecutive months of better open orders month-over-month in commercial, consecutive quarters of double-digit growth in opens for national orders, you're building a pipeline that will go into '26. And when we look at the strength across asset classes, it continues to be led by industrial multifamily and industrial, obviously includes the data centers, and I know others in the industry have commented on that. But it's still very broad-based.

And I'll make one last comment. We do a quarterly survey -- I've talked about this before -- of our 19 national commercial offices. And they rank -- for the quarter, activity across the asset classes. And in this past quarter, for the first time, our 2 office categories, which is suburban and CBD were not 11 and 12. They moved up to 7 to 8. And so relative to my comment in the opening, that could be just an additive thing to '26. And maybe a long-winded answer to say, yes, there's certainly an outcome that could be a better commercial performance than '21 and '22.

Our next questions come from the line of Terry Ma with Barclays.

Maybe just a follow-up on the FG distribution. I mean, you called out some other options, maybe just kind of outline those options? And then it also sounds like from your comments, you obviously like FG kind of longer term. Does this kind of change like -- is it your intention to kind of hold the asset kind of longer term, I guess, at the end of the day? And if so, like, why would you call out like other options kind of available to you?

Well, Terry, I think we do like the asset, and we think there's still a lot of continued growth. I think it's unquestioned that under our ownership, this company has transformed and performed exceedingly well. We like to pivot to capital light. But like any business, anything is on the table if it's a better idea at some point. And so could there be other changes? Sure. Is that the current plan? I would say not the current plan. And this was really just let's get more flow, let's unlock some value for shareholders. We think, like I said before, it is a tangible distribution of value to our FNF shareholders, along with our increased cash dividend. So I wouldn't read too much into it, other than what I just said.

And more shares out there, more shares of F&G out in the marketplace not only benefit FG and FG's shareholder base, but really FNF because we believe that having more float allows more upside to F&G, which obviously, as a majority owner benefits FNF.

Got it. That's helpful. And then maybe just on the title margin this quarter of 17.8%. I think last quarter, you guys called out a number of things, including higher investments in security and recruiting. I guess, maybe just update us on that? Like, was there any impact to the margin from those initiatives this quarter? And how should we kind of think about the margin as we go through the end of the year and into next year?

Thanks, Terry. I'll let Mike talk about the margin outlook, if you will. But in terms of one-timers that we called out last quarter, I would just say we had a couple of small items that mostly offset in the current quarter. I mentioned in my comments that we had a legal settlement, which boosted investment income a little bit. That was about a $7 million benefit, and we had $4 million in addition to that as a benefit in other operating expenses, all related to that legal case, which settled after many years.

So that was kind of a plus 11, if you will, offset by what we talked about last quarter, which were elevated health claims, and we also said that we expected those to run through the balance of the year. So we probably had about $6 million or $7 million of elevated health claims in the quarter as well. And so call that netting mostly offsetting each other. And so from a margin standpoint, there wasn't a lot of net positive or negative relative to the -- what we'll call those one-offs.

Yes. And then, Terry, what I'll add, I mean, obviously, it was a great quarter with really, growth across multiple business segments and one of our best quarters in the last 4 years. And we had -- commercial refi was better, some of our centralized businesses, other ancillary businesses like [ home orenton ]. And we just kind of had all of them with improved margins. So that was very helpful to the quarter.

But quarter-to-quarter, there's always puts and takes. And as we go into the fourth quarter, we know it's typically the weakest quarter for purchase closings. So that's a take, obviously. And then you've got to factor in, well, how well will commercial do? We expect that to do well. What's the mix with agency? How do the ancillaries perform? So that's why it's difficult for us to kind of predict with confidence, a particular margin in a quarter.

We would expect the fourth quarter to be good. I think we did 16.6% last year, and we'd expect it to be a good quarter, but we don't fully know. As we think about next year, I think our base case is that we could have modestly better margins than we'll probably do this full year. If we get improvement in the purchase environment, we're now in year 4 of a pretty weak purchase transactional environment. Many have been saying, look, next year, next year, and it's just tough to predict. But if we get a better purchase environment next year, we already talked about possibly a better commercial environment.

And then refi is the one that's really rate dependent. And I just -- and one of the reasons why we called it out in the opener, was to see open orders go from 1,300 in July to 2,100 in September with essentially a 30 or 40 basis point drop in rates just shows you the power of the swings in refi volumes. And again, that will just be rate dependent.

[Operator Instructions] Our next questions come from the line of Mark DeVries with Deutsche Bank.

I just wanted to clarify, Tony, your response to Bose's question on the spin. Did you indicate that now that you'll be dropping below 80%, that if you were to elect to do a subsequent distribution, that, that would not be tax free? Did I hear that right?

That's correct. These are taxable distributions. So this, 12% is the taxable distribution. And if we were to, let's say, opt to distribute the entire 70% ownership in the future, that would not be a tax-free spin because once you drop below 80%, you've, in effect, lost your ability to do a full spin tax-free.

Okay. Just given that, could you talk a little more about how you landed on 12% as being the right number, particularly since you kind of lose that optionality going forward?

And maybe Chris will weigh in here, too, I think he's with us. I think it doubles the float. And so that -- don't like the right number. I don't know, Chris, if you have anything you'd want to add to that?

Yes. No, I mean, it will take us comfortably over $1 billion of free float. So while a small distribution from an FNF perspective, it's quite meaningful to us on the FG side. So it will take free float over $1 billion, which is great. And yet, I think still with a vote of confidence in the upside of FG.

Got it. And then turning to the commercial side. Mike, could you give us some perspective on -- if you think about pre-pandemic, how big of a contributor was office? And how much of a tailwind could that have to your commercial business if that starts to normalize?

Yes. That's a really good question. I don't probably have a very specific answer. It's more anecdotal. But I recall in the years between 2015 and probably 2019, that it seemed like office was just one of the top segments. Particularly, I remember in 2015 and 2016 in markets like New York, there were some just major transactions and things like that. So we might be able to go back and get a better answer on that, Mark. But I don't have a number to give you, other than to say it's been so weak that any [indiscernible] is going to be additive.

Yes. That's helpful. And then is there any margin difference in office compared to your other commercial businesses?

No, I think it's all just about the particular fee per file revenue on transactions. So our margins in our national commercial on a pretax basis generally are north of 30%. And sometimes higher, and we would expect to probably get that on office versus any other type of commercial asset.

Our next questions come from the line of Mark Hughes with Truist Securities.

Yes. Thanks. The earnings from equity investments were pretty good this quarter. What was that? And is that sustainable?

Sustainable is a good question. There is volatility in that bucket. We have some -- I won't name the fund, but we have a few funds that we invest in and have for years, frankly, and the marks there move around a little bit. But the last couple of quarters, you might have seen it last quarter as well, but the last couple of quarters, we've had some really positive results from some marks that we have on, I believe, 1 particular investment in that bucket. So I would say for modeling purposes, I wouldn't go with sustainable. I would think you'd keep that pretty small and then just wait for those to come through.

Yes. What was the actual order count, daily count for refis in October?

Yes, Mark, it's Mike. We opened just a little over 1,800 orders per day in October, which was down from the 2,100 in September, but above the average for the quarter of 1,600. So still really good, but they did come off just a bit.

Refi?

Refi. That was the question, right?

Yes, that was the question.

I'm trying to refi orders. Yes, hopefully, I got it right.

Yes. On the -- you made a point about commercial refi. What was that point? What -- how big is it relative to the overall mix? And is there any particular trend there?

I think the point is it shows that customers are getting financing. And there was concerns about -- you hear these things about [ wallet ] maturity and all this kind of stuff and that maybe people won't be able to refinance commercial properties. And I think the fact that our refi opens are up double digits over last year, I think, points to the fact that maybe the [ market sans ] locked up as you might think. But I wouldn't say it's necessarily a significant overall volume, but definitely additive if you think of it that way.

Yes. And then you had mentioned with Inhere that 85% of orders were engaged. Could you expand on that? And is that to say that the -- in the large majority of orders, the -- it's being used, but maybe it could be used more fully if it's engaged? What's the full level of engagement?

When we open an order, we invite them to Inhere. And so that invites them to a portal environment, they're authenticated and then they interact with us on that environment. And 85% of our orders had engagement from customers to that invitation. And that's an increase over where we've been in the past. And I think it just shows how this is developing and building and gaining attention. So we're excited about that. And then once they're in the platform and they stay in it to track their order through up to closing, we're taking them out of e-mail in the way they interact with us. And we believe that's a more secure, efficient, better customer experience kind of environment.

And to have 860,000 unique users actually doing that in the quarter, I think it's also very exciting, but again, points right back to the scale. The fact that we've actually deployed this across our entire footprint, the only company in the industry that's done that, still. And so I think it's just -- we're excited about the long-term opportunities of that as sort of a transformational customer experience and more secure platform.

Thank you. And this will conclude our question-and-answer session. I would now like to turn the conference back over to CEO, Mike Nolan, for closing remarks.

Thanks for joining our call this morning. Together, the combined business delivered strong third quarter results, demonstrating the power of our complementary businesses and our ability to execute in dynamic market conditions. The Title segment continues to deliver industry-leading margins in a low transactional environment and is capitalizing on stronger commercial activity. F&G is executing on its strategy that's focused on balancing continued growth in the spread-based annuity business alongside the fee-based flow reinsurance, middle-market life insurance and owned distribution strategies as they continue to deliver long-term shareholder value. We appreciate your interest in FNF and look forward to updating you on our fourth quarter earnings call.

Thank you for attending today's presentation and the conference call has concluded. You may now disconnect.

So let's get started. So thank you, everyone, for joining this afternoon. My name is Terry Ma. I cover mortgage finance here at Barclays. I'm very pleased to have the gentlemen from FNF joining me on stage here.

I have Mike Nolan, CEO; and Tony Park, CFO. So thank you very much for joining. Welcome.

Thanks, Terry.

So to start off, let's just maybe get a mark-to-market for third quarter on purchase, refi and commercial order count trends. Can you also just remind us what July trends were and what August is shaping up to be?

Yes. Sure, Terry. I'll start with that. So on the purchase side in July, orders were flat with the prior year, and we kind of saw the same thing in August. They're up about 0.5%. So really a flat purchase market, which really isn't surprising given all the dynamics that are going around with housing affordability and all those things.

Our refi is doing a little bit better. We were up 20% month-over-month in July and up 10% August over August. It will be interesting to see with rates which are starting to come down a little bit, whether that generates some more activity as we go into September. I think it will, but it's going to kind of depend on how those rates hold up.

On the commercial side, it still seems to be pretty strong. We're up 14% July over July and 5% August over August. And our national orders were up 22% in July, and we've talked about the strength in national and they were up 10% August over August.

Got it.

Mike mentioned -- I'll just chime in for a moment. Mike mentioned the rates and them coming down, and I know it's been fairly short lived. But I think the daily rate on Friday -- I didn't look at it yesterday, but the daily rate on Friday was 6.29%. So clearly, about 70 basis points below where it was a couple of months ago.

Yes. So that's helpful color. So as you mentioned, commercial has been pretty strong. I think national orders have been up double digits for something like 5 consecutive quarters. Can you maybe just talk about what sectors you're currently seeing the most activity? And then in terms of the just strong commercial trend, how long can that persist for?

Yes. I mean you're right. It's been 5 consecutive quarters of double-digit growth. And remember, national orders are our highest fee per file part of the business. So that's really encouraging to see that we have that.

In terms of the asset classes, it's still consistent with what we've talked about really for the past couple of years, which is industrial, and that encompasses a lot of different things, multifamily, energy transactions, you think like wind and solar. These data centers, which probably fall in the industrial category are certainly having a big impact on the industry. These are really big-ticket items, and there's more of that. But you've also got things like affordable housing that are still doing well.

At times, the retail, hospitality, gaming segments are pretty good. And the one that's still not is office, although it's getting a little bit better on the margins, but we're having this great kind of commercial market. We're probably on track to have our third best year ever and only behind '21 and '22. And when you think it's doing that without really much office, as office comes back, and I think it will, at some point, I think that will be additive to the commercial opportunity.

Great. So maybe we'll touch on home price appreciation. That's seemingly moderated in several regions and a few regions have maybe turned negative in recent months. So maybe the HPA impacts on fee per file also affect affordability. How do you foresee this impacting your business going forward?

Yes. I would say on the home price appreciation front, we tend to see maybe about a 60% correlation between the change in home prices and our average fee per file that can change from market to market. So if home prices are up 5%, then our average fee on average might be up 3%. Of course, it works in reverse as well.

I guess the good news would be, if home prices stabilize and come down, we should see a lot more volume. And frankly, we would prefer that over a little bit higher fee per file. So we'll give up a little fee per file to get a lot more volume.

Got it. Maybe just digging a bit deeper on fee per file, what are some of the trends you're seeing there quarter-to-date?

I guess I can weigh in on the residential side. I would say, second quarter over second quarter, our purchase fee per file was up about 3%, and our refi fee per file was also up about 3%.

What we've seen in July and August kind of goes to your point that maybe we see home prices stabilizing or maybe even coming down because our fee per file in August is down about 2% from where we were in June on the purchase side. And refi is about flat, so it hasn't moved much.

Yes. And I'd say on the commercial side, the quarter is not over, and it can really depend on what closes out, right, in September. But we've been running about 15,000 on fee per file in national. And I think high 8,000s on local. And I think that's probably a good proxy to think about as we go through the third quarter and then we'll just see what shows up on the closing side in September.

Okay. That makes sense. So maybe we'll shift over to margin. That's been roughly flat year-over-year, the first half at 13.8%, but obviously, there are some margin headwinds from investment and health care costs in the second quarter.

You've indicated confidence in reaching your 15% to 20% margin guide even with the health care-related drag persisting. So maybe just briefly recap the drivers that negatively impacted margin and just talk about your confidence level in achieving that 15% to 20% guide.

Sure. Do you want to start with the headwinds?

Yes. The health care cost was about $12 million in the quarter, which was about 60 basis points. That frankly, it surprised us. We've had pretty consistent trends over the last couple of years. And then really in May, we had very few but high-cost claimants, and that persisted really through May, June, July. And so we took that $12 million charge as an estimate on what the cost would be as we make our way through the year. And I wouldn't be surprised to see maybe $4 million to $5 million in headwinds in the third and maybe fourth quarters.

We can -- there are things we can do certainly next year to plan for if we expect health care costs to continue to increase, changing of programs, working with vendors to maybe manage some of our claims or types of claims differently. And we're looking at all those. We can also raise rates and we can certainly pay more as a company and maybe charge our employees a little bit more.

I don't think this is unique to us in terms of health care trends. I see a lot of articles that talk about health care trends that have been increasing. And frankly, we've been pretty stable for a couple of years. And so I guess this was our point where we saw a little bit of an increase.

And then the second point, smaller number, but we were about $10 million or so higher in tech and security and risk spend in Q2 relative to Q2 of last year. So that was one of the headwinds, if you will.

I think we're on a good run rate. So I don't think that goes higher from here. It's consistent with what we spent in the first quarter, but it is higher than the second quarter of last year. So I think we'll probably be steady as we go through the balance of the year on that front.

And what I'd add to that, too, is when we came into '25, our base case was it was going to look a lot like '24. And that's really how it's played out. Our margin through the first half was essentially flat with last year.

Yes, 13.8%, right.

And as we go through the back half, I think that expectation holds. It should look a lot like last year, and we still expect to probably hit or maybe slightly exceed the margin we had for last year.

Okay. That's helpful. And what about the margin headwind from hiring and recruiting. Can you provide some additional color there on the kind of opportunity you saw and how do you kind of evaluate similar opportunities going forward?

Yes, yes. Thanks. It's a good question. We always focus on recruiting. We always have. And our belief is we do that regardless of the environment.

So we're recruiting every quarter, and we're trying to bring over talented people from other title organizations who can bring us revenue. So these are revenue-attached recruits that we're talking about. We hire other people, but we don't talk about them in this context.

We had one of our best recruiting quarters we've had in a really long time in the second quarter. And I think it's partly just the focus we put on it with our scale. We're trying to do it across all the geographies we're in, and we have more geography than anybody else. And I think there's also -- we're in year 4 of a down market.

And I think there's just more opportunities to talk to people who maybe aren't as happy on what's going on inside the company. Maybe they don't feel they're investing as much in the business as they might in a better market.

We continue to invest. We're doing a lot of interesting things on the tech side and others. And I think it's resonating and we bring them in. They're like many acquisitions. You're bringing in revenue, like you would when you buy a company, but it's one person at a time, but they also have front-loaded expenses before the revenue shows up. So you're hiring them, you've got their cost immediately and maybe some other costs and having them come over, but the revenues may be showing up 60, 90 days later because they've got to start to try to board their clients into our organization before the orders show up and then the orders close out with the tail of 45, 50, 60 days.

So from our view, it's a really positive event that we had such a good recruiting quarter. But compared to the second quarter last year, it did clip the margins a bit.

Got it. Maybe on that note, other mortgage companies have been working on preparing themselves to react just more effectively to kind of an uptick in volumes. How has FNF kind of improved its position since last year?

Yes. We are -- we have a lot of experience with scaling this business up and down from a staffing standpoint. And we're very good at it and the people we have in the field know how to do it in their local markets. And you can look at different points back during the recession back in '07 and '08 when we had to downsize the company by over 1/3. We did that very quickly.

And then as markets improved, we built the company back up. We did it in the pandemic. When that hit in March of 2020, I think we took out 20% or more of the staff in a month or a matter of weeks because our view at the time was it was going to be a bad year. We didn't know rates were going to go so low and we had to hire a lot of people back very quickly.

And we hired a lot of the same people back actually on that one. But our field people are very good at it. And part of it is when you think about the structure, we have 1,300 locations in local communities across the country.

And so if everybody -- and it's not this simple, but if everybody adds 2 people, you just added 2,600 people. And so it's -- the problem to solve, either up or down, is dispersed in a way that makes it easier to solve, if that makes sense. So I think we're -- we're not worried about having to add the staff, if we need to.

Okay. So as we look forward, how can we think about incremental margins on the business for purchase, refi or commercial? Should those kind of pick up more meaningfully?

Yes. I would say that we generally talk about incremental margins in our direct operations at about 40%. And it can probably vary a little bit within those buckets. Maybe our national commercial is probably a little bit stronger or if we get a real surge in, let's say, refinance at the centralized level, then it's probably better than that. But I think that's a pretty good proxy is 40% incremental margins.

Okay. That's helpful. Maybe switching gears a little bit. Are there any longer-term investments that you're getting excited about that you can share with us, i.e., SoftPro or anything else?

Yes. I think there's a number of things. SoftPro is certainly one of them. So SoftPro is the title and close technology we use in our business. And we've now deployed it across the entire footprint. It was a multiyear process to get that done. But we're on one platform, and that actually is very helpful to deploying things like AI as well as gaining efficiencies around managing your tech stack.

We buy a lot of companies over time. And with that, you get a lot of different technologies. So we're very excited that we've gotten SoftPro basically deployed throughout the whole company. Second is our inHere digital transaction platform, which we've rolled out. I think we're in year 4 maybe on that one?

Yes.

And that's now rolled out across the company. It's a transactional platform where someone can start from beginning to end digitally and do a transaction with us. We've got about 1 million users in the past year, I think, consumers, real estate agents, lenders. So it's really gaining a lot of traction. And we think that will continue to grow now that we've fully deployed because it's connected to software, the APIs to surface up the information for the inHere platform in front of the customer comes through the connections with SoftPro. So now that we've got that fully deployed, we can do that everywhere.

We're the only title company that's done it across their footprint, and we've got more scale than anybody else. And we think there's a lot of other things that we can do that are interesting inside in here that can lead to other places and have market share gains. We think it can become a way to engage with customers not just during the transaction, but after the transaction. So we've got some ideas around that. Some things are in pilots. But we think it's interesting.

We just announced the partnership with CLEAR for -- that came out today. We put a lot of effort into working with them to take what they do already very successfully in airports and ballparks across the U.S. and help us deal with fraud in real estate. And not a lot -- we're not prepared to give a lot of specifics today, but we're excited about this. We think it's an innovative idea. No one else has done it.

And that's another thing.

And then really, just AI, in general, we've got a lot of data. We've got one operating system, and we think that affords us a really unique position to leverage AI for the benefit of the company and efficiency and really the benefit of our customers.

That's helpful. Just I guess what ending are you in terms of AI? Are you in the just beginning stages, exploring? Or like how should we kind of think about how that evolves?

I think it's pretty early innings. And here's kind of where we started. We've built out an infrastructure with the Chief AI Officer. We have a working group of individuals throughout the organization that help evaluate use cases, governance, risk, HR, you've got to build kind of a discipline around evaluation of AI. And then the next big step, which we're on is building literacy. So anyone that's got to roll this out in big organizations, you've got to build literacy for your employees.

So we've rolled out the Microsoft Copilot tool for every employee. Everyone's got access to AI tools now to start to learn how to use them in their daily work.

We've rolled out the GitHub tool to all of our developers. We have hundreds of developers in our different businesses, things like SoftPro in India and others.

And then we've got maybe 10 use cases in various levels of study, if you will. And when you think about all the documents that we use in real estate transactions and in our business, I think there can be in e-mails. I think there's going to be a lot of productivity lift leveraging AI tools to help us get through that information quicker, faster, get to the answers quicker, but still with sort of human-in-the-loop control so that we don't introduce risk in a business like title insurance where we underwrite to 0 actually.

That's helpful. Maybe one last question on margin drag in last quarter. Can you maybe just provide some color on why there was extra spend on cybersecurity?

I think the overall environment just requires more spend on tech and risk and cybersecurity. If you go back 5 years, our budget was probably a fraction of what it is now.

And it's just -- I feel like it's just the environment that we're all in to protect our employees, our company, our customers from risks, bad actors out there. And so like I said, I think we're on a good run rate now. But yes, we spend a lot more now than we used to a couple of years ago.

I think that's true of virtually every company. You have to spend and harden your systems from a risk standpoint. The bad actors aren't going away. AI is going to aid that as well. I mean that's a great thing for it to happen in productivity, but it's also going to bring more risk into real estate fraud and other types of fraud.

Okay. Got it. And then maybe just switching gears and talking about the regulatory front. Concerns on the title pilot were reignited. Considering you've conversed with Pulte shortly after his announcement on expansion into pilot, is there anything incremental you can add on just your thoughts or views about the pilot?

Sure. I think maybe to correct something because I think that was the narrative when he made the announcement about Westcor being added as a vendor. I think that was commonly interpreted as an expansion of the pilot, meaning more transaction flows through the pilot. That's actually not the case. And that is one of the parts of the conversation I had with them the next day after the announcement. The intent is not to expand the pilot. The pilot is the pilot. It runs until May of '26. Westcor was brought in as a second vendor, and I think it got brought in because of concerns. I mean I don't know this specifically, but concerns that the waiver idea just wasn't resonating that there was pushback to that.

I mean think about it, if you're a lender, you go from a world of a title policy that provides significant protections, duty to defend, gap coverage, fraud coverage, forgery coverage to a waiver. And I think the Westcor alternative is like a step towards more of a title policy. It's not a full title policy, but it provides some of those protections.

So to me, it was actually a bit of an affirmation of the value of title, that movement. The pilot itself, I think, is very small. And I don't feel it has a material impact on us certainly today. It's due to expire in May of '26. It may get extended, we'll see. And really, really not much color when I talked to the director, I've met with them twice, just reiterated that we don't support the idea of a waiver. We think it's bad policy, a bad idea, but we're very open to continued conversations with the GSEs on this topic as well as many other topics.

We talk to GSEs all the time about various things. We're engaged with them at different levels of our business pretty much every day. And we've always been collaborative, and I think he appreciated that, and we had a good conversation. I appreciated his time and that's kind of where we're at.

Got it. Okay. And then maybe just taking a step back, anything else on the regulatory front you're kind of watching out for?

There's always things going on at the state level. Various bills that are in consideration or maybe have been passed, and they're not necessarily directed at the title industry, but they can have impacts on the title industry or the broader real estate industry.

So we're monitoring state-level bills every day, thousands of them actually, that might have an impact some way or another. And we advocate when we feel the need to, and we're pretty good at it. And I think states are pretty receptive to hearing concerns. We have a team of people that do it. And so really, that probably the other thing is the proposed FinCEN rule. I don't know if you're familiar with that, but FinCEN is proposing to significantly expand the transactions that the title industry has to report to them that might be considered suspicious. And we're talking about an expansion of maybe 20,000 reports today to 800,000 or 900,000 or 1 million in the future. And we think it's not necessary. There's privacy concerns that we have.

We filed a lawsuit to challenge it. We're the only ones in the industry that did that. The form itself will now be requiring, it has 111 fields. They have to be completed on every one of these transactions. Many of them multipart sections. And for it to be compliant, every single field has to be completed or you can't file it. And a lot of times, we're not sure we even have the information.

So that's something that we're concerned about. We're also prepared to -- we're also working to comply with it. It's due to go into effect December 1, unless we're successful. And that's just in the legal domain right now.

Got it. And what is the implication if that ultimately kind of goes through and it gets expanded from 20,000 to.

It's just more work for every closing company and more cost. And again, we think it's overreach from our view, and there's some privacy concerns that we think are important to air out with the government. But we'll comply like we have with anything else, but it's just going to mean more cost and more work.

Got it. Maybe -- I'm sorry, maybe one other regulatory. Are we done with that one?

I was going to ask, any way to kind of quantify or size the incremental cost to be compliant with that?

I don't -- there's estimates out there. I don't really know. I think it's the kind of thing you have to get into to find out. We'll automate as much of it as we possibly can. I'm a little bit more concerned about how able the industry will be to get all this information and what will happen to a closing if there's one field that hasn't been filled out?

Yes. Got it.

Yes. I was just going to mention, and we've talked about this before, but the state of Texas looks at rates every 5 years, they promulgate rates in Texas and proposed a 10% increase earlier this year. That's been challenged, and I believe it's working its way through the courts to see where that lands.

We made an estimate. And if we had 2024 volumes with that new rate structure, it would have impacted our revenue by about $70 million and our pretax profits by about $14 million, assuming we didn't take any actions to reduce that impact. Again, that's just a proposal or a recommendation.

At this point, it's not in effect and we don't know exactly when and where that will land, but I thought I'd throw that out there because that is still an open item.

Got it. So maybe we'll shift gears and talk about capital returns. There has been an increase in the buyback in recent quarters. Maybe just remind us of the priorities when it comes to capital allocation and how you think about use of excess capital?

Yes, I would say the priorities would be our dividend, our common dividend that we pay, obviously, every quarter and look to raise that typically annually in the fourth quarter, and that's about $550 million at the current run rate. So that's clearly a priority number 1 as well as interest expense. Our debt levels are pretty low and our rates on those -- on that debt is very low. So that's $75 million, but clearly a must-have.

After that, it's more opportunistic. It's between M&A and share buybacks. We generate about $900 million to $1 billion annually of holdco cash flow that we upstream to holdco. And that's in a trough environment like what we've seen in the last couple of years. You're right. We did -- so we took a pause for a couple of years on the buyback front because we knew we were in a challenging market and wanted to make sure that we were maintaining strong cash position, which we did and so the Board decided to restart the buyback in the first quarter, and we did that modestly.

And then in the second quarter, we saw some weakness in our share price. It came down from, call it, the mid-60s to maybe the mid-50s or below.

And so the Board at that point, felt like this was a great investment for us to be more active on the buyback front. And so we bought about 3 million shares, spent about $160 million in the second quarter on share buybacks. And we don't give guidance in terms of our expectation for buybacks as we work our way through the year.

I will say and have said that we are active and we typically are active on a daily basis. I'm not sure we'll be as aggressive as we were in Q2, but I do believe we'll be in the market.

And then M&A will -- M&A was softer last year and Mike talked about it a little bit when we talked about recruiting. There are plenty of potential targets out there, but valuation may be an issue. And so we haven't had a lot of M&A activity in the last year, 1.5 years.

Got it. Maybe along that point, kind of what type of deals are you kind of most interested in? And kind of like what are you looking for that fits best into your business strategy?

Well, I would say it's the things we've talked about in the past, and we'd really like to ramp up the agent acquisitions that we've always done.

As Tony said, it's been a little tougher in this lower transactional environment where people want to hang on for a better year to get a better multiple, frankly. And again, we're in year 4 of this down market. Maybe those opportunities will start to break open. But we need to do more of that. If we saw things and we've talked about it in things like home warranty or appraisal, subservicing, these other connected businesses we have, that's where we'd like to do things. We're not really looking outside of the real estate related businesses to invest in.

Got it. Okay. That makes sense. So I'll be remiss I won't talk about FG. It's been really great for earnings, generating about 30% of FNF-adjusted earnings last few quarters. Maybe just -- it feels like it's going to be a more durable part of the company kind of going forward. So maybe just remind us how FNF views FG and just talk a little bit more about what FG kind of looks like going forward?

Yes. Maybe I'll touch on that. Mike can weigh in. I would say that the Board has been very pleased. I think the thesis behind the acquisition was, let's buy a business with recurring revenue, recurring earnings that we can grow and kind of complement the title business, which is cyclical, and it's really exactly what's happened.

We've expanded. We got the ratings upgrade. We've expanded into multiple channels. We've grown our sales from $3-ish billion to $15-ish billion annually. We've grown our assets under management from the mid-20s to close to $60 billion now. And so the performance has been wonderful.

We had maybe a little pushback on the shareholder side of things as they didn't feel like we were getting and agreeably, so we didn't feel like we were getting full valuation of that investment reflected in FNF share price. So we decided to float a small portion of the shares publicly back a couple of years ago. I think that was December of '22 maybe, something like that.

And so anyway, we own 82.5% of the business today, and we do have 18-or-so-ish percent of shares public. And that certainly moved up from where the IPO price was, which was about $19. And so I believe that we're getting some of that valuation reflected in FNF's current share price. Some would argue maybe not all of it, and I think that's fair.

But like I said, the performance is good. The earnings, consistent. The opportunities are still there to grow the assets. They are looking at maybe a slight shift in strategy, which is less capital intensive with signing a $1 billion sidecar with Blackstone and getting some fee income from that.

We have an own distribution strategy where we're getting some fee income there, looking to -- maybe instead of just growing the asset base in all areas, we'll look to be a little more strategic and opportunistic in terms of areas where we might grow that are generating the highest return. So maybe, yes, a long way of saying, I don't know that it's permanent part of FNF. I just don't. I can't answer that question. But I will say it's been a nice complement, a very good investment, and we've been very pleased.

Got it. Yes, it sounds like it's been performing well. But maybe just kind of remind investors like the date everyone kind of seems focused on was June of '25 is the first date. You could implement or affect a tax-free spin. Like what are kind of some of the factors that you may consider like for that process?

Yes. I mean that's right. We needed to hold it 5 years for tax purposes before we could spin it out to our shareholders tax-free. And so theoretically, we could take that 82.5% ownership that FNF has and spin that to FNF shareholders and it wouldn't be a taxable event. So that is available to us and became available to us in June.

Some may expect that we will do that because we've done that type of thing in years past with other investments. And so we know how to do that. We have experience doing that. And I think some people maybe even think we should do that.

Who knows? I don't know if we'll end up doing that. There are other ways to monetize or divest off F&G if we chose to go down that path as well. Maybe not as tax-efficient because it would involve a sale or a merger and potentially a taxable event.

We do feel like we've built up great value here. I think the book value when we bought the company was somewhere in the high $2 billion range, and now it's pushing $6 billion. And so we've really grown the book value, growing the earnings, growing the earnings generation base. And so I think we have a really valuable asset here.

Okay. Great. We have a few minutes left. I'm going to pause and see if there are any questions from the audience. No questions. All right. Maybe on that note, we'll just wrap it up there.

Great. Thank you, Terry.

Thank you.

Thank you, Terry.

Good morning, and welcome to the FNF's Second Quarter 2025 Earnings Call. [Operator Instructions]. I would now like to turn the call over to Lisa Foxworthy-Parker, SVP, Investor and External Relations. Please go ahead.

Thanks, operator, and welcome, everyone. I'm joined today by Mike Nolan, CEO; and Tony Park, CFO. We look forward to addressing your questions following our prepared remarks. F&G's management team, including Chris Blunt and Conor Murphy, will also be available for Q&A.

Today's earnings call may include forward-looking statements and projections under the Private Securities Litigation Reform Act, which do not guarantee future events or performance. We do not undertake any duty to revise or update such statements to reflect new information, subsequent events or changes in strategy.

Please refer to our most recent quarterly and annual reports and other SEC filings for details on important factors that could cause actual results to differ materially from those expressed or implied. This morning's discussion also includes non-GAAP measures, which management believes are relevant in assessing the financial performance of the business. Non-GAAP measures have been reconciled to GAAP where required and in accordance with SEC rules within our earnings materials available on the company's investor website. Please note that today's call is being recorded and will be available for a webcast replay.

And with that, I'll hand the call over to Mike Nolan.

Thank you, Lisa, and good morning. Overall, our businesses generated strong results for the second quarter. Starting with Title, we delivered adjusted pretax title earnings of $337 million, a $13 million or 4% increase over the second quarter of 2024. We achieved an industry-leading adjusted pretax title margin of 15.5% for the second quarter, up 380 basis points from 11.7% in the first quarter of 2025.

Compared to the second quarter of 2024 adjusted pretax title margin of 16.2%, we saw a decline of 70 basis points, primarily due to higher expenses, including 60 basis points or $12 million of elevated health claims. We also had higher strategic investments in security, technology and recruiting to position the business for long-term growth. Importantly, these expense items did not impact the direct Title and Agency Title businesses, which performed well and generated healthy incremental margins. Tony will provide further details later on the call. Looking at our Title results more closely, starting with purchase, we were encouraged to see a 5% increase in daily purchase orders opened over the first quarter of 2025, although lower than the more typical increase of 10% that we have seen in recent years.

This reflects market volatility and higher rates, which continued to impact the residential purchase market. Our daily purchase orders opened were in line with the second quarter of 2024, up 5% over the first quarter of 2025 and in line for the month of July with the prior year. For refinance, we were pleased to see a 28% increase in refinance orders opened over the second quarter of 2024 with just a modest movement in mortgage rates.

Daily refinance orders opened were 1,300 in the second quarter and remained at that level in the month of July. Our refinance orders opened per day were up 28% over the second quarter of 2024, up 2% over the first quarter of 2025 and up 20% for the month of July versus the prior year. Commercial volumes continue to be a bright spot with direct commercial revenue of $626 million in the first 6 months, up 23% over $511 million in the first half of 2024. We had a very strong quarter for commercial revenue, driven by national and local revenues, which were both up more than 22% versus the prior-year quarter. In particular, national daily orders opened were up 11% over the second quarter of 2024 and held steady for the month of June as compared to June of 2024.

Notably, we now have 5 consecutive quarters with double-digit increases in national daily orders opened. Local market daily orders opened were up 4% over the second quarter of 2024 and up 9% for the month of June over June of 2024. On the whole, our total commercial orders opened were 858 per day, up 7% over the second quarter of 2024, in line with the first quarter of 2025 and up 14% for the month of July versus the prior year. Bringing it all together, total orders opened averaged 5,800 per day in the second quarter, with April at 5,800, May at 5,700 and June at 5,900.

For the month of July, total orders opened were 5,500 per day, up 5% versus the prior year. Looking ahead, our Title segment remains poised for a rebound in transaction volumes, and we continue to invest in the business for the long term. Over time, we see opportunities to gain efficiencies across our operations and further enhance profitability. We continue to generate strong free cash flows, enabling our dynamic capital allocation strategy, which Tony will speak to in a few minutes.

I'd like to take a moment to recognize our employees for all that they do to provide innovative Title Insurance solutions that protect consumers and lenders while ensuring secure and efficient real estate transactions. Turning now to our F&G segment. F&G has profitably grown assets under management before flow reinsurance to $69.2 billion at June 30, up 13% over the prior-year quarter. We remain pleased with F&G's performance and foresee plenty of opportunities to grow and increase the value of the business. On a stand-alone basis, F&G reported GAAP equity, excluding AOCI of $5.9 billion at June 30. Since the 2020 acquisition by FNF, F&G has generated a 58% increase in its cumulative book value per share, excluding AOCI, to $43.39 at the end of the second quarter.

With that, let me now turn the call over to Tony to review FNF's second quarter financial performance and provide additional insights.

Thank you, Mike. Starting with our consolidated results, we generated $3.6 billion in total revenue in the second quarter. Excluding net recognized gains and losses, our total revenue was $3.5 billion as compared with $3.2 billion in the second quarter of 2024. The net recognized gains and losses in each period are primarily due to mark-to-market accounting treatment of equity and preferred stock securities, whether the securities were disposed of in the quarter or continue to be held in our investment portfolio. We reported second quarter net earnings of $278 million, including net recognized gains of $98 million versus net earnings of $306 million, including $88 million of net recognized losses in the second quarter of 2024.

Adjusted net earnings were $318 million or $1.16 per diluted share compared with $338 million or $1.24 per share for the second quarter of 2024. The Title segment contributed $260 million. The F&G segment contributed $89 million, and the Corporate segment had a net loss of $3 million before eliminating $28 million of dividend income from F&G in the consolidated financial statements.

Turning to second quarter financial highlights specific to the Title segment. Our Title segment generated $2.2 billion in total revenue in the second quarter, excluding net recognized gains of $43 million compared with $2 billion in the second quarter of 2024. Direct premiums increased 12% over the prior year. Agency premiums increased 7% and escrow, title-related and other fees increased 7%. Personnel costs increased 10% and other operating expenses increased 10%. All in, the Title business generated adjusted pretax title earnings of $337 million compared with $324 million for the second quarter of 2024, and a 15.5% adjusted pretax title margin for the quarter versus 16.2% in the prior-year quarter. As Mike mentioned, the second quarter margin was impacted by higher expenses with 3 primary drivers. First, we had 60 basis points or $12 million of elevated health claims, which we expect to remain elevated for the remainder of the year before likely normalizing in 2026.

Next, we had higher strategic investment in security and technology relative to the second quarter of 2024, although this spend is in line with the sequential quarter and reflects our current run rate.

Finally, we saw higher personnel expense as a result of an active recruiting quarter as we continue to build the business for the long term. Importantly, we don't expect these incremental expenses to impact our ability to deliver a 15% to 20% pretax title margin once we rebound to a normalized market, although transactional volumes remain low at this time. Our title and corporate investment portfolio totaled $4.8 billion at June 30. Interest and investment income in the Title and Corporate segments was $95 million, down 4% versus the prior-year quarter and excluding income from F&G dividends to the holding company. For the remainder of 2025, we expect to generate quarterly interest and investment income of $90 million to $95 million in each quarter, assuming 2 Fed funds rate cuts later in the year.

In addition, we expect approximately $28 million per quarter of common and preferred dividend income from F&G to the Corporate segment. Our title claims paid were $66 million and in line with our provision for the second quarter. The carried reserve for title claim losses is approximately $54 million or 3.3% above the actuary central estimate.

We continue to provide for title claims at 4.5% of total title premiums.

Next, turning to financial highlights specific to the F&G segment. Since F&G hosted its earnings call earlier this morning and provided a thorough update, I will provide a few key highlights. F&G's AUM before flow reinsurance increased to a record $69.2 billion at June 30. This includes retained assets under management of $55.6 billion. F&G's gross sales were $4.1 billion, one of its best sales quarters in history. F&G had significant growth in core sales of $2.2 billion, which includes indexed annuities, indexed life and pension risk transfer and $1.9 billion of MYGA and funding agreements, 2 products we view as opportunistic. Second quarter of 2024 was the all-time record with $4.4 billion of gross sales. Net sales retained were $2.7 billion compared to $3.4 billion in the second quarter of 2024. This reflects third-party flow reinsurance at varying ceded amounts in line with capital targets. Adjusted net earnings for the F&G segment were $89 million in the second quarter compared with $122 million for the second quarter of 2024.

F&G's operating performance from their underlying spread-based and fee-based businesses continues to be strong. F&G continues to provide a complement to the Title business. In the first 6 months, the F&G segment contributed 32% of FNF's adjusted net earnings, down from 40% in the first half of 2024. Yesterday, F&G announced the launch of a new reinsurance vehicle in partnership with Blackstone managed funds with approximately $1 billion in capital commitments. The reinsurance sidecar provides long-term on-demand capital to F&G through a forward flow reinsurance agreement of certain fixed indexed annuity products effective August 1.

The reinsurance sidecar is another source of growth capital and will move F&G further toward a more fee-based, higher-margin and less capital-intensive business model. From a capital and liquidity perspective, FNF continues to maintain a strong balance sheet and balanced capital allocation strategy. Our consolidated debt-to-capitalization ratio, excluding AOCI, remains in line with our long-term target range of 20% to 30%, and we expect that our balance sheet will naturally delever as equity grows. FNF continues to return excess cash to shareholders through share repurchases and has remained active throughout the second quarter and into the third quarter.

During the second quarter, we repurchased 2.9 million shares for a total of $159 million at an average price of $55.20 per share. For the second quarter, we have returned nearly $300 million of capital to our shareholders through common dividends and share repurchases. Year-to-date, we have returned over $450 million through common dividends and share repurchases. From a capital allocation perspective, we entered 2025 with $687 million in cash and short-term liquid investments at the holding company. During the first 6 months, the business generated cash to fund our $271 million quarterly common dividend paid, $37 million of holding company interest expense, $150 million investment in the F&G common equity raise and the $184 million in share repurchases, all while keeping pace with wage inflation and funding the continued higher spend in risk and technology required in today's landscape.

We ended the first half of 2025 with $583 million in cash and short-term liquid investments at the holding company.

This concludes our prepared remarks, and let me now turn the call back to our operator for questions.

[Operator Instructions]. Our first question comes from Mark DeVries with Deutsche Bank.

Having hit the 5-year anniversary on the investment in F&G, I'd be remiss if I didn't ask for some updated thoughts on kind of how you guys and the Board are thinking about the appeal of continuing to kind of hold these very separate businesses under the same company?

Thanks, Mark. It's Tony. I'll start. Others could weigh in. I would say kind of the same commentary that we've shared previously, which is the Board has been very pleased with F&G's performance and really the validation of the thesis behind the acquisition.

F&G has contributed 32% of our adjusted earnings through the first half of the year. We're getting about $120-almost million of cash from F&G to holding. And so that's been helpful. And we're really excited, and you probably heard with the launch of the sidecar and some other strategy around core sales versus opportunistic sales. We're excited about more fee-based, higher margin, less capital-intensive business model that F&G is pursuing. And so at this point, it's continue to run the business, operate the business as they have.

And that's kind of the update. I don't know, did you guys want to weigh in at all? All right.

Okay. Understood. And then second question, just on the personnel expenses. It was a pretty big step-up and well above kind of consensus expectations. Tony, I know you called out -- I think you said an active recruiting quarter, but I can't on my time covering the company, remember such a big step-up, particularly in a relatively static environment. Anything else to kind of call out there that kind of drove that personnel expense? Any incremental detail you can provide?

Mark, it's Mike. Yes, on the recruiting, I would say that, that was about a 20 basis point impact. And it really was one of our best recruiting quarters in a long time and significantly stronger than the second quarter. So we were trying to bridge the second quarter of last year to this quarter. And when you think about recruiting, it's ultimately great for the company, and we've always been very strong in that realm. But you do front-load the expenses. And so as you board people that are going to bring you revenue, they're bringing that 60, 90 days after. And then I think we had more spend in the shared service areas, some of which is personnel because we've added staff with -- in the risk and security areas. We're doing more in technology. So I think it was a combination of those factors.

And then I'll see if Tony had anything to add on that.

Yes, I'll just weigh in on the medical claims, which we called out as a $12 million delta relative to the Q2 of last year. And it's one of those things where it's obviously unfortunate when your employees and dependents have higher medical claims. Most large companies, as you probably know, are self-insured. And we've been real consistent in our run rate in terms of all-in medical. In 2023, it was about $175 million annual spend and the same number in 2024. And frankly, the year started out pretty similarly. But really in May, we started to see high-cost claimants and not a big number, but expensive claims come through, and those are anywhere from, call it, $100,000 to $1 million in a particular case, and we had a number of those.

And so it drove up our estimate of medical claims, what we think we'll incur through the balance of the year. So we added $12 million this quarter and would likely -- we'll likely add some more in Q3 and Q4, probably not to that level, but maybe a total of $12 million over the balance of the year.

And then we'll take actions next year in terms of maybe plan design and looking at vendors to assist us with various programs to reduce our spend as we look forward. You can't really make those changes in the middle of the year because you don't go through an open enrollment. But that was just sort of a blip that we don't expect to continue as we move into 2026.

And Mark, I want to emphasize something on to Tony's comments that fundamentally, it was really a strong quarter for our Title operations. We had growth across all of our core business segments in both revenue and profit. Industry-leading title margins generated $260 million in adjusted earnings, up from the second quarter of last year by about $20 million and really feel like the business performed very well, but we did have some variances to call out relative to the second quarter margin of last year.

Okay. Got it. Just a couple of clarifications. Did those health care claim expenses flow through the personnel cost line?

Yes, they did.

Okay. Got it. And then just on the recruiting activity, what kind of led to the big quarter? Were there any kind of dislocations with competitors that created a unique opportunity? Or is it just trying to be opportunistic for the opportunity you think lies ahead for the business?

I would say it's opportunistic. We have a large footprint. And we have a lot of people, a lot of operations that are actively recruiting. We've just got more than everyone else. So we've got more firepower on it. I think the fact that we're doing so well in that category points to that we're a company of choice, and we want to be a company of choice for talented title professionals. And so I don't know that it was any major dislocation on anybody else's part, but it was just more -- we're very focused on it, and we had a particularly good quarter, particularly as it related to the second quarter of last year.

We have a next question from the line of Terry Ma with Barclays.

Just wanted to follow up on kind of margin and expense commentary. I guess it sounds like the impact to margin from the health care claims of 60 basis points would kind of peak this quarter and then maybe just subside the rest of the year.

Is that the right interpretation? And then when you kind of put everything together with the elevated health claims, recruiting security and tech investments, I guess, do you have confidence in staying within that 15% to 20% margin for this year?

Absolutely, Terry. We we're right in line really with where we were last year. And the early view of July is that we had a good strong July. And we said our base case has always been as we've gone into the year, that '25 is going to be a lot like '24. And as we look at the second half of '25, we think it's going to look a lot like the second half of '24 with the wildcards really being more what happens with mortgage rates up or down. We've seen some optimism there as the daily rates come off a bit. I think it's maybe [ 6 ] or something like that. every little bit helps. And then commercial activity is probably the other wildcard.

I'm encouraged that July resale orders were kind of in line with last July and that we're still seeing some uplift on refi. So yes, we've got a little higher run rate on shared services that we also had in Q1. The health claims, we think they'll moderate, but they're still going to be probably elevated to last year. And then we think that will normalize in '26. And then the recruiting, it varies. And second quarters are typically sort of peak recruiting quarters. So we might see that lessen a bit in the second half. But again, it's opportunistic, and we will take advantage of getting talented people when that's available because we're building the business for the long term.

Got it. That's helpful. And then maybe on commercial, it looks like the momentum is continuing with particular strength on the national side, which I think you called out was up 22% year-over-year for closed orders. I guess any color on both national and local as you kind of look into the back half of the year? How sustainable do you think this momentum is and kind of where you...

Yes, I do want to clarify one thing. It was 22% on opens, not closed. But yes, it's been fantastic. And we're -- through the first 7 months of the year, we're averaging 860 open orders per day in the total book, which is a nice lift from really where we've been even going back, if you look at 2015 through 2020 and '23 and '24, kind of carve out the peak years of '21 and '22, we seem to have jumped up to a new level. As we look at the back half, the pipeline in national is quite strong. I mean we've had 5 consecutive quarters of double-digit growth in national commercial open orders. And as you know, there's a bit more of a tail as to when those close. So we would expect to have a strong closing pipeline there. Local orders are still up. It's not like they're off. They're just not up as much. And interestingly, we've seen a nice pickup in commercial refinance orders.

Our total mix in opens has shifted from about 75% in January now just below 72% in July. So that doesn't sound like a lot. But in the first half, our commercial opens on refi were up 21%. And in July, they were up 35%. So it's nice to see that financing of commercial properties seems to be picking up, and I think that also could bode well for not only the back half of the year, but probably as we go into '26.

The next question comes from Bose George with KBW.

I wanted to just ask about the buybacks, obviously has increased and the quarterly run rate is similar to what we saw back in '22 and '21. Can you just discuss the potential cadence of the buybacks going forward?

Any weakness in our share price at these levels is a great use of excess capital, and you saw that activity in Q2 with $159 million in buybacks and 2.9 million shares. And so I would expect that we'll monitor the market, be active. And again, if there's weakness there, we'll probably be more active.

Does that answer your question, Bose?

Yes. I got -- I have another question though. And just a follow-up on that. In terms of -- does the buyback signal anything in terms of sort of incremental capital into F&G? Does it suggest that, that's kind of done and you have more sort of flexibility in terms of that?

Yes. I would say that I don't know that it signals anything directly other than we don't expect to need incremental capital for F&G. I know that we did participate in the common equity raise of F&G earlier this year. And I think it was very early in 2024 when we acquired the preferred stock investment. But yes, no, I think that F&G with their capital-light strategy is well positioned to take advantage of capital sources that they have unrelated to FNF. And so I would say that kind of our uses are our common dividend, M&A to the extent, there's M&A available to us and share buybacks. And we're sitting on $600 million of cash at the holding company level, and we're generating strong cash flow.

Okay. Great. Actually, one quick follow-up on that. Did you give me a number or how much did you repurchase in July?

We did not provide a number. It was -- and it will be in the Q, which will be filed tomorrow. And I think it was just 1 day's worth or something like that. I think it was $5 million, and that's because our blackout kicks in almost right after the end of the quarter.

[Operator Instructions]. Our next question comes from the line of Mark Hughes with Trust Securities.

The participant has dropped from the question queue. We will move on to the next participant that is Geoffrey Dunn with Dowling & Partners.

Tony, can you share the remaining dividend capacity from the regulated entities for the second half and also your expectation for nonregulated divs?

Yes. I think we have about $250 million available from the regulated companies over the second half, and then we have about $60 million coming from F&G in the second half. The other subs, the nonregulated, it's a little more difficult because I would then need to forecast what their earnings are going to be because that's real-time cash flow. It's probably -- I mean, we had $120 million in Q2 from unregulated. It will be a little less in the second half on a quarterly basis only because of tax payments tend to ramp in the second half, but it could be a couple of hundred million dollars. So add that back, add that together, it's $400 million to $500 million.

Okay. And then I know how the refi versus purchase pricing works on the direct resi business. But how does it work on commercial? Should we be expecting a deceleration on the commercial fee per file with the pickup in refi?

Yes, Geoff, it's Mike. I don't really think so. The fee per file is pretty consistent. And our average total commercial fee per file of $11,300 in the second quarter, I think if you wanted to use a number going forward, something in that range would probably be the number to model. With the national overall pickup in orders, they just inherently have higher fee per files, as you know. And we think that could be a bit stronger mix as we go in the back half of the year just because of those strong opens that I talked about. So I would probably use that number, $11,000-ish.

Our next question comes from the line of Mark Hughes with Trust Securities.

Any update on the regulatory front from FHFA or anything that you're seeing that actually suggests any momentum in Washington that might be impactful to the title industry?

Mark, it's Mike. Not really. I think that the pilot is intended to be limited scope. It runs through May of '26. I think the anticipation is about 15,000 loans going through that pilot. And I don't think there's any change to that, and then we'll see where it goes. As you might know, I had a very nice call with the Director of FHFA. He's good to talk to, very willing to listen. And they did add Westcore as a second provider of the program with kind of a new -- I don't know if it's new yet, but a limited title option. So it's not the waiver. It's kind of a different product approach. We're still waiting to see what that looks like. And I told the director that we're -- we believe strongly that the waiver is not a good idea, but that we've always worked collaboratively with the FHFA and with the GSEs, and we want to continue to do that.

So we remain engaged, but still view it as a limited scope pilot.

Very good. And the recruiting you're doing, are these -- would we characterize them as revenue-attached people that bring relationships and low of activity?

100%. The adds that we've had, if you look at our staff, we're up in our direct title footprint about 3% over this time last year. And it's virtually all revenue-attached recruits. We haven't been hiring for sort of production capacity. So they bring revenue, and you can kind of think of them as like many acquisitions really. The acquisition activity has been down just because the opportunities haven't been there.

But when you're hiring good people that bring revenue, you're sort of accomplishing the same thing as you do when you buy a company.

Yes. Yes, very good. Did you give July the kind of the growth in national versus local commercial?

Yes, I don't know if I did or I did. It might have been in the script, but I'm looking at the numbers. So on the open side, national open orders were up 22% over July last year and local open orders were up 8%. So really good both in growth, but really strong growth on the national side.

Ladies and gentlemen, this will conclude our question-and-answer session. I will now turn the conference back over to CEO, Mike Nolan, for closing remarks.

Thanks for joining our call this morning. Together, the combined business delivered strong second quarter results. The Title segment is delivering industry-leading margins and remains poised for a rebound in transactional levels as we continue to invest in the business for the long term.

F&G's new reinsurance sidecar is another source of growth capital and will help move F&G further toward a more fee-based, higher-margin and less capital-intensive business model to help deliver on its Investor Day targets. We appreciate your interest in FNF and look forward to updating you on our third quarter earnings call.

Thank you for attending today's presentation, and the conference call has concluded. You may now disconnect.