Fidelity National Financial, Inc. (FNF) September 2026 Conference Transcript

All right. So we'll kick it off. I'm very pleased to have up here Fidelity National Financial. Joining me is Mike Nolan, CEO, Tony Park, CFO. So welcome, gentlemen.

Thanks, Jerry. Glad to be here.

Yeah, glad to have you. So we'll just jump right into it. Maybe just to start off, can you maybe update us on third quarter trends across purchase, refi, and commercial?

Sure. It's been interesting, even with the rate movement, that on the purchase open side, we've outperformed last year every month through August. And, you know, in the first half, it was about a 3% overall improvement in July, which we previously reported was 4%, and in August it was 6%. So we actually had our best year-over-year month in terms of purchase opens percentage growth in August. Refi, you know, really when you think about last year, rates were going down during the year, and our refi volumes went up. We've really had the opposite of that this year with rates starting lower and then increasing. So while we had in the first quarter I think a 50% improvement in refi opens, that fell to mid-teens in the second quarter. July was minus 5, and August we're in the mid-30s decline. So definitely seeing how that gets impacted with those rate movements. And then commercial has just been steady and strong all year through August. We're up about 6% in our total opens, and August was up 8%. So still seeing strength in that commercial segment.

Got it. That's helpful, Culler. So mortgage origination volumes have come under renewed pressure this year from higher rates. What's your outlook for the rest of 26 and 2027? Relative industry forecasts of roughly $2 trillion in 26 and $2.3 trillion in 2027.

Well, our outlook really is that there's still strong underlying demand for home buying and home refinancing. And over time, as rates ease, I think we can see meaningful increases in that activity. If rates stay kind of bound in the range they're at, then you're probably looking at more steady state from where we're at today.

Got it. And, you know, you touched on commercial. That's really been a bright spot in 2026. Can you just talk about what sectors are showing the most strength today and also where you're seeing continued pressure?

Well, you're right. The commercial has been broad-based, and we're tracking towards a record year. And in terms of sectors, we've seen it across multiple asset classes and multiple geographies, things like industrial, multifamily, energy, affordable housing, retail, hospitality, probably every segment you can think at except for office.

And then maybe just talk about the nuances you're seeing within national versus local trend, any notable differences?

On the order activity, they've both been up all year. Open orders on the local side have been modestly up over national. But probably the notable difference has really been around fee profile and revenue growth. It's been much stronger on the national side in terms of percentage revenue growth year over year, both for revenue and for fee profile.

I think we reported, was it 29 deals in the second quarter? reported 29 deals that were closed either through our direct channel or our agency channel that were over a million dollars in premiums. So clearly the size of the deals is helping drive that fee profile. Got it.

Any particular sectors with the larger deals? I mean, in those 29, is that the question? Yeah. I would say it was really wide ranging. Certainly data centers were in there, but they weren't necessarily the dominant sector. We saw energy transactions, manufactured home transactions, other portfolio types of transactions. So it really was, again, broad-based.

Got it. Okay. I wanted to drill down to data centers. That's certainly been a meaningful driver of commercial. Can you maybe just talk about what you're seeing in that market, what the data center pipeline looks like today, and then how long you expect these tailwinds to persist?

Sure. Well, we still see a lot of strength, and we have a strong pipeline, strong inventory of transactions. We're still opening transactions. I know there's been a lot of headlines recently around community pushback and things like that, but from our view, it's still very active. There still is a lot of capital that's flowing into those deals. You've got a lot of players that are well capitalized in that space and i think it'll still be active for this year and i've seen a number of forecasts that say it's going to be active for the next three or four years we'll see how that plays out and what what real impact you know some of the community pushback may or may not have got it okay um so just to switch gears you know title margin was 15.7% through the first half of the year.

You've suggested recruiting could pressure second-half margins. Is that still the right outlook, and what are the biggest factors that could drive margins higher or lower from here?

Sure. You know, the comment around recruiting was more specific to our margin in the second quarter vis-a-vis the third. You know, we did 17.8 in the second, and we've had a lot of success with recruiting, and you're essentially front-loading expenses when you're doing that with the revenue to follow. So I think the impact is more around the third quarter. When you think about margins more broadly, in the short term, I think about two things. One, volumes drive it either way, for sure. And then secondly, how we react to volumes. And we've always demonstrated our ability to manage margins regardless of the environment. we're exceeding the industry in a very low transaction environment and we'll continue to do that. And then third, longer term, it's really how technology and improved productivity and enhanced efficiencies from things like AI and other technologies that we already have will improve the margin outlook in like-kind markets going forward.

Got it. And maybe just to follow up on the recruiting, just more broadly, how do you think about recruiting in this environment? Maybe just talk about what factors determine when you lean into recruiting versus kind of pulling back.

We really think about recruiting in every environment. So it's not like a switch that you turn off and on. We're always recruiting. We're always driving towards adding talent to the organization. We've had two really strong recruiting quarters in a row, probably for a variety of reasons, including maybe the overall environment. The investments we're making in the business, I think, is attracting talent to this organization. And it's opportunistic at times. And you can be developing relationships in a recruiting sense, but not necessarily looking to hire at the same time. It might be you're building a relationship over time to recruit later. So we will continue to recruit regardless of the environment, and we'll accelerate that when we see more opportunity. Got it. That makes sense.

And then just probably you previously indicated FNF can generate title margins in the 15% to 20% range. But in a more normalized environment, Is that still the right range going forward? And are there any tech investments or AI investments that could impact that normalized range over time?

Well, we're hitting the low to midpoint of that 15 to 20 in a really low transactional environment now. And to think about should we change that range, I think we do need to get to a less volatile environment and more normalized. In our view, a normalized market is somewhere in the neighborhood of 5 million existing home sales, which is the 30-year long-term average, and a solid refi market, good commercial market. And in that environment, we believe we'd be in the upper bounds of that 15 to 20 range. We've had one year when we did above it, and that was 21, and we had incredible volumes really across all the different segments. But I think longer term, I think what's worth noting is the dual benefit we will get from improved volumes plus technology investments, plus the benefits of things like AI, and that's where you could envision higher margins than 20%.

Yeah, we used to talk about 15% to 20% more aspirationally back when we were into 13%, 14%, maybe low 15% margins. And now most quarters were in that, other than maybe a Q1, were in that range of 15% to 20%. So I could see that with a better market on the residential side that we would be, you know, mid that range. and, you know, potentially hire on a consistent basis. Got it.

And any color on tech investments or AI initiatives you guys are kind of looking at that may, you know, improve that over time, that range?

I mean, our approach to the beginning has been sort of a three-pronged ladder. Well, first was build governance, which we did. You know, we hired a chief AI officer back in 23. We built out a governance team. That was really important. We've been really working on diffusion and building literacy, And we have close to 60 percent of our employees regularly using AI on a monthly, weekly basis and seeing benefits from that. People are building agents. They're finding ways to improve personal productivity. So that's one. Secondly, is deploying what I call bespoke solutions that fit individual parts of the business, whether it's our subservicing business at Loan Care or our centralized fulfillment business at ServiceLink, I think our agency business, specialized solutions that meet their needs, claims work, legal work, et cetera. And then the third is embedding the tooling in, like, our title and close software, our in-air digital transaction platform, connecting it with our e-mail. And we're working on that and doing that. And I think those three things together can provide really enhanced productivity over time. Got it. Okay.

That's helpful, caller. Earlier this year, there were some headlines on potential new title insurance entrants that are leveraging AI. Can you just talk about the competitive environment and also what you see from your traditional competitors as well as the new tech-enabled ones?

Well, I'd start by saying the industry is highly competitive, and it always has been. And from some lenses, it might not appear that way because you've got four national underwriters that have about 80% of the underwriting in the industry. But there's over 20,000 independent title agents, and they're competing across the U.S. and local communities for the next title order. And we're competing with many of them. We're also underwriting many of them. So it's a very competitive industry. I'm not really aware of any particular new entrants that are effectively leveraging AI in a way that is changing the competitive dynamic. I know there are times when announcements are out there that say that, but I've not seen anything new. And I would say that everyone's got an opportunity to deploy AI. Everyone can get tooling. Everyone can think about how to deploy it. The advantage we have is we have scale that no one else has. And so when we deploy that tooling at our scale, it has a multiplier, a force multiplier effect. And I think that's one of the bigger advantages we have into the future. What was the second part of the question?

I mean, just maybe just remind us what the barriers to entry are for the title industry.

I don't know if it's about barriers to entry, but maybe barriers to success. And what I would say there is that, particularly for AI, you need data and scale. And we have the data and we have the scale. And new entrants don't have the data. I'm talking about proprietary data. They don't have any of that. And they don't have any scale. And by scale, that also means we have trusted distribution relationships. And those things together are really powerful moats. And then you could add things like the regulatory environment and capital requirements that less-scaled players might find more challenging. So maybe not barriers to entry, but barriers to success. Got it.

We have 1,300 offices throughout the country that are earning the next title order from our customer base. And it's just such a huge advantage relative to what you might have as a new entrant, where even if you're going to enter the business, you're going to enter in one market and start from there. And we have a huge advantage over that.

Got it. Maybe just to follow up on that proprietary data point, the use of technology or AI maybe makes it easier to replicate that at some level. Maybe not today, but just given a rapid pace of how the technology is evolving.

AI is best when you can give it your data and your own internal process work and train it on that. Then you can get really great outcomes. Right now, when you think about AI, it's trained on the Internet. And so it knows a lot about the Internet, and we can all go to it and ask it questions, and it gives us answers. It doesn't know really anything about title insurance. It doesn't really know anything about our own workflows and our own processes. It doesn't have our prior title work where we've actually researched and cultivated and curated the property records that are available. So it lacks a lot of things that new entrants can't duplicate because they don't have it and we do.

Got it.

Okay, that makes a lot of sense.

Maybe just switching gears again, you spent several years building out the in-here platform, recently launched property monitoring. How should investors think about the strategic value of the platform beyond improving customer service? and does the opportunities for operational efficiency and share gain over time?

Well, in here is the only fully deployed digital transaction platform in the industry, and no one is even really close. We had 2.8 million unique users on it last year, and not only are we getting efficiency benefits out of that way of connecting with customers, meaning not phone calls and not emails, but the participants to the transaction all get benefits. So we do believe we're building efficiencies, and we also believe it adds stickiness to us, what could lead to share gains or share retention, if not gains. And we think we really have a first-mover advantage with it, and that's another platform now we can deploy AI tooling into. And we're not stopping there. We've rolled out what we call Live In Here, which is an initiative to engage home buyers post-close. And we've added property monitoring, which, again, we think brings more value to our customers after the transaction in a way that will just deepen our relationship and deepen our retention of customer relationships.

Got it. But investors often think of F&F primarily as a title insurance company and really a beneficiary of housing activity. How do you think about F&F's role in the real estate ecosystem today? And, you know, what aspects of the business do you think are underappreciated by investors?

Well, the way we think about our role in the real estate ecosystem is that we are the rails that everything runs on. That's what title companies do. That's what the title industry does, that it manages all the disparate parts of a transaction and all the different participants in a way that's organized, efficient, and leads to good outcomes for lenders and buyers and sellers and agents, et cetera. Maybe what's underappreciated is the importance of that, but I think what's also underappreciated is the dual benefit we will get as the industry leader, as I said before, is volumes recover, and we get more benefits out of leveraging technology like AI. Got it.

That makes sense. So turning to FG, you know, share performance has struggled due to lower expected returns on all the investments and also potentially concerns around private credit. How does FNF's board currently view the strategic value of the business alongside the core title franchise?

Yeah, thanks for the question. I would say, I mean, I'm not privy to everything that's discussed by the board, either in a board meeting or outside of a board meeting. I will say that the board has been overall very pleased with the performance of F&G in the six years that we've owned them. We've grown the asset base from $26 billion to three times that. We've grown the sales fivefold, branched into a number of distribution channels that F&G wasn't in before we bought them. And so that's been positive. To your point, the alternative investment noise, if you will, has not been what we've expected when we made those investments. But those sometimes or oftentimes take time to mature, and later in the cycle of ownership of those alts, you generally see the value come through. So we're not concerned with that, but it has put a little bit of a damper on F&G's reported earnings. In terms of valuation, I think our board and we share the same frustration that our shareholders share, which is we're not realizing the true value that we know we have in that asset. I mean, F&G is a $6 billion gap book value asset, and we're not seeing anything near there in F&G share price or in F&F share price. And so that's been a frustration. We tried to maybe unlock some of that with the first spinoff a few years ago where we spun 15 percent of our ownership to our shareholders. And I think that helped. It certainly put a mark, a public mark on the valuation. But then we heard, you know, more recently that shareholders that wanted to own F&G meaningfully couldn't because there weren't enough shares out there. There wasn't enough float, and so we added to that float in December of last year and distributed another, call it 18%, to where 30% was in the public domain. And then, frankly, there's been some macro noise, really unrelated to F&G, but some macro noise that has impacted not just the life and annuity space, but really a lot of investments out there. And so we really haven't seen maybe the true benefit that we might get from distributing those additional shares. But at the same time, yeah, it's a frustration that we can't seem to realize that benefit that we see in our F&G ownership.

Got it. Do you think it could benefit from additional distributions? I guess how are you thinking about the FGPs because entering this year or last year, most people were potentially expecting a tax-free spin as an option. Obviously, you moved below the 80% threshold, and that's obviously off the table. How should investors kind of think about that?

Yeah, it's a good question. I'm not sure I have a good answer. It's going to be the board's decision on where we go from here. I mean, I think ideally in their mind that we would unlock the value and see both shares rise and maybe then stay where we are. I don't know that we plan to continue to distribute F&G shares, but, you know, our board has a 40-plus year track record of creating shareholder value. and they're patient to a point, but then they oftentimes, at least with past investments, realize there's a better way to create shareholder value. I'm not suggesting where they might go with this particular investment, but I will say the feel is that it's a frustration and we haven't solved it yet.

Got it. So FG's management's announced it's exploring strategic alternatives for peak altitude that includes bringing a majority partner in. Can you maybe just describe the business, the rationale for adding a partner, and also when should investors expect an update on this process?

Yeah, in terms of an update, I guess we'll have to wait and see how that plays out. in terms of peak. Peak is an investment. We have majority and minority-owned distribution IMOs, if you will. I think we have four of them. We've invested about $700 million, and it generates about $80 to $85 million in EBITDA. So it's a good, healthy business, not capital-intensive. And I think the idea there, again, is maybe we have an underappreciated, undervalued asset that maybe we can take some money off the table, find a strategic partner, maybe it's a 50-50, 51-49 partnership where we can grow that asset and still return money to F&G and maybe then return that to F&F or whatever F&G might do with that. I'm not sure we know at this point, but we know we have an asset there that has value, and with a strategic partner, we believe we can really grow that asset. Got it.

So clearly, it seems like the market's undervaluing FG within FNF. If we think about kind of the earnings power, I believe a few years ago, you guys mentioned that you viewed FG as a good hedge against the title business in a higher rate environment. Do you still view that as the case?

Yeah, I certainly do view it as the case. I think F&G, certainly if you normalize the returns on alts, F&G is a steady performer. The revenue and earnings are steady, and they grow in a higher rate environment. F&F typically has more challenges in a higher rate environment, certainly on the volume side. Now we have had some real strong tailwinds on the commercial side, but on the residential side, as Mike spoke to, it's been a more difficult environment. So I do think there's a balance. I don't know if it's a pure hedge per se, but I think there's a nice balance or complement in terms of the overall return to our shareholders with having that steady earning stream. But again, we don't seem to be rewarded for that at this point.

Maybe we would just touch on the regulatory front. The FHFA extended its title pilot to May 2027. Are you hearing anything else on the regulatory development side that could either benefit or be a risk to title insurance? Maybe just expand on the pilot.

I think at first it's worth noting that the pilot is intentionally small, and it applies to a small subset of a small environment of residential refinance transactions. It did get extended, and we don't really know how many loans have flowed through it. I don't think that's been reported, but our sense is it's a fairly small number. As we go through the pilot program, it got extended. I think the view is that it's a difficult thing to scale if you're FHFA because you've got to think about, are we going to pay for anything at scale? Because it's basically being paid for by FHFA. But in terms of other regulatory challenges. There's really not a lot out there that we're seeing. Other than on the state level, there's always a variety of bills being proposed that aren't necessarily directed at the title industry, but could have elements in the bill that impact us one way or another. Things like redaction statutes, which are basically proposed statutes that would redact from public records certain people's information, and it's done under the guise of, you know, concern about security and things like that. And we're very active in tracking all the bills across the country, and we work very effectively with state regulatory agencies, state legislators, to really get the industry's voice and our voice into how to make the bill work in a way that doesn't negatively impact our record system and the broader real estate system got it maybe just to follow up on the pilot you did mention it's a very small subset of kind of low-risk refi transactions so I guess is it your view that it would be hard to implement on a wider scale for all refi and also purchase obviously well someone's got to pay for it and so the question is who's going to do that. And it's my understanding right now that Fannie, I guess, is paying for whatever goes through that program. It's not free, really. Someone's getting paid. That's difficult to see the reason for scaling that beyond a limited pilot.

Got it. Maybe just can you remind us what your priorities are in terms of capital deployment and how you approach shared buybacks?

Yeah, I mean, first and foremost, we pay a dividend, a very strong yielding dividend at this point. Our board looks at that dividend annually, and we raise it not every year, but almost every year we raise the dividend. So it's a nice payout there, and that's a commitment of about $550 million annually. After that, we have some modest interest expense of about $75 million annually, and then we look to more opportunistic capital allocation options, which would include M&A and share buybacks. And we do both, and we're active in both, depending on the market backdrop. M&A has been a little slower over the last few years, mostly because valuations have been hard to nail down as we've transitioned from a really strong market in 20 and 21 and, you know, the first part of 22 to more of a trough market in the past few years. I would say there's a lot of activity on the M&A front in terms of discussions and even negotiations, but we haven't done as many deals in the last two years as we historically have, but I would expect that we make more acquisitions on the title agent side is really mostly what I'm speaking to over the next few years. On the buyback front, again, opportunistic. We are typically active on buybacks, especially at these share price levels, but we're also blacked out a lot during the year. We have, you know, standard blackouts for earnings and things like that, but we also have unexpected blackouts. And so, you know, we have to find our pockets for when we can buy back, but, you know, we're always looking to be in the market when we can be.

Got it. Open it up to the audience for any questions. Looks like we have no questions. um maybe just to close um what do you want the main message to investors um to be today um obviously um share price valuation is depressed a little bit like what do you think the market's underappreciating about the business and what are you most excited about going forward i think about our long-term sustainable competitive advantages and that we have trusted distribution relationships at scale.

We've got technology at scale that others don't have, and we have the best opportunity to deploy AI at scale than any other player in the business. So as we look forward, I think the opportunities are really great for us, again, particularly as you marry volumes back to that. I mean, we still are at very low transactional volumes with existing home sales and refinance and commercial strong, that we will get an outsized benefit from both volume and technology vis-a-vis the industry.

And maybe I'll just throw in, I believe, and I just said it earlier, but I believe we have a very undervalued asset in F&G, and at some point I believe we'll realize that value.

On that note, we'll just send it there. Thank you so much.

Thank you.