Fidelity National Financial , Inc. (NYSE: NYSE:FNF) has delivered strong first-quarter results, with notable performances in both its Title segment and F&G business. The Title segment reported adjusted pre-tax earnings of $171 million and a 10.7% margin. F&G's assets under management reached a record high of $58 billion, reflecting robust business performance in a low-interest-rate environment. Despite challenges in the housing market, FNF remains optimistic about the long-term outlook and is investing in technology and strategic acquisitions to foster growth.
Key Takeaways
- FNF's Title segment achieved $171 million in adjusted pre-tax earnings with a 10.7% margin.
- F&G's assets under management hit a record $58 billion.
- FNF invested $250 million in F&G to support its expansion.
- The company remains cautious due to market challenges but expects Title margins to improve.
- F&G reported $3.5 billion in gross sales, with net sales at $2.3 billion.
- FNF's consolidated adjusted net earnings were $245 million for the quarter.
- The company has $618 million in cash and short-term investments and plans to invest in business growth.
Company Outlook
- FNF anticipates adjusted pre-tax title margins to reach the low to mid-teens in the coming quarters.
- The company plans to invest in technology, recruit talent, and explore strategic acquisitions.
- FNF will continue to invest in the business for long-term growth, with title acquisitions averaging $200-$300 million annually.
Bearish Highlights
- The company is cautious due to higher mortgage rates, housing affordability, and low inventory.
- Volatility in mortgage rates could affect future margins.
Bullish Highlights
- FNF is optimistic about the long-term prospects of the real estate market.
- The company is well-positioned to navigate through the market cycle.
- F&G's business is expected to perform well regardless of the interest rate cycle.
Misses
- No share repurchases were made in the first quarter.
Q&A Highlights
- Staffing levels have seen only a modest increase, relying more on existing staff hours.
- The company is managing headcount efficiently and expects better margins with increased revenue.
- Buybacks were paused in Q1, but may be revisited if cash flow increases.
- Executives emphasize more volume in the title business over additional investment income.
- F&G's earnings are influenced by spreads and the credit environment, not just interest rates.
Fidelity National Financial's first-quarter achievements demonstrate the company's resilience and strategic planning in the face of market challenges. With a disciplined approach to capital allocation and a clear focus on long-term growth, FNF is poised to capitalize on market opportunities and navigate through the cycles with confidence.
InvestingPro Insights
Fidelity National Financial, Inc. (FNF) has shown a solid performance as evidenced by the latest InvestingPro data and tips. With a market capitalization of $14.37 billion and a price-to-earnings (P/E) ratio of 17.22, the company stands out in the financial sector. Notably, the P/E ratio adjusted for the last twelve months as of Q4 2023 is 27.8, indicating investors' expectations for future earnings growth.
The company's revenue growth for the last twelve months as of Q4 2023 is 1.57%, with a significant quarterly increase of 33.36%. This highlights FNF's ability to grow its top-line revenue despite market fluctuations. Additionally, the gross profit margin stands at a healthy 51.07%, showcasing the company's efficiency in managing its costs and sustaining profitability.
InvestingPro Tips suggest that FNF has a commendable history of rewarding shareholders, having raised its dividend for 12 consecutive years and maintained dividend payments for 20 consecutive years. This consistent dividend growth is a testament to the company's financial stability and commitment to returning value to its shareholders. Moreover, analysts predict the company will continue to be profitable this year, with net income expected to grow.
For readers looking to delve deeper into FNF's financial health and future prospects, there are additional InvestingPro Tips available. These include insights on analyst earnings revisions, the company's performance over the last year and decade, and its trading position near the 52-week high. To access these valuable tips and more, visit https://www.investing.com/pro/FNF and use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. Currently, there are 9 additional InvestingPro Tips listed for FNF, which can provide a more comprehensive understanding of the company's potential.
Fidelity National Financial's strategic investments and prudent financial management, as reflected in the InvestingPro data and tips, underscore the company's strong position in the market and its potential for sustained growth.
Full transcript - Fidelity National Financial (FNF) Q1 2024:
Operator: Ladies and gentlemen, good morning and welcome to FNF First Quarter Earnings Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the call over to Lisa Foxworthy-Parker, SVP, Investor and External Relations. Please go ahead.
Lisa Foxworthy-Parker: Great. Thanks, operator and welcome everyone. Joining me today are Mike Nolan, Chief Executive Officer; and Tony Park, Chief Financial Officer. We look forward to addressing your questions following our prepared remarks. Chris Blunt, F&G’s CEO and Wendy Young, F&G’s CFO will join us for the Q&A portion of today’s call. 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 a discussion of the factors that could cause actual results to differ materially from those expressed or implied. This morning’s discussion also includes non-GAAP financial measures that we believe maybe meaningful to investors. Non-GAAP measures have been reconciled to GAAP where required in accordance with SEC rules within our earnings materials available on the company’s website. Yesterday, we issued a press release, which is also available on our website. Today’s call is being recorded and will be available for webcast replay at fnf.com. It will also be available through telephone replay beginning today at 3:00 p.m. Eastern Time through May 16, 2024. And now, I’ll turn the call over to our CEO, Mike Nolan.
Mike Nolan: Thank you, Lisa and good morning. We are very pleased with our first quarter results for both the Title segment and F&G, which provides a strong start to the year. Both businesses are well positioned for the current market and for longer term growth. Our title business continues to perform well in a volatile and challenging environment. We delivered adjusted pre-tax earnings in our Title segment of $171 million and achieved an industry-leading adjusted pre-tax title margin of 10.7% for the first quarter, an increase of 70 basis points over the 10% margin in the prior year quarter. This performance is in line with our expectation that entering 2024 with historic low order volumes would pressure first quarter margins much like last year. In the first quarter, we saw normal seasonality in purchase opened orders with sequential improvement coming off the fourth quarter. In April, purchase open orders per day were up 4% over last year, but higher mortgage rates may temper purchase volumes going forward. Refis are holding steady at roughly 1,000 per day at the current floor. Commercial volumes continue to be resilient and consistent. We generated revenue in commercial of $238 million in the first quarter, trending in line with the approximately $1 billion in annual revenue levels seen in 2023. We saw continued strength in multifamily, industrial and other segments like energy and affordable housing similar to recent years. Looking at first quarter volumes more closely, daily purchase orders opened were up 5% over the first quarter of 2023, up 25% over the fourth quarter of 2023, up 4% for the month of April versus the prior year and up 4% for the month of April versus March. Our refinance orders opened per day were down 2% from the first quarter of 2023, up 16% over the fourth quarter of 2023, down 2% for the month of April versus the prior year and down 2% for the month of April versus March. Our total commercial orders opened were 785 per day, in line with the first quarter of 2023, up 12% over the fourth quarter of 2023, up 4% for the month of April versus the prior year and up 1% for the month of April versus March. Overall, total orders opened averaged 5,100 per day in the first quarter, with January at 4,800, February at 5,100 and March at 5,300. For the month of April, total orders opened were 5,400 per day, up 2% versus March. At this time, we remain cautious and continue to view our performance in 2023 as a proxy for 2024 with some upside if rates come down later this year. However, market challenges from higher mortgage rates currently running in the low to mid-7% range, housing affordability and low inventory are expected to persist in the near term. Given mortgage rate volatility we could see adjusted pre-tax title margin move into the low to mid-teens range over the next couple of quarters. The timing for a potential rebound in the housing market is uncertain, and largely dependent on lower mortgage rates. In the scenario where more inventory comes into the market and rates come down, we are well positioned to capture upside to last year’s performance. Overall, higher volumes above current trough levels would help to drive stronger incremental margins and showcase the scale and efficiencies that our diversified national footprint provides much like what we saw in 2019 through 2021. In the current environment, we remain focused on managing our business to the trend in opened orders and we’ll continue to monitor our headcount and footprint carefully. Over the long term, we remain bullish on the real estate market, and we’ll continue to develop and invest in technology, recruit top talent and make strategic acquisitions all while maintaining industry-leading margins. I also wanted to comment on some recent headlines emanating from Washington on homeownership in America and the costs associated with buying a home. While we strongly support the broader effort to make homeownership more affordable, we believe the recent comments from the FHFA and the CFPB relative to title insurance are misguided and display a misunderstanding of the vital role in value that title insurance provides consumers and the broader economy and the critical role it plays in helping to make the American dream of homeownership a reality. The title industry not only protects consumers’ property ownership rights, but also the critical integrity of land records. In addition, we are our first line of defense in helping protect buyers and sellers from real estate and wire fraud. Title insurance also provides insures a duty to defend them in the event of a covered claim, and title insurers have state mandated reserves standing behind their policies, unlike attorney opinion letters or a GSE waiver. We welcome the opportunity to continue conversations with the FHFA and CFPB and we’ll continue to actively engage with all stakeholders in discussing the fundamental value that title insurance and settlement services deliver to America’s homebuyers and sellers, lenders and other participants in what for many is their most important real estate transaction. Turning to our F&G business. F&G has profitably grown its assets under management before flow reinsurance to a record $58 billion at March 31. As demonstrated, F&G’s business performs well in a low rate environment and even better and higher rate environments, which provides a nice counterbalance for the title business. Their growth prospects are compelling and led to our board’s decision to invest $250 million in F&G during the first quarter, in exchange for a mandatory convertible preferred security. This will enable F&G to take advantage of the current opportunity to accelerate growth of its retained AUM. Overall, we are pleased with F&G’s performance, which continues to exceed our expectations and even more pleased that this performance is being recognized by the market as seen in F&G’s strong share price performance since its listing in December of 2022. We believe that the growing value of F&G is beginning to be recognized in FNF’s shares as well. I would like to thank our employees for their outstanding efforts in delivering a solid start to the year, including another industry-leading performance despite the tough market. With that, let me now turn the call over to Tony to review FNF’s first quarter financial performance and provide additional highlights.
Tony Park: Thank you, Mike. Starting with our consolidated results, we generated $3.3 billion in total revenue in the first quarter. Excluding net recognized gains and losses, our total revenue was $3 billion, as compared with $2.5 billion in the first quarter of 2023. 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 off in the quarter or continue to be held in our investment portfolio. We reported first quarter net earnings of $248 million, including net recognized gains of $275 million versus a net loss of $59 million, including $5 million of net recognized gains in the first quarter of 2023. Adjusted net earnings were $206 million or $0.76 per diluted share compared with $151 million or $0.56 per share for the first quarter of 2023. The Title segment contributed $130 million. The F&G segment contributed $95 million and the Corporate segment contributed $8 million before eliminating $27 million of dividend income from F&G in our consolidated financial statements. Turning to Q1 financial highlights specific to the Title segment. Our Title segment generated $1.6 billion in total revenue in the first quarter, excluding net recognized gains of $63 million compared with $1.5 billion in the first quarter of 2023. Direct premiums increased 3% versus the prior year. Agency premiums increased 8%, and escrow title related and other fees increased 3%. Personnel costs increased 3% and other operating expenses decreased 4%. All in, the title business generated adjusted pre-tax title earnings of $171 million compared with $153 million for the first quarter of 2023 and a 10.7% adjusted pre-tax title margin for the quarter versus 10% in the prior year quarter. Our title and corporate investment portfolio totaled $4.6 billion at March 31. Interest and investment income in the title and corporate segments was $94 million, an increase of $2 million over the prior year quarter, primarily due to higher income from cash, short-term and fixed income investments, partially offset by lower income from our 1031 Exchange business resulting from declining balances. For the remainder of 2024, we expect quarterly interest and investment income to be stable at $95 million to $100 million, with anticipated Fed funds cuts of 50 basis points over the next 12 months. In addition, we expect approximately $27 million per quarter in dividend income from F&G to our corporate segment. Our title claims paid of $70 million were $24 million higher than our provision of $46 million for the first quarter. The carried reserve for title claim losses is approximately $67 million or 4% above the actuary central estimate. We continue to provide for title claims at 4.5% of total title premiums. Turning to financial highlights specific to the F&G segment. F&G hosted its earnings call earlier this morning and provided a thorough update, so I will focus on the key highlights of its quarterly performance. F&G reported gross sales of $3.5 billion in the first quarter, a 6% increase from the first quarter of 2023, driven by continued strong retail sales and robust institutional market sales. F&G’s net sales retained were $2.3 billion in the first quarter, in-line with the prior year quarter. F&G has profitably grown its retained assets under management to a record $49.8 billion at March 31. AUM before flow reinsurance was $58 billion. Adjusted net earnings for the F&G segment were $95 million in the first quarter. This includes alternative investment returns below our long-term expectations by $44 million or $0.16 per share and significant income items of $5 million or $0.02 per share. To bring it all together, FNF’s consolidated adjusted net earnings, excluding significant items in the F&G segment, were $245 million or $0.90 per diluted share in the first quarter. From a capital and liquidity perspective, we are maintaining a strong balance sheet at the trough of the cycle and remain focused on ensuring a balanced capital allocation strategy as we navigate the current environment. We held $618 million in cash and short-term liquid investments at the holding company level at March 31st. As a reminder, this amount reflects the $250 million investment made in F&G in January 2024, given the many opportunities to grow their business. Our annual interest expense on $3.9 billion of consolidated debt outstanding is approximately $200 million, comprised of $80 million for FNF’s holding company debt and $120 million for F&G segment debt. Our consolidated debt-to-capitalization ratio, excluding AOCI, remains in-line with our long-term target range of 20% to 30%. We view our current annual common dividend of approximately $525 million as sustainable. During the first quarter, we paid common dividends of $0.48 per share for a total of $130 million. We continue to invest in the business for long-term growth and typically see opportunistic spend on strategic title acquisitions averaged $200 million to $300 million per year. In terms of share repurchases, we paused our activity during 2023 due to the uncertainty in one of the weakest years in industry history. As we are still in a tough market, there were no share repurchases in the first quarter. This concludes our prepared remarks, and let me now turn the call back to our operator for questions.
Operator: Thank you. [Operator Instructions] Our first question is from the line of Soham Bhonsle with BTIG Pactual. Please go ahead.
Soham Bhonsle: Hey, guys. Good morning. I hope you are doing well. First one, maybe just on the comment, Mike, on the low to mid-teens margin over the next few quarters, can you maybe just elaborate a little bit more there? Should we think of that as more similar to last year or something better? Because you just put a higher margin on orders that were down, looks like 1% year-over-year and your orders are trending up so far in April. So just wondering if this is just some conservatism? Or are there costs that are coming down the pipe that maybe we’re not seeing?
Mike Nolan: Yes, sure. I mean, as you know, we don’t give guidance, but we’d expect margins to be good relative to the environment. And I think part of the commentary reflects the fact that at these lower levels, these lower revenue and volume levels, it doesn’t take a lot to move margins around in a particular quarter. And when you think about the various segments, refi is relatively flat. So you don’t see much volatility there one way or the other. And so margins will be kind of dependent on how commercial finishes out in a particular quarter. And given the lumpiness of that business, that can kind of move your margins around. And then secondarily, if there’s continued rate volatility on just mortgage rates overall in either direction. So it could be up or down, it could affect the purchase revenues. So I think that’s where the comments are grounded in. And I would just add that if we have more revenue and we see improvements there, we’re well positioned to drive stronger margins.
Soham Bhonsle: Got it. Okay. And then it looks like F&G’s contribution this quarter to EPS exceeded at least what title generated on a core basis, I mean this is the first time, and this kind of place your whole thesis, right, of being able to offset title earnings in a tough environment. So I guess, does this sort of performance maybe embolden you and the management team to just stay the course on F&G? Or are there other factors that we should think about when it comes to sort of owning the asset longer-term?
Tony Park: Yes. It’s a fair question. I think we’ve been saying for a while that staying the course is exactly what the board intends to do at least for now. We can’t predict the future, and what might happen and if there’s a better opportunity, we’ve been opportunistic over our history with various businesses, and so you can’t predict what might happen there. But I will tell you, the board is very pleased with F&G’s performance. And you’re right, that was probably closer to – I think, last quarter, F&G was like 30% of A&E, and now it’s closer to half, and it kind of validates the board’s initial premise. When rates go up, FG outperforms and the title business can have its challenges. And we feel like there’s value creation here, and we feel like there’s been some recognition of that value creation. So again, I’m not going to comment on what the board might do ultimately with the investment, but I will tell you that they’ve been pleased thus far.
Soham Bhonsle: Got it. And Tony, if I could just squeeze one more in. The corporate segment looks like it produced a profit this quarter. I’m guessing it’s the $27 million related to the dividend. But should we expect – I guess, you said expect that going forward, so does that segment turn into a profit going forward? How should we think about that? Thank you.
Tony Park: Yes. Thanks for that observation. We did add a new column, if you will, in our earnings release, and really, the point here was to highlight that F&G is paying now $27 million per quarter in investment income to our corporate segment. And so we didn’t want that to get lost by netting those two together. In reality, our consolidated financials have to net those together. But when you want to isolate our segments, I think it’s important to see that corporate is receiving that $27 million. So that’s why, yes, you see a profit and adjusted profit of adjusted net earnings of $8 million in the corporate segment, but then you do have that elimination of $27 million. So I think that’s the way we’d like to show that in the future, just to highlight that point.
Soham Bhonsle: Great. Thank you.
Operator: Thank you. Our next question comes from the line of Bose George with KBW. Please go ahead.
Bose George: Hi, good morning. Actually I wanted to go back to the margin discussion. So you noted that your volumes are up in April. But when you compare it to the cadence that you guys saw last year, is it more muted than what you saw last year? And so when you think about the margin in 2Q versus 1Q, could we see a similar improvement, or could it be a little more muted than last year?
Mike Nolan: Yes. Good question, Bose. It’s Mike. The sequential improvement in the first quarter over the fourth quarter this year was actually a little bit better than prior years. It was 25% up against, probably an average of about 20% over the last handful of years. So that was actually very encouraging. And then April is up 4% over March of this year, it was a little less than last year. I think we were about 6%, so not really much difference. And we were pleased with that given that rates were moving back up in April. We just don’t know, Bose, the impact on May and June. If rates stay elevated, it may put more pressure as we see, opens move through the last couple of months of the quarter. So, that’s part of the wildcard. And it’s just hard to predict the rates, I mean they move back down, I think around 6.8% in the fourth quarter or somewhere in there, and they jump up in April, hit as high as 7.5%. I think they are back down to 7.2% if you are tracking the daily rates. And it’s just more volatile than we have typically had in prior periods. So, that’s part of what’s the color of the comment, I think.
Bose George: Okay. That makes sense. Thanks. And then actually, just to follow-up on the F&G – sorry, on the corporate question as well. So, the Corporate segment goes up, actually, where is the offset, is that coming out of the F&G segment?
Tony Park: Yes. So, F&G is paying dividend, both on their common shares and their preferred. So, it’s like $22 million common dividend, another $5 million on the preferred. Dividends actually come out of the equity section in F&G, so it’s not an expense to F&G. But it’s real cash to FNF corporate and so we book it in the income and then we eliminate it since you can’t earn, you can’t show earnings from a subsidiary in your financials. And so that’s why that’s an offset. And it was like that absent the preferred dividend, I don’t know that we had that last quarter. But in terms of just the common dividend, we had it in the prior quarter, it’s just it was netted together.
Bose George: Okay. And is the elimination in the income statement, or is that sort of below the line somewhere?
Tony Park: Yes, the elimination is in the income statement. There is actually a column that you can now see in our earnings release that shows a negative $27 million that offsets the Corporate segment.
Bose George: Okay. Great. Thanks.
Operator: [Operator Instructions] Our next question is from the line of John Campbell with Stephens Inc. Please go ahead.
John Campbell: Hi guys. Good morning.
Mike Nolan: Hi John.
Tony Park: Good morning John.
John Campbell: It looks like you ended up with more title-filled staff in the quarter. I think that was the first sequential increase since maybe 3Q ‘21. And obviously, it’s a seasonally weaker period. Just curious about how you are thinking about the staffing levels as you move throughout the year? And maybe if you could talk to how much incremental capacity maybe you feel like you have built in the last year or so. I mean going back to the margin commentary, it seems like you are not – at least you are not signaling a big lift off of last year, but with order growth and what I think would be maybe a little bit of incremental capacity, it seems like you should do better there, but just maybe some commentary around that.
Mike Nolan: Yes. Well, first the staffing. I think the increase was fairly modest. It mainly relates to additional hours that get put on by existing staff, which isn’t unusual as we head into the New Year coming off the weakness in the fourth quarter. We are very focused on headcount still, John. And – but at the same time, also recruiting and have had some adds in the acquisition space as well. So, I think we are well positioned with staffing to the current environment. And back to the margin question, if we get – if we see more revenue, more pickup in purchase in particular, we will drive better margins. We are very well positioned for that. It just gets back to the volatility on mortgage rates and how quickly that could have an impact in one direction or the other. And as we go through the balance of the year, I think we will just continue to manage the staffing accordingly like we always have. I mean I think the outperformance on margin in the first quarter certainly is partly due to the fact that we came into the year in a better position from an expense standpoint and took advantage of that in the first quarter.
John Campbell: Okay. Makes a lot of sense. And then on the capital allocation framework, obviously, you guys have flat line in the buybacks after record years in 2021 and 2022. I don’t know if I am reading too much in the commentary from you, Tony, but it sounds like maybe we should just be thinking about the return, potentially the buyback activity just kind of aligning with U.S. housing recovery. Is that a fair assumption?
Tony Park: Yes. I think it probably is. We took – we paused in 2023 in the first quarter. I think from my standpoint, I am looking to see some positive cash flow. I mean we have positive cash flow, but a lot of it goes towards a $525 million dividend commitment and a couple $200 million to $300 million in acquisition activity. And so I guess, I am looking for something more than $800 million to fund that, realizing that we do have a cushion in a $600 million sitting on the balance sheet. We generated positive operating cash flow in Q1 of about $80 million in the Title and in Corporate segments, which isn’t unusual, the first quarter is always the most challenging. But if we see upside to cash flow this year relative to last, I could see us revisiting that. But to your point, I think a lot of it depends on just where we feel like the trends are headed. And I think we all believe that things are going to get better. It’s just calling that timing is probably most challenging.
John Campbell: Okay. That makes sense and if I could squeeze in maybe one more here. Mike, I agree with you. I mean the market feels like it is wanting to bounce back, obviously a lot that hinges on rates. And so just kind of related to that, you guys gave the April numbers, so maybe if you could talk to maybe the progression week-to-week throughout the quarter if you saw much of an influence from rate movements. And then I don’t know if you have got the orders for the trends for the first week of May, but maybe talk to how the market kind of turned into May?
Mike Nolan: Yes. I don’t have anything I could report on May, but back to your comment, if you look at the pickup in refinance business in the first quarter, I think we were up, let me – 16% over the fourth, rates did come down in the first quarter. And I think to your point, refis reacted to that, still at low levels, but they – I think they reacted to that. And then as we got into April, that’s when rates went back up. And then refi was down a little bit to the prior period. On the purchase side, I actually was pleased that even though rates were moving up in April, like I said, they got to 7.5% at one point, it was not showing up and impacting our purchase open orders, in fact they were up 4% sequentially. What we don’t know is kind of how – as I have said before, how it’s going to play out into May and June if rates stay elevated or move higher. And if they go lower, then you could have a more positive outcome, obviously.
John Campbell: Excellent. Thanks. Thanks for the color.
Operator: Thank you. Our next question is from the line of Maxwell Fritscher with Truist Securities. Please go ahead.
Maxwell Fritscher: Hi. Good morning. I am calling in for Mark Hughes. Kind of in relation to that last question, I was just wondering if any internal models are showing what would be the best equilibrium between – and this is in regards to rates, the best equilibrium for the title business, the investment income in F&G, where rates would be headed for – to have the optimal earnings?
Tony Park: Wow, yes, I don’t know that we have a model for that. We all – we have always said and just speaking specific to title before I even try to touch on. I will let Chris and Wendy handle the F&G side. But on title, we have always said more volume trumps investment income. And so if we can get to a rate environment where we get over 5 million existing home sales or whatever the number is and get into that normalized market, I think we will take that any day over maybe even a couple of hundred million dollars of additional investment income. Having said that, certainly, it’s a bit of a hedge, and we are enjoying $100 million a quarter in interest and investment income from the portfolio, but lower rates and more volume is certainly better. And did you want to…
Mike Nolan: Yes. I guess it’s Mike, Maxwell, I would add. Just look back at years like 2019 and 2020, 2021, we didn’t have a lot of investment income because rates were low, but the title business just exploded. And you can look at the margins and the profitability we drove in those years hitting an all-time high of, I think it was 21% in – almost 22% in ‘21, and that was without very little investment income. So, I think that probably answers your question and Chris can certainly confirm this. But F&G’s business performs well regardless of the interest rate cycle. The interest rates on their floating assets are there, but it’s a small part of the story. So – and I will let Chris confirm that. But I think we take lower rates for sure.
Chris Blunt: Yes. Mike, that’s right. I mean one of the charts we are most proud of is you see the pretty consistent spreads from when the 10-year treasury was up 39 basis points up to where it sits now, because again, once we get premiums in, we are getting those invested in the ground ASAP, and we are locking in that net spread. So, spread matters to us, credit environment matters to us, but we are largely indifferent. Now, in a rising rate environment, it’s easier to eke out more spread. There is a little more demand for the product. But yes, I think folks are going to be surprised that as rates fall, our earnings should hold up quite well.
Maxwell Fritscher: Yes. There is a lot there, you answered that perfectly, so I appreciate that and that’s all I have. Thanks.
Mike Nolan: Thanks.
Operator: Thank you. Ladies and gentlemen, this will conclude our question-and-answer session. I will now turn the conference back over to CEO, Mike Nolan for his closing remarks. Mike?
Mike Nolan: Thank you. We are pleased with our solid start to the year. We remain well positioned to navigate the market cycle and are continuing to build and expand our title business for the long-term. Likewise, F&G’s opportunities are compelling with many prospects ahead to drive asset growth, deliver margin expansion and generate accretive returns. Thanks for your time this morning. We appreciate your interest in FNF and look forward to updating you on our second quarter earnings call.
Operator: Thank you. The conference of FNF has now concluded. Thank you for your participation. You may now disconnect your lines.
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