FNF Insures Its Position at Top of Real Estate and Title Insurance Market

FNF Insures Its Position at Top of Real Estate and Title Insurance Market

Price $48.87                      Dividend Holding                       October 14, 2021

  • 3.4% dividend yield is the highest in the sector.
  • Top provider of title insurance and real estate settling services in 42 states.
  • F&G partnership with Blackstone to enhance portfolio value and provide further financial stability.
  • Total revenue up 72.4% in 1H 2021, indicating strong real estate recovery and reduction in COVID-19 morbidity from 2020.

Investment Thesis

Fidelity National Financial (FNF) is a leading provider of various types of insurance and transaction services to the real estate industry. FNF comprises various underwriters and issuers, including Fidelity National Title, Chicago Title, Commonwealth Land Title, Alamo Title, F&G, and National Title of New York.

FNF is dominant in the industry, holding the #1 or #2 market share in 42 states for title insurance and settlement and being the most diversified from a geographic and revenue stance. With this, coupled with its high dividend yield and compelling valuation, we believe FNF is an excellent choice for minor capital appreciation and dividend yield.

Title Insurance and Settlement

FNF is the largest title insurance provider and settling service in the US and holds the #1 or #2 market position in 42 states.

Title insurance is an insurance policy for lenders on property relating to the legal side of the property and claims against it. A bad title can take many forms, including unpaid back taxes on behalf of a previous owner, building code violations, previously undisclosed building restrictions, or something as simple as a record-keeping error that costs money to fix.

Settlement services include escrow, titling, closing, and other mortgage and purchasing related transactions in buying or refinancing commercial or residential property.

2020 saw a massive boom in refinancing operations, likely due to the COVID-19 pandemic driving interest rates to a low point with consumers eager to cash in. This increased title insurance revenue up by 13% in 2020, bringing FNF’s title insurance margin to 21.4%, compared to the average competitor sitting at 13.5%. FNF maintains a sub 5% loss ratio (claims plus expenses over total earned premiums) on title insurance and maintains a large reserve of cash on hand for settling claims quickly.

IBNR – Incurred But Not Reported: money set aside for claims but not yet claimed

FNF has put a significant amount of R&D into technology in the real estate sector, including CINC, RealGeeks, Agent Pronto, and SkySlope. These firms differ slightly in the services they provide. Still, the core is that they provide various technology solutions relating to residential real estate transactions through lead generation, transaction management, customer relations management, and others. These firms help FNF solidify relationships with clients and keep FNF at the core of the real estate transaction industry.


FGL holdings (F&G) is in the top 5 fixed indexed annuity writer in the industry and is a leading life insurance provider primarily targeted toward middle income Americans. F&G provides life insurance and various annuity products, including fixed indexed, fixed-rate, and immediate. Recently, F&G has partnered with Blackstone, one of the world’s top investment managers with $530 billion in AUM. This provides F&G with the financial and human capital to handle large and complex financial transactions. This was part of a rebalancing strategy executed in 2018, where F&G repositioned itself away from credit risk through higher quality structured securities and private placements.


The risk for FNF is twofold. First, on the demand side, refinancings are probably past their peak, which will cause a decline in revenues. Second, on the competitive front, Fintech companies are trying to develop competing capabilities with lower costs. Both of these situations need to be monitored closely.

There are financial risks to consider as with any firm exposed to the market, F&G in financial markets, and FNF in real estate markets. The financial crisis in 2008 made many firms rethink their risk exposures, and F&G is no exception. F&G recently ran a stress test of their current portfolio under the conditions present in financial markets during the financial crisis and found its strategy resilient to even large-scale defaults over several years.

In the F&G division, COVID-19, which significantly raised morbidity in older customers who traditionally purchase life insurance.


Total revenue across sectors is up a massive 72.4% in 1H 2021 compared to 1H 2020 driven by home purchases. In Q2 2021, compared to Q2 2020, purchase orders 41%, with refinancing dropping 25%.

1H 2021 saw $651 million in total capital expenditures, with $212 million toward dividends and $294 million toward repurchasing shares.

Fidelity National Financial (FNF)
















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