Blaming rising interest rates, title insurer Fidelity National Financial Inc. reported Friday that its earnings last year dropped 66% to $12.1 million but that it would continue to repurchase its stock and to pursue a hostile takeover attempt.
The nation's fifth-largest title insurance underwriter said the profit of 81 cents a share was in line with estimates by industry analysts and mirrored the generally depressed state of real estate sales.
In 1993, the company earned $36.3 million, or $2.37 a share. Its annual revenue fell 14% last year to $492.8 million from $595.4 million in 1993.
Interest rate increases starting 13 months ago resulted in "an extremely depressed market for the title insurance industry," Chairman William P. Foley II said.
"Residential refinancings dissipated throughout the year, and home resale transactions remained stagnant," he said. "The relatively low volume of title orders and increased cancellation trends accounted for the 1994 revenue and income declines."
The company responded to the declining market with cost-cutting measures, including a nationwide reduction of about 2,000 workers, or 30% of its total staff, President Frank P. Willey said.
The company, though, continued to make a series of small acquisitions to gain market share. And it has continued its stock repurchase program despite reduced earnings, Willey said.
Fidelity, he said, remains committed to its 11-month struggle to acquire US Facilities Corp., a Costa Mesa medical, property and casualty insurer.
For the fourth quarter, Fidelity reported a loss of $1.1 million, or 8 cents a share, including a one-time tax-related charge against earnings of $1.5 million. In the last quarter of 1993, the company earned $12 million, or 76 cents a share. Quarterly revenue fell 35% to $106.4 million last year from $163.5 million in the quarter a year earlier.
Fidelity's shares closed Friday at $10.75 a share, down 12 cents, in New York Stock Exchange trading.