Fidelity Is Latest Title Insurer to Report Loss--$3.3 Million : Earnings: The Irvine company was hurt in the first quarter by slack home sales and loan refinancings.
In the latest of a stream of red ink reported by title insurers, Fidelity National Financial Inc. said that it lost $3.3 million for its first quarter as home sales remained slack and rising interest rates stalled the market for home loan refinancings.
The quarterly loss, amounting to 27 cents a share, for the nation’s fifth-largest title insurer is a dramatic drop from last year’s first-quarter earnings of $6.8 million, or 40 cents a share. Fidelity officials said the red ink was expected.
The impact of the higher rates and the continued weak demand for houses also showed up in the Irvine company’s revenue, which plummeted 42% to $83.1 million for the first quarter from $143.6 million for last year’s first three months.
The long boom in refinancings, fueled by ever-lower interest rates, had lifted profits industrywide for most real-estate related companies. But since last winter, rates have risen seven times. The refinancing market dried up and home sales haven’t grown to fill the void.
Fidelity joins a list of real-estate related companies hurt by the lower mortgage activity. Last week, First American Financial Corp., the nation’s second-largest title insurer, posted the worst first quarter in its 106-year history, losing $12.7 million.
Like many of its rivals, Fidelity has responded to the business downturn by cutting costs. Since 1993, the company has eliminated a quarter of its work force, which is now about 3,500 employees.
“We will continue to adjust expenses and personnel costs as needed,” said William P. Foley II, Fidelity’s chairman, said in a prepared statement.
Foley said business has begun to pick up as mortgage rates have stabilized in recent months. Unless there is another hike in interest rates, Foley said, “We are optimistic that this trend will continue.”
Fidelity’s president, Frank P. Willey, said in an interview that despite the poor quarterly performance, the company remains financially strong. It will continue, for instance, to pursue its hostile takeover bid for US Facilities Corp., a Costa Mesa insurance company.
Fidelity’s quarterly loss, released Friday, included an extraordinary expense of $813,000, or 7 cents a share, for the early retirement of certain debt.
The company’s stock closed Friday at $11.50 a share, up 62.5 cents on the New York Stock Exchange.
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Fidelity National Financial
For the first quarter, Fidelity National Financial Inc. reported a loss of $3.3 million on revenue of $83 million. Figures in millions of dollars, except per-share data:
1995 1994 Percent change Total revenue $83.1 $143.6 -42.2% Net earnings (loss) (3.3) 6.8 n/a Earnings per share (0.27) 0.40 n/a
Source: Fidelity National Financial; Researched by JANICE L. JONES / Los Angeles Times
