2 Title Insurers Report Soaring Profits
Two major title insurers, Fidelity National Financial Inc. and First American Corp., said Wednesday that their first-quarter earnings soared as the booming housing and mortgage markets hiked demand for real estate services.
Profit at Irvine-based Fidelity climbed 42% to $143.6 million, or $1.44 a share, compared with $101 million, or $1.03 a share, in the same year-earlier period. Revenue rose 35%, to $1.44 billion.
Santa Ana-based First American said its net income doubled to $87.6 million, or $1.05 a share, from $44.1 million, or 57 cents a share, a year earlier. Revenue rose 29%, to $1.34 billion.
Both companies beat Wall Street’s expectations, but their shares fell amid expectations that the refinancing boom will eventually wind down.
Fidelity also said its board of directors declared a 5-for-4 stock split, and authorized talks with the city of Jacksonville, Fla., to relocate its headquarters there.
Fidelity lists its headquarters as Irvine, but its executive operations are in Santa Barbara.
Fidelity acquired a 500,000-square-foot office complex in downtown Jacksonville through the January acquisition of Alltel Information Services.
Fidelity’s majority-owned, publicly traded subsidiary, Fidelity National Information Solutions Inc., would remain in Santa Barbara, as would the regional title insurance operations.
The windfall Fidelity has earned from the housing and refi bonanza has allowed the company to buy Alltel and other businesses that aren’t dependent on interest rates, said analyst Jim J. Fowler, who follows Fidelity for JMP Securities.
“Fidelity is very effectively transforming itself from a title insurance company into a transactional management company,” he said.
First American’s results included a gain on the merger of the company’s Credit Online business with DealerTrack Holdings Inc. of $8 million, or 9 cents a share.
The results beat the 87 cents a share mean estimate of analysts surveyed by Thomson First Call.
The mortgage refinancing market continues to defy predictions that it will slow down soon, said Charles Gunther, senior analyst at Wells Fargo Securities in San Francisco. In expectation of a dip, the stock market has been discounting First American since spring of 2001, he said.
First American shares slipped 4 cents, to $25.98; Fidelity lost 98 cents, to $34.86. Both trade on the New York Stock Exchange.
