A cooler spring homebuying season led to a mixed bag of financial results for the Big Four title insurance firms in the second quarter of 2024. Although all four firms reported a net income during the quarter, not all of them recorded better results than a year ago.
Old Republic
At Old Republic, total operating revenue was up 10% year over year to $2.012 billion, while net income was down annually from $115.5 million a year ago to $91.8 million in Q2 2024. The drop in overall net income was certainly not due to the performance of Old Republic’s title segment, which reported a 2.1% yearly increase in title net fees and premiums earned to $663.4 million and a 50.8% jump in income to $30.2 million.
“Although mortgage rates remain high and the overall real estate market is slow, we’re pleased to see revenue growth in the quarter in both the direct and agency channels,” Carolyn Monroe, the president and CEO of Old Republic’s title segment, said during the firm’s Q2 2024 earnings call. “We’re cautiously optimistic that the market has found some footing, although the timing and the pace of the recovery really remain difficult to forecast.”
As the firm looks to the future, executives said they are continuing to focus technological developments.
“Our investments include internally developed solutions and the deployment of technology through strategic partnerships and alliances. One such recent partnership allows us to provide our offices and agents a technology tool and verification service to help mitigate wire fraud and diversions,” Monroe said. “Utilizing the strategic alliance, we can quickly respond to the industry-wide high-cost issue of real estate fraud and security.”
Stewart
Unlike Old Republic, Stewart managed to record a yearly increase in both revenue and net income in Q2 2024. During the second quarter, Stewart reported a total revenue of $602.2 million, up from $529.2 million a year prior, and a net income of $17.3 million up from $15.8 million. The firm’s title segment also reported an uptick in operating revenue, jumping 6% year over year to $496.2 million. However, despite this uptick the title firm’s pre-tax income fell 6% annual to $33.4 million.
While revenue increased in domestic commercial, international and agency title operations, it fell 8% annually in domestic non-commercial revenue to $169.4 million.
“We have continued to make great progress on our strategic initiatives and are winning share in multiple businesses. These things are difficult to pull off in a normal market, much less an environment that we’re in now,” Fred Eppinger, Stewart’s CEO, said during the firm’s Q2 2024 earnings call. “The housing market has remained depressed much longer than most people anticipated, but Stewart has maintained our competitive edge by improving our financial and operational positions. We remain confident that we are well positioned to capitalize on improving market conditions.”
Eppinger said Stewart expects 2025 year to be a “transitional year” for the housing market and that his firm, like Old Republic is also focusing on technology, which it says will enhance its “title production processes and are working on utilizing technology to improve [its] data management and access.“
First American
First American was the lone stand out among the Big Four in reporting annual decreases in both total revenue and net income, with revenue dropping 2% annually to $1.6 billion and net income falling from $138.5 million a year ago to $116.0 million in Q2 2024. These decreases came as the number of title orders opened in the quarter fell from 174,600 a year ago to 169,600 this year. This resulted in title revenue dropping to $1.522 billion from $1.531 billion in Q2 2023 pre-tax title income falling to $177.4 million from $185.7 million a year prior.
“In the purchase market, despite early positive signs the spring selling season proved to be disappointing,” Ken DeGiorgio, the CEO of First American, said during his firm’s earnings call with analysts and investors. “Our closed orders were up less than 1% compared with last year as affordability issues, high mortgage rates, and elevated home prices suppressed demand. Despite the muted transaction activity, tight inventory conditions led to home price appreciation, resulting in a 4% increase in our direct purchase revenue.”
Like his counterparts at the other title firms, DeGiorgio also highlighted his firm’s technological advancements. One such advancement was using its automated underwriting technology for purchase transactions instead of just refinances.
“In April, we successfully launched an ongoing pilot automated underwriting for purchase transactions, which is much more complex and heavily dependent on title data,” DeGiorgio said. “This initiative, which we call Sequoia, was launched in Maricopa and Riverside counties with a goal of rendering an insurable title decision for at least 50% of residential properties.”
Fidelity National Financial
While Fidelity did manage to improve its total revenue and net earnings from a year ago, its title segment did not have a great quarter. For the entire firm, revenue was up from $3.068 billion in Q2 2023 to $3.158 billion this year, while net earnings jumped from $219 million a year ago to $306 million in Q2 2024.
Fidelity’s title segment reported flat year-over-year revenue of $1.9 billion and a $6 million decline in earnings to $159 million, as the total number of title orders opened dropped by 3,000 orders to 344,000 orders.
“Our title business continues to perform very well in this low transactional environment as elevated mortgage rates and housing affordability continue to hamper U.S. home sales. This strong result reflects our disciplined operating strategy and our investments in innovative technologies and data,” Mike Nolan, the CEO of Fidelity, said in his firm’s Q2 2204 earnings call. “Our operational discipline focuses on actively managing our business to the trend in opened orders and adjusting our headcount and footprint accordingly. Our technology investments focus on leveraging data and digital tools to increase operational efficiency and improve the overall experience of our clients and customers. We are optimistic that the industry is getting closer to more favorable market conditions and that mortgage rates may have hit their peak given current market expectations for an initial Federal Reserve rate cut in September.”
Fidelity’s commitment to its technological advancement was also called out in the call, with Nolan noting that the firm named its first Chief Artificial Intelligence Officer role this quarter, which he said was in recognition of “its importance of the future.”
“We are committed to responsibly harnessing the new capabilities that AI can bring to drive greater efficiencies and productivity over time,” Nolan said.