A cooler spring home-buying season led to mixed financial results for the four major title insurance companies in the second quarter of 2024. Although all four companies reported net income in the quarter, not all of them posted better results than the previous year.
Old Republic
At Old RepublicTotal operating income increased 10% year-over-year to $2.012 billion, while net income decreased year-over-year from $115.5 million a year ago to $91.8 million in the second quarter of 2024. The decline in total net income was certainly not due to the performance of Old Republic’s title segment, which reported a 2.1% year-over-year increase in net fees and title premiums earned to $663.4 million and a 50.8% increase in revenue to $30.2 million.
““While mortgage rates remain high and the overall real estate market remains sluggish, we are pleased with the quarterly revenue growth in both the direct and agency channels,” said Carolyn Monroe, president and CEO of Old Republic’s title segment, during the company’s second-quarter 2024 earnings call. “We are cautiously optimistic that the market has found some footing, although the timing and pace of the recovery remains difficult to predict.”
Looking to the future, the company will continue to focus on technological developments, according to executives.
“Our investments include internally developed solutions and the use of technology through strategic partnerships and alliances. One of these recent partnerships allows us to provide our offices and agents with a technology tool and verification service to help mitigate wire fraud and diversion,” Monroe said. “The strategic alliance allows us to quickly respond to the industry-wide, costly problem of real estate fraud and security.”
Stewart
Unlike Old Republic, Stewart saw year-on-year increases in both revenue and net income in the second quarter of 2024. In the second quarter, Stewart reported total revenue of $602.2 million (up from $529.2 million a year earlier) and net income of $17.3 million (up from $15.8 million). The company’s title segment also reported an increase in operating revenue, which rose 6% year-on-year to $496.2 million. Despite this increase, however, the title company’s pretax income declined 6% year-on-year to $33.4 million.
While revenues increased in the domestic commercial, international and agency title business, revenues in the domestic non-commercial business decreased 8% year-over-year to $169.4 million.
“We have continued to make great progress on our strategic initiatives and are gaining market share in several business areas. These things are difficult to pull off in a normal market, let alone in an environment like we are in now,” Stewart CEO Fred Eppinger said during the company’s second quarter 2024 earnings call. “The real estate market has remained depressed much longer than most people expected, but Stewart has maintained our competitive advantage by improving our financial and operating position. We remain confident that we are well positioned to benefit from improving market conditions.”
Eppinger said Stewart expects 2025 to be a “transitional year” for the real estate market and that his company, like Old Republic, is also focusing on technology, which he said will “improve title production processes and is working on leveraging technology to improve (its) data management and data access.”
First American
First American was the only one of the Big Four to report annual declines in both total revenue and net income. Revenue fell 2% annually to $1.6 billion and net income fell to $116.0 million in Q2 2024 from $138.5 million a year earlier. These declines came as the number of title orders opened in the quarter fell to 169,600 this year from 174,600 a year earlier. This caused title revenue to fall to $1.522 billion in Q2 2023 from $1.531 billion and title pre-tax income to fall to $177.4 million from $185.7 million a year earlier.
“In the buying market, the spring selling season proved disappointing despite early positive signs,” said First American CEO Ken DeGiorgio during his company’s earnings call with analysts and investors. “Our closed orders increased less than 1% year over year as affordability issues, high mortgage rates and elevated home prices depressed demand. Despite the subdued transaction activity, tight inventory drove home price appreciation, resulting in a 4% increase in our direct purchases.”
Like his colleagues at other title companies, DeGiorgio also highlighted his company’s technological advances. One of those advances was the use of automated underwriting technology for purchase transactions rather than just refinances.
“In April, we successfully launched an ongoing pilot of automated underwriting for purchase transactions, which is much more complex and relies heavily on title data,” DeGiorgio said. “This initiative, which we call Sequoia, was launched in Maricopa and Riverside counties with the goal of making an insurable title decision for at least 50% of residential properties.”
Fidelity National Financial
While loyalty Although the company managed to improve its overall revenue and net income year-on-year, its stock segment did not have a good quarter. For the entire company, revenue increased from $3.068 billion in the second quarter of 2023 to $3.158 billion this year, while net income increased from $219 million last year to $306 million in the second quarter of 2024.
Fidelity’s securities segment reported revenue of $1.9 billion, flat year-over-year, and profits of $159 million, down $6 million as the total number of securities orders opened declined by 3,000 orders to 344,000 orders.
“Our title business continues to perform very well in this low transaction environment as elevated mortgage rates and affordable housing continue to hinder home sales in the U.S. This strong result reflects our disciplined operating strategy and our investments in innovative technology and data,” said Mike Nolan, CEO of Fidelity, in his company’s second quarter 2020 earnings call. “Our operating discipline is focused on actively adapting our business to the open order trend and adjusting our headcount and footprint accordingly. Our technology investments are focused on leveraging data and digital tools to increase operational efficiency and improve the overall experience of our customers and clients. We are optimistic that the industry is approaching more favorable market conditions and that mortgage rates will continue to rise given current market expectations for an initial The US Federal Reserve Interest rate cut in September.”
Fidelity’s commitment to technological advancement was also highlighted in the conference call. Nolan noted that the company appointed its first Chief Artificial Intelligence Officer this quarter, which he said was a recognition of “the importance of the company for the future.”
“We are committed to using the new capabilities of AI responsibly to achieve greater efficiency and productivity over time,” Nolan said.
