To make sure that buying a dream home doesn't become a nightmare, Fidelity National Financial provides title insurance, escrow, home warranties, and other services related to real estate transactions. It is now the biggest dog in the residential and commercial title insurance sectors, (the next largest player is First American) and accounts for 35% of all title insurance policies in the US. The company operates through its four underwriters: Fidelity National Title Company, Chicago Title, Commonwealth Land Title, and Alamo Title. It sells its products both directly and through independent agents. Fidelity National has also grown its holdings in casual restaurant chains.
Fidelity National Financial operates exclusively within the US. Naturally, the biggest markets are in states with the greatest populations. California, Texas, and New York account for more than a third of its title insurance premiums.
Title insurance is typically one of the most stable types of insurance written. It is folded into the piles of paperwork homebuyers sign during closings, with little or no fuss. Even though US home sales remain sluggish, the company has stayed busy from the brisk pace of refinancing of existing mortgages.
Title insurance premiums account for more than two-thirds of Fidelity National Financial's revenues, but the company also maintains a small handful of other operations completely outside of the title insurance industry. These include a 50.2% stake in auto parts manufacturer Remy International and a minority interest in Ceridian, a payroll and HR services firm. It has also committed to expanding its holdings in casual dining restaurants though its 55% ownership of American Blue Ribbon Holdings.
Sales and Marketing
Fidelity National Financial maintains some 1,100 retail offices to provide residential title insurance. It markets its commercial title insurance in major urban real estate markets.
While the company is basically sound, Fidelity National Financial's revenues are hampered by stiffness in the residential mortgage lending market. Its revenues fell 8% to $4.8 million in 2011. The decrease mostly reflects the fact that the company has been shrinking through divestitures. Its net income has stabilized around $370 million in 2011 and 2010 following the roller coaster years of the recession.
Fidelity National Financial is now so dominant within the title insurance industry that any attempt to grow larger there would draw the scrutiny of regulators. Instead, the company is diversifying by buying up restaurant chains and transferring them to American Blue Ribbon Holdings. By mid-2012 Fidelity National Financial boasted a new restaurant segment on its financial results.
To raise a bit of cash for diversification, the company sold its profitable flood insurance business to WRM America Holdings for $210 million in late 2011. It then sold all but 15% of Fidelity National Property Casualty Insurance, its personal lines business, to WT Holdings for some $119 million in 2012.
Mergers and Acquisitions
In late 2012 Fidelity National Financial acquired the Nashville-based J. Alexander's chain of 33 restaurants and merged it under American Blue Ribbon Holdings, which also owns Ohio-based Max & Erma's and Tennessee-based O'Charley's.
Like all title insurers, Fidelity National Financial shivered when the big chill hit the real estate market in 2008. But, while the company slowed it remained quick enough to take advantage of opportunities. When its ailing rival LandAmerica Financial Group filed Chapter 11 in 2008, the company bought up the choicer bits for $235 million. This purchase helped make it into the largest title insurer in the US and caught the attention of the FTC, prompting the company to divest a few holdings to soothe the agency's nerves. The 2009 sale of Fidelity National Capital only brought in $50 million, but took $214 million of debt off company ledgers. The 2010 sale of its 32% stake in Sedgwick Claims Management brought in some $225 million.
The current company arose in 2006 when a previous company, also named Fidelity National Financial, split apart its title insurance operations from its information services business. What had been Fidelity National Title Group took on its former parent's name, while Fidelity National Information Services took on the former parent's remaining operations. The two companies share a history and some stray holdings, but are otherwise separate.