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About Chicago Title Insurance Company

To make sure that buying a dream home doesn't become a nightmare, Fidelity National Financial (also known as FNF) provides title insurance, escrow, home warranties, and other services related to real estate transactions. It is now the top dog in the residential and commercial title insurance sectors (the second-largest is First American), and issues more title insurance policies than any other title company in the US. The company operates through underwriters including Fidelity National Title Insurance, Commonwealth Land Title, Alamo Title, and National Title of New York. It sells its products both directly and through independent agents. In 2018 FNF agreed to buy Stewart Information Services, another Big Four title insurance firm. 

Operations

FNF is organized into two segments: Title and Corporate and Other. The Title segment brings in most of the group's revenues; it includes title insurance and related closing services. Through subsidiary ServiceLink, FNF provides mortgage transaction services such as facilitating the production and management of mortgage loans.

In late 2017, the company split off Cannae Holdings, part of its former Fidelity National Finance Ventures (FNFV) segment. Now a publicly traded entity, Cannae owns stakes in numerous firms including payroll and HR services firm Ceridian Holding, restaurant owner American Blue Ribbon Holdings, and medical software company T-System Holding.

 

Geographic Reach

FNF's insurance businesses operate exclusively within the US. Naturally, the biggest markets are in states with the greatest populations: California, Texas, Florida, New York, and Illinois combined account for more than 45% of its title insurance premiums.

The company leases offices in more than 40 states and Washington, DC, as well as in Canada and India.

Sales and Marketing

FNF uses direct sales representatives and independent agents to market its title and escrow products to residential and commercial real estate customers. The company maintains some 1,400 retail offices to provide residential title insurance. It markets its commercial title insurance through a network of 5,200 agents in major urban real estate markets.

Financial Performance

While the company is basically sound, FNF's revenues can be hampered by stiffness in the residential mortgage lending market. With the exception of 2015, revenue has been on the rise. Even more steadily, net income has been rising for the past few years. 

Revenue rose 6% to $7.7 billion in 2017 as title insurance premiums and escrow, title-related, and other fees all increased. Existing home sales increased that year, but mortgage interest rates inched upward, leading refinance transactions to fall.

Thanks largely to the higher revenue, net income rose 19% to $771 million in 2017. However, higher agent commissions expenses and personnel costs did cut into profits that year.

FNF ended 2017 with $635 million in cash and cash equivalents, which was $357 million less than it had at the beginning of the year. Operating activities provided $737 million in cash, financing activities (primarily long-term debt reduction) used $999 million and investing activities used another $95 million.

Strategy

Title insurance is typically one of the most stable types of insurance written. It is folded into the piles of paperwork home buyers sign during closings, with little or no fuss. Even when US home sales become sluggish, FNF stays active from refinancing of existing mortgages. However, when interest rates rise, refinancing activities tend to slow down. In the current economic cycle, FNF expects that mortgage originations will slow down through 2019, but lower unemployment rates and rising consumer confidence should help offset the impact of higher interest rates. Additionally, commercial real estate transactions tend to be less reliant on interest rates, which should help boost the company's sales.

To stay at the top of the title insurance game, FNF's core strategies include building on its various, well-known brand names including Fidelity National Title, Commonwealth Land Title, and Alamo Title. It is also focused on delivering superior customer service and maintaining operations that can withstand the cyclical title insurance industry. For the latter, it monitors its corporate organization and office network (consolidating operations as necessary) and strikes a balance between residential and commercial transactions. The company also introduces new products and technologies to remain competitive.

In a similar vein, transaction services unit ServiceLink entered the auction business when FNF acquired Hudson & Marshall in mid-2017. The new ServiceLink Auction offering provides foreclosure and real estate-owned auction services.

Historically, FNF and its operating subsidiaries have grown through numerous acquisitions in the title insurance space, as well as by adding new offerings to attract more customers. While keeping its eye on strengthening its existing title insurance operations, the company has made some moves to diversify by buying up non-insurance related businesses. In 2017, for example, it acquired health care technology firm T-System for $200 million.

However, in a major turnaround, the company divested most of its non-insurance holdings in 2017. It separated from its Black Knight technology services arm and holding company Cannae (both of which are now public companies). The transactions helped streamline FNF's corporate structure, allowing it to focus on the title insurance sector.

Mergers and Acquisitions

FNF plans to buy another Big Four title insurance firm, Stewart Information Services. The $1.2 billion deal will make the nation's largest title company even bigger, with some 44% of the market share. 

The company made a number of acquisitions during 2017. It bought Hudson & Marshall, a leading property and real estate auction firm. FNF subsidiary ServiceLink entered the auction business through that transaction; Hudson & Marshall now powers the new ServiceLink Auction offering. Also that year, FNF acquired Real Geeks, which provides a customer relationship management (CRM) platform and other internet tools to the real estate industry. The company then acquired control of Title Guaranty of Hawaii, the state's oldest title insurance company, which was previously an unaffiliated agent of Chicago Title. FNF also acquired a majority stake in SkySlope, which provides digital transaction management technology to the real estate sector.  

Further boosting its technology capabilities, in 2016 FNF acquired Georgia-based Commissions (which provides web-based real estate marketing and CRM software) for $229 million. 

Company Background

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 choice 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.

Chicago Title Insurance Company

10 S LASALLE ST STE 2850
Chicago, IL 60603
Phone: 1 (312) 223-2402

Stats

Employer Type: Privately Owned
Senior Vice President: Vincent Fina
Executive Account Manager: Scott Isacson
Senior Vice President: John Premac
Employees (This Location): 500
Employees (All Locations): 5,135

Major Office Locations

Chicago, IL

Other Locations

Campbell, CA
Stuart, FL
Houston, TX
Olympia, WA
Waukesha, WI