Profits were down at Fidelity National Financial in 2006 as the company completed a restructuring that separates the company’s title insurance and mortgage loan processing divisions into separate companies.
The reorganization eliminated a holding company structure, with Fidelity National Title assuming the name and stock market ticker symbol (FNF) of its former parent, Fidelity National Financial. FNF’s mortgage loan processing division, Fidelity National Information Services Inc., is now a separate company, trading as FIS.
At $71.2 million, or 34 cents per share, fourth-quarter earnings at Fidelity National Financial were down 38 percent from the $115.2 million posted in the fourth quarter of 2005. Earnings for the year were $437.8 million, or $2.39 per share, down from $964.1 million, or $5.43 per share, in 2005.
Those results, however, include only results of FNF’s former subsidiary, Fidelity National Information Services, through Oct. 23. Costs related to the reorganization were also charged to FNF’s books.
To make an apples-to-apples comparison, FNF also provided “pro forma” financial results that excluded FIS results and transaction costs related to the reorganization. Using those methods, FNF would have posted fourth-quarter earnings of $93.4 million (compared with $190.2 million in 2005) and $431.4 million for the year (down 31 percent from $621.7 million in 2005).
FNF’s Fidelity National Title Group posted $155.7 million in fourth-quarter pre-tax earnings, down 24 percent from the $204.9 million in the fourth quarter of 2005. Pre-tax earnings for the year at the title group were $650.8 million, down 25 percent from $868.3 million in 2005.
Direct orders closed for the quarter were 427,700, compared with 517,900 in the same quarter of 2005. The closing rate on orders open was 69 percent, compared with 79 percent at the same time last year.
“In title, we continue to closely monitor order count, headcount and productivity metrics, which allowed us to generate nearly an 11 percent margin in the fourth quarter, despite an 8.5 percent decline in revenue compared to the prior year,” said FNF Chairman and Chief Executive Officer William P. Foley II in a statement.
FNF on Monday also announced that it had acquired document management company Advanced Total Imaging Inc.
“We do not have a full scale in-house document scanning and management solution, but the acquisition of ATI allows us to develop a focused, in-house document scanning and management solution and eliminate the expense of outsourcing that function to an external vendor,” Foley said.
Also on Monday, FNF subsidiary Fidelity National Real Estate Solutions announced the acquisition of Go Apply, a lead-generation site that claims 30 mortgage lenders and 2,500 mortgage brokers as clients.