Higher interest rates and the slowdown in the mortgage lending and housing markets helped push Fidelity National Financial’s second-quarter profits down 36 percent from last year, to $84.8 million.
Revenue for the quarter totaled $1.49 billion, down 44 percent from $2.64 billion for the same quarter last year.
“We expect the second half of 2007 to remain a challenge and we will continue to monitor order counts and employee headcount in our quest to maximize earnings from our title business,” FNF Chairman of the Board William P. Foley II said in a statement.
In announcing results for the second quarter, the company highlighted a 9.6 percent pre-tax profit margin in the title business as a bright spot in a “difficult operating environment.” Profit margins in the title business were 12.3 percent in the same quarter last year, however.
Second quarter pre-tax earnings in FNF’s title group — which includes Fidelity National Title, Chicago Title, Ticor Title, Security Union Title and Alamo Title — totaled $131.1 million, down 31 percent from the same quarter a year ago. Title group revenue totaled 1.36 billion for the quarter, down 13 percent from the second quarter 2006.
Fidelity, which says it issues about 28 percent of all U.S. title insurance policies, reported closing 66 percent of orders opened, down from 68 percent a year ago. At 408,700, orders closed during the quarter were down 14 percent from the 473,800 tallied in the second quarter of 2006.
The 131,500 orders closed in June were a low for the quarter, and represented a 21 decline from the same month last year.
“Higher interest rates and the slowdown in the mortgage and real estate markets had a dampening effect on the normal seasonal improvement in the title business during the second quarter,” Foley said.
The company said it continues to move forward with a planned $5.3 billion acquisition of Ceridian Corp. with Thomas H. Lee Partners. Ceridian shareholders are scheduled to vote on the acquisition Sept. 12.
Ceridian provides human resource services including payroll and benefits administration to other businesses. Ceridian’s Comdata subsidiary is a payment processor and issues credit cards, debit cards and stored value cards.