Fidelity National Financial, Inc. · NYSE:FNF
Fidelity National Financial — Stephens, Inc. Spring Investment Conference 2007
29 slides from Fidelity National Financial's conference presentation, Jun 15, 2007
Slide 1: Stephens, Inc. Spring Investment Conference - June 7, 2007
Stephens, Inc. Spring Investment Conference - June 7, 2007
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation contains forward-looking statements that involve a number of risks and uncertainties. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. Forward-looking statements are based o
Slide 3: Operating Strategy: Fidelity National Title Group and Specialty Insurance
Operating Strategy Fidelity National Title Group Continue to be one of the nation's largest title insurance companies Remain the most profitable title insurance company through superior execution Utilize significant cash flow to pay our cash dividend ($1.20 annually/4.5% yield) Specialty Insurance G
Slide 4: Operating Strategy: Sedgwick CMS and Value Creation Opportunities
Operating Strategy Sedgwick CMS Produce double digit organic revenue growth Seek out attractive acquisition opportunities Monetize the value of this asset for our shareholders Value Creation Opportunities Seek recurring revenue and earnings acquisition opportunities, such as Ceridian Maximize the va
Slide 5: Ceridian Acquisition
Ceridian Acquisition FNF and THL Partners have signed a definitive merger agreement to jointly acquire Ceridian Corporation ("Ceridian") for $36 per common share in cash Ceridian is a leading provider of human resources, transportation and retail information management services in the U. S., Canada
Slide 6: Ceridian Acquisition: What Ceridian Provides FNF
Ceridian Acquisition Ceridian provides FNF with: Leading market positions in large, growing markets Long-term and diversified customer relationships Recurring and predictable revenue Strong cash flow Significant margin expansion opportunity Opportunity to create significant long-term value for FNF s
Slide 7: Fidelity National Title Group - Overview
Fidelity National Title Group - Overview FNT is one of the nation's largest title insurance and escrow services companies Alamo Title Chicago Title Fidelity National Title Security Union Ticor Title
Slide 8: FNT - Title Insurance Market Share
FNT - Title Insurance Market Share FNF Others Old Rep Stewart LandAm 1st Am East 29 8.3 5.7 11.4 18.2 27.4 West 30.6 38.6 34.6 31.6 North 45.9 46.9 45 43.9 Fidelity National Title Group 29.0% Others 8.3% Old Republic 5.7% Stewart 11.4% LandAmerica 18.2% First American 27.4% CA - 32% mkt. share TX -
Slide 9: Title Industry Comparison - 2006
Title Industry Comparison - 2006 FNT First American LandAmerica Stewart Old Republic Title Revenue $5.9 billion $6.2 billion $3.6 billion $2.4 billion $1.0 billion Pre-tax Earnings $651 million $228 million $135 million $83 million $31 million Pre-tax Margin 11.0% 3.7% 3.8% 3.5% 3.1% Personnel & Oth
Slide 10: Title Industry Comparison - Q1 2007
Title Industry Comparison - Q1 2007 FNT First American LandAmerica Stewart Old Republic Title Revenue $1.3 billion $1.4 billion $814 million $515 million $217 million Pre-tax Earnings $115 million $32 million $13 million ($8) million $700,000 Pre-tax Margin 9.2% 2.2% 1.6% (1.6)% .3% Personnel & Othe
Slide 11: 1st Quarter 2007 FNT - Pre-Tax Margin Industry Comparison
1996 1997 1998 Nine Months East 0 -160 160 220 920 2.2% - -1.6% ..3% 9.2% Old Republic Stewart First American FNT 1.6% Land America 1st Quarter 2007 FNT - Pre-Tax Margin Industry Comparison
Slide 12: Managing Through a Slowing Market
Managing Through a Slowing Market Monitor operating metrics every week Open and closed order counts, headcount, efficiency metrics React quickly - utilize the "order lag" to our advantage Aggressively reduce headcount as metrics dictate No severance costs paid Sales commissions are purely a variable
Slide 13: Managing Through a Slowing Market: Trough Earnings
Managing Through a Slowing Market "Trough" earnings have typically come in periods of aggressive Fed rate hikes and corresponding significant increases in mortgage rates, like 1994 and 2000 In a trough, we believe our title business can generate at least a 10% pre-tax margin, including investment in
Slide 14: FNT Pre-Tax Margin History
FNT Pre-Tax Margin History *2000 results exclude $13.4 million in non-operating, non-recurring charges
Slide 15: Managing Through a Slowing Market: Expense Management
Managing Through a Slowing Market Expense management is the key to preserving margins FNT FAF LFG STC ORI Personnel & Other Operating Expenses as a % of Direct Revenue - Q1 2007 92% 100% 103% 112% 114%
Slide 16: Flood Insurance
Flood Insurance $150 million - $200 million in annual revenue FNF issues and processes new policies, renewals and related flood claims We are one of the largest writers of flood insurance in the U.S. with approximately 655,000 policies in force at March 31, 2007 Policies concentrated in coastal and
Slide 17: Flood Insurance: Revenue Model
Flood Insurance Receive approximately $.30 for new and renewal policies and a 3.3% override for claims processing; seasonally strongest in spring/summer Recurring revenue stream, with more than a 90% annual renewal rate on existing policies; low double digit pre-tax margin Upside comes from processi
Slide 18: Personal Lines Insurance
Personal Lines Insurance $200 million in annual revenue Personal lines insurance, primarily homeowners insurance, sourced through leads from the FNT title insurance operations and an independent agent network Licensed in all 50 states; more than 217,000 policies in force at March 31, 2007 California
Slide 19: Personal Lines Insurance: Operations
Personal Lines Insurance Internet based, start-up operation launched in 2000 Low cost structure and low acquisition costs Produced 12% revenue growth in the first quarter of 2007 Recurring revenue stream with loss ratio of approximately 65% and on-going combined ratio of 85% - 90% Specialty Insuranc
Slide 20: Home Warranty Insurance
Home Warranty Insurance $80 million in annual revenue One-year, renewable policy that covers major mechanical household systems and appliances (electric, central heating, interior plumbing, dishwasher, etc) Real estate agents usually direct business making it relationship driven like title insurance
Slide 21: Sedgwick - Overview
Industry leading provider of outsourced insurance claims management services to large corporate and public sector entities Designs, implements and manages innovative, outsourced third party administration (TPA) programs for workers' compensation claims management, liability claims management and dis
Slide 22: Cascade Timberlands LLC
Cascade Timberlands LLC ("Cascade") FNF acquired a 70% interest in Cascade from March 2006 through May 2006 for approximately $90 million Cascade owns 292,000 acres of land on the eastern side of the Cascade Mountain range Bull Springs - 33,000 acres Gilchrist - 143,000 Embody - 26,000 Mazama - 90,0
Slide 23: Cascade Timberlands LLC Strategy
Cascade Timberlands LLC ("Cascade") Strategy Bull Springs - Seeking entitlements for a 5,000 acre resort overlay Gilchrist - Resort plan completed for Crescent Creek property and we are evaluating opportunities Inventory of 600 million board feet; harvesting 23 million board feet in 2007 which will
Slide 24: Fidelity National Special Opportunities
Fidelity National Special Opportunities Newly formed group that seeks to purchase control positions in securities of distressed companies at a significant discount to the underlying fundamental long-term value of the enterprise Our strategy dictates that the securities are then converted into equity
Slide 25: Cyberhomes
Cyberhomes FNF owns 61% of Fidelity National Real Estate Solutions ("FNRES"), a provider of real estate content, products and services to consumers, lenders and other real estate industry participants Its most significant opportunity is Cyberhomes, a newly created real estate portal that generates l
Slide 26: FNF Financial Overview
FNF Financial Overview 1st Quarter 2007 Full Year 2006 Total Revenue $1.37 billion $6.33 billion Net Earnings $83.4 million $431.4 million EPS $0.37 $1.94
Slide 27: FNF Cash and Investment Portfolio
FNF Cash and Investment Portfolio Cash and investment portfolio $4.5 billion Less: Restrictions Statutory reserves $1.4 billion Secured trust deposits $0.8 billion Other liquidity restrictions $0.5 billion Total restrictions $2.7 billion Net cash and investment portfolio $1.8 billion Cash and invest
Slide 28: Uses of Cash
FNF pays a $1.20 per share annual cash dividend, an annual yield of 4.5%+ As we have historically, we intend to increase the dividend over time FNF has a three-year, 25 million share repurchase authorization, equal to nearly 12% of the outstanding shares - currently buying back shares consistently i
Slide 29: Creating Shareholder Value
Creating Shareholder Value 5 Year 10 Year YTD FNF 0.32 0.27 0.17 S&P 500 0.19 0.19 0.08 Stock Performance FNF S&P 32% 19% 27% 19% 17% 8%
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