Oscar Nieves

Oscar Nieves inquired about the expected commercial revenue growth for FNF in 2026, given that 2025 exited at levels previously projected for 2026, and asked for a specific growth range.

Answer

Mike Nolan, CEO, clarified that no specific 2026 forecast was given previously but expects 2026 direct commercial revenue to be 'as good, if not better' than 2025. He highlighted positive trends in commercial order volume (up 8% in Q4 2025, 11% in January 2026) and strong fee per file growth in 2025, though fee per file remains a 'wild card' due to transaction mix. Regarding residential, Mike Nolan found MBA and Fannie Mae's existing home sales forecasts (4.3-4.4M in 2026) fair, driven by rates, and noted significant refinance potential if rates stay low (5.8M mortgages in the money at 6% per ICE). Tony Park, CFO, added that home prices have stabilized, making rates the primary driver, and FNF's fee per file trends (purchase up 3%, refi up 4% vs. Q4 2024) suggest stable home prices.

Oscar Nieves asked for clarity on the commercial revenue growth outlook for 2026, given 2025's strong performance. He also sought management's perspective on residential existing home sales and home price growth forecasts for 2026 and 2027.

Answer

CEO Mike Nolan indicated that 2026 commercial revenue should be as good or better than 2025, driven by increased order volume, though fee per file remains a variable. He found MBA and Fannie Mae's existing home sales forecasts fair, highlighting significant refinance potential with lower rates. CFO Tony Park added that affordability is rate-driven and home prices have stabilized.

Oscar Nieves inquired about the primary drivers of the title segment's adjusted pretax margin expansion, the potential upside from technology investments, and First American Financial's capital allocation priorities for 2026.

Answer

Mark Seaton (CEO) identified commercial tailwinds, effective expense management, and the higher margin profile of the commercial market as key drivers for margin expansion. He confirmed significant upside from Endpoint and Sequoia, expecting gradual, long-term margin improvement from decommissioning old technology and productivity gains at national scale. He outlined capital priorities as investing in core business (already in run rate), opportunistic M&A, and returning capital to shareholders via dividends (targeting 40% payout) and opportunistic buybacks.

Oscar Nieves asked about the primary drivers of the title segment's adjusted pretax margin expansion, which reached its highest level since Q2 2022. He also questioned the potential upside from the Sequoia and Endpoint technology investments and the company's capital allocation priorities for 2026.

Answer

CEO Mark Seaton identified commercial tailwinds (revenue growth, expense management) and the higher margin of the commercial market as key drivers for margin expansion. He sees significant upside from Endpoint and Sequoia as they transition from beta versions to national scale, leading to decommissioning of old technology and productivity improvements. For capital allocation, Mark Seaton prioritized investing in the core business/technology, followed by opportunistic acquisitions, and then returning capital to shareholders through dividends and buybacks, while also building dry powder for AI-related opportunities.

Oscar Nieves asked for specifics on Stewart's cautious optimism for the 2026 housing market, including any geographic concentrations. He also sought quantification of the revenue and earnings impact if mortgage rates drop below 6%, and how the finalized 6% reduction in Texas title payment rates would affect Stewart's financials. Additionally, he asked for more detail on Stewart's M&A strategy for share gains in key MSAs, including target capital deployment for title and real estate solutions businesses.

Answer

CEO Fred Eppinger attributed cautious optimism for 2026 housing to a slight decrease in under-3% mortgages, improved inventory quality (up 8% in Q4 2025 year-over-year), and increased activity, projecting modest growth of 6-8%. He emphasized that existing home sales, particularly reaching 5 million units, are the primary driver for margin expansion to 12% due to fixed-cost leverage. Regarding the Texas rate reduction, he stated it would have a low single-digit impact on earnings this year, managed through fee adjustments, and would not alter growth expectations. He outlined a three-year M&A strategy targeting roughly $300 million in direct channel acquisitions (small, $10M-$30M) in 30 key MSAs to improve local share and margins, with additional opportunistic, smaller acquisitions in lender services and for specialized tool sets, largely self-funded.

Oscar Nieves sought specifics on Stewart's cautious optimism for the 2026 housing market, including any geographic concentrations. He also asked for a quantification of the revenue and earnings impact if mortgage rates drop below 6%, and how the Texas Department of Insurance's 6% rate reduction would affect Stewart's financials. Finally, he inquired about the strategy for M&A in key MSAs and capital deployment targets for title and real estate solutions.

Answer

CEO Fred Eppinger attributed cautious optimism for 2026 housing to a slight tick down in under-3% mortgage rates and an 8% year-over-year increase in Q4 inventory, expecting modest 6-8% growth. He noted that existing home sales, stuck at 4 million for three years, are the primary economic driver, with a potential 12% margin if sales reach 5 million. Regarding the Texas rate reduction, Eppinger stated it would have a low single-digit impact on earnings this year, managed through fee adjustments, and would not alter growth expectations. He outlined a strategy to deploy approximately $300 million in direct channel acquisitions over the next three years in 30 target MSAs to improve margins, with smaller, opportunistic acquisitions in lender services and for "tool sets," largely self-funded.