Big Four Q1 2025 Title Insurance Results & What They Mean | Ep 50

In a world where change is the only constant, Mo Shumil stands at the forefront, guiding title professionals to not just grow their businesses, but to master the art of innovation. With every episode, you're handed the keys to unlock unparalleled growth and stay ahead of the curve. Get ready for a transformative journey. Okay, let's jump straight into a deep dive today on a stack of reports you sent our way. We're talking about the Q1 2025 earnings from the four biggest title insurance underwriters, FNF, First American, Old Republic, and Stuart Title.

Now I know reading through these can feel like navigating a financial maze, right? Full of jargon and numbers that maybe don't seem directly relevant to your day-to-day as an independent title agent. But our mission here is really to cut through all that noise, pull out the essential insights, and figure out exactly what these Q1 results tell you about navigating the market for the rest of 2025. What actually matters to your business in these pages? That's exactly right.

Think of this like getting an updated map, you know, of the terrain you're operating in. These reports are like windows into the health of the market. They show where activity is picking up, where things are maybe still a bit slow, and crucially, how the companies you partner with are actually performing. So maybe we should start high level. What did Q1 reveal about the title industry overall?

Okay, let's unpack this. What was the absolute biggest headline from these reports collectively? Like the one big thing. Well, the most significant positive signal, and it was really consistent across all four, is revenue growth. Every single one of the major underwriters reported double digit percentage increases in total revenue for Q1 2025 compared to the same quarter last year.

Double digit, wow. Yeah, that's a pretty strong indicator the market is moving past that recent slowdown we've seen. Okay, double digit growth sounds fantastic. Where's that energy coming from mainly? Primarily, it seems to be a rebound in commercial title transactions.

This was highlighted by FNF, First American, ORI, and Stewart, all of them. They saw pretty substantial year over year jumps in commercial revenue, ranging from like a healthy 23% up to a massive 39%. 39%, okay. Yeah, and commercial deals, as you know, they're typically larger. So a pickup there significantly boosts the overall revenue and definitely lifts the average fee per file.

So commercial is really driving the bus right now. What about residential? I mean, for many independent agents, that's the bread and butter, right? Right, good question. Residential activity is stabilizing, which is also good news, although it's certainly not back to those peak levels we saw a few years ago.

Purchase transactions showed definite signs of recovery. FNF, for example, reported closed purchase orders of about 10% year over year. Okay, 10%. First American's closed orders were up a bit more modestly, around 2.6%. Stewart actually saw a slight decrease in residential unit volume, and this is important, their average fee per file in residential was higher.

Higher fee per file. Why is that happening? What does that tell us? Well, it suggests a couple of things, probably. It could reflect higher home value, sure, but it also might indicate a shift towards higher premium purchase deals or maybe more complex transactions that just command a higher fee.

Okay. So even if the sheer number of residential deals isn't exploding, the value of the deals being closed seems to be improving for some of these players, which helps offset that volume softness. And what about refinances? I mean, with interest rates still where they are? Yeah, refi volumes, unfortunately, they remain at what First American explicitly called trough levels, just really low.

Trough levels, ouch. Yeah. The high rate environment continues to keep homeowners from refinancing like they were before. So the growth we're seeing, it's not driven by the refi boom of past years at all. It's really coming from a stronger commercial market and that gradual recovery and purchase activity.

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What do the margins look like? Margins are definitely still under pressure compared to those, you know, boom years we just talked about, but they are showing year over year improvement for most of the big four. FNF continues to lead the pack. Their adjusted pre-tax margin was around 11.7%. 11.7, still strong.

Very strong. First American saw a really notable margin expansion, reaching 7.2% on a gap basis and 7.9% adjusted. That's a big jump for them. Yeah, that is significant. Good Republic's title margin improved to about 2.2% adjusted.

Still thin. Yeah. But definitely an improvement from where they were. Okay. And Stewart's adjusted margin was around 1.8%, also up slightly.

So why are we saying adjusted margins? What does that really mean for an agent listener and why should they care about adjusted versus, you know, the other number? Good point. Adjusted figures, they basically strip out things like one-time events or maybe some accounting quirks that might distort the picture of the core business operations. They give you a cleaner look at how profitable the actual day-to-day title business is.

Okay. The core operation. Exactly. And why it matters to you is that healthy, improving margins mean the underwriters are financially stronger. This underpins their ability to invest in things like technology, provide support, and it just gives you confidence that the policies they issue, the ones you're working with, are backed by a stable entity.

Better margins might mean less flexibility for those kinds of investments, though as we'll see, some are investing anyway. That makes a lot of sense. Okay. Any other big picture themes you pulled from Q1 across all four? Expense management is still a huge focus.

Everyone's talking about it. Companies are keeping costs really tight to protect profitability in this kind of recovering but still challenging market. Right. Belt tightening continues. Yeah.

This is also interesting. No major M&A among the big four this quarter. It suggests they're maybe more focused internally right now, trying to capitalize on organic growth as the market strengthens. Okay. So overall picture.

Gradual recovery, commercial leading the charge, purchase improving, refi's basically out, and underwriters are focused on growing revenue and watching costs, leading to better margins than last year, even if they're not peak margins. Why is this broad view essential for an independent agent to grasp? Because the underwriter's performance is really a leading indicator for your own business flow. Their health dictates their capacity to handle volume, the level of service and support you can probably expect, and maybe most importantly, their financial resilience. That's paramount since you're issuing their policies, right?

Absolutely critical. So seeing how they view the market and how they're performing helps you calibrate your own strategy and your own expectations for the rest of the year. That's a really critical link. Okay. Let's dive into each company individually then.

How did their title segments stack up and what's the specific takeaway for agents who partner with them? Okay. Let's start with FNF. They're the market leader and their Q1 results for the core title business were quite strong. Their title revenue was up somewhere between, say, 6% and 12% year over year, depending on the specific line item you look at.

And importantly, they maintain that industry-leading adjusted pre-tax margin of 11.7%, actually improving it by a hundred basis points from a year ago. A hundred basis points. So a full percentage point just- Yes, exactly. One full percentage point. So their margin went from like 10.7% adjusted last year to 11.7% this year.

And that's not just higher revenue doing that. It reflects really strong operational efficiency in their core title operations. Okay. And what was their volume mix like? Where did the business come from?

FNF saw opened orders per day rise nearly 10% year over year, and their closed orders were also up 10%. What's really significant for them though is that 75% of their orders were purchased transactions. 75% purchase. Wow. Yeah.

Shows their continued strength in that specific segment and their commercial revenue jumped a substantial 23% year over year, clearly benefiting from that broader market trend we talked about. So the takeaway for FNF agents? Their core title business is a profit engine. It's incredibly resilient and it's benefiting strongly from both that steady purchase activity and the big commercial rebound. They look financially solid and operationally very efficient.

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They really did, showed significant improvement. Their total revenue was up 11% year over year. Again, primarily driven by the title segment. Their reported net income jumped a massive 59% on a gap basis and adjusted earnings per share nearly double. Double.

Yeah. And their title segment margin expanded dramatically. 7.2% gap or 7.9% adjusted. That's a huge leap from 5.5% just a year ago. Wow, that is a big jump in margin.

Where did they attribute that improvement? What drove that? Well, they specifically cited a huge 29% growth in commercial revenues. Their commercial segment brought in $184 million for the quarter. And the average commercial deal size was also up significantly, around 31%.

Okay, the commercial boost. Huge. On residential side, closed orders were up that more modest 2.6%. But agent-based premiums rose a strong 16% year over year. 16% from agents.

Yeah, though that's influenced a bit by reporting lag. And their direct premiums and escrow fees were up 14%, boosted by an 11% increase in the average revenue per order. So First American is benefiting from both the surge in commercial and getting more revenue per residential file, even if the volume wasn't up quite as much. Exactly. They're capturing growth from multiple angles that increase commercial volume, the higher fee per file in residential, and some modest residential volume improvement.

This dramatic improvement in profitability is really a key insight. For agents partnering with them, it means First American is seeing a really robust financial recovery, which could potentially free up resources for agent support or investments down the line. Okay, very interesting. Let's turn to Old Republic, ORI. Their business mix is a bit broader, isn't it?

That's correct. ORI is more diversified. They have a large property and casualty P&C insurance segment alongside their title business. Their overall consolidated results were solid. Net operating income up 9.2% year over year.

And their title net premiums and fees climbed 10.9% year over year, right in line with their peers, showing they also benefited from the higher market volumes. How did their title segment perform specifically, maybe compared to FNF and First American's margins? Yeah, ORI's title segment was profitable, though less so than the other two we just discussed. But it definitely showed improvement. Pre-tax income for title was $4.3 million, up from $2.3 million last year.

They reported a combined ratio of 102%, which essentially means they were close to breaking even on the underwriting side alone before you factor in investment income. Right, a combined ratio over 100 means underwriting itself wasn't profitable. Correct, so the improvement there shows better operational control. But what's important for agents, revenue generated through the agency channel was up 12%. That actually outpaced their direct revenue growth, which was 6%.

Oh, interesting. So agents drove more of their growth. Yeah, it indicates they really benefited from increased business coming from independent agents like yourself. And their volume mix, commercial versus residential, similar story. Very similar story.

Just like the others, commercial title premiums were strong. They surged 27% year over year for ORI. Commercial now makes up almost 24% of their total title premium. A quarter of the business now. Pretty much.

And residential premiums were also up a healthy 11%. So ORI title is also riding that commercial wave, seeing solid residential improvement. And that's leading to better, even if still kind of tight, profitability. That's the picture the numbers paint, yeah. The takeaway here for agents working with ORI is that their title unit is stable and it is improving its profitability mainly through that increased volume and some cost discipline.

And their financial stability as a partner is definitely reinforced by the overall strength of the larger older public parent company. Okay, good context. Finally, let's look at Stewart title. Smallest of the big four, how did they fare? Stewart also reported pretty solid Q1 results.

They had 10% total revenue growth year over year, reaching $612 million. Their gap net income was relatively flat compared to last year, but their adjusted net income, again, giving that clear operational view, rose to $7 million. Okay, so underlying profitability improved. Exactly. Their adjusted pre-tax margin ticked up slightly to 1.8%.

And their title segment's operating revenues were up a strong 11% year over year. Where did Stewart see its biggest boost? Was it also commercial? Oh, definitely commercial. Their domestic commercial revenues surged a remarkable 39% year over year.

39%, that's the highest jump we've mentioned. It is. And what's interesting is it wasn't just higher dollar value deals, it was fueled by a 23% increase in the actual number of commercial deals they closed. Oh. Coupled with a 13% higher average fee per commercial file, which reached an impressive $15,800.

15.8 average on commercial. Okay, how about residential? Residential revenue was roughly flat for Stewart. Now, their residential transaction counts were actually slightly lower year over year, but this was completely offset by a significant 13% jump in their average residential fee per file. That hit around $3,300.

3,300 average residential fee. All right. So for Stewart, it's really that huge commercial jump and getting significantly more revenue out of each transaction, particularly in residential, that's driving their improvement. Precisely. Stewart's performance heavily benefited from that massive commercial growth and their ability to capture those higher fees per residential file, even with slightly lower volume there.

Their title unit is back to showing modest profitability after being closer to break even last year, thanks to this revenue growth and some tight cost management. And again, agent revenue was up for them too, meaning agents generated higher remittances. Now, Stewart also has that real estate solution segment, doesn't it? How did that factor into their overall picture? Good point.

The revenues in that solution segment were up 17% year over year, mainly from services like credit information. However, the pre-tax income here actually fell 40%. Fell 40%, why? Because they're heavily investing right now to scale up these services. The adjusted margin in solutions was down to 9.9%.

So it shows Stewart is putting money into diversifying beyond core title, looking for long-term growth, but that comes with investment costs right now that impact the current profitability of that specific segment. Okay, that diversification costs money up front. Got it. That gives us a great picture of the numbers for each company. What are the leaders, the CEOs, actually saying about the market and their plans?

Let's shift to management perspectives. Sure. Starting with F&F, their management really emphasized the robustness of their core title business, highlighting how well it performed despite maybe some volatility in other areas of their larger company. They explicitly noted that improving real estate volume directly boosts title margins, and they actually anticipate further margin expansion if volumes continue to rise. So they see more upside potential.

Definitely. Their focus is clearly on maintaining that expense discipline we talked about and returning capital to shareholders, which signals confidence. They distributed $136 million in dividends and bought back about $25 million in stock just in Q1. Okay, confidence from F&F. First American has a new CEO, Mark Seton took over in April.

What was his tone? Mark Seton struck a tone of, I'd say, cautious optimism. He acknowledged that Q1 was actually a better start than we expected. Okay, positive surprise. Yeah.

Under his leadership, the strategy seems to involve continued investment in the business, but while maintaining a strong balance sheet. They also showed confidence through share repurchases, buying back $28 million in Q1. And specifically, what are they talking about that might impact independent agents? Any focus there? First American seems particularly focused on tech innovation that's relevant to agents.

They're really emphasizing digital closing solutions and leveraging their significant data assets. They seem to believe these tools will directly help independent agents operate more efficiently. Okay, tech for agents, makes sense. What about Old Republic? You mentioned their conservative approach.

Yeah, Ori's leadership consistently maintains that long-term conservative outlook. They prioritize stable, profitable operations and balance sheet strength above maybe chasing aggressive short-term gains. This conservative philosophy, it's really part of their identity. And it provides a certain level of assurance to agents regarding their reliability and stability as a partner. Their focus on organic growth and supporting their agency network.

And interestingly, that decision they made to sell a non-core tech platform. It might suggest they're leaning towards focusing on their core underwriting strength and maybe partnering for certain tech needs rather than trying to build absolutely everything in-house. Interesting strategic choice. And Stewart's CEO, Fred Eppinger, what's his message? Fred Eppinger expressed pride in their revenue growth despite the tough market conditions.

His commentary really emphasized disciplined operations, thoughtful growth, and what he called a relentless commitment to customer service for independent agents. Relentless service, okay. Yeah. And after some recent acquisitions they made, their strategy now seems centered on integrating those. needs rather than trying to build absolutely everything in-house.

Interesting strategic choice. And Stewart's CEO, Fred Eppinger, what's his message? Fred Eppinger expressed, you know, pride in their revenue growth despite the tough market conditions. His commentary really emphasized disciplined operations, thoughtful growth, and what he called a relentless commitment to customer service for independent agents. Relentless service.

Okay. Yeah. And after some recent acquisitions they made, their strategy now seems centered on integrating those businesses effectively and driving organic growth while really aggressively managing expenses to try and close that margin gap with their larger competitors. This podcast is proudly sponsored by Need extra hands without extra overhead? Meet Safi Virtual, your on-demand team of virtual assistants trained specifically for the title industry.

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So it sounds like kind of across the board, management teams are definitely navigating the current reality of higher rates, but they're seeing real improvement, especially in commercial. And the focus is on operational efficiency, boosting profitability, and strategically investing for the market recovery they all seem to anticipate. That consistent message about seeing recovery and making strategic investments alongside cost control is certainly a key theme coming out of all their calls and reports. You've mentioned technology investment multiple times now. The source reports all seem to highlight this as a focus area for everyone.

What should agents specifically understand about these tech plays? What's going on there? Yeah, this is a definite strategic thread connecting all four. You're right. FNF is investing in digital closing platforms and other related real estate technology, you know, prop tech.

First American is often seen as a leader here. They're not just talking about digital closing solutions. They seem to be actively deploying new digital settlement products. Deploying them now? The increased amortization of capitalized software costs in their reports, that's like an accounting signal that software development they've been paying for is now actually going live and being used in the business.

Ah, okay. That's a tangible sign. Exactly. And they're also putting a lot of emphasis on leveraging their vast data assets and exploring AI adoption. Now, as we touched on, ORI seems to be taking maybe a slightly different path.

Selling that non-core tech platform might signal a preference for focusing on core underwriting and potentially integrating third party tech solutions rather than trying to build a massive internal tech stack themselves. Focus versus build. Right. And Stuart is also investing in technology. They specifically mentioned things like AI driven title search and digital closing tools.

They also view their expanded diversified services segment, which includes some tech enabled offerings, as a way to provide a more integrated, maybe one-stop shop experience for clients. Although, as we noted, that segment is currently less profitable because of the investment costs involved. So these aren't just corporate buzzwords floating around in earnings calls. These are real dollars being spent on a real tech development. Absolutely.

These look like significant strategic investments. The aim seems to be streamlining processes, improving accuracy, like with AI search potentially, and making transactions faster and maybe safer, which is crucial for you and your clients, obviously. For independent agents listening, this means your underwriters are actively developing tools and platforms that could genuinely enhance your workflows, enable things like fully digital e-closings eventually, and maybe boost your overall efficiency. Okay, but is there a potential flip side here? Could some of these underwriter tech efforts eventually start to compete with independent agents directly?

That's always a question, isn't it? But the way the source material presents it and how the companies talk about it, these are primarily framed as initiatives designed to benefit the entire ecosystem. So consumers, agents, and the underwriters. The focus seems to be on enhancing the process and providing tools that agents can then leverage to be more competitive themselves, rather than directly competing with the agent channel. So enabling agents, not replacing them.

That seems to be the positioning. For instance, First American's use of data assets is framed as something that can help agents do their job better. And Stewart's integrated services could potentially be offerings you can provide to your clients through their platform. The stated aim, at least, is improving efficiency and capability within the existing partnership model. That's a really important distinction.

All right, let's try and bring this all together then. Based on these Q1 earnings reports and what the management teams are saying, what's the real bottom line, the key takeaway and outlook for you, the independent title agent listening right now? Well, I think the bottom line is a cautiously optimistic picture for the industry overall. You should probably expect to see gradual growth in transaction volume continuing through 2025. And, you know, this could accelerate if interest rates do start to ease later in the year, as some forecasters are suggesting might happen.

I mean, commercial is still where the big wins are happening right now. Definitely. The significant rebound in the commercial sector is a major opportunity. It was highlighted by all four underwriters' revenue numbers. So focusing on, or maybe expanding your capacity for, commercial deals with your underwriter partners seems like a very smart play right now based on these results.

Also, really pay close attention to the tech tools and the support systems your underwriters are actively rolling out, their investments in digital closings, AI, other efficiencies. These aren't just internal projects. They're designed to provide capabilities that you can leverage to streamline your own operations. So lean into the tech they offer. Absolutely.

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Despite some margin pressures remaining compared to those historical peaks, these Q1 results really confirm that the big four underwriters are profitable and importantly, they remain well capitalized. This provides that essential layer of assurance that the policies you issue are backed by financially stable companies, which is just fundamental to your business and your client's peace of mind. And that CEO sentiment we discussed seems to really align with this acknowledging the quote, complex operating environment, but also seeing a better start than expected, emphasizing stability and highlighting real revenue growth despite the ongoing challenges. Yes, exactly. The tone from leadership across the board is one of actively navigating the present while strategically positioning for and already benefiting from a market that they clearly see as being in the early stages of recovery or perhaps turning the corner.

Okay, so the outlook based on Q1 numbers is expect a gradual increase in activity, continued strength in commercial, residential purchase stabilizing and maybe offering higher profile revenue, refi staying pretty low for now and underwriters investing in efficiency and agent support while keeping a close eye on maintaining their financial health. That comprehensive view, pieced together from the earnings calls and reports, paints a pretty clear picture, I think. The industry is adapting, it's seeing real improvement in key areas and it's actively building for a potentially more efficient future. This has been a really insightful deep dive. It's amazing how much you can learn about the operational reality and maybe the future direction of the title industry when you look past the surface of what might just seem like dry financial reports, looking at them through the lens of what actually matters to the agents on the ground.

It really does connect those dots, doesn't it, between, you know, Wall Street numbers and the day to day reality of running a title agency, the performance and the strategies of these underwriters directly influence the landscape that independent agents work within every single day. Absolutely. So here's something to really consider, maybe chew on, as you plan for the back half of the year. If these Q1 results really do show the market is turning the corner, like they suggest, and if your underwriter partners are specifically investing in technology right now to handle future volume more efficiently and maybe provide better tools to support agents, how might you best adapt your own agency's operations, your workflow, maybe even your client offerings to capture that potential growth and fully leverage the new tools and capabilities your partners are actively providing in the coming months? Something to think about.

And that's a wrap on today's journey with Mo Shamil from the Title Agents Podcast, reminding you that mastering the art of innovation is key in the title industry's fast-paced world. If you're finding it tough to keep up with the changes and challenges, remember you're not alone. Our calendar is open for you. Find the link in the show notes and let's connect. Make sure to hit subscribe to not miss out on strategies that elevate and insights that empower.

Together, we'll navigate the future of the industry. I look forward to our next meeting in the upcoming episode.