Fidelity National Financial, Inc. (FNF)

FNF 
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Fidelity National Financial, Inc. (FNF)

Q3 2010 Earnings Conference Call

October 21, 2010 9 AM ET

Executives

Dan Murphy – SVP and Treasurer

George Scanlon – COO

Tony Park – CFO

Peter Sadowski – EVP and Chief Legal Officer

Bill Foley – Executive Chairman

Al Stinson – CEO

Randy Quirk – CEO, Fidelity National Title Group

Analysts

Bob Napoli – Piper Jaffray

Mark DeVries – Barclays Capital

Brett Huff – Stephens

Doug Mewhirter – RBC Capital Markets

Nath Otis – KBW

Adam Klauber – Macquarie

Dan Simon [ph]

Presentation

Operator: Ladies and gentlemen, thank you for standing by, and welcome to the FNF 2010 third quarter earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. (Operator instructions) As a reminder, this conference is being recorded.

I would now like to turn the conference over to our host, Mr. Dan Murphy. Please go ahead.

Dan Murphy

Thanks and good morning everyone, and thanks for joining us for our third quarter 2010 earnings conference call. Joining me today are George Scanlon, our new CEO; Tony Park, our CFO; Randy Quirk, President; and Al Stinson, Executive Vice President.

We will begin with a brief strategic overview from George, as well as an update on the title business and our operating companies. Tony will finish with a review of the financials highlights. We’ll then open it up for your questions and finish with some concluding remarks from George.

This conference call may contain 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 on management’s beliefs as well as assumptions made by and information currently available to management. Because such statements are based on expectations as to future economic performance and are not statements of facts, actual results may differ materially from those projected. We undertake no obligation to update any forward-looking statements whether as a result of new information, future events, or otherwise. The risk and uncertainties, which forward-looking statements are subject to include, but are not limited to, the risks and other factors detailed in our press release dated yesterday, and in the statements regarding forward-looking information, risk factors, and other sections of the company’s Form 10-K, and other filings with the SEC.

This conference call will be available for replay via webcast at our website at fnf.com. It will also be available through phone replay beginning at 11:00 A.M. Eastern Time today through October, 28. The replay number is 800-475-6701, with an access code of 173222.

Let me now turn the call over to our CEO, George Scanlon.

George Scanlon

Thank you Dan and good morning everybody. This was another strong quarter for our title insurance business as refinance buying began to increase in June and showed continued strength throughout the entire third quarter. With many of those orders opening late in the quarter, we expect to see a significant amount of the benefit of those increased order counts in our fourth quarter results.

We completed the acquisition of Commerce Velocity during the third quarter. Commerce Velocity provides technology solutions to mortgage lenders, loan servicing organizations and investment banks that enable users to mitigate risk and optimize outcomes for their mortgage loan portfolios. Commerce Velocity has been strategically aligned with ServiceLink, our national lender platform and a leading provider of origination in default related solutions to the mortgage industry.

The strategic integration of our new and existing competencies creates a complete workflow management solution for loan origination through loss mitigation that falls in assets disposition. We sold approximately half of our investment in FIS stock through that company’s August tender offer, selling 1.6 million shares at the tender price of $29. This resulted in total proceeds of nearly $47 million, a pretax gain of approximately $22 million. We continue to own another 1.6 million shares of FIS with a current value of approximately $45 million.

There has been significant discussion and speculation concerning our involvement with foreclosures and potential risks we face from those transactions. Many lenders have announced that they have halted foreclosures and the sale of REO properties due to possible flaws in documentation used in the foreclosure process. We do not believe that this situation will have a material adverse impact on our title business. FNF’s title insurance underwriters issue title policies on REO properties to new purchasers and lenders to those purchasers. FNF believes that those policies will not result in additional claims exposure to FNF because the new owners and their lenders would have the rights of good faith purchasers which should not be affected by potential defects in documentation. Even if a court sets aside a foreclosure due to a defect in documentation, the foreclosing lender would be required to return to our insurers all funds obtained from that, resulting in no loss under the title insurance policy.

Additionally, we recently reached an agreement with Bank of America under which they will provide a representation that all documentation, procedures and/or notices related to the foreclosure of a property comply with state law and local practice and they will indemnify FNF against any losses incurred directly by their failure to comply with state law or local practice on transactions in which foreclosure has already occurred or been initiated and those to be initiated in the future. We believe that this agreement reflects current law in every state and is consistent with the rights that we have under the policies that we issue. We will also require similar representation and indemnification on future REO transactions from all other lenders.

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