Open orders generally rose quarter-to-quarter, reflecting the higher mortgage origination volume.
Among other industry happenings, the sale of Agents Title and Boston National Title from
Essent now joins Radian Group in looking to bridge the two lines, efforts for which until now have not been successful, as Old Republic's results show.
Doma's latest business model change
This follows
Working directly with Doma, lenders can clear issues earlier in the process, while at the same time significantly reduce the title insurance and closing fees paid by consumers, Simkoff said.
"Importantly, we are now in discussions with a number of these parties…so that we can bring this model to life at a crucial time when housing affordability is at record lows," he said. That will allow Doma to increase its market share. The most
But it's a far cry from what the company was projecting its market share would be when it agreed to go public in a special purpose acquisition company merger in 2021.
For 2020, it had closed orders of 92,400. Its presentation estimated that
But for the six months of 2023, Doma's done just a fraction of that, with 13,316 closed orders. In 2022 over the same period, it did 46,146, a pace similar to its 2020 volume.
"The last 18 months have proved to be incredibly challenging to Doma as we navigated through a rapidly declining mortgage market and skyrocketing interest rates," Simkoff said. "The reconfiguration of our business model to best drive our vision gives us newfound confidence that our proven technology is now best positioned to drive a massive impact that we've always known we can achieve."
Doma lost $35.9 million in the second quarter, an improvement from the first quarter loss of $42.1 million and year-ago loss of $58.7 million.
Adjusted EBITDA, the non-GAAP measure that Doma is using to track profitability, was also in the red, a loss of $13.7 million, compared with $21.6 million three months prior and $43.3 million one year ago.
Opened orders of 8,368 were down from 9,940 in the first quarter and 25,231 a year ago.
During the quarter, it conducted a reverse split of its stock in order to regain stock market compliance.
FNF returns to profitability
It earned $219 million for the period, compared with a loss of $59 million in the first quarter. This was below the net income of $537 million in the second quarter last year.
For the title business only, total revenue of $1.9 billion was a 27% decrease from $2.6 billion in the second quarter of 2022.
"Our title business delivered an industry leading adjusted pre-tax margin of 15.8% in the second quarter given the expense actions taken over the past year," said William Foley, chairman, in a press release. "While the long-term outlook for housing remains strong given household formation and underlying demographics in the U.S., the near term continues to be uncertain given the high level of interest rates which could persist for longer than expected."
Open orders totaled 347,000, compared with 308,000 in the prior quarter and 443,000 one year ago.
FNF still holds a majority stake in life insurer F&G Life & Annuities. But given that investors undervalue the title insurance business, a full divestiture of F&G is possible, a report from Soham Bhonsle of BTIG said.
"Our sense is that FNF remains highly satisfied by performance (which is fair given the solid growth over the past three years) and that for now, FG remains a part of the company's plan," Bhonsle said. "That said, we also think both the company and the board fully appreciate the valuation gap (where the title business trades at about 9 times price to earnings ratio versus peers at 11 to 12 times) that exists today and is open to all options that would maximize value long term."
First American has smallest increase in new orders
Opened orders totaled 174,600, the smallest quarterly gain among the big 4 underwriters as its slightly higher than the 172,600 for the first quarter and lower than the year ago's 257,200.
Meanwhile, its ServiceMac unit is expected to lose 40% of the loans it currently subservices for Home Point Capital in September, with the remaining 60% likely staying on the books at least until the end of the year if not beyond, Ken DeGiorgio, CEO, said on the earnings call.
Home Point was reported to be ServiceMac's largest account. Its portfolio
"We're already making expense reductions associated with that," DeGiorgio said. "Now there's a healthy pipeline that we think will replace that." But, the time lines to add those aren't quick, he continued.
Expense management helped drive Old Republic's profit
Pretax operating income for the second quarter totaled $34.7 million, compared with $17.4 million for the prior three months and $109.5 million in the second quarter of 2022.
"We continue working to manage costs in response to market revenue levels while keeping a focus on longer-term strategic initiatives," Carolyn Monroe, president and CEO of Old Republic National Title Holding Co., said on the earnings call. "We have improved our combined ratio by 2.4 points from the first quarter of this year, which helped drive increased profitability."
Its second quarter opened orders of 87,548 topped the first quarter's 79,415 but down from the previous year's 117,234.
Meanwhile, the mortgage insurance business, which has
Net premiums earned fell 29% from the prior year, to $4.3 million from $6 million, as policies exit the book of business and are not replaced.
At the same time, loss and loss adjustment expenses improved 44% to -$4.5 million from -$8 million as cure rates rallied — the number of borrowers becoming current again — on loans previously reported as being in default.
Transaction increase turns Stewart's 1Q loss into 2Q profits
But a year ago, Stewart earned $61.7 million.
"Fortunately, we have seen modest increases in the transaction volumes during the second quarter after experiencing a historic low in the first quarter," said Fred Eppinger, CEO, during the earnings call. "We expect the challenges of this environment to continue throughout 2023."
For Stewart to get to the improved market in 2024, "is to invest in our people and remain focused on our long-term improvement plan while managing through a few challenging quarters," Eppinger said.
The title business reported $35.5 million of pretax income, down 62% from the second quarter of 2022's $93.6 million.
Open orders of 85,184, up from 73,861 in the first quarter but down from 103,646 one year ago.
Investors Title's profits up over both comparable periods
Investors' revenue decreased year-over-year 17.8% to $58.3 million, due to fewer real estate transactions resulting from higher mortgage interest rates.
That was offset by net investment gains and a near 29% reduction in operating expenses.
"Regardless of current market conditions, the strength of our balance sheet affords flexibility in the execution of our business strategy," J. Allen Fine, chairman, said in a press release. "We continue to pursue opportunities to expand our presence, enhance operational capabilities, and position ourselves for profitable growth over the full real estate cycle."