Fidelity National Financial Inc.FNF

Morningstar Rating

Stock Research and Analysis

by Jim Ryan

In late 2008, title insurer Fidelity National Financial completed its acquisition of Commonwealth Land Title, Lawyers Title, and United Capital Title from a competitor in bankruptcy, LandAmerica LFGRQ. Initially, the combined operations capture 46% Read more

Bulls Say

Adding the title operations from LandAmerica allows Fidelity to rule the national title insurance market. The company will be able to define policy and pricing terms to its customers.

Fidelity's conservative claim reserves earn the firm favorable financial solvency ratings.

Fidelity's strong presence in the commercial title insurance market will help the firm weather a residential real estate downturn. Read more

Bears Say

Past mergers in the title industry have not worked out as well as it was thought they would. Fidelity is paying for a market share that could quickly shrink because of competitive initiatives.

Fidelity suffers from "restructuring-itis," which distracts management from daily operations.

The departure of Fidelity National Information Services creates strategic problems for Fidelity's title operations.

Mortgage originations tripled during the past five years but will return to normalized levels, reducing the revenue base for the title industry. Read more

Strategy

Fidelity intends to use the cash-cow title insurance profits to feed growth potential in title, specialty insurance, and other business lines. The firm intends to use dividends and share repurchases Read more

Management

We continue to be disappointed by the conflicting actions of management that violate good governance standards. Most recently, Fidelity National Financial invested in former affiliate Fidelity National Information Services' takeover of Metavante MV. Read more

Profile

Fidelity National Financial owns multiple title insurance underwriters, a specialty insurance company, a 32% interest in a claims-management company, a tree farm, and a Read more

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