Title Insurer Fidelity National to Buy Competitor Stewart for $1.2 Billion

March 19, 2018

Title insurer Fidelity National Financial Inc. has agreed to acquire Stewart Information Services Corp. for approximately $1.2 billion.

The consideration will be $50 per share of common stick, paid 50 percent in cash and 50 percent in FNF common stock.

Jacksonville, Florida-based FNF said it intends to achieve at least $135 million in operational cost synergies from the deal.

The proposed transaction is subject to approval by Stewart’s shareholders and regulatory authorities and the satisfaction of customary closing conditions. Closing is expected in the first or second quarter of 2019.

Houston-based Stewart provides residential and commercial title insurance, closing and settlement services, appraisal and valuation services and other offerings to the real estate industry. It reported $1.9 billion in revenues for the full year 2017, down slightly from $2.1 billion in 2016, and $49 million net income, compared to $56 million in 2016.

After the firm’s revenues declined in 2016, Stewart’s board of directors in 2017 formed a strategic committee to actively assess strategic alternatives.

“Last year, our board initiated a review of strategic alternatives for the company, and after an extensive process, we determined that capitalizing on the Fidelity platform will best enable us to support the Stewart brand and continue providing the service our customers have come to expect,” said Thomas G. Apel, Stewart’s chairman of the board. “Combining with Fidelity National Financial will create a strong portfolio of customers and business relationships, and will provide us with the ability to grow the Stewart brand.”

“We are very familiar with Stewart in the marketplace and see multiple areas where we can assist and accelerate Stewart’s growth plans,” said FNF CEO Raymond Quirk. “We also believe there are significant operational efficiencies we can bring to bear by leveraging FNF’s shared services infrastructure that will provide meaningful long-term value creation opportunities for our shareholders.”

Fidelity National Financial is the nation’s largest title insurance company through its title insurance underwriters – Fidelity National Title, Chicago Title, Commonwealth Land Title, Alamo Title and National Title of New York – that collectively issue more title insurance policies than any other title company in the country. For 2017, the company reported $7.2 billion in revenues, $1 billion in earnings and a 33 percent share of the U.S. title insurance business.

According to a performance report by actuarial firm Demotech that closely follows the title insurance industry, total operating income for the entire U.S. title insurance industry increased from approximately $12.2 billion in 2012 to $14.9 billion in 2016, which represented a $1.2 billion increase from 2015. According to Demotech, the top four title insurance groups accounted for 85 percent of net premiums written in 2016. Approximately 34 independent title insurers accounted for the remaining 15 percent of net premiums written in 2016.

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