Fidelity National Financial Inc., the big title insurer and provider of financial technology, said its earnings almost tripled in the first quarter, but mostly because it sold a 25% stake in its banking technology unit.
The Jacksonville, Fla., company, which has grown rapidly in recent years through acquisitions, also said it would defer further deals to focus on absorbing the companies it has already bought.
First-quarter net earnings rose 196% from a year earlier, to $444.5 million, or $2.51 per share, Fidelity said Tuesday. Revenue rose 24%, to $2.27 billion; that of the financial technology unit, Fidelity Information Services, rose 9%, to $155 million.
Fidelity National also reported that it was seeing signs of an uptick in title insurance operations.
The sharp profit increase included a $318 million gain from the March sale of a 25% share of Fidelity Information Services to the leveraged buyout firms Thomas H. Lee Partners LP of Boston and Texas Pacific Group of Fort Worth.
In March, the unit received a $2.8 billion loan from a consortium led by Bank of America Corp., JPMorgan Chase & Co., Wachovia Corp., Deutsche Bank AG, and Bear, Stearns & Co. Inc. It turned over most of the money to Fidelity National, which used it to fund a March 28 dividend of $10 per share.
During a conference call with analysts on Tuesday, William P. Foley 2d, Fidelity National’s chairman and chief executive, called the recapitalization and the partial sale a “milestone in the evolution of our company.”
Two core processors acquired last year should begin contributing to revenue this year, he said: Aurum Technologies Inc. this quarter and InterCept Inc. later.
Fidelity bought Aurum in March 2004 and InterCept in November. The result, Mr. Foley said, is that “we now have relationships with over 3,500 financial institutions,” up from 700 or 800. That “puts us in a position to be a lot more competitive.”
But he said he was “not happy” that Fidelity National remains best known for its mortgage title insurance operations. It should be thought of as “a diversified financial services provider,” Mr. Foley said.
