Shares of Fidelity National Financial Inc., the title insurer that bought LandAmerica Financial Group Inc. in December, dropped the most in four months Tuesday morning after it warned of a third straight quarterly loss and announced plans to sell 13.3 million shares.
Fidelity slipped as much as 12% in the first half-hour of trading.
The Jacksonville, Fla., company said it would post a first-quarter loss of 6 to 10 cents a share, compared with a profit of 13 cents a year earlier.
Fitch Inc. had downgraded Fidelity's credit rating to junk after the LandAmerica acquisition closed.
Title insurers, which protect buyers from liens and ownership disputes tied to properties changing hands, are coping with a decline in revenue during the housing slump.
LandAmerica, once the No. 3 title insurer, was undercapitalized relative to Fidelity, Fitch said in December.
Fidelity said Tuesday that it plans to use the proceeds of the stock sale "for general corporate purposes," including the potential repayment of a $1.1 billion syndicated credit agreement.
First-quarter results were hurt by a decline in commercial sales, Fidelity said. It also had investment writedowns of $5.7 million in the period.
Formal results are expected to be released in the fourth week of April, the company said.
Fidelity and First American Corp. of Santa Ana, Calif., the top two companies in the industry, are cutting jobs to cope with reduced revenue. Fidelity said in February that it had cut 1,500 positions, or about 27% of the work force at the LandAmerica units it acquired.
Fidelity shares have gained about 12% in the past year.
JPMorgan Chase & Co. and Goldman Sachs Group Inc. are managing the share sale with Barclays PLC, KBW Inc., Piper Jaffray Cos. and Stephens Inc.
The three largest title insurers have cut at least 18,000 positions since 2003.
