Fidelity National Financial Inc. reported in a Jan. 9 Securities and Exchange Commission filing that a cyberattack first reported in November affected about 1.3 million consumers.
The Jacksonville-based title insurance company said it is providing services for affected customers including credit monitoring and identity theft restoration, and that it is facing several lawsuits related to the breach.
However, Fidelity said it does not believe the incident will have a material financial impact.
Fidelity said in two previous SEC filings that it became aware of the breach Nov. 19 and that the incident was contained Nov. 26.
The company never publicly identified the attacker but several technology news sites identified a ransomware gang as the source.
“The ransomware gang known as ALPHV (or BlackCat) claimed responsibility for the FNF cyberattack in a post on its dark web leak site, which it uses to extort victims into paying the hackers to remove and delete the data,” technology news website TechCrunch said in a story posted Jan. 9.
“ALPHV subsequently removed FNF from its site. Ransomware and extortion gangs sometimes remove a victim’s information when they pay the ransom,” it said.
Fidelity’s latest SEC filing said it completed its forensic investigation of the incident Dec. 13.
“We determined that an unauthorized third-party accessed certain FNF systems, deployed a type of malware that is not self-propagating, and exfiltrated certain data,” it said.
“The Company has no evidence that any customer-owned system was directly impacted in the incident, and no customer has reported that this has occurred.”
Unrelated to the security incident, Deutsche Bank analyst Mark DeVries initiated coverage of Fidelity with a “hold” rating Jan. 9, saying its annuity and life insurance unit could be a drag on the stock.
Fidelity owns 85% of F&G Annuities and Life Inc. after spinning off 15% of the business as a separate public company in December 2022.
“FNF is the largest and highest margin title insurer, so it stands to benefit from a recovery in the mortgage market, but its ownership of F&G, an annuity and life insurance provider, complicates the story,” DeVries said in his report.
DeVries began coverage of 16 consumer and specialty finance stocks and issued a “buy” rating on Fidelity’s chief title insurance rival, First American Financial Corp.
“Normally, FAF and FNF are highly correlated, so if one works, the other will too, but we are concerned that FNF’s 85% ownership of F&G, which is now trading well above where comps sold, could cause FNF to underperform if that valuation doesn’t hold, so we’re more constructive on the pure play FAF,” he said.
DeVries said Fidelity has been trading at a discount to its sum-of-the-parts value since it acquired F&G in June 2020.
“Investors in FNF could realize the value of this discount if FNF spins off the remaining 85% of F&G that it currently owns,” he said.
However, “FNF is unlikely to spin off the shares for another year, after which it would be able to distribute the shares tax free.”
Intercontinental Exchange Inc. was upgraded from “equal weight” to “overweight” by Barclays analyst Benjamin Budish, in part because of catalysts from its recent acquisition of Jacksonville-based Black Knight Inc.
Black Knight was a mortgage technology company spun off from Fidelity in 2015 and was acquired by ICE in September 2023.
“Rate declines could support volume improvement, plus recent deals wins could start to materialize,” Budish said in his Jan. 8 report.
“There is little doubt that rising rates, combined with a meaningful supply/demand imbalance, have put significant pressure on ICE’s mortgage business,” he said.
“That said, at this point, while it is not yet clear that this pressure will abate immediately (particularly due to an apparent lack of willingness of sellers), we think the business has likely troughed, and in the meantime, ICE has already begun to announce new deal wins that were likely unable to close while the merger was still pending which should start flowing into revenues over the course of the year.”
ICE and Black Knight announced the merger agreement in May 2022 but it took 16 months to complete as the companies worked to satisfy antitrust issues raised by the U.S. Federal Trade Commission.
ICE operates several business units and is best known as the operator of the New York Stock Exchange, but it also had a large mortgage technology business before acquiring Black Knight.
Budish said about 70% of ICE’s mortgage technology revenue will be recurring business, up from about 51% before the addition of Black Knight.
The deal increases ICE’s companywide recurring revenue from about 51% to 56% of total revenue, he said.
“With ICE being one of the exchanges with the higher recurring revenue mix, we see this as a nice hedge for transaction revenues if volatility remains lower vs. the prior few years,” Budish said.
“That said, our rating upgrade is predicated more on our expectation that several parts of the business are set to reaccelerate as well as compelling relative valuation,” he said.
One of Jacksonville’s largest employers is cutting a large number of jobs in its global operations.
Citigroup Inc. CEO Jane Fraser said in the company’s fourth-quarter conference call Jan. 12 that it will eliminate about 20,000 positions as part of a restructuring plan announced in September.
The New York-based banking giant employs nearly 240,000 people around the world.
The company said in September it employs about 4,200 people in Jacksonville, including a large credit card operations center.
Citigroup did not specify where it will cut jobs.
The company reported a net loss of $1.8 billion, or $1.16 a share, in the fourth quarter, which it attributed to several one-time charges including a $1.7 billion special assessment imposed by the Federal Deposit Insurance Corp.
The FDIC charge was assessed to 114 large U.S. banks to cover the costs of two big bank failures last year.
Citigroup said without that and the other one-time charges, it would have recorded a profit of 84 cents a share in the quarter.
At an investor conference in September, Fraser announced plans to restructure the company into five main business lines and hinted at job cuts.
She said in the Jan. 12 call that the restructuring resulted in the elimination of about 5,000 positions, mainly managers.
Citigroup has operated the credit card center in Jacksonville since 1997 when it bought AT&T’s Universal Card business.
The company said it now has about 30 business functions in Jacksonville but it does not have a branch network in Northeast Florida.
Its banking subsidiary, Citibank, has just one branch in the Jacksonville market at the credit card center at 14000 Citicards Way on the Southside.
Fraser said she expects 2024 to be a turning point for the company after the restructuring.
“I recognize the importance of this year, and I am highly confident that we will see the benefits of the actions we’ve taken through the momentum of our businesses,” she said.
DirecTV and Tegna Inc. reached an agreement Jan. 13 to end a contract dispute that kept Tegna’s television stations off the satellite service since Nov. 30.
Tegna owns 64 U.S. stations, including Jacksonville NBC affiliate WTLV TV-12 and ABC affiliate WJXX TV-25.
The companies did not announce terms of the deal in a joint statement, saying only it was a multiyear agreement.
The dispute involved the fees DirecTV pays to Tegna. DirecTV had proposed a new model in which Tegna would set a market price for its stations and let DirecTV viewers decide whether they want to subscribe to the stations individually.
Tegna had rejected that proposal when its previous contract with DirecTV expired Nov. 30.
ComSovereign Holding Corp. filed financial reports with the SEC for the first three quarters of 2023 on Jan. 9, bringing the company up to date with its required filings.
The Tucson, Arizona-based communications technology company had been facing a delisting of its stock from Nasdaq for being delinquent in its reports. ComSovereign did not file its annual report for 2022 until Dec. 7.
“Collectively, these filings support the Company’s return to current filer status and continue our efforts to move the business forward,” CEO David Knight said in a news release.
ComSovereign was created in late 2019 by the merger of Jacksonville-based Drone Aviation Holding Corp. and ComSovereign Corp.
Its drone subsidiary continues to be headquartered in Jacksonville. Besides the tethered drone business, it also operates telecommunications subsidiaries.
The quarterly reports show drones are ComSovereign’s biggest business, producing $3.4 million of the company’s total revenue of $4.2 million in the first nine months of 2023.
ComSovereign reported a net loss of $5.7 million in the nine-month period, but that was down from a $39.6 million loss the previous year.
An 85% drop in operating expenses helped reduce the loss.
“The positive impact of our comprehensive streamlining efforts can be clearly seen by dramatic reductions in general and administrative expenses throughout 2023, as we focused the business to better support our wireless connectivity and aerial platform businesses,” Knight said.
“The tangible results of our transformation plan have already contributed to building a foundation which can support a return to growth and the progress we expect to make throughout 2024,” he said.