Latest Capitol Investment V News
Aug 13, 2021
By Brad Finkelstein August 13, 2021, 3:14 p.m. EDT 3 Min Read REGISTER NOW While newly public Doma Holdings' management boosted its outlook based on its second quarter performance, the company's bottom line still remains in the red. The second quarter net loss of $23.3 million is greater than the first quarter loss of $11.8 million and the year-ago loss of $6.3 million. Losses from operations grew to $18.6 million from $8.3 million and $5 million over the same time frame. But Doma, formerly known as States Title, boosted its 2021 outlook for two non-GAAP measurements — retained premiums and fees, and adjusted gross profits — based on growth in its open and closed order counts on a year-over-year basis. Retained premiums and fees for the quarter totaled $64.8 million, up from $44.4 million the prior year, while adjusted gross profit of $29.5 million topped the year ago's $22.6 million. During the quarter, Doma added 17 new customers to its enterprise channel, including Wells Fargo and it got additional business from existing customers like Chase, Homepoint and PennyMac, said CEO Max Simkoff during its earnings call. After the quarter ended, Doma announced that Fairway Independent Mortgage had become an enterprise channel customer. "Some of these wallet share gains were driven by Doma expanding into four more states, bringing our geographic footprint up over 75% coverage of the U.S. mortgage market by volume," Simkoff said. "Our local division grew over the same period last year in large part due to a significant shift in our transaction mix toward purchase transactions." Doma’s second quarter total of open orders, 41,491, was close to the first quarter's 41,000 but well above the 30,432 one year prior. The four largest title underwriters all reported fewer open orders on a quarter-to-quarter basis. But Doma’s market share still remains well behind the larger players; Stewart, the smallest of the four family underwriters, had 143,301 open orders in the second quarter. Closed orders ended the quarter at 31,436, down from 33,000 in the first quarter and up from 21,885 for the second quarter of 2020. Net premiums written totaled $109.3 million in the second quarter, up from $108 million in the first quarter and $86.3 million during the second quarter of 2020. "All of our growth in 2021 so far, as well as the continued growth we expect for the remainder of the year, is driven by a self-funded plan that does not yet reflect any benefit in the $350 million of new proceeds we just raised when we entered the public markets on July 28," Simkoff said. "These proceeds will allow us to expand the scope of our ambition, and to accelerate the pace of our execution to deliver upside beyond the self-funded plan we previously outlined." Between the proceeds from the merger with special purpose acquisition company Capitol Investment V and the related public investment in private equity funding, Doma raised $350 million in new capital. The company is in the process of finalizing a plan to use some of those proceeds to build deeper functionality in its decisioning technology across every aspect of the mortgage closing process using new proprietary data sources, Simkoff said. The 519% year-over-year growth in closed orders and 343% increase in open orders from the enterprise business only gave Doma "an added confidence in our ability to meaningfully exceed our operational retain premium and fees forecast," said Noaman Ahmad, chief financial officer. "Close order growth in our local channel was 4%, and while this was muted when compared to the growth in our Doma enterprise channel, we saw favorable mix trends with purchase close orders growing 48% year-over-year," Ahmad added. That drove a 10% increase in average direct retained premiums and fees in the local channel, which works with smaller lenders and real estate agents. Adjusted EBITDA decreased by almost $10 million from the prior year to a loss of $11.9 million, as Doma invested in customer acquisition and corporate support staffing initiatives as part of becoming a public company, Ahmad said. "Because financial results exceeded our original plans for the first half of 2021 and because of our recent strong open order momentum, which is a leading indicator of retained premium fees, we are today raising our full year outlook," Ahmad said. "We now expect to generate between $250 and $260 million of retained premium and fees, and between $95 and $105 million of adjusted gross profit for full year 2021." During the going public process, Doma forecast $226 million of retained premium fees and $89 million of adjusted gross profit for this year.