While the management of the newly listed Doma Holdings has raised its outlook based on the performance of the second quarter, the company's earnings remain in the red.
The second quarter net loss of $ 23.3 million is higher than the first quarter loss of $ 11.8 million and the prior year loss of $ 6.3 million. Operating losses increased from $ 8.3 million and $ 5 million to $ 18.6 million over the same period.
However, Doma, formerly known as the States Title, has increased its outlook for 2021 for two non-GAAP measures – withheld premiums and fees and adjusted gross profits – based on year-over-year growth in the number of open and closed orders.
Withheld bonuses and fees for the quarter were $ 64.8 million, compared to $ 44.4 million last year, while Adjusted Gross Income was $ 29.5 million, compared to $ 22.6 million a year ago -Dollars exceeded.
During the quarter, Doma added 17 new customers to its corporate channel, including Wells Fargo, and it received additional business from existing customers such as Chase, Homepoint and PennyMac, CEO Max Simkoff said during his conference call. After the quarter ended, Doma announced that Fairway Independent Mortgage had become an enterprise channel customer.
"Some of that wallet share growth was driven by Doma's expansion into four more states, covering our geographic footprint for over 75% of the US mortgage market by volume," said Simkoff. "Our local area has grown compared to the same period last year, largely due to a significant shift in our transaction mix towards purchase transactions."
Doma's total backlog of outstanding orders in the second quarter was 41,491, close to the 41,000 of the first quarter, but well above the 30,432 of the previous year. The four largest title insurers reported fewer open orders from quarter to quarter.
But Doma's market share still lags far behind the bigger players; Stewart, the smallest of the four family insurers, had 143,301 open orders in the second quarter.
Orders closed ended the quarter at 31,436, up from 33,000 in the first quarter and up from 21,885 in the second quarter of 2020.
Net written premiums were $ 109.3 million in the second quarter, up from $ 108 million in the first quarter and $ 86.3 million in the second quarter of 2020.
"All of our growth to date in 2021, as well as the growth we expect for the remainder of the year, is being driven by a self-funded plan that does not yet take advantage of the $ 350 million in new revenue we have just raised. when we entered the public markets on July 28th, "said Simkoff." These proceeds will allow us to expand the scope of our ambitions and accelerate the pace of our execution to achieve upside potential beyond the self-funded plan outlined above . "
Doma has raised $ 350 million in new capital between the proceeds from the merger with the special purpose vehicle Capitol Investment V and the associated public investment in private equity financing.
The company is in the process of finalizing a plan to use a portion of this revenue to build deeper functionality in its decision technology for every aspect of the mortgage closing process using new proprietary data sources, Simkoff said.
The 519% year-over-year growth in completed orders and the 343% increase in open orders from the enterprise business only gave Doma "additional confidence in our ability to significantly exceed our forecast for operating premiums and fees," Noaman said Ahmad, Chief Financial Officer.
"Order growth in our local channel was 4% and while this was subdued compared to growth in our corporate channel Doma, we saw favorable mix trends with orders on orders increasing 48% year over year," added Ahmad. This resulted in a 10% increase in the average retained premiums and fees in the local channel that works with smaller lenders and real estate agents.
Adjusted EBITDA declined nearly $ 10 million year over year to a loss of $ 11.9 million as Doma invested in customer acquisition and human resources initiatives to support the company as part of its conversion to a publicly traded company.
"With financial results exceeding our original plans for the first half of 2021 and our recent strong momentum in open orders, which is a leading indicator of premium retention, we are today raising our full year outlook," said Ahmad. "We now expect to withhold between $ 250 million and $ 260 million in premiums and fees and between $ 95 million and $ 105 million in adjusted gross income for full year 2021."
During the IPO, Doma forecast $ 226 million in premium fees withheld and $ 89 million in adjusted gross income for this year.