Fidelity National Financial, Inc. (NYSE:FNF) Q2 2021 Earnings Conference Call August 4, 2021 12:00 PM ET Company Participants Jamie Lillis - IR Randy Quirk - CEO Mike Nolan - President Tony Park - CFO Chris Blunt - F&G's CEO Conference Call Participants James Hawley - Stephens Mark DeVries - Barclays Andrew Kligerman - Credit Suisse Mark Hughes - Truist Bose George - KBW Operator Good morning, ladies and gentlemen, and welcome to the FNF 2021 Second Quarter Earnings Call. During today's presentation, all pa ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 001-32630 FIDELITY NATIONAL FINANCIAL, INC. (Exact name of registrant as specified in its charter) Delaware 16-1725106 (State or other jurisdiction ...

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 001-32630 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K (Mark One) FIDELITY NATIONAL FINANCIAL, INC. (Exact name of registrant as specified in its charter) Delaware 16-1725106 (State or other jurisdiction of incorporation or or ...

Fidelity National Financial, Inc. (NYSE:FNF) Q4 2020 Results Earnings Conference Call February 25, 2021 12:00 PM ET Company Participants Jamie Lillis - Investor Relations Randy Quirk - Chief Executive Officer Mike Nolan - President Tony Park - Chief Financial Officer Chris Blunt – Chief Executive Officer, F&G Conference Call Participants Jack Micenko - SIG John Campbell - Stephens Mark DeVries - Barclays Bose George - KBW Operator Good morning, ladies and gentlemen, and welcome to the FNF 2020 Fourth Quarte ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number: 1-32630 FIDELITY NATIONAL FINANCIAL, INC. (Exact name of registrant as specified in its charter) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020 Delaware 16-1725106 (State or other jurisdiction of incorporatio ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number: 1-32630 FIDELITY NATIONAL FINANCIAL, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) Delawa ...

Table of Contents QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2020 OR UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 1-32630 FIDELITY NATIONAL FINANCIAL, INC. _________________________________________________________________________________________________________________________ ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K (Mark One) ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 2019 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File No. 1-32630 Fidelity National Financial, Inc. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) (I.R.S. Employ ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 1-32630 FIDELITY NATIONAL FINANCIAL, INC. ___________________________________________________________________________________________________________________ ...

Filing Information [Form 10-Q Details](index=1&type=section&id=Form%2010-Q%20Details) This section details the Form 10-Q filing for the quarterly period ended June 30, 2019, by Fidelity National Financial, Inc - Filing is a **Form 10-Q** for the quarterly period ended June 30, 2019[1](index=1&type=chunk) - Registrant: **Fidelity National Financial, Inc. (FNF)**, a Delaware corporation[1](index=1&type=chunk)[2](index=2&type=chunk) Registrant Status | Status | Value | |---|---| | Large Accelerated Filer | ☑ | | Accelerated Filer | ☐ | | Non-accelerated Filer | ☐ | | Smaller Reporting Company | ☐ | | Emerging Growth Company | ☐ | | Shell Company | NO þ | Common Stock Outstanding (June 30, 2019) | Class | Shares Outstanding | |---|---| | FNF Common Stock | 274,416,550 | Part I: FINANCIAL INFORMATION [Item 1. Condensed Consolidated Financial Statements](index=4&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for the periods ended June 30, 2019 and 2018 [A. Condensed Consolidated Balance Sheets](index=4&type=section&id=A.%20Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheets (June 30, 2019 vs. Dec 31, 2018) | (Dollars in millions) | June 30, 2019 | December 31, 2018 | |---|---|---| | **ASSETS** | | | | Total investments | $3,629 | $3,549 | | Cash and cash equivalents | $1,605 | $1,257 | | Goodwill | $2,725 | $2,726 | | Lease assets | $402 | $— | | Total assets | $10,189 | $9,301 | | **LIABILITIES AND EQUITY** | | | | Total liabilities | $4,893 | $4,329 | | Redeemable non-controlling interest | $344 | $344 | | Total Fidelity National Financial, Inc. shareholders' equity | $4,962 | $4,630 | | Total equity | $4,952 | $4,628 | | Total liabilities, redeemable non-controlling interest and equity | $10,189 | $9,301 | [B. Condensed Consolidated Statements of Earnings](index=6&type=section&id=B.%20Condensed%20Consolidated%20Statements%20of%20Earnings) Condensed Consolidated Statements of Earnings (Three Months Ended June 30) | (Dollars in millions, except per share data) | 2019 | 2018 | |---|---|---| | Total revenues | $2,144 | $2,123 | | Total expenses | $1,791 | $1,848 | | Earnings from continuing operations before income taxes and equity in earnings of unconsolidated affiliates | $353 | $275 | | Income tax expense | $86 | $22 | | Net earnings attributable to Fidelity National Financial, Inc. common shareholders | $266 | $251 | | Net earnings per share attributable to FNF common shareholders, basic | $0.97 | $0.92 | | Net earnings per share attributable to FNF common shareholders, diluted | $0.96 | $0.90 | Condensed Consolidated Statements of Earnings (Six Months Ended June 30) | (Dollars in millions, except per share data) | 2019 | 2018 | |---|---|---| | Total revenues | $3,866 | $3,816 | | Total expenses | $3,249 | $3,414 | | Earnings from continuing operations before income taxes and equity in earnings of unconsolidated affiliates | $617 | $402 | | Income tax expense | $151 | $53 | | Net earnings attributable to Fidelity National Financial, Inc. common shareholders | $472 | $348 | | Net earnings per share attributable to FNF common shareholders, basic | $1.73 | $1.27 | | Net earnings per share attributable to FNF common shareholders, diluted | $1.70 | $1.25 | [C. Condensed Consolidated Statements of Comprehensive Earnings](index=7&type=section&id=C.%20Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Earnings) Condensed Consolidated Statements of Comprehensive Earnings (Three Months Ended June 30) | (In millions) | 2019 | 2018 | |---|---|---| | Net earnings | $270 | $254 | | Other comprehensive earnings (loss) | $22 | $(5) | | Comprehensive earnings | $292 | $249 | | Comprehensive earnings attributable to Fidelity National Financial, Inc. common shareholders | $288 | $246 | Condensed Consolidated Statements of Comprehensive Earnings (Six Months Ended June 30) | (In millions) | 2019 | 2018 | |---|---|---| | Net earnings | $476 | $352 | | Other comprehensive earnings (loss) | $49 | $(14) | | Comprehensive earnings | $525 | $338 | | Comprehensive earnings attributable to Fidelity National Financial, Inc. common shareholders | $521 | $334 | [D. Condensed Consolidated Statements of Equity](index=8&type=section&id=D.%20Condensed%20Consolidated%20Statements%20of%20Equity) Condensed Consolidated Statement of Equity (Six Months Ended June 30, 2019) | (In millions) | Balance, Dec 31, 2018 | Exercise of stock options | Treasury stock repurchased | Other comprehensive earnings | Stock-based compensation | Dividends declared | Purchase of additional share in consolidated subsidiaries | Subsidiary dividends declared to non controlling interests | Net earnings | Balance, June 30, 2019 | |---|---|---|---|---|---|---|---|---|---|---| | FNF Common Stock | $— | $— | $— | $— | $— | $— | $— | $— | $— | $— | | Additional Paid-in Capital | $4,500 | $6 | $— | $— | $18 | $— | $4 | $— | $— | $4,528 | | Retained Earnings | $641 | $— | $— | $— | $— | $(171) | $— | $— | $472 | $942 | | Accumulated Other Comprehensive Earnings (Loss) | $(13) | $— | $— | $52 | $— | $— | $— | $— | $— | $36 | | Treasury Stock | $(498) | $— | $(46) | $— | $— | $— | $— | $— | $— | $(544) | | Non-controlling Interests | $(2) | $— | $— | $— | $— | $— | $(7) | $(5) | $4 | $(10) | | Total Equity | $4,628 | $6 | $(46) | $52 | $18 | $(171) | $(3) | $(5) | $476 | $4,952 | Condensed Consolidated Statement of Equity (Six Months Ended June 30, 2018) | (In millions) | Balance, Dec 31, 2017 | Exercise of stock options | Adjustment for cumulative effect for adoption of ASU 2016-01 | Other comprehensive earnings | Reclassification for ASU 2018-02 | Equity portion of debt conversions settled in cash | Dilution resulting from subsidiary issuance of equity | Stock-based compensation | Dividends declared | Subsidiary repurchase of equity | Acquisitions of non-controlling interests | Subsidiary dividends declared to non controlling interests | Net earnings | Balance, June 30, 2018 | |---|---|---|---|---|---|---|---|---|---|---|---|---|---| | FNF Common Stock | $— | $— | $— | $— | $— | $— | $— | $— | $— | $— | $— | $— | $— | $— | | Additional Paid-in Capital | $4,587 | $6 | $— | $— | $— | $(51) | $(2) | $15 | $— | $— | $— | $— | $— | $4,555 | | Retained Earnings | $217 | $— | $128 | $— | $1 | $— | $— | $— | $(165) | $— | $— | $— | $348 | $529 | | Accumulated Other Comprehensive Earnings (Loss) | $111 | $(109) | $— | $(14) | $(1) | $— | $— | $— | $— | $— | $— | $— | $— | $(13) | | Treasury Stock | $(468) | $— | $— | $— | $— | $— | $— | $— | $— | $— | $— | $— | $— | $(468) | | Non-controlling Interests | $20 | $— | $— | $— | $— | $— | $4 | $— | $— | $(1) | $3 | $(4) | $4 | $26 | | Total Equity | $4,467 | $6 | $19 | $(15) | $— | $(51) | $2 | $15 | $(165) | $(1) | $3 | $(4) | $352 | $4,629 | [E. Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=E.%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows (Six Months Ended June 30) | (In millions) | 2019 | 2018 | |---|---|---| | Net cash provided by operating activities | $372 | $350 | | Net cash provided by investing activities | $120 | $54 | | Net cash used in financing activities | $(144) | $(194) | | Net increase in cash and cash equivalents | $348 | $210 | | Cash and cash equivalents at end of period | $1,605 | $1,320 | [F. Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=F.%20Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [Note A — Basis of Financial Statements](index=12&type=section&id=Note%20A%20%E2%80%94%20Basis%20of%20Financial%20Statements) This note outlines the basis of preparation for the unaudited interim financial statements and details recent developments - FNF is a leading provider of title insurance, escrow, and other title-related services, as well as technology and transaction services to the real estate and mortgage industries[24](index=24&type=chunk) - Pending acquisition of Stewart Information Services Corporation: FNF exercised its second option to extend the closing date to **September 18, 2019**, and continues to seek regulatory approvals[26](index=26&type=chunk)[27](index=27&type=chunk) - Cannae Revolver: Cannae borrowed **$100 million** from FNF on February 7, 2019, and repaid the full amount on June 12, 2019[30](index=30&type=chunk) Income Tax Expense and Rate (YoY Change) | Period | 2019 (Millions) | 2018 (Millions) | YoY Change (Millions) | 2019 Tax Rate | 2018 Tax Rate | YoY Change (Percentage Points) | |---|---|---|---|---|---|---| | Three months ended June 30 | $86 | $22 | +$64 | 24% | 8% | +16% | | Six months ended June 30 | $151 | $53 | +$98 | 24% | 13% | +11% | - Adopted ASU 2016-02 Leases (Topic 842) on January 1, 2019, using a modified retrospective approach, resulting in **$421 million in Lease assets** and **$437 million in Lease liabilities**, with no impact to opening equity[36](index=36&type=chunk)[37](index=37&type=chunk) - Will not early adopt ASU 2016-13 Financial Instruments - Credit Losses (CECL model), effective for annual periods beginning after December 15, 2019[39](index=39&type=chunk) [Note B — Summary of Reserve for Claim Losses](index=14&type=section&id=Note%20B%20%E2%80%94%20Summary%20of%20Reserve%20for%20Claim%20Losses) This note summarizes the reserve for title claim losses, highlighting provisions, claims paid, and the ending balance Summary of Reserve for Claim Losses (Six Months Ended June 30) | (Dollars in millions) | 2019 | 2018 | |---|---|---| | Beginning balance | $1,488 | $1,490 | | Total title claim loss provision | $107 | $107 | | Total title claims paid, net of recoupments | $(115) | $(110) | | Ending balance of claim loss reserve for title insurance | $1,480 | $1,487 | | Provision for title insurance claim losses as a percentage of title insurance premiums | 4.5% | 4.5% | - Estimating future title loss payments is difficult due to the complex nature of claims, long payment periods, and varying dollar amounts, leading to potential future reserve adjustments[40](index=40&type=chunk)[41](index=41&type=chunk) [Note C — Fair Value Measurements](index=15&type=section&id=Note%20C%20%E2%80%94%20Fair%20Value%20Measurements) This note details the fair value hierarchy for assets and liabilities measured on a recurring basis Fair Value Hierarchy of Assets (June 30, 2019) | (In millions) | Level 1 | Level 2 | Level 3 | Total | |---|---|---|---|---| | Fixed maturity securities available for sale | $— | $1,913 | $16 | $1,954 | | Preferred securities | $18 | $269 | $— | $287 | | Equity securities | $690 | $— | $— | $690 | | Other long-term investment | $— | $— | $112 | $112 | | Total assets | $708 | $2,307 | $128 | $3,143 | Fair Value Hierarchy of Assets (December 31, 2018) | (In millions) | Level 1 | Level 2 | Level 3 | Total | |---|---|---|---|---| | Fixed maturity securities available for sale | $— | $1,931 | $17 | $1,948 | | Preferred securities | $16 | $285 | $— | $301 | | Equity securities | $498 | $— | $— | $498 | | Other long-term investment | $— | $— | $101 | $101 | | Total assets | $514 | $2,266 | $118 | $2,898 | - **Level 2** fair value measures for preferred and fixed maturity securities are provided by a third-party pricing service, using observable inputs like benchmark yields, reported trades, and broker quotes[43](index=43&type=chunk) - **Level 3** fair value measures for other long-term investments use an income approach and discounted cash flow analysis, with the primary unobservable input being the discount rate (**7.3% - 7.9% range**)[45](index=45&type=chunk) Changes in Level 3 Assets Fair Value (Six Months Ended June 30, 2019) | (In millions) | Other long-term investment | Corporate debt securities | Total | |---|---|---|---| | Fair value, beginning balance | $101 | $17 | $118 | | Net valuation gain included in earnings | $8 | $— | $8 | | Fair value, ending balance | $112 | $16 | $128 | [Note D — Investments](index=18&type=section&id=Note%20D%20%E2%80%94%20Investments) This note details the carrying amounts and fair values of available-for-sale securities and their unrealized gains and losses Fixed Maturity Securities Available for Sale (June 30, 2019) | (In millions) | Carrying Value | Cost Basis | Unrealized Gains | Unrealized Losses | Fair Value | |---|---|---|---|---|---| | U.S. government and agencies | $265 | $259 | $6 | $— | $265 | | State and political subdivisions | $76 | $74 | $2 | $— | $76 | | Corporate debt securities | $1,581 | $1,542 | $44 | $(5) | $1,581 | | Mortgage-backed/asset-backed securities | $73 | $71 | $2 | $— | $73 | | Foreign government bonds | $59 | $61 | $1 | $(3) | $59 | | Total | $2,054 | $2,007 | $55 | $(8) | $2,054 | Contractual Maturities of Fixed Maturity Securities (June 30, 2019) | Maturity | Amortized Cost (Millions) | % of Total | Fair Value (Millions) | % of Total | |---|---|---|---|---| | One year or less | $328 | 16% | $326 | 16% | | After one year through five years | $1,196 | 59% | $1,217 | 59% | | After five years through ten years | $301 | 15% | $319 | 15% | | After ten years | $111 | 6% | $119 | 6% | | Mortgage-backed/asset-backed securities | $71 | 4% | $73 | 4% | | Total | $2,007 | 100% | $2,054 | 100% | Realized Gains and Losses, Net (Six Months Ended June 30, 2019 vs. 2018) | (In millions) | 2019 | 2018 | |---|---|---| | Sales and maturities of fixed maturity securities available for sale | $1 | $1 | | Sales and maturities of preferred securities | $— | $1 | | Sales of equity securities | $5 | $(1) | | Valuation of equity securities | $168 | $(12) | | Valuation of preferred securities | $13 | $(8) | | Valuation of other long term investments | $7 | $— | | Impairment of lease assets | $(8) | $— | | Other realized gains and losses, net | $(3) | $(1) | | Total | $183 | $(15) | - **No impairment charges** were recorded for investments in the six-month period ended June 30, 2019, compared to **$3 million** in 2018[55](index=55&type=chunk) - Investment in Cannae common stock (related party) had a fair value of **$165 million** as of June 30, 2019, up from **$98 million** as of December 31, 2018[60](index=60&type=chunk) [Note E — Notes Payable](index=21&type=section&id=Note%20E%20%E2%80%94%20Notes%20Payable) This note details the company's notes payable, including carrying values, fair values, and maturity schedules Notes Payable (June 30, 2019 vs. Dec 31, 2018) | (In millions) | June 30, 2019 | December 31, 2018 | |---|---|---| | 4.50% Notes, net of discount | $443 | $442 | | 5.50% Notes, net of discount | $398 | $398 | | Revolving Credit Facility | $(3) | $(4) | | Total | $838 | $836 | - Estimated fair value of unsecured notes payable was **$903 million** at June 30, 2019, **$53 million higher** than its carrying value[61](index=61&type=chunk) - As of June 30, 2019, there was **no principal outstanding** under the Revolving Credit Facility, with **$800 million** of available borrowing capacity[65](index=65&type=chunk) Gross Principal Maturities of Notes Payable (June 30, 2019) | Year | Amount (Millions) | |---|---| | 2019 (remaining) | $— | | 2020 | $— | | 2021 | $— | | 2022 | $400 | | 2023 | $— | | Thereafter | $450 | | Total | $850 | [Note F — Commitments and Contingencies](index=23&type=section&id=Note%20F%20%E2%80%94%20Commitments%20and%20Contingencies) This note addresses legal and regulatory contingencies, including ongoing litigation and inquiries from state insurance departments - Accrual for legal and regulatory matters was **$12 million** as of June 30, 2019, and **$11 million** as of December 31, 2018, not considered material[69](index=69&type=chunk) - Class action lawsuit (Patterson, et al. v. Fidelity National Title Insurance Company, et al.) alleges failure to provide premium discounts; damages are **not reasonably estimable** at this time[70](index=70&type=chunk)[71](index=71&type=chunk) - Company cooperates with inquiries from state insurance departments and other regulatory agencies, and does not anticipate a material adverse effect on financial condition[72](index=72&type=chunk) [Note G — Dividends](index=24&type=section&id=Note%20G%20%E2%80%94%20Dividends) This note reports the declaration of cash dividends by the Board of Directors - On July 16, 2019, the Board of Directors declared cash dividends of **$0.31 per share**, payable on September 30, 2019[73](index=73&type=chunk) [Note H — Segment Information](index=25&type=section&id=Note%20H%20%E2%80%94%20Segment%20Information) This note provides summarized financial information for the company's two reportable segments: Title and Corporate and Other - The **Title segment** includes title insurance underwriters and related businesses, providing core title insurance and mortgage transaction services[77](index=77&type=chunk) - The **Corporate and Other segment** consists of the parent holding company, real estate technology subsidiaries, and remaining real estate brokerage businesses[77](index=77&type=chunk) Segment Net Earnings (Three Months Ended June 30) | (In millions) | 2019 | 2018 | |---|---|---| | Title | $295 | $272 | | Corporate and Other | $(25) | $(18) | | Total Net Earnings | $270 | $254 | Segment Net Earnings (Six Months Ended June 30) | (In millions) | 2019 | 2018 | |---|---|---| | Title | $523 | $396 | | Corporate and Other | $(47) | $(44) | | Total Net Earnings | $476 | $352 | [Note I — Supplemental Cash Flow Information](index=27&type=section&id=Note%20I%20%E2%80%94%20Supplemental%20Cash%20Flow%20Information) This note provides supplemental cash flow details, including cash payments for interest and income taxes Cash Paid (Six Months Ended June 30) | (In millions) | 2019 | 2018 | |---|---|---| | Interest | $22 | $18 | | Income taxes | $78 | $112 | Non-Cash Investing and Financing Activities (Six Months Ended June 30) | (In millions) | 2019 | 2018 | |---|---|---| | Change in proceeds of sales of investments available for sale receivable in period | $(6) | $5 | | Change in purchases of investments available for sale payable in period | $(4) | $— | | Lease liabilities recognized in exchange for lease right-of-use assets | $15 | $— | | Remeasurement of lease liabilities | $42 | $— | [Note J — Revenue Recognition](index=28&type=section&id=Note%20J%20%E2%80%94%20Revenue%20Recognition) This note explains the company's revenue recognition policies and disaggregates revenue by stream and segment - Adoption of ASC Topic 606 on January 1, 2018, **did not materially impact** the recognition of primary revenue sources[80](index=80&type=chunk) Total Revenues by Stream (Three Months Ended June 30) | Revenue Stream | 2019 (Millions) | 2018 (Millions) | |---|---|---| | Total revenue from insurance contracts | $1,425 | $1,377 | | Total revenue from contracts with customers | $551 | $666 | | Other revenue (Loan subservicing, Interest & investment income, Realized gains/losses) | $168 | $80 | | Total Revenues | $2,144 | $2,123 | Total Revenues by Stream (Six Months Ended June 30) | Revenue Stream | 2019 (Millions) | 2018 (Millions) | |---|---|---| | Total revenue from insurance contracts | $2,458 | $2,458 | | Total revenue from contracts with customers | $988 | $1,186 | | Other revenue (Loan subservicing, Interest & investment income, Realized gains/losses) | $320 | $100 | | Total Revenues | $3,866 | $3,816 | - Direct title insurance premiums are recognized at the time of closing; agency title premiums are recognized when the underlying title order and transaction closing are complete[81](index=81&type=chunk) - Deferred revenue (contract liabilities) was **$112 million** at June 30, 2019, primarily for home warranty contracts[91](index=91&type=chunk) [Note K. Leases](index=30&type=section&id=Note%20K.%20Leases) This note details the company's adoption of ASC Topic 842 for leases, effective January 1, 2019 - Adopted ASC Topic 842 on January 1, 2019, recognizing **Lease assets of $421 million** and **Lease liabilities of $437 million** at adoption, with no impact to opening equity[37](index=37&type=chunk)[92](index=92&type=chunk) - Operating leases primarily relate to rented office space for title operations, with a weighted-average remaining lease term of **4.2 years** as of June 30, 2019[93](index=93&type=chunk)[94](index=94&type=chunk) - The weighted-average discount rate used for operating lease liabilities was **4.37%** as of June 30, 2019[97](index=97&type=chunk) Future Operating Lease Payments (Undiscounted, June 30, 2019) | Year | Amount (Millions) | |---|---| | 2019 (remaining) | $74 | | 2020 | $130 | | 2021 | $102 | | 2022 | $75 | | 2023 | $47 | | Thereafter | $42 | | Total operating lease payments, undiscounted | $470 | | Less: present value discount | $42 | | Lease liability, at present value | $428 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations [Overview](index=33&type=section&id=Overview) - For a description of the business, including segments and recent developments, refer to Note A to the Condensed Consolidated Financial Statements[103](index=103&type=chunk) [Business Trends and Conditions](index=33&type=section&id=Business%20Trends%20and%20Conditions) This section discusses key factors influencing the Title segment's revenue, primarily residential and commercial real estate activity - Residential real estate activity is dependent on mortgage interest rates, mortgage funding supply, housing inventory and home prices, and the strength of the U.S. economy[104](index=104&type=chunk) U.S. Mortgage Originations Forecast (in trillions) | (in trillions) | 2021 | 2020 | 2019 | 2018 | |---|---|---|---|---| | Purchase transactions | $1.3 | $1.3 | $1.3 | $1.2 | | Refinance transactions | $0.4 | $0.4 | $0.4 | $0.4 | | Total U.S. mortgage originations forecast | $1.7 | $1.7 | $1.7 | $1.6 | - Mortgage interest rates declined to an average of **3.80%** in June 2019, impacting residential refinance transactions volume in Q2 2019[104](index=104&type=chunk)[105](index=105&type=chunk) - U.S. economy shows strong indicators: unemployment rate at **3.7%** in June 2019 and Consumer Confidence Index at historically high levels[106](index=106&type=chunk) - Commercial real estate transaction volume has experienced historically high volumes and fee-per-file from 2015 through H1 2019[108](index=108&type=chunk) - Real estate transactions are seasonal, with **Q1 typically weakest** and **Q2/Q3 strongest** for residential, and **Q4 strong** for commercial[109](index=109&type=chunk) [Results of Operations](index=35&type=section&id=Results%20of%20Operations) [Consolidated Results of Operations](index=35&type=section&id=Consolidated%20Results%20of%20Operations) This section provides an overview of the company's consolidated financial performance and key expense categories Consolidated Revenues and Net Earnings (YoY Change) | Metric | Q2 2019 (Millions) | Q2 2018 (Millions) | YoY Change (Millions) | H1 2019 (Millions) | H1 2018 (Millions) | YoY Change (Millions) | |---|---|---|---|---|---|---| | Total revenues | $2,144 | $2,123 | +$21 | $3,866 | $3,816 | +$50 | | Net earnings | $270 | $254 | +$16 | $476 | $352 | +$124 | - Operating expenses are closely tied to title business activity, with direct title operations revenue often lagging expenses by **45-60 days**[113](index=113&type=chunk) - Income tax expense as a percentage of earnings before taxes increased in 2019 periods (**24% in Q2 2019** vs. 8% in Q2 2018) primarily due to a change in tax estimate[119](index=119&type=chunk) [Title Segment](index=36&type=section&id=Title%20Segment) This section details the financial performance of the Title segment, including revenues, order volumes, and key expenses Title Segment Total Revenues and Earnings (YoY Change) | Metric | Q2 2019 (Millions) | Q2 2018 (Millions) | YoY Change (Millions) | H1 2019 (Millions) | H1 2018 (Millions) | YoY Change (Millions) | |---|---|---|---|---|---|---| | Total revenues | $2,092 | $1,958 | +$134 (7%) | $3,755 | $3,548 | +$207 (6%) | | Earnings from continuing operations, before income taxes and equity in earnings of unconsolidated affiliates | $387 | $300 | +$87 | $679 | $463 | +$216 | Title Premiums (YoY Change) | Metric | Q2 2019 (Millions) | Q2 2018 (Millions) | YoY Change (Millions) | H1 2019 (Millions) | H1 2018 (Millions) | YoY Change (Millions) | |---|---|---|---|---|---|---| | Direct title insurance premiums | $625 | $599 | +$26 (4%) | $1,065 | $1,071 | $(6) (1%) | | Agency title insurance premiums | $754 | $732 | +$22 (3%) | $1,306 | $1,296 | +$10 (1%) | | Total title premiums | $1,379 | $1,331 | +$48 (4%) | $2,371 | $2,367 | +$4 (<1%) | Direct Operations Order Volumes (YoY Change) | Metric | Q2 2019 (Thousands) | Q2 2018 (Thousands) | YoY Change (%) | H1 2019 (Thousands) | H1 2018 (Thousands) | YoY Change (%) | |---|---|---|---|---|---|---| | Orders opened | 544 | 505 | +7.7% | 982 | 983 | -0.1% | | Orders closed | 359 | 362 | -0.8% | 622 | 675 | -7.8% | - Closed title insurance orders from purchase transactions decreased, while **refinance transactions increased** in H1 2019 compared to 2018[122](index=122&type=chunk)[124](index=124&type=chunk) Average Fee Per File (Direct Operations) | Period | 2019 | 2018 | |---|---|---| | Three months ended June 30 | $2,677 | $2,579 | | Six months ended June 30 | $2,630 | $2,470 | - Increase in average fee per file reflects a **stronger commercial market** and favorable increase in average property prices[126](index=126&type=chunk) - Interest and investment income increased by **$11 million (QoQ)** and **$22 million (YoY H1)** due to increased market interest rates and higher average fixed maturity holdings[129](index=129&type=chunk) - Realized gains and losses, net, increased significantly (**$62 million QoQ**, **$203 million YoY H1**) primarily due to increased non-cash valuation gains on equity and preferred security holdings[130](index=130&type=chunk) - Personnel costs increased **3% QoQ** due to increased headcount from higher open title order volumes[131](index=131&type=chunk) Agent Commissions vs. Agent Premiums | Metric | Q2 2019 (Millions) | % | Q2 2018 (Millions) | % | H1 2019 (Millions) | % | H1 2018 (Millions) | % | |---|---|---|---|---|---|---|---|---| | Agent premiums | $754 | 100% | $732 | 100% | $1,306 | 100% | $1,296 | 100% | | Agent commissions | $579 | 77% | $561 | 77% | $1,000 | 77% | $992 | 77% | | Net retained agent premiums | $175 | 23% | $171 | 23% | $306 | 23% | $304 | 23% | - Provision for title claim losses remained consistent at **$62 million (QoQ)** and **$107 million (YoY H1)**, reflecting an average provision rate of **4.5%** of title premiums[133](index=133&type=chunk) [Corporate and Other Segment](index=39&type=section&id=Corporate%20and%20Other%20Segment) This section analyzes the financial performance of the Corporate and Other segment Corporate and Other Segment Total Revenues and Loss (YoY Change) | Metric | Q2 2019 (Millions) | Q2 2018 (Millions) | YoY Change (Millions) | H1 2019 (Millions) | H1 2018 (Millions) | YoY Change (Millions) | |---|---|---|---|---|---|---| | Total revenues | $52 | $165 | $(113) (68%) | $111 | $268 | $(157) (59%) | | Loss from continuing operations, before income taxes and equity in earnings of unconsolidated affiliates | $(34) | $(25) | $(9) | $(62) | $(61) | $(1) | - Significant decrease in total revenues primarily due to the **sale of Pacific Union** (real estate brokerage) on September 24, 2018[136](index=136&type=chunk)[137](index=137&type=chunk) - Personnel costs increased **$13 million (22%) YoY H1**, driven by increased deferred compensation valuation expense and growth in real estate technology subsidiaries[138](index=138&type=chunk) - Other operating expenses decreased significantly (**$104 million QoQ**, **$168 million YoY H1**) primarily due to the sale of Pacific Union[139](index=139&type=chunk) [Liquidity and Capital Resources](index=39&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's cash requirements, sources of liquidity, and capital allocation strategy - Current cash requirements include personnel costs, operating expenses, claim payments, taxes, debt payments, capital expenditures, acquisitions, stock repurchases, and dividends[140](index=140&type=chunk) - As of June 30, 2019, liquidity included **$1,605 million in cash and cash equivalents**, **$314 million in short-term investments**, and **$800 million** available under the Revolving Credit Facility[141](index=141&type=chunk) - Insurance subsidiaries are restricted by state regulation in dividend payments; **$1,518 million of net assets were restricted** from dividend payments without prior approval as of December 31, 2018[143](index=143&type=chunk) Cash Flows (Six Months Ended June 30, YoY Change) | Activity | 2019 (Millions) | 2018 (Millions) | YoY Change (Millions) | |---|---|---|---| | Operating activities | $372 | $350 | +$22 | | Investing activities | $120 | $54 | +$66 | | Financing activities | $(144) | $(194) | +$50 (less cash used) | - **Operating cash flow** increase primarily due to higher pre-tax earnings and timing of receipts/payments[146](index=146&type=chunk) - **Investing cash flow** increase primarily due to **$90 million** increase in net cash inflow from investment sales/distributions[147](index=147&type=chunk) - **Financing cash flow** decrease in cash used primarily due to **$88 million** debt repayments in 2018[149](index=149&type=chunk) - Repurchased **1,230,000 shares** of FNF common stock for **$46 million** (average $37.53/share) during the six months ended June 30, 2019[151](index=151&type=chunk)[153](index=153&type=chunk) [Critical Accounting Policies](index=42&type=section&id=Critical%20Accounting%20Policies) - No material changes to critical accounting policies since the Annual Report for December 31, 2018, other than the adoption of ASC Topic 842 (Leases)[156](index=156&type=chunk) [Item 3. Quantitative and Qualitative Disclosure About Market Risk](index=42&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosure%20About%20Market%20Risk) This section states there have been no material changes in the market risks previously described in the company's Annual Report - No material changes in market risks since the Annual Report on Form 10-K for December 31, 2018[157](index=157&type=chunk) [Item 4. Controls and Procedures](index=42&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures as of June 30, 2019 - Disclosure controls and procedures were evaluated and deemed **effective** as of June 30, 2019[158](index=158&type=chunk) - **No material changes** in internal control over financial reporting occurred during the quarter ended June 30, 2019[159](index=159&type=chunk) Part II: OTHER INFORMATION [Item 1. Legal Proceedings](index=43&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note F of the Condensed Consolidated Financial Statements for a discussion of legal proceedings - Discussion of legal proceedings is incorporated by reference from Note F in Item 1 of Part I[161](index=161&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=43&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section summarizes the repurchases of equity securities by FNF during the three months ended June 30, 2019 Equity Securities Repurchases (Three Months Ended June 30, 2019) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs | |---|---|---|---|---| | 4/1/2019 - 4/30/2019 | 90,000 | $38.42 | 90,000 | 23,740,000 | | 5/1/2019 - 5/31/2019 | 330,000 | $39.06 | 330,000 | 23,410,000 | | 6/1/2019 - 6/30/2019 | 300,000 | $39.98 | 300,000 | 23,110,000 | | Total | 720,000 | $39.36 | 720,000 | | - The 2018 Repurchase Program allows for the purchase of up to **25 million shares** of FNF common stock through July 31, 2021[162](index=162&type=chunk) [Item 6. Exhibits](index=44&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications and XBRL formatted financial statements - Exhibits include certifications (Section 302 and 906 of Sarbanes-Oxley Act) by CFO and CEO, and XBRL formatted financial statements[167](index=167&type=chunk) Signatures [Authorized Signature](index=45&type=section&id=Authorized%20Signature) This section contains the authorized signature for the Form 10-Q filing - Report signed by **Anthony J. Park, Chief Financial Officer** (Principal Financial and Accounting Officer) on July 23, 2019[169](index=169&type=chunk)