UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q



þ☑		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, ~~2018~~2019



o☐		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)



Delaware					16-1725106
(State or other jurisdiction of incorporation or organization)					(I.R.S. Employer Identification Number)

601 Riverside Avenue	,	Jacksonville	,	Florida	32204
(Address of principal executive offices)					(Zip Code)

(904) 854-8100

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:



Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
FNF Common Stock, $0.0001 par value	FNF	New York Stock Exchange
5.50% Notes due September 2022	FNF22	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ~~YES~~ þYes ☑ NO o☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files)~~.YES~~ þ.Yes ☑ NO o☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer," “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):



Large ~~accelerated filer~~ þ Accelerated Filer	☑	Accelerated filero	☐	Non-accelerated filero	☐	Smaller reporting companyo	☐	Emerging growth companyo
				~~(Do not check if a smaller reporting company)~~				☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES o☐ NO þ

The number of shares outstanding of the Registrant's common stock as of ~~July 31, 2018~~June 30, 2019 were:

FNF Common Stock ~~274,903,852~~

274,416,550

FORM 10-Q

QUARTERLY REPORT

Quarter Ended June 30, ~~2018~~2019

TABLE OF CONTENTS




	Page
Part I: FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
A. Condensed Consolidated Balance Sheets as of June 30, ~~2018~~2019 and December 31, ~~2017~~2018	1
B. Condensed Consolidated Statements of Earnings for the ~~three-month~~three and six-month periods ended June 30, ~~2018~~2019 and ~~2017~~2018	2
C. Condensed Consolidated Statements of Comprehensive Earnings for the ~~three-month~~three and six-month periods ended June 30, ~~2018~~2019 and ~~2017~~2018	3
D. Condensed Consolidated Statements of Equity for the six-month periods ended June 30, ~~2018~~2019 and ~~2017~~2018	4
E. Condensed Consolidated Statements of Cash Flows for the six-month periods ended June 30, ~~2018~~2019 and ~~2017~~2018	5
F. Notes to Condensed Consolidated Financial Statements	6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	2423
Item 3. Quantitative and Qualitative Disclosure About Market Risk	3331
Item 4. Controls and Procedures	3331
Part II: OTHER INFORMATION
Item 1. Legal Proceedings	3432
~~Item 1A. Risk Factors~~	34
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	3432
Item 6. Exhibits	3533

Table of Contents

Part I: FINANCIAL INFORMATION


Item 1.	Condensed Consolidated Financial Statements

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in millions, except share data)


	June 30, 2018			December 31, 2017			June 30, 2019			December 31, 2018
	(Unaudited)						(Unaudited)
ASSETS
Investments:
Fixed maturity securities available for sale, at fair value, at June 30, 2018 and December 31, 2017 includes pledged fixed maturity securities of $418 and $364, respectively, related to secured trust deposits	$	1,781		$	1,816
Fixed maturity securities available for sale, at fair value, at June 30, 2019 and December 31, 2018 includes pledged fixed maturity securities of $425 and $418, respectively, related to secured trust deposits							$	2,054		$	1,998
Preferred securities, at fair value	291			319			287			301
Equity securities, at fair value	670			681			690			498
Investments in unconsolidated affiliates	144			150			139			137
Other long-term investments	136			110			145			135
Short-term investments, at December 31, 2017 includes short-term investments of $3 related to secured trust deposits	255			295
Short-term investments, at December 31,2018 includes short-term investments of $8 related to secured trust deposits							314			480
Total investments	3,277			3,371			3,629			3,549
Cash and cash equivalents, at June 30, 2018 and December 31, 2017 includes $493 and $475, respectively, of pledged cash related to secured trust deposits	1,320			1,110
Trade and notes receivables, net of allowance of $18, at June 30, 2018 and December 31, 2017	338			317
Cash and cash equivalents, at June 30, 2019 and December 31, 2018 includes $503 and $412, respectively, of pledged cash related to secured trust deposits							1,605			1,257
Trade and notes receivables, net of allowance of $19 at June 30, 2019 and December 31, 2018							361			306
Goodwill	2,764			2,746			2,725			2,726
Prepaid expenses and other assets	416			398			422			377
Lease assets, see Note K							402			—
Other intangible assets, net	564			618			472			513
Title plants	398			398			405			405
Property and equipment, net	177			193			168			164
Income taxes receivable							—			4
Total assets	$	9,254		$	9,151		$	10,189		$	9,301
LIABILITIES AND EQUITY
Liabilities:
Accounts payable and accrued liabilities	$	912		$	955		$	925		$	956
Notes payable	734			759			838			836
Reserve for title claim losses	1,487			1,490			1,480			1,488
Secured trust deposits	897			830			912			822
Lease liabilities, see Note K							428			—
Income taxes payable	15			137			49			—
Deferred tax liability	236			169			261			227
Total liabilities	4,281			4,340			4,893			4,329
Commitments and Contingencies:
Redeemable non-controlling interest by 21% minority holder of ServiceLink Holdings, LLC	344			344			344			344
Equity:
FNF common stock, $0.0001 par value; authorized 487,000,000 shares as of June 30, 2018 and December 31, 2017; outstanding of 274,709,481 and 274,431,737 as of June 30, 2018 and December 31, 2017, respectively, and issued of 287,998,983 and 287,718,304 as of June 30, 2018 and December 31, 2017, respectively	—			—
FNF common stock, $0.0001 par value; authorized 487,000,000 shares as of June 30, 2019 and December 31, 2018; outstanding of 274,416,550 and 275,373,834 as of June 30, 2019 and December 31, 2018, respectively, and issued of 289,875,770 and 289,601,523 as of June 30, 2019 and December 31, 2018, respectively							—			—
Preferred stock, $0.0001 par value; authorized 50,000,000 shares; issued and outstanding, none	—			—			—			—
Additional paid-in capital	4,555			4,587			4,528			4,500
Retained earnings	529			217			942			641
Accumulated other comprehensive (loss) earnings	(13		)	111
Less: Treasury stock, 13,289,502 shares and 13,286,567 shares as of June 30, 2018 and December 31, 2017, respectively, at cost	(468		)	(468		)
Accumulated other comprehensive earnings (loss)							36			(13		)
Less: Treasury stock, 15,459,220 shares and 14,227,689 shares as of June 30, 2019 and December 31, 2018, respectively, at cost							(544		)	(498		)
Total Fidelity National Financial, Inc. shareholders’ equity	4,603			4,447			4,962			4,630
Non-controlling interests	26			20			(10		)	(2		)
Total equity	4,629			4,467			4,952			4,628
Total liabilities, redeemable non-controlling interest and equity	$	9,254		$	9,151		$	10,189		$	9,301

See Notes to Condensed Consolidated Financial Statements

Table of Contents

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Dollars in millions, except per share data)


	Three months ended June 30,						Six months ended June 30,					Three months ended June 30,					Six months ended June 30,
	2018			2017			2018			2017		2019		2018			2019		2018
	(Unaudited)						(Unaudited)					(Unaudited)					(Unaudited)
Revenues:
Direct title insurance premiums	$	599		$	575		$	1,071		$	1,040	$	625	$	599		$	1,065	$	1,071
Agency title insurance premiums	732			726			1,296			1,309		754		732			1,306		1,296
Escrow, title-related and other fees	763			720			1,381			1,291		665		765			1,199		1,383
Interest and investment income	45			33			83			61		59		43			113		81
Realized gains and losses, net	(16		)	5			(15		)	1		41		(16		)	183		(15		)
Total revenues	2,123			2,059			3,816			3,702		2,144		2,123			3,866		3,816
Expenses:
Personnel costs	665			626			1,272			1,195		685		665			1,277		1,272
Agent commissions	561			558			992			1,004		579		561			1,000		992
Other operating expenses	506			479			929			868		409		506			753		929
Depreciation and amortization	45			44			92			87		44		45			88		92
Provision for title claim losses	60			65			107			117		62		60			107		107
Interest expense	11			13			22			29		12		11			24		22
Total expenses	1,848			1,785			3,414			3,300		1,791		1,848			3,249		3,414
Earnings from continuing operations before income taxes and equity in earnings of unconsolidated affiliates	275			274			402			402		353		275			617		402
Income tax expense	22			101			53			170		86		22			151		53
Earnings from continuing operations before equity in earnings of unconsolidated affiliates	253			173			349			232
Earnings before equity in earnings of unconsolidated affiliates												267		253			466		349
Equity in earnings of unconsolidated affiliates	1			3			3			4		3		1			10		3
Net earnings from continuing operations	254			176			352			236
Net earnings from discontinued operations, net of tax	—			126			—			147
Net earnings	254			302			352			383		270		254			476		352
Less: Net earnings attributable to non-controlling interests	3			6			4			15		4		3			4		4
Net earnings attributable to Fidelity National Financial, Inc. common shareholders	$	251		$	296		$	348		$	368	$	266	$	251		$	472	$	348
Amounts attributable to Fidelity National Financial, Inc. common shareholders
Net earnings from continuing operations attributable to FNF common shareholders	$	251		$	176		$	348		$	237
Net (loss) earnings from discontinued operations attributable to FNF common shareholders	—			(1		)	—			9
Net earnings attributable to FNF common shareholders	$	251		$	175		$	348		$	246
Net earnings from discontinued operations attributable to FNFV Group common shareholders				$	121					$	122
Earnings per share
Basic
Net earnings from continuing operations attributable to FNF common shareholders	$	0.92		$	0.65		$	1.27		$	0.88
Net earnings from discontinued operations attributable to FNF common shareholders	—			—			—			0.03
Net earnings per share attributable to FNF common shareholders	$	0.92		$	0.65		$	1.27		$	0.91
Net earnings per share from discontinued operations attributable to FNFV Group common shareholders				$	1.83					$	1.85
Diluted
Net earnings from continuing operations attributable to FNF common shareholders	$	0.90		$	0.63		$	1.25		$	0.85
Net earnings from discontinued operations attributable to FNF common shareholders	—			—			—			0.03
Net earnings per share attributable to FNF common shareholders	$	0.90		$	0.63		$	1.25		$	0.88
Net earnings per share from discontinued operations attributable to FNFV Group common shareholders				$	1.81					$	1.79
Net earnings per share attributable to FNF common shareholders, basic												$	0.97	$	0.92		$	1.73	$	1.27
Net earnings per share attributable to FNF common shareholders, diluted												$	0.96	$	0.90		$	1.70	$	1.25

Weighted average shares outstanding FNF common stock, basic basis	273			271			273			271		273		273			273		273
Weighted average shares outstanding FNF common stock, diluted basis	278			277			279			278		277		278			277		279
Cash dividends paid per share FNF common stock	$	0.30		$	0.25		$	0.60		$	0.50
Weighted average shares outstanding FNFV Group common stock, basic basis				66						66
Weighted average shares outstanding FNFV Group common stock, diluted basis				67						68

See Notes to Condensed Consolidated Financial Statements

Table of Contents

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS

(In millions)


	Three months ended June 30,						Six months ended June 30,					Three months ended June 30,						Six months ended June 30,
	Three months ended June 30,						Six months ended June 30,					Three months ended June 30,						Six months ended June 30,
	2018			2017			2018			2017		2019			2018			2019			2018
	(Unaudited)						(Unaudited)					(Unaudited)						(Unaudited)
Net earnings	$	254		$	302		$	352		$	383	$	270		$	254		$	476		$	352
Other comprehensive (loss) earnings:
Unrealized (loss) gain on investments and other financial instruments, net (excluding investments in unconsolidated affiliates) (1)	(6		)	13			(15		)	25
Other comprehensive earnings (loss):
Unrealized gain (loss) on investments and other financial instruments, net (excluding investments in unconsolidated affiliates) (1)												20			(6		)	43			(15		)
Unrealized gain on investments in unconsolidated affiliates (2)	1			4			4			11		1			1			7			4
Unrealized (loss) gain on foreign currency translation (3)	(1		)	4			(2		)	6
Unrealized gain (loss) on foreign currency translation (3)												2			(1		)	4			(2		)
Reclassification adjustments for change in unrealized gains and losses included in net earnings (4)	1			(1		)	(1		)	2		(1		)	1			(5		)	(1		)
Other comprehensive (loss) earnings	(5		)	20			(14		)	44
Other comprehensive earnings (loss)												22			(5		)	49			(14		)
Comprehensive earnings	249			322			338			427		292			249			525			338
Less: Comprehensive earnings attributable to non-controlling interests	3			9			4			17		4			3			4			4
Comprehensive earnings attributable to Fidelity National Financial, Inc. common shareholders	$	246		$	313		$	334		$	410	$	288		$	246		$	521		$	334
Comprehensive earnings attributable to FNF common shareholders	$	246		$	190		$	334		$	287
Comprehensive earnings attributable to FNFV Group common shareholders				$	123					$	123


(1)	Net of income tax expense (benefit) ~~expense~~ of ~~$(2)~~$6 million and $8(2) million for the three-month periods ended June 30, ~~2018~~2019 and ~~2017,~~2018, respectively, and ~~$(5)~~$14 million and ~~$16~~$(5) million for the six-month periods ended June 30, 2019 and 2018, ~~and 2017,~~ respectively.


(2)	Net of income tax expense of less than $1 million for the three-month periods ended June 30, 2019 and $32018, and $2 million and $1 million for the six-month periods ended June 30, 2019 and 2018, respectively


(3)	Net of income tax expense (benefit) of $1 million and less than $(1) million for the three-month periods ended June 30, ~~2018~~2019 and ~~2017,~~2018, respectively, and $1 million and $7$(1) million for the six-month periods ended June 30, ~~2018~~2019 and ~~2017,~~2018, respectively.


~~(3)~~(4)	Net of income tax (benefit) expense of less than $(1) million and $3$1 million for the three-month periods ended June 30, ~~2018~~2019 and ~~2017,~~2018, respectively, and $(2) million and less than $(1) million ~~and $3 million~~ for the six-month periods ended June 30, 2019 and 2018, ~~and 2017,~~ respectively.


~~(4)~~	~~Net of income tax expense (benefit) of less than $1 million and $(1) million for the three-month periods~~ ~~ended June 30, 2018~~ ~~and~~ ~~2017, respectively, and less than~~ ~~$(1) million~~ ~~and $1 million for the six-month periods ended June 30, 2018 and 2017, respectively.~~

See Notes to Condensed Consolidated Financial Statements

Table of Contents

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF EQUITY

(In ~~millions)~~millions, except per share data)

(Unaudited)


	Fidelity National Financial, Inc. Common Shareholders																											Fidelity National Financial, Inc. Common Shareholders
	FNF			FNFV									Accumulated																								Accumulated
	Group			Group									Other													Redeemable		FNF									Other													Redeemable
	Common			Common			Additional						Comprehensive			Treasury				Non-						Non-		Common			Additional						Comprehensive			Treasury				Non-						Non-
	Stock			Stock			Paid-in			Retained			Earnings			Stock				controlling			Total			controlling		Stock			Paid-in			Retained			Earnings			Stock				controlling			Total			controlling
	Shares	$		Shares	$		Capital			Earnings			(Loss)			Shares	$			Interests			Equity			Interests		Shares	$		Capital			Earnings			(Loss)			Shares	$			Interests			Equity			Interests
Balance, December 31, 2016	285	$	—	81	$	—	$	4,848		$	1,784		$	(13	)	27	$	(623	)	$	902		$	6,898		$	344
Balance, December 31, 2017																												288	$	—	$	4,587		$	217		$	111		13	$	(468	)	$	20		$	4,467		$	344
Exercise of stock options																												—	—		6			—			—			—	—			—			6			—
Adjustment for cumulative effect for adoption of ASU 2016-01																												—	—		—			128			(109		)	—	—			—			19			—
Other comprehensive earnings — unrealized loss on investments and other financial instruments																												—	—		—			—			(15		)	—	—			—			(15		)	—
Other comprehensive earnings — unrealized gain on investments in unconsolidated affiliates																												—	—		—			—			4			—	—			—			4			—
Other comprehensive earnings — unrealized loss on foreign currency translation																												—	—		—			—			(2		)	—	—			—			(2		)	—
Reclassification adjustments for change in unrealized gains and losses included in net earnings																												—	—		—			—			(1		)	—	—			—			(1		)	—
Reclassification for ASU 2018-02																												—	—		—			1			(1		)	—	—			—			—			—
Equity portion of debt conversions settled in cash																												—	—		(51		)	—			—			—	—			—			(51		)	—
Dilution resulting from subsidiary issuance of equity																												—	—		(2		)	—			—			—	—			4			2			—
Stock-based compensation																												—	—		15			—			—			—	—			—			15			—
Dividends declared, $0.60 per common share																												—	—		—			(165		)	—			—	—			—			(165		)	—
Subsidiary repurchase of equity																												—	—		—			—			—			—	—			(1		)	(1		)	—
Acquisitions of non-controlling interests																												—	—		—			—			—			—	—			3			3			—
Subsidiary dividends declared to non-controlling interests																												—	—		—			—			—			—	—			(4		)	(4		)	—
Net earnings																												—	—		—			348			—			—	—			4			352			—
Balance, June 30, 2018																												288	$	—	$	4,555		$	529		$	(13	)	13	$	(468	)	$	26		$	4,629		$	344

Balance, December 31, 2018																												290	$	—	$	4,500		$	641		$	(13	)	14	$	(498	)	$	(2	)	$	4,628		$	344
Exercise of stock options	1	—		—	—		16			—			—			—	—			—			16			—		—	—		6			—			—			—	—			—			6			—
Treasury stock repurchased	—	—		—	—		—			—			—			1	(20		)	—			(20		)	—		—	—		—			—			—			1	(46		)	—			(46		)	—
Other comprehensive earnings — unrealized gain (loss) on investments and other financial instruments	—	—		—	—		—			—			25			—	—			2			27			—
Other comprehensive earnings — unrealized gain on investments and other financial instruments																												—	—		—			—			43			—	—			—			43			—
Other comprehensive earnings — unrealized gain on investments in unconsolidated affiliates	—	—		—	—		—			—			11			—	—			—			11			—		—	—		—			—			7			—	—			—			7			—
Other comprehensive earnings — unrealized gain on foreign currency translation	—	—		—	—		—			—			6			—	—			—			6			—		—	—		—			—			4			—	—			—			4			—
Reclassification adjustments for change in unrealized gains and losses included in net earnings	—	—		—	—		—			—			2			—	—			—			2			—		—	—		—			—			(5		)	—	—			—			(5		)	—
Equity portion of debt conversions settled in cash	—	—		—	—		(244		)	—			—			—	—			—			(244		)	—
Black Knight repurchases of BKFS stock	—	—		—	—		—			—			—			—	—			(47		)	(47		)	—
Stock-based compensation	—	—		—	—		17			—			—			—	—			7			24			—		—	—		18			—			—			—	—			—			18			—
Dividends declared	—	—		—	—		—			(136		)	—			—	—			—			(136		)	—
Sale of OneDigital	—	—		—	—		—			—			—			—	—			(6		)	(6		)	—
Acquisitions of non-controlling interests	—	—		—	—		—			—			—			—	—			9			9			—
Dividends declared, $0.62 per common share																												—	—		—			(171		)	—			—	—			—			(171		)	—
Purchase of additional share in consolidated subsidiaries																												—	—		4			—			—			—	—			(7		)	(3		)	—
Subsidiary dividends declared to non-controlling interests	—	—		—	—		—			—			—			—	—			(4		)	(4		)	—		—	—		—			—			—			—	—			(5		)	(5		)	—
Net earnings	—	—		—	—		—			368			—			—	—			15			383			—		—	—		—			472			—			—	—			4			476			—
Balance, June 30, 2017	286	$	—	81	$	—	$	4,637		$	2,016		$	31		28	$	(643	)	$	878		$	6,919		$	344

Balance, December 31, 2017	288	$	—	—	$	—	$	4,587		$	217		$	111		13	$	(468	)	$	20		$	4,467		$	344
Adjustment for cumulative effect for adoption of ASU 2016-01	—	—		—	—		—			128			(109		)	—	—			—			19			—
Exercise of stock options	—	—		—	—		6			—			—			—	—			—			6			—
Other comprehensive earnings — unrealized losses on investments and other financial instruments	—	—		—	—		—			—			(15		)	—	—			—			(15		)	—
Other comprehensive earnings — unrealized gain on investments in unconsolidated affiliates	—	—		—	—		—			—			4			—	—			—			4			—
Other comprehensive earnings — unrealized losses on foreign currency translation	—	—		—	—		—			—			(2		)	—	—			—			(2		)	—
Reclassification adjustments for change in unrealized gains and losses included in net earnings	—	—		—	—		—			—			(1		)	—	—			—			(1		)	—
Reclassification for ASU 2018-02	—	—		—	—		—			1			(1		)	—	—			—			—			—
Stock-based compensation	—	—		—	—		15			—			—			—	—			—			15			—
Dilution resulting from subsidiary equity issuance	—	—		—	—		(2		)	—			—			—	—			4			2			—
Dividends declared	—	—		—	—		—			(165		)	—			—	—			—			(165		)	—
Subsidiary equity repurchase	—	—		—	—		—			—			—			—	—			(1		)	(1		)	—
Acquisitions of noncontrolling interests	—	—		—	—		—			—			—			—	—			3			3			—
Equity portion of debt conversions settled in cash	—	—		—	—		(51		)	—			—			—	—			—			(51		)	—
Subsidiary dividends declared to non-controlling interests	—	—		—	—		—			—			—			—	—			(4		)	(4		)	—
Net earnings	—	—		—	—		—			348			—			—	—			4			352			—
Balance, June 30, 2018	288	$	—	—	$	—	$	4,555		$	529		$	(13	)	13	$	(468	)	$	26		$	4,629		$	344
Balance, June 30, 2019																												290	$	—	$	4,528		$	942		$	36		15	$	(544	)	$	(10	)	$	4,952		$	344

See Notes to Condensed Consolidated Financial Statements

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FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)


	For the six months ended June 30,						For the six months ended June 30,

	2018			2017			2019			2018
	(Unaudited)						(Unaudited)
Cash flows from operating activities:
Net earnings	$	352		$	383		$	476		$	352
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	92			222			88			92
Equity in (earnings) losses of unconsolidated affiliates	(3		)	4
(Gain) loss on sales of investments and other assets, net	(5		)	12
Gain on sale of OneDigital	—			(269		)
Impairment of assets	—			2
Equity in earnings of unconsolidated affiliates							(10		)	(3		)
Loss (gain) on sales of investments and other assets and asset impairments, net							4			(5		)
Non-cash lease costs							73			—
Operating lease payments							(75		)	—
Distributions from unconsolidated affiliates, return on investment	3			—			5			3
Stock-based compensation cost	15			24			18			15
Change in valuation of equity and preferred securities available for sale, net	21			—
Change in valuation of equity and preferred securities, net							(187		)	21
Changes in assets and liabilities, net of effects from acquisitions:
Net increase in trade receivables	(21		)	(30		)	(51		)	(21		)
Net increase in prepaid expenses and other assets	(19		)	(65		)	(48		)	(19		)
Net decrease in accounts payable, accrued liabilities, deferred revenue and other	(25		)	(98		)
Net (decrease) increase in reserve for title claim losses	(3		)	5
Net increase (decrease) in accounts payable, accrued liabilities, deferred revenue and other							16			(25		)
Net decrease in reserve for title claim losses							(8		)	(3		)
Net change in income taxes	(57		)	101			71			(57		)
Net cash provided by operating activities	350			291			372			350
Cash flows from investing activities:
Proceeds from sales of investment securities	309			200			405			309
Proceeds from calls and maturities of investment securities	304			283			112			304
Proceeds from sales of property and equipment	21			—			—			21
Proceeds from the sale of cost method and other investments	—			14
Funding of Cannae Holdings Inc. note receivable							(100		)	—
Proceeds from repayment of Cannae Holdings Inc. note receivable							100			—
Additions to property and equipment and capitalized software	(39		)	(88		)	(47		)	(39		)
Purchases of investment securities	(579		)	(199		)	(518		)	(579		)
Net proceeds from (purchases of) short-term investment securities	40			(45		)
Purchases of other long-term investments	—			(2		)
Net proceeds from sales and maturities of short-term investment securities							166			40
Additional investments in unconsolidated affiliates	(34		)	(47		)	(20		)	(34		)
Distributions from unconsolidated affiliates, return of investment	42			44			27			42
Net other investing activities	(4		)	(4		)	(5		)	(4		)
Proceeds from the sale of OneDigital	—			326
Other acquisitions/disposals of businesses, net of cash acquired	(6		)	(83		)
Other acquisitions/disposals of businesses, net of cash acquired/disposed							—			(6		)
Net cash provided by investing activities	54			399			120			54
Cash flows from financing activities:
Borrowings	—			759
Debt service payments	(30		)	(922		)
Black Knight treasury stock repurchases of BKFS stock	—			(47		)
Debt principal payments							—			(30		)
Equity portion of debt conversions paid in cash	(58		)	(243		)	—			(58		)
Dividends paid	(164		)	(136		)	(169		)	(164		)
Subsidiary dividends paid to non-controlling interest shareholders	(4		)	(4		)	(5		)	(4		)
Exercise of stock options	6			16			6			6
Subsidiary equity repurchase	(1		)	—			—			(1		)
Net change in secured trust deposits	67			32			90			67
Purchase of additional share in consolidated subsidiaries							(3		)	—
Payment of contingent consideration for prior period acquisitions	(10		)	(11		)	(17		)	(10		)
Purchases of treasury stock	—			(16		)	(46		)	—
Net cash used in financing activities	(194		)	(572		)	(144		)	(194		)
Net increase in cash and cash equivalents	210			118			348			210
Cash and cash equivalents at beginning of period	1,110			1,323			1,257			1,110
Cash and cash equivalents at end of period	$	1,320		$	1,441		$	1,605		$	1,320

See Notes to Condensed Consolidated Financial Statements

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FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note A — Basis of Financial Statements

The financial information in this report presented for interim periods is unaudited and includes the accounts of Fidelity National Financial, Inc. and its subsidiaries (collectively, “we,” “us,” “our,” or “FNF”) prepared in accordance with U.S. generally accepted accounting principles ("GAAP") and the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All adjustments made were of a normal, recurring nature. This report should be read in conjunction with our Annual Report on Form 10-K (our "Annual Report") for the year ended December 31, ~~2017.~~2018.

Certain reclassifications have been made into the ~~2017~~2018 Condensed Consolidated Financial Statements to conform to classifications used in ~~2018.~~2019.

Description of the Business

We are a leading provider of (i) title insurance, escrow and other title-related services, including trust activities, trustee sales guarantees, recordings and reconveyances and home warranty products and (ii) technology and transaction services to the real estate and mortgage industries. FNF is one of the nation’s largest title insurance companies ~~and operates~~operating through its title insurance underwriters - Fidelity National Title Insurance Company ("FNTIC"), Chicago Title Insurance Company ("Chicago Title"), Commonwealth Land Title Insurance Company ("Commonwealth Title"), Alamo Title Insurance and National Title Insurance of New York Inc. - which collectively issue more title insurance policies than any other title company in the United States. Through our subsidiary, ServiceLink Holdings, LLC ("ServiceLink"), we provide mortgage transaction services, including title-related services and facilitation of production and management of mortgage loans.

For information about our reportable segments refer to Note H Segment Information.

Recent Developments

Pending Acquisition of Stewart

On March 18, 2018, we signed a merger agreement (the "Merger Agreement") to acquire Stewart Information Services Corporation ("Stewart") (NYSE: STC) (the "Stewart Merger"), pursuant to which each share of Stewart common stock issued and outstanding immediately prior to the effective time of the Stewart Merger (other than shares owned by Stewart, its subsidiaries, FNF or the wholly-owned subsidiaries of FNF party to the Merger Agreement and shares in respect of which appraisal rights have been properly exercised and perfected under Delaware law), will be converted into the right to receive, at the election of the holder of such share, (i) $50.00 in cash, (ii) 1.2850 shares of FNF common stock, or (iii) $25.00 in cash and 0.6425 shares of FNF common stock, subject to potential adjustment (as described below) and proration to the extent the option to receive cash or the option to receive stock is oversubscribed.

FNF currently intends to fund the $1.2 billion purchase price through a combination of cash on hand at FNF and the issuance of FNF common stock to Stewart stockholders and will be paid 50% in cash and 50% in FNF common stock. Including the assumption of $109 million of Stewart debt, our pro forma debt to total capital ratio is expected to be no more than approximately 20% at the close of the transaction.

~~Under the~~. The material terms of the Merger Agreement ifand progress on the ~~combined company is required~~Stewart Merger through February 2019 are set forth in our Annual Report.

On June 10, 2019, we exercised our second option to ~~divest assets or businesses~~extend the closing date of the transaction an additional three months to September 18, 2019.

We continue to work with the Federal Trade Commission and the New York State Department of Financial Services to seek approval of the proposed acquisition. If the approvals are obtained, we remain confident that the Stewart acquisition can create meaningful long-term value for ~~which 2017 annual revenues exceed $75 million, up to a cap~~our shareholders.

The closing of $225 million, in order to receive required regulatory approvals, the purchase price will be adjusted down on a pro-rata basis to a minimum purchase price of $45.50 per share of common stock of Stewart. If the Stewart Merger is ~~not completed for failure~~subject to ~~obtain the required~~certain closing conditions, including federal and state regulatory approvals and the satisfaction of other customary closing conditions.

Note Receivable from Cannae

In November 2017, in conjunction with the split-off of our former portfolio company investments into a separate company, Cannae Holdings, Inc. ("Cannae"), we ~~are required~~issued to ~~pay~~Cannae a ~~reverse break-up fee~~revolver note (the "Cannae Revolver") in the aggregate principal amount of ~~$50 million~~up to ~~Stewart.~~$100 million. Cannae is considered a related party to FNF.

The Cannae Revolver accrues interest quarterly at LIBOR plus 450 basis points and matures on the five-year anniversary from the date of issuance. The maturity date is automatically extended for additional five-year terms unless notice of non-renewal is otherwise provided by either FNF or Cannae, in their sole discretion.

On ~~May 30, 2018, we filed a preliminary registration statement on Form S-4 with~~February 7, 2019, Cannae borrowed $100 million from FNF under the ~~U.S. Securities and Exchange Commission (the "SEC").~~

Cannae Revolver. On ~~May 31, 2018, we received a request for additional information and documentary material, often referred~~June 12, 2019, Cannae repaid to ~~as a “Second Request,” from~~FNF the ~~United States Federal Trade Commission (the “FTC”) in connection with~~entire $100 million outstanding amount under the ~~FTC’s Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”) regulatory review of the Stewart Merger.~~Cannae Revolver.

On July ~~12,~~5, 2019, Cannae borrowed $100 million from FNF under the Cannae Revolver.

We account for the Cannae Revolver as a financing receivable. Interest income is recorded ratably in periods in which principal is outstanding. Uncollectible financing receivables are written off or impaired when, based on all available information, it is probable that a loss has occurred.

Income Tax

Income tax expense was $86 million and $22 million in the three-month periods ended June 30, 2019 and 2018, ~~we filed amendment number one to our preliminary registration statement on Form S-4 with~~respectively, and $151 million and $53 million in the ~~SEC.~~six-month periods ended June 30, 2019 and 2018, respectively. Income tax expense as a

~~On July 26, 2018, we filed amendment number two to our preliminary registration statement on Form S-4 with the SEC and it was declared effective by the SEC on August 1, 2018.~~

On August 1, 2018, Stewart filed its definitive proxy statement with the SEC and mailed the proxy statement to its stockholders. The special meeting of Stewart stockholders to vote on the Stewart Merger is scheduled for September 5, 2018.

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FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued

~~The closing~~percentage of ~~the Stewart Merger is subject to certain closing conditions, including Stewart stockholder approval, federal~~earnings before income taxes was 24% and ~~state regulatory approvals and the satisfaction of other customary closing conditions. Closing of the Stewart Merger is expected~~8% in the ~~first or second quarter~~three-month periods ended June 30, 2019 and 2018, respectively, and 24% and 13% in the six-month periods ended June 30, 2019 and 2018, respectively. The increase in income tax expense as a percentage of ~~2019.~~

~~Other Developments~~

~~On May 22,~~earnings before taxes in the 2019 periods from the comparable periods in 2018 ~~Janet Kerr resigned~~was primarily attributable to a change in tax estimate in the three months ended June 30, 2018 relating to the timing of payments for, and tax rate applicable to, our tax liability resulting from the decrease in statutory premium reserve associated with the redomestication of certain of our ~~Board of Directors (the "Board") due to personal reasons.~~

In May 2018, after discussion among the Board, it was decided that Willie D. Davis would not be nominated for re-election at the annual meeting of FNF's shareholders. In order for the Board to continue to benefit from Mr. Davis' valuable insight and diverse point of view, Mr. Davis has been appointed by the board to serve as Director Emeritus for a three-year term beginning immediately following our 2018 annual meeting of shareholders.title underwriters.

Earnings Per Share

Basic earnings per share, as presented on the Condensed Consolidated Statement of Earnings, is computed by dividing net earnings available to common shareholders in a given period by the weighted average number of common shares outstanding during such period. In periods when earnings are positive, diluted earnings per share is calculated by dividing net earnings available to common shareholders by the weighted average number of common shares outstanding plus the impact of assumed conversions of potentially dilutive securities. For periods when we recognize a net loss, diluted earnings per share is equal to basic earnings per share as the impact of assumed conversions of potentially dilutive securities is considered to be antidilutive. We have granted certain stock options, shares of restricted stock, convertible debt instruments and certain other convertible share based payments which have been treated as common share equivalents for purposes of calculating diluted earnings per share for periods in which positive earnings have been reported.

Options or other instruments which provide the ability to purchase shares of our common stock that are antidilutive are excluded from the computation of diluted earnings per share. There were no antidilutive ~~options~~instruments outstanding during the ~~three-~~three or six-month periods ended June 30, ~~2018~~2019 or June 30, ~~2017.~~

~~Income Tax~~

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Reform Act”). Among other provisions, the Tax Reform Act reduced the federal statutory corporate income tax rate from 35% to 21% and limited or eliminated certain deductions. Our effective tax rate was 8.0% and 36.9% in the three months ended June 30, 2018 and 2017, respectively, and 13.2% and 42.3% in the six months ended June 30, 2018 and 2017, respectively. The decrease in both periods is primarily attributable to the decreased federal tax rate associated with the passage of the Tax Reform Act and to a change in tax estimate in the three-month period ended June 30, 2018 regarding the timing of payments for, and tax rate applicable to, our tax liability resulting from the decrease in our statutory premium reserves associated with the redomestication of certain of our title insurance underwriters in 2017. The decrease in the six-month period was also attributable to increased tax expense of $21 million in the 2017 period resulting from a change in judgment of the tax deductibility of legal settlements finalized in the period.

SEC Staff Accounting Bulletin No. 118 ("SAB 118"), has provided guidance for companies that have not completed their accounting for the income tax effects of the Tax Reform Act in the period of enactment, allowing for a measurement period of up to one year after the enactment date to finalize the recording of the related tax impacts. As of June 30, 2018, we have not completed our accounting for the tax effects of the enactment of the Tax Reform Act; however, we have made a reasonable estimate of the effects on our deferred tax balances. In other cases, we have not been able to make a reasonable estimate and will continue to analyze the Tax Reform Act in order to finalize any related impacts within the measurement period. Areas of continued analysis with respect to the Tax Reform Act include the tax deductibility of certain executive compensation and final tax return to provision adjustments.

~~Discontinued Operations~~

On November 17, 2017, we completed our previously announced split-off (the “FNFV Split-Off”) of our former wholly-owned subsidiary Cannae Holdings, Inc. (“Cannae”) which consisted of the businesses, assets and liabilities formerly attributed to our FNF Ventures ("FNFV") Group including Ceridian Holding, LLC, American Blue Ribbon Holdings, LLC and T-System Holding LLC. The FNFV Split-Off was accomplished by the Company's redemption (the “Redemption”) of all of the outstanding shares of FNFV Group common stock, par value $0.0001 per share (“FNFV common stock”) for outstanding shares of common stock of Cannae, par value $0.0001 per share (“Cannae common stock”), amounting to a redemption of each outstanding share of FNFV common stock for one share of Cannae common stock, as of November 17, 2017. As a result of the FNFV Split-Off, Cannae is a separate, publicly traded company (NYSE: CNNE) as of November 20, 2017. All of the Company’s core title insurance, real

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~~FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued~~

estate, technology and mortgage related businesses, assets and liabilities currently attributed to the Company’s FNF common stock that are not held by Cannae remain with the Company. As a result of the FNFV Split-Off, the financial results of FNFV Group have been reclassified to discontinued operations for the three and six months ended June 30, 2017.

On September 29, 2017 we completed our tax-free distribution to FNF shareholders of all 83.3 million shares of New BKH Corp. ("New BKH") common stock that we previously owned (the “BK Distribution”). Immediately following the BK Distribution, New BKH and Black Knight Financial Services, Inc. ("Black Knight") engaged in a series of transactions resulting in the formation of a new publicly traded holding company, Black Knight, Inc. ("New Black Knight"). Holders of FNF common stock received approximately 0.30663 shares of New Black Knight common stock for every one share of FNF common stock held at the close of business on September 20, 2017, the record date for the BK Distribution. New Black Knight's common stock is now listed under the symbol “BKI” on the New York Stock Exchange. The BK Distribution was generally tax-free to FNF shareholders for U.S. federal income tax purposes, except to the extent of any cash received in lieu of New Black Knight's fractional shares. As a result of the BK Distribution, the financial results of Black Knight have been reclassified to discontinued operations for the three and six months ended June 30, 2017.

~~See Note K.~~ ~~Discontinued Operations~~ ~~for further details of the results of FNFV and Black Knight.~~2018.

Recent Accounting Pronouncements

~~Revenue Recognition~~Adopted Pronouncements

In ~~May 2014,~~February 2016, the Financial Accounting Standards Board ("FASB") issued ~~ASU No. 2014-09,~~ ~~Revenue from Contracts with Customers(Topic 606)~~. This ASU provides a new comprehensive revenue recognition model that requires companies to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. This update also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. This update permits the use of either the retrospective or cumulative effect transition method. ASU No. 2016-08, ~~Revenue from Contracts with Customers(Topic 606): Principal versus Agent Considerations~~ ~~was issued by FASB in March 2016 to clarify the principal versus agent considerations within ASU 2014-09. ASU 2016-10~~ ~~Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing~~ ~~was issued by the FASB in April 2016 to clarify how to determine whether goods and services are separately identifiable and thus accounted for as separate performance obligations. ASU 2016-12~~ ~~Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients~~ ~~was issued by the FASB in May 2016 to clarify certain terms from the aforementioned updates and to add practical expedients for contracts at various stages of completion. ASU 2016-20,~~ ~~Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers, was issued by the FASB in December 2016 which includes thirteen technical corrections and improvements affecting narrow aspects of the guidance issued in ASU 2014-09.~~

We adopted these revenue standards on January 1, 2018 using the modified retrospective approach. As there was no material impact to our historical revenue recognition, we did not record a cumulative-effect adjustment to the opening balance of retained earnings in the current year. See Note J. ~~Revenue Recognition~~ ~~for further discussion of our revenue.~~

~~Other Adopted Pronouncements~~

~~In January 2016, the FASB issued ASU No. 2016-01~~ ~~Financial Instruments - Overall(Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities~~. The primary amendments required by the ASU include: requiring equity investments with readily determinable fair values to be measured at fair value through net income rather than through other comprehensive income; allowing entities with equity investments without readily determinable fair values to report the investments at cost, adjusted for changes in observable prices, less impairment; requiring entities that elect the fair value option for financial liabilities to report the change in fair value attributable to instrument-specific credit risk in other comprehensive income; and clarifying that entities should assess the need for a valuation allowance on a deferred tax asset related to available-for-sale debt securities in combination with other deferred tax assets. The amendments in this ASU are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The ASU requires a cumulative-effect adjustment of the balance sheet as of the beginning of the year of adoption. Early adoption of the ASU is not permitted, except for the provision related to financial liabilities for which the fair value option has been elected.

We adopted this new guidance on January 1, 2018, which resulted in the reclassification of our unrealized gains and losses on our equity and preferred securities available for sale previously included in accumulated other comprehensive income to beginning retained earnings. Changes in the fair value of our investments in equity and preferred securities subsequent to January 1, 2018 are now included in our earnings from continuing operations. We reclassified a total of $109 million from Accumulated other comprehensive income to beginning Retained earnings as of January 1, 2018. The total cumulative effect on opening equity, including an increase in Retained earnings of $19 million attributable to an increase in value of certain Other long term investments

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~~FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued~~

~~resulting from recording at fair value, was an increase in Retained earnings of $128 million and decrease in Accumulated other comprehensive income of $109 million.~~

~~In November 2016, the FASB issued ASU No. 2016-18~~ ~~Statement of Cash Flows (Topic 230): Restricted Cash~~. The amendments in this ASU require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. GAAP previously did not include specific guidance on the cash flow classification and presentation of changes in restricted cash. The Company previously excluded cash pledged related to secured trust deposits, which generally meets the definition of restricted cash, from the reconciliation of beginning-of-period to end-of-period total amounts shown on the statement of cash flows. This update is effective for annual periods beginning after December 15, 2017, including interim periods within those fiscal years. The ASU requires retrospective application to all prior periods presented upon adoption.

We adopted this ASU on January 1, 2018. The adoption of this ASU resulted in the following retrospective changes to our Statement of Cash Flows for the six months ended June 30, 2017: an increase in the net change in cash and cash equivalents of $206 million due to the inclusion of the change in our cash pledged against secured trust deposits, an increase in investing cash inflow of $174 million related to the movement of cash paid for investments pledged against secured trust deposits from operating to investing activities, and a decrease in financing cash outflow of $32 million related to the movement of the change in secured trust deposits from operating to financing activities.

~~In February 2018, the FASB issued ASU No. 2018-02~~ ~~Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.~~ The amendments in this ASU allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from Tax Reform. We adopted this ASU on April 1, 2018. Adoption of this ASU resulted in the reclassification of $1 million from Accumulated other comprehensive loss to Retained earnings in the three months ended June 30, 2018.

~~Other Pronouncements Not Yet Adopted~~

~~Leases~~

~~In February 2016, the FASB issued ASU~~Accounting Standards Update ("ASU") No. 2016-02 Leases (Topic 842). The amendments in this ASU introduce broad changes to the accounting and reporting for leases by lessees. The main provisions of the new standard include: clarifications to the definitions of a lease, components of leases, and criteria for determining lease classification; requiring virtually all leased assets, including operating leases and related liabilities resulting from applying the fair value measurement, to be reflected on the lessee's balance sheet; and expanding and adding to the required disclosures for lessees. This update is effective for annual and interim periods beginning after December 15, 2018, including interim periods within those fiscal years. Early application of the standard is permitted. The ASU requires a modified retrospective approach to transitioning which allows for the use of practical expedients to effectively account for leases commenced prior to the effective date in accordance with previous GAAP, except that lessees were required to recognize a right-of-use asset and a lease liability for all operating leases at each reporting date based on the present value of the remaining minimum rental payments that were tracked and disclosed under previous GAAP. In July 2018, the FASB issued ASU 2018-11 Leases (Topic 842): Targeted Improvements which allows entities the option to adopt this standard ~~prospectively~~using a modified retrospective approach with a cumulative-effect adjustment to opening equity at the adoption date and include required disclosures for prior periods.

We have identified a vendor with software suited to track and account for leases under the new standard and are in process of transitioning our lease accounting within the software. We anticipate this standard will have a material impact on our consolidated balance sheets. However, while we are still in the preliminary stages of our analysis, we do not anticipate that adoption of this ASU will have a material impact on our consolidated income statements. While we are continuing to assess all potential impacts of the standard, we currently believe the most significant impact relates to our accounting for leased office space. We plan to adopt this standardadopted Topic 842 on January 1, 2019 using a modified retrospective approach and recorded lease right-of-use assets ("Lease assets") of $421 million and liabilities for future discounted lease payment obligations ("Lease liabilities") of $437 million at the date of adoption. The adoption also resulted in a decrease of $9 million and $25 million to ~~use~~our Prepaid expenses and other assets and Accounts payable and accrued liabilities, respectively. There was no impact to opening equity as a result of the adoption. We elected to apply the following package of practical expedients ~~available upon adoption.~~on a consistent basis permitting entities not to reassess: (i) whether any expired or existing contracts are or contain a lease; (ii) lease classification for any expired or existing leases and (iii) whether initial direct costs for any expired or existing leases qualify for capitalization under the amended guidance.

~~Other~~See Note K. Leases for further discussion of our leasing arrangements and related accounting.

Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU No. 2016-13 Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments. The amendments in this ASU introduce broad changes to accounting for credit impairment of financial instruments. The primary updates include the introduction of a new current expected credit loss ("CECL") model that is based on expected rather than incurred losses and amendments to the accounting for impairment of fixed maturity securities available for sale. This update is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. We are still evaluating the effect this new guidance will have on our consolidated financial statements and related disclosures and have not yet concluded on its effects. We do not plan to early adopt the standard.

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FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued

~~In January 2017, the FASB issued ASU 2017-04,~~ ~~Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.~~ The guidance simplifies the measurement of goodwill impairment by removing step 2 of the goodwill impairment test, which requires the determination of the fair value of individual assets and liabilities of a reporting unit. The new guidance requires goodwill impairment to be measured as the amount by which a reporting unit’s carrying value exceeds its fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The amendments should be applied on a prospective basis. The new standard is effective for fiscal years beginning after December 15, 2019 with early adoption permitted for interim or annual goodwill impairment tests performed after January 1, 2017. We are currently evaluating the effect this new guidance will have on our consolidated financial statements and related disclosures and have not yet concluded on its effects.

Note B — Summary of Reserve for Claim Losses

A summary of the reserve for claim losses follows:



	Six months ended June 30,
	2019			2018
	(Dollars in millions)
Beginning balance	$	1,488		$	1,490
Claim loss provision related to:
Current year	107			107
Prior years	—			—
Total title claim loss provision	107			107
Claims paid, net of recoupments related to:
Current year	(2		)	(3		)
Prior years	(113		)	(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		%

Six months ended June 30,
2018 2017
(Dollars in millions)
Beginning balance $ 1,490
$ 1,487
Change in reinsurance recoverable —
(4 )
Claim loss provision related to:
Current year 107
113
Prior years —
4
Total title claim loss provision 107
117
Claims paid, net of recoupments related to:

Current year (3 ) (2 )
Prior years (107 ) (106 )
Total title claims paid, net of recoupments (110 ) (108 )
Ending balance of claim loss reserve for title insurance $ 1,487
$ 1,492
Provision for title insurance claim losses as a percentage of title insurance premiums 4.5 % 5.0 %

We continually update loss reserve estimates as new information becomes known, new loss patterns emerge, or as other contributing factors are considered and incorporated into the analysis of reserve for claim losses. Estimating future title loss payments is difficult because of the complex nature of title claims, the long periods of time over which claims are paid, significantly varying dollar amounts of individual claims and other factors.

Due to the uncertainty inherent in the process and to the judgment used by management, the ultimate liability may be greater or less than our current reserves. If actual claims loss development varies from what is currently expected and is not offset by other factors, it is possible that additional reserve adjustments may be required in future periods in order to maintain our recorded ~~reserves may fall outside~~reserve within a reasonable range of our actuary's central ~~estimate, which may require additional reserve adjustments in future periods.~~estimate.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued

Note C — Fair Value Measurements

The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively:



	June 30, 2019
	Level 1		Level 2		Level 3		Total
	(In millions)
Fixed maturity securities available for sale:
U.S. government and agencies	$	—	$	265	$	—	$	265
State and political subdivisions	—		76		—		76
Corporate debt securities	—		1,565		16		1,581
Mortgage-backed/asset-backed securities	—		73		—		73
Foreign government bonds	—		59		—		59
Preferred securities	18		269		—		287
Equity securities	690		—		—		690
Other long-term investment	—		—		112		112
Total assets	$	708	$	2,307	$	128	$	3,143

June 30, 2018
Level 1 Level 2 Level 3 Total
(In millions)
Fixed maturity securities available for sale:
U.S. government and agencies $ —
$ 245
$ —
$ 245
State and political subdivisions —
196
—
196
Corporate debt securities —
1,217
13
1,230
Mortgage-backed/asset-backed securities —
51
—
51
Foreign government bonds —
59
—
59
Preferred securities 18
273
—
291
Equity securities 669
1
—
670
Other long-term investments —
—
102
102
Total assets $ 687
$ 2,042
$ 115
$ 2,844



	December 31, 2018
	Level 1		Level 2		Level 3		Total
	(In millions)
Fixed maturity securities available for sale:
U.S. government and agencies	$	—	$	225	$	—	$	225
State and political subdivisions	—		148		—		148
Corporate debt securities	—		1,486		17		1,503
Mortgage-backed/asset-backed securities	—		60		—		60
Foreign government bonds	—		62		—		62
Preferred securities	16		285		—		301
Equity securities	498		—		—		498
Other long-term investment	—		—		101		101
Total assets	$	514	$	2,266	$	118	$	2,898

December 31, 2017
Level 1 Level 2 Level 3 Total
(In millions)
Fixed maturity securities available for sale:
U.S. government and agencies $ —
$ 195
$ —
$ 195
State and political subdivisions —
391
—
391
Corporate debt securities —
1,117
—
1,117
Mortgage-backed/asset-backed securities —
56
—
56
Foreign government bonds —
57
—
57
Preferred securities 23
296
—
319
Equity securities 681
—
—
681
Total assets $ 704
$ 2,112
$ —
$ 2,816

Our Level 2 fair value measures for preferred securities and fixed maturity securities available for sale are provided by a third-party pricing service. We utilize one firm for our preferred stock and our bond portfolios. The pricing service is a leading global provider of financial market data, analytics and related services to financial institutions. The inputs utilized in these pricing methodologies include observable measures such as benchmark yields, reported trades, broker dealer quotes, issuer spreads, two sided markets, benchmark securities, bids, offers and reference data including market research publications. We review the pricing methodologies for all of our Level 2 securities by obtaining an understanding of the valuation models and assumptions used by the third-party as well as independently comparing the resulting prices to other publicly available measures of fair value and internally developed models. The pricing methodologies used by the relevant third-party pricing services are as follows:

U.S. government and agencies: These securities are valued based on data obtained for similar securities in active markets and from inter-dealer brokers.

State and political subdivisions: These securities are valued based on data obtained for similar securities in active markets and from inter-dealer brokers. Factors considered include relevant trade information, dealer quotes and other relevant market data.

Corporate debt securities: These securities are valued based on dealer quotes and related market trading activity. Factors considered include the bond's yield, its terms and conditions, or any other feature which may influence its risk and thus marketability, as well as relative credit information and relevant sector news.

Foreign government bonds: These securities are valued based on a discounted cash flow model incorporating observable market inputs such as available broker quotes and yields of comparable securities.

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Mortgage-backed/asset-backed securities: These securities are comprised of commercial mortgage-backed securities, agency mortgage-backed securities, collateralized mortgage obligations, and asset-backed securities. They are valued based on available trade information, dealer quotes, cash flows, relevant indices and market data for similar assets in active markets.

Preferred securities: Preferred securities are valued by calculating the appropriate spread over a comparable U.S. Treasury security. Inputs include benchmark quotes and other relevant market data.

In conjunction with our adoption of ASU No. 2016-01, beginning January 1, 2018, we began recording certain equity investments included in other long term investments at fair value which were previously accounted for as cost method investments. See discussion of Recent Accounting Pronouncements in Note A. ~~Basis of Financial Statements~~ ~~for further information on the impact of the adoption of ASU No. 2016-01.~~

Our Level 3 fair value measures for our other long term ~~investments~~investment are provided by a third-party pricing service. We utilize one firm to value our Level 3 other ~~long term~~long-term investment. The pricing service is a leading global provider of financial market data, analytics and related services to financial institutions. We utilize the income approach and a discounted cash flow analysis in determining the fair value of our Level 3 other ~~long term~~long-term investment. The primary unobservable input utilized in this pricing methodology is the discount rate used which is determined based on underwriting yield, credit spreads, yields on benchmark indices, and comparable public company debt. The discount rate used in our determination of the fair value of our Level 3 other ~~long term~~long-term investment as of June 30, ~~2018~~2019 was ~~8.0%~~a range of 7.3% - ~~8.2%~~7.9% and a weighted-average of 7.5%. Based on the total fair value of our Level 3 other ~~long term~~long-term investment as of June 30, ~~2018,~~2019, changes in the discount rate utilized will not result in a fair value significantly different than the amount recorded.

Our Level 3 fair value measures for our corporate debt securities relate to multiple investments which are considered immaterial individually and in the aggregate.

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FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued

The following table presents a summary of the changes in the fair values of Level 3 assets, measured on a recurring basis, for the three and ~~six months~~six-month periods ended June 30, 2019 and 2018.



	Three months ended June 30, 2019								Three months ended June 30, 2018
	Other long-term		Corporate debt						Other long-term			Corporate debt
	investment		securities			Total			investment			securities		Total
	(In millions)								(In millions)
Fair value, beginning balance	$	107	$	18		$	125		$	101		$	13	$	114
Transfers to Level 2	—		(2		)	(2		)	—			—		—
Paid-in-kind dividends (1)	2		—			2			2			—		2
Net valuation gain (loss) included in earnings (2)	3		—			3			(1		)	—		(1		)
Fair value, ending balance	$	112	$	16		$	128		$	102		$	13	$	115

Three months ended June 30, 2018
Other long-term Corporate debt
investments securities Total
(In millions)
Fair value, March 31, 2018 $ 101
$ 13
$ 114
Paid-in-kind dividends (1) 2
—
2
Net valuation loss included in earnings (2) (1 ) —
(1 )
Fair value, June 30, 2018 $ 102
$ 13
$ 115



	Six months ended June 30, 2019								Six months ended June 30, 2018
	Other long-term		Corporate debt						Other long-term			Corporate debt
	investment		securities			Total			investment			securities		Total
	(In millions)								(In millions)
Fair value, beginning balance	$	101	$	17		$	118		$	—		$	—	$	—
Fair value of assets associated with the adoption of ASU 2016-01	—		—			—			100			—		100
Transfers from Level 2	—		—			—			—			13		13
Transfers to Level 2	—		(5		)	(5		)	—			—		—
Paid-in-kind dividends (1)	3		1			4			3			—		3
Purchases	—		5			5			—			—		—
Sales and maturities	—		(1		)	(1		)	—			—		—
Net valuation gain included in earnings (2)	8		—			8			(1		)	—		(1		)
Net unrealized loss included in other comprehensive earnings (3)	—		(1		)	(1		)	—			—		—
Fair value, ending balance	$	112	$	16		$	128		$	102		$	13	$	115

Six months ended June 30, 2018
Other long-term Corporate debt
investments securities Total
(In millions)
Fair value, December 31, 2017 $ —
$ —
$ —
Fair value of assets associated with the adoption of ASU 2016-01 100
—
100
Transfers from Level 2 —
13
13
Paid-in-kind dividends (1) 3
—
3
Net valuation loss included in earnings (2) (1 ) —
(1 )
Fair value, June 30, 2018 $ 102
$ 13
$ 115

(1) Included in Interest and investment income on the Condensed Consolidated Statements of Earnings

(2) Included in Realized gains and losses, net on the Condensed Consolidated Statements of Earnings

(3) Included in Unrealized gain (loss) on investments and other financial instruments, net (excluding investments in unconsolidated affiliates) on the Condensed Consolidated Statements of Comprehensive Earnings

Transfers into or out of the Level 3 fair value category occur when unobservable inputs become more or less significant to the fair value measurement or upon a change in valuation technique. For the three and six months ended June 30, 2019, transfers between Level 2 and Level 3 are not considered material. For the six months ended June 30, 2018, transfers between Level 2 and Level 3 were based on changes in significance of unobservable inputs used associated with a change in the valuation technique used for certain of the Company’s corporate debt securities and are not considered material to the Company's financial position or results of operations. ~~There were no transfers between~~

Substantially all of the unrealized gain (loss) on investments and other financial instruments, net (excluding investments in unconsolidated affiliates) on our Condensed Consolidated Statements of Comprehensive Income relate to fixed maturity securities which are considered Level 2 fair value measures.

The carrying amounts of short-term investments, accounts receivable and ~~Level 3 in the three months ended June 30, 2018. The Company’s policy is~~notes receivable approximate fair value due to ~~recognize transfers between levels in~~their short-term nature and/or short time period since consummation. Additional information regarding the fair value ~~hierarchy at the end~~ of ~~the reporting period.~~our investment portfolio is included in Note D. Investments.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued

~~As of December 31, 2017 and June 30, 2017, we held no material assets or liabilities measured at fair value using Level 3 inputs.~~

The carrying amounts of short-term investments, accounts receivable and notes receivable approximate fair value due to their short-term nature. Additional information regarding the fair value of our investment portfolio is included in Note D. ~~Investments~~.

Note D — Investments

The carrying amounts and fair values of our available for sale securities at June 30, ~~2018~~2019 and December 31, ~~2017~~2018 are as follows:



	June 30, 2019
	Carrying		Cost		Unrealized		Unrealized			Fair
	Value		Basis		Gains		Losses			Value
	(In millions)
Fixed maturity securities available for sale:
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

June 30, 2018
Carrying Cost Unrealized Unrealized Fair
Value Basis Gains Losses Value
(In millions)
Fixed maturity securities available for sale:
U.S. government and agencies $ 245
$ 248
$ —
$ (3 ) $ 245
State and political subdivisions 196
194
2
—
196
Corporate debt securities 1,230
1,238
4
(12 ) 1,230
Mortgage-backed/asset-backed securities 51
51
1
(1 ) 51
Foreign government bonds 59
62
—
(3 ) 59
Total $ 1,781
$ 1,793
$ 7
$ (19 ) $ 1,781



	December 31, 2018
	Carrying		Cost		Unrealized		Unrealized			Fair
	Value		Basis		Gains		Losses			Value
	(In millions)
Fixed maturity securities available for sale:
U.S. government and agencies	$	225	$	226	$	1	$	(2	)	$	225
State and political subdivisions	148		147		1		—			148
Corporate debt securities	1,503		1,510		6		(13		)	1,503
Mortgage-backed/asset-backed securities	60		59		1		—			60
Foreign government bonds	62		67		—		(5		)	62
Total	$	1,998	$	2,009	$	9	$	(20	)	$	1,998

December 31, 2017
Carrying Cost Unrealized Unrealized Fair
Value Basis Gains Losses Value
(In millions)
Fixed maturity securities available for sale:
U.S. government and agencies $ 195
$ 196
$ —
$ (1 ) $ 195
State and political subdivisions 391
387
4
—
391
Corporate debt securities 1,117
1,110
11
(4 ) 1,117
Mortgage-backed/asset-backed securities 56
55
1
—
56
Foreign government bonds 57
58
1
(2 ) 57
Preferred securities 319
307
12
—
319
Equity securities 681
517
172
(8 ) 681
Total $ 2,816
$ 2,630
$ 201
$ (15 ) $ 2,816

The cost basis of fixed maturity securities available for sale includes an adjustment for amortized premium or accreted discount since the date of purchase.

In conjunction with our adoption of ASU No. 2016-01, beginning January 1, 2018, unrealized gains and losses on equity and preferred securities are included in Realized gains and losses, net on the Condensed Consolidated Statement of Earnings. Accordingly, they are excluded from the table as of June 30, 2018 above. Refer to discussion under ~~Recent Accounting Pronouncements~~ ~~included in Note A.~~ ~~Basis of Financial Statements~~ ~~for further discussion of the effects of the adoption of ASU 2016-01.~~

~~Table of Contents~~

~~FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued~~

The following table presents certain information regarding contractual maturities of our fixed maturity securities at June 30, ~~2018:~~2019:



	June 30, 2019
	Amortized		% of		Fair		% of
Maturity	Cost		Total		Value		Total
	(Dollars in millions)
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	%

June 30, 2018
Amortized % of Fair % of
Maturity Cost Total Value Total
(Dollars in millions)
One year or less $ 397
22 % $ 395
22 %
After one year through five years 1,220
68
1,210
68
After five years through ten years 120
7
120
7
After ten years 5
—
5
—
Mortgage-backed/asset-backed securities 51
3
51
3
Total $ 1,793
100 % $ 1,781
100 %

Expected maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Because of the potential for prepayment on mortgage-backed and asset-backed securities, they are not categorized by contractual maturity.

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FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued

Net unrealized losses on investment securities and the fair value of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, were as follows (in millions):



June 30, 2019
	Less than 12 Months					12 Months or Longer					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
Corporate debt securities	$	107	$	(4	)	$	236	$	(1	)	$	343	$	(5	)
Foreign government bonds	—		—			33		(3		)	33		(3		)
Total temporarily impaired securities	$	107	$	(4	)	$	269	$	(4	)	$	376	$	(8	)

June 30, 2018
Less than 12 Months 12 Months or Longer Total
Fair Unrealized Fair Unrealized Fair Unrealized
Value Losses Value Losses Value Losses
U.S. government and agencies $ 212
$ (3 ) $ —
$ —
$ 212
$ (3 )
Corporate debt securities 909
(10 ) 47
(2 ) 956
(12 )
Foreign government bonds 41
(2 ) 7
(1 ) 48
(3 )
Mortgage-backed/asset-backed securities 28
(1 ) —
—
28
(1 )
Total temporarily impaired securities $ 1,190
$ (16 ) $ 54
$ (3 ) $ 1,244
$ (19 )



December 31, 2018
	Less than 12 Months					12 Months or Longer					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
U.S. government and agencies	$	71	$	(1	)	$	117	$	(1	)	$	188	$	(2	)
Corporate debt securities	661		(8		)	301		(5		)	962		(13		)
Foreign government bonds	52		(3		)	10		(2		)	62		(5		)
Total temporarily impaired securities	$	784	$	(12	)	$	428	$	(8	)	$	1,212	$	(20	)

December 31, 2017
Less than 12 Months 12 Months or Longer Total
Fair Unrealized Fair Unrealized Fair Unrealized
Value Losses Value Losses Value Losses
U.S. government and agencies $ 149
$ (1 ) $ —
$ —
$ 149
$ (1 )
Corporate debt securities 464
(3 ) 51
(1 ) 515
(4 )
Foreign government bonds —
—
10
(2 ) 10
(2 )
Equity securities 121
(7 ) 5
(1 ) 126
(8 )
Total temporarily impaired securities $ 734
$ (11 ) $ 66
$ (4 ) $ 800
$ (15 )

We recorded no impairment charges relating to investments during the three or six-month periods ended June 30, 2019. We recorded $3 million of impairment charges relating to investments during the three and six-month periods ended June 30, 2018. ~~We recorded $1 million in impairment charges relating to investments during the three and six-month periods ended June 30, 2017.~~ Impairment in ~~these~~the 2018 periods relate to fixed maturity securities of investees entering Chapter 11 bankruptcy which exhibited decreasing fair market values and from which we are uncertain of our ability to recover our initial investment.

As of June 30, ~~2018, we held $1 million of investment securities for which an other-than-temporary impairment had been previously recognized. As of~~2019 and December 31, ~~2017,~~2018, we held no investment securities for which an other-than-temporary impairment had been previously recognized. It is possible that future events may lead us to recognize impairment losses related to our investment portfolio and that unanticipated future events may lead us to dispose of certain investment holdings and recognize the effects of any market movements in our condensed consolidated financial statements.

~~Table of Contents~~

~~FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued~~

The following tables present realized gains and losses on investments and other assets and proceeds from the sale or maturity of investments and other assets for the three and six-month periods ended June 30, ~~2018~~2019 and ~~2017,~~2018, respectively:



	Three months ended June 30, 2019									Six months ended June 30, 2019
	Gross Realized Gains		Gross Realized Losses		Net Realized Gains (Losses)			Gross Proceeds from Sale/Maturity		Gross Realized Gains		Gross Realized Losses			Net Realized Gains (Losses)			Gross Proceeds from Sale/Maturity
	(In millions)									(In millions)
Sales and maturities of fixed maturity securities available for sale	$	1	$	—	$	1		$	137	$	2	$	(1	)	$	1		$	372
Sales and maturities of preferred securities	—		—		—			3		—		—			—			26
Sales of equity securities	1		—		1			82		5		—			5			124
Valuation of equity securities					42			—							168			—
Valuation of preferred securities					2			—							13			—
Valuation of other long term investments					3			—							7			—
Impairment of lease assets					(5		)	—							(8		)	—
Other realized gains and losses, net					(3		)	—							(3		)	—
Total					$	41		$	222						$	183		$	522

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FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued

Three months ended June 30, 2018 Six months ended June 30, 2018
Gross Realized Gains Gross Realized Losses Net Realized Gains (Losses) Gross Proceeds from Sale/Maturity Gross Realized Gains Gross Realized Losses Net Realized Gains (Losses) Gross Proceeds from Sale/Maturity
(In millions) (In millions)
Fixed maturity securities available for sale $ 1
$ (3 ) $ (2 ) $ 245
$ 4
$ (3 ) $ 1
$ 543
Preferred stock 1
—
1
46
1
—
1
46
Equity securities 3
(4 ) (1 ) 19
3
(4 ) (1 ) 19
Valuation losses on equity securities (8 ) —
(12 ) —
Valuation losses on preferred securities (5 ) —
(8 ) —
Property and equipment —
—
5
21
Other realized gains and losses, net (1 ) —
(1 ) —
Total $ (16 ) $ 310
$ (15 ) $ 629



	Three months ended June 30, 2018										Six months ended June 30, 2018
	Gross Realized Gains		Gross Realized Losses			Net Realized Gains (Losses)			Gross Proceeds from Sale/Maturity		Gross Realized Gains			Gross Realized Losses			Net Realized Gains (Losses)			Gross Proceeds from Sale/Maturity
	(In millions)										(In millions)
Sales and maturities of fixed maturity securities available for sale	$	1	$	(3	)	$	(2	)	$	245	$	4		$	(3	)	$	1		$	543
Sales and maturities of preferred securities	1		—			1			46		1		—	—			1			46
Sales of equity securities	3		(4		)	(1		)	19		3		—	(4		)	(1		)	19
Valuation of equity securities						(8		)	—								(12		)	—
Valuation of preferred securities						(5		)	—								(8		)	—
Property and equipment						—			—								5			21
Other realized gains and losses, net						(1		)	—								(1		)	—
Total						$	(16	)	$	310							$	(15	)	$	629

Three months ended June 30, 2017 Six months ended June 30, 2017
Gross Realized Gains Gross Realized Losses Net Realized Gains (Losses) Gross Proceeds from Sale/Maturity Gross Realized Gains Gross Realized Losses Net Realized Gains (Losses) Gross Proceeds from Sale/Maturity
(In millions) (In millions)
Fixed maturity securities available for sale $ 1
$ (2 ) $ (1 ) $ 203
$ 4
$ (5 ) $ (1 ) $ 440
Preferred stock available for sale —
—
—
10
—
—
—
—
10
Other long-term investments 9
14
9
14
Loss on debt redemptions (3 ) —
(5 ) —
Other assets —
—
(2 ) —
Total $ 5
$ 227
$ 1
$ 464

Investment with Related Party

Included in equity securities as of June 30, 2019 and December 31, 2018 are 5,706,134 shares of Cannae common stock (NYSE: CNNE) which were purchased during the fourth quarter of 2017 in connection with the split-off of our former portfolio company investments to Cannae. The fair value of our related party investment based on quoted market prices is $165 million and $98 million as of June 30, 2019 and December 31, 2018, respectively.

Note E —Notes Payable

Notes payable consists of the following:



	June 30, 2019			December 31, 2018
	(In millions)
4.50% Notes, net of discount	$	443		$	442
5.50% Notes, net of discount	398			398
Revolving Credit Facility	(3		)	(4		)
	$	838		$	836

June 30,
2018 December 31,
2017
(In millions)
Unsecured notes, net of discount, interest payable semi-annually at 5.50%, due September 2022 $ 398
$ 397
Unsecured convertible notes, net of discount, interest payable semi-annually at 4.25%, due August 2018 40
65
Revolving Credit Facility, unsecured, unused portion of $500, due April 2022 with interest payable monthly at LIBOR + 1.40% (3.75% at June 30, 2018) 295
295
Other 1
2
$ 734
$ 759

At June 30, ~~2018,~~2019, the estimated fair value of our ~~long-term debt~~unsecured notes payable was approximately ~~$844~~$903 million, which was ~~$103~~$53 million higher than its carrying value, excluding $7$12 million of net unamortized debt issuance costs and ~~premium/~~discount. ~~The fair value of our unsecured notes payable was $543 million as of June 30, 2018.~~ The fair values of our unsecured notes payable are based on established market prices for the securities on June 30, ~~2018~~2019 and are considered Level 2 financial liabilities.

On August 13, 2018, we completed an offering of $450 million in aggregate principal amount of 4.50% notes due August 2028 (the "4.50% Notes"), pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended. The ~~carrying value~~

~~Table~~4.50% Notes were priced at 99.252% of ~~Contents~~

~~FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued~~

par to yield 4.594% annual interest. We pay interest on the 4.50% Notes semi-annually on the 15th of February and August, beginning February 15, 2019. The 4.50% Notes contain customary covenants and events of default for investment grade public debt, which primarily relate to failure to make principal or interest payments. On May 16, 2019, we completed an offering to exchange the 4.50% Notes for substantially identical notes registered pursuant to Rule 424 under the Securities Act of 1933 (the "4.50% Notes Exchange"). There were no material changes to the terms of the ~~Revolving Credit Facility approximates fair value at June 30, 2018,~~4.50% Notes as ~~it is~~ a ~~variable rate instrument with a short reset period (monthly) which reflects current market rates. The revolving credit facilities are considered Level 2 financial liabilities.~~result of the 4.50% Notes Exchange and all holders of the 4.50% Notes accepted the offer to exchange.

On June 25, 2013, FNF entered into an agreement to amend and restate our existing $800 million Second Amended and Restated Credit Agreement (the “Existing Credit Agreement”), dated as of April 16, 2012 with Bank of America, N.A., as administrative agent (in such capacity, the “Administrative Agent”) and the other agents party thereto (the “Revolving Credit Facility”). On April 27, 2017, the Existing Credit Agreement was amended (the "Restated Credit Agreement").The material terms of the ~~Revolving~~Restated Credit ~~Facility~~Agreement are set forth in our Annual Report for the year ended December 31, ~~2017.~~2018. As of June 30, ~~2018,~~ 2019,

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there was ~~$295 million~~no principal outstanding, ~~net of $5~~$3 million of unamortized debt issuance costs, and ~~$500~~$800 million of ~~remaining~~available borrowing capacity under the Revolving Credit Facility.

On August 28, 2012, FNF completed an offering of $400 million in aggregate principal amount of 5.50% notes due September 2022 (the "5.50% ~~notes"~~Notes"), pursuant to an effective registration statement previously filed with the ~~SEC.~~Securities Exchange Commission ("SEC"). The material terms of the 5.50% ~~notes are set forth in our Annual Report for the year ended December 31, 2017.~~

On August 2, 2011, FNF completed an offering of $300 million in aggregate principal amount of 4.25% convertible senior notes due August 2018 (the "Notes") in an offering conducted in accordance with Rule 144A under the Securities Act of 1933, as amended. The material terms of the Notes are set forth in our Annual Report for the year ended December 31, 2017. Beginning October 1, 2013, these notes are convertible under the 130% Sale Price Condition described in our Annual Report. During the six months ended June 30, 2018, we repurchased Notes, and Notes were converted by holders, with aggregate principal of $29 million for $86 million. Upon maturity of the Notes in August 2018, we expect to settle in cash and pay approximately $118 million based on stock prices and conversion rates as of June 30, 2018.



Gross principal maturities of notes payable at June 30, 2019 are as follows (in millions):
2019 (remaining)	$	—
2020	—
2021	—
2022	400
2023	—
Thereafter	450
	$	850

Gross principal maturities of notes payable at June 30, 2018 are as follows (in millions):
2018 (remaining) $ 40
2019 —
2020 1
2021 —
2022 700
Thereafter —
$ 741

Note F — Commitments and Contingencies

Legal and Regulatory Contingencies

In the ordinary course of business, we are involved in various pending and threatened litigation matters related to our operations, some of which include claims for punitive or exemplary damages. With respect to our title insurance operations, this customary litigation includes but is not limited to a wide variety of cases arising out of or related to title and escrow claims, for which we make provisions through our loss reserves. Additionally, like other companies, our ordinary course litigation includes a number of class action and purported class action lawsuits, which make allegations related to aspects of our operations. We believe that no actions, other than the matters discussed below, if any, depart from customary litigation incidental to our business.

We review lawsuits and other legal and regulatory matters (collectively “legal proceedings”) on an ongoing basis when making accrual and disclosure decisions. When assessing reasonably possible and probable outcomes, management bases its decision on its assessment of the ultimate outcome assuming all appeals have been exhausted. For legal proceedings in which it has been determined that a loss is both probable and reasonably estimable, a liability based on known facts and which represents our best estimate has been recorded. Our accrual for legal and regulatory matters was $12 million and $2$11 million as of June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively. None of the amounts we have currently recorded are considered to be material to our financial condition individually or in the aggregate. Actual losses may materially differ from the amounts recorded and the ultimate outcome of our pending legal proceedings is generally not yet determinable. While some of these matters could be material to our operating results or cash flows for any particular period if an unfavorable outcome results, at present we do not believe that the ultimate resolution of currently pending legal proceedings, either individually or in the aggregate, will have a material adverse effect on our financial condition.

In a class action captioned Patterson, et al. v. Fidelity National Title Insurance Company, et al., Case No. GD 03-021176, originally filed on October 27, 2003 and pending in the Court of Common Pleas of Allegheny County, Pennsylvania, plaintiffs allege the named Company underwriters violated Pennsylvania’s Unfair Trade Practices and Consumer Protection Law (“UTPCPL”) by failing to provide premium discounts

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in accordance with filed rates in refinancing transactions. Contrary to rulings in similar federal court cases that considered the rate rule and agreed with the Company’s position, the court held that the rate rule should be interpreted such that an institutional mortgage in the public record is a “proxy” for prior title insurance entitling a consumer to a discount rate when refinancing when there is a mortgage of record within the number of years required by the rate rule. The rate rule requires sufficient evidence of a prior policy, and because not all institutional mortgages were insured, the Company’s position is that a recorded first mortgage alone does not constitute sufficient evidence of an earlier policy entitling consumers to a discounted rate. The court certified the class refusing to follow prior Pennsylvania Supreme Court and appellate court decisions holding that the UTPCPL requires proof of reliance, an individual issue ~~which~~that precludes certification. After notice to the class, plaintiffs moved for partial summary judgment on liability, and defendants moved for summary judgment. On June 27, 2018, the court entered an order granting plaintiffs’ motion for partial summary judgment on liability, and denying the Company’s ~~motion finding~~motion. The court also determined that a multiplier of 1.5, not treble, should be applied to the amount of damages, if any, proven by class members at trial and that the ~~Company failed to advise it’s agents how to interpret~~plaintiffs should bear the ~~rate rule so that it would be uniformly applied, thereby having engaged in “deceptive conduct.”~~responsibility of identifying class members and calculating damages. The Company ~~plans~~sought permission from the Pennsylvania Superior Court to ~~seek~~appeal both the liability and damage multiplier issues; however, the petition was denied. The Company has filed a petition with the Pennsylvania Supreme Court requesting permission

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to appeal on the merits, or in the alternative, an order directing the Pennsylvania Superior Court to grant interlocutory ~~review of the summary judgment order or appeal after entry of judgment.~~review. There has been no determination as to the size of the class. It is unknown whether plaintiffs will seek statutory or actual damages, or whether the judge will exercise discretion to award ~~treble damages or award~~ prejudgment interest or ~~what plaintiffs’ counsel will seek as~~ reasonable attorneys’ fees. Accordingly, damages are not reasonably estimable at this time. We will continue to vigorously defend this matter, and we do not believe the result will have a material adverse effect on our financial condition.

From time to time we receive inquiries and requests for information from state insurance departments, attorneys general and other regulatory agencies about various matters relating to our business. Sometimes these take the form of civil investigative demands or subpoenas. We cooperate with all such inquiries and we have responded to or are currently responding to inquiries from multiple governmental agencies. Also, regulators and courts have been dealing with issues arising from foreclosures and related processes and documentation. Various governmental entities are studying the title insurance product, market, pricing, and business practices, and potential regulatory and legislative changes, which may materially affect our business and operations. From time to time, we are assessed fines for violations of regulations or other matters or enter into settlements with such authorities which may require us to pay fines or claims or take other actions. We do not anticipate such fines and settlements, either individually or in the aggregate, will have a material adverse effect on our financial condition.

~~Operating Leases~~

~~Future minimum operating lease payments are as follows (in millions):~~

2018 (remaining) $ 77
2019 140
2020 111
2021 83
2022 56
Thereafter 53
Total future minimum operating lease payments $ 520

Note G — Dividends

On July ~~17, 2018,~~16, 2019, our Board of Directors declared cash dividends of ~~$0.30~~$0.31 per share, payable on September ~~28, 2018,~~30, 2019, to FNF common shareholders of record as of September ~~14, 2018.~~16, 2019.

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Note H — Segment Information

Summarized financial information concerning our reportable segments is shown in the following tables.

As of and for the three months ended June 30, ~~2018:~~2019:



	Title		Corporate and Other			Total
	(In millions)
Title premiums	$	1,379	$	—		$	1,379
Other revenues	613		52			665
Revenues from external customers	1,992		52			2,044
Interest and investment income, including realized gains and losses	100		—			100
Total revenues	2,092		52			2,144
Depreciation and amortization	38		6			44
Interest expense	—		12			12
Earnings (loss) before income taxes and equity in earnings of unconsolidated affiliates	387		(34		)	353
Income tax expense (benefit)	95		(9		)	86
Earnings (loss) before equity in earnings of unconsolidated affiliates	292		(25		)	267
Equity in earnings of unconsolidated affiliates	3		—			3
Net earnings (loss)	$	295	$	(25	)	$	270
Assets	$	9,040	$	1,149		$	10,189
Goodwill	2,461		264			2,725

Title Corporate and Other Total
(In millions)
Title premiums $ 1,331
$ —
$ 1,331
Other revenues 602
161
763
Revenues from external customers 1,933
161
2,094
Interest and investment income, including realized gains and losses 29
—
29
Total revenues 1,962
161
2,123
Depreciation and amortization 38
7
45
Interest expense —
11
11
Earnings (loss) from continuing operations, before income taxes and equity in earnings of unconsolidated affiliates 301
(26 ) 275
Income tax expense (benefit) 29
(7 ) 22
Earnings (loss) from continuing operations, before equity in earnings of unconsolidated affiliates 272
(19 ) 253
Equity in earnings of unconsolidated affiliates 1
—
1
Earnings (loss) from continuing operations $ 273
$ (19 ) $ 254
Assets $ 8,540
$ 714
$ 9,254
Goodwill 2,447
317
2,764

As of and for the three months ended June 30, ~~2017:~~2018:



	Title		Corporate and Other			Total
	(In millions)
Title premiums	$	1,331	$	—		$	1,331
Other revenues	600		165			765
Revenues from external customers	1,931		165			2,096
Interest and investment income, including realized gains and losses	27		—			27
Total revenues	1,958		165			2,123
Depreciation and amortization	38		7			45
Interest expense	—		11			11
Earnings (loss) before income taxes and equity in earnings of unconsolidated affiliates	300		(25		)	275
Income tax expense (benefit)	29		(7		)	22
Earnings (loss) before equity in earnings of unconsolidated affiliates	271		(18		)	253
Equity in earnings of unconsolidated affiliates	1		—			1
Net earnings (loss)	$	272	$	(18	)	$	254
Assets	$	8,540	$	714		$	9,254
Goodwill	2,447		317			2,764

Title Corporate and Other Total
(In millions)
Title premiums $ 1,301
$ —
$ 1,301
Other revenues 575
145
720
Revenues from external customers 1,876
145
2,021
Interest and investment income, including realized gains and losses 41
(3 ) 38
Total revenues 1,917
142
2,059
Depreciation and amortization 39
5
44
Interest expense —
13
13
Earnings (loss) from continuing operations, before income taxes and equity in earnings of unconsolidated affiliates 294
(20 ) 274
Income tax expense (benefit) 114
(13 ) 101
Earnings (loss) from continuing operations, before equity in earnings of unconsolidated affiliates 180
(7 ) 173
Equity in earnings of unconsolidated affiliates 2
1
3
Earnings (loss) from continuing operations $ 182
$ (6 ) $ 176
Assets $ 8,516
$ 5,686
$ 14,202
Goodwill 2,383
215
2,598

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As of and for the six months ended June 30, 2019:



	Title		Corporate and Other			Total
	(In millions)
Title premiums	$	2,371	$	—		$	2,371
Other revenues	1,094		105			1,199
Revenues from external customers	3,465		105			3,570
Interest and investment income, including realized gains and losses	290		6			296
Total revenues	3,755		111			3,866
Depreciation and amortization	77		11			88
Interest expense	—		24			24
Earnings (loss) before income taxes and equity in earnings of unconsolidated affiliates	679		(62		)	617
Income tax expense (benefit)	166		(15		)	151
Earnings (loss) before equity in earnings of unconsolidated affiliates	513		(47		)	466
Equity in earnings of unconsolidated affiliates	10		—			10
Net earnings (loss)	$	523	$	(47	)	$	476
Assets	$	9,040	$	1,149		$	10,189
Goodwill	2,461		264			2,725

As of and for the six months ended June 30, 2018:



	Title		Corporate and Other			Total
	(In millions)
Title premiums	$	2,367	$	—		$	2,367
Other revenues	1,116		267			1,383
Revenues from external customers	3,483		267			3,750
Interest and investment income, including realized gains and losses	65		1			66
Total revenues	3,548		268			3,816
Depreciation and amortization	78		14			92
Interest expense	—		22			22
Earnings (loss) before income taxes and equity in earnings of unconsolidated affiliates	463		(61		)	402
Income tax expense (benefit)	69		(16		)	53
Earnings (loss) before equity in earnings of unconsolidated affiliates	394		(45		)	349
Equity in earnings of unconsolidated affiliates	2		1			3
Net earnings (loss)	$	396	$	(44	)	$	352
Assets	$	8,540	$	714		$	9,254
Goodwill	2,447		317			2,764

Title Corporate and Other Total
(In millions)
Title premiums $ 2,367
$ —
$ 2,367
Other revenues 1,118
263
1,381
Revenues from external customers 3,485
263
3,748
Interest and investment income, including realized gains and losses 67
1
68
Total revenues 3,552
264
3,816
Depreciation and amortization 78
14
92
Interest expense —
22
22
Earnings (loss) from continuing operations, before income taxes and equity in earnings of unconsolidated affiliates 464
(62 ) 402
Income tax expense (benefit) 69
(16 ) 53
Earnings (loss) from continuing operations, before equity in earnings of unconsolidated affiliates 395
(46 ) 349
Equity in earnings of unconsolidated affiliates 2
1
3
Earnings (loss) from continuing operations $ 397
$ (45 ) $ 352
Assets $ 8,540
$ 714
$ 9,254
Goodwill 2,447
317
2,764

~~As of and for the six months ended June 30, 2017:~~

Title Corporate and Other Total
(In millions)
Title premiums $ 2,349
$ —
$ 2,349
Other revenues 1,071
220
1,291
Revenues from external customers 3,420
220
3,640
Interest and investment income, including realized gains and losses 67
(5 ) 62
Total revenues 3,487
215
3,702
Depreciation and amortization 77
10
87
Interest expense —
29
29
Earnings (loss) from continuing operations, before income taxes and equity in earnings of unconsolidated affiliates 445
(43 ) 402
Income tax expense (benefit) 192
(22 ) 170
Earnings (loss) from continuing operations, before equity in earnings of unconsolidated affiliates 253
(21 ) 232
Equity in earnings of unconsolidated affiliates 4
—
4
Earnings (loss) from continuing operations $ 257
$ (21 ) $ 236
Assets $ 8,516
$ 5,686
$ 14,202
Goodwill 2,383
215
2,598

The activities in our segments include the following:

•

Title. This segment consists of the operations of our title insurance underwriters and related businesses. This segment provides core title insurance and escrow and other title-related services including trust activities, trustee sales guarantees, and home warranty products. This segment also includes our transaction services business, which includes other title-related services used in the production and management of mortgage loans, including mortgage loans that experience default.

•

Corporate and Other. Thissegment consists of the operations of the parent holding company, our real estate technology subsidiaries and our remaining real estate brokerage businesses. This segment includes the results of operations of Pacific Union International, Inc. ("Pacific Union") through September 24, 2018, the date we closed on the sale of all of our equity interest in, and notes outstanding from, Pacific Union. This segment also includes certain other unallocated corporate overhead expenses and eliminations of revenues and expenses between it and our Title segment.

~~Title.~~ This segment consists of the operations of our title insurance underwriters and related businesses. This segment provides core title insurance and escrow and other title-related services including trust activities, trustee sales guarantees, and home warranty products. This segment also includes our transaction services business, which includes other title-related services used in the production and management of mortgage loans, including mortgage loans that experience default.

~~Corporate and Other.~~ ~~This~~segment consists of the operations of the parent holding company, our various real estate brokerage businesses, and our real estate technology subsidiaries. This segment also includes certain other unallocated corporate overhead expenses and eliminations of revenues and expenses between it and our Title segment, as well as the assets of discontinued operations of Black Knight and FNFV as of June 30, 2017.

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Note I — Supplemental Cash Flow Information

The following supplemental cash flow information is provided with respect to certain cash payment and non-cash investing and financing activities.



	Six months ended June 30,
	2019			2018
Cash paid for:
Interest	$	22		$	18
Income taxes	78			112
Non-cash investing and financing activities:
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		)	—
Change in accrual for unsettled repurchases of formerly outstanding debt instruments	—			(11		)
Lease liabilities recognized in exchange for lease right-of-use assets	15			—
Remeasurement of lease liabilities	42			—

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Six months ended June 30,
2018 2017
Cash paid for:
Interest $ 18
$ 69
Income taxes 112
202
Non-cash investing and financing activities:
Investing activities:

Change in proceeds of sales of investments available for sale receivable in period $ 5
$ 3
Change in purchases of investments available for sale payable in period —
(1 )

Financing activities:
Change in treasury stock purchases payable in period $ —
$ 4
Change in accrual for unsettled debt service payments related to the Notes (4 ) 1
Change in accrual for the equity portion of unsettled repurchases of the Notes (7 ) 1
Debt extinguished through the sale of OneDigital —
151

Note J — Revenue Recognition

On January 1, 2018, we adopted ~~ASC~~Accounting Standard Codification ("ASC") Topic 606 by applying the modified retrospective method. Results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported under the accounting standards in effect for the prior period.

The adoption of ASC Topic 606 did not have an impact on the recognition of our primary sources of revenue, direct and agency title premiums, as those revenue streams are subject to the accounting and reporting requirements under ASC Topic 944. Timing of recognition of substantially all of our remaining revenue was also not impacted and we therefore did not record any cumulative effect adjustment to opening equity.

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~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued~~

Disaggregation of Revenue

Our revenue consists of:



			Three months ended June 30,					Six months ended June 30,
			2019		2018			2019		2018
Revenue Stream	Income Statement Classification	Segment	Total Revenue
Revenue from insurance contracts:			(in millions)
Direct title insurance premiums	Direct title insurance premiums	Title	$	625	$	599		$	1,065	$	1,071
Agency title insurance premiums	Agency title insurance premiums	Title	754		732			1,306		1,296
Home warranty	Escrow, title-related and other fees	Title	46		46			87		91
Total revenue from insurance contracts			1,425		1,377			2,458		2,458
Revenue from contracts with customers:
Escrow fees	Escrow, title-related and other fees	Title	237		235			402		418
Other title-related fees and income	Escrow, title-related and other fees	Title	165		162			301		303
ServiceLink, excluding title premiums, escrow fees, and subservicing fees	Escrow, title-related and other fees	Title	97		104			180		198
Real estate technology	Escrow, title-related and other fees	Corporate and other	26		27			51		52
Real estate brokerage	Escrow, title-related and other fees	Corporate and other	14		134			21		210
Other	Escrow, title-related and other fees	Corporate and other	12		4			33		5
Total revenue from contracts with customers			551		666			988		1,186
Other revenue:
Loan subservicing revenue	Escrow, title-related and other fees	Title	68		53			124		106
Interest and investment income	Interest and investment income	Various	59		43			113		81
Realized gains and losses, net	Realized gains and losses, net	Various	41		(16		)	183		(15		)
Total revenues	Total revenues		$	2,144	$	2,123		3,866		3,816

Three months ended June 30, Six months ended June 30,
2018 2017 2018 2017
Revenue Stream Income Statement Classification Segment Total Revenue
Revenue from insurance contracts: (in millions)
Title insurance premiums Direct title insurance premiums;
Agency title insurance premiums Title $ 1,331
$ 1,301
$ 2,367
$ 2,349
Home warranty Escrow, title-related and other fees Title 46
42
91
83
Total revenue from insurance contracts 1,377
1,343
2,458
2,432
Revenue from contracts with customers:
Escrow fees Escrow, title-related and other fees Title 235
220
418
394
Other title-related fees and income Escrow, title-related and other fees Title 165
162
305
300
Real estate brokerage Escrow, title-related and other fees Corporate and other 134
131
210
188
ServiceLink, excluding title premiums, escrow fees, and subservicing fees Escrow, title-related and other fees Title 103
108
198
214
Real estate technology Escrow, title-related and other fees Corporate and other 27
15
52
31
Other Escrow, title-related and other fees Corporate and other —
—
1
2
Total revenue from contracts with customers 664
636
1,184
1,129
Other revenue:
Loan subservicing revenue Escrow, title-related and other fees Title 53
42
106
79
Interest and investment income Interest and investment income Various 45
33
83
61
Realized gains and losses, net Realized gains and losses, net Various (16 ) 5
(15 ) 1
Total revenues Total revenues 2,123
2,059
3,816
3,702

Our Direct title insurance premiums are recognized as revenue at the time of closing of the underlying transaction as the earnings process is then considered complete. Regulation of title insurance rates varies by state. Premiums are charged to customers based on rates predetermined in coordination with each states' respective Department of Insurance. Cash associated with such revenue is typically collected at closing of the underlying real estate transaction. Premium revenues from agency title operations are recognized when the underlying title order and transaction closing, if applicable, are ~~complete and the agent has been invoiced.~~complete.

Revenues from our home warranty business are generated from contracts with customers to provide warranty for major home appliances. ~~Contracts~~Substantially all of our home warranty contracts are one year in length and revenue is recognized ratably over the term of the contract.

Escrow fees and Other title-related fees and income in our Title segment are closely related to Direct title insurance premiums and are primarily associated with managing the closing of real estate transactions including the processing of funds on behalf of

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the transaction participants, gathering and recording the required closing documents, providing notary and home inspection services, and other real estate or title-related activities. Revenue is primarily recognized upon closing of the underlying real estate transaction or completion of services. Cash associated with such revenue is typically collected at closing.

Revenues from ~~our~~ ServiceLink, ~~subsidiary,~~ excluding its title premiums, escrow fees, and loan subservicing fees primarily include revenues from real estate appraisal services and foreclosure processing and facilitation services. Revenues from real estate appraisal services are recognized when all appraisal work is complete, a final report is issued to the client and the client is billed. Revenues from foreclosure processing and facilitation services are primarily recognized upon completion of the services and when billing to the client is complete.

Real estate brokerage revenues are primarily comprised of commission revenues earned in association with the facilitation of real estate transactions and are recognized upon closing of the sale of the underlying real estate transaction.

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~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued~~

~~Real estate~~ technology revenues are primarily comprised of subscription fees for use of software provided to real estate professionals. Subscriptions are only offered on a month-by-month basis and fees are billed monthly. Revenue is recognized in the month services are provided.

Loan subservicing revenues are generated by certain subsidiaries of ServiceLink and are associated with the servicing of mortgage loans on behalf of its customers. Revenue is recognized when the underlying work is performed and billed. Loan subservicing revenues are subject to the recognition requirements of ASC Topic 860.

Interest and investment income consists primarily of interest payments received on fixed maturity security holdings and dividends received on equity and preferred security holdings.

We do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less, primarily related to revenue from our home warranty business, and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed.

Contract Balances

The following table provides information about trade receivables and deferred revenue:



	June 30, 2019		December 31, 2018
	(In millions)
Trade receivables	$	337	$	284
Deferred revenue (contract liabilities)	112		105

June 30, 2018 December 31, 2017
(In millions)
Trade receivables $ 314
$ 292
Deferred revenue (contract liabilities) 108
107

Deferred revenue is recorded primarily for our home warranty contracts. Revenues from home warranty products are recognized over the life of the policy, which is primarily one year. The unrecognized portion is recorded as deferred revenue in accounts payable and other accrued liabilities in the Condensed Consolidated Balance Sheets. During the three and six months ended June 30, ~~2018,~~2019, we recognized ~~$45~~$44 million and $78 million of revenue, respectively, which was included in deferred revenue at the beginning of the period.

Note ~~K — Discontinued Operations~~K. Leases

~~Black Knight~~

AsWe adopted ASC Topic 842 on January 1, 2019 using a ~~result~~modified retrospective approach. Prior year periods continue to be reported under ASC Topic 840. See Note A Basis of Financial Statements for further discussion of the ~~BK Distribution,~~current period effects of adoption of ASU No. 2016-02 Leases (Topic 842).

Right-of-use assets and lease liabilities related to operating leases under ASC Topic 842 are recorded when we ~~have reclassified~~are party to a contract which conveys the ~~financial results of Black Knight to discontinued operations in our Condensed Consolidated Statements of Earnings~~right for the ~~three~~Company to control an asset for a specified period of time. Substantially all of our operating lease arrangements relate to rented office space and ~~six-months ended June 30, 2017.~~real estate for our title operations. We ~~retained no ownership in Black Knight. Subsequent to the BK Distribution, Black Knight is considered a related party to FNF.~~

~~We have various agreements with Black Knight to provide technology, data and analytics services, as well as corporate shared services and information technology. We~~generally are ~~also~~not a party to ~~certain other agreements~~any material contracts considered finance leases. Right-of-use assets and lease liabilities under ~~which we incur other expenses or receive revenues from Black Knight. We expect to continue utilizing Black Knight to provide technology~~ASC Topic 842 are recorded as Lease assets and ~~data and analytics services for~~Lease liabilities, respectively, on the ~~foreseeable future. The cash inflows and outflows from and to Black Knight~~Condensed Consolidated Balance Sheet as ~~well as revenues and expenses included in continuing operations in the six months ended~~of June 30, ~~2018 which were previously eliminated~~2019.

Our operating leases range in term from one to ten years. As of June 30, 2019, the weighted-average remaining lease term of our ~~condensed consolidated financial statements as intra-entity transactions are~~operating leases was 4.2 years.

Our lease agreements do not contain material ~~to our results of operations.~~variable lease payments, buyout options, residual value guarantees or restrictive covenants.

2221

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FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued

~~A summary~~Most of our leases include one or more options to renew, with renewal terms that can extend the lease term by varying amounts. The exercise of lease renewal options is at our sole discretion. We do not include options to renew in our measurement of right-of-use assets and lease liabilities as they are not considered reasonably assured of exercise.

Our operating lease liability is determined by discounting future lease payments using a discount rate based on the Company's incremental borrowing rate for similar collateralized borrowing. The discount rate is calculated as an average of the ~~operations~~current yield on our unsecured notes payable and 140 basis points in excess of ~~Black Knight~~the current five year LIBOR swap rate. As of June 30, 2019 the weighted-average discount rate used to determine our operating lease liability was 4.37%.

We do not separate lease components from non-lease components for any of our right-of-use assets.

Our lease costs are included in ~~discontinued operations is shown below~~Other operating expenses on the Condensed Consolidated Statements of Income and were $36 million and $73 million for the three and six-month periods ended June 30, 2019, respectively. We do not have any material short term lease costs, variable lease costs, or sublease income.

Future payments under operating lease arrangements accounted for under ASC Topic 842 as of June 30, 2019 are as follows (in 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

Three months ended June 30, Six months ended June 30,

2017 2017
(Unaudited)
Revenues:
Escrow, title-related and other fees $ 246
$ 494
Realized gains and losses, net (17 ) (19 )
Total revenues 229
475
Expenses:
Personnel costs 97
197
Other operating expenses 51
96
Depreciation and amortization 50
103
Interest expense 13
29
Total expenses 211
425
Earnings from discontinued operations before income taxes 18
50
Income tax expense 12
22
Net earnings from discontinued operations 6
28
Less: Net earnings attributable to non-controlling interests 7
19
Net (loss) earnings attributable to Fidelity National Financial, Inc. common shareholders $ (1 ) $ 9

Cash flow from discontinued operations data:
Net cash provided by operations $ 74
$ 123
Net cash used in investing activities (15 ) (31 )

~~FNFV~~

~~As a result of the FNFV Split-Off we have reclassified the financial results of FNFV Group to discontinued operations~~Future payments under operating lease arrangements accounted for the three and six months ended June 30, 2017 in our Condensed Consolidated Statements of Earnings. Subsequent to the FNFV Split-Off, Cannae is considered a related party to FNF. The cash inflows and outflows from and to Cannae as well as revenues and expenses included in continuing operations in the six months ended June 30, 2017 which were previously eliminated in our condensed consolidated financial statements as intra-entity transactions, are not material to our results of operations.

In conjunction with the FNFV Split-Off, FNTIC, Chicago Title, and Commonwealth Title contributed an aggregate of $100 million to Cannae in exchange for 5,706,134 shares of Cannae common stock. As of June 30, 2018, we own approximately 7.9% of Cannae's outstanding common equity. In addition, we issued to Cannae a revolver note (the "Cannae Revolver") in the aggregate principal amount of up to $100 million, which accrues interest at LIBOR plus 450 basis points and matures on the five-year anniversary of the date of the Cannae Revolver. The maturity date is automatically extended for additional five-year terms unless notice of non-renewal is otherwise provided by either FNF or Cannae, in their sole discretion. As of June 30, 2018, there is no outstanding balance under ~~the Cannae Revolver.~~

~~In connection with the FNFV Split-Off, the following material agreements were entered into by and between the Company and Cannae (the “Split-Off Agreements”):~~

•~~a Reorganization Agreement, dated~~ASC Topic 840 as of November 17, 2017, by and between the Company and Cannae, which provides for, among other things, the principal corporate transactions required to effect the Split-Off, certain conditions to the Split-Off and provisions governing the relationship between the Company and Cannae with respect to and resulting from the Split-Off;

•~~a Tax Matters Agreement, dated~~December 31, 2018 are as of November 17, 2017, by and between the Company and Cannae, which governs the Company’s and Cannae’s respective rights, responsibilities and obligations with respect to taxes and tax benefits, the filing of tax returns, the control of audits and other tax matters; and

•a Voting Agreement, dated as of November 17, 2017, by and between the Company and Cannae, pursuant to which the Company agrees to appear or cause all shares of Cannae common stock that the Company or its subsidiaries, as applicable, own after the Split-Off to be counted as present at any meeting of the stockholders of Cannae for the purpose of establishing a quorum, and agrees to vote all of such shares of Cannae common stock (or cause them to be voted) in

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~~FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued~~

~~the same manner as, and in the same proportion to, all shares voted by holders of Cannae common stock (other than the Company and its subsidiaries).~~

~~A summary of the operations of FNFV included in discontinued operations is shown below~~follows (in millions):



2019	$	145
2020	121
2021	93
2022	68
2023	41
Thereafter	28
Total future minimum operating lease payments	$	496

Three months ended June 30, Six months ended June 30,

2017 2017
(Unaudited)
Revenues:
Escrow, title-related and other fees $ 42
$ 91
Restaurant revenue 288
561
Interest and investment income 1
2
Realized gains and losses, net 268
273
Total revenues 599
927
Expenses:
Personnel costs 65
111
Other operating expenses 29
54
Cost of restaurant revenue 249
485
Depreciation and amortization 16
32
Interest expense 3
7
Total expenses 362
689
Earnings from discontinued operations before income taxes 237
238
Income tax expense 113
111
Earnings from continuing operations before equity in losses of unconsolidated affiliates 124
127
Equity in losses of unconsolidated affiliates (4 ) (8 )
Net earnings from discontinued operations 120
119
Less: Net loss attributable to non-controlling interests (1 ) (3 )
Net earnings attributable to Fidelity National Financial, Inc. common shareholders $ 121
$ 122

Cash flow from discontinued operations data:
Net cash used in operations $ (113 ) $ (98 )
Net cash provided by investing activities 125
98
See Note I. Supplemental Cash Flow Information for certain information on noncash investing and financing activities related to our operating lease arrangements.

~~Reconciliation to Consolidated Financial Statements~~

~~A reconciliation of the net earnings of Black Knight and FNFV to the Statement of Earnings is shown below:~~

Three months ended June 30, Six months ended June 30,

2017 2017
(Unaudited)
Earnings from discontinued operations attributable to Black Knight $ 6
$ 28
Earnings from discontinued operations attributable to FNFV 120
119
Net earnings from discontinued operations, net of tax $ 126
$ 147

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The statements contained in this Quarterly Report on Form 10-Q that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding our expectations, hopes, intentions or strategies regarding the future. All forward-looking statements included in this document are based on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements. It is important to note that our actual results could vary materially from those forward-looking statements contained herein due to many factors, including, but not limited to: changes in general economic,

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business and political conditions, including changes in the financial markets; continued weakness or adverse changes in the level of real estate activity, which may be caused by, among other things, high or increasing interest rates, a limited supply of mortgage funding or a weak U.S. economy; our potential inability to find suitable acquisition candidates, acquisitions in lines of business that will not necessarily be limited to our traditional areas of focus, or difficulties in integrating acquisitions; our dependence on distributions from our title insurance underwriters as our main source of cash flow; significant competition that our operating subsidiaries face; compliance with extensive government regulation of our operating subsidiaries; the risk that ~~Stewart stockholders may not adopt the Merger Agreement; the risk that~~ the necessary regulatory approvals for the Stewart Merger may not be obtained or may be obtained subject to conditions that are not ~~anticipated;~~anticipated and which may require the Company to pay Stewart a reverse termination fee of $50 million; risks that any of the closing conditions to the proposed Stewart Merger may not be satisfied in a timely manner; the risk that our and Stewart's businesses will not be integrated successfully, that such integration may be more difficult, time-consuming or more costly than expected or that the expected benefits of the Stewart Merger will not be realized; and other risks detailed in the “Statement Regarding Forward-Looking Information,” “Risk Factors” and other sections of our Annual Report on Form 10-K (our "Annual Report") for the year ended December 31, ~~2017~~2018 and other filings with the SEC.

The following discussion should be read in conjunction with our Annual ~~Report for the year ended December 31, 2017.~~Report.

Overview

For a description of our business, including descriptions of segments and recent business developments, see the discussion under Basis of Financial Statements in Note A to the Condensed Consolidated Financial Statements included in Item 1 of Part I of this Report, which is incorporated by reference into this Part I, Item 2.

Business Trends and Conditions

Title

Our Title segment revenue is closely related to the level of real estate activity which includes sales, mortgage financing and mortgage refinancing. Declines in the level of real estate activity or the average price of real estate sales will adversely affect our title insurance revenues.

We have found that residential real estate activity is generally dependent on the following factors:

mortgage interest rates;

mortgage funding supply;

housing inventory and home prices; and

the strength of the United States economy, including employment levels.

As of ~~July 6, 2018,~~June 18, 2019, the Mortgage Bankers Association ("MBA") estimated (actual for fiscal year ~~2017)~~2018) the size of the U.S. mortgage originations market as shown in the following table for ~~2017~~2018 - ~~2020~~2021 in its "Mortgage Finance Forecast" (in trillions):


	2020		2019		2018		2017		2021		2020		2019		2018
Purchase transactions	$	1.3	$	1.2	$	1.1	$	1.1	$	1.3	$	1.3	$	1.3	$	1.2
Refinance transactions	0.4		0.4		0.5		0.6		0.4		0.4		0.4		0.4
Total U.S. mortgage originations forecast	$	1.7	$	1.6	$	1.6	$	1.7	$	1.7	$	1.7	$	1.7	$	1.6

In 2017, total originations were reflective of a generally improving residential real estate market driven by increasing home prices and historically low mortgage interest rates. Mortgage interest rates increased slightly in 2017 from 2016, but remained low compared to historical rates. In 2018, average interest rates ~~and have continued~~on 30-year, fixed-rate mortgages in the U.S. rose from approximately 4.0% to ~~rise~~4.9% through October, representing an increase of 22%, before retreating to 4.55% in the ~~first half~~last week of ~~2018. Refinance~~December according to mortgage buyer Freddie Mac. As a result of the overall upward trend in rates, refinance transactions decreased in both 2017 and ~~through the first half of~~ 2018 from the historically high levels experienced in ~~recent years through 2016.~~preceding years. Existing home sales increased through 2017 and began leveling out ~~and decreasing through~~in the first half, and decreasing in the second half, of 2018. ~~Over~~Coupled with stagnant levels of new home construction over the same time period, ~~there~~the result has been a ~~consistent~~ decline in total housing inventory and increase in average home ~~prices.~~prices, albeit with decreasing magnitude toward the end of 2018. Through the first half of 2019, mortgage interest rates continued to decline to an average of 3.80% in June 2019.

~~In 2018 and beyond,~~

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The combination of reduced housing inventory, increasing mortgage interest rates ~~driven by gradual increases~~(through 2018) and increasing home prices led the MBA to lower mortgage origination forecasts for 2019 and beyond during the second half of 2018. Market volatility and the shift in mortgage interest rates in late 2018 and through the first half of 2019 have created uncertainty in forecasts of future mortgage interest rates and originations. As a result, the U.S. Federal Reserve has held the target federal funds rate ~~are expected~~steady in 2019 and indicated it may reduce the target rate if economic conditions deteriorate. After accounting for the decrease in the first half of 2019, the MBA expects mortgage interest rates to ~~adversely~~remain flat in 2019. The decrease in market interest rates through the first half of 2019 has begun to impact ~~mortgage originations. In a rising interest rate environment,~~the volume of residential refinance transactions ~~are expected to continue to decline.~~in the second quarter of 2019. See further discussion in the following Results of Operations section. The MBA predicts overall mortgage originations in ~~2018~~2019 through ~~2020~~2021 will remain relatively flat compared to the ~~2017~~2018 period ~~driven by~~and rates will return to a decrease in refinance transactions, offset by an increase in purchase transactions. Purchase transactions involve the issuance of both a lender’s policy and an owner’s policy, resulting in higher title premiums, whereas refinance transactions only require a lender’s policy, resulting in lower title premiums.gradual upward trend.

~~While projected increases in mortgage interest rates present a potential headwind for mortgage originations, other~~Other economic indicators used to measure the health of the ~~United States~~U.S. economy, including the unemployment rate and consumer confidence, have ~~improved in recent years.~~continued to indicate the U.S. economy remains on strong footing. According to the ~~United States~~U.S. Department of Labor's Bureau of Labor, the unemployment rate ~~has dropped from 7.4% in 2013 to 4.0%~~was at a historically low 3.7% in June ~~2018.~~2019. Additionally, the Conference Board's monthly Consumer Confidence Index has remained at historically high levels through ~~2018.~~the second quarter of 2019, despite a slight drop from late 2018 highs. Toward the end of the fiscal year of 2018 and into 2019, there has been increased global economic uncertainty and stock market volatility. Such market uncertainty could ultimately impact U.S. real estate markets if they continue to worsen. We believe ~~that improvements~~continued strong readings in ~~both of these~~domestic U.S. economic indicators ~~among~~

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~~other indicators which support a generally strong United States economy,~~ present potential tailwinds for mortgage originations, ~~and support recent home price trends.~~despite growing risks from global economic uncertainties.

We cannot be certain how ~~if at all,~~ the ~~positive~~ effects ~~of a change in mix of purchase to refinance transactions, increasing home prices, and~~ of a generally strong ~~United States~~U.S. economy, ~~and the negative effects of projected short-term decreases in overall originations and increases in~~flat mortgage interest rates and global economic uncertainty will impact mortgage originations and our future results of ~~operations.~~operations from our residential business. We continually monitor mortgage origination trends and believe that, based on our ability to produce industry leading operating margins through all economic cycles, we are well positioned to adjust our operations for adverse changes in real estate activity.

Because commercial real estate transactions tend to be generally driven by supply and demand for commercial space and occupancy rates in a particular area rather than by interest rate fluctuations, we believe that our commercial real estate title insurance business is less dependent on the industry cycles discussed above than our residential real estate title business. Commercial real estate transaction volume is also often linked to the availability of financing. ~~Over~~Factors including U.S. tax reform and a shift in U.S. monetary policy have had, or are expected to have, varying effects on availability of financing in the ~~last couple~~U.S. Lower corporate and individual tax rates and corporate tax-deductibility of capital expenditures have provided increased capacity and incentive for investments in commercial real estate. Conversely, gradual increases in the Fed Funds Rate through the end of 2018 and the shift in late 2017 by the U.S. Federal Reserve to unwind its balance sheet are generally expected to adversely impact availability of financing by decreasing the overall money supply. In recent years, we have continued to experience strong demand in commercial real estate ~~markets. In~~markets and from 2015 through ~~2017, the volume and fee-per-file of our commercial transactions were at historical highs. Through~~ the first half of ~~2018,~~2019, we ~~have continued to see strong demand for~~experienced historically high volumes and fee-per-file in our commercial ~~transactions.~~business.

Seasonality. Historically, real estate transactions have produced seasonal revenue fluctuations in the real estate industry. The first calendar quarter is typically the weakest quarter in terms of revenue due to the generally low volume of home sales during January and February. The second and third calendar quarters are typically the strongest quarters in terms of revenue, primarily due to a higher volume of residential transactions in the spring and summer months. The fourth quarter is typically also strong due to the desire of commercial entities to complete transactions by year-end. We have noted short-term fluctuations through recent years in resale and refinance transactions as a result of changes in interest rates.

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Results of Operations


Consolidated Results of Operations
Net Earnings. The following table presents certain financial data for the periods indicated:	Net Earnings. The following table presents certain financial data for the periods indicated:										Net Earnings. The following table presents certain financial data for the periods indicated:
	Three months ended June 30,					Six months ended June 30,					Three months ended June 30,					Six months ended June 30,
	2018			2017		2018			2017		2019		2018			2019		2018
	(In millions)										(In millions)
Revenues:
Direct title insurance premiums	$	599		$	575	1,071			1,040		$	625	$	599		1,065		1,071
Agency title insurance premiums	732			726		1,296			1,309		754		732			1,306		1,296
Escrow, title-related and other fees	763			720		1,381			1,291		665		765			1,199		1,383
Interest and investment income	45			33		83			61		59		43			113		81
Realized gains and losses, net	(16		)	5		(15		)	1		41		(16		)	183		(15		)
Total revenues	2,123			2,059		3,816			3,702		2,144		2,123			3,866		3,816
Expenses:
Personnel costs	665			626		1,272			1,195		685		665			1,277		1,272
Agent commissions	561			558		992			1,004		579		561			1,000		992
Other operating expenses	506			479		929			868		409		506			753		929
Depreciation and amortization	45			44		92			87		44		45			88		92
Provision for title claim losses	60			65		107			117		62		60			107		107
Interest expense	11			13		22			29		12		11			24		22
Total expenses	1,848			1,785		3,414			3,300		1,791		1,848			3,249		3,414
Earnings from continuing operations before income taxes and equity in earnings of unconsolidated affiliates	275			274		402			402
Earnings before income taxes and equity in earnings of unconsolidated affiliates											353		275			617		402
Income tax expense	22			101		53			170		86		22			151		53
Equity in earnings of unconsolidated affiliates	1			3		3			4		3		1			10		3
Net earnings from continuing operations	$	254		$	176	$	352		$	236
Net earnings											$	270	$	254		$	476	$	352

Revenues.

Total revenues increased by $6421 million in the three months ended June 30, ~~2018~~2019 and increased ~~by $114~~$50 million in the six months ended June 30, ~~2018,~~2019 compared to the corresponding periods in ~~2017.~~

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2018.

Net earnings ~~from continuing operations~~ increased by ~~$78~~$16 million in the three months ended June 30, ~~2018~~2019 and increased ~~by $116~~$124 million in the six months ended June 30, ~~2018,~~2019 compared to the corresponding periods in ~~2017.~~2018.

The change in revenue and net earnings from our reportable segments is discussed in further detail at the segment level below.

Expenses.

Our operating expenses consist primarily of Personnel costs; Other operating expenses, which in our title business are incurred as orders are received and processed; and Agent commissions, which are incurred as title agency revenue is recognized. Title insurance premiums, escrow and title-related fees are generally recognized as income at the time the underlying transaction closes or other service is provided. Direct title operations revenue often lags approximately 45-60 days behind expenses and therefore gross margins may fluctuate. The changes in the market environment, mix of business between direct and agency operations and the contributions from our various business units have historically impacted margins and net earnings. We have implemented programs and have taken necessary actions to maintain expense levels consistent with revenue streams. However, a short-term lag exists in reducing controllable fixed costs and certain fixed costs are incurred regardless of revenue levels.

Personnel costs include base salaries, commissions, benefits, stock-based compensation and bonuses paid to employees, and are one of our most significant operating expenses.

Agent commissions represent the portion of premiums retained by our third-party agents pursuant to the terms of their respective agency contracts.

Other operating expenses consist primarily of facilities expenses, title plant maintenance, premium taxes (which insurance underwriters are required to pay on title premiums in lieu of franchise and other state taxes), appraisal fees and other cost of sales

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on ServiceLink product offerings and other title-related products, postage and courier services, computer services, professional services, travel expenses, general insurance, and bad debt expense on our trade and notes receivable.

The Provision for title claim losses includes an estimate of anticipated title and title-related claims, and escrow losses.

The change in expenses attributable to our reportable segments is discussed in further detail at the segment level below.

Income tax expense was ~~$22~~$86 million and ~~$101~~$22 million in the three-month periods ended June 30, ~~2018~~2019 and ~~2017,~~2018, respectively, and ~~$53~~$151 million and ~~$170~~$53 million in the six-month periods ended June 30, ~~2018~~2019 and ~~2017,~~2018, respectively. Income tax expense as a percentage of earnings before income taxes was ~~8.0%~~24% and ~~36.9% for~~8% in the three-month periods ended June 30, ~~2018~~2019 and ~~2017,~~2018, respectively, and ~~13.2%~~24% and ~~42.3% for~~13% in the ~~six-month~~six- month periods ended June 30, 2019 and 2018, ~~and 2017,~~ respectively. ~~Income~~The increase in income tax expense as a percentage of earnings before ~~income~~ taxes ~~fluctuates depending on our estimate of ultimate income tax liability and changes~~ in the characteristics of net earnings, such as the weighting of operating income versus investment income. On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Reform Act”). Among other provisions, the Tax Reform Act reduced the Federal statutory corporate income tax rate from 35% to 21% and limited or eliminated certain deductions. The decrease in income tax as a percentage of earnings before income taxes2019 periods from the ~~three-month period ended June 30, 2017 to the~~ comparable periods in 2018 ~~period~~ was primarily ~~driven by the Tax Reform Act as well as~~attributable to a change in tax estimate ~~regarding~~in the three months ended June 30, 2018 relating to the timing of payments for, and tax rate applicable to, our tax liability resulting from the decrease in ~~our~~ statutory premium ~~reserves~~reserve associated with the redomestication of certain of our title insurance underwriters in 2017. The decrease in the six-month period was also attributable to increased tax expense of $21 million in the 2017 period resulting from a change in judgment of the tax deductibility of legal settlements finalized in the period.underwriters.

Equity in earnings of unconsolidated affiliates was $1 million and $3 million for the three-month periods ended June 30, 2018 and 2017, respectively, and $3 million and $4 million for the six-month periods ended June 30, 2018 and 2017, respectively. The equity in earnings in 2018 and 2017 are attributable to various individually immaterial unconsolidated affiliates.

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Title

The following table presents the results from operations of our Title segment:



	Three months ended June 30,						Six months ended June 30,
	2019		2018				2019		2018
	(In millions)
Revenues:
Direct title insurance premiums	$	625	$	599			$	1,065	$	1,071
Agency title insurance premiums	754		732				1,306		1,296
Escrow, title-related and other fees	613		600				1,094		1,116
Interest and investment income	54		43				102		80
Realized gains and losses, net	46		(16		)		188		(15		)
Total revenues	2,092		1,958				3,755		3,548
Expenses:
Personnel costs	653		633				1,204		1,212
Agent commissions	579		561				1,000		992
Other operating expenses	373		366				688		696
Depreciation and amortization	38		38				77		78
Provision for title claim losses	62		60				107		107
Total expenses	1,705		1,658				3,076		3,085
Earnings from continuing operations, before income taxes and equity in earnings of unconsolidated affiliates	$	387	$	300			$	679	$	463
Orders opened by direct title operations (in thousands)	544		505				982		983
Orders closed by direct title operations (in thousands)	359		362				622		675
Fee per file	$	2,677	$	2,579		��	$	2,630	$	2,470

Three months ended June 30, Six months ended June 30,
2018 2017 2018 2017
(In millions)
Revenues:
Direct title insurance premiums $ 599
$ 575
$ 1,071
$ 1,040
Agency title insurance premiums 732
726
1,296
1,309
Escrow, title-related and other fees 602
575
1,118
1,071
Interest and investment income 45
33
82
61
Realized gains and losses, net (16 ) 8
(15 ) 6
Total revenues 1,962
1,917
3,552
3,487
Expenses:
Personnel costs 635
602
1,214
1,150
Agent commissions 561
558
992
1,004
Other operating expenses 367
359
697
694
Depreciation and amortization 38
39
78
77
Provision for title claim losses 60
65
107
117
Total expenses 1,661
1,623
3,088
3,042
Earnings from continuing operations, before income taxes and equity in earnings of unconsolidated affiliates $ 301
$ 294
$ 464
$ 445
Orders opened by direct title operations (in thousands) 505
524
983
996
Orders closed by direct title operations (in thousands) 362
370
675
704
Fee per file $ 2,579
$ 2,428
$ 2,470
$ 2,295

Total revenues for the Title segment increased by $45134 million, or 2%7%, in the three months ended June 30, ~~2018~~2019 and increased by ~~$65~~$207 million, or 2%6%, in the six months ended June 30, ~~2018,~~2019 from the corresponding periods in ~~2017.~~2018.

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The following table presents the percentages of title insurance premiums generated by our direct and agency operations:


	Three months ended June 30,								Six months ended June 30,								Three months ended June 30,								Six months ended June 30,
			% of				% of				% of				% of				% of				% of				% of				% of
	2018		Total		2017		Total		2018		Total		2017		Total		2019		Total		2018		Total		2019		Total		2018		Total
	(Dollars in millions)																(Dollars in millions)
Title premiums from direct operations	$	599	45	%	$	575	44	%	$	1,071	45	%	$	1,040	44	%	$	625	45	%	$	599	45	%	$	1,065	45	%	$	1,071	45	%
Title premiums from agency operations	732		55		726		56		1,296		55		1,309		56		754		55		732		55		1,306		55		1,296		55
Total title premiums	$	1,331	100	%	$	1,301	100	%	$	2,367	100	%	$	2,349	100	%	$	1,379	100	%	$	1,331	100	%	$	2,371	100	%	$	2,367	100	%

Title premiums increased by 2%4% in the three months ended June 30, ~~2018~~2019 as compared to the corresponding period in ~~2017.~~2018. The increase is comprised of an increase in Title premiums from direct operations of ~~$24~~$26 million, or 4%, and an increase in Title premiums from agency operations of $6$22 million, or ~~1%, in the three months ended June 30, 2018.~~3%.

Title premiums increased by less than 1% in the six months ended June 30, ~~2018~~2019 as compared to the corresponding period in ~~2017.~~2018. The increase is comprised of an increase in Title premiums from ~~direct~~agency operations of ~~$31~~$10 million, or 3%1%, partially offset by a decrease in Title premiums from ~~agency~~direct operations of ~~$13~~$6 million, or 1%~~, in the six months ended June 30, 2018.~~

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The following table presents the percentages of opened and closed title insurance orders generated by purchase and refinance transactions by our direct operations:


	Three months ended June 30,				Six months ended June 30,				Three months ended June 30,				Six months ended June 30,
	2018		2017		2018		2017		2019		2018		2019		2018
Opened title insurance orders from purchase transactions (1)	71.0	%	65.9	%	68.5	%	64.9	%	61	%	71	%	63	%	69	%
Opened title insurance orders from refinance transactions (1)	29.0		34.1		31.5		35.1		39		29		37		31
	100.0	%	100.0	%	100.0	%	100.0	%	100	%	100	%	100	%	100	%

Closed title insurance orders from purchase transactions (1)	70.8	%	67.2	%	66.8	%	62.9	%	65	%	71	%	65	%	67	%
Closed title insurance orders from refinance transactions (1)	29.2		32.8		33.2		37.1		35		29		35		33
	100.0	%	100.0	%	100.0	%	100.0	%	100	%	100	%	100	%	100	%

(1) Percentages exclude consideration of an immaterial number of non-purchase and non-refinance orders.

Title premiums from direct operations increased in the three months ended June 30, 2019 and decreased in the six months ended June 30, ~~2018~~2019, as compared to the corresponding ~~period~~periods in ~~2017.~~2018. The increase in the three-month period is primarily attributable to an increase in the fee per file, ~~driven by a favorable change in the mix of closed orders from purchase and refinance transactions,~~ partially offset by a decrease in closed order ~~volume.~~ volumes. The decrease in the six-month period is primarily attributable to a decrease in closed order volumes, partially offset by an increase in the fee per file.

We experienced ~~an increase~~a decrease in closed title insurance order volumes from purchase transactions ~~which was more than offset by a decrease~~and an increase in closed title insurance order volumes from refinance transactions in the three and six months ended June 30, ~~2018~~2019 as compared to the corresponding periods in ~~2017.~~2018. Total closed order volumes were 359,000 in the three months ended June 30, 2019 compared to 362,000 in the three months ended June 30, 2018 ~~compared with 370,000~~and 622,000 in the ~~three~~six months ended June 30, ~~2017 and~~2019 compared to 675,000 in the six months ended June 30, ~~2018 compared with 704,000~~2018. This represented an overall decrease of 1% and 8% in the three and six months ended June 30, 2019 from the corresponding periods in 2018.

Total open title insurance order volumes increased in the three months ended June 30, 2019 and decreased slightly in the six months ended June 30, ~~2017. This represented an overall~~2019 as compared to the corresponding periods in 2018. The increase in the three- month period was primarily attributable to increased open title orders from refinance transactions, partially offset by a decrease ~~of 2% and 4 %, respectively. Opened~~in open title ~~order volumes trended consistently with closed order volumes in both periods.~~orders from purchase transactions.

The average fee per file in our direct operations was $2,677 and $2,630 in the three and six months ended June 30, 2019, respectively, compared to $2,579 and $2,470 in the three and six months ended June 30, 2018, ~~respectively, compared to $2,428 and $2,295 in the three and six months ended June 30, 2017,~~ respectively. The increase in average fee per file reflects ~~the~~a stronger commercial market and a favorable ~~change~~increase in ~~mix~~average property prices of ~~closed orders from purchase and~~underlying transactions, partially offset by an increased proportion of refinance transactions. The fee per file tends to change as the mix of refinance and purchase transactions changes, because purchase transactions involve the issuance of both a lender’s policy and an owner’s policy, resulting in higher fees, whereas refinance transactions only require a lender’s policy, resulting in lower fees.

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Title premiums from agency operations increased $6$22 million, or 1%3%, in the three months ended June 30, ~~2018~~2019 and ~~decreased $13~~increased $10 million, or 1%, in the six months ended June 30, ~~2018 as compared to~~2019 from the corresponding ~~period~~periods in ~~2017.~~2018. The increase was directionally consistent with the trend in title premiums from direct operations and is further impacted by changes in underlying real estate activity in the geographic regions in which the independent agents operate.

Escrow, title-related and other fees increased by ~~$27~~$13 million, or 5%2%, in the three months ended June 30, ~~2018~~2019 and ~~increased by $47~~decreased $22 million, or 4%2%, in the six months ended June 30, ~~2018~~2019 from the corresponding periods in ~~2017.~~2018. Escrow fees, which are more closely related to our direct operations, increased by ~~$14~~$3 million, or 6%1%, in the three months ended June 30, ~~2018~~2019 and ~~increased~~decreased by ~~$24~~$16 million or ~~6%,~~4% in the six months ended June 30, ~~2018~~2019 as compared to the corresponding periods in ~~2017.~~2018. The increase ~~is representative~~in the three-month period and decrease in the six-month period are directionally consistent with the change in title premiums from direct operations, albeit to a lesser magnitude resulting from a higher proportion of commercial transactions in the ~~favorable increase in closed title insurance orders from purchase transactions previously discussed.~~2019 periods. Other fees in the Title segment, excluding escrow fees, increased ~~$13~~by $11 million or ~~4%,~~3% in the three months ended June 30, ~~2018~~2019 and ~~increased $23~~decreased by $7 million, or 3%1%, in the six months ended June 30, ~~2018, from~~2019 compared to the corresponding periods in ~~2017. This increase is primarily attributable to revenue growth associated with our home warranty businesses, increased subservicing revenue at ServiceLink, and acquisitions, partially offset~~2018. The changes in Other fees were driven by ~~decreases in revenue at FNF Canada and at certain other ServiceLink subsidiaries.~~various individually immaterial items.

Interest and investment income levels are primarily a function of securities markets, interest rates and the amount of cash available for investment. Interest and investment income increased by ~~$12~~$11 million in the three months ended June 30, ~~2018~~2019 and increased ~~$21~~$22 million in the six months ended June ~~30, 2018,~~20, 2019 compared to the corresponding periods in ~~2017.~~2018. The increase was primarily driven by the impact of increased market interest rates ~~earned in our~~on the cash and investment portfolio and float income on tax-deferred property exchange ~~business, interest earned on short term investments, and dividends from other long term investments, partially offset by a decrease~~businesses as well as an increase in ~~our~~average fixed maturity holdings period over period.

Realized gains and losses, net, ~~decreased $24~~increased $62 million in the three months ended June 30, ~~2018~~2019 and ~~decreased $21~~increased $203 million in the six months ended June 30, ~~2018~~2019 from the comparable periods in ~~2017.~~2018. The ~~decrease was~~increase is primarily attributable to ~~the inclusion of~~increased non-cash valuation ~~losses~~gains on our equity and preferred security ~~holdings in the 2018 periods associated with the adoption of ASU 2016-01 on January 1, 2018.~~holdings.

Personnel costs include base salaries, commissions, benefits, stock-based compensation and bonuses paid to employees, and are one of our most significant operating expenses. Personnel costs increased $3320 million, or 5%3%, in the three months ended June 30,

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~~2018~~ 2019 and ~~increased $64~~decreased $8 million, or 6%1%, in the six months ended June 30, ~~2018,~~2019 compared to the corresponding periods in ~~2017.~~2018. The increase in the ~~2018~~three-month period is primarily ~~due~~attributable to ~~higher commissions and bonuses associated with~~ increased headcount driven by the increase in open title order volumes in the 2019 period. The decrease in the six-month period is primarily attributable to ~~process increased closed~~lower average headcount resulting from the decrease in title order ~~counts from purchase transactions and increased expense associated with acquisitions.~~volumes year over year. Personnel costs as a percentage of total revenues from direct title premiums and escrow, title-related and other fees were 53% ~~and 52%~~ for the three-month periods ended June 30, ~~2018~~2019 and ~~2017,~~2018, respectively, and 56% and 55% ~~and 54% for~~in the ~~six-month periods~~six month-period ended June 30, 2019 and 2018, ~~and 2017,~~ respectively. The increase in personnel cost as a percentage of total revenues from direct title premiums and escrow, title-related and other fees was primarily driven by the change in mix of title premiums from purchase and refinance transactions and to increased cost of employee group insurance claims. Average employee count in the Title segment was ~~23,344~~23,255and ~~23,146~~23,344 in the three-month periods ended June 30, ~~2018~~2019 and ~~2017,~~2018, respectively, and ~~23,177and 22,858~~22,712 and 23,177 in the six-month periods ended June 30, 2019 and 2018, ~~and 2017,~~ respectively.

Other operating expenses increased by $8$7 million, or 2%, in the three months ended June 30, ~~2018~~2019 and ~~increased by $3~~decreased $8 million, or ~~less than~~ 1%, in the six months ended June 30, ~~2018,~~2019 from the corresponding periods in ~~2017.~~2018. Other operating expenses as a percentage of total revenue excluding agency premiums, interest and investment income, and realized gains and losses ~~decreased 1%~~were 30% and 31% in the three months ended June 30, 2019 and 2018, respectively, and 32% in the six months ended June 30, 2019 and 2018, ~~from the comparable periods in 2017.~~respectively.

Agent commissions represent the portion of premiums retained by agents pursuant to the terms of their respective agency contracts. Agent commissions and the resulting percentage of agent premiums that we retain vary according to regional differences in real estate closing practices and state regulations.

The following table illustrates the relationship of agent premiums and agent commissions, which have remained relatively consistent since ~~2017:~~2018:

Three months ended June 30, Six months ended June 30,
2018 % 2017 % 2018 % 2017 %
(Dollars in millions)
Agent premiums 732
100 % 726
100 % $ 1,296
100 % $ 1,309
100 %
Agent commissions 561
77 % 558
77 % 992
77 % 1,004
77 %
Net retained agent premiums $ 171
23 % $ 168
23 % $ 304
23 % $ 305
23 %

Depreciation and amortization decreased by $1 million in the three months ended June 30, 2018 and increased by $1 million in the six months ended June 30, 2018, compared to the corresponding periods in 2017.



	Three months ended June 30,								Six months ended June 30,
	2019		%		2018		%		2019		%		2018		%
	(Dollars in 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	%

The claim loss provision for title insurance was ~~$60~~$62 million and ~~$65~~$60 million for the three-month periods ended June 30, ~~2018~~2019 and ~~2017,~~2018, respectively, and $107 million in the six-month periods ended June 30, 2019 and 2018, respectively. The provision reflects an average provision rate of 4.5% ~~and 5.0%~~ of title premiums respectively. The claim loss provision for title insurance was $107 million and $117 million for the six-month periods ended June 30, 2018 and 2017, respectively, and reflects an average provision rate of 4.5% and 5.0% of title premiums, respectively.in all periods. We continually monitor and evaluate our loss provision level, actual claims paid, and the loss reserve position each quarter. This loss provision rate is set to provide for losses on current

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year policies, but due to development of prior years and our long claim duration, it periodically includes amounts of estimated adverse or positive development on prior years' policies.

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Corporate and Other

The Corporate and Other segment consists of the operations of the parent holding company, our various real estate brokerage businesses, and our real estate technology subsidiaries. This segment also includes certain other unallocated corporate overhead expenses and eliminations of revenues and expenses between it and our Title segment.

On September 24, 2018, we closed on the sale of Pacific Union, a real estate brokerage. The results of operations of Pacific Union are included through the date of sale.

The following table presents the results from operations of our Corporate and Other segment:


	Three months ended June 30,						Six months ended June 30,						Three months ended June 30,						Six months ended June 30,
	2018			2017			2018			2017			2019			2018			2019			2018
	(In millions)												(In millions)
Revenues:
Escrow, title-related and other fees	$	161		$	145		$	263		$	220		$	52		$	165		$	105		$	267
Interest and investment income	—			—			1			—			5			—			11			1
Realized gains and losses, net	—			(3		)	—			(5		)	(5		)	—			(5		)	—
Total revenues	161			142			264			215			52			165			111			268
Expenses:
Personnel costs	30			24			58			45			32			32			73			60
Other operating expenses	139			120			232			174			36			140			65			233
Depreciation and amortization	7			5			14			10			6			7			11			14
Interest expense	11			13			22			29			12			11			24			22
Total expenses	187			162			326			258			86			190			173			329
Loss from continuing operations, before income taxes and equity in earnings of unconsolidated affiliates	$	(26	)	$	(20	)	$	(62	)	$	(43	)	$	(34	)	$	(25	)	$	(62	)	$	(61	)

The revenue in the Corporate and Other segment for all periods represents revenue generated by our non-title real estate technology and brokerage ~~and technology~~ subsidiaries ~~offset by the elimination of~~as well as mark-to-market valuation changes on certain ~~revenues between segments. See Note J.~~ ~~Revenue Recognition~~ ~~included in Item 1 of Part 1 of this Quarterly Report for further discussion and disaggregation of our revenue.~~corporate deferred compensation plans.

Total revenues in the Corporate and Other segment ~~increased $19~~decreased $113 million, or ~~13%~~68%, in the three-month period ended June 30, ~~2018~~2019 and ~~increased $49~~decreased $157 million, or ~~23%~~59%, in the six-month period ended June 30, ~~2018,~~2019 from the ~~comparative~~corresponding periods in ~~2017.~~2018. The ~~increase~~decrease is primarily attributable to ~~growth and acquisitions in our real estate brokerage businesses resulting in~~the sale of Pacific Union, partially offset by increased revenue associated with the valuation of $3 million and $22 million in the three and six month periods ended June 30, 2018 respectively, and in our real estate technology businesses resulting in increased revenue of $12 million and $21 million in the three and six month periods ended June 30, 2018 respectively, from the comparable 2017 periods. The three month period ended June 30, 2017 also includes $15 million related to recording one additional month of results of operations for our real estate brokerages, which were previously reported on a one-month lag.deferred compensation assets.

Personnel costs in the Corporate and Other segment ~~increased $6 million, or 25%,~~were flat in the three-month period ended June 30, ~~2018~~2019 and increased $13 million, or ~~29%~~22%, in the six-month period ended June 30, ~~2018,~~2019 from the corresponding periods in ~~2017.~~2018. The increase in the six month period ended June 30, 2019 is primarily attributable to increased ~~costs~~expense associated with the aforementioned increase in ~~revenue.~~the valuation of deferred compensation plan assets and increased costs resulting from growth of our real estate technology subsidiaries, partially offset by our sale of Pacific Union.

Other operating expenses in the Corporate and Other segment ~~increased $19~~decreased $104 million, or ~~16%~~74%, in the three-month period ended June 30, ~~2018~~2019 and ~~increased $58~~decreased $168 million, or ~~33%~~72%, in the six-month period ended June 30, ~~2018,~~2019 from the corresponding periods in ~~2017.~~2018. The ~~increase~~decrease is primarily attributable to ~~increased costs associated with the increase in revenue and to the inclusion~~our sale of ~~$12 million and $22 million of expense eliminations (reduction to expense) in the three and six months ended June 30, 2017, respectively, related to eliminations of transactions with Black Knight.~~Pacific Union.

~~Discontinued Operations~~

As a result of the FNFV Split-Off and BK Distribution, the results of operations of FNFV and Black Knight are included in discontinued operations. Earnings from discontinued operations, net of tax, were $126 million and $147 million in the three and six months ended June 30, 2017. Refer to Note K. ~~Discontinued Operations~~ to our Condensed Consolidated Financial Statements in Item 1 of Part I of this Quarterly Report for further information, including a breakout of the results of operations of both FNFV and Black Knight.

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Liquidity and Capital Resources

Cash Requirements. Our current cash requirements include personnel costs, operating expenses, claim payments, taxes, payments of interest and principal on our debt, capital expenditures, business acquisitions, stock repurchases and dividends on our common stock. We paid dividends of ~~$0.30~~$0.31 per share in the second quarter of ~~2018,~~2019, or approximately ~~$82~~$85 million to our FNF common shareholders. On July ~~17, 2018,~~16, 2019, our Board of Directors declared cash dividends of ~~$0.30~~$0.31 per share, payable on September ~~28, 2018,~~30, 2019, to FNF common shareholders of record as of September ~~14, 2018.~~16, 2019. There are no restrictions on our retained earnings regarding our ability to pay dividends to our shareholders, although there are limits on the ability of certain subsidiaries to pay dividends to us, as described below. The declaration of any future dividends is at the discretion of our Board of Directors. Additional uses of cash flow are expected to include acquisitions, stock repurchases and debt repayments.

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As of June 30, 2019, we had cash and cash equivalents of $1,605 million, short term investments of $314 million and available capacity under our Revolving Credit Facility of $800 million. We continually assess our capital allocation strategy, including decisions relating to the amount of our dividend, reducing debt, repurchasing our stock, making acquisitions and/or conserving cash. We believe that all anticipated cash requirements for current operations will be met from internally generated funds, through cash dividends from subsidiaries, cash generated by investment securities, potential sales of non-strategic assets and borrowings on ~~existing credit facilities.~~our Revolving Credit Facility. Our short-term and long-term liquidity requirements are monitored regularly to ensure that we can meet our cash requirements. We forecast the needs of all of our subsidiaries and periodically review their short-term and long-term projected sources and uses of funds, as well as the asset, liability, investment and cash flow assumptions underlying such forecasts.

Our insurance subsidiaries generate cash from premiums earned and their respective investment portfolios, and these funds are adequate to satisfy the payments of claims and other liabilities. Due to the magnitude of our investment portfolio in relation to our title claim loss reserves, we do not specifically match durations of our investments to the cash outflows required to pay claims, but do manage outflows on a shorter time frame.

Our two significant sources of internally generated funds are dividends and other payments from our subsidiaries. As a holding company, we receive cash from our subsidiaries in the form of dividends and as reimbursement for operating and other administrative expenses we incur. The reimbursements are paid within the guidelines of management agreements among us and our subsidiaries. Our insurance subsidiaries are restricted by state regulation in their ability to pay dividends and make distributions. Each applicable state of domicile regulates the extent to which our title underwriters can pay dividends or make other distributions. As of December 31, ~~2017, $1,700~~2018, $1,518 million of our net assets were restricted from dividend payments without prior approval from the relevant departments of insurance. We anticipate that our title insurance subsidiaries will pay or make dividends in the remainder of ~~2018~~2019 of approximately ~~$179~~$258 million. Our underwritten title companies and non-insurance subsidiaries are not regulated to the same extent as our insurance subsidiaries.

The maximum dividend permitted by law is not necessarily indicative of an insurer’s actual ability to pay dividends, which may be constrained by business and regulatory considerations, such as the impact of dividends on surplus, which could affect an insurer’s ratings or competitive position, the amount of premiums that can be written and the ability to pay future dividends. Further, depending on business and regulatory conditions, we may in the future need to retain cash in our underwriters or even contribute cash to one or more of them in order to maintain their ratings or their statutory capital position. Such a requirement could be the result of investment losses, reserve charges, adverse operating conditions in the current economic environment or changes in statutory accounting requirements by regulators.

Cash flow from our operations will be used for general corporate purposes including to reinvest in operations, repay debt, pay dividends, repurchase stock, pursue other strategic initiatives and/or conserve cash.

Operating Cash Flow. Our cash flows provided by operations for the six months ended June 30, 2019 and 2018 ~~and 2017~~ totaled ~~$350~~$372 million and ~~$291~~$350 million, respectively. The increase in cash provided by operating activities of ~~$59~~$22 million is primarily attributable to ~~decreased payments for income taxes~~the increase in ~~the current period of $90 million~~pre-tax earnings and the payment of legal settlements of $65 million in the 2017 period, partially offset by $25 million of cash flow from operating activities attributable to discontinued operations in the 2017 period and decreased net earnings of $31 million. The remaining variance is attributable to timing of receipt and payment of prepaid assets, receivables and ~~payables.~~payables, partially offset by increased payments for income taxes.

Investing Cash Flows. Our cash provided by investing activities for the six months ended June 30, 2019 and 2018 ~~and 2017~~ were ~~$54~~$120 million and ~~$399~~$54 million, respectively. The ~~2017 period included $67 million of cash provided by investing activities of discontinued operations. The decrease~~increase in cash provided by investing activities of ~~$345~~$66 million in the ~~2018~~2019 period ~~from~~compared to the ~~2017~~2018 period is primarily attributable to a ~~$154~~$90 million ~~decrease~~increase in net ~~inflows~~cash inflow from ~~the~~ sales of investments and distributions of and from equity and fixed income investments, net of purchases of investments and additional investments in unconsolidated investees, ~~and FNFV's sale of its subsidiary for $326 million in the 2017 period,~~ partially offset by the inclusion of $21 million of proceeds from the sale of property ~~and equipment of $21 million, lower cash paid for acquisitions of $77 million and decreased capital expenditures of $49 million~~ in the 2018 ~~period compared to the corresponding period in 2017.~~period.

Capital Expenditures. Total capital expenditures for property and equipment and capitalized software were ~~$39~~$47 million and ~~$88~~$39 million for the six-month periods ended June 30, 2019 and 2018, ~~and 2017,~~ respectively. ~~The decrease is primarily attributable to capital expenditures at Black Knight and FNFV in the 2017 period.~~

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Financing Cash Flows. Our cash flows used in financing activities for the six months ended June 30, 2019 and 2018 ~~and 2017~~ were ~~$194~~$144 million and ~~$572~~$194 million, respectively. The decrease in cash used in financing activities of ~~$378~~$50 million from the ~~2018~~2019 period to the ~~2017~~2018 period is primarily attributable to ~~decreased net~~$88 million of repayments of debt ~~service payments, net of borrowings, of $318~~in the 2018 period and a $23 million ~~decreased equity repurchases of both FNF and Black Knight stock of $63 million, and an~~ increase in the change in secured trust deposits ~~of $35 million,~~in the 2019 period, partially offset by ~~an increase~~purchases of treasury stock in ~~dividends paid of $28 million.~~the 2019 period.

Financing Arrangements. For a description of our financing arrangements see Note E. Notes Payable included in Item 1 of Part 1 of this Quarterly Report, which is incorporated by reference into this Item 2 of Part I.

During the six months ended June 30, 2018, we repurchased Notes, and Notes were converted by holders, with aggregate principal of $29 million for $86 million. Upon maturity of the Notes in August 2018, we expect to settle in cash and pay approximately $118 million based on stock prices and conversion rates as of June 30, 2018.

Contractual Obligations.There have been no significant changes to our long-term contractual obligations since our Annual Report for the year ended December 31, ~~2017.~~2018.

Capital Stock Transactions. On July 20, 2015, our Board of Directors approved a three-year stock repurchase program (the "2015 Repurchase Program") under which we could purchase up to 25 million shares of our FNF common stock through July 31, 2018. On July 17, 2018, our Board of Directors ~~terminated the 2015 Repurchase Program effective as of July 31, 2018 and~~ approved a new three-year stock repurchase program effective August 1, 2018 (the "2018 Repurchase Program") under which we ~~can~~may purchase up to 25 million shares of our FNF common stock through July 31, 2021. We may make repurchases from time to time in the open market, in block purchases or in

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privately negotiated transactions, depending on market conditions and other factors. We repurchased 1,230,000 shares of FNF common stock during the six months ended June 30, 2019 for approximately $46 million, or an average of $37.53 per share. Subsequent to June 30, 2019 through market close on July 16, 2019, we purchased 30,000 additional shares for $1 million, or an average of $40.65 per share. Since the original commencement of the ~~2015~~2018 Repurchase Program through market close on July ~~30, 2018,~~16, 2019, we repurchased a total of ~~10,589,000~~1,920,000 FNF common shares for ~~$372~~$69 million, or an average of ~~$35.10~~$35.80 per share. ~~We have not made any repurchases under these programs in the three or six months ended June 30, 2018 or in the subsequent period ended August 6, 2018.~~

Equity and Preferred Security Investments. Our equity and preferred security investments may be subject to significant volatility. ~~Should~~Currently prevailing accounting standards require us to record the change in fair value of ~~these~~equity and preferred security investments ~~fall below our cost basis and/or the financial condition or prospects~~held as of ~~these companies deteriorate, we may determine~~any given period end within earnings. Our results of operations in a future ~~period that this decline in fair value~~periods is ~~other-than-temporary, requiring that an impairment loss~~anticipated to be ~~recognized in the period~~subject to such ~~a determination is made.~~volatility.

Off-Balance Sheet Arrangements.~~There~~ Other than inclusion of operating lease arrangements on the balance sheet, further discussed below, there have been no significant changes to our off-balance sheet arrangements since our Annual Report for the year ended December 31, ~~2017.~~2018.

Critical Accounting Policies

~~There~~Other than our adoption of ASC Topic 842 as further described in Notes A and K to our Condensed Consolidated Financial Statements included in Item 1 of Part 1 of this Quarterly Report which is incorporated by reference into this Item 2 of Part I, there have been no material changes to our critical accounting policies described in our Annual Report for ~~our fiscal~~the year ended December 31, ~~2017~~2018.

Item 3. Quantitative and Qualitative Disclosure about Market Risk

There have been no material changes in the market risks described in our Annual Report on Form 10-K for the year ended December 31, ~~2017.~~2018.

Item 4. Controls and Procedures

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended. Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is: (a) recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms; and (b) accumulated and communicated to management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

There were no changes in our internal control over financial reporting that occurred during the quarter ended June 30, ~~2018~~2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Part II: OTHER INFORMATION

Item 1. Legal Proceedings

See discussion of legal proceedings in Note F. Commitment and Contingencies to the Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report, which is incorporated by reference into this Item 1 of Part II.

~~Item 1A. Risk Factors~~

In addition to the significant risks and uncertainties described in our Annual Report, we identified the following additional risk as a result of the pending Stewart Merger. See "Recent Developments" in Note A. ~~Basis of Financial Statements~~ ~~to our Condensed Consolidated Financial Statements included in Item 1 of Part 1 of this report for further discussion of the Stewart Merger.~~

~~Our pending acquisition of Stewart may expose us to certain risks.~~

On March 19, 2018, we signed a merger agreement (the "Merger Agreement") to acquire Stewart Information Services Corporation ("Stewart") (NYSE: STC) (the "Stewart Merger"). The closing of the Stewart Merger is subject to certain closing conditions, including Stewart stockholder approval, federal and state regulatory approvals and the satisfaction of other customary closing conditions. Closing of the Stewart Merger is expected in the first or second quarter of 2019. If the Stewart Merger is not completed for failure to obtain the required regulatory approvals, we are required to pay a reverse break-up fee of $50 million to Stewart. If the Stewart Merger is completed, we may face challenges in integrating Stewart. These challenges include eliminating redundant operations, facilities and systems, coordinating management and personnel, retaining key employees, managing different corporate cultures, and achieving cost reductions. There can be no assurance that we will be able to fully integrate all aspects of the acquired business successfully, and the process of integrating this acquisition may disrupt our business and divert our resources.



Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

~~None.~~

The following table summarizes repurchases of equity securities by FNF during the 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 (1)	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (2)
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


(1)	On July 17, 2018, our Board of Directors approved the 2018 Repurchase Program, effective August 1, 2018, under which we may purchase up to 25 million shares of our FNF common stock through July 31, 2021.


(2)	As of the last day of the applicable month.

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Item 6. Exhibits

(a) Exhibits:



~~2.1~~		Agreement and Plan of Merger, dated as of March 18, 2018, by and among Stewart Information Services Corporation, Fidelity National Financial, Inc., A Holdco Corp., and S Holdco LLC (incorporated by reference to Exhibit 2.1 to the Registrant's Current Report on Form 8-K filed on March 19, 2018)

~~3.1~~		Fifth Amended and Restated Certificate of Incorporation of Fidelity National Financial, Inc. (incorporated by reference to Exhibit 3.1 to the Registrants Current Report on Form 8-K filed on June 13, 2018)

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification by Chief Executive Officer of Periodic Financial Reports pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.

32.2		Certification by Chief Financial Officer of Periodic Financial Reports pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.

101		The following materials from Fidelity National Financial, Inc.'s Quarterly Report on Form 10-Q for the quarter and ~~six-months~~six months ended June 30, ~~2018,~~2019, formatted in Extensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Earnings, (iii) the Condensed Consolidated Statements of Comprehensive Earnings, (iv) the Condensed Consolidated Statements of Stockholders' Equity, (v) the Condensed Consolidated Statements of Cash Flows, and (vi) the Notes to the Consolidated Financial Statements.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



Date:	~~August 6, 2018~~July 23, 2019	FIDELITY NATIONAL FINANCIAL, INC. (registrant)
		By:	/s/ Anthony J. Park
			Anthony J. Park
			Chief Financial Officer (Principal Financial and Accounting Officer)

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	June 30, 2018
	Level 1		Level 2		Level 3		Total
	(In millions)
Fixed maturity securities available for sale:
U.S. government and agencies	$	—	$	245	$	—	$	245
State and political subdivisions	—		196		—		196
Corporate debt securities	—		1,217		13		1,230
Mortgage-backed/asset-backed securities	—		51		—		51
Foreign government bonds	—		59		—		59
Preferred securities	18		273		—		291
Equity securities	669		1		—		670
Other long-term investments	—		—		102		102
Total assets	$	687	$	2,042	$	115	$	2,844



	December 31, 2017
	Level 1		Level 2		Level 3		Total
	(In millions)
Fixed maturity securities available for sale:
U.S. government and agencies	$	—	$	195	$	—	$	195
State and political subdivisions	—		391		—		391
Corporate debt securities	—		1,117		—		1,117
Mortgage-backed/asset-backed securities	—		56		—		56
Foreign government bonds	—		57		—		57
Preferred securities	23		296		—		319
Equity securities	681		—		—		681
Total assets	$	704	$	2,112	$	—	$	2,816



	Three months ended June 30, 2017										Six months ended June 30, 2017
	Gross Realized Gains		Gross Realized Losses			Net Realized Gains (Losses)			Gross Proceeds from Sale/Maturity		Gross Realized Gains			Gross Realized Losses			Net Realized Gains (Losses)			Gross Proceeds from Sale/Maturity
	(In millions)										(In millions)
Fixed maturity securities available for sale	$	1	$	(2	)	$	(1	)	$	203	$	4		$	(5	)	$	(1	)	$	440
Preferred stock available for sale	—		—			—			10		—		—	—			—			10
Other long-term investments						9			14								9			14
Loss on debt redemptions						(3		)	—								(5		)	—
Other assets						—			—								(2		)	—
Total						$	5		$	227							$	1		$	464



Gross principal maturities of notes payable at June 30, 2018 are as follows (in millions):
2018 (remaining)	$	40
2019	—
2020	1
2021	—
2022	700
Thereafter	—
	$	741