Table of Contents




     
     
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, 20182019


OR
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 ClassTrading SymbolName of Each Exchange on Which Registered
FNF Common Stock, $0.0001 par valueFNFNew York Stock Exchange
5.50% Notes due September 2022FNF22New 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, 2018June 30, 2019 were:    
FNF Common Stock    274,903,852
274,416,550
     
     





FORM 10-Q
QUARTERLY REPORT
Quarter Ended June 30, 20182019
TABLE OF CONTENTS
  
 Page
 
 
 
  
  
  
  
  
  
  
  
  
  




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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 value291
 319
287
 301
Equity securities, at fair value670
 681
690
 498
Investments in unconsolidated affiliates144
 150
139
 137
Other long-term investments136
 110
145
 135
Short-term investments, at December 31, 2017 includes short-term investments of $3 related to secured trust deposits255
 295
Short-term investments, at December 31,2018 includes short-term investments of $8 related to secured trust deposits314
 480
Total investments3,277
 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 deposits1,320
 1,110
Trade and notes receivables, net of allowance of $18, at June 30, 2018 and December 31, 2017338
 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 deposits1,605
 1,257
Trade and notes receivables, net of allowance of $19 at June 30, 2019 and December 31, 2018361
 306
Goodwill2,764
 2,746
2,725
 2,726
Prepaid expenses and other assets416
 398
422
 377
Lease assets, see Note K402
 
Other intangible assets, net564
 618
472
 513
Title plants398
 398
405
 405
Property and equipment, net177
 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 payable734
 759
838
 836
Reserve for title claim losses1,487
 1,490
1,480
 1,488
Secured trust deposits897
 830
912
 822
Lease liabilities, see Note K428
 
Income taxes payable15
 137
49
 
Deferred tax liability236
 169
261
 227
Total liabilities4,281
 4,340
4,893
 4,329
Commitments and Contingencies:
 

 

Redeemable non-controlling interest by 21% minority holder of ServiceLink Holdings, LLC344
 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 capital4,555
 4,587
4,528
 4,500
Retained earnings529
 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’ equity4,603
 4,447
4,962
 4,630
Non-controlling interests26
 20
(10) (2)
Total equity4,629
 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


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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 20172019 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 premiums732
 726
 1,296
 1,309
754
 732
 1,306
 1,296
Escrow, title-related and other fees763
 720
 1,381
 1,291
665
 765
 1,199
 1,383
Interest and investment income45
 33
 83
 61
59
 43
 113
 81
Realized gains and losses, net(16) 5
 (15) 1
41
 (16) 183
 (15)
Total revenues2,123
 2,059
 3,816
 3,702
2,144
 2,123
 3,866
 3,816
Expenses:              
Personnel costs665
 626
 1,272
 1,195
685
 665
 1,277
 1,272
Agent commissions561
 558
 992
 1,004
579
 561
 1,000
 992
Other operating expenses506
 479
 929
 868
409
 506
 753
 929
Depreciation and amortization45
 44
 92
 87
44
 45
 88
 92
Provision for title claim losses60
 65
 107
 117
62
 60
 107
 107
Interest expense11
 13
 22
 29
12
 11
 24
 22
Total expenses1,848
 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 affiliates275
 274
 402
 402
353
 275
 617
 402
Income tax expense22
 101
 53
 170
86
 22
 151
 53
Earnings from continuing operations before equity in earnings of unconsolidated affiliates253
 173
 349
 232
Earnings before equity in earnings of unconsolidated affiliates267
 253
 466
 349
Equity in earnings of unconsolidated affiliates1
 3
 3
 4
3
 1
 10
 3
Net earnings from continuing operations254
 176
 352
 236
Net earnings from discontinued operations, net of tax
 126
 
 147
Net earnings254
 302
 352
 383
270
 254
 476
 352
Less: Net earnings attributable to non-controlling interests3
 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 basis273
 271
 273
 271
273
 273
 273
 273
Weighted average shares outstanding FNF common stock, diluted basis278
 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


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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,
  
2018 2017 2018 20172019 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 earnings249
 322
 338
 427
292
 249
 525
 338
Less: Comprehensive earnings attributable to non-controlling interests3
 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, 20182019 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, 20182019 and 2017,2018, respectively, and $1 million and $7$(1) million for the six-month periods ended June 30, 20182019 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, 20182019 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








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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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Table of Contents




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
20172019
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 amortization92
 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, net4
 (5)
Non-cash lease costs73
 
Operating lease payments(75) 
Distributions from unconsolidated affiliates, return on investment3
 
5
 3
Stock-based compensation cost15
 24
18
 15
Change in valuation of equity and preferred securities available for sale, net21
 
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 other16
 (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 activities350
 291
372
 350
Cash flows from investing activities:      
Proceeds from sales of investment securities309
 200
405
 309
Proceeds from calls and maturities of investment securities304
 283
112
 304
Proceeds from sales of property and equipment21
 

 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 receivable100
 
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 securities40
 (45)
Purchases of other long-term investments
 (2)
Net proceeds from sales and maturities of short-term investment securities166
 40
Additional investments in unconsolidated affiliates(34) (47)(20) (34)
Distributions from unconsolidated affiliates, return of investment42
 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 activities54
 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 options6
 16
6
 6
Subsidiary equity repurchase(1) 

 (1)
Net change in secured trust deposits67
 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 equivalents210
 118
348
 210
Cash and cash equivalents at beginning of period1,110
 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 20172018 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 operatesoperating 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 requiredStewart Merger through February 2019 are set forth in our Annual Report.
On June 10, 2019, we exercised our second option to divest assets or businessesextend 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 capour 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 failuresubject to obtain the requiredcertain 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 requiredissued to payCannae a reverse break-up feerevolver note (the "Cannae Revolver") in the aggregate principal amount of $50 millionup 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 withFebruary 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 referredJune 12, 2019, Cannae repaid to as a “Second Request,” fromFNF the United States Federal Trade Commission (the “FTC”) in connection withentire $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 withrespectively, 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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The closingpercentage of the Stewart Merger is subject to certain closing conditions, including Stewart stockholder approval, federalearnings before income taxes was 24% and state regulatory approvals and the satisfaction of other customary closing conditions.  Closing of the Stewart Merger is expected8% in the first or second quarterthree-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 resignedwas 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 optionsinstruments outstanding during the three-three or six-month periods ended June 30, 20182019 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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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 RecognitionAdopted 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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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 ASUAccounting 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 prospectivelyusing 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 useour 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.  
OtherSee 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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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 year107
 107
Prior years
 
Total title claim loss provision107
 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 premiums4.5% 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 year107
 113
Prior years
 4
Total title claim loss provision107
 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 premiums4.5% 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 outsidereserve within a reasonable range of our actuary's central estimate, which may require additional reserve adjustments in future periods.estimate.


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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, 20182019 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 securities18
 269
 
 287
Equity securities690
 
 
 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 securities18
 273
 
 291
Equity securities669
 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 securities16
 285
 
 301
Equity securities498
 
 
 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 securities23
 296
 
 319
Equity securities681
 
 
 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 investmentsinvestment are provided by a third-party pricing service. We utilize one firm to value our Level 3 other long termlong-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 termlong-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 termlong-term investment as of June 30, 20182019 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 termlong-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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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 monthssix-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 2016-01100
 
 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 isnotes receivable approximate fair value due to recognize transfers between levels intheir 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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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, 20182019 and December 31, 20172018 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 subdivisions76
 74
 2
 
 76
Corporate debt securities1,581
 1,542
 44
 (5) 1,581
Mortgage-backed/asset-backed securities73
 71
 2
 
 73
Foreign government bonds59
 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 subdivisions196
 194
 2
 
 196
Corporate debt securities1,230
 1,238
 4
 (12) 1,230
Mortgage-backed/asset-backed securities51
 51
 1
 (1) 51
Foreign government bonds59
 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 subdivisions148
 147
 1
 
 148
Corporate debt securities1,503
 1,510
 6
 (13) 1,503
Mortgage-backed/asset-backed securities60
 59
 1
 
 60
Foreign government bonds62
 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 subdivisions391
 387
 4
 
 391
Corporate debt securities1,117
 1,110
 11
 (4) 1,117
Mortgage-backed/asset-backed securities56
 55
 1
 
 56
Foreign government bonds57
 58
 1
 (2) 57
Preferred securities319
 307
 12
 
 319
Equity securities681
 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.

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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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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, 20182019 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 securities909
 (10) 47
 (2) 956
 (12)
Foreign government bonds41
 (2) 7
 (1) 48
 (3)
Mortgage-backed/asset-backed securities28
 (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 securities661
 (8) 301
 (5) 962
 (13)
Foreign government bonds52
 (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 securities464
 (3) 51
 (1) 515
 (4)
Foreign government bonds
 
 10
 (2) 10
 (2)
Equity securities121
 (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 thesethe 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 of2019 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.

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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, 20182019 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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  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 debtunsecured 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, 20182019 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

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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 RevolvingRestated Credit FacilityAgreement 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 millionno principal outstanding, net of $5$3 million of unamortized debt issuance costs, and $500$800 million of remainingavailable 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
2022400
2023
Thereafter450
 $850
      Gross principal maturities of notes payable at June 30, 2018 are as follows (in millions): 
2018 (remaining)$40
2019
20201
2021
2022700
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, 20182019 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 whichthat 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 findingmotion. 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 interpretplaintiffs 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 planssought permission from the Pennsylvania Superior Court to seekappeal 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
2019140
2020111
202183
202256
Thereafter53
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 revenues613
 52
 665
Revenues from external customers1,992
 52
 2,044
Interest and investment income, including realized gains and losses100
 
 100
Total revenues2,092
 52
 2,144
Depreciation and amortization38
 6
 44
Interest expense
 12
 12
Earnings (loss) before income taxes and equity in earnings of unconsolidated affiliates387
 (34) 353
Income tax expense (benefit)95
 (9) 86
Earnings (loss) before equity in earnings of unconsolidated affiliates292
 (25) 267
Equity in earnings of unconsolidated affiliates3
 
 3
Net earnings (loss)$295
 $(25) $270
Assets$9,040
 $1,149
 $10,189
Goodwill2,461
 264
 2,725
 Title Corporate and Other Total
 (In millions)
Title premiums$1,331
 $
 $1,331
Other revenues602
 161
 763
Revenues from external customers1,933
 161
 2,094
Interest and investment income, including realized gains and losses29
 
 29
Total revenues1,962
 161
 2,123
Depreciation and amortization38
 7
 45
Interest expense
 11
 11
Earnings (loss) from continuing operations, before income taxes and equity in earnings of unconsolidated affiliates301
 (26) 275
Income tax expense (benefit)29
 (7) 22
Earnings (loss) from continuing operations, before equity in earnings of unconsolidated affiliates272
 (19) 253
Equity in earnings of unconsolidated affiliates1
 
 1
Earnings (loss) from continuing operations$273
 $(19) $254
Assets$8,540
 $714
 $9,254
Goodwill2,447
 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 revenues600
 165
 765
Revenues from external customers1,931
 165
 2,096
Interest and investment income, including realized gains and losses27
 
 27
Total revenues1,958
 165
 2,123
Depreciation and amortization38
 7
 45
Interest expense
 11
 11
Earnings (loss) before income taxes and equity in earnings of unconsolidated affiliates300
 (25) 275
Income tax expense (benefit)29
 (7) 22
Earnings (loss) before equity in earnings of unconsolidated affiliates271
 (18) 253
Equity in earnings of unconsolidated affiliates1
 
 1
Net earnings (loss)$272
 $(18) $254
Assets$8,540
 $714
 $9,254
Goodwill2,447
 317
 2,764

 Title Corporate and Other Total
 (In millions)
Title premiums$1,301
 $
 $1,301
Other revenues575
 145
 720
Revenues from external customers1,876
 145
 2,021
Interest and investment income, including realized gains and losses41
 (3) 38
Total revenues1,917
 142
 2,059
Depreciation and amortization39
 5
 44
Interest expense
 13
 13
Earnings (loss) from continuing operations, before income taxes and equity in earnings of unconsolidated affiliates294
 (20) 274
Income tax expense (benefit)114
 (13) 101
Earnings (loss) from continuing operations, before equity in earnings of unconsolidated affiliates180
 (7) 173
Equity in earnings of unconsolidated affiliates2
 1
 3
Earnings (loss) from continuing operations$182
 $(6) $176
Assets$8,516
 $5,686
 $14,202
Goodwill2,383
 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 revenues1,094
 105
 1,199
Revenues from external customers3,465
 105
 3,570
Interest and investment income, including realized gains and losses290
 6
 296
Total revenues3,755
 111
 3,866
Depreciation and amortization77
 11
 88
Interest expense
 24
 24
Earnings (loss) before income taxes and equity in earnings of unconsolidated affiliates679
 (62) 617
Income tax expense (benefit)166
 (15) 151
Earnings (loss) before equity in earnings of unconsolidated affiliates513
 (47) 466
Equity in earnings of unconsolidated affiliates10
 
 10
Net earnings (loss)$523
 $(47) $476
Assets$9,040
 $1,149
 $10,189
Goodwill2,461
 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 revenues1,116
 267
 1,383
Revenues from external customers3,483
 267
 3,750
Interest and investment income, including realized gains and losses65
 1
 66
Total revenues3,548
 268
 3,816
Depreciation and amortization78
 14
 92
Interest expense
 22
 22
Earnings (loss) before income taxes and equity in earnings of unconsolidated affiliates463
 (61) 402
Income tax expense (benefit)69
 (16) 53
Earnings (loss) before equity in earnings of unconsolidated affiliates394
 (45) 349
Equity in earnings of unconsolidated affiliates2
 1
 3
Net earnings (loss)$396
 $(44) $352
Assets$8,540
 $714
 $9,254
Goodwill2,447
 317
 2,764

 Title Corporate and Other Total
 (In millions)
Title premiums$2,367
 $
 $2,367
Other revenues1,118
 263
 1,381
Revenues from external customers3,485
 263
 3,748
Interest and investment income, including realized gains and losses67
 1
 68
Total revenues3,552
 264
 3,816
Depreciation and amortization78
 14
 92
Interest expense
 22
 22
Earnings (loss) from continuing operations, before income taxes and equity in earnings of unconsolidated affiliates464
 (62) 402
Income tax expense (benefit)69
 (16) 53
Earnings (loss) from continuing operations, before equity in earnings of unconsolidated affiliates395
 (46) 349
Equity in earnings of unconsolidated affiliates2
 1
 3
Earnings (loss) from continuing operations$397
 $(45) $352
Assets$8,540
 $714
 $9,254
Goodwill2,447
 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 revenues1,071
 220
 1,291
Revenues from external customers3,420
 220
 3,640
Interest and investment income, including realized gains and losses67
 (5) 62
Total revenues3,487
 215
 3,702
Depreciation and amortization77
 10
 87
Interest expense
 29
 29
Earnings (loss) from continuing operations, before income taxes and equity in earnings of unconsolidated affiliates445
 (43) 402
Income tax expense (benefit)192
 (22) 170
Earnings (loss) from continuing operations, before equity in earnings of unconsolidated affiliates253
 (21) 232
Equity in earnings of unconsolidated affiliates4
 
 4
Earnings (loss) from continuing operations$257
 $(21) $236
Assets$8,516
 $5,686
 $14,202
Goodwill2,383
 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. Thissegment 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 ASCAccounting 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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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. ContractsSubstantially 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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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.
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.
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 OperationsK.      Leases
Black Knight
AsWe adopted ASC Topic 842 on January 1, 2019 using a resultmodified 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 reclassifiedare party to a contract which conveys the financial results of Black Knight to discontinued operations in our Condensed Consolidated Statements of Earningsright for the threeCompany 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. Wegenerally are alsonot a party to certain other agreementsany 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 technologyASC Topic 842 are recorded as Lease assets and data and analytics services forLease liabilities, respectively, on the foreseeable future. The cash inflows and outflows from and to Black KnightCondensed Consolidated Balance Sheet as well as revenues and expenses included in continuing operations in the six months endedof June 30, 2018 which were previously eliminated2019.
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 areoperating 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.


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A summaryMost 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 operationscurrent yield on our unsecured notes payable and 140 basis points in excess of Black Knightthe 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 belowOther 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
2020130
2021102
202275
202347
Thereafter42
Total operating lease payments, undiscounted$470
Less: present value discount42
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
 $494
Realized gains and losses, net(17) (19)
Total revenues229
 475
Expenses:   
Personnel costs97
 197
Other operating expenses51
 96
Depreciation and amortization50
 103
Interest expense13
 29
Total expenses211
 425
Earnings from discontinued operations before income taxes18
 50
Income tax expense12
 22
Net earnings from discontinued operations6
 28
Less: Net earnings attributable to non-controlling interests7
 19
Net (loss) earnings attributable to Fidelity National Financial, Inc. common shareholders$(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 operationsFuture 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, datedASC 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, datedDecember 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 belowfollows (in millions):
2019$145
2020121
202193
202268
202341
Thereafter28
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 revenue288
 561
Interest and investment income1
 2
Realized gains and losses, net268
 273
Total revenues599
 927
Expenses:   
Personnel costs65
 111
Other operating expenses29
 54
Cost of restaurant revenue249
 485
Depreciation and amortization16
 32
Interest expense3
 7
Total expenses362
 689
Earnings from discontinued operations before income taxes237
 238
Income tax expense113
 111
Earnings from continuing operations before equity in losses of unconsolidated affiliates124
 127
Equity in losses of unconsolidated affiliates(4) (8)
Net earnings from discontinued operations120
 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 activities125
 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:
22
 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 FNFV120
 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, 20172018 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 20172018 - 20202021 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 continuedon 30-year, fixed-rate mortgages in the U.S. rose from approximately 4.0% to rise4.9% through October, representing an increase of 22%, before retreating to 4.55% in the first halflast week of 2018. RefinanceDecember 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 throughin the first half, and decreasing in the second half, of 2018. OverCoupled with stagnant levels of new home construction over the same time period, therethe 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 expectedsteady 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 adverselyremain 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 20182019 through 20202021 will remain relatively flat compared to the 20172018 period driven byand 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, otherOther economic indicators used to measure the health of the United StatesU.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 StatesU.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 improvementscontinued strong readings in both of thesedomestic 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 StatesU.S. economy, and the negative effects of projected short-term decreases in overall originations and increases inflat 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. OverFactors 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 coupleU.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. Inmarkets 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 forexperienced 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 20172019 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 premiums732
 726
 1,296
 1,309
754
 732
 1,306
 1,296
Escrow, title-related and other fees763
 720
 1,381
 1,291
665
 765
 1,199
 1,383
Interest and investment income45
 33
 83
 61
59
 43
 113
 81
Realized gains and losses, net(16) 5
 (15) 1
41
 (16) 183
 (15)
Total revenues2,123
 2,059
 3,816
 3,702
2,144
 2,123
 3,866
 3,816
Expenses:              
Personnel costs665
 626
 1,272
 1,195
685
 665
 1,277
 1,272
Agent commissions561
 558
 992
 1,004
579
 561
 1,000
 992
Other operating expenses506
 479
 929
 868
409
 506
 753
 929
Depreciation and amortization45
 44
 92
 87
44
 45
 88
 92
Provision for title claim losses60
 65
 107
 117
62
 60
 107
 107
Interest expense11
 13
 22
 29
12
 11
 24
 22
Total expenses1,848
 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 affiliates275
 274
 402
 402
Earnings before income taxes and equity in earnings of unconsolidated affiliates353
 275
 617
 402
Income tax expense22
 101
 53
 170
86
 22
 151
 53
Equity in earnings of unconsolidated affiliates1
 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, 20182019 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, 20182019 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, 20182019 and 2017,2018, respectively, and $53$151 million and $170$53 million in the six-month periods ended June 30, 20182019 and 2017,2018, respectively. Income tax expense as a percentage of earnings before income taxes was 8.0%24% and 36.9% for8% in the three-month periods ended June 30, 20182019 and 2017,2018, respectively, and 13.2%24% and 42.3% for13% in the six-monthsix- month periods ended June 30, 2019 and 2018, and 2017, respectively. IncomeThe 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 asattributable to a change in tax estimate regardingin 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 reservesreserve 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 premiums754
 732
 1,306
 1,296
Escrow, title-related and other fees613
 600
 1,094
 1,116
Interest and investment income54
 43
 102
 80
Realized gains and losses, net46
 (16) 188
 (15)
Total revenues2,092
 1,958
 3,755
 3,548
Expenses:       
Personnel costs653
 633
 1,204
 1,212
Agent commissions579
 561
 1,000
 992
Other operating expenses373
 366
 688
 696
Depreciation and amortization38
 38
 77
 78
Provision for title claim losses62
 60
 107
 107
Total expenses1,705
 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 premiums732
 726
 1,296
 1,309
Escrow, title-related and other fees602
 575
 1,118
 1,071
Interest and investment income45
 33
 82
 61
Realized gains and losses, net(16) 8
 (15) 6
Total revenues1,962
 1,917
 3,552
 3,487
Expenses:       
Personnel costs635
 602
 1,214
 1,150
Agent commissions561
 558
 992
 1,004
Other operating expenses367
 359
 697
 694
Depreciation and amortization38
 39
 78
 77
Provision for title claim losses60
 65
 107
 117
Total expenses1,661
 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, 20182019 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 Total2019 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 operations732
 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, 20182019 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, 20182019 as compared to the corresponding period in 2017.2018. The increase is comprised of an increase in Title premiums from directagency operations of $31$10 million, or 3%1%, partially offset by a decrease in Title premiums from agencydirect 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 20172019 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, 20182019, as compared to the corresponding periodperiods 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 increasea decrease in closed title insurance order volumes from purchase transactions which was more than offset by a decreaseand an increase in closed title insurance order volumes from refinance transactions in the three and six months ended June 30, 20182019 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 370,000and 622,000 in the threesix months ended June 30, 2017 and2019 compared to 675,000 in the six months ended June 30, 2018 compared with 704,0002018. 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 overall2019 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. Openedin 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 thea stronger commercial market and a favorable changeincrease in mixaverage property prices of closed orders from purchase andunderlying 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, 20182019 and decreased $13increased $10 million, or 1%, in the six months ended June 30, 2018 as compared to2019 from the corresponding periodperiods 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, 20182019 and increased by $47decreased $22 million, or 4%2%, in the six months ended June 30, 20182019 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, 20182019 and increaseddecreased by $24$16 million or 6%,4% in the six months ended June 30, 20182019 as compared to the corresponding periods in 2017.2018. The increase is representativein 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 $13by $11 million or 4%,3% in the three months ended June 30, 20182019 and increased $23decreased by $7 million, or 3%1%, in the six months ended June 30, 2018, from2019 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 offset2018. 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, 20182019 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 ouron 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 decreasebusinesses as well as an increase in ouraverage fixed maturity holdings period over period.
Realized gains and losses, net, decreased $24increased $62 million in the three months ended June 30, 20182019 and decreased $21increased $203 million in the six months ended June 30, 20182019 from the comparable periods in 2017.2018. The decrease wasincrease is primarily attributable to the inclusion ofincreased non-cash valuation lossesgains 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 $64decreased $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 2018three-month period is primarily dueattributable 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 closedlower 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, 20182019 and 2017,2018, respectively, and 56% and 55% and 54% forin the six-month periodssix 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 23,34423,255and 23,14623,344 in the three-month periods ended June 30, 20182019 and 2017,2018, respectively, and 23,177and 22,85822,712 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, 20182019 and increased by $3decreased $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 premiums732
 100% 726
 100% $1,296
 100% $1,309
 100%
Agent commissions561
 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 premiums754
 100% 732
 100% $1,306
 100% $1,296
 100%
Agent commissions579
 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, 20182019 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 20172019 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 revenues161
 142
 264
 215
52
 165
 111
 268
Expenses:              
Personnel costs30
 24
 58
 45
32
 32
 73
 60
Other operating expenses139
 120
 232
 174
36
 140
 65
 233
Depreciation and amortization7
 5
 14
 10
6
 7
 11
 14
Interest expense11
 13
 22
 29
12
 11
 24
 22
Total expenses187
 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 ofas 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 $19decreased $113 million, or 13%68%, in the three-month period ended June 30, 20182019 and increased $49decreased $157 million, or 23%59%, in the six-month period ended June 30, 2018,2019 from the comparativecorresponding periods in 2017.2018. The increasedecrease is primarily attributable to growth and acquisitions in our real estate brokerage businesses resulting inthe 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, 20182019 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 costsexpense 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 $19decreased $104 million, or 16%74%, in the three-month period ended June 30, 20182019 and increased $58decreased $168 million, or 33%72%, in the six-month period ended June 30, 2018,2019 from the corresponding periods in 2017.2018. The increasedecrease is primarily attributable to increased costs associated with the increase in revenue and to the inclusionour 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, $1,7002018, $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 20182019 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 taxesthe increase in the current period of $90 millionpre-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 decreaseincrease in cash provided by investing activities of $345$66 million in the 20182019 period fromcompared to the 20172018 period is primarily attributable to a $154$90 million decreaseincrease in net inflowscash 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 20182019 period to the 20172018 period is primarily attributable to decreased net$88 million of repayments of debt service payments, net of borrowings, of $318in 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 increasepurchases 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 canmay 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 20152018 Repurchase Program through market close on July 30, 2018,16, 2019, we repurchased a total of 10,589,0001,920,000 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. ShouldCurrently prevailing accounting standards require us to record the change in fair value of theseequity and preferred security investments fall below our cost basis and/or the financial condition or prospectsheld as of these companies deteriorate, we may determineany given period end within earnings. Our results of operations in a future period that this decline in fair valueperiods is other-than-temporary, requiring that an impairment lossanticipated to be recognized in the periodsubject 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
ThereOther 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 fiscalthe year ended December 31, 20172018.

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, 20182019 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:
34
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

3.1
31.1 
   
31.2 
   
32.1 
   
32.2 
   
101 
The following materials from Fidelity National Financial, Inc.'s Quarterly Report on Form 10-Q for the quarter and six-monthssix 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, 2018July 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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