UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q



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

For the quarterly period ended March 31, 2020

~~June 30, 2019~~



☐						TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-32630

FIDELITY NATIONAL FINANCIAL, INC.

(Exact name of registrant as specified in its charter)

Delaware

16-1725106

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

601 Riverside Avenue

Jacksonville

Florida

32204

(Address of principal executive offices)

(Zip Code)

(904) 854-8100

(Registrant’s telephone number, including area code)

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

Title of Each Class

Trading Symbol

Name of Each Exchange on Which Registered

FNF Common Stock, $0.0001 par value

FNF

New York Stock Exchange

5.50% Notes due September 2022

FNF22

New York Stock Exchange

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).Yes ☑ NO ☐

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

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth 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. ☐

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

YES ☐ NO þ

The number of shares outstanding of the Registrant's common stock as of ~~June 30, 2019~~April 13, 2020 were:

FNF Common Stock ~~274,416,550~~

272,013,813

Table of Contents

FORM 10-Q

QUARTERLY REPORT

Quarter Ended ~~June 30, 2019~~March 31, 2020

TABLE OF CONTENTS




			Page
Part I: FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
A. Condensed Consolidated Balance Sheets as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019			1
B. Condensed Consolidated Statements of Earnings for the three ~~and six-month~~-month periods ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~			2
C. Condensed Consolidated Statements of Comprehensive Earnings for the three ~~and six-month~~-month periods ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~			3
D. Condensed Consolidated Statements of Equity for the ~~six-month~~three -month periods ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~			4
E. Condensed Consolidated Statements of Cash Flows for the ~~six-month~~three-month periods ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~			5
F. Notes to Condensed Consolidated Financial Statements			6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			23
Item 3. Quantitative and Qualitative Disclosure About Market Risk			31
Item 4. Controls and Procedures			31
Part II: OTHER INFORMATION
Item 1. Legal Proceedings			3231
Item 1A. Risk Factors			31
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			32
Item 5. Other Information			33
Item 6. Exhibits			3334

Table of Contents

Part I: FINANCIAL INFORMATION


~~Item 1.~~	Item 1. Condensed Consolidated Financial Statements

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in millions, except share data)


	June 30, 2019			December 31, 2018				March 31, 2020		December 31, 2019
	(Unaudited)							(Unaudited)
ASSETS	ASSETS						ASSETS
Investments:							Investments:
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
Fixed maturity securities available for sale, at fair value, at March 31, 2020 and December 31, 2019, net of allowance for credit losses of $11 and $0, respectively, and includes pledged fixed maturity securities of $423 and $410, respectively, related to secured trust deposits							Fixed maturity securities available for sale, at fair value, at March 31, 2020 and December 31, 2019, net of allowance for credit losses of $11 and $0, respectively, and includes pledged fixed maturity securities of $423 and $410, respectively, related to secured trust deposits	$	2,057	$	2,090
Preferred securities, at fair value	287			301			Preferred securities, at fair value	304		323
Equity securities, at fair value	690			498			Equity securities, at fair value	628		811
Investments in unconsolidated affiliates	139			137			Investments in unconsolidated affiliates	148		131
Other long-term investments	145			135			Other long-term investments	93		153
Short-term investments, at December 31,2018 includes short-term investments of $8 related to secured trust deposits	314			480
Short-term investments, at March 31, 2020 and December 31, 2019 includes pledged short-term investments of $0 and $12, respectively, related to secured trust deposits							Short-term investments, at March 31, 2020 and December 31, 2019 includes pledged short-term investments of $0 and $12, respectively, related to secured trust deposits	1,258		876
Total investments	3,629			3,549			Total investments	4,488		4,384
Cash and cash equivalents, at June 30, 2019 and December 31, 2018 includes $503 and $412, respectively, of pledged cash related to secured trust deposits	1,605			1,257
Trade and notes receivables, net of allowance of $19 at June 30, 2019 and December 31, 2018	361			306
Cash and cash equivalents, at March 31, 2020 and December 31, 2019 includes $306 and $384, respectively, of pledged cash related to secured trust deposits							Cash and cash equivalents, at March 31, 2020 and December 31, 2019 includes $306 and $384, respectively, of pledged cash related to secured trust deposits	890		1,376
Trade and notes receivables, net of allowance of $23 and $20 at March 31, 2020 and December 31, 2019, respectively							Trade and notes receivables, net of allowance of $23 and $20 at March 31, 2020 and December 31, 2019, respectively	322		346

Goodwill	2,725			2,726			Goodwill	2,726		2,727
Prepaid expenses and other assets	422			377			Prepaid expenses and other assets	397		432
Lease assets, see Note K	402			—
Lease assets							Lease assets	406		410
Other intangible assets, net	472			513			Other intangible assets, net	396		422
Title plants	405			405			Title plants	404		404
Property and equipment, net	168			164			Property and equipment, net	175		176
Income taxes receivable	—			4

Total assets	$	10,189		$	9,301		Total assets	$	10,204	$	10,677
LIABILITIES AND EQUITY	LIABILITIES AND EQUITY						LIABILITIES AND EQUITY
Liabilities:							Liabilities:
Accounts payable and accrued liabilities	$	925		$	956		Accounts payable and accrued liabilities	$	864	$	1,094
Notes payable	838			836			Notes payable	839		838
Reserve for title claim losses	1,480			1,488			Reserve for title claim losses	1,518		1,509
Secured trust deposits	912			822			Secured trust deposits	826		791
Lease liabilities, see Note K	428			—
Lease liabilities							Lease liabilities	439		442
Income taxes payable	49			—			Income taxes payable	53		10
Deferred tax liability	261			227			Deferred tax liability	205		284

Total liabilities	4,893			4,329			Total liabilities	4,744		4,968
Commitments and Contingencies:							Commitments and Contingencies:
Redeemable non-controlling interest by 21% minority holder of ServiceLink Holdings, LLC	344			344			Redeemable non-controlling interest by 21% minority holder of ServiceLink Holdings, LLC	344		344
Equity:							Equity:
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	—			—

FNF common stock, $0.0001 par value; authorized 600,000,000 shares as of March 31, 2020 and December 31, 2019; outstanding of 272,418,216 and 275,563,436 as of March 31, 2020 and December 31, 2019, respectively, and issued of 292,341,256 and 292,236,476 as of March 31, 2020 and December 31, 2019, respectively							FNF common stock, $0.0001 par value; authorized 600,000,000 shares as of March 31, 2020 and December 31, 2019; outstanding of 272,418,216 and 275,563,436 as of March 31, 2020 and December 31, 2019, respectively, and issued of 292,341,256 and 292,236,476 as of March 31, 2020 and December 31, 2019, respectively	—		—

Preferred stock, $0.0001 par value; authorized 50,000,000 shares; issued and outstanding, NaN							Preferred stock, $0.0001 par value; authorized 50,000,000 shares; issued and outstanding, NaN	—		—
Additional paid-in capital	4,528			4,500			Additional paid-in capital	4,592		4,581
Retained earnings	942			641			Retained earnings	1,204		1,356
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		)
Accumulated other comprehensive earnings							Accumulated other comprehensive earnings	28		43
Less: Treasury stock,19,923,040 shares and 16,673,040 shares as of March 31, 2020 and December 31, 2019, respectively, at cost							Less: Treasury stock,19,923,040 shares and 16,673,040 shares as of March 31, 2020 and December 31, 2019, respectively, at cost	(692)		(598)
Total Fidelity National Financial, Inc. shareholders’ equity	4,962			4,630			Total Fidelity National Financial, Inc. shareholders’ equity	5,132		5,382
Non-controlling interests	(10		)	(2		)	Non-controlling interests	(16)		(17)
Total equity	4,952			4,628			Total equity	5,116		5,365
Total liabilities, redeemable non-controlling interest and equity	$	10,189		$	9,301		Total liabilities, redeemable non-controlling interest and equity	$	10,204	$	10,677

See Notes to Condensed Consolidated Financial Statements

Table of Contents

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Dollars in millions, except per share data)


	Three months ended June 30,					Six months ended June 30,						Three months ended March 31,
	2019		2018			2019		2018				2020		2019
	(Unaudited)					(Unaudited)						(Unaudited)
Revenues:											Revenues:
Direct title insurance premiums	$	625	$	599		$	1,065	$	1,071		Direct title insurance premiums	$	546	$	440
Agency title insurance premiums	754		732			1,306		1,296			Agency title insurance premiums	732		552
Escrow, title-related and other fees	665		765			1,199		1,383			Escrow, title-related and other fees	601		534
Interest and investment income	59		43			113		81			Interest and investment income	53		54
Realized gains and losses, net	41		(16		)	183		(15		)	Realized gains and losses, net	(320)		142
Total revenues	2,144		2,123			3,866		3,816			Total revenues	1,612		1,722
Expenses:											Expenses:
Personnel costs	685		665			1,277		1,272			Personnel costs	614		592
Agent commissions	579		561			1,000		992			Agent commissions	560		421
Other operating expenses	409		506			753		929			Other operating expenses	411		344
Depreciation and amortization	44		45			88		92			Depreciation and amortization	43		44
Provision for title claim losses	62		60			107		107			Provision for title claim losses	58		45
Interest expense	12		11			24		22			Interest expense	12		12
Total expenses	1,791		1,848			3,249		3,414			Total expenses	1,698		1,458
Earnings from continuing operations before income taxes and equity in earnings of unconsolidated affiliates	353		275			617		402
Income tax expense	86		22			151		53
Earnings before equity in earnings of unconsolidated affiliates	267		253			466		349
(Loss) earnings from continuing operations before income taxes and equity in earnings of unconsolidated affiliates											(Loss) earnings from continuing operations before income taxes and equity in earnings of unconsolidated affiliates	(86)		264
Income tax (benefit) expense											Income tax (benefit) expense	(28)		65
(Loss) earnings before equity in earnings of unconsolidated affiliates											(Loss) earnings before equity in earnings of unconsolidated affiliates	(58)		199
Equity in earnings of unconsolidated affiliates	3		1			10		3			Equity in earnings of unconsolidated affiliates	1		7
Net earnings	270		254			476		352

Net (loss) earnings											Net (loss) earnings	(57)		206
Less: Net earnings attributable to non-controlling interests	4		3			4		4			Less: Net earnings attributable to non-controlling interests	4		—
Net earnings attributable to Fidelity National Financial, Inc. common shareholders	$	266	$	251		$	472	$	348
Net (loss) earnings attributable to Fidelity National Financial, Inc. common shareholders											Net (loss) earnings attributable to Fidelity National Financial, Inc. common shareholders	$	(61)	$	206
Earnings per share											Earnings per share
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

Net (loss) earnings per share attributable to FNF common shareholders, basic											Net (loss) earnings per share attributable to FNF common shareholders, basic	$	(0.22)	$	0.75

Net (loss) earnings per share attributable to FNF common shareholders, diluted											Net (loss) earnings per share attributable to FNF common shareholders, diluted	$	(0.22)	$	0.74

Weighted average shares outstanding FNF common stock, basic basis	273		273			273		273			Weighted average shares outstanding FNF common stock, basic basis	274		273
Weighted average shares outstanding FNF common stock, diluted basis	277		278			277		279			Weighted average shares outstanding FNF common stock, diluted basis	274		277

See Notes to Condensed Consolidated Financial Statements

Table of Contents

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS

(In millions)

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

2019 2018 2019 2018
(Unaudited) (Unaudited)
Net earnings $ 270
$ 254
$ 476
$ 352
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
1
7
4
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
(5 ) (1 )
Other comprehensive earnings (loss) 22
(5 ) 49
(14 )
Comprehensive earnings 292
249
525
338
Less: Comprehensive earnings attributable to non-controlling interests 4
3
4
4
Comprehensive earnings attributable to Fidelity National Financial, Inc. common shareholders $ 288
$ 246
$ 521
$ 334


	Three months ended March 31,

	2020		2019
	(Unaudited)
Net (loss) earnings	$	(57)	$	206
Other comprehensive (loss) earnings:
Unrealized (loss) gain on investments and other financial instruments, net (excluding investments in unconsolidated affiliates) (1)	(9)		23
Unrealized gain on investments in unconsolidated affiliates (2)	7		6
Unrealized (loss) gain on foreign currency translation (3)	(10)		2
Reclassification adjustments for change in unrealized gains and losses included in net earnings (4)	(3)		(4)

Other comprehensive (loss) earnings	(15)		27
Comprehensive (loss) earnings	(72)		233
Less: Comprehensive earnings attributable to non-controlling interests	4		—
Comprehensive (loss) earnings attributable to Fidelity National Financial, Inc. common shareholders	$	(76)	$	233

~~(1)~~

~~Net of income tax expense (benefit) of $6~~

(1)Net of income tax (benefit) expense of $(3) million and $7 million for the three-month periods ended March 31, 2020 and 2019, respectively.

(2)Net of income tax expense of $2 million and $2 million for the three-month periods ended March 31, 2020 and 2019, respectively.

(3)Net of income tax (benefit) expense of $(3) million and $1 million for the three-month periods ended March 31, 2020 and 2019, respectively.

(4)Net of income tax expense of $1 million and $1 million for the three-month periods ended March 31, 2020 and $~~(2) million~~ ~~for the three-month periods ended June 30,~~ 2019, ~~and 2018, respectively, and $14 million and $(5) million for the six-month periods ended June 30, 2019 and 2018,~~ respectively.


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


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

See Notes to Condensed Consolidated Financial Statements

Table of Contents

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF EQUITY

(In millions, except per share data)

(Unaudited)

Fidelity National Financial, Inc. Common Shareholders
Accumulated
FNF Other Redeemable
Common Additional Comprehensive Treasury Non- Non-
Stock Paid-in Retained Earnings Stock controlling Total controlling
Shares $ Capital Earnings (Loss) Shares $ Interests Equity Interests
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 —
—
6
—
—
—
—
—
6
—
Treasury stock repurchased —
—
—
—
—
1
(46 ) —
(46 ) —
Other comprehensive earnings — unrealized gain on investments and other financial instruments —
—
—
—
43
—
—
—
43
—
Other comprehensive earnings — unrealized gain on investments in unconsolidated affiliates —
—
—
—
7
—
—
—
7
—
Other comprehensive earnings — unrealized gain on foreign currency translation —
—
—
—
4
—
—
—
4
—
Reclassification adjustments for change in unrealized gains and losses included in net earnings —
—
—
—
(5 ) —
—
—
(5 ) —
Stock-based compensation —
—
18
—
—
—
—
—
18
—
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 —
—
—
—
—
—
—
(5 ) (5 ) —
Net earnings —
—
—
472
—
—
—
4
476
—
Balance, June 30, 2019 290
$ —

$ 4,528
$ 942
$ 36
15
$ (544 ) $ (10 ) $ 4,952
$ 344


	Fidelity National Financial, Inc. Common Shareholders
										Accumulated
	FNF									Other										Redeemable
	Common					Additional				Comprehensive	Treasury						Non-			Non-
	Stock					Paid-in		Retained		Earnings	Stock						controlling		Total	controlling
	Shares	$		Capital		Earnings		(Loss)		Shares	$		Interests		Equity		Interests
Balance, December 31, 2018	290	$	—	$	4,500	$	641	$	(13)	14	$	(498)	$	(2)	$	4,628	$	344
Exercise of stock options	—	—		1		—		—		—	—		—		1		—


Treasury stock repurchased	—	—		—		—		—		1	(18)		—		(18)		—

Other comprehensive earnings - unrealized gain on investments and other financial instruments	—	—		—		—		23		—	—		—		23		—
Other comprehensive earnings - unrealized gain on investments in unconsolidated affiliates	—	—		—		—		6		—	—		—		6		—
Other comprehensive earnings - unrealized gain on foreign currency translation	—	—		—		—		2		—	—		—		2		—
Reclassification adjustments for change in unrealized gains and losses included in net earnings	—	—		—		—		(4)		—	—		—		(4)		—

Stock-based compensation	—	—		9		—		—		—	—		—		9		—

Dividends declared, $0.31 per common share	—	—		—		(85)		—		—	—		—		(85)		—



Subsidiary dividends declared to non-controlling interests	—	—		—		—		—		—	—		(3)		(3)		—
Net earnings	—	—		—		206		—		—	—		—		206		—
Balance, March 31, 2019	290	$	—	$	4,510	$	762	$	14	15	$	(516)	$	(5)	$	4,765	$	344

Balance, December 31, 2019	292	$	—	$	4,581	$	1,356	$	43	17	$	(598)	$	(17)	$	5,365	$	344

Exercise of stock options	—	—		2		—		—		—	—		—		2		—
Treasury stock repurchased	—	—		—		—		—		3	(94)		—		(94)		—

Other comprehensive loss — unrealized loss on investments and other financial instruments	—	—		—		—		(9)		—	—		—		(9)		—
Other comprehensive earnings — unrealized gain on investments in unconsolidated affiliates	—	—		—		—		7		—	—		—		7		—
Other comprehensive loss — unrealized loss on foreign currency translation	—	—		—		—		(10)		—	—		—		(10)		—
Reclassification adjustments for change in unrealized gains and losses included in net earnings	—	—		—		—		(3)		—	—		—		(3)		—


Stock-based compensation	—	—		9		—		—		—	—		—		9		—


Dividends declared, $0.33 per common share	—	—		—		(91)		—		—	—		—		(91)		—







Subsidiary dividends declared to non-controlling interests	—	—		—		—		—		—	—		(3)		(3)		—

Net (loss) earnings	—	—		—		(61)		—		—	—		4		(57)		—
Balance, March 31, 2020	292	$	—	$	4,592	$	1,204	$	28	20	$	(692)	$	(16)	$	5,116	$	344

See Notes to Condensed Consolidated Financial Statements

Table of Contents

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)


								For the three months ended March 31,

								2020		2019
								(Unaudited)
Cash flows from operating activities:							Cash flows from operating activities:
Net (loss) earnings							Net (loss) earnings	$	(57)	$	206
Adjustments to reconcile net (loss) earnings to net cash provided by (used in) operating activities:							Adjustments to reconcile net (loss) earnings to net cash provided by (used in) operating activities:
Depreciation and amortization							Depreciation and amortization	43		44
Equity in earnings of unconsolidated affiliates							Equity in earnings of unconsolidated affiliates	(1)		(7)
Loss on sales of investments and other assets and asset impairments, net							Loss on sales of investments and other assets and asset impairments, net	8		—

Non-cash lease costs							Non-cash lease costs	37		37
Operating lease payments							Operating lease payments	(38)		(37)
Distributions from unconsolidated affiliates, return on investment							Distributions from unconsolidated affiliates, return on investment	—		3
Stock-based compensation cost							Stock-based compensation cost	9		9
Change in valuation of equity and preferred securities, net							Change in valuation of equity and preferred securities, net	312		(142)
Changes in assets and liabilities, net of effects from acquisitions:							Changes in assets and liabilities, net of effects from acquisitions:

Net decrease in trade receivables							Net decrease in trade receivables	20		12
Net decrease (increase) in prepaid expenses and other assets							Net decrease (increase) in prepaid expenses and other assets	23		(76)
Net decrease in accounts payable, accrued liabilities, deferred revenue and other							Net decrease in accounts payable, accrued liabilities, deferred revenue and other	(228)		(106)
Net increase (decrease) in reserve for title claim losses							Net increase (decrease) in reserve for title claim losses	9		(5)
Net change in income taxes							Net change in income taxes	(32)		58
Net cash provided by (used in) operating activities							Net cash provided by (used in) operating activities	105		(4)
Cash flows from investing activities:							Cash flows from investing activities:
Proceeds from sales of investment securities							Proceeds from sales of investment securities	106		194
Proceeds from calls and maturities of investment securities							Proceeds from calls and maturities of investment securities	159		62
Proceeds from sales of property and equipment							Proceeds from sales of property and equipment	9		—
Fundings of Cannae Holdings Inc. note receivable							Fundings of Cannae Holdings Inc. note receivable	—		(100)

Additions to property and equipment and capitalized software							Additions to property and equipment and capitalized software	(28)		(22)
Purchases of investment securities							Purchases of investment securities	(300)		(322)
Net (purchases of) proceeds from sales and maturities of short-term investment securities							Net (purchases of) proceeds from sales and maturities of short-term investment securities	(382)		268

Additional investments in unconsolidated affiliates							Additional investments in unconsolidated affiliates	(9)		(1)
Distributions from unconsolidated affiliates, return of investment							Distributions from unconsolidated affiliates, return of investment	2		17
Net other investing activities							Net other investing activities	4		(2)

	For the six months ended June 30,

	2019			2018
	(Unaudited)
Cash flows from operating activities:
Net earnings	$	476		$	352
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	88			92
Equity in earnings of unconsolidated affiliates	(10		)	(3		)
Loss (gain) on sales of investments and other assets and asset impairments, net	4			(5		)
Non-cash lease costs	73			—
Operating lease payments	(75		)	—
Distributions from unconsolidated affiliates, return on investment	5			3
Stock-based compensation cost	18			15
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	(51		)	(21		)
Net increase in prepaid expenses and other assets	(48		)	(19		)
Net increase (decrease) in accounts payable, accrued liabilities, deferred revenue and other	16			(25		)
Net decrease in reserve for title claim losses	(8		)	(3		)
Net change in income taxes	71			(57		)
Net cash provided by operating activities	372			350
Cash flows from investing activities:
Proceeds from sales of investment securities	405			309
Proceeds from calls and maturities of investment securities	112			304
Proceeds from sales of property and equipment	—			21
Funding of Cannae Holdings Inc. note receivable	(100		)	—
Proceeds from repayment of Cannae Holdings Inc. note receivable	100			—
Additions to property and equipment and capitalized software	(47		)	(39		)
Purchases of investment securities	(518		)	(579		)
Net proceeds from sales and maturities of short-term investment securities	166			40
Additional investments in unconsolidated affiliates	(20		)	(34		)
Distributions from unconsolidated affiliates, return of investment	27			42
Net other investing activities	(5		)	(4		)
Other acquisitions/disposals of businesses, net of cash acquired/disposed	—			(6		)
Net cash provided by investing activities	120			54
Net cash (used in) provided by investing activities							Net cash (used in) provided by investing activities	(439)		94
Cash flows from financing activities:							Cash flows from financing activities:
Debt principal payments	—			(30		)
Equity portion of debt conversions paid in cash	—			(58		)

Dividends paid	(169		)	(164		)	Dividends paid	(90)		(85)
Subsidiary dividends paid to non-controlling interest shareholders	(5		)	(4		)	Subsidiary dividends paid to non-controlling interest shareholders	(3)		(3)
Exercise of stock options	6			6			Exercise of stock options	2		1
Subsidiary equity repurchase	—			(1		)

Net change in secured trust deposits	90			67			Net change in secured trust deposits	35		(113)
Purchase of additional share in consolidated subsidiaries	(3		)	—

Payment of contingent consideration for prior period acquisitions	(17		)	(10		)	Payment of contingent consideration for prior period acquisitions	(7)		(6)

Purchases of treasury stock	(46		)	—			Purchases of treasury stock	(89)		(18)
Net cash used in financing activities	(144		)	(194		)	Net cash used in financing activities	(152)		(224)
Net increase in cash and cash equivalents	348			210
Net decrease in cash and cash equivalents							Net decrease in cash and cash equivalents	(486)		(134)
Cash and cash equivalents at beginning of period	1,257			1,110			Cash and cash equivalents at beginning of period	1,376		1,257
Cash and cash equivalents at end of period	$	1,605		$	1,320		Cash and cash equivalents at end of period	$	890	$	1,123

See Notes to Condensed Consolidated Financial Statements

Table of Contents

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,” the "Company" 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, ~~2018.~~

~~Certain reclassifications have been made to the 2018 Condensed Consolidated Financial Statements to conform to classifications used in~~ 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 operating through its title insurance underwriters - Fidelity National Title Insurance Company ("FNTIC"), Chicago Title Insurance Company ("Chicago Title"), Commonwealth Land Title Insurance Company ("Commonwealth Title"), Alamo Title Insurance and National Title Insurance of New York Inc. - which collectively issue more title insurance policies than any other title company in the United States. Through our subsidiary, ServiceLink Holdings, LLC ("ServiceLink"), we provide mortgage transaction services, including title-related services and facilitation of production and management of mortgage loans.

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

Recent Developments

Pending Acquisition of ~~Stewart~~FGL Holdings ("FGL")

On ~~March 18, 2018,~~February 7, 2020, we ~~signed~~entered into a merger agreement as amended or otherwise supplemented from time to time, (the ~~"Merger Agreement"~~“Merger Agreement”) to acquire ~~Stewart Information Services Corporation ("Stewart")~~FGL (NYSE: ~~STC)~~FG) (the ~~"Stewart Merger"~~“FGL Merger”). ~~The material~~Subject to the terms and conditions of the Merger Agreement, which has been approved by the board of directors of FNF, at the First Effective Time (as defined in the Merger Agreement), the ordinary shares of FGL (the “Ordinary Shares”), including all restricted Ordinary Shares (whether vested or unvested), issued and ~~progress on~~outstanding as of immediately prior to the ~~Stewart Merger through February 2019 are~~First Effective Time (other than (i) shares owned by FGL and any of its subsidiaries or FNF and any of its subsidiaries and (ii) shares in respect of which dissenters rights have been properly exercised and perfected under Cayman law) will be converted into the right to receive $12.50 in cash or 0.2558 shares (“the Stock Consideration”) of common stock of FNF (“FNF Common Stock”), at the election of the holder thereof and subject to the proration mechanics set forth in ~~our Annual Report.~~the Merger Agreement. Pursuant to the Merger Agreement, all Ordinary Shares held by FNF and its subsidiaries will be converted into the right to receive the Stock Consideration. Each Series B Cumulative Preferred Share, all of which are held by FNF and its subsidiaries, will be converted into the right to receive a number of shares of FNF Common Stock that is equal to (i) the Liquidation Preference (as defined in the Merger Agreement) divided by (ii) the Reference Parent Common Stock Price (as defined in the Merger Agreement).

~~On June 10, 2019, we exercised our second option~~

Additionally, pursuant to ~~extend~~ the ~~closing date~~Merger Agreement, all options to purchase Ordinary Shares (“FGL Share Option”) and phantom unit denominated in Ordinary Shares (“FGL Phantom Unit”), in each case, outstanding immediately prior to the First Effective Time, will be canceled and converted into options to purchase FNF Common Stock and phantom units denominated in FNF Common Stock at the First Effective Time (collectively, the “Rollover Awards”), as applicable. The Rollover Awards will generally be subject to the same terms and conditions as applicable to the applicable canceled FGL Share Option or FGL Phantom Unit immediately prior to the First Effective Time, except that (i) all performance-vesting criteria will be deemed satisfied at the First Effective Time at the levels described in the Merger Agreement and such Rollover Awards will be subject only to time-based vesting conditions after the First Effective Time, and (ii) immediately prior to the First Effective Time, additional time-vesting credits will be provided to holders in respect of FGL Share Options and FGL Phantom Units granted prior to January 1, 2020, as described in the ~~transaction an additional three months to September 18, 2019.~~Merger Agreement.

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 our shareholders.

The closing of the ~~Stewart~~FGL Merger is subject to certain closing conditions, including the approval by FGL stockholders, 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 issued to Cannae a revolver note (the "Cannae Revolver")Closing is expected in the ~~aggregate principal amount~~second or third quarter of ~~up to $100 million. Cannae is considered a related party to FNF.~~2020.

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 ~~February 7, 2019, Cannae borrowed $100 million from FNF under~~April 27, 2020 we entered into an amendment to the ~~Cannae Revolver. On June 12, 2019, Cannae repaid to FNF~~Merger Agreement (the "Amendment"). See Item 5. of Part II of this Quarterly Report for further discussion of the ~~entire $100 million outstanding amount under the Cannae Revolver.~~Amendment.

~~On July 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, respectively, and $151 million and $53 million in the six-month periods ended June 30, 2019 and 2018, respectively. Income tax expense as a

Table of Contents

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued

Term Loan

In connection with the contemplated FGL Merger, on April 22, 2020, we entered into a term loan credit agreement that provides for an aggregate principal borrowing of $1.0 billion (the "Term Loan Agreement") with Bank of America, N.A, as administrative agent (in such capacity, the "Administrative Agent"), JPMorgan Chase Bank, N.A., as syndication agent, and the other lenders party thereto from time to time (the “Term Lenders”), pursuant to which the Term Lenders provided a $1 billion delayed draw term loan facility (the “Term Loan”). The Term Loan generally accrues interest based on a fluctuating rate per annum based on either (i) the base rate (which is equal to the highest of (a) the federal funds rate plus 0.5% of 1%, (b) the Administrative Agent’s "prime rate," and (c) LIBOR plus 1% (with a floor of 1.75%)), plus a margin of between 1% and 2% depending on the senior unsecured debt ratings of FNF (the “FNF Debt Rating”) or (ii) LIBOR (with a floor of 0.75%) plus a margin of between 2% and 0.03 depending on the FNF Debt Rating. In accordance with the Term Loan Agreement, the FGL Merger shall have been, or shall concurrently with the Term Loan Agreement borrowing be, consummated in accordance with the terms of the Merger Agreement. See Item 5. of Part II of this Quarterly Report for further discussion of the Term Loan Agreement.

Income Tax

Income tax (benefit) expense was $(28) million and $65 million in the three-month periods ended March 31, 2020 and 2019, respectively. Income tax (benefit) expense as a percentage of (loss) earnings before income taxes was ~~24%~~33% and 8%25% in the three-month periods ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018, respectively, and 24% and 13% in the six-month periods ended June 30, 2019 and 2018,~~ respectively. The ~~increase~~change in income tax (benefit) expense as a percentage of (loss) earnings before income taxes in the ~~2019 periods~~2020 period from the comparable ~~periods~~period in ~~2018 was~~2019 is primarily attributable to ~~a change in~~an additional tax ~~estimate~~benefit in the ~~three months ended June 30, 2018 relating~~current quarter of $7 million related to a 2017 amended return filed in 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 title underwriters.~~2020 period.

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. For the three months ended March 31, 2020, our basic and diluted net loss per share attributable to FNF common shareholders are the same because we generated a net loss attributable to FNF common shareholders and the assumed conversions of our potentially dilutive securities would have an antidilutive impact. There were no3 million antidilutive securities outstanding during the three months ended March 31, 2020. There were 0 antidilutive instruments outstanding during the three ~~or six-month periods~~months ended ~~June 30, 2019 or June 30, 2018.~~March 31, 2019.

Recent Accounting Pronouncements

Adopted Pronouncements

~~In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02~~ ~~Leases (Topic 842)~~. The amendments in this ASU introduce broad changes to the accounting and reporting for leases by lessees. The main provisions of the new standard include: clarifications to the definitions of a lease, components of leases, and criteria for determining lease classification; requiring virtually all leased assets, including operating leases and related liabilities resulting from applying the fair value measurement, to be reflected on the lessee's balance sheet; and expanding and adding to the required disclosures for lessees. In July 2018, the FASB issued ASU 2018-11 ~~Leases (Topic 842): Targeted Improvements~~ which allows entities the option to adopt this standard using a modified retrospective approach with a cumulative-effect adjustment to opening equity at the adoption date and include required disclosures for prior periods.

We adopted 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 our Prepaid expenses and other assets and Accounts payable and accrued liabilities, respectively. There was no impact to opening equity as a result of the adoption. We elected to apply the following package of practical expedients 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.

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

~~Pronouncements Not Yet Adopted~~

In June 2016, the FASB issued ASU No. 2016-13 Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments (Topic 326). 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~~The method used to measure estimated credit losses for ~~annual periods~~fixed maturity available-for-sale securities will be unchanged from current GAAP; however, the amendments require credit losses to be recognized through an allowance rather than as a reduction to the amortized cost of those securities. We adopted ASC 326 using the modified retrospective method for all financial assets measured at amortized cost. Results for reporting period beginning after December 15, 2019 ~~including interim periods within those fiscal years. Early adoption is permitted~~are presented under ASC 326 while prior period amounts continue to be reported in accordance with previously applicable Generally Accepted Accounting Principles. We adopted this standard using the prospective transition approach for ~~annual periods beginning~~debt securities for which other than temporary impairment had been recognized prior to January 1, 2020. As a result, the amortized cost basis remains the same before and after ~~December 15, 2018, including interim periods within those fiscal years. We are still evaluating~~ the ~~effect this new guidance~~effective date of ASC 326. The effective interest rate on these debt securities was not changed. Amounts previously recognized in accumulated other comprehensive income as of January 1, 2020 relating to improvements in cash flows expected to be collected 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~~be accreted into income over the ~~standard.~~remaining life of the asset.

Table of Contents

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued

Recoveries of amounts previously written off relating to improvements in cash flows after January 1, 2020 will be recorded in earnings when received. We did not record a cumulative-effect adjustment to the opening balance of retained earnings upon adoption of this standard in the current quarter as the impact was not material. The overall effect of Topic 326 was not material to the Consolidated Financial Statements upon adoption. See Note D. Investments for further discussion of the adoption as it relates to our fixed maturity securities available for sale.

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. We have adopted this standard as of January 1, 2020 and are applying this guidance on a prospective basis. The overall effect of Topic 350 was not material to the Consolidated Financial Statements upon adoption.

Pronouncements Not Yet Adopted

In December 2019, the FASB issued ASU 2019-12 Income Taxes - Simplifying the Accounting for Income Taxes (Topic 740), which simplifies various aspects of the income tax accounting guidance and will be applied using different approaches depending on what the specific amendment relates to and, for public entities, are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted. We do not expect this guidance to have a material impact on our Consolidated Financial Statements and related disclosures upon adoption.

Table of Contents

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued

Note B — Summary of Reserve for Claim Losses

A summary of the reserve for claim losses follows:


	Three months ended March 31,
	2020			2019
	(Dollars in millions)
Beginning balance	$	1,509		$	1,488

Change in reinsurance recoverable	(1)			(1)
Claim loss provision related to:
Current year	58			45
Prior years	—			—
Total title claim loss provision	58			45
Claims paid, net of recoupments related to:
Current year	—			(1)
Prior years	(48)			(48)
Total title claims paid, net of recoupments	(48)			(49)
Ending balance of claim loss reserve for title insurance	$	1,518		$	1,483
Provision for title insurance claim losses as a percentage of title insurance premiums	4.5		%	4.5		%

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

Current year (2 ) (3 )
Prior years (113 ) (107 )
Total title claims paid, net of recoupments (115 ) (110 )
Ending balance of claim loss reserve for title insurance $ 1,480
$ 1,487
Provision for title insurance claim losses as a percentage of title insurance premiums 4.5 % 4.5 %

NaN lawsuits have been filed by various parties against Chicago Title Company and Chicago Title Insurance Company as its alter ego (collectively, the “Named Companies”), among others. Generally, plaintiffs claim they are investors who were solicited by Gina Champion-Cain to provide funds that purportedly were to be used for high-interest, short-term loans to parties seeking to acquire California alcoholic beverage licenses. Plaintiffs contend that under California state law, alcoholic beverage license applicants are required to escrow an amount equal to the license purchase price while their applications remain pending with the State. It is further alleged that Chicago Title Company participated with Ms. Champion-Cain and her entities in a fraud scheme involving an escrow account maintained by Chicago Title Company into which the plaintiffs’ funds were deposited.

The five lawsuits are as follows:

On October 22, 2019, a lawsuit styled, Ovation Fin. Holdings 2 LLC, Ovation Fund Mgmt. II, LLC, Banc of California, N.A. v. Chicago Title Ins. Co., Chicago Title Co., was filed in the United States District Court for the Southern District of California. Plaintiffs claim losses of more than $75 million as a result of the alleged fraud scheme, and also seek consequential,

treble, and punitive damages. The Named Companies are defending and have filed a motion to dismiss the complaint on several grounds, or alternatively, to stay the case.

On November 5, 2019, a putative class action lawsuit styled, Blake E. Allred and Melissa M. Allred v. Chicago Title Co., Chicago Title Ins. Co., Adelle E. Ducharme, Betty Elixman, Gina Champion-Cain, Joelle Hanson, Cris Torres, and Rachel Bond, was filed in the United States District Court for the Southern District of California. Plaintiffs seek class certification and consequential, treble, and punitive damages. The Named Companies are defending and have filed a motion to dismiss the complaint on several grounds, or alternatively, to stay the case.

On December 13, 2019, a lawsuit styled, Kim Funding, LLC, Kim H. Peterson, Joseph J. Cohen, and ABC Funding Strategies, LLC v. Chicago Title Co., Chicago Title Ins. Co., Thomas Schwiebert, Adelle Ducharme, and Betty Elixman, was filed in the Superior Court of San Diego County for the State of California. Plaintiffs claim losses of more than $250 million as a result of the alleged fraud scheme, and also seek statutory, treble, and punitive damages. The Named Companies are defending and have filed a motion to dismiss the complaint on several grounds.

On March 6, 2020, a lawsuit styled, Wakefield Capital, LLC, Wakefield Investments, LLC, 2Budz Holding, LLC, Doug and Kristine Heidrich, and Jeff and Heidi Orr v. Chicago Title Co. and Chicago Title Ins. Co., was filed in the Superior Court of San Diego County for the State of California. Plaintiffs claim losses in excess of $7.8 million as a result of the alleged fraud scheme, and also seek punitive damages, recovery of attorneys’ fees, and disgorgement. The Company is investigating and will file its response on or before the due date.

On March 16, 2020, a lawsuit styled, Randolph L. Levin, et al., v. Chicago Title Co., Chicago Title Ins. Co., Thomas Schwiebert, Adelle Ducharme, Betty Elixman, et al., was filed in the Superior Court of San Diego County for the State of

Table of Contents

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued

California. Plaintiffs claim losses in excess of $38 million as a result of the alleged fraud scheme, and also seek punitive damages and the recovery of attorneys’ fees. The Company is investigating and will file its response on or before the due date.

In addition, the Chicago Title Company is also in receipt of a pre-suit demand for approximately $30 million from another group of alleged investors. Chicago Title Company has acknowledged receipt of the claim and is investigating.

At this time, the Company is unable to ascertain its liability, if any, and is unable to make an estimate of a reasonably possible claim loss for any of these claims due to the complex nature of the claims and litigation, the early procedural status of each claim (involving unresolved questions of fact without any rulings on the merits or determinations of liability), the extent of discovery not yet conducted, potential insurance coverage, and an incomplete evaluation of possible defenses, counterclaims, crossclaims or third-party claims that may exist. Moreover, it is likely that in some instances, the claims listed above are duplicative. The Company, however, has recorded an incurred claim loss reserve for legal fees related to these matters as of March 31, 2020, which is included in its consolidated reserve for claim losses. As further information becomes available, the Company will continue to evaluate the adequacy of its consolidated reserve for claim losses.

We continually ~~update~~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 reserve within a reasonable range of our actuary's central estimate.

810

Table of Contents

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued

Note C — Fair Value Measurements

The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, respectively:


	March 31, 2020
	Level 1		Level 2		Level 3		Total
	(In millions)
Fixed maturity securities available for sale:
U.S. government and agencies	$	—	$	278	$	—	$	278
State and political subdivisions	—		92		—		92
Corporate debt securities	—		1,553		14		1,567
Mortgage-backed/asset-backed securities	—		63		—		63
Foreign government bonds	—		57		—		57
Preferred securities	141		163		—		304
Equity securities	627		—		1		628
Other long-term investments	59		—		—		59


Total assets	$	827	$	2,206	$	15	$	3,048

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


	December 31, 2019
	Level 1		Level 2		Level 3		Total
	(In millions)
Fixed maturity securities available for sale:
U.S. government and agencies	$	—	$	288	$	—	$	288
State and political subdivisions	—		93		—		93
Corporate debt securities	—		1,570		17		1,587
Mortgage-backed/asset-backed securities	—		62		—		62
Foreign government bonds	—		60		—		60
Preferred securities	65		258		—		323
Equity securities	810		—		1		811
Other long-term investments	—		—		120		120


Total assets	$	875	$	2,331	$	138	$	3,344

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

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~~1 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.

Table of Contents

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued

•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.

~~Table of Contents~~•

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

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

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.

Our Level 3 fair value measures for our other ~~long term~~long-term investment ~~are~~were provided by a third-party pricing service. We ~~utilize one~~utilized 1 firm to value our Level 3 other long-term investment. The pricing service is a leading global provider of financial market data, analytics and related services to financial institutions. We ~~utilize~~utilized the income approach and a discounted cash flow analysis in determining the fair value of our Level 3 other long-term investment. The primary unobservable input utilized in this pricing methodology is the discount rate used which is determined based on underwriting yield, credit spreads, yields on benchmark indices and comparable public company debt. The discount rate used in our determination of the fair value of our Level 3 other long-term investment as of ~~June 30,~~December 31, 2019 was a range of ~~7.3%~~6.8% - ~~7.9%~~7.4% and a weighted-average of ~~7.5%~~7.0%. ~~Based~~Based on the total fair value of our Level 3 other long-term investment as of ~~June 30,~~December 31, 2019, changes in the discount rate utilized will not result in a fair value significantly different than the amount recorded.

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

~~Table of Contents~~

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

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

The following table presents a summary of the changes in the fair values of Level 3 assets, measured on a recurring basis, for the ~~three and six-month~~three-month periods ended ~~June 30, 2019~~March 31, 2020 and ~~2018.~~2019.

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

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


	Three months ended March 31, 2020														Three months ended March 31, 2019
	Other Long-Term		Equity		Corporate Debt				Other Long-Term		Corporate Debt
	Investment		Securities		Securities		Total		Investment		Securities		Total
	(In millions)														(In millions)
Fair value, beginning balance	$	120	$	1	$	17	$	138	$	101	$	17	$	118


Transfers out of Level 3	(59)		—		—		(59)		—		(4)		(4)
Paid-in-kind dividends (1)	2		—		—		2		1		1		2
Purchases	—		—		—		—		—		5		5
Sales and maturities	—		—		—		—		—		(1)		(1)
Net valuation (loss) gain included in earnings (2)	(63)		—		(3)		(66)		5		—		5

Fair value, ending balance	$	—	$	1	$	14	$	15	$	107	$	18	$	125

(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,~~March 31, 2020, we transferred $59 million of other long-term investments from Level 3 to Level 1 based on a change in valuation technique. For the three months ended March 31, 2019, transfers ~~between Level 2 and~~out of 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.

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 notes receivable approximate fair value due to their short-term nature and/or short time period since consummation. Additional information regarding the fair value of our investment portfolio is included in Note D. Investments.

1112

Table of Contents

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued

Note D — Investments

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

June 30, 2019
Carrying Cost Unrealized Unrealized Fair
Value Basis Gains Losses Value
(In millions)
Fixed maturity securities available for sale:
U.S. government and agencies $ 265
$ 259
$ 6
$ —
$ 265
State and political subdivisions 76
74
2
—
76
Corporate debt securities 1,581
1,542
44
(5 ) 1,581
Mortgage-backed/asset-backed securities 73
71
2
—
73
Foreign government bonds 59
61
1
(3 ) 59
Total $ 2,054
$ 2,007
$ 55
$ (8 ) $ 2,054

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

Beginning January 1, 2020, unrealized losses are evaluated to determine whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, adverse conditions specifically related to the security and changes to the rating of the security by a rating agency, among other factors, including the correlation between changes in the price of certain comparable benchmark indices and the security. If credit losses exist, an allowance for credit losses is recorded for the credit losses limited by the amount that the fair value is less than the amortized cost. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income. Such reviews are inherently uncertain and the value of the investment may not fully recover or may decline in future periods resulting in additional losses.

The cost basis of fixed maturity securities available for sale includes an adjustment for amortized premium or accreted discount since the date of purchase. The fair values of our available for sale securities at March 31, 2020 and December 31, 2019 are as follows:


	March 31, 2020
		Cost		Unrealized		Unrealized		Allowance for		Fair
		Basis		Gains		Losses		Credit Loss		Value
	(In millions)
Fixed maturity securities available for sale:
U.S. government and agencies		$	265	$	13	$	—	$	—	$	278
State and political subdivisions		90		2		—		—		92
Corporate debt securities		1,547		42		(11)		(11)		1,567
Mortgage-backed/asset-backed securities		60		3		—		—		63
Foreign government bonds		63		—		(6)		—		57
Total		$	2,025	$	60	$	(17)	$	(11)	$	2,057


	December 31, 2019
		Cost		Unrealized		Unrealized		Fair
		Basis		Gains		Losses		Value
	(In millions)
Fixed maturity securities available for sale:
U.S. government and agencies		$	282	$	7	$	(1)	$	288
State and political subdivisions		90		3		—		93
Corporate debt securities		1,536		54		(3)		1,587
Mortgage-backed/asset-backed securities		60		2		—		62
Foreign government bonds		61		1		(2)		60


Total		$	2,029	$	67	$	(6)	$	2,090

Table of Contents

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued

The following table presents certain information regarding contractual maturities of our fixed maturity securities at ~~June 30, 2019:~~March 31, 2020:


	March 31, 2020
	Amortized		% of		Fair		% of
Maturity	Cost		Total		Value		Total
	(Dollars in millions)
One year or less	$	319	16	%	$	315	15	%
After one year through five years	1,104		54		1,112		55
After five years through ten years	421		21		442		21
After ten years	121		6		125		6
Mortgage-backed/asset-backed securities	60		3		63		3
Total	$	2,025	100	%	$	2,057	100	%

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 %

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.

Net unrealized losses on investment securities for which the allowance for credit losses has not been recorded 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 March 31, 2020 were as follows:


March 31, 2020
	Less than 12 Months						12 Months or Longer						Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses


Corporate debt securities	$	404	$	(9)	$	45	$	(2)	$	449	$	(11)
Foreign government bonds	36		(2)		20		(4)		56		(6)


Total temporarily impaired securities	$	440	$	(11)	$	65	$	(6)	$	505	$	(17)

~~Table~~Unrealized losses on corporate bonds have not been recognized into income because the issuers bonds are of ~~Contents~~

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

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

high credit quality (rated AA or higher), management does not intend to and it is likely that management will not be required to sell the securities prior to their anticipated recovery and the decline in fair value is largely due to changes in interest rates and other market conditions. The issuers continue to make timely principal and interest payment on the bonds. The fair value is expected to recover as the bonds approach maturity.

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, 2019 and~~ December 31, ~~2018,~~2019, were as ~~follows (in millions):~~follows:


December 31, 2019
	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	$	62	$	(1)	$	—	$	—	$	62	$	(1)

Corporate debt securities	98		(2)		51		(1)		149		(3)
Foreign government bonds	—		—		33		(2)		33		(2)


Total temporarily impaired securities	$	160	$	(3)	$	84	$	(3)	$	244	$	(6)

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 )

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

During the three months ended March 31, 2020, we recorded impairment charges of $11 million related to our corporate debt securities. We recorded ~~no impairment charges~~0 impairments relating to our investments during the three ~~or six-month periods~~months ended ~~June 30,~~March 31, 2019. ~~We recorded $3 million~~

Table of impairment charges relating to investments during the three and six-month periods ended June 30, 2018. Impairment in the 2018 periods relate to fixed maturity securities of investees entering Chapter 11 bankruptcy which exhibited decreasing fair market values and from which we are uncertain of our ability to recover our initial investment.Contents

~~As of June 30, 2019 and December 31, 2018, we held no investment securities for which an other-than-temporary impairment had been previously recognized.~~ FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued

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.

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~~three-month periods ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively:


	Three months ended March 31, 2020
	Gross Realized Gains		Gross Realized Losses		Allowance for Credit Losses		Net Realized Gains (Losses)		Gross Proceeds from Sale/Maturity
	(In millions)

Sales and maturities of fixed maturity securities available for sale	$	12	$	(1)	$	—	$	11	$	177
Sales and maturities of preferred securities	—		—		—		—		83
Sales of equity securities	—		—		—		—		—
Valuation of fixed maturity securities available for sale					(11)		(11)		—
Valuation of equity securities					—		(205)		—
Valuation of preferred securities					—		(42)		—
Valuation of other long term investments					—		(63)		—

Other realized gains and losses, net					—		(10)		9
Total					$	(11)	$	(320)	$	269

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


	Three months ended March 31, 2019
	Gross Realized Gains		Gross Realized Losses		Net Realized Gains (Losses)		Gross Proceeds from Sale/Maturity
	(In millions)
Sales and maturities of fixed maturity securities available for sale	$	1	$	(1)	$	—	$	235
Sales and maturities of preferred securities	—		—		—		24
Sales of equity securities	4		—		4		41
Valuation of equity securities					126		—
Valuation of preferred securities					11		—
Valuation of other long term investments					5		—
Impairment of lease assets					(4)		—
Total					$	142	$	300

~~Table of Contents~~

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

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

Three months ended June 30, 2018 Six months ended June 30, 2018
Gross Realized Gains Gross Realized Losses Net Realized Gains (Losses) Gross Proceeds from Sale/Maturity Gross Realized Gains Gross Realized Losses Net Realized Gains (Losses) Gross Proceeds from Sale/Maturity
(In millions) (In millions)
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

Investment with Related Party

Included in equity securities as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 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~~$191 million and ~~$98~~$212 million as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, respectively.

Table of Contents

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued

Note E ~~—Notes~~— 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


	March 31, 2020		December 31, 2019
	(In millions)
4.50% Notes, net of discount	$	443	$	443
5.50% Notes, net of discount	398		398



Revolving Credit Facility	(2)		(3)









	$	839	$	838

At ~~June 30, 2019,~~March 31, 2020, the estimated fair value of our unsecured notes payable was approximately ~~$903~~$955 million, which was ~~$53~~$104 million higher than its carrying value, excluding $12 million of net unamortized debt issuance costs and discount. The fair values of our unsecured notes payable are based on established market prices for the securities on ~~June 30, 2019~~March 31, 2020 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 4.50% Notes were priced at 99.252% of 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 4.50% Notes as a 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~~April 27, 2017, we entered into ~~an agreement to amend and restate our existing $800 million Second~~a Fourth Amended and Restated Credit Agreement that provides for our $800 million revolving credit facility (the ~~“Existing~~Revolving Credit ~~Agreement”), dated as of April 16, 2012~~Facility) 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 Restated Credit Agreement are set forth in our Annual Report for the year ended December 31, ~~2018.~~2019. As of ~~June 30, 2019,~~

~~Table of Contents~~

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

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

March 31, 2020, there was no0 principal outstanding, $3$2 million of unamortized debt issuance costs, and $800 million of available borrowing capacity under the Revolving Credit Facility.

On August 28, 2012, ~~FNF~~we completed an offering of $400 million in aggregate principal amount of 5.50% notes due September 2022 (the "5.50% Notes"), pursuant to an effective registration statement previously filed with the Securities and Exchange Commission ("SEC"). The material terms of the 5.50% Notes are set forth in our Annual Report for the year ended December 31, ~~2018.~~2019.

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


Gross principal maturities of notes payable at March 31, 2020 are as follows (in millions):
2020 (remaining)	$	—
2021	—
2022	400
2023	—
2024	—
Thereafter	450
	$	850

Table of Contents

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued

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. See Note B. Summary of Reserve for Claim Losses for further discussion. 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 $11~~$22 million as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018, respectively.~~2019. 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.~~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 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 that precludes certification. After notice to the class, plaintiffs moved for partial summary judgment on liability, and defendants moved for summary judgment. On June 27, 2018, the court entered an order granting plaintiffs’ motion for partial summary judgment on liability, and denying the Company’s motion. 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 plaintiffs~~Plaintiffs should bear the responsibility of identifying class members and calculating damages. The ~~Company sought permission from the Pennsylvania Superior Court to appeal~~Company’s requests for interlocutory appeals of both the liability and damage multiplier ~~issues; however, the petition was~~issues were denied. The ~~Company has filed~~parties executed a ~~petition with~~written settlement agreement and received preliminary approval. Notice must now be given, and the ~~Pennsylvania Supreme Court requesting permission~~

~~Table of Contents~~

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

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

~~to appeal on~~class action settlement administrator will follow the merits, or in the alternative, an order directing the Pennsylvania Superior Court to grant interlocutory 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 prejudgment interest or reasonable attorneys’ fees. Accordingly, damages are not reasonably estimable at this time.claims process. We ~~will continue to vigorously defend this matter, and we~~ do not believe the ~~result~~settlement 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.

~~Note G — Dividends~~

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

1617

Table of Contents

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued

Note G — Dividends

On April 22, 2020, our Board of Directors declared cash dividends of $0.33 per share, payable on June 30, 2020, to FNF common shareholders of record as of June 16, 2020.

Table of Contents

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued

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, 2019:~~March 31, 2020:

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


	Title		Corporate and Other		Total
	(In millions)
Title premiums	$	1,278	$	—	$	1,278
Other revenues	610		(9)		601
Revenues from external customers	1,888		(9)		1,879
Interest and investment income, including realized gains and losses	(265)		(2)		(267)
Total revenues	1,623		(11)		1,612
Depreciation and amortization	37		6		43
Interest expense	—		12		12
Loss before income taxes and equity in earnings of unconsolidated affiliates	(53)		(33)		(86)
Income tax benefit	(19)		(9)		(28)
Loss before equity in earnings of unconsolidated affiliates	(34)		(24)		(58)
Equity in earnings of unconsolidated affiliates	1		—		1
Net loss	$	(33)	$	(24)	$	(57)
Assets	$	8,728	$	1,476	$	10,204
Goodwill	2,460		266		2,726

As of and for the three months ended ~~June 30, 2018:~~March 31, 2019:


	Title		Corporate and Other		Total
	(In millions)
Title premiums	$	992	$	—	$	992
Other revenues	481		53		534
Revenues from external customers	1,473		53		1,526
Interest and investment income, including realized gains and losses	190		6		196
Total revenues	1,663		59		1,722
Depreciation and amortization	39		5		44
Interest expense	—		12		12
Earnings (loss) before income taxes and equity in earnings of unconsolidated affiliates	292		(28)		264
Income tax expense (benefit)	71		(6)		65
Earnings (loss) before equity in earnings of unconsolidated affiliates	221		(22)		199
Equity in earnings of unconsolidated affiliates	7		—		7
Net earnings (loss)	$	228	$	(22)	$	206
Assets	$	8,567	$	1,080	$	9,647
Goodwill	2,463		264		2,727

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

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 also includes certain other unallocated corporate overhead expenses and eliminations of revenues and expenses between it and our Title segment.

Table of Contents

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued

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

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

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

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

~~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.~~ ~~This~~segment 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.

~~Table of Contents~~

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

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

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.


	Three months ended March 31,
	2020		2019
Cash paid for:
Interest	$	22	$	22
Income taxes	4		6
Non-cash investing and financing activities:

Change in proceeds of sales of investments available for sale receivable in period	$	—	$	(44)
Change in purchases of investments available for sale payable in period	—		20
Change in treasury stock purchases payable in period	5		—
Lease liabilities recognized in exchange for lease right-of-use assets	8		6
Remeasurement of lease liabilities	22		9

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
—

1920

Table of Contents

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued

Note J — Revenue Recognition

On January 1, 2018, we adopted Accounting Standard Codification ("ASC") Topic 606 by applying the modified retrospective method. 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.

Disaggregation of Revenue

Our revenue consists of:


			Three months ended March 31,
			2020		2019
Revenue Stream	Income Statement Classification	Segment	Total Revenue
Revenue from insurance contracts:			(in millions)
Direct title insurance premiums	Direct title insurance premiums	Title	$	546	$	440
Agency title insurance premiums	Agency title insurance premiums	Title	732		552
Home warranty	Escrow, title-related and other fees	Title	43		41
Total revenue from insurance contracts			1,321		1,033
Revenue from contracts with customers:
Escrow fees	Escrow, title-related and other fees	Title	221		165
Other title-related fees and income	Escrow, title-related and other fees	Title	159		136
ServiceLink, excluding title premiums, escrow fees, and subservicing fees	Escrow, title-related and other fees	Title	106		83
Real estate technology	Escrow, title-related and other fees	Corporate and other	27		25
Real estate brokerage	Escrow, title-related and other fees	Corporate and other	6		7
Other	Escrow, title-related and other fees	Corporate and other	(42)		21
Total revenue from contracts with customers			477		437
Other revenue:
Loan subservicing revenue	Escrow, title-related and other fees	Title	81		56
Interest and investment income	Interest and investment income	Various	53		54
Realized gains and losses, net	Realized gains and losses, net	Various	(320)		142
Total revenues	Total revenues		$	1,612	$	1,722

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

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.

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

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

~~Table of Contents~~

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

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

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 ServiceLink, 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.

Table of Contents

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued

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

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


	March 31, 2020		December 31, 2019
	(In millions)
Trade receivables	$	301	$	321
Deferred revenue (contract liabilities)	107		111

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, 2019,~~March 31, 2020, we recognized ~~$44~~$44 million ~~and $78 million~~ of revenue ~~respectively,~~ which was included in deferred revenue at the beginning of the period.

~~Note K. Leases~~

~~We adopted ASC Topic 842 on January 1, 2019 using a modified retrospective approach. Prior year periods continue to be reported under ASC Topic 840. See Note A~~ ~~Basis of Financial Statements~~ ~~for further discussion of the 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 are party to a contract which conveys the right for the Company to control an asset for a specified period of time. Substantially all of our operating lease arrangements relate to rented office space and real estate for our title operations. We generally are not a party to any material contracts considered finance leases. Right-of-use assets and lease liabilities under ASC Topic 842 are recorded as Lease assets and Lease liabilities, respectively, on the Condensed Consolidated Balance Sheet as of June 30, 2019.

~~Our operating leases range in term from one to ten years. As of June 30, 2019, the weighted-average remaining lease term of our operating leases was 4.2 years.~~

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

2122

Table of Contents

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

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

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

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

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

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

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

2019 (remaining) $ 74
2020 130
2021 102
2022 75
2023 47
Thereafter 42
Total operating lease payments, undiscounted $ 470
Less: present value discount 42
Lease liability, at present value $ 428

~~Future payments under operating lease arrangements accounted for under ASC Topic 840 as of December 31, 2018 are as follows (in millions):~~

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

~~See~~ ~~Note I. Supplemental Cash Flow Information~~ ~~for certain information on noncash investing and financing activities related to our operating lease arrangements.~~

~~Table of Contents~~

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, 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;~~economy, or the overall impact of the outbreak of the novel coronavirus COVID-19; 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 consummating and integrating ~~acquisitions;~~acquisitions (including the contemplated FGL Merger); 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 the necessary regulatory approvals for the Stewart Merger may not be obtained or may be obtained subject to conditions that are not 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, ~~2018~~2019 and other filings with the SEC.

The following discussion should be read in conjunction with our Annual 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;

•supply and demand for commercial real estate; and

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

AsWhile the severity and duration of ~~June 18, 2019,~~the negative impacts related to the recent outbreak of COVID-19 are not yet known, the most recent forecast of the Mortgage Bankers Association ("MBA") ~~estimated~~, as of April 2, 2020, estimates (actual for fiscal year ~~2018)~~2019) the size of the U.S. residential mortgage originations market as shown in the following table for ~~2018~~2019 - ~~2021~~2022 in its "Mortgage Finance Forecast" (in ~~trillions)~~billions):


	2022		2021		2020		2019
Purchase transactions	$	1,478	$	1,397	$	1,242	$	1,272
Refinance transactions	$	429	$	502	$	1,184	$	901
Total U.S. mortgage originations forecast	$	1,907	$	1,899	$	2,426	$	2,173

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

In ~~2017,~~2019, total originations were reflective of a ~~generally improving~~strong residential real estate market driven by increasing home prices and ~~historically~~ low mortgage interest rates. ~~Mortgage~~Concerns over a slowing global economy and the impact of a prolonged trade war resulted in interest rates increased slightly in 2017 from 2016, but remained low compared to historical rates. In 2018, average interest rates on 30-year, fixed-rate mortgages in the U.S. rose from approximately 4.0% to 4.9% through October, representing an increase of 22%, before retreating to 4.55% in the last week of December according to mortgage buyer Freddie Mac. As a result of the overall upward trend in rates, refinance transactions decreased in both 2017 and 2018 from the historically high levels experienced in preceding years. Existing home sales increased through 2017 and began leveling out in the first half, and decreasingrate cuts in the second half of the year which significantly increased refinance transactions and slightly increased purchase transactions when compared to 2018. ~~Coupled with stagnant~~Additionally, existing home sales increased in each quarter of 2019. Average interest rates on 30-year fixed rate mortgages, averaged 4.4% in the first quarter of 2019 but subsequently decreased in the following three quarters to an average of 3.7% in the fourth quarter of 2019.

As of April 2, 2020, the MBA expects residential purchase transactions to slightly decrease from 2019 levels ~~of new home construction over the same time period, the result has been~~in 2020 followed by a ~~decline in total housing inventory and~~slight increase in ~~average home prices, albeit with decreasing magnitude toward~~2021. Additionally the ~~end~~MBA expects residential refinance transactions to increase in 2020

Table of ~~2018.~~Contents

followed by a decrease in 2021. The MBA expects overall mortgage originations to increase in 2020 followed by a decrease in 2021.

On March 11, 2020, the World Health Organization declared that the novel coronavirus or COVID-19 “can be characterized as a pandemic,” which is defined as a worldwide spread of a new disease for which most people do not have immunity. On March 15th, 2020, the Federal Reserve took emergency action and reduced its benchmark interest rate by a full percentage point to nearly zero. Through the ~~first half of 2019,~~three months ended March 31, 2020, mortgage interest rates continued to decline to ~~an average of 3.80% in June 2019.~~

~~Table of Contents~~

The combination of reduced housing inventory, increasing mortgage interest rates (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 volatilitybelow 3.50%. Concerns over a slowing global economy and the ~~shift~~impact of a prolonged trade war, now combined with the COVID-19 pandemic sweeping the globe, have resulted in ~~mortgage interest rates in late 2018 and through the first half of 2019 have created~~significant uncertainty in ~~forecasts of future mortgage interest rates~~the economic outlook. With shelter in place and ~~originations. As a result,~~similar restrictive mitigation measures issued throughout the ~~U.S. Federal Reserve has held~~country for an unknown duration, the ~~target federal funds rate steady in 2019~~Company's expectation is that real estate activity will decline dramatically, at least through June 30, 2020 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 remain flat in 2019. The decrease in market interest rates through the first half of 2019 has begun to impact the volume of residential refinance transactions in the second quarter of 2019. See further discussion in the following Results of Operations section. The MBA predicts overall mortgage originations in 2019 through 2021 will remain relatively flat compared to the 2018 period and rates will return to a gradual upward trend.potentially much longer.

Other economic indicators used to measure the health of the U.S. economy, including the unemployment rate and consumer confidence, ~~have continued to indicate~~indicated that the ~~U.S. economy remains~~U.S was on strong ~~footing.~~footing prior to the outbreak of COVID-19. However, the impact of COVID-19 reduced the outlook related to these economic indicators in March 2020. According to the U.S. Department of Labor's Bureau of Labor, the unemployment rate was at a historically low ~~3.7%~~3.5% in ~~June 2019.~~February 2020 but as of March 31, 2020, unemployment rose nearly 1% to 4.4%. Additionally, the Conference Board's monthly Consumer Confidence Index ~~has~~ remained at ~~historically~~ high levels through 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 continued strong readingsFebruary 2020 before falling over 9% in ~~domestic U.S. economic indicators present potential tailwinds for mortgage originations, despite growing risks from global economic uncertainties.~~March 2020.

We cannot be certain how the effects of a generally strong U.S. economy, flat mortgage interest rates and global economic uncertainty will impact mortgage originations and our future results of 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. Factors including U.S. tax reform and a shift in U.S. monetary policy have had, or are expected to have, varying effects on availability of financing in the U.S. Lower corporate and individual tax rates and corporate tax-deductibility of capital expenditures have provided increased capacity and incentive for investments in commercial real estate. Conversely, gradual increases in the Fed Funds Rate through the end of 2018 and the shift in late 2017 by the U.S. Federal Reserve to unwind its balance sheet are generally expected to adversely impact availability of financing by decreasing the overall money supply. In recent years, we have continued to experience strong demand in commercial real estate markets and from 2015 through the ~~first half of 2019,~~three months ended March 31, 2020, we experienced historically high volumes and fee-per-file in our commercial business. While COVID-19 will likely have an impact on the timing and volume of commercial real estate transactions in the short term as the logistics of transactions evolves and some buyers move to the sidelines until the pandemic is resolved, we believe that refinance activity will likely increase in response to the recent Fed rate cuts. For the three weeks ended April 17, 2020, purchase orders opened per day declined by 47% and refinance orders opened per day increased 122% versus the prior comparable period.

We cannot be certain how the outbreak of COVID-19 and the steps taken to attempt to mitigate its spread will impact our future results of operations. 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 and to take advantage of increased volume when demand returns.

See Item 1A of Part II of this Quarterly Report for further discussion risk factors related to COVID-19.

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. Seasonality in 2020 will likely deviate from historical patterns due to COVID-19 with the first quarter potentially being the strongest of 2020. We have noted short-term fluctuations through recent years in resale and refinance transactions as a result of changes in interest rates.

Table of Contents

Results of Operations

Consolidated Results of Operations
Net Earnings. The following table presents certain financial data for the periods indicated:
Three months ended June 30, Six months ended June 30,
2019 2018 2019 2018
(In millions)
Revenues:
Direct title insurance premiums $ 625
$ 599
1,065
1,071
Agency title insurance premiums 754
732
1,306
1,296
Escrow, title-related and other fees 665
765
1,199
1,383
Interest and investment income 59
43
113
81
Realized gains and losses, net 41
(16 ) 183
(15 )
Total revenues 2,144
2,123
3,866
3,816
Expenses:
Personnel costs 685
665
1,277
1,272
Agent commissions 579
561
1,000
992
Other operating expenses 409
506
753
929
Depreciation and amortization 44
45
88
92
Provision for title claim losses 62
60
107
107
Interest expense 12
11
24
22
Total expenses 1,791
1,848
3,249
3,414
Earnings before income taxes and equity in earnings of unconsolidated affiliates 353
275
617
402
Income tax expense 86
22
151
53
Equity in earnings of unconsolidated affiliates 3
1
10
3
Net earnings $ 270
$ 254
$ 476
$ 352
Consolidated Results of Operations

Net Earnings. The following table presents certain financial data for the periods indicated:




	Three months ended March 31,
	2020		2019
	(In millions)
Revenues:
Direct title insurance premiums	$	546	$	440
Agency title insurance premiums	732		552
Escrow, title-related and other fees	601		534

Interest and investment income	53		54
Realized gains and losses, net	(320)		142
Total revenues	1,612		1,722
Expenses:
Personnel costs	614		592
Agent commissions	560		421
Other operating expenses	411		344

Depreciation and amortization	43		44
Provision for title claim losses	58		45
Interest expense	12		12
Total expenses	1,698		1,458
(Loss) earnings before income taxes and equity in earnings of unconsolidated affiliates	(86)		264
Income tax (benefit) expense	(28)		65
Equity in earnings of unconsolidated affiliates	1		7
Net (loss) earnings	$	(57)	$	206

Revenues.

Total revenues ~~increased~~decreased by ~~$21 million~~ ~~in the three months ended June 30, 2019 and increased $50 million in the six months ended June 30, 2019 compared to the corresponding periods in 2018.~~

~~Net earnings increased by $16~~$110 million in the three months ended ~~June 30, 2019 and increased $124 million in the six months ended June 30, 2019~~March 31, 2020 compared to the corresponding ~~periods~~period in ~~2018.~~2019.

Net earnings decreased by $263 million in the three months ended March 31, 2020 compared to the corresponding period in 2019.

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.

Table of Contents

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

~~Table of Contents~~

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 (benefit) expense was ~~$86~~$(28) million and ~~$22~~$65 million in the three-month periods ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018, respectively, and $151 million and $53 million in the six-month periods ended June 30, 2019 and 2018,~~ respectively. Income tax (benefit) expense as a percentage of earnings before income taxes was ~~24%~~33% and 8%25% in the three-month periods ended ~~June 30,~~March 31, 2020 and 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 (benefit) expense as a percentage of (loss) earnings before taxes in the ~~2019 periods~~2020 period from the comparable ~~periods~~period in ~~2018 was~~2019 is primarily attributable to ~~a change in~~an additional tax ~~estimate~~benefit in the ~~three months ended June 30, 2018 relating~~current quarter of $7 million related to a 2017 amended return filed in 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 title underwriters.~~2020 period.

Title

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

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


	Three months ended March 31,
	2020		2019
	(In millions)
Revenues:
Direct title insurance premiums	$	546	$	440
Agency title insurance premiums	732		552
Escrow, title-related and other fees	610		481
Interest and investment income	48		48
Realized gains and losses, net	(313)		142
Total revenues	1,623		1,663
Expenses:
Personnel costs	641		551
Agent commissions	560		421
Other operating expenses	380		315
Depreciation and amortization	37		39
Provision for title claim losses	58		45

Total expenses	1,676		1,371
(Loss) earnings from continuing operations, before income taxes and equity in earnings of unconsolidated affiliates	$	(53)	$	292
Orders opened by direct title operations (in thousands)	682		438
Orders closed by direct title operations (in thousands)	377		263
Fee per file	$	2,224	$	2,567

Total revenues for the Title segment ~~increased~~decreased by ~~$134~~$40 million,, or 7%2%, in the three months ended ~~June 30, 2019 and increased by $207 million, or 6%, in the six months ended June 30, 2019~~March 31, 2020 from the corresponding ~~periods~~period in ~~2018.~~2019.

~~Table of Contents~~

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


	Three months ended March 31,
			% of				% of
	2020		Total		2019		Total
	(Dollars in millions)
Title premiums from direct operations	$	546	43	%	$	440	44	%
Title premiums from agency operations	732		57		552		56
Total title premiums	$	1,278	100	%	$	992	100	%

Table of Contents

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

Title premiums increased by 4%29% in the three months ended ~~June 30, 2019~~March 31, 2020 as compared to the corresponding period in ~~2018.~~2019. The increase is comprised of an increase in Title premiums from direct operations of ~~$26~~$106 million, or 4%24%, and an increase in Title premiums from agency operations of ~~$22~~$180 million, or ~~3%.~~

Title premiums increased by less than 1% in the six months ended June 30, 2019 as compared to the corresponding period in 2018. The increase is comprised of an increase in Title premiums from agency operations of $10 million, or 1%, partially offset by a decrease in Title premiums from direct operations of $6 million, or 1%33%.

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 March 31,
	2019		2018		2019		2018			2020		2019
Opened title insurance orders from purchase transactions (1)	61	%	71	%	63	%	69	%	Opened title insurance orders from purchase transactions (1)	41	%	65	%
Opened title insurance orders from refinance transactions (1)	39		29		37		31		Opened title insurance orders from refinance transactions (1)	59		35
	100	%	100	%	100	%	100	%		100	%	100	%

Closed title insurance orders from purchase transactions (1)	65	%	71	%	65	%	67	%	Closed title insurance orders from purchase transactions (1)	46	%	66	%
Closed title insurance orders from refinance transactions (1)	35		29		35		33		Closed title insurance orders from refinance transactions (1)	54		34
	100	%	100	%	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, 2019,~~March 31, 2020, as compared to the corresponding ~~periods~~period in ~~2018.~~2019. The increase in the three-month period is primarily attributable to an increase in ~~the fee per file, partially offset by a decrease in closed order volumes. The decrease in the six-month period is primarily attributable to a decrease in~~ closed order volumes, partially offset by ~~an increase~~a decrease in the fee per file.

We experienced ~~a decrease in closed title insurance order volumes from purchase transactions and~~ an increase in closed title insurance order volumes from purchase and refinance transactions in the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 as compared to the corresponding ~~periods~~period in ~~2018.~~2019. Total closed order volumes were ~~359,000~~377,000 in the three months ended ~~June 30, 2019~~March 31, 2020 compared to ~~362,000~~263,000 in the three months ended ~~June 30, 2018 and 622,000 in the six months ended June 30, 2019 compared to 675,000 in the six months ended June 30, 2018.~~March 31, 2019. This represented an overall ~~decrease~~increase of ~~1% and 8%~~43% in the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 from the corresponding ~~periods~~period in ~~2018.~~2019. The increase in refinance transactions in the 2020 period is primarily due to lower average interest rates when compared to the corresponding 2019 period.

Total ~~open~~opened title insurance order volumes increased in the three months ended ~~June 30, 2019 and decreased slightly in the six months ended June 30, 2019~~March 31, 2020, as compared to the corresponding ~~periods~~period in ~~2018.~~2019. The increase in the ~~three- month~~three-month period was primarily attributable to increased ~~open~~opened title orders from refinance transactions, ~~partially offset by~~and a ~~decrease~~slight increase in ~~open~~opened title orders from purchase transactions.

The average fee per file in our direct operations was ~~$2,677 and $2,630~~$2,224 in the three ~~and six~~ months ended ~~June 30, 2019, respectively,~~March 31, 2020, compared to ~~$2,579 and $2,470~~$2,567 in the three ~~and six~~ months ended ~~June 30, 2018,~~March 31, 2019, respectively. The ~~increase~~year-to-date decrease in average fee per file reflects ~~a stronger commercial market and a favorable increase in average property prices of underlying transactions, partially offset by~~ an increased proportion of refinance transactions. The fee per file tends to change as the mix of refinance and purchase transactions changes, because purchase transactions involve the issuance of both a lender’s policy and an owner’s policy, resulting in higher fees, whereas refinance transactions only require a lender’s policy, resulting in lower fees.

~~Table of Contents~~

Title premiums from agency operations increased ~~$22~~$180 million, or 3%33%, in the three months ended ~~June 30, 2019 and increased $10 million, or 1%, in the six months ended June 30, 2019~~March 31, 2020 from the corresponding ~~periods~~period in ~~2018.~~2019. 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 ~~$13~~$129 million, or 2%27%, in the three months ended ~~June 30, 2019 and decreased $22 million, or 2%, in the six months ended June 30, 2019~~March 31, 2020 from the corresponding ~~periods~~period in ~~2018.~~2019. Escrow fees, which are more closely related to our direct operations, increased by $3$56 million, or 1%34%, in the three months ended ~~June 30, 2019 and decreased by $16 million or 4% in the six months ended June 30, 2019~~March 31, 2020 as compared to the corresponding ~~periods~~period in ~~2018.~~2019. The increase in the three-month period ~~and decrease in the six-month period are~~is 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 2019 periods.~~operations. Other fees in the Title segment, excluding escrow fees, increased by ~~$11~~$73 million or 3%23% in the three months ended ~~June 30, 2019 and decreased by $7 million, or 1%, in the six months ended June 30, 2019~~March 31, 2020, compared to the corresponding ~~periods~~period in ~~2018.~~2019. The changes in Other fees were primarily driven by a $43 million increase in volume related to our ServiceLink business. The remaining increase in Other Fees in the 2020 period relate to 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 $11~~remained flat in the three months ended March 31, 2020 compared to the corresponding period in 2019.

Table of Contents

Realized gains and losses, net, decreased $455 million in the three months ended June 30, 2019 and increased $22 million in the six months ended June 20, 2019 compared to the corresponding periods in 2018. The increase was primarily driven by the impact of increased market interest rates on the cash and investment portfolio and float income on tax-deferred property exchange businesses as well as an increase in average fixed maturity holdings period over period.

~~Realized gains and losses, net, increased $62 million in the three months ended June 30, 2019 and increased $203 million in the six months ended June 30, 2019~~March 31, 2020 from the comparable ~~periods~~period in ~~2018.~~2019. The ~~increase~~decrease in the three-month period is primarily attributable to ~~increased~~fluctuations in non-cash valuation ~~gains~~changes on our equity and preferred security 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 ~~$20~~$90 million,, or 3%16%, in the three months ended ~~June 30, 2019 and decreased $8 million, or 1%, in the six months ended June 30, 2019~~March 31, 2020 compared to the corresponding periods in ~~2018.~~2019. The increase in the three-month period is primarily attributable to increased average headcount and increased commissions driven by the increase in ~~open~~closed title order volumes in the ~~2019~~2020 period. ~~The decrease in the six-month period is primarily attributable to lower average headcount resulting from the decrease in title order 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%~~55% and 60% for the three-month periods ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018, respectively, and 56% and 55% in the six month-period ended June 30, 2019 and 2018,~~ respectively. Average employee count in the Title segment was ~~23,255~~24,427 and ~~23,344~~22,170 in the three-month periods ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018, respectively, and 22,712 and 23,177 in the six-month periods ended June 30, 2019 and 2018,~~ respectively.

Other operating expenses increased by $7$65 million, or 2%21%, in the three months ended ~~June 30, 2019 and decreased $8 million, or 1%, in the six months ended June 30, 2019~~March 31, 2020 from the corresponding ~~periods~~period in ~~2018.~~2019. Other operating expenses as a percentage of total revenue excluding agency premiums, interest and investment income, and realized gains and losses were ~~30%~~33% and ~~31%~~34% in the three months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018, respectively, and 32% in the six months ended June 30, 2019 and 2018,~~ 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~~has remained relatively consistent since ~~2018:~~2019:


	Three months ended June 30,								Six months ended June 30,									Three months ended March 31,
	2019		%		2018		%		2019		%		2018		%			2020		%		2019		%
	(Dollars in millions)																	(Dollars in millions)
Agent premiums	754		100	%	732		100	%	$	1,306	100	%	$	1,296	100	%	Agent premiums	$	732	100	%	$	552	100	%
Agent commissions	579		77	%	561		77	%	1,000		77	%	992		77	%	Agent commissions	560		77	%	421		76	%
Net retained agent premiums	$	175	23	%	$	171	23	%	$	306	23	%	$	304	23	%	Net retained agent premiums	$	172	23	%	$	131	24	%

The claim loss provision for title insurance was ~~$62~~$58 million and ~~$60~~$45 million for the three-month periods ended ~~June 30,~~March 31, 2020 and 2019, ~~and 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% of title premiums 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

~~Table of Contents~~

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.

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:

Table of Contents


	Three months ended June 30,						Six months ended June 30,							Three months ended March 31,
	2019			2018			2019			2018				2020		2019
	(In millions)													(In millions)
Revenues:													Revenues:

Escrow, title-related and other fees	$	52		$	165		$	105		$	267		Escrow, title-related and other fees	$	(9)	$	53
Interest and investment income	5			—			11			1			Interest and investment income	5		6
Realized gains and losses, net	(5		)	—			(5		)	—			Realized gains and losses, net	(7)		—
Total revenues	52			165			111			268			Total revenues	(11)		59
Expenses:													Expenses:
Personnel costs	32			32			73			60			Personnel costs	(27)		41

Other operating expenses	36			140			65			233			Other operating expenses	31		29
Depreciation and amortization	6			7			11			14			Depreciation and amortization	6		5

Interest expense	12			11			24			22			Interest expense	12		12
Total expenses	86			190			173			329			Total expenses	22		87
Loss from continuing operations, before income taxes and equity in earnings of unconsolidated affiliates	$	(34	)	$	(25	)	$	(62	)	$	(61	)	Loss from continuing operations, before income taxes and equity in earnings of unconsolidated affiliates	$	(33)	$	(28)

The revenue in the Corporate and Other segment for all periods represents revenue generated by our non-title real estate technology and brokerage subsidiaries as well as mark-to-market valuation changes on certain corporate deferred compensation plans.

Total revenues in the Corporate and Other segment decreased ~~$113~~$70 million, or ~~68%~~119%, in the three-month period ended ~~June 30, 2019 and decreased $157 million, or 59%, in the six-month period ended June 30, 2019~~March 31, 2020 from the corresponding ~~periods~~period in ~~2018.~~2019. The decrease is primarily attributable to ~~the sale of Pacific Union, partially offset by increased revenue~~valuation losses associated with ~~the valuation of~~our deferred compensation plan assets.

Personnel costs in the Corporate and Other segment ~~were flat~~decreased $68 million, or 166%, in the three-month period ended ~~June 30, 2019 and increased $13 million, or 22%, in the six-month period ended June 30, 2019~~March 31, 2020 from the corresponding ~~periods~~period in ~~2018.~~2019. The ~~increase~~decrease in the ~~six month~~three-month period ended ~~June 30, 2019~~March 31, 2020 is primarily attributable to ~~increased expense~~decreased valuations associated with ~~the aforementioned increase in the valuation of~~our deferred compensation plan ~~assets and increased costs resulting from growth of our real estate technology subsidiaries, partially offset by our sale of Pacific Union.~~assets.

Other operating expenses in the Corporate and Other segment ~~decreased $104~~increased $2 million, or ~~74%~~7%, in the three-month period ended ~~June 30, 2019 and decreased $168 million, or 72%, in the six-month period ended June 30, 2019~~March 31, 2020 from the corresponding ~~periods~~period in ~~2018.~~2019. The ~~decrease~~increase is primarily attributable to ~~our sale~~costs related to the contemplated FGL Merger, which were in excess of ~~Pacific Union.~~the costs incurred related to the abandoned acquisition of Stewart Information Services Corporation in the 2019 period.

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 ~~$0.31~~$0.33 per share in the ~~second~~first quarter of ~~2019,~~2020, or approximately ~~$85~~$90 million to our ~~FNF~~ common shareholders. On ~~July 16, 2019,~~April 22, 2020, our Board of Directors declared cash dividends of ~~$0.31~~$0.33 per share, payable on ~~September~~June 30, ~~2019,~~2020, to FNF common shareholders of record as of ~~September~~June 16, ~~2019.~~2020. 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.

~~Table of Contents~~

As of ~~June 30, 2019,~~March 31, 2020, we had cash and cash equivalents of ~~$1,605~~$890 million, short term investments of ~~$314~~$1,258 million and available capacity under our Revolving Credit Facility of $800 million. On April 22, 2020 we entered into the Term Loan Agreement which provides for a $1 billion, 364 day delayed-draw, term loan. In addition to our cash on hand the proceeds of the Term Loan Agreement will be used to fund the up-to $1.5 billion cash portion of the FGL Merger. 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 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

Table of Contents

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, ~~2018, $1,518~~2019, $1,868 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 ~~2019~~2020 of approximately ~~$258~~$389 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 (used in) operations for the ~~six~~three months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ totaled ~~$372~~$105 million and ~~$350~~$(4) million, respectively. The increase in cash provided by operating activities of ~~$22~~$109 million is primarily attributable to the increase in pre-tax earnings, excluding non-cash valuation losses and the timing of ~~receipt~~receipts and ~~payment~~payments of prepaid assets, receivables and ~~payables,~~income taxes, partially offset by ~~increased~~the timing of receipts and payments ~~for income taxes.~~of payables.

Investing Cash Flows. Our cash flows (used in) provided by investing activities for the ~~six~~three months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ were ~~$120~~$(439) million and ~~$54~~$94 million, respectively. The increase in cash ~~provided by~~used in investing activities of ~~$66~~$533 million in the ~~2019~~2020 period compared to the ~~2018~~2019 period is primarily attributable to a ~~$90~~$650 million increase in net cash ~~inflow~~outflow from purchases of short-term investments and an $88 million reduction in proceeds from sales of ~~investments and distributions of and from equity and fixed income investments, net of purchases of investments and additional investments in unconsolidated investees,~~investment securities, partially offset by ~~the inclusion of $21 million of~~increased proceeds from ~~the sale~~call and maturities of ~~property~~investment securities of $97 million in the ~~2018~~2020 period, and the funding of the Cannae note receivable of $100 million in the 2019 period.

Capital Expenditures. Total capital expenditures for property and equipment and capitalized software were ~~$47~~$28 million and ~~$39~~$22 million for the ~~six-month~~three-month periods ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively.

Financing Cash Flows. Our cash flows used in financing activities for the ~~six~~three months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ were ~~$144~~$152 million and ~~$194~~$224 million, respectively. The decrease in cash used in financing activities of ~~$50~~$72 million from the 2019 period ~~to the 2018 period~~ is primarily attributable to ~~$88 million of repayments of debt in the 2018 period and a $23~~$148 million increase in cash inflows related to the change in secured trust deposits, ~~in the 2019 period,~~ partially offset by a $71 million increase in purchases of treasury stock induring the ~~2019~~2020 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. Additionally, see Item 5. of Part II of this Quarterly Report for discussion of the Term Loan Agreement.

Contractual Obligations. There have been no significant changes to our long-term contractual obligations since our Annual Report for the year ended December 31, ~~2018.~~2019.

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

~~Table of Contents~~

privately negotiated transactions, depending on market conditions and other factors. We repurchased ~~1,230,000~~3,250,000 shares of FNF common stock during the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 for approximately ~~$46~~$94 million, or an average of ~~$37.53~~$28.95 per share. Subsequent to ~~June 30, 2019~~March 31, 2020 through market close on ~~July 16, 2019,~~April 23, 2020, we purchased ~~30,000~~400,000 additional shares for $1$10 million, or an average of ~~$40.65~~$24.39 per share. Since the original commencement of the 2018 Repurchase Program through market close on ~~July 16, 2019,~~April 23, 2020, we repurchased a total of ~~1,920,000~~6,430,000 FNF common shares for ~~$69~~$210 million, or an average of ~~$35.80~~$32.70 per share.

Equity and Preferred Security Investments. Our equity and preferred security investments may be subject to significant volatility. Currently prevailing accounting standards require us to record the change in fair value of equity and preferred security investments held as of any given period end within earnings. Our results of operations in future periods is anticipated to be subject to such volatility.

Table of Contents

Off-Balance Sheet Arrangements. 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, 2018.~~Report.

Critical Accounting Policies

Other than our adoption of ASC Topic ~~842~~326 as further described in Notes A and KD 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 on Form 10-K for the year ended December 31, ~~2018~~.2019.

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, ~~2018.~~2019.

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, 2019~~March 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

~~Table of Contents~~

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

The risk factors disclosed in "Item 1A. Risk Factors" included in our Annual Report on Form 10-K for the year ended December 31, 2019, are hereby incorporated by reference. In addition, , we identified the following additional risk as a result of the outbreak of the COVID-19 pandemic.

Our business could be materially and adversely affected by the occurrence of a catastrophe, including natural or man-made disasters.

Any catastrophic event, such as pandemic diseases, terrorist attacks, floods, severe storms or hurricanes or computer cyber-terrorism, could have a material and adverse effect on our business in several respects:

•the outbreak of a pandemic disease, like the novel coronavirus COVID-19, could have a material adverse effect on our liquidity, financial condition and the operating results of our insurance business due to its impact on the economy and financial markets;

•the occurrence of any pandemic disease, natural disaster, terrorist attack or any other catastrophic event that results in our workforce being unable to be physically located at one of our facilities could result in lengthy interruptions in our service; or

•we could experience long-term interruptions in our service and the services provided by our significant vendors due to the effects of catastrophic events, including but not limited to government mandates to self-quarantine, work remotely and prolonged travel restrictions. Some of our operational systems are not fully redundant, and our disaster recovery and business continuity planning cannot account for all eventualities. Additionally, unanticipated problems with our disaster recovery systems could further impede our ability to conduct business, particularly if those problems affect our computer-based data processing, transmission, storage and retrieval systems and destroy valuable data.

Table of Contents

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

The following table summarizes repurchases of equity securities by FNF during the three months ended ~~June 30, 2019:~~March 31, 2020:


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)

1/1/2020 - 1/31/2020	—	$	—	—	22,220,000
2/1/2020 - 2/29/2020	150,000	40.30		150,000	22,070,000
3/1/2020 - 3/31/2020	3,100,000	28.40		3,100,000	18,970,000



Total	3,250,000	$	28.95	3,250,000

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)~~	(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.~~

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

Table of Contents

Item 5. Other Information

Merger Agreement Amendment

On April 24, 2020 we entered into an amendment to the Merger Agreement (the "Amendment"). Under the Amendment, the parties have agreed that the exchange agent will be required, not less than 20 days prior to the election deadline, to mail the election forms to all persons who are record holders of FGL ordinary shares (other than FGL, any subsidiary of FGL, FNF, F I Corp., F II Corp., or any other subsidiary thereof) and FGL restricted stock rights as of the FGL record date (April 23, 2020).

Term Loan Agreement

In connection with the FGL Merger, on April 22, 2020, we entered into the Term Loan Agreement which provides for an aggregate principal borrowing of $1 billion, which has a maturity date 364 days from the signing date. The Term Loan generally accrues interest based on a fluctuating rate per annum based on either (i) the base rate (which is equal to the highest of (a) the federal funds rate plus 1/2 of 1%, (b) the Administrative Agent’s "prime rate," and (c) LIBOR plus 1% (with a floor of 1.75%)), plus a margin of between 1% and 2% depending on the FNF Debt Rating or (ii) LIBOR (with a floor of 0.75%) plus a margin of between 2% and 3% depending on the FNF Debt Rating. In addition, FNF will pay a ticking fee of between 37.5 and 62.5 basis points on the daily unused portion of the commitments under the Term Loan Agreement, also depending on the FNF Debt Rating. In accordance with the Term Loan Agreement, the FGL Merger shall have been, or shall concurrently with the borrowing be, consummated in accordance with the terms of the Merger Agreement. The Term Loan Agreement contains affirmative, negative and financial covenants, and events of default that are generally consistent with the corresponding provisions in the Restated Credit Agreement.

Table of Contents

Item 6. Exhibits

(a) Exhibits:

~~31.1~~

2.1

Agreement and Plan of Merger, dated February 7, 2020, by and between FGL Holdings, Fidelity National Financial, Inc., F Corp I and F Corp II. (incorporated by reference to Exhibit 2.1 to the Registrant's Current Report on Form 8-K filed on February 7, 2020)

10.1

Term Loan Credit Agreement, dated April 22, 2020, among Fidelity National Financial, Inc., as the Borrower, Bank of America, N.A. as Administrative Agent, JP Morgan Chase Bank, N.A., as Syndication Agent, and The Other Lenders Party Thereto

10.2

First Amendment to the Agreement and Plan of Merger, dated as of April 24, 2020, by Fidelity National Financial, Inc., a Delaware Corporation ("Parent"), F I Corp., a Cayman Islands exempted company and wholly owned subsidiary of Parent, F II Corp., a Cayman Islands exempted company and wholly owned subsidiary of Parent, and FGL Holdings, a Cayman Island exempted company

31.1

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

31.2

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

32.1

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

32.2

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

~~101~~101.INS

~~The following materials from Fidelity National Financial, Inc.'s Quarterly Report on Form 10-Q for the quarter and six months ended June 30, 2019,~~Inline XBRL Instance Document*

101.SCH

Inline XBRL Taxonomy Extension Schema Document

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

104

Cover Page Interactive Data File formatted in ~~Extensible Business Reporting Language (XBRL): (i)~~Inline XBRL and contained in Exhibit 101.

* The instance document does not appear in the ~~Condensed Consolidated Balance Sheets, (ii)~~interactive data file because its XBRL tags are embedded within 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.inline XBRL document.

Table of Contents

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:

~~July 23, 2019~~April 28, 2020

FIDELITY NATIONAL FINANCIAL, INC.

(registrant)

By:

/s/ Anthony J. Park

Anthony J. Park

Chief Financial Officer

(Principal Financial and Accounting Officer)



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



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



	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



	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



	June 30, 2019
	Carrying		Cost		Unrealized		Unrealized			Fair
	Value		Basis		Gains		Losses			Value
	(In millions)
Fixed maturity securities available for sale:
U.S. government and agencies	$	265	$	259	$	6	$	—		$	265
State and political subdivisions	76		74		2		—			76
Corporate debt securities	1,581		1,542		44		(5		)	1,581
Mortgage-backed/asset-backed securities	73		71		2		—			73
Foreign government bonds	59		61		1		(3		)	59
Total	$	2,054	$	2,007	$	55	$	(8	)	$	2,054



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



Consolidated Results of Operations
Net Earnings. The following table presents certain financial data for the periods indicated:
	Three months ended June 30,					Six months ended June 30,
	2019		2018			2019		2018
	(In millions)
Revenues:
Direct title insurance premiums	$	625	$	599		1,065		1,071
Agency title insurance premiums	754		732			1,306		1,296
Escrow, title-related and other fees	665		765			1,199		1,383
Interest and investment income	59		43			113		81
Realized gains and losses, net	41		(16		)	183		(15		)
Total revenues	2,144		2,123			3,866		3,816
Expenses:
Personnel costs	685		665			1,277		1,272
Agent commissions	579		561			1,000		992
Other operating expenses	409		506			753		929
Depreciation and amortization	44		45			88		92
Provision for title claim losses	62		60			107		107
Interest expense	12		11			24		22
Total expenses	1,791		1,848			3,249		3,414
Earnings before income taxes and equity in earnings of unconsolidated affiliates	353		275			617		402
Income tax expense	86		22			151		53
Equity in earnings of unconsolidated affiliates	3		1			10		3
Net earnings	$	270	$	254		$	476	$	352