Fidelity National Financial (FNF) 8-K Results of Operations and Financial Condition

FNF Reports Third Quarter 2018 Diluted EPS of $0.85 and Adjusted Diluted EPS of $0.78, Pre-Tax Title Margin of 16.2% and Adjusted Pre-Tax Title Margin of 15.6%

Jacksonville, Fla. - (October 24, 2018) - Fidelity National Financial, Inc. (NYSE:FNF), a leading provider of title insurance and transaction services to the real estate and mortgage industries, today reported operating results for the three and nine-month periods ended September 30, 2018.

• Total revenue of approximately $2.1 billion in the third quarter versus $2.0 billion in the third quarter of 2017

• Third quarter net earnings of $236 million and adjusted net earnings of $218 million versus net earnings from continuing operations of $156 million and adjusted net earnings from continuing operations of $174 million for the third quarter of 2017

• Third quarter diluted EPS of $0.85 and adjusted diluted EPS of $0.78 versus diluted EPS from continuing operations of $0.57 and adjusted diluted EPS from continuing operations of $0.63 in the third quarter of 2017

Title

• Total revenue of approximately $1.9 billion versus approximately $1.9 billion in total revenue in the third quarter of 2017

• Pre-tax earnings of $309 million and adjusted pre-tax earnings of $297 million versus pre-tax earnings of $262 million and adjusted pre-tax earnings of $287 million in the third quarter of 2017

• Pre-tax title margin of 16.2% and adjusted pre-tax title margin of 15.6% versus pre-tax title margin of 14.0% and adjusted pre-tax title margin of 15.3% in the third quarter of 2017

• Third quarter purchase orders opened increased 0.3% and purchase orders closed decreased 1%, respectively, versus the third quarter of 2017

• Total commercial revenue of $271 million, an 8% increase over total commercial revenue in the third quarter of 2017, driven by a 16% increase in total commercial fee per file and a 7% decrease in closed orders; third quarter total commercial open orders increased 1% compared to the prior year

• Overall third quarter average fee per file of $2,623, an 11% increase versus the third quarter of 2017

Title Orders

		Direct Orders Opened *			Direct Orders Closed *
Month	/ (% Purchase)			/ (% Purchase)
July 2018		158,000	70%		116,000	71%
August 2018		165,000	69%		123,000	71%
September 2018		133,000	69%		100,000	70%
Third Quarter 2018		456,000	69%		339,000	71%

		Direct Orders Opened *		Direct Orders Closed *
Month	/ (% Purchase)			/ (% Purchase)
July 2017		159,000	66%	118,000	66%
August 2017		181,000	61%	131,000	65%
September 2017		161,000	59%	118,000	63%
Third Quarter 2017		501,000	62%	367,000	65%

* Includes an immaterial number of non-purchase and non-refinance orders

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	Open		Closed		Commercial
	Commercial		Commercial		Revenue		Commercial
	Orders		Orders		(In millions)		Fee Per File
Third Quarter 2018 - Total Commercial		48,900		31,200		$271		$8,700
Third Quarter 2017 - Total Commercial		48,300		33,400		$250		$7,500

"The third quarter was a solid performance for our title business, as we generated adjusted pre-tax title earnings of $297 million and a 15.6% adjusted pre-tax title margin, increases of $10 million and 30 basis points, respectively, over the third quarter of 2017," said Chairman William P. Foley, II. "The commercial and residential purchase markets continued to be the main drivers of our performance in the third quarter, as total commercial revenue grew by 8% versus the third quarter of 2017, continuing a very strong year for our commercial business. While residential purchase open orders per day increased by 0.3% and residential purchase closed orders per day declined by 1%, this was offset by an 11% increase in the fee per file that provided 3% growth in direct title premiums over the prior year. As we enter the seasonally slower fourth quarter, we will remain focused on our operating metrics and staffing levels in order to maximize our profitability.

"We continue to work through the regulatory process for the Stewart Information Services acquisition that we announced on March 19. We are currently engaged in the Second Request related to the FTC's HSR regulatory review of the transaction. Responses to nearly all the FTC's requests for information and documentation have been submitted. The Form A filings with the states of Texas and New York are being reviewed by those states. We still anticipate a first or second quarter of 2019 closing for the transaction and continue to believe the Stewart acquisition will create meaningful long-term value for our shareholders."

Conference Call

We will host a call with investors and analysts to discuss third quarter 2018 FNF results on Thursday, October 25, 2018, beginning at 1:00 p.m. Eastern Time. A live webcast of the conference call will be available on the Events and Multimedia page of the FNF Investor Relations website at fnf.com. The conference call replay will be available via webcast through the FNF Investor Relations website at fnf.com. The telephone replay will be available from 3:00 p.m. Eastern time on October 25, 2018, through November 1, 2018, by dialing 800-475-6701 (USA) or 320-365-3844 (International). The access code will be 455027.

About Fidelity National Financial, Inc.

Fidelity National Financial, Inc. (NYSE: FNF) is a leading provider of title insurance and transaction services to the real estate and mortgage industries. FNF is the nation’s largest title insurance company through its title insurance underwriters - Fidelity National Title, Chicago Title, Commonwealth Land Title, Alamo Title and National Title of New York - that collectively issue more title insurance policies than any other title company in the United States. More information about FNF can be found at fnf.com.

Use of Non-GAAP Financial Information

Generally Accepted Accounting Principles (GAAP) is the term used to refer to the standard framework of guidelines for financial accounting. GAAP includes the standards, conventions, and rules accountants follow in recording and summarizing transactions and in the preparation of financial statements. In addition to reporting financial results in accordance with GAAP, FNF has provided non-GAAP financial measures, which it believes are useful to help investors better understand its financial performance, competitive position and prospects for the future. These non-GAAP measures include adjusted pre-tax earnings, adjusted pre-tax earnings from continuing operations, adjusted pre-tax earnings as a percentage of adjusted revenue (adjusted pre-tax title margin), adjusted pre-tax earnings from continuing operations as a percentage of adjusted revenue (adjusted pre-tax title margin from continuing operations). adjusted net earnings, adjusted net earnings from continuing operations, adjusted EPS and adjusted EPS from continuing operations.

Any non-GAAP measures should be considered in context with the GAAP financial presentation and should not be considered in isolation or as a substitute for GAAP net earnings. Further, FNF's non-GAAP measures may be calculated differently from similarly titled measures of other companies. Reconciliations of these non-GAAP measures to related GAAP measures are provided below.

Forward-Looking Statements and Risk Factors

This press release contains forward-looking statements that involve a number of risks and uncertainties. Statements that are not historical facts, including statements regarding our expectations, hopes, intentions or strategies regarding the future are forward-looking statements. Forward-looking statements are based on management's beliefs, as well as assumptions made by,

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and information currently available to, management. Because such statements are based on expectations as to future financial and operating results and are not statements of fact, actual results may differ materially from those projected. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

The risks and uncertainties which forward-looking statements are subject to include, but are not limited to: changes in general economic, business and political conditions, including changes in the financial markets; weakness or adverse changes in the level of real estate activity, which may be caused by, among other things, high or increasing interest rates, a limited supply of mortgage funding or a weak U. S. economy; our potential inability to find suitable acquisition candidates; our dependence on distributions from our title insurance underwriters as a 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 of our acquisition of Stewart Information Services Corporation ("Stewart") may not be obtained or may be obtained subject to conditions that are not anticipated; risks that any of the closing conditions to the proposed Stewart merger may not be satisfied in a timely manner; the risk that the businesses will not be integrated successfully, that such integration may be more difficult, time-consuming or costly than expected or that the expected benefits of the acquisition will not be realized; and other risks detailed in the “Statement Regarding Forward-Looking Information,” “Risk Factors” and other sections of FNF's Form 10-K and other filings with the Securities and Exchange Commission ("SEC").

FNF-E

SOURCE: Fidelity National Financial, Inc.

CONTACT: Daniel Kennedy Murphy, Senior Vice President and Treasurer, 904-854-8120, dkmurphy@fnf.com

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FIDELITY NATIONAL FINANCIAL, INC.

THIRD QUARTER SEGMENT INFORMATION

(In millions, except order information in thousands)

(Unaudited)

	Consolidated			Title			Corporate and Other
Three Months Ended
September 30, 2018
Direct title premiums	$	574		$	574		$	—
Agency title premiums	722			722			—
Escrow, title related and other fees	691			566			125
Total title and escrow	1,987			1,862			125
Interest and investment income	48			46			2
Realized gains and losses, net	50			40			10
Total revenue	2,085			1,948			137
Personnel costs	654			624			30
Agent commissions	554			554			—
Other operating expenses	477			365			112
Depreciation and amortization	46			38			8
Claim loss expense	58			58			—
Interest expense	9			—			9
Total expenses	1,798			1,639			159
Pre-tax earnings (loss)	$	287		$	309		$	(22	)
Non-GAAP adjustments before taxes
Realized (gains) and losses, net	(50		)	(40		)	(10		)
Purchase price amortization	27			22			5
Transaction costs	9			—			9
Sales tax contingency	6			6			—
Total non-GAAP adjustments before taxes	$	(8	)	$	(12	)	$	4
Adjusted pre-tax earnings (loss)	$	279		$	297		$	(18	)
Adjusted pre-tax margin	13.7		%	15.6		%	—
Pre-tax earnings (loss)	$	287		$	309		$	(22	)
Income tax expense (benefit)	51			68			(17		)
Earnings from equity investments	1			1			—
Non-controlling interests	1			3			(2		)
Net earnings (loss) attributable to FNF, Inc. common shareholders	$	236		$	239		$	(3	)
EPS attributable to FNF, Inc. common shareholders - basic	$	0.86
EPS attributable to FNF, Inc. common shareholders - diluted	$	0.85
FNF, Inc. weighted average shares - basic	273
FNF, Inc. weighted average shares - diluted	278

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FIDELITY NATIONAL FINANCIAL, INC.

THIRD QUARTER SEGMENT INFORMATION

(In millions, except order information in thousands)

(Unaudited)

	Consolidated			Title			Corporate and Other
Three Months Ended
September 30, 2018
Net earnings (loss) attributable to FNF, Inc. common shareholders	$	236		$	239		$	(3	)
Total non-GAAP, pre-tax adjustments	$	(8	)	$	(12	)	$	4
Income taxes on non-GAAP adjustments	2			3			(1		)
Noncontrolling interest on non-GAAP adjustments	(4		)	(2		)	(2		)
Black Knight tax contingency	(8		)	—			(8		)
Total non-GAAP adjustments	$	(18	)	$	(11	)	$	(7	)
Adjusted net earnings (loss) attributable to FNF, Inc. common shareholders	$	218		$	228		$	(10	)
Adjusted EPS attributable to FNF, Inc. common shareholders - diluted	$	0.78
Direct orders opened (000's)	456			456
Direct orders closed (000's)	339			339
Fee per file	$	2,623		$	2,623
Actual title claims paid	$	55
Cash flows provided by operations	$	321

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FIDELITY NATIONAL FINANCIAL, INC.

THIRD QUARTER SEGMENT INFORMATION

(In millions, except order information in thousands)

(Unaudited)

	Consolidated			Title			Corporate and Other
Three Months Ended
September 30, 2017
Direct title premiums	$	558		$	558		$	—
Agency title premiums	719			719			—
Escrow, title related and other fees	678			563			115
Total title and escrow	1,955			1,840			115
Interest and investment income	32			32			—
Realized gains and losses, net	(1		)	—			(1		)
Total revenue	1,986			1,872			114
Personnel costs	627			605			22
Agent commissions	553			553			—
Other operating expenses	444			348			96
Depreciation and amortization	46			40			6
Claim loss expense	64			64			—
Interest expense	10			—			10
Total expenses	1,744			1,610			134
Pre-tax earnings (loss) from continuing operations	$	242		$	262		$	(20	)
Non-GAAP adjustments before taxes
Realized (gains) and losses, net	1			—			1
Purchase price amortization	29			24			5
Spin-off costs	1			—			1
Other adjustments	1			1			—
Total non-GAAP adjustments before taxes	$	32		$	25		$	7
Adjusted pre-tax earnings (loss) from continuing operations	$	274		$	287		$	(13	)
Adjusted pre-tax margin from continuing operations	13.8		%	15.3		%	—
Pre-tax earnings (loss) from continuing operations	$	242		$	262		$	(20	)
Income tax expense (benefit)	88			98			(10		)
Earnings from equity investments	3			3			—
Earnings from discontinued operations, net of tax	18			—			18
Non-controlling interests	10			1			9
Net earnings (loss) attributable to FNF, Inc. common shareholders	$	165		$	166		$	(1	)
Net (loss) earnings attributable to FNFV Group common shareholders	$	(5	)	$	—		$	(5	)
Net earnings attributable to FNF Group common shareholders	$	170		$	166		$	4
Net earnings (loss) from continuing operations attributable to FNF, Inc. common shareholders	$	156		$	166		$	(10	)
EPS attributable to FNF, Inc. common shareholders - basic	$	0.63
EPS attributable to FNF, Inc. common shareholders - diluted	$	0.62
EPS from continuing operations attributable to FNF, Inc. common shareholders - diluted	$	0.57
FNF, Inc. weighted average shares - basic	272
FNF, Inc. weighted average shares - diluted	276

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FIDELITY NATIONAL FINANCIAL, INC.

THIRD QUARTER SEGMENT INFORMATION

(In millions, except order information in thousands)

(Unaudited)

	Consolidated			Title			Corporate and Other
Three Months Ended
September 30, 2017
Net earnings (loss) attributable to FNF, Inc. common shareholders	$	165		$	166		$	(1	)
Earnings from discontinued operations, net of tax	18			—			18
Non-controlling interests of discontinued operations	9			—			9
Net earnings (loss) from continuing operations attributable to FNF, Inc. common shareholders	$	156		$	166		$	(10	)
Total non-GAAP, pre-tax adjustments	$	32		$	25		$	7
Income taxes on non-GAAP adjustments	(11		)	(9		)	(2		)
Noncontrolling interest on non-GAAP adjustments	(3		)	(3		)	—
Total non-GAAP adjustments	$	18		$	13		$	5
Adjusted net earnings (loss) from continuing operations attributable to FNF, Inc. common shareholders	$	174		$	179		$	(5	)
Adjusted EPS from continuing operations attributable to FNF, Inc. common shareholders - diluted	$	0.63
Direct orders opened (000's)	501			501
Direct orders closed (000's)	367			367
Fee per file	$	2,368		$	2,368
Actual title claims paid	$	60		$	60
Cash flows provided by operations	$	298

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FIDELITY NATIONAL FINANCIAL, INC.

YTD SEGMENT INFORMATION

(In millions, except order information in thousands)

(Unaudited)

	Consolidated			Title			Corporate and Other
Nine Months Ended
September 30, 2018
Direct title premiums	$	1,645		$	1,645		$	—
Agency title premiums	2,018			2,018			—
Escrow, title related and other fees	2,072			1,684			388
Total title and escrow	5,735			5,347			388
Interest and investment income	131			128			3
Realized gains and losses, net	35			25			10
Total revenue	5,901			5,500			401
Personnel costs	1,926			1,838			88
Agent commissions	1,546			1,546			—
Other operating expenses	1,406			1,062			344
Depreciation and amortization	138			116			22
Claim loss expense	165			165			—
Interest expense	31			—			31
Total expenses	5,212			4,727			485
Pre-tax earnings (loss)	$	689		$	773		$	(84	)
Non-GAAP adjustments before taxes
Realized (gains) and losses, net	(35		)	(25		)	(10		)
Purchase price amortization	82			66			16
Transaction costs	13			—			13
Sales tax contingency	6			6			—
Other adjustments	3			1			2
Total non-GAAP adjustments before taxes	$	69		$	48		$	21
Adjusted pre-tax earnings (loss)	$	758		$	821		$	(63	)
Adjusted pre-tax margin	12.9		%	15.0		%	—
Pre-tax earnings (loss)	$	689		$	773		$	(84	)
Income tax expense (benefit)	104			137			(33		)
Earnings from equity investments	4			3			1
Non-controlling interests	5			7			(2		)
Net earnings (loss) attributable to FNF, Inc. common shareholders	$	584		$	632		$	(48	)
EPS attributable to FNF, Inc. common shareholders - basic	$	2.14
EPS attributable to FNF, Inc. common shareholders - diluted	$	2.09
FNF, Inc. weighted average shares - basic	273
FNF, Inc. weighted average shares - diluted	279

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FIDELITY NATIONAL FINANCIAL, INC.

YTD SEGMENT INFORMATION

(In millions, except order information in thousands)

(Unaudited)

	Consolidated			Title			Corporate and Other
Nine Months Ended
September 30, 2018
Net earnings (loss) attributable to FNF, Inc. common shareholders	$	584		$	632		$	(48	)
Total non-GAAP, pre-tax adjustments	$	69		$	48		$	21
Income taxes on non-GAAP adjustments	(15		)	(10		)	(5		)
Noncontrolling interest on non-GAAP adjustments	(10		)	(8		)	(2		)
Change in tax estimate	(45		)	(45		)	—
Black Knight tax contingency	(8		)	—			(8		)
Total non-GAAP adjustments	$	(9	)	$	(15	)	$	6
Adjusted net earnings (loss) attributable to FNF, Inc. common shareholders	$	575		$	617		$	(42	)
Adjusted EPS attributable to FNF, Inc. common shareholders - diluted	$	2.06
Direct orders opened (000's)	1,439			1,439
Direct orders closed (000's)	1,014			1,014
Fee per file	$	2,521		$	2,521
Actual title claims paid	$	165
Cash flows provided by operations	$	671

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FIDELITY NATIONAL FINANCIAL, INC.

YTD SEGMENT INFORMATION

(In millions, except order information in thousands)

(Unaudited)

Nine months ended	Consolidated			Title			Corporate and Other
September 30, 2017
Direct title premiums	$	1,598		$	1,598		$	—
Agency title premiums	2,028			2,028			—
Escrow, title related and other fees	1,969			1,634			335
Total title and escrow	5,595			5,260			335
Interest and investment income	93			93			—
Realized gains and losses, net	—			6			(6		)
Total revenue	5,688			5,359			329
Personnel costs	1,822			1,755			67
Agent commissions	1,557			1,557			—
Other operating expenses	1,312			1,042			270
Depreciation and amortization	133			117			16
Claim loss expense	181			181			—
Interest expense	39			—			39
Total expenses	5,044			4,652			392
Pre-tax earnings (loss) from continuing operations	$	644		$	707		$	(63	)
Non-GAAP adjustments before taxes
Realized (gains) and losses, net	—			(6		)	6
Purchase price amortization	82			69			13
Spin-off costs	3			—			3
Sales tax contingency	3			3			—
Other adjustments	2			2			—
Total non-GAAP adjustments before taxes	$	90		$	68		$	22
Adjusted pre-tax earnings (loss) from continuing operations	$	734		$	775		$	(41	)
Adjusted pre-tax margin from continuing operations	12.9		%	14.5		%	—
Pre-tax earnings (loss) from continuing operations	$	644		$	707		$	(63	)
Income tax expense (benefit)	258			290			(32		)
Earnings from equity investments	7			7			—
Earnings from discontinued operations, net of tax	165			—			165
Non-controlling interests	25			—			25
Net earnings attributable to FNF, Inc. common shareholders	$	533		$	424		$	109
Net earnings attributable to FNFV Group common shareholders	$	117		$	—		$	117
Net earnings (loss) attributable to FNF Group common shareholders	$	416		$	424		$	(8	)
Net earnings (loss) from continuing operations attributable to FNF, Inc. common shareholders	$	393		$	424		$	(31	)
EPS attributable to FNF, Inc. common shareholders - basic	$	1.54
EPS attributable to FNF, Inc. common shareholders - diluted	$	1.50
EPS from continuing operations attributable to FNF, Inc. common shareholders - diluted	$	1.42
FNF, Inc. weighted average shares - basic	271
FNF, Inc. weighted average shares - diluted	277

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FIDELITY NATIONAL FINANCIAL, INC.

YTD SEGMENT INFORMATION

(In millions, except order information in thousands)

(Unaudited)

	Consolidated			Title			Corporate and Other
Nine months ended
September 30, 2017
Net earnings attributable to FNF, Inc. common shareholders	$	533		$	424		$	109
Earnings from discontinued operations, net of tax	165			—			165
Non-controlling interests of discontinued operations	25			—			25
Net earnings (loss) from continuing operations attributable to FNF, Inc. common shareholders	$	393		$	424		$	(31	)
Total non-GAAP, pre-tax adjustments	$	90		$	68		$	22
Income taxes on non-GAAP adjustments	(30		)	(22		)	(8		)
Noncontrolling interest on non-GAAP adjustments	(10		)	(10		)	—
Nondeductible income taxes on litigation and regulatory settlements	21			21			$	—
Total non-GAAP adjustments	$	71		$	57		$	14
Adjusted net earnings (loss) from continuing operations attributable to FNF, Inc. common shareholders	$	464		$	481		$	(17	)
Adjusted EPS from continuing operations attributable to FNF, Inc. common shareholders - diluted	$	1.68
Direct orders opened (000's)	1,497			1,497
Direct orders closed (000's)	1,071			1,071
Fee per file	$	2,320		$	2,320
Actual title claims paid	$	168		$	168
Cash flows provided by operations	$	688

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FIDELITY NATIONAL FINANCIAL, INC.

QUARTERLY OPERATING STATISTICS

(Unaudited)

	Q3 2018			Q2 2018			Q1 2018			Q4 2017			Q3 2017			Q2 2017			Q1 2017			Q4 2016
Quarterly Open Orders ('000's except % data)
Total open orders*	456			505			478			445			501			524			472			474
Total open orders per day*	7.2			7.9			7.7			7.2			8.0			8.2			7.6			7.6
Purchase % of open orders	69		%	71		%	66		%	60		%	62		%	66		%	64		%	53		%
Refinance % of open orders	31		%	29		%	34		%	40		%	38		%	34		%	36		%	47		%
Total closed orders*	339			362			313			357			367			370			334			419
Total closed orders per day*	5.4			5.7			5.0			5.8			5.8			5.8			5.4			6.8
Purchase % of closed orders	71		%	71		%	62		%	61		%	65		%	67		%	58		%	51		%
Refinance % of closed orders	29		%	29		%	38		%	39		%	35		%	33		%	42		%	49		%
Commercial (millions, except orders in '000's)
Total commercial revenue	$	271		$	276		$	230		$	288		$	250		$	261		$	224		$	285
Total commercial open orders	48.9			54.2			52.8			46.3			48.3			50.8			49.4			45.9
Total commercial closed orders	31.2			35.1			31.5			33.2			33.4			33.6			30.0			34.7
National commercial revenue	$	150		$	147		$	122		$	165		$	138		$	148		$	127		$	167
National commercial open orders	19.8			23.0			21.1			19.0			19.9			22.0			21.1			17.9
National commercial closed orders	12.0			12.9			11.2			12.1			13.1			13.3			11.2			12.8
Total Fee Per File
Fee per file	$	2,623		$	2,579		$	2,344		$	2,425		$	2,368		$	2,428		$	2,148		$	2,091
Residential and local commercial fee per file	$	2,261		$	2,253		$	2,027		$	2,032		$	2,066		$	2,104		$	1,829		$	1,746
Residential fee per file	$	2,008		$	2,012		$	1,789		$	1,784		$	1,856		$	1,895		$	1,623		$	1,538
Total commercial fee per file	$	8,700		$	7,900		$	7,300		$	8,700		$	7,500		$	7,800		$	7,500		$	8,200
National commercial fee per file	$	12,500		$	11,400		$	10,900		$	13,600		$	10,500		$	11,100		$	11,300		$	13,000
Total Staffing
Total field operations employees	10,800			11,000			10,900			11,200			11,700			11,300			11,000			11,100

* Includes an immaterial number of non-purchase and non-refinance orders

FIDELITY NATIONAL FINANCIAL, INC.

SUMMARY BALANCE SHEET INFORMATION

(In millions)

	FNF, Inc. September 30, 2018				FNF, Inc. December 31, 2017
	(Unaudited)				(Unaudited)
Cash and investment portfolio		$	4,845			$	4,481
Goodwill		2,719				2,746
Title plant		405				398
Total assets		9,371				9,151
Notes payable		836				759
Reserve for title claim losses		1,491				1,490
Secured trust deposits		835				830
Redeemable non-controlling interests		344				344
Non-redeemable non-controlling interests		(1		)		20
Total equity and non-controlling interests		5,032				4,811
Total equity attributable to common shareholders		4,689				4,447

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