AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 21, 1998.

REGISTRATION NO. 333-62353

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------

AMENDMENT NO. 1

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------

AMERICAN NATIONAL FINANCIAL, INC.
(Exact name of registrant as specified in charter)

CALIFORNIA 6361 33-0731648
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)

--------------------------
17911 VON KARMAN, SUITE 200
IRVINE, CALIFORNIA 92614
(949) 622-4700
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
--------------------------
MICHAEL C. LOWTHER
CHIEF EXECUTIVE OFFICER
17911 VON KARMAN, SUITE 200
IRVINE, CALIFORNIA 92614
(949) 622-4700
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
--------------------------
COPIES TO:

THOMAS G. BROCKINGTON, ESQ. NICK E. YOCCA, ESQ.
SCOTT SANTAGATA, ESQ. J. MICHAEL VAUGHN, ESQ.
RUTAN & TUCKER, LLP STRADLING YOCCA CARLSON & RAUTH
611 Anton Boulevard, Suite 1400 660 Newport Center Drive, Suite 1600
Costa Mesa, California 92626 Newport Beach, California 92660
(714) 641-5100 (949) 725-4000

--------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
--------------------------

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act,
check the following box. / /

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /

If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. / /

CALCULATION OF REGISTRATION FEE

PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING REGISTRATION FEE
SECURITIES TO BE REGISTERED REGISTERED (1) SHARE (2) PRICE (2) (5)

Common Stock, no par value.................. 1,437,500 shares $12.00 $17,250,000 $5,088.75
Representative's Warrants(3)................ 125,000 shares .001 125 (3)
Common Stock, no par value(4)............... 125,000 shares $14.40 $1,800,000 $531.00
TOTAL....................................... $5,619.75

(1) Includes 187,500 shares of Common Stock which may be purchased by the
Underwriters to cover over-allotments, if any.

(2) Estimated pursuant to Rule 457(a) solely for the purpose of calculating the
registration fee.

(3) To be issued to the Representative of the several Underwriters. No fee
pursuant to Rule 457(g).

(4) Issuable upon exercise of the Representative's Warrants. Pursuant to Rule
416, there are also being registered such additional shares as may be issued
pursuant to the anti-dilution provisions of the Representative's Warrants.

(5) Previously paid.

--------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

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SUBJECT TO COMPLETION, DATED OCTOBER 21, 1998

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

1,250,000 SHARES

[LOGO]

COMMON STOCK
------------

All of the 1,250,000 shares of Common Stock (the "Common Stock") offered
hereby are being sold by American National Financial, Inc. (the "Company").
Prior to this offering there has been no public market for the Common Stock of
the Company. It is currently anticipated that the initial public offering price
of the Common Stock will be between $10.00 and $12.00 per share. See
"Underwriting" for a discussion of the factors to be considered in determining
the initial public offering price.

Fidelity National Financial, Inc. (NYSE:FNF) will own approximately 34% of
the Company's outstanding Common Stock upon the completion of this offering.

Application has been made to have the Common Stock approved for quotation on
the Nasdaq National Market under the symbol "ANFI."
----------------

FOR A DISCUSSION OF CERTAIN MATERIAL FACTORS THAT SHOULD BE CONSIDERED IN
CONNECTION WITH AN INVESTMENT IN THE COMMON STOCK, SEE "RISK FACTORS" COMMENCING
ON PAGE 6 HEREOF.
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

UNDERWRITING
DISCOUNTS AND PROCEEDS TO
PRICE TO PUBLIC COMMISSIONS(1) COMPANY(2)

Per Share................................................ $ $ $
Total(3)................................................. $ $ $

(1) Excludes additional compensation to Cruttenden Roth Incorporated, the
representative of the Underwriters (the "Representative") in the form of
warrants to purchase 125,000 shares of Common Stock, exercisable over a
period of four years commencing one year from the date of this Prospectus
(the "Representative's Warrants"). The Company has agreed to indemnify the
Underwriters against certain civil liabilities, including certain
liabilities under the Securities Act of 1933, as amended (the "Securities
Act"). See "Underwriting."

(2) Before deducting offering expenses estimated to be approximately $570,000
payable by the Company, including $275,000 in the form of a nonaccountable
expense allowance.

(3) The Company has granted to the Underwriters a 45-day option to purchase up
to 187,500 additional shares of Common Stock solely to cover
over-allotments, if any (the "Over-Allotment Option"). If such option is
exercised in full, the total Price to Public, Underwriting Discounts and
Commissions, and Proceeds to Company will be $ , $ and
$ , respectively. See "Underwriting."
----------------

The shares of Common Stock are offered severally by the Underwriters named
herein subject to prior sale, when, as and if delivered to and accepted by the
Underwriters, and subject to the right of the Underwriters to reject any order
in whole or in part and certain other conditions. It is expected that delivery
of the certificates for the Common Stock will be made against payment therefor
at the offices of Cruttenden Roth Incorporated, Irvine, California or through
the facilities of the Depository Trust Company, on or about , 1998.

[CRUTTENDEN ROTH INC. LOGO]

THE DATE OF THIS PROSPECTUS IS , 1998

[MAP]

This map shows the locations of the current Company offices (designated by
an "*"), and the states (shaded in blue) in which National Title Insurance of
New York Inc. is presently licensed to underwrite title insurance. American
Title Company, a subsidiary of the Company, has agreed to acquire National Title
Insurance of New York Inc., although the consummation of this acquisition is
subject to certain conditions and is not a condition to the consummation of this
offering. See "Risk Factors--Risks Associated with the Acquisition of National"
and "Business--Acquisition of National."

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING ENTERING STABILIZING BIDS, EFFECTING SYNDICATE SHORT COVERING
TRANSACTIONS OR IMPOSING PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES,
SEE "UNDERWRITING."

PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY SHOULD BE READ IN CONJUNCTION WITH, AND IS QUALIFIED
IN ITS ENTIRETY BY, THE MORE DETAILED INFORMATION AND FINANCIAL STATEMENTS
(INCLUDING THE NOTES THERETO) APPEARING ELSEWHERE IN THIS PROSPECTUS. AS USED IN
THIS PROSPECTUS, EXCEPT WHERE THE CONTEXT REQUIRES OTHERWISE, REFERENCES MADE TO
"ANFI" OR THE "COMPANY" MEAN AMERICAN NATIONAL FINANCIAL, INC. AND ITS
SUBSIDIARIES, AND REFERENCES TO THE "PREDECESSOR" OR "PREDECESSORS" MEAN THE
OPERATIONS DURING ALL PERIODS PRIOR TO JULY 1, 1997 OF VARIOUS SUBSIDIARIES OR
DIVISIONS OF FIDELITY NATIONAL FINANCIAL, INC. ("FNFI") THAT ARE NOW OPERATED BY
THE COMPANY AND ITS SUBSIDIARIES. UNLESS OTHERWISE INDICATED, THE INFORMATION
CONTAINED IN THIS PROSPECTUS (I) ASSUMES AN INITIAL PUBLIC OFFERING PRICE OF
$11.00 PER SHARE, (II) ASSUMES NO EXERCISE OF THE UNDERWRITERS' OVER-ALLOTMENT
OPTION, (III) ASSUMES NO EXERCISE OF ANY OTHER OUTSTANDING WARRANTS OR OPTIONS,
(IV) EXCEPT AS SET FORTH HEREIN GIVES PRO FORMA EFFECT TO THE REORGANIZATION
DESCRIBED HEREIN (SEE "REORGANIZATION"); AND (V) REFLECTS A 6.0528-FOR-1 SPLIT
OF THE COMPANY'S COMMON STOCK EFFECTED IN AUGUST 1998.

THE COMPANY

American National Financial, Inc. ("ANFI" or the "Company") provides title
insurance services as well as other real estate related financial and
informational services including escrow, real estate information, trustee sale
guarantees, and appraisals. In addition, the Company obtains specialized
services for its customers, which include, but are not limited to, tax reporting
services, exchange intermediary services and courier services. The Company's
business is focused on the residential real estate market, and it generates the
majority of its revenues from issuing title insurance policies as an independent
agent on behalf of Fidelity National Title Insurance Company ("FNTIC"), a title
underwriter. For the fiscal year ended December 31, 1997 and the six months
ended June 30, 1998, title insurance premiums represented approximately 63.8%
and 60.6% of the Company's revenues, respectively.

The title insurance industry consists of insurers ("underwriters") who issue
policies through direct operations or through agents. The Company's principal
subsidiary, American Title Company ("ATC"), is an agent, known in California as
an "underwritten title company."

ATC acts exclusively as an agent for FNTIC with respect to the procurement
of title insurance policies in 13 selected counties in California and one county
in Arizona, subject to certain exceptions. FNTIC is a wholly owned subsidiary of
FNFI. Upon completion of this offering, FNFI will own approximately 34% of the
outstanding Common Stock. ATC retains 88% of the title premiums collected on
policies issued. The remaining 12% is comprised of an 11% underwriting fee and a
1% administrative service fee, both paid to FNTIC pursuant to ATC's agreement
with FNTIC. As an agent, ATC is not subject to the loss and reserve requirements
applicable to insurers, and under its agreement with FNTIC, ATC's liability is
limited to the first $5,000 of loss under any policy issued by it on behalf of
FNTIC, except in the case of negligence, or willful or reckless conduct. To
date, the Company has not incurred any material liability under its obligation
to reimburse FNTIC for such losses.

The Company has agreed to acquire National Title Insurance of New York Inc.
("National"), a New York underwriter licensed in 35 states and the U.S. Virgin
Islands, from a subsidiary of FNFI. The Company's planned acquisition of
National, which is subject to regulatory approval, is intended to facilitate the
Company's expansion into new markets and permit the Company to directly
underwrite the title insurance policies that it issues in geographic areas not
covered by the Company's exclusive relationship with FNTIC. The acquisition of
National is not a condition to the consummation of this offering.

The Company provides a variety of other real estate transaction services, in
addition to title insurance, the most significant of which is escrow services.
Escrow services provided by the Company include all of those typically required
in connection with residential and commercial real estate purchase and finance
activities. Fees from escrow services represented approximately 22.0% of the
Company's and the Predecessors' revenues in 1997 and 23.7% of the Company's
revenues for the six months ended June 30, 1998.

The key elements of the Company's business strategy include: expanding
geographically into key markets through a combination of opening new offices,
teaming with local companies, and acquiring established operations; leveraging
the business relationships it develops through its title insurance business to
generate additional demand for its other services; recruiting highly qualified
personnel with business relationships that permit the expansion of the Company's
business; and pursuing strategic acquisitions of title insurance and related
real estate service companies in order to penetrate new markets.

The Company's principal executive offices are located at 17911 Von Karman,
Suite 200, Irvine, California 92614. The Company's telephone number is (949)
622-4700.

THE OFFERING

Common Stock Offered by the Company...... 1,250,000 shares

Common Stock to be Outstanding after the
Offering(1)............................ 6,167,096 shares

Use of Proceeds.......................... To finance the acquisition of National and for
general corporate purposes, which may include
strategic acquisitions. See "Use of Proceeds"
and "Business-- Acquisition of National."

Proposed Nasdaq National Market Symbol... ANFI

- ------------------------

(1) Excludes (i) 125,000 shares issuable upon exercise of the Representative's
Warrants; (ii) 332,904 shares issuable upon exercise of outstanding options
at an exercise price of $0.66 per share; and (iii) 650,000 shares initially
reserved for issuance and any additional shares which become issuable under
the Company's 1998 Stock Incentive Plan, of which 320,000 shares will be
issuable, subject to certain vesting requirements, pursuant to options to be
granted upon consummation of this offering at an exercise price equal to the
initial public offering price. See "Management--Stock Incentive Plan."

RISK FACTORS

Prospective investors should carefully consider the factors discussed in
detail elsewhere in this Prospectus under the caption "Risk Factors."

SUMMARY CONSOLIDATED FINANCIAL AND OPERATING INFORMATION(1)
(In thousands, except per share and other operating data)

PREDECESSOR
--------------------------------------------------------------- COMPANY
-------------------
YEAR ENDED DECEMBER 31, SIX MONTHS YEAR ENDED
------------------------------------------ ENDED JUNE 30, DECEMBER 31,
1993 1994 1995 1996 1997 1997
--------- --------- --------- --------- ------------------- -------------------
(UNAUDITED)

STATEMENT OF OPERATIONS DATA:
Total revenue..................... $ 18,576 $ 18,293 $ 29,721 $ 51,732 $ 25,141 $ 33,525
Personnel costs................... 9,810 13,917 18,512 29,216 14,364 16,185
Other operating expenses.......... 5,782 7,649 9,963 14,473 5,623 8,084
Title plant rent and
maintenance..................... 1,215 1,538 2,405 4,107 2,009 2,664
Fees to underwriters.............. 1,282 1,503 2,628 4,151 1,852 2,614
Income before minority interest... 280 (3,909) (2,400) (174) 743 2,204
Net income (loss)(4).............. 280 (3,909) (2,400) (174) 743 1,123
PER SHARE DATA:
Earnings per share:
Basic........................... $ 0.38
Diluted......................... $ 0.38
Weighted average common shares
outstanding:....................
Basic........................... 2,972
Diluted......................... 2,972
PRO FORMA DATA (UNAUDITED)(5):
Net income........................
Earnings per share:
Basic...........................
Diluted.........................
Weighted average common shares
outstanding:
Basic...........................
Diluted.........................
OTHER OPERATING DATA:
Files opened...................... 60,600 93,900 40,700 46,800
Files closed...................... 36,700 63,000 28,200 32,600
Average fee per file(6)........... $ 786 $ 773 $ 835 $ 886

SIX MONTHS ENDED JUNE
PRO FORMA(5)
YEAR ENDED 30,
DECEMBER 31, ------------------------
1997 1997(2) 1998(3)
------------- ----------- -----------
(UNAUDITED) (UNAUDITED)

STATEMENT OF OPERATIONS DATA:
Total revenue..................... $ 58,666 $ 25,141 $ 45,275
Personnel costs................... 30,710 14,364 22,522
Other operating expenses.......... 13,416 5,623 7,775
Title plant rent and
maintenance..................... 4,673 2,009 3,016
Fees to underwriters.............. 4,466 1,852 3,300
Income before minority interest... 3,013 743 5,131
Net income (loss)(4).............. 3,013 743 3,086
PER SHARE DATA:
Earnings per share:
Basic........................... $ 1.06
Diluted......................... $ 1.01
Weighted average common shares
outstanding:....................
Basic........................... 2,918
Diluted......................... 3,060
PRO FORMA DATA (UNAUDITED)(5):
Net income........................ 3,013 5,205
Earnings per share:
Basic........................... $ .59 $ 1.04
Diluted......................... $ .59 $ 1.01
Weighted average common shares
outstanding:
Basic........................... 5,072 5,018
Diluted......................... 5,072 5,160
OTHER OPERATING DATA:
Files opened...................... 87,500 40,700 65,600
Files closed...................... 60,800 28,200 44,500
Average fee per file(6)........... $ 863 $ 835 $ 834

AT JUNE 30, 1998 (UNAUDITED)
-------------------------------------------
PRO FORMA
ACTUAL PRO FORMA(5) AS ADJUSTED(5)(7)
--------- ------------- -----------------

BALANCE SHEET DATA:
Cash and cash equivalents............................................. $ 6,154 $ 2,454 $ 14,602
Working capital....................................................... 8,612 5,312 17,461
Total assets.......................................................... 27,532 23,832 35,979
Long-term debt and capitalized leases................................. 7,124 2,224 2,224
Minority interest..................................................... 5,619 -- --
Shareholders' equity.................................................. 4,209 11,028 23,176

- ----------------------------------

(1) The Company was incorporated in November 1996 and acquired 60% of the
outstanding common stock of ATC on July 1, 1997. Upon consummation of the
Reorganization (See "Reorganization"), the Company will acquire the
remaining 40% of the outstanding common stock of ATC. The summary financial
information set forth above includes financial information for the
Predecessor for the years ended December 31, 1993, 1994, 1995 and 1996, and
the six month period ended June 30, 1997, and historical information for the
Company for the year ended December 31, 1997, which includes the results of
operations of ATC for the six month period from July 1, 1997 to December 31,
1997, and from January 1, 1998 to June 30, 1998.

(2) Reflects only Predecessor financial information, which has been audited. The
Company's historical operating results for the six months ended June 30,
1997 were not significant.

(3) Reflects historical financial information of the Company.

(4) The statutory tax rate was 40% (combined federal and state) for each of the
periods presented. The effective tax rate fluctuates from period to period
based on the components of taxable income. The effective tax rate for the
six months ended June 30, 1998 was 41%, for the six months ended June 30,
1997 was 43% and for the twelve months ended December 31, 1997 (combined
Company and Predecessor) was 44.1%.

(5) To give effect to the Reorganization and assumes ATC had been acquired on
January 1, 1997. See "Reorganization." Does not include any adjustments with
respect to the pending acquisition of National.

(6) Average fee per file information consists of title insurance premiums,
escrow fees and other title-related fees divided by the number of closed
files (not including revenue generated by, or closed files relating to, the
Company's Shortened Title Assurance Reports ("STAR Product"), which are
excluded due to the abbreviated characteristics of the policy). In addition,
non title-related revenues and investment income are excluded as there are
no associated closed files. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

(7) Adjusted to give effect to the sale by the Company of 1,250,000 shares of
Common Stock offered hereby at the assumed initial public offering price of
$11.00 per share and the receipt of the estimated net proceeds therefrom.
See "Use of Proceeds" and "Capitalization."

RISK FACTORS

IN EVALUATING AN INVESTMENT IN THE COMMON STOCK BEING OFFERED HEREBY,
INVESTORS SHOULD CONSIDER CAREFULLY THE FOLLOWING RISK FACTORS, AS WELL AS THE
OTHER INFORMATION CONTAINED IN THIS PROSPECTUS.

CYCLICAL NATURE OF REAL ESTATE MARKET

The title insurance industry is dependent on the volume of real estate
transactions that occur. Substantially all of the Company's title insurance,
escrow and other real estate service business results from sales and
refinancings of real estate, primarily residential properties, and from the
construction and sale of new properties. Real estate activity is cyclical in
nature and is highly sensitive to the cost and availability of long-term
mortgage funds and general economic conditions. Real estate activity and, in
turn, the Company's revenue base, can be adversely affected during periods of
high interest rates and/or limited money supply. In the first half of 1998, low
mortgage interest rates and a strong California real estate market contributed
to increased residential transaction activity. Accordingly, no assurance can be
given that historical levels of premiums and fees received by the Company will
be available to the Company in the future.

GEOGRAPHIC CONCENTRATION

The Company derives substantially all of its revenues from real estate
transactions occurring in California. Due to the relatively high cost of real
estate in California, the real estate market may be more sensitive to
fluctuations in interest rates and general economic conditions than other
regions of the United States. Adverse economic conditions affecting the
California real estate market could have a material adverse effect on the
Company's business, financial condition and results of operations.

RISKS ASSOCIATED WITH THE RELATIONSHIP WITH FIDELITY NATIONAL FINANCIAL, INC.

The Company maintains a close relationship with FNFI and its subsidiaries
and relies upon them for a number of services in connection with its operations.
The Company has agreed that until June 30, 2002 it will act exclusively as an
agent for FNTIC with respect to the procurement of title insurance policies in
13 selected counties in California and one county in Arizona, subject to certain
exceptions. In exchange for a management fee, FNTIC provides a variety of
administrative services for ATC, including accounting, legal and human resources
services. The unexpected loss of FNTIC's underwriting or administrative
services, for any reason, could result in an interruption in the Company's
operations until such services are secured elsewhere, which could have a
material adverse effect on the Company's business, financial condition and
results of operations.

Certain of FNFI's subsidiaries are competitors of the Company in several of
the markets in which the Company operates. A director and certain officers of
the Company are also directors or officers of FNFI. Accordingly, there is a
possibility that the interests of the Company and FNFI might conflict. There can
be no assurance that the directors or officers of the Company, in satisfying
their fiduciary duties and the requirements of applicable statutory laws to
ensure such conflicts are properly resolved, can or will act in the best
interests of the Company.

RISKS ASSOCIATED WITH THE ACQUISITION OF NATIONAL

On March 16, 1998, ATC entered into a Stock Purchase Agreement with a
subsidiary of FNFI to acquire all of the outstanding capital stock of National.
Due to the affiliated nature of the parties this should not be considered an
arm's length transaction. National, a New York based title insurance
underwriter, is currently licensed to issue title insurance policies in 35
states and the U.S. Virgin Islands. ATC has requested regulatory approval of
this transaction from the Department of Insurance of the State of New York. An
element of the Company's business strategy is to utilize National not only as a
means to generate underwriting premiums but to expand geographically into states
where the Company does not

currently operate. This is the primary purpose of the acquisition of National.
There can be no assurance, however, that the required regulatory approval will
be obtained for the acquisition of National or that the acquisition will be
completed. In addition, National does not currently underwrite title insurance
policies through direct operations or agency relationships and the Company will
be required to commit resources to establish direct operations and agency
relationships in order to realize the benefits of this acquisition. The amount
of such resources will depend on the Company's resource allocation strategy for
the development of National, which has not been completed. Cash resources for
the development of National are expected to be provided by current cash balances
and internally generated funds. There can be no assurance that the Company will
be able to develop any business or generate title insurance premiums through
National, or that it will realize any of the benefits anticipated from the
acquisition of National. See "Business--Business Strategy" and "Business--
Acquisition of National." The acquisition of National is not a condition to the
consummation of this offering.

COMPETITION

The title insurance business is very competitive, primarily in the areas of
service and expertise. The size and financial strength of the title insurer who
underwrites the policies are also important factors in decisions relating to the
purchase of title insurance. Many of the Company's competitors have greater
financial, personnel, marketing and other resources than the Company, and some
are underwritten by larger title insurance companies. Also, the removal of
regulatory barriers in the future might result in new competitors, including
financial institutions entering the title insurance business. Intense
competition among the more established title insurance companies and any such
new entrants could have a material adverse effect on the business, financial
condition and results of operations of the Company. See "Business--Competition."

RISKS RELATED TO POSSIBLE ACQUISITIONS

An element of the Company's business strategy is to expand its operations
through the acquisition of complementary businesses. Except for the acquisition
of National, the Company has no agreements, understandings or commitments and is
not currently engaged in negotiations with respect to any additional
acquisition. There can be no assurance that the Company will be able to
identify, acquire, profitably manage or successfully integrate any businesses
into the Company without incurring substantial expenses, delays or other
operational or financial problems. Moreover, competition for acquisition
candidates is intense, which could both increase the price of any acquisition
targets and decrease the number of attractive companies available for
acquisition. Furthermore, acquisitions involve a number of special risks,
including diversion of management's attention, failure to retain key acquired
personnel, increased costs to improve managerial, operational, financial and
administrative systems, legal liabilities, and amortization of acquired
intangible assets, some or all of which could materially and adversely affect
the Company's business, operating results and financial condition. The Company
may have to issue additional equity securities or incur indebtedness in order to
finance the acquisition of other businesses. In addition, there can be no
assurance that acquired businesses, if any, will achieve anticipated revenues
and earnings or performance at levels historically enjoyed by the Company. The
failure of the Company to manage its acquisition strategy successfully could
materially and adversely affect the Company's business, operating results and
financial condition. See "Business--Business Strategy."

MANAGEMENT OF GROWTH

The Company is currently experiencing significant growth and intends to
pursue further growth as part of its business strategy. The Company's ability to
effectively manage the growth of its operations will require it to continue to
improve its operational, financial and other internal systems and to attract,
develop, motivate and retain its employees. The Company's rapid growth has
presented and will continue to present numerous operational challenges, such as
the assimilation of financial reporting systems, and

will increase the demands on the Company's senior management and the Company's
systems and internal controls. In addition, the Company's success depends in
large part upon its ability to attract, develop, motivate and retain talented
employees with significant industry experience and contacts. Such employees are
currently in great demand and there is significant competition for employees
with the requisite skills and experience from other national and regional title
companies. There can be no assurance that the Company will be able to attract
and retain the qualified personnel necessary to pursue its growth strategy.
There can be no assurance that the Company will be able to maintain or
accelerate its current growth, effectively manage its expanding operations or
achieve planned growth on a timely or profitable basis. To the extent the
Company is unable to manage its growth effectively and efficiently, the
Company's business, financial condition and results of operations could be
materially and adversely affected. See "Business-- Business Strategy."

GOVERNMENT REGULATION OF SUBSIDIARIES

The Company's underwritten title company subsidiaries, ATC, Nations Title
Insurance of Arizona, Inc. and Santa Barbara Title Company, are subject to
regulation by the state insurance authorities of the various states in which
they transact business. The regulation of underwritten title companies is
generally limited to requirements to maintain specified levels of net worth and
working capital, and to obtain and maintain a license in each of the counties in
which it operates.

If ATC acquires National, it will be subject to more extensive regulations
applicable to title insurance underwriters. The nature and extent of such
regulation of title insurance underwriters varies from jurisdiction to
jurisdiction, but typically involve regulation of dividend payments, prior
approval of the acquisition and control of a title company or of any company
controlling a title company, certain transactions entered into by a title
company with any of its affiliates, standards of solvency and minimum amounts of
capital surplus which must be maintained, limitations on types and amounts of
investments, restrictions on the size of risks which may be insured, approval of
policy forms and premium rates, methods of accounting, establishing reserves for
losses and loss adjustment expenses, underwriting and marketing practices, and
reinsurance. These regulations may impede, or impose burdensome conditions on,
rate increases or other actions that the Company might want to take to enhance
its operating results. Such regulation is generally intended for the protection
of policyholders rather than security holders. In addition, state regulatory
examiners perform periodic examination of title underwriters.

The insurance underwriter regulatory framework has recently been subject to
increased scrutiny by the National Association of Insurance Commissioners, state
legislators and insurance regulators in the United States Congress. No assurance
can be given that future legislative or regulatory changes resulting from such
activity will not adversely affect the Company or its subsidiaries.

DEPENDENCE ON KEY PERSONNEL

The success of the Company is highly dependent on the efforts of William P.
Foley, II, Chairman of the Board, Michael C. Lowther, Chief Executive Officer,
Wayne D. Diaz, President, Barbara A. Ferguson, Executive Vice President, Dennis
R. Duffy, Executive Vice President, and Carl A. Strunk, Executive Vice President
and Chief Financial Officer. The loss of services of Messrs. Foley, Lowther,
Diaz, Duffy, or Strunk, or Ms. Ferguson, or any of the Company's key executives,
for any reason, could materially and adversely affect the Company's business,
operating results and financial condition. The Company has entered into
three-year employment agreements with Mr. Lowther, Mr. Diaz, Ms. Ferguson and
Mr. Duffy. The Company does not maintain key man insurance on any of its
executive officers.

HOLDING COMPANY STRUCTURE; RELIANCE ON DIVIDENDS FROM SUBSIDIARIES

As a holding company whose principal assets include the securities of its
underwritten title company subsidiaries, the Company's ability to meet debt
service obligations and pay operating expenses and

dividends, if authorized by its Board of Directors, depends primarily on the
receipt of sufficient dividends from its subsidiaries. The insurance statutes
and related regulations of California and Arizona, among other states, require
the maintenance of minimum amounts of net worth, which may affect the
underwritten title company's ability to pay dividends to the Company.

VARIABILITY IN QUARTERLY RESULTS

The Company may experience significant fluctuations in future quarterly
operating results due to a number of factors, including differences in the
timing of the recognition of revenues and expenses, changes in the mix of title
orders relating to refinancing transactions and real estate sale transactions,
the seasonality of the real estate industry, the fluctuation of interest rates
and general economic conditions. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

BROAD DISCRETION AS TO USE OF PROCEEDS

The Company has allocated a substantial portion of the net proceeds to be
received in connection with this offering to increase the Company's funds
available for working capital and general corporate purposes. The Company's
management will have broad discretion to allocate the proceeds of the offering
and the purposes for which such funds are used may vary significantly depending
on a number of factors, including the amount of future revenues, the amount of
cash generated or used by the Company's operations and acquisition opportunities
presented to the Company.

CONTROL BY PRINCIPAL SHAREHOLDERS

Following the consummation of the offering, FNFI will beneficially own
approximately 34.1% of the Company's outstanding Common Stock (approximately
33.0% if the Underwriters' over-allotment option is exercised in full), and will
have the ability to control or significantly influence the election of directors
and the results of other matters submitted to a vote of shareholders. In
addition, Messrs. Lowther and Diaz, who are executive officers and directors of
the Company, will collectively own approximately 31.7% of the Company's
outstanding Common Stock (approximately 30.7% if the Underwriters'
over-allotment option is exercised in full) after the consummation of the
offering. Such concentration of ownership may have the effect of delaying or
preventing a change in control of the Company and may adversely affect the
voting or other rights of other holders of Common Stock. See "Management" and
"Principal Shareholders."

SUBSTANTIAL DILUTION

The initial public offering price for the shares of Common Stock in this
offering is substantially higher than the net tangible book value per share of
Common Stock. Purchasers of the Common Stock offered hereby will therefore incur
an immediate substantial dilution in the amount of $7.73 per share in pro forma
net tangible book value. See "Dilution."

NO PRIOR PUBLIC MARKET; POSSIBLE VOLATILITY OF STOCK PRICE

Prior to the offering, there has been no public market for the Company's
Common Stock, and there can be no assurance that an active public market for the
Common Stock will develop or be sustained after the offering. The initial public
offering price will be determined by negotiations among the Company and the
Representative of the Underwriters and may bear no relationship to the Company's
book value, earnings history or other investment criterion or to the price at
which the Common Stock will trade after the offering. See "Underwriting" for
factors to be considered in determining the initial public offering price. The
Company believes that factors such as announcements of developments related to
the Company's business, the Company's failure to meet securities analysts'
expectations, general conditions in the real estate market and the economy,
acquisitions, and changes in government regulations could cause the

price of the Company's Common Stock to fluctuate, perhaps substantially. In
addition, in recent years the stock market has experienced extreme price and
volume fluctuations which have affected the market price of many service based
companies and which have at times been unrelated to the operating performance of
the specific companies whose stocks were affected. Such fluctuations could
adversely affect the market price of the Company's Common Stock. Pursuant to the
Bylaws of the NASD, the Common Stock will be offered at a price no greater than
that recommended by a qualified independent underwriter. See "Underwriting."

POTENTIAL ANTI-TAKEOVER EFFECTS OF PREFERRED STOCK

The Company's Articles of Incorporation authorize the issuance of 5,000,000
shares of "blank check" preferred stock, which will have such designations,
rights and preferences as may be determined from time to time by the Board of
Directors. Accordingly, the Board of Directors is empowered, without shareholder
approval, to issue preferred stock with dividend, liquidation, conversion,
voting or other rights which could adversely affect the voting power or other
rights of the holders of the Company's Common Stock. In the event of such
issuance, the preferred stock could be utilized, under certain circumstances, as
a method of discouraging, delaying or preventing a change in control of the
Company. See "Description of Securities-- Preferred Stock."

SHARES ELIGIBLE FOR FUTURE SALE; EFFECT OF OUTSTANDING OPTIONS

Sales of a substantial number of shares of Common Stock including shares of
Common Stock issued upon the exercise of outstanding options and warrants in the
public market following the offering could adversely affect the market price for
the Common Stock. The officers, directors and substantially all other
shareholders of the Company have agreed not to sell or otherwise transfer any
Common Stock for 180 days following the date of the Underwriting Agreement
without the consent of the Representative on behalf of the Underwriters. The
Company has outstanding options to purchase 332,904 shares of Common Stock at an
exercise price of $0.66 per share. The Company intends to grant options to
certain directors and employees to purchase 320,000 shares of Common Stock at
the initial public offering price and subject to certain vesting requirements
pursuant to the Company's 1998 Stock Incentive Plan. The Company intends to
register all of such shares, as well as options to purchase an additional
330,000 shares reserved for issuance under the 1998 Stock Incentive Plan, on a
registration statement on Form S-8, shortly after the date of this Prospectus.
The possibility that substantial amounts of Common Stock may be sold in the
public market would likely have a material adverse effect on prevailing market
prices of the Common Stock and could impair the Company's ability to raise
capital through the sale of its equity securities. See "Shares Eligible for
Future Sale."

YEAR 2000 ISSUE

Many existing computer programs use only two digits to identify a year in
the date field. These programs were designed and developed without considering
the impact of the upcoming change in the century. As a result, any computer
programs that have time-sensitive software may recognize a date using "00" as
the year 1900 rather than the year 2000. This could result in major system
failure or miscalculations. The Company has performed a review of its internal
systems to identify and resolve the effect of Year 2000 software issues on the
integrity and reliability of its financial and operational systems. The Company
has a plan to correct and test the programs affected by the conversion of a two
digit year to a four digit year. The final phase of the project is scheduled to
be completed by mid-1999. The review of systems also includes the identification
of vendors that may have a significant impact on the Company's operations and
their expected completion of any conversions.

concurrently with planned systems upgrades and conversions in the normal course
of business as such expenses associated with Year 2000 conversions are not
expected to materially impact the Company. Presently, the Company does not have
a contingency plan for Year 2000 issues. The Company expects to have such a plan
in effect by the end of the first quarter of 1999. Management believes that if
financial and operational systems relating to its escrow services are not Year
2000 compliant, the Company's business may be significantly interrupted,
resulting in a material adverse effect on the Company's financial condition and
results of operations. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Year 2000 Issues."

FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS

This Prospectus contains certain forward-looking statements that involve
substantial risks and uncertainties. Such forward-looking statements are
principally contained in the sections "Prospectus Summary," "Risk Factors,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business" and include, without limitation, (i) the Company's
expectation and estimates as to the Company's business operations (including the
introduction of new products or services) and future financial performance
(including growth in revenues and net income and cash flows); (ii) the ability
of the Company to finance its working capital requirements; (iii) the Company's
business strategy for expanding its presence in the title insurance and real
estate related services markets; and (iv) the Company's ability to distinguish
itself from its current and future competitors. In addition, in those and other
portions of this Prospectus, the words "anticipates," "believes," "estimates,"
"expects," "plans," "intends" and similar expressions, as they relate to the
Company or its management, are intended to identify forward-looking statements.
These forward-looking statements are based largely on the Company's current
expectations and are subject to a number of risks and uncertainties. The
Company's actual results, performance or achievements could differ materially
from the results expressed in, or implied by, these forward-looking statements.
In addition to the other risks described elsewhere in this "Risk Factors"
discussion, factors that could cause or contribute to such differences include,
but are not limited to (i) those relating to conducting operations in a
competitive and regulated environment; (ii) the effect of fluctuations in the
volume of, and the seasonal nature of, real estate transactions; (iii) the
relatively high costs of producing title evidence when premiums are subject to
regulatory and competitive restraints; (iv) changes in external competitive
market factors or in the Company's internal budgeting process which might impact
trends in the Company's results of operations; (v) unanticipated working capital
or other cash requirements; (vi) changes in the Company's business strategy or
an inability to execute its strategy due to unanticipated changes in the title
insurance and real estate services markets; and (vii) various other factors that
may prevent the Company from competing successfully in the marketplace.

THE COMPANY

ATC, the Company's primary subsidiary, commenced business in 1989, and was
acquired by FNFI in December 1995, at which time ATC's operations had been
conducted solely in Kern County, California. Following the acquisition by FNFI,
ATC pursued an expansion strategy that included acquiring and opening offices in
selected other counties located throughout California. In January 1997, FNFI
contributed to ATC all of the outstanding stock of Nations Title Insurance of
Arizona, Inc., which is an underwritten title company in Phoenix, Arizona, and
Landmark REO Management Services, Inc., a property management company.

The Company was incorporated in November 1996 by its current management, and
in July 1997 acquired 60% of the outstanding stock of ATC from FNFI for $6.0
million in cash. The purchase price was funded with debt incurred by the
Company, all of which will have been repaid from operations or as a result of
the Reorganization. In August 1997, under the control of the Company, ATC
purchased all of the outstanding common stock of Santa Barbara Title Company.
The Company also formed its other subsidiaries, American Document Services,
Inc., West Point Appraisal Services, Inc., West Point Support Services, Inc. and
West Point Properties, Inc., in 1997.

In March 1998, the Company agreed to acquire National, a New York
underwriter, from a subsidiary of FNFI for $3.25 million. This acquisition is
intended to enable the Company to generate underwriting fees and to expand
geographically into counties and states in which the Company does not presently
operate. National is licensed to issue title insurance in 35 states and the U.S.
Virgin Islands. The completion of this transaction is subject to certain
conditions, including receipt of approval from the New York Department of
Insurance. The acquisition of National is not a condition to the consummation of
this offering. See "Risk Factors--Risks Associated with the Acquisition of
National" and "Business--Acquisition of National."

REORGANIZATION

In August 1998, the Company agreed to acquire the remaining 40% of the
Company's outstanding common stock of ATC from FNFI in exchange for shares of
Common Stock representing approximately 43% of the Company's outstanding shares
immediately prior to this offering. This transaction is subject to the approval
of the California Department of Insurance and is a non-waivable condition to the
consummation of this offering. In connection with this exchange, the
shareholders of the Company, other than FNFI, will assume approximately $1.2
million of acquisition debt from the Company, and the remaining unpaid balance
of the acquisition indebtedness, in the amount of approximately $3.5 million,
will be repaid from the proceeds of a dividend to the Company from ATC. (These
transactions are collectively referred to as the "Reorganization").

The following diagram illustrates the Company's corporate structure before
giving effect to the Reorganization.

[GRAPHIC]

[Graphic consists of organizational chart showing subsidiaries and classes
of shareholders of American Title Company, before reorganization.]

(1) Includes American Document Services, Inc., West Point Appraisal Services,
Inc., West Point Support Services, Inc. and West Point Properties, Inc.

The following diagram illustrates the corporate structure of the Company
after giving effect to the Reorganization.

[GRAPHIC]

[Graphic consists of organizational chart showing subsidiaries and classes
of shareholders of American National Financial, Inc. and American Title Company,
after reorganization.]

(1) Includes American Document Services, Inc., West Point Appraisal Services,
Inc., West Point Support Services, Inc. and West Point Properties, Inc.

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 1,250,000 shares of
Common Stock offered hereby, after deducting underwriting discounts and
commissions and other offering expenses (estimated to be approximately
$570,000), all of which are payable by the Company, are estimated to be
approximately $12.1 million ($14.0 million if the Underwriters' over-allotment
option is exercised in full). The Company intends to use $3.25 million of the
net proceeds to finance the acquisition of National. See "Business-- Acquisition
of National." The remainder will be used for general corporate purposes, which
may include strategic acquisitions. Except for the acquisition of National, the
Company has no agreements, understandings or commitments and is not currently
engaged in negotiations with respect to any acquisitions. Management will have
broad discretion with respect to the expenditure of such proceeds. See "Risk
Factors--Broad Discretion as to Use of Proceeds."

In addition to providing the Company with funds to finance the purchase of
National and other possible strategic acquisitions, the purposes of this
offering are to increase the Company's working capital and equity base, to
provide a public market for its Common Stock, to provide liquidity for its
shareholders and to permit the use of publicly tradeable Common Stock in future
acquisitions.

Pending their application by the Company, the net proceeds of the offering
not immediately required for the purposes described above will be invested
principally in U.S. Government securities, short-term certificates of deposit,
money market funds or other short-term, interest-bearing securities.

DIVIDEND POLICY

ANFI has not declared or paid any cash dividends on its capital stock since
its inception and for the foreseeable future intends to follow a policy of
retaining all of its earnings, if any, to finance the development and continued
expansion of its business. There can be no assurance that dividends will ever be
paid by the Company. Any future determination as to payment of dividends will
depend upon the Company's financial condition, results of operations and such
other factors as the Board of Directors deems relevant. The Company's
underwritten title company subsidiaries are subject to certain governmental
regulations requiring the maintenance of minimum amounts of net worth, which may
affect their ability to pay dividends to the Company and, accordingly, the
Company's ability to pay dividends to its shareholders. See "Risk
Factors--Holding Company Structure; Reliance on Dividends from Subsidiaries."

DILUTION

The pro forma net tangible book value of the Company at June 30, 1998 after
giving effect to the Reorganization was approximately $8.0 million or $1.31 per
share. Pro forma net tangible book value per share represents the amount of the
Company's total tangible assets less total liabilities, divided by the number of
shares of Common Stock outstanding. After giving effect to the receipt by the
Company of the estimated net proceeds from the sale of the shares of Common
Stock offered hereby at an assumed initial public offering price of $11.00 per
share, the pro forma as adjusted net tangible book value of the Company at June
30, 1998 would have been approximately $20.2 million, or $3.27 per share. This
represents an immediate increase in pro forma net tangible book value of $1.96
per share to the existing shareholders and an immediate dilution of $7.73 per
share to new investors purchasing shares in the offering. The following table
illustrates this per share dilution:

Assumed initial public offering price per share of Common
Stock.................................................... $ 11.00
Pro forma net tangible book value per share as of
June 30, 1998.......................................... $ 1.31
Increase in pro forma net tangible book value per share
attributable to new investors.......................... 1.96
-----
Pro forma net tangible book value per share after the
offering................................................. 3.27
-----------
Dilution per share to new investors........................ $ 7.73
-----------
-----------

The following table summarizes on a pro forma basis as of June 30, 1998,
after giving effect to the Reorganization, the differences between the existing
shareholders and new investors with respect to the number of shares of Common
Stock purchased from the Company, the total consideration paid and the average
price per share:

SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
------------------- ---------------------- PRICE PER
NUMBER PERCENT AMOUNT PERCENT SHARE
--------- -------- ----------- ------- ---------

Existing shareholders................... 4,917,096 79.7% $ 6,818,649(1) 33.2% $ 1.39
New investors........................... 1,250,000 20.3 $13,750,000 66.8 $11.00
--------- -------- ----------- -------
Total................................. 6,167,096 100.0% $20,568,649 100.0%
--------- -------- ----------- -------
--------- -------- ----------- -------

- ------------------------

(1) Includes approximately $5.6 million, representing the book value of the
minority interest associated with the shares of ATC owned by FNFI, which are
to be exchanged for 2,099,996 shares of Common Stock in connection with the
Reorganization, and $1.2 million, representing the principal amount of
indebtedness of the Company to be assumed by the existing shareholders
(other than FNFI) in connection with the Reorganization.

CAPITALIZATION

The following table sets forth the capitalization of the Company: (i) at
June 30, 1998, (ii) on a pro forma basis to give effect to the Reorganization
and the repayment of acquisition debt since June 30, 1998, and (iii) pro forma
as adjusted, to give effect to the Reorganization and the repayment of
acquisition debt since June 30, 1998 and to reflect the sale of 1,250,000 shares
of Common Stock offered by the Company hereby and the receipt of the estimated
net proceeds therefrom. See "Use of Proceeds" and "Reorganization." The
following table should be read in conjunction with the Consolidated Financial
Statements of the Company and related notes thereto appearing elsewhere in this
Prospectus.

JUNE 30, 1998
-------------------------------------
PRO FORMA
ACTUAL PRO FORMA(5) AS ADJUSTED
--------- ------------- -----------
(DOLLARS IN THOUSANDS)

Cash and cash equivalents.................................................. $ 6,154 $ 2,454 $ 14,602
--------- ------------- -----------
--------- ------------- -----------
Acquisition debt(1)........................................................ $ 4,900 $ -- $ --
Note payable, secured by building(2)....................................... 473 473 473
Obligations under capital leases with affiliates(3)........................ 1,751 1,751 1,751
--------- ------------- -----------
Total long term debt and capital lease obligations......................... 7,124 2,224 2,224
Minority interest in consolidated subsidiary............................... 5,619 -- --
Shareholders' equity:
Preferred Stock, no par value, 5,000,000 shares authorized; no shares
issued and outstanding................................................. -- -- --
Common Stock, no par value, 50,000,000 shares authorized; 2,875,092
shares issued and outstanding, actual; 4,975,088 shares issued and
outstanding, pro forma; and 6,225,088 shares issued and outstanding,
pro forma as adjusted(4)............................................... -- -- --
Additional paid-in-capital............................................... -- 6,819 18,967
Retained earnings........................................................ 4,209 4,209 4,209
--------- ------------- -----------
Total shareholders' equity............................................. 4,209 11,028 23,176
--------- ------------- -----------
Total capitalization................................................. $ 16,952 $ 13,252 $ 25,400
--------- ------------- -----------
--------- ------------- -----------

- ------------------------

(1) Acquisition debt bears interest at the prime rate (8.5% per annum as of June
30, 1998), matures in November 2002, and includes current maturities of
$400,000.

(2) Note payable, secured by building, bears interest at the prime rate (8.5%
per annum as of June 30, 1998) and matures in December 1999.

(3) Includes current maturities of $697,273.

(4) Excludes (i) 125,000 shares issuable upon exercise of the Representative's
Warrants; (ii) 332,904 shares issuable upon exercise of outstanding options
at an exercise price of $0.66 per share; and (iii) 650,000 shares initially
reserved for issuance and any additional shares which become issuable under
the Company's 1998 Stock Incentive Plan, of which 320,000 shares will be
issuable, subject to certain vesting requirements, pursuant to options to be
granted upon consummation of this offering at an exercise price equal to the
initial public offering price. See "Management--Stock Incentive Plan."

(5) Pro Forma column does not include any adjustments with respect to the
pending acquisition of National.

SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA
(IN THOUSANDS, EXCEPT PER SHARE AND OTHER OPERATING DATA)

The Predecessor financial information included in this Prospectus includes
the historical financial information of the operations previously owned by FNFI
and acquired by the Company on July 1, 1997. The Company's financial information
included herein includes only the historical financial information of the
Company since its formation in 1996. All Predecessor information excludes the
impact of the goodwill and minority interest associated with the Company's
acquisition of 60% of the common stock of ATC from FNFI on July 1, 1997.

The Company income statement data for the year ended December 31, 1997, and
the balance sheet data at December 31, 1997, have been derived from the
Company's consolidated financial statements and Notes thereto, which statements
have been audited by KPMG Peat Marwick LLP, independent auditors, and are
included elsewhere in this Prospectus. The Predecessor balance sheet data at
December 31, 1996 and the Predecessor income statement data for each of the two
fiscal years ended December 31, 1995 and 1996 and the six months ended June 30,
1997 have been derived from the Predecessor's Financial Statements, which
statements are included elsewhere in this Prospectus. The Company's data for the
six months ended June 30, 1998 have been derived from unaudited Financial
Statements also appearing elsewhere herein and which, in the opinion of
management, include all adjustments, consisting only of normal recurring
adjustments, necessary for a fair statement of the results of interim periods
presented. Results for the period ended June 30, 1998 are not necessarily
indicative of the results that may be expected for the entire year. The
following information should be read in conjunction with the Financial
Statements and the Notes thereto and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included elsewhere in this
Prospectus.

PREDECESSOR PRO
----------------------------------------------------------- COMPANY FORMA(4)(6)
--------------- YEAR
YEAR ENDED DECEMBER 31, SIX MONTHS YEAR ENDED ENDED
------------------------------------------ ENDED JUNE 30, DECEMBER 31, DECEMBER 31,
1993 1994 1995 1996 1997 1997 1997
--------- --------- --------- --------- --------------- --------------- -------------
(UNAUDITED) (UNAUDITED)

STATEMENT OF OPERATIONS DATA:
Title premiums..................... $ 10,719 $ 12,650 $ 21,974 $ 36,600 $ 16,773 $ 20,641 $ 37,414
Escrow fees........................ 6,205 4,470 5,527 9,672 5,581 7,352 12,933
Other fees and income.............. 1,652 1,173 2,220 5,460 2,787 5,532 8,319
--------- --------- --------- --------- ------- ------- -------------
Total revenue.................... $ 18,576 $ 18,293 $ 29,721 $ 51,732 $ 25,141 $ 33,525 $ 58,666
Personnel costs.................... 9,810 13,917 18,512 29,216 14,364 16,185 30,710
Other operating expenses........... 5,782 7,649 9,963 14,473 5,623 8,084 13,416
Title plant rent and maintenance... 1,215 1,538 2,405 4,107 2,009 2,664 4,673
Fees to underwriters............... 1,282 1,503 2,628 4,151 1,852 2,614 4,466
Income before minority interest.... 280 (3,909) (2,400) (174) 743 2,204 3,013
Net income (loss)(3)............... 280 (3,909) (2,400) (174) 743 1,123 3,013
PER SHARE DATA:
Earnings per share:
Basic............................ $ 0.38
Diluted.......................... $ 0.38
Weighted average common shares
outstanding:
Basic............................ 2,972
Diluted.......................... 2,972
PRO FORMA DATA (UNAUDITED) (4):
Net income......................... $ 3,013
Earnings per share:
Basic............................ $ .59
Diluted.......................... $ .59
Weighted average common shares
outstanding:
Basic............................ 5,072
Diluted.......................... 5,072
OTHER OPERATING DATA:
Files opened....................... 60,600 93,900 40,700 46,800 87,500
Files closed....................... 36,700 63,000 28,200 32,600 60,800
Average fee per file(5)............ $ 786 $ 773 $ 835 $ 886 $ 863
Period end number of employees.....

SIX MONTHS ENDED JUNE
30,
----------------------
1997(1) 1998(2)
--------- -----------
(UNAUDITED)

STATEMENT OF OPERATIONS DATA:
Title premiums..................... $ 16,773 $ 27,421
Escrow fees........................ 5,581 10,716
Other fees and income.............. 2,787 7,138
--------- -----------
Total revenue.................... $ 25,141 $ 45,275
Personnel costs.................... 14,364 22,522
Other operating expenses........... 5,623 7,775
Title plant rent and maintenance... 2,009 3,016
Fees to underwriters............... 1,852 3,300
Income before minority interest.... 743 5,131
Net income (loss)(3)............... 743 3,086
PER SHARE DATA:
Earnings per share:
Basic............................ $ 1.04
Diluted.......................... $ 1.01
Weighted average common shares
outstanding:
Basic............................ 2,918
Diluted.......................... 3,060
PRO FORMA DATA (UNAUDITED) (4):
Net income......................... $ 5,339
Earnings per share:
Basic............................ $ 1.04
Diluted.......................... $ 1.01
Weighted average common shares
outstanding:
Basic............................ 5,018
Diluted.......................... 5,160
OTHER OPERATING DATA:
Files opened....................... 40,700 65,600
Files closed....................... 28,200 44,500
Average fee per file(5)............ $ 835 $ 834
Period end number of employees.....

DECEMBER 31,
----------------
1996(1) 1997(2)
------- ------- JUNE 30, 1998
---------------
(UNAUDITED)

BALANCE SHEET DATA:
Cash and cash equivalents............. $ 26 $ 7,224 $ 6,154
Working capital....................... 4,426 5,047 8,612
Total assets.......................... 10,015 22,365 27,532
Due to affiliates..................... -- 1,411 197
Shareholders' equity.................. 6,753 1,123 4,209

- ------------------------------

(1) Reflects only Predecessor financial information which has been audited. The
Company's historical operating results for the six months ended June 30,
1997 were not significant.

(2) Reflects historical financial information of the Company.

(3) The statutory tax rate was 40% (combined federal and state) for each of the
periods presented. The effective tax rate fluctuates from period to period
based on the components of taxable income. The effective tax rate for the
six months ended June 30, 1998 was 41%, for the six months ended June 30,
1997 was 43% and for the twelve months ended December 31, 1997 (combined
Company and Predecessor) was 44.1%.

(4) To give effect to the Reorganization (see "Reorganization") and assumes ATC
had been acquired on January 1, 1997. Does not include any adjustments with
respect to the pending acquisition of National.

(5) Average fee per file information consists of title insurance premiums,
escrow fees and other title-related fees divided by the number of closed
files (not including revenue generated by, or closed files relating to, the
Company's STAR Product, which are excluded due to the abbreviated
characteristics of the policy). In addition, non title-related revenues and
investment income are excluded as there are no associated closed files. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

(6) Refer to Unaudited Pro Forma Combined Condensed Financial Information at
pages 20-22.

UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)

The following unaudited pro forma combined condensed financial information
is based upon historical financial statements of the Company and the Predecessor
and has been prepared to illustrate the effects of (i) the acquisition of 60% of
the common stock of ATC (the "Majority Acquisition"), which occurred on July 1,
1997, and (ii) the proposed Reorganization (See "Reorganization") whereby the
Company will acquire the remaining 40% of ATC.

The unaudited pro forma combined condensed balance sheet as of June 30, 1998
gives effect to the Reorganization as if this transaction was completed on June
30, 1998, and was prepared based on the historical balance sheet of the Company
as of June 30, 1998. The unaudited pro forma combined condensed income
statements for the year ended December 31, 1997 and the six months ended June
30, 1998 give effect to the Majority Acquisition and Reorganization as if these
transactions had been completed at the beginning of each period presented. The
unaudited pro forma combined condensed income statements for the year ended
December 31, 1997 and the period ended June 30, 1998 were prepared based upon
the historical financial statements of the Company for those periods.

The unaudited pro forma combined condensed financial information is provided
for comparative purposes only and is not indicative of the results of operations
or financial position of the combined companies that would have occurred had
these transactions been consumated at the beginning of the periods presented or
on the date indicated, nor is it indicative of future operating results or
financial position. The unaudited pro forma adjustments are based upon currently
available information and upon certain assumptions that management believes are
reasonable under the circumstances. The unaudited pro forma combined condensed
financial information and related notes thereto should be read in conjunction
with the Company's consolidated financial statements and the financial
statements of ANFI Predecessor included in this Prospectus.

AS OF JUNE 30, 1998
-----------------------------------------------
PRO FORMA
ADJUSTMENTS TO ADJUSTED TO
REFLECT REFLECT
PRO FORMA CONDENSED BALANCE SHEET HISTORICAL REORGANIZATION REORGANIZATION
----------- ------------------- -------------

ASSETS
Current assets:
Cash and cash equivalents....................... $ 6,154 $ (3,700)(2)(7) $ 2,454
Investments..................................... 1,982 -- 1,982
Accounts receivable............................. 8,714 -- 8,714
Other current assets............................ 3,440 -- 3,440
----------- ------- -------------
Total current assets.......................... 20,290 (3,700) 16,590
Other assets........................................ 7,242 -- 7,242
----------- ------- -------------
Total assets.................................. $ 27,532 $ (3,700) $ 23,832
----------- ------- -------------
----------- ------- -------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and other current
liabilities................................... $ 10,384 $ -- $ 10,384
Due to affiliates............................... 197 -- 197
Current portion of long-term debt............... 400 (400)(2)(7) --
Current portion of capitalized leases........... 697 -- 697
----------- ------- -------------
Total current liabilities..................... 11,678 (400) 11,278
Long-term debt...................................... 4,973 (4,500)(2)(3) 473
Obligation under capital leases with affiliates..... 1,053 -- 1,053
----------- ------- -------------
Total liabilities............................. $ 17,704 $ (4,900) $ 12,804
----------- ------- -------------
Minority interest................................... 5,619 (5,619)(1) --
----------- ------- -------------
Shareholders' equity:
Common stock, $0 par value...................... -- -- --
Additional paid--in capital..................... -- 6,819 (1)(3 6,819
Retained earnings............................... 4,209 -- 4,209
----------- ------- -------------
Total shareholders' equity.................... 4,209 6,819 11,028
----------- ------- -------------
Total liabilities and shareholders' equity.... $ 27,532 $ (3,700) $ 23,832
----------- ------- -------------
----------- ------- -------------

See notes to Unaudited Pro Forma Combined Condensed Financial Information on
page 22.

FOR THE YEAR ENDED DECEMBER 31, 1997
-----------------------------------------------------------------------------

PRO FORMA ADJUSTMENTS TO
REFLECT MAJORITY
ACQUISITION OF ATC
------------------------- ADJUSTED TO PRO FORMA
ANFI OTHER REFLECT ADJUSTMENTS TO
PRO FORMA COMBINED CONDENSED INCOME COMPANY PREDECESSOR PRO FORMA MAJORITY REFLECT
STATEMENT HISTORICAL HISTORICAL ADJUSTMENTS ACQUISITION REORGANIZATION
---------- ----------- ----------- --------------- --------------
Revenue:
Title premiums.......................... $20,641 $16,773 $-- $37,414 $--
Escrow fees............................. 7,352 5,581 -- 12,934 --
Other fees and income................... 5,532 2,787 -- 8,319 --
---------- ----------- ----- ------- ------
Total revenue..................... 33,525 25,141 -- 58,667 --
---------- ----------- ----- ------- ------
Expenses:
Personnel costs......................... 16,185 14,364 -- 30,550 160(11)
Other operating expenses................ 8,084 5,623 137(8)(10) 13,844 (428)(4)
Fees to underwriters.................... 2,614 1,852 -- 4,466 --
Title plant rent and maintenance........ 2,664 2,009 -- 4,673 --
---------- ----------- ----- ------- ------
Total expenses.................... 29,547 23,848 137 53,533 (268)
---------- ----------- ----- ------- ------
Income before income taxes and minority
interest.............................. 3,978 1,293 (137) 5,134 268
Provision for income taxes.............. 1,774 550 (45)(5) 2,280 109(5)
---------- ----------- ----- ------- ------
Income before minority interest......... 2,204 743 (92) 2,854 159
Minority interest....................... (1,081) -- (297)(9) (1,378) 1,378(6)
---------- ----------- ----- ------- ------
Net income.............................. $ 1,123 $ 743 $(389) $ 1,476 $1,537
---------- ----------- ----- ------- ------
---------- ----------- ----- ------- ------
Weighted average shares outstanding,
basic and diluted..................... 2,972
----------
----------
Basic and diluted net earnings per
share................................. $ 0.38
----------
----------

ADJUSTED TO
PRO FORMA COMBINED CONDENSED INCOME REFLECT
STATEMENT REORGANIZATION
--------------
Revenue:
Title premiums.......................... $37,414
Escrow fees............................. 12,933
Other fees and income................... 8,319
-------
Total revenue..................... 58,666
-------
Expenses:
Personnel costs......................... 30,710
Other operating expenses................ 13,416
Fees to underwriters.................... 4,466
Title plant rent and maintenance........ 4,673
-------
Total expenses.................... 53,265
-------
Income before income taxes and minority
interest.............................. 5,401
Provision for income taxes.............. 2,388
-------
Income before minority interest......... 3,013
Minority interest....................... --
-------
Net income.............................. $ 3,013
-------
-------
Weighted average shares outstanding,
basic and diluted..................... 5,072
-------
-------
Basic and diluted net earnings per
share................................. $ 0.59
-------
-------

See notes to Unaudited Pro Forma Combined Condensed Financial Information on
page 22.

FOR THE SIX MONTHS ENDED JUNE 30, 1998
-----------------------------------------------

PRO FORMA
ADJUSTMENTS ADJUSTED TO
PRO FORMA COMBINED CONDENSED INCOME COMPANY TO REFLECT REFLECTED
STATEMENT HISTORICAL REORGANIZATION REORGANIZATION
---------- ----------- -----------------
Revenues:
Title premiums.......................... $27,421 $-- $27,421
Escrow fees............................. 10,716 -- 10,716
Other fees and income................... 7,138 -- 7,138
---------- ----------- -------
Total revenue..................... 45,275 -- 45,275
---------- ----------- -------
Expenses:
Personnel costs......................... 22,522 80(11) 22,602
Other operating expenses................ 7,774 (205)(4) 7,569
Fees to underwriters.................... 3,300 -- 3,300
Title plant rent and maintenance........ 3,016 -- 3,016
---------- ----------- -------
Total expenses.................... 36,612 (125) 36,487
---------- ----------- -------
Income before income taxes and minority
interest.............................. 8,663 125 8,788
Provision for income taxes(5)........... 3,532 51 3,583
---------- ----------- -------
Income before minority interest......... 5,131 74 5,205
Minority interest....................... (2,045) 2,045(6) --
---------- ----------- -------
Net income.............................. $ 3,086 $2,119 $ 5,205
---------- ----------- -------
---------- ----------- -------
Weighted average shares outstanding,
basic.................................. 2,918 5,018
---------- -------
---------- -------
Weighted average shares outstanding,
diluted................................ 3,060 5,160
---------- -------
---------- -------
Basic net earnings per share............ $ 1.06 $ 1.04
---------- -------
---------- -------
Diluted net earnings per share.......... $ 1.01 $ 1.01
---------- -------
---------- -------

NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION

(1) Reflects the acquisition of the remaining 40% of ATC, at book value of the
minority interest, in exchange for 2.1 million shares of common stock of the
Company.

(2) Reflects the repayment of acquisition debt of the Company from the proceeds
of the $3.5 million dividend from ATC.

(3) Reflects the assumption of $1.2 million of the Company's acquisition debt by
certain shareholders.

(4) Reflects the reduction of interest expense that would have resulted had the
acquisition debt been repaid on January 1, 1997 (1997 pro forma) or January
1, 1998 (1998 pro forma), net of the forfeiture of interest income on the
cash used to repay the debt.

(5) To give effect to the tax impact of the pro forma adjustments.

(6) Reflects the elimination of the minority interest resulting from the
acquisition of the remaining 40% of the outstanding common stock of ATC.

(7) Gives pro forma effect to the debt payments from July 1, 1998 to the date of
the Reorganization.

(8) Reflects amortization of goodwill from the 60% ATC acquisition from January
1, 1997 to June 30, 1997.

(9) Reflects the pro forma minority interest on the Predecessor earnings for the
six months ended June 30, 1997.

(10) Represents the increase to interest expense that would have been incurred
had the acquisition debt been outstanding since January 1, 1997.

(11) Reflects the pro forma effect of the 1998 executive employment agreements
executed in connection with the Reorganization, excluding any additional
bonuses that may become payable.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

BACKGROUND

The following discussion and analysis should be read in conjunction with the
Consolidated Financial Statements of the Company and the Predecessors and the
related Notes thereto appearing elsewhere herein.

The discussion set forth below includes both historical financial
information relating to the Company and financial information relating to the
Company's Predecessors. All amounts and related information for 1995 and 1996
relate solely to Predecessor operations, which consisted of the operations that
are now ATC.

The Predecessor operations are those of ATC since it was acquired by FNFI
and other operations of FNFI contributed to ATC as of June 30, 1997 that were
operated as separate profit centers but not separate legal entities. As separate
profit centers or divisions of FNFI, only operating activities of these
divisions were segregated in FNFI's accounting records. Cash balances and other
balance sheet information was co-mingled within the accounts of FNFI's
subsidiaries that owned the respective divisions. As such, the balance sheet and
statements of shareholders' equity and cash flows present the operations of ATC.
The statements of combined operations present operations of ATC and the
divisions of FNFI, which were later contributed to ATC, as if the combined
operations were a single entity throughout the periods presented.

For purposes of discussion below, the Company operations (which includes ATC
for July 1, 1997 through December 31, 1997) and the Predecessor operations (for
January 1, 1997 through June 30, 1997) have been combined. Despite existing as
separate legal entities during the year, for comparison purposes the substance
of the operations of these businesses were consistent throughout 1997.
Therefore, presenting the combined financial information for 1997 provides the
most consistent basis for a meaningful comparison with operations in 1996 and
1995. The information for the six months ended June 30, 1997 and June 30, 1998
consist of Predecessor information for the earlier period, and actual historical
information for the Company for the latter period. Operations during the latter
period included both the ATC, Nations Title Insurance of Arizona ("NTA") and
West Point Support Services, Inc. ("WPSS") operations as well as the results of
operations of the Company's other subsidiaries, which had not been in operation
during the earlier period. See "The Company."

The Company has recently completed several acquisitions and is currently
involved in an additional pending acquisition and the Reorganization. Upon
consummation of the Reorganization, the minority interest in consolidated
subsidiary as shown on the Company's balance sheet will be eliminated. The
Company believes that the acquisition of Santa Barbara Title Company will not
have a material impact on the Company's results of operations. In addition, the
Company is currently in the process of completing a resource allocation plan
concerning the operation of National following its acquisition. The impact of
such acquisition on the Company's results of operations is dependent upon the
resource allocation plan ultimately adopted by the Company.

OVERVIEW

The following table sets forth certain financial and other data of the
Company and its Predecessor operations for the periods indicated:

SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
-------------------------------- ----------------
1995 1996 1997 1997 1998
------- ------- ------------- ------- -------
(DOLLARS IN THOUSANDS, OTHER THAN FEE PER FILE)

Total revenue........................... $29,721 $51,732 $58,666 $25,141 $45,275
Total expenses.......................... 33,508 51,947 53,395 23,848 36,613
Income before minority
interest.............................. (2,400) (174) 2,947 743 5,131
Net income (loss)....................... $(2,400) $ (174) N/A(1) $ 743 $ 3,086
------- ------- ------------- ------- -------
------- ------- ------------- ------- -------

Orders opened(2)........................ 60,600 93,900 87,500 40,700 65,600
Orders closed(2)........................ 36,700 63,000 60,800 28,200 44,500
Average fee per file(2)................. $ 786 $ 773 $ 863 $ 835 $ 834

- ------------------------

(1) Not applicable because the second six months of this period excludes the 40%
minority interest in ATC.

(2) Excludes orders and fees related to STAR products.

The Company's revenue is closely related to the level of real estate
activity and the average price of real estate sales. Real estate sales are
directly affected by the availability of funds to finance purchases. Other
factors affecting real estate activity include demand, mortgage interest rates,
family income levels and general economic conditions. While the level of sales
activity was relatively depressed in certain geographical areas during the
period 1991 through mid-1993, reductions in mortgage interest rates beginning in
the latter part of 1991 triggered an increase in refinancing activity, which
continued at record levels through 1993 and into the first quarter of 1994.
During 1994 and early 1995, steady interest rate increases caused by actions
taken by the Federal Reserve Board resulted in a significant decline in
refinancing transactions and a stagnation in residential resales and new home
sales. Since late 1995, decreases in mortgage interest rates and the resulting
improvement in the real estate market have had a favorable effect on the level
of real estate activity, including refinancing transactions, new home sales and
resales. The overall economic environment, stable mortgage interest rates and
strength in the California and West Coast real estate market contributed to very
positive conditions for the industry throughout the second half of 1996, all of
1997 and into the first half of 1998. It is impossible to predict the direction
interest rates and the real estate market may move in the future.

The Company's revenues include revenues from title insurance premiums (which
also includes trustee sale guarantee fees), escrow fees, and other fees and
revenues. The Company's operations generate escrow fees from holding and
disbursing funds and documents in connection with the closing of real estate
transactions. Escrow fees generally fluctuate in a pattern consistent with the
fluctuation in title insurance premiums. Other fees and revenue primarily
consist of real estate information fees, reconveyance fees, recording fees and
appraisal fees, in connection with real estate transactions, and include fees
related to the Company's STAR product. Other fees and revenue trend closely with
the level of title insurance and escrow business.

The Company's principal costs include personnel costs, fees to underwriters,
title plant rent and maintenance costs, and other operating expenses. Personnel
costs include both base salaries and commissions paid to employees, and are the
most significant operating expense incurred by the Company.

Fees to underwriters represent the portion of gross title policy premiums
paid by the Company's underwritten title companies to FNTIC pursuant to the
terms of Issuing Agency Agreements with that underwriter, and similar fees paid
by the Company's other underwritten title company subsidiaries. Prior to

1997, the Predecessor operations were charged a 12% underwriting fee by its
underwriters. Beginning in January 1997, ATC entered into an Issuing Agency
Agreement with FNTIC under which ATC pays FNTIC an underwriting fee equal to 11%
of the title insurance premiums received. In addition, ATC pays FNTIC a fee
equal to 1% of title insurance premiums for certain accounting, human resources
and legal services provided by FNFI. Although the fee for these management
services was not negotiated in an arm's length transaction, the Company believes
that the amount of these fees is reasonable in light of the level of services
received and the estimated costs of performing these services internally. See
"Certain Transactions."

Title plant rent and maintenance costs consist of payments for access to
title plants, and costs of updating these title plants. Title plant rent and
maintenance costs includes daily update expenses that are dependent on the
volume of real estate transaction activity in the market generally and a rental
charge that is based on actual utilization.

Other operating expenses consist of facilities expenses, postage and courier
services, computer services, professional services, advertising expenses,
general insurance, trade and notes receivable allowances, depreciation and
amortization and interest expense. The repayment of debt pursuant to the terms
of the Reorganization will result in a material decrease in interest expense.
Interest expense incurred during 1997 and the six month period ended June 30,
1998, related to the debt repaid in the Reorganization was $413,000 and
$241,000, respectively.

Title insurance premiums and escrow fee revenues are recognized as income at
the time the underlying real estate transaction closes. Expenses directly
related to the title and escrow process are recognized as they are incurred,
throughout the duration of the escrow. As a result, the Company's recognition of
revenue relating to a given escrow lags approximately 60-90 days behind the
opening of that escrow and the recognition of the corresponding expenses. These
factors may result in fluctuations in gross margins from quarter to quarter.

While the number of orders that close affects the Company's revenue, the
largest component of the Company's expenses are personnel costs. Since personnel
costs are relatively fixed over the short-term, in a rapidly declining market,
reductions in the number of orders can adversely affect margins. Gross margins
are also affected by the relative numbers of orders that relate to refinancing
transactions, as compared to those relating to real estate sale transactions.

The average fee per file and corresponding gross margins are higher for real
estate sale and resale transactions than refinance transactions for three
principal reasons: (i) a larger percentage of sale and resale orders close as
compared to refinance orders, (ii) typically two policies are issued in a resale
transaction (one each to the buyer and lender) whereas only one is issued in a
refinance transaction and (iii) the base rate charged on sale and resale
transactions is typically higher than that charged on refinance transactions.

Because title insurance premiums are calculated with regard to the purchase
price of the property or the amount of the lender's mortgage, average fees per
file will also increase during periods in which real estate prices, and
corresponding mortgage loans, are increasing.

RESULTS OF OPERATIONS--INTERIM PERIODS

The following table presents information regarding the components of the
Company's revenue for the periods presented. The percentages shown reflect the
dollar amounts shown expressed as a percentage of total revenues for the
corresponding period.

SIX MONTHS ENDED JUNE 30,
------------------------------------------
1997 1998
-------------------- --------------------
(DOLLARS IN THOUSANDS)
AMOUNT % AMOUNT %
--------- --------- --------- ---------

Title insurance premiums............................... $ 16,773 66.7 $ 27,421 60.6
Escrow fees............................................ 5,581 22.2 10,716 23.7
Other fees and revenue................................. 2,787 11.1 7,138 15.7
--------- --------- --------- ---------
Total revenue...................................... $ 25,141 100.0% $ 45,275 100.0%
--------- --------- --------- ---------
--------- --------- --------- ---------
Personnel costs........................................ $ 14,364 57.1 $ 22,522 49.7
Other operating expenses............................... 5,623 22.4 7,775 17.2
Title plant rent and maintenance....................... 2,009 8.0 3,016 6.7
Fees to underwriters................................... 1,852 7.4 3,300 7.3
--------- --------- --------- ---------
Total expenses..................................... $ 23,848 94.9% $ 36,613 80.9%
--------- --------- --------- ---------
--------- --------- --------- ---------

REVENUE

TITLE INSURANCE PREMIUMS. Revenues from title insurance premiums were $27.4
million for the six months ended June 30, 1998 (the "1998 Period") as compared
to $16.8 million for the same period in 1997 (the "1997 Period"), an increase of
$10.6 million or 63.1%. This growth is a result of increases in both home prices
and the number of sale and refinancing transactions that occurred in the 1998
Period. During this time period the number of orders closed increased by 57.8%.
The average fee per file, defined as total revenues net of abbreviated title
policies issued primarily to lenders, divided by the number of orders closed,
was $834 for the 1998 Period, as compared to $835 for the 1997 Period.

ESCROW FEES. Revenues from escrow fees were $10.7 million for the 1998
Period as compared to $5.6 million for the 1997 Period, an increase of $5.1
million or 91.1%. This increase is a result of a continuing favorable market for
real estate transactions as well as continuing efforts by the Company to expand
its escrow operations in Southern California. Ten new escrow offices were opened
during 1998. The favorable real estate market has resulted from demand and from
favorable mortgage interest rates.

OTHER FEES AND REVENUE. Other fees and revenue were $7.1 million for the
1998 Period, as compared to $2.8 million for the 1997 Period, an increase of
$4.3 million or 153.6%. This increase is a result of the increased number of
real estate transactions handled by the Company during the 1998 Period, as
described above, as well as an expansion of the services offered by the Company
between the periods. Services offered in the 1998 Period that were not offered
in the 1997 Period include real estate appraisal services, property site
inspections, and document retrieval services. Revenues from the expanded
services for the 1998 Period were $1.0 million. The remaining $3.3 million
increase is attributed to the increased number of real estate transactions in
the 1998 Period.

EXPENSES

PERSONNEL COSTS. Personnel costs were $22.5 million for the 1998 Period as
compared to $14.4 million for the 1997 Period, an increase of $8.1 million or
56.3%. Personnel costs were 49.7% of total revenues for the 1998 Period as
compared to 57.1% for the 1997 Period. This decrease of personnel costs as a
percentage of revenues is a result of increased productivity and operating
efficiencies resulting from the implementation of automated escrow and title
systems, which has been ongoing since 1997. Management does not expect the
improvement in productivity to continue at the same rate in the future.
Management has entered into new employment agreements with certain of its
executive officers and projects that these

will result in at least $160,000 of additional personnel costs annually,
exclusive of any additional bonus that may become payable.

OTHER OPERATING EXPENSES. Other operating expenses were $7.8 million for
the 1998 Period as compared to $5.6 million for the 1997 Period, an increase of
$2.2 million or 39.3%. As a percentage of total revenues, other operating
expenses decreased to 17.2% during the 1998 Period from 22.4% for the 1997
Period. This reduction as a percentage of revenues resulted from the
implementation of automated escrow and title systems and cost control programs
by the Company during 1997 and from centralized oversight of operating branches.

TITLE PLANT RENT AND MAINTENANCE EXPENSES. Title plant rent and maintenance
expenses were $3.0 million for the 1998 Period as compared to $2.0 million for
the 1997 Period, an increase of $1.0 million or 50.0%. This increase is
primarily due to the variable component relating to the volume of orders, which
increased during the 1998 Period. The variable component of title plant rent and
maintenance relates to a per order charge for title plant usage. Title plant
rent and maintenance expenses as a percentage of title insurance premiums were
11.0% during the 1998 Period as compared to 12.0% during the 1997 period.
Certain title plant rent expenses are incurred by the Company regardless of
volume levels. This is reflected by the fact that compared to the 1997 period,
the Company's title plant rent and maintenance expenses as a percentage of title
insurance premiums, were lower during the 1998 Period when the Company's volume
levels were much higher.

FEES TO UNDERWRITERS. Fees to underwriters were $3.3 million for the six
months ended June 30, 1998 as compared to $1.9 million for the same period of
the prior year, an increase of $1.4 million or 73.7%. Fees to underwriters are
calculated as a fixed percentage of title insurance premiums received, and
therefore increased from period to period in direct proportion to the increase
in title insurance premium revenue during these periods.

RESULTS OF OPERATIONS--YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

The following table presents information regarding the components of the
Company's revenue for the periods presented.

YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
1995 1996 1997
-------------------- -------------------- --------------------
AMOUNT % AMOUNT % AMOUNT %
--------- --------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS)

Title insurance premiums........... $ 21,974 73.9 $ 36,600 70.7 $ 37,414 63.8
Escrow fees........................ 5,527 18.6 9,672 18.7 12,933 22.0
Other fees and revenue............. 2,220 7.5 5,460 10.6 8,319 14.2
--------- --------- --------- --------- --------- ---------
Total revenue.................... $ 29,721 100.0% $ 51,732 100.0% $ 58,666 100.0%
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
Personnel costs.................... $ 18,512 62.3 $ 29,216 56.5 $ 30,549 52.0
Other operating expenses........... 9,963 33.5 14,473 28.0 13,707 23.4
Title plant rent and maintenance... 2,405 8.1 4,107 7.9 4,673 8.0
Fees to underwriters............... 2,628 8.8 4,151 8.0 4,466 7.6
--------- --------- --------- --------- --------- ---------
Total expenses................. $ 33,508 112.7% $ 51,947 100.4% $ 53,395 91.0%
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------

COMPARISON OF THE YEARS ENDED DECEMBER 31, 1997 AND DECEMBER 31, 1996

REVENUE

TITLE INSURANCE PREMIUMS. Revenues from title insurance premiums was $37.4
million for 1997, as compared to $36.6 million for 1996, an increase of $0.8
million or 2.2%. This increase resulted from increases in both refinancing and
real estate sale transactions during 1997, which largely resulted from stable
mortgage interest rates and improvements in the overall economic environment in
the California real estate market, offset in part by a reduction in revenues
related to the countercyclical trustee sale

guarantee and foreclosure business. The Company's average fee per file for
orders closed in 1997 was $863 compared to $773 in 1996, an increase of $90 or
11.6%.

ESCROW FEES. Revenues from escrow fees were $12.9 million for 1997, as
compared to $9.7 million for 1996, an increase of $3.2 million or 33.0%. The
increase in escrow fees, which occurred despite the more modest increase in
title premiums during the same period, is primarily related to the establishment
of new operations in Southern California, which contributed approximately $2.0
million.

OTHER FEES AND REVENUE. Other fees and revenue were $8.3 million for 1997
as compared to $5.5 million for 1996, an increase of $2.8 million or 50.9%. This
increase is primarily a result of the additional services offered by the Company
from its support services, appraisal and asset management divisions
(representing approximately $2.2 million of the increase). The remaining
increase of approximately $600,000 is related to the increase in business volume
in the title-related divisions.

EXPENSES

PERSONNEL COSTS. Personnel costs were $30.5 million for 1997, as compared
to $29.2 million for 1996, an increase of $1.3 million or 4.5%. As a percentage
of total revenue, personnel costs decreased to 52.0% in 1997 from 56.5% in 1996.
This decrease of personnel costs as a percentage of revenues is a result of
increased productivity and operating efficiencies resulting from the
implementation of automated escrow and title systems. Management does not expect
the improvement in productivity to continue at the same rate in the future,
however.

OTHER OPERATING EXPENSES. Other operating expenses were $13.7 million in
1997 as compared to $14.5 million in 1996, a decrease of $0.8 million or 5.5%.
As a percentage of total revenue, other operating expenses decreased to 23.4% in
1997 from 28% in 1996. This decrease resulted from cost control programs
implemented in 1997.

TITLE PLANT RENT AND MAINTENANCE EXPENSES. Title plant rent and maintenance
expenses were $4.7 million for 1997 as compared to $4.1 million for 1996, an
increase of $0.6 million or 14.6%. This increase is primarily due to the
variable component relating to the volume of orders, which increased during
1997. Title plant rent and maintenance expenses as a percentage of title
insurance premiums were 12.5% in 1997 as compared to 11.2% during 1996. The
period to period increase resulted primarily from the expansion of the Company's
operations during 1997 and the related increase in fixed title plant costs
without a corresponding increase in title insurance premiums.

FEES TO UNDERWRITERS. Fees to underwriters increased to $4.5 million in
1997 from $4.2 million in fiscal 1996, an increase of $0.3 million or 7.1%. Fees
paid to underwriters are a fixed percentage of title insurance premiums, and
therefore increased for the same reasons applicable to the increases in title
insurance premiums from year to year.

COMPARISON OF THE YEARS ENDED DECEMBER 31, 1996 AND DECEMBER 31, 1995

REVENUE

TITLE INSURANCE PREMIUMS. Revenue from title insurance premiums was $36.6
million for 1996, as compared to $22.0 million for 1995, an increase of $14.6
million or 66.4%. This increase resulted from increases in both refinancing and
real estate sale transactions during fiscal 1996, which resulted primarily from
decreases in mortgage interest rates in late 1995.

ESCROW FEES. Revenue from escrow fees were $9.7 million for 1996, as
compared to $5.5 million for 1995, an increase of $4.2 million or 76.4%. This
increase is a result of year to year improvement in the real estate market
described above, as well as focused efforts by the Predecessor to expand its
escrow business in certain markets, such as Southern California, during 1996.

OTHER FEES AND REVENUES. Other fees and revenues increased to $5.5 million
for 1996 as compared to $2.2 million for 1995, an increase of $3.3 million or
150.0%. This increase is a result of the introduction of the STAR product, which
is the Company's "Shortened Title Assurance Report," a limited coverage title
policy offered to lenders. STAR product revenue accounted for $2.7 million of
the $3.3 million increase from 1995 to 1996.

EXPENSES

PERSONNEL COSTS. Personnel costs were $29.2 million for 1996, as compared
to $18.5 million for 1995, an increase of $10.7 million or 57.8%. As a
percentage of total revenue, personnel costs decreased to 56.5% in 1996 from
62.3% in 1995, due principally to the year to year growth in revenues. The
increase in personnel costs relates to an increase in the number of employees of
the Company, which accompanied the 74.1% increase in total revenue during these
periods.

OTHER OPERATING EXPENSES. Other operating expenses increased to $14.5
million in 1996 from $10.0 million in 1995. The increase resulted from growth in
the Predecessor's existing operations, which resulted in $2.1 million of
additional expenses primarily relating to variable costs associated with the
growth of the Predecessor's operations, as well as expenses of $1.2 million
relating to the acquisition of NTA and expenses of an additional $1.2 million
relating to the introduction of the STAR division products. As a percentage of
total revenue, other operating expenses decreased to 28.0% in 1996 from 33.5% in
1995. This decrease resulted from the fixed nature of certain of the other
operating expenses which were covered by a larger revenue base.

TITLE PLANT RENT AND MAINTENANCE EXPENSES. Title plant rent and maintenance
expenses were $4.1 million for 1996 as compared to $2.4 million for 1995, an
increase of $1.7 million or 70.8%. This increase is primarily due to the
variable component relating to the volume of orders, which increased during
1996. Title plant rent and maintenance expenses as a percentage of title
insurance premiums was $11.2% in 1996 as compared to 10.9% in 1995. The slight
increase can be attributed to the increase in the number of title operations in
1996 given the partially fixed nature of these expenses.

FEES TO UNDERWRITERS. Fees to underwriters increased to $4.2 million in
1996 from $2.6 million in 1995, an increase of $1.6 million or 61.5%. Fees paid
to underwriters are a fixed percentage of title insurance premiums, and
therefore increased for the same reasons applicable to the increases in title
insurance premiums from year to year. Underwriting fees as a percentage of title
insurance premiums for 1996 were 12.0% for all title divisions.

LIQUIDITY AND CAPITAL RESOURCES

Cash provided by operating activities was $3.1 million for the six months
ended June 30, 1998. At June 30, 1998, the Company held cash and cash
equivalents of $6.2 million. At that date, the Company had long term debt of
$7.1 million which consisted of capitalized leases, real estate indebtedness and
debt (the "Acquisition Debt") incurred in connection with the acquisition by the
Company of 60% of the outstanding common stock of ATC from FNFI. Upon
consummation of the Reorganization, all of the Company's Acquisition Debt will
be repaid or extinguished. See "Reorganization." The repayment of the
Acquisition Debt will reduce the Company's cash balances by $3.7 million.

Cash provided by (used in) operating activities was $2.8 million and $(4.5)
million for the years ended December 31, 1997 and 1996, respectively. At
December 31, 1997, the Company had $7.2 million of cash and cash equivalents and
long term debt of $8.5 million.

The Company's current cash requirements include debt service, operating
expenses and taxes. The Company believes that all anticipated cash requirements
for current operations will be met from internally generated funds. In the
future, the Company's cash requirements will include those relating to the
development of National's business. While the Company presently has in place
much of the infrastructure

(principally consisting of personnel) that will be used for this development,
management believes that additional cash resources will be required if the
acquisition is consummated. The amount of such resources will be dependent on
the Company's resource allocation plan for National, which has not been
completed. The development of direct sales operations for the expansion of
National would require more cash resources than developing these operations
using agency relationships. Cash requirements for the development of National
are expected to be met from current cash balances and internally generated
funds. National is presently owned by a subsidiary of FNFI, and therefore its
acquisition by the Company should not be considered an arm's length transaction.

Two significant sources of the Company's funds are dividends and
distributions from its subsidiaries. As a holding company, the Company receives
cash from its subsidiaries in the form of dividends and as reimbursement for
operating and other administrative expenses it incurs. The Company's
underwritten title companies collect premiums and fees and pay underwriting fees
and operating expenses. These companies are restricted only to the extent of
maintaining minimum levels of working capital and net worth, but are not
restricted by state regulations or banking authorities in their ability to pay
dividends and make distributions. The Company's other subsidiary operations
collect revenue and pay operating expenses; however, they are not regulated by
insurance regulatory or banking authorities. Positive cash flow from the
underwritten title companies and other subsidiary operations is invested
primarily in cash and cash equivalents.

At December 31, 1997, the Company was not in compliance with certain
covenants in the agreements relating to the Acquisition Debt, which covenants
relate to minimum tangible net worth and capital expenditure restrictions. The
lender has waived the minimum tangible net worth covenant through June 30, 1998,
and the Company believes it will be in compliance with this covenant for at
least the next 12 months. The Company is in compliance with this covenant at
June 30, 1998. The lender has also agreed to waive the capital expenditure
restriction through October 31, 1998.

Current regulations require that ATC maintain a minimum net worth of
$400,000 and that Santa Barbara Title Company maintain a minimum net worth of
$120,000. The net worth of ATC was $10.4 million as of December 31, 1997 and
$14.0 million as of June 30, 1998. The net worth of Santa Barbara Title Company
was $380,000 as of December 31, 1997 and $295,000 as of June 30, 1998.

SEASONALITY

Historically, the greatest volume of residential resale activity has usually
occurred in the spring and summer months. However, events during the past five
years, including numerous actions taken by the Federal Reserve Board, have
caused unusual fluctuations in real estate activity, particularly in the
seasonal pattern of residential resale and refinance activity. The Company
cannot predict whether this pattern will continue to be affected by such
factors.

INFLATION

To the extent real estate prices or mortgage interest rates increase due to
inflationary factors, the Company's title insurance premium revenue generally
increases because premiums are determined in part by the value of property or
the amount of the mortgage loan. The Company's personnel costs and other
operating expenses are also sensitive to inflation.

YEAR 2000 ISSUES

The Company has completed a review of the Year 2000 issues affecting its
business, including the Company's operational, information and financial
systems. Based on this investigation, the Company believes that it has
identified substantially all of the internal application software programs which
require modification in order to become Year 2000 compliant and has a plan to
correct and test the programs affected by the conversion of a two-digit year to
a four-digit year. The Company expects the early phases of

the project to be completed by the end of 1998. The final phase of the project
is scheduled to be completed by mid-1999. The review of systems also includes
the identification of vendors that may have a significant impact on the
Company's operations and their expected completion of any conversions.

The Company believes that its information systems operations and those of
its significant vendors are or will become Year 2000 compliant such that there
will not be any material adverse impact on the Company's results of operations
or financial condition. The Year 2000 compliance changes are being made
concurrently with planned systems upgrades and conversions in the normal course
of business as such expenses associated with Year 2000 conversions are not
expected to materially impact the Company. Presently, the Company does not have
a contingency plan for Year 2000 issues. The Company expects to have such a plan
in effect by the end of the first quarter of 1999. Management believes that if
financial and operational systems relating to its escrow services are not Year
2000 compliant, the Company's business may be significantly interrupted,
resulting in a material adverse effect on the Company's financial condition and
results of operations.

BUSINESS

INTRODUCTION

The Company provides title insurance services as well as other real estate
related financial and informational services including escrow, real estate
information, trustee sale guarantees, and appraisals. In addition, the Company
obtains specialized services for its customers, which include, but are not
limited to, tax reporting services, exchange intermediary services and courier
services. The Company's business is focused on the residential real estate
market and it generates the majority of its revenues from issuing title
insurance policies as an independent agent on behalf of a title underwriter. For
the year ended December 31, 1997 and the six months ended June 30, 1998, title
insurance premiums represented approximately 63.8% and 60.6% of the Company's
revenues, respectively.

The title insurance industry consists of insurers ("underwriters") who issue
policies through direct operations or through agents. The Company's principal
subsidiary, ATC, is an agent, known in California as an "underwritten title
company." ATC has entered into an Issuing Agency Agreement to issue policies on
behalf of FNTIC, an insurer which is licensed in California and Arizona, among
other states. The Company has agreed to acquire National, a New York underwriter
licensed in 35 states and the U.S. Virgin Islands. The Company's planned
acquisition of National is intended to facilitate the Company's expansion into
new markets and permit the Company to directly underwrite the title insurance
policies that it issues in geographic areas not covered by the Company's
exclusive relationship with FNTIC.

The Company's operations are conducted through 14 branches, consisting of 57
offices, located in major counties throughout California and in Maricopa County,
Arizona (Phoenix and surrounding areas).

REAL ESTATE INDUSTRY

Title insurance revenue is closely related to the level of real estate
purchase and financing activity and the average price of real estate sales. Real
estate sales are directly affected by the availability of funds to finance
purchases. Other factors affecting real estate activity include demand, mortgage
interest rates, family income levels and general economic conditions. While the
level of sales activity was relatively depressed in certain geographical areas
during the early 1990's, decreases in mortgage interest rates since late 1995
and the resulting improvement in the real estate market have had a favorable
effect on the level of real estate activity, including refinancing transactions,
new home sales and resales. The overall economic environment, stable mortgage
interest rates and strength in the real estate market, especially in California,
contributed to very positive conditions for the industry throughout 1996 and
1997 and into the first half of 1998. It is impossible to predict the future
direction interest rates and the real estate market may move or fluctuate.

According to Corporate Development Services, title insurance premiums in the
United States were approximately $6.0 billion in 1997, representing an 11.8%
compound annual growth rate since 1995. The Company believes that the increase
in title premiums is primarily a result of an increase in new home sales and an
increase in refinancing transactions, both of which resulted in large part from
a decrease in mortgage interest rates during this period. The Mortgage Bankers
Association estimates that refinancing transactions during the first four months
of 1998 were four times higher than during the same period in 1997. In addition,
the National Association of Realtors anticipates record sales of 4.35 million
residential units in 1998, as compared to 4.22 million units in 1997.

Historically, as interest rates decrease, the number of housing starts
typically rise in following periods. The following chart displays this
relationship between national housing starts and interest rates.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

NATIONAL HOUSING STARTS & INTEREST RATES

1988 1989 1990 1991 1992 1993
Total Housing Starts 1,488,000 1,376,000 1,193,000 1,014,000 1,200,000 1,288,000
Fixed Mortgage Interest Rates 10.33% 10.32% 10.13% 9.25% 8.40% 7.33%
Sources:
Fixed Mortgage Rates: Freddie Mac Lender Survey; fixed
rate;
80% loan-to-value mortgages. Does not incorporate points.
Housing Starts: U.S. Bureau of the Census

NATIONAL HOUSING STARTS & INTEREST RATES

1994 1995 1996 1997
Total Housing Starts 1,457,000 1,354,000 1,477,000 1,476,000
Fixed Mortgage Interest Rates 8.36% 7.95% 7.81% 7.10%
Sources:
Fixed Mortgage Rates: Freddie Mac Lender Survey; fixed
rate;
80% loan-to-value mortgages. Does not incorporate points.
Housing Starts: U.S. Bureau of the Census

Historical data shows the correlation between mortgage interest rates and
title policy premiums: as interest rates decrease, the volume of title policies
typically increases.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

NATIONAL MORTGAGE RATES AND TITLE PREMIUMS

1993 1994 1995 1996 1997
Fixed Interest Rates 7.33% 8.36% 7.95% 7.81% 7.10%
Title Insurance Premiums $6,000,000 $5,800,000 $4,800,000 $5,500,000 $6,000,000
Sources:
Mortgage Rates: Freddie Mac Lender Survey; Contract
rate
on commitments for fixed-rate; 80% loan-to-value
mortgages. Does not incorporate points.
Statutory Title Premiums: Corporate Development
Services.

TITLE INDUSTRY

TITLE POLICIES

Title insurance policies insure title to real estate. The beneficiaries of
title insurance policies are generally buyers of real property or mortgage
lenders. The policy protects the insured against title defects, liens and
encumbrances not specifically excepted from its coverage. Most mortgage lenders
require title insurance as a condition to making loans secured by real estate.

Title insurance is different from other types of insurance because it
relates to past events which affect title to property at the time of closing and
not unforeseen future events. Prior to issuing policies, underwriters can reduce
or eliminate future losses by accurately performing searches and examinations.

Title insurance policies are issued on the basis of a preliminary title
report or commitment. These reports are prepared after a search of public
records, maps and other relevant documents to ascertain title ownership and the
existence of easements, restrictions, rights of way, conditions, encumbrances or
other matters affecting the title to, or use of, real property. A visual
inspection or survey of the property may also be made prior to the issuance of
certain title insurance policies. Copies of public records, maps and other
relevant historical documents are compiled and indexed in a "title plant" in
order to facilitate the preparation of preliminary reports without the necessity
of manually searching public records. Each title plant relates to a particular
county and is kept current on a daily or other periodic basis by the continual
addition of copies of recorded documents which affect real property in the
particular county. Title companies often subscribe to independent title
information services to assist in the updating of their title plants and the
maintenance of title records.

The major expense of a title company is the cost of the search and
examination function performed in preparing preliminary title reports,
commitments and title policies, rather than the claim losses associated with the
issuance of these policies. The premium for title insurance is due in full at
the closing of the real estate transaction and is based upon the purchase price
of the property insured or the amount of the mortgage loan, and upon the type of
coverage. Coverage under the policy generally terminates upon resale or
refinance of the property. The terms of coverage have become relatively
standardized in accordance with forms approved by state or national trade
associations, such as the American Land Title Association, The California Land
Title Association and the Land Title Association of Arizona. Among the most
commonly issued title insurance policies are standard or extended coverage
policies for owners and lenders and trustee sale guarantees, which provide
assurances to trustees concerning certain information in connection with
nonjudicial foreclosures.

THE TITLE POLICY AND UNDERWRITING PROCESS

A brief description of the process of issuing a title insurance policy,
which usually occurs over a thirty to ninety day period, is as follows:

(i) The customer, typically a real estate salesperson or broker, escrow
agent or lender, places an order for a title policy.

(ii) After the relevant historical data on the property is compiled, the
title officer prepares a preliminary title report which documents (a) the
current status of title and conditions affecting the property, (b) any
exclusions, exceptions and/or limitations which the title underwriter might
include in the policy and (c) specific issues which need to be addressed and
resolved by the parties to the transaction before the title policy will be
issued. The preliminary report is circulated to all the parties for
consideration of any specific issues.

(iii) After the specific issues identified in the preliminary report are
resolved, an escrow agent closes the transaction in accordance with the
instructions of the parties and the title underwriter's conditions.

(iv) Once the transaction is closed and all monies have been released,
the title underwriter or agent issues the policies (a) to the owner and the
lender on a new home sale or resale transaction or (b) to the lender only,
on a refinance transaction.

The terms and conditions upon which title to real property will be insured
are determined in accordance with the standards, policies and procedures of the
title underwriter. The underwriter may have a relationship with a third party
agent, under which the agent issues the title insurance policy on behalf of the
underwriter. The agent performs the search and examination function and retains
a majority of the title premium as a commission. The underwriter receives the
remainder of the premium collected by the agent in exchange for assuming the
risk on the policy.

Underwriting practices in California and Arizona are generally dictated by
the California and Arizona Land Title Associations, although the underwriter's
personnel interpret the application of these rules to specific circumstances. An
underwriter, such as FNTIC, also maintains and distributes current information
on title practices and procedures to its issuing agents.

A third party agent that issues title insurance on behalf of an insurer is
not subject to the same liability that the insurer faces under the policy. The
agent is not assuming risk on the title policy and its liability with respect to
the issuance of the policy is typically limited to a specific amount, pursuant
to an agreement with the insurer.

COMPETITIVE FACTORS

A key competitive factor in the title insurance business is the ability to
develop and maintain a qualified and experienced group of professionals through
which services are delivered to customers. Title insurance business is typically
generated through relationships with persons in the real estate industry such as
independent escrow companies, real estate brokers and agents, developers,
mortgage brokers, mortgage bankers, financial institutions and attorneys. Thus,
the relationships and contacts maintained by sales personnel are critical to
generating such business. In addition, the quality of a title company's service,
its responsiveness, and its ability to adapt to customer's needs are important
in attracting and maintaining customers. Other competitive factors include the
financial strength and reputation of the insurer.

The Company believes that the price of title insurance is typically not an
important competitive factor. In both California and Arizona, where the
Company's operations are currently conducted, the minimum price of title
insurance is posted by the title underwriter and is regulated by the Department
of Insurance in California, and by the State Banking Commission in Arizona. In
the event the Company expands its operations into states where regulatory
authorities do not control prices, the price of title insurance may also become
an important competitive factor.

REAL ESTATE RELATED SERVICES

In addition to title insurance, real estate transactions often require other
services such as escrow, appraisals, property management, trustee sale
guarantees, and document preparation. The demand for faster closings and more
cost effective transactions has resulted in a trend toward purchasing real
estate related services on a "one stop" basis from vendors who offer the full
array of such services. Because title companies occupy a central role in the
process of closing a real estate transaction they are in a unique position to
provide these services.

The demand for some of these real estate related services is also
countercyclical to the title insurance business. For example, as the economy
declines, interest rates rise and residential housing sales drop, which causes
foreclosures and the corresponding demand for trustee sale guarantees and
property management services to increase.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

NATIONAL HOUSING STARTS AND DELINQUENCY RATES

1988 1989 1990 1991 1992 1993
Delinquency Rates 4.79% 4.81% 4.66% 5.03% 4.57% 4.22%
Housing Starts 1,488,000 1,376,000 1,193,000 1,014,000 1,200,000 1,288,000
Sources:
Housing Starts: U.S. Bureau of the Census
Delinquency Rates: National Delinquency Survey,
Mortgage Bankers Association

NATIONAL HOUSING STARTS AND DELINQUENCY RATES

1994 1995 1996 1997
Delinquency Rates 4.10% 4.24% 4.33% 4.31%
Housing Starts 1,457,000 1,354,000 1,477,000 1,476,000
Sources:
Housing Starts: U.S. Bureau of the Census
Delinquency Rates: National Delinquency Survey,
Mortgage Bankers Association

COMPANY OPERATIONS

TITLE OPERATIONS

The Company's largest subsidiary, ATC, is an underwritten title company
licensed by the Department of Insurance of the State of California. ATC is not a
title underwriter, but rather its current business is limited to issuing
policies as an agent on behalf of FNTIC, a subsidiary of FNFI. ATC acts
exclusively as an agent for FNTIC with respect to the procurement of title
insurance policies in 13 selected counties in California and one county in
Arizona, subject to certain exceptions. At the present time ATC does not conduct
operations in any other counties in California. This exclusive arrangement with
FNTIC does not apply to other counties into which the Company may expand in the
future. ATC retains 88% of the title premium collected on policies issued
pursuant to its agreement with FNTIC. The remaining 12% is comprised of an 11%
underwriting fee and a 1% administrative service fee, both paid to FNTIC. As an
agent, ATC is not subject to the loss and reserve requirements applicable to
insurers, and pursuant to its agreement with FNTIC, ATC's liability is limited
to the first $5,000 of loss under any policy issued by it on behalf of FNTIC,
except in the case of negligence, or willful or reckless conduct. To date, the
amounts paid by the Company to FNTIC in reimbursement of FNTIC's claims losses
under this arrangement have not been material. See "Business--Title Industry
and--Relationship With Fidelity National Financial, Inc."

However, ATC has agreed to purchase National, which is a licensed title
underwriter. Although it has not recently written any significant amount of
business, National is licensed to issue title insurance in 35 states. The
acquisition, if successfully completed, is expected to provide the Company with
an opportunity to underwrite title insurance policies and expand its operations
through both direct and agency relationships. See "Business--Acquisition of
National" and "Risk Factors--Risks Associated with the Acquisition of National."
The maximum amount of liability for an insurer, such as National, under a title
insurance policy is usually the face amount of the policy plus the cost of
defending the insured's title against an adverse claim. The reserve for claim
losses is based upon known claims, as well as losses the insurer expects to
incur based on historical experience and other factors, including industry
averages, claim loss history, legal environment, geographic considerations,
expected recoupments and the types of policies written. The title underwriter
establishes a reserve for each known claim based on a review and evaluation of
potential liability.

ATC's trustee sale guarantee ("TSG") division provides a central location
for all trustee sale guarantee requests throughout California. The Company's
services include providing ten-day letter information, customized accounting and
reporting documents, fast track messenger services, and electronic file
transfers. TSG services provide assurances to trustees concerning certain
information in connection with nonjudicial foreclosures of property secured by a
deed of trust. Because the number of foreclosures tends to increase as the real
estate market and the economy decline, the Company's TSG division tends to be
countercyclical to its title insurance business.

The Company, through its subsidiaries, maintains 14 branches consisting of
57 offices located in major counties throughout California and in Maricopa
County, Arizona (Phoenix and surrounding areas). Each of the Company's branches
processes real estate transactions within the geographical area of the branch,
usually a county boundary. Each branch is operated as a separate profit center.
In the calendar years 1996 and 1997 and the six months ended June 30, 1998, the
following branch operations of the Company and the Predecessor accounted for the
indicated percentages of total title insurance premium revenues:

YEAR ENDED DECEMBER 31,
------------------------------------------------------
SIX MONTHS ENDED JUNE 30,
1996 1997 1998
-------------------------- -------------------------- --------------------------
BRANCH OPERATIONS PREMIUMS PERCENT PREMIUMS PERCENT PREMIUMS PERCENT
- --------------------------------------- ------------- ----------- ------------- ----------- ------------- -----------

Alameda, CA............................ $ 2,801,290 7.7 $ 2,340,155 6.3 $ 2,074,325 7.6
Contra Costa, CA....................... 878,216 2.4 1,422,190 3.8 1,455,815 5.3
Fresno, CA............................. 494,605 1.4 -- -- -- --
Inland Empire, CA (Riverside and San
Bernardino).......................... 2,887,014 7.9 3,239,259 8.7 1,498,223 5.5
Kern, CA............................... 2,593,224 7.1 2,569,164 6.9 1,466,678 5.3
Los Angeles, CA........................ 5,909,103 16.1 6,622,961 17.6 3,934,997 14.4
Orange, CA............................. 10,606,365 29.1 9,310,389 24.8 7,441,289 27.2
Phoenix, AZ............................ 1,912,400 5.2 2,680,274 7.2 1,815,447 6.6
Sacramento, CA......................... 764,427 2.1 348,751 0.9 268,469 1.0
San Diego, CA.......................... 2,946,284 8.0 2,279,367 6.1 2,170,902 7.9
San Mateo, CA.......................... 1,005,697 2.7 899,866 2.4 368,133 1.3
Santa Barbara, CA...................... -- -- -- 0.0 230,415 0.8
Santa Clara, CA........................ 3,529,743 9.6 2,863,894 7.7 2,474,388 9.0
Ventura, CA............................ 271,626 0.7 2,837,472 7.6 2,222,074 8.1
------------- ----- ------------- ----- ------------- -----
Totals............................... $ 36,599,994 100.0% $ 37,413,743 100.0% $ 27,421,155 100.0%
------------- ----- ------------- ----- ------------- -----
------------- ----- ------------- ----- ------------- -----

TITLE PLANTS

To facilitate the preparation of title reports without the necessity of
manually searching official public records, copies of public records, maps and
other relevant historical documents are sometimes compiled and indexed in a
"title plant." Each title plant relates to a particular county and is kept
current on a daily or other frequent basis by the addition of copies of recorded
documents which affect real property. Title companies often subscribe to
independent title information services to assist in the updating of their title
plants and the maintenance of title records.

The Company leases title plants from FNTIC in Kern, San Mateo and Santa
Clara counties for an aggregate payment of $10,000 per month. At the expiration
of the lease, the Company will have an option to acquire these title plants for
nominal consideration. See "Business--Relationship With Fidelity National
Financial, Inc." The Company has also entered into a lease with Title Records,
Inc. for the use of a title plant in Los Angeles County, and has the right to
acquire a copy of the public records, maps and other relevant historical
documents at that plant. The Company accesses title plants in the other counties
in which it operates through joint plant user agreements with Experian Group and
Security Union Title Insurance Company.

Maintenance activities constitute a significant item of expense, since each
document must be reviewed and indexed. These costs plus the costs of subscribing
to various title information services and other plant expenses range from
approximately $2,000 to $21,000 per month per branch.

ESCROW SERVICES

The escrow services provided by the Company include all of those typically
required in connection with residential and commercial real estate purchase and
finance activities. Fees from escrow services represented approximately 22.0% of
the Company's and the Predecessor's revenues in 1997 and 23.7% of the Company's
revenues for the six months ended June 30, 1998. This higher growth rate is
primarily attributable to the opening of 10 new escrow offices by the Company in
California during 1998.

Escrow operations are regulated by state insurance authorities, and the
Company has the flexibility to establish different fee schedules in different
counties. The Company believes that the acquisition of National, if completed,
will enable the Company to expand its escrow operations into counties in which
it does not presently hold the necessary licenses. The Company intends to
evaluate these expansion opportunities on a county by county basis.

OTHER REAL ESTATE RELATED SERVICES

In addition to issuing title insurance policies and providing escrow
services, the Company provides other real estate related services, including
those described below. Such services accounted for approximately 14.2% of the
Company's and the Predecessor's revenues in 1997, and 15.8% of the Company's
revenue for the six months ended June 30, 1998.

PROPERTY MANAGEMENT SERVICES. ATC's subsidiary, Landmark REO Management
Services, Inc., provides quality property management and disposition services
for foreclosure properties throughout the United States. These services include
the initial property inspection, eviction coordination, property maintenance,
the retention of a local broker, and the supervision of escrow for the sale of
the property. The Company's property management services are provided in
connection with foreclosures and therefore tend to be countercyclical to its
title insurance business.

DOCUMENT PREPARATION SERVICES. The Company also offers a variety of
services relating to the documentation of real estate transactions. Such
services include (i) the preparation of reconveyance and assignment documents,
(ii) file research and document retrieval services, and (iii) recording
services, including retrieval of recorded documents. The Company is capable of
providing these services in every county and township in the United States. The
Company's provision of these services is facilitated by independent abstract
companies, title companies and law firms.

APPRAISAL SERVICES. The Company's subsidiary, West Point Appraisal
Services, Inc., is an appraisal management company offering a variety of
residential appraisal services to meet the varying needs of its customers. The
appraisal services are provided through independent approved fee appraisers.

SHORTENED TITLE ASSURANCE REPORTS. The Company's STAR Product serves as a
low-cost, limited form of title protection for the benefit of lenders in
subordinate loan transactions where the primary lending criteria is the
borrower's creditworthiness rather than the security interest in the real
property.

CENTRAL ORDER PROCESSING UNIT. The Company's Central Order Processing Unit
("COP Unit") provides customers with a centralized location through which they
can order title and escrow services. The services offered through the COP Unit
can be provided on a nationwide basis.

BUSINESS STRATEGY

The Company's objective is to become a leading supplier of title insurance
and related real estate financial and informational services. The key elements
in the Company's strategy to achieve this objective are to:

- EXPAND TO KEY GEOGRAPHIC MARKETS. A large percentage of title insurance
policies are generated in a relatively small number of markets throughout
the United States. The Company believes it can maximize its growth
opportunities by expanding into these key real estate markets, initially
in the western region of the United States. In 1997, premiums paid in
California, Arizona, Texas, Oregon, Washington and New Mexico together
represented 36.7% of the policy premiums written in the United States
according to Corporate Development Services, Inc. The Company intends to
pursue such expansion through a combination of opening new offices,
teaming with local companies, and acquiring established operations.

- EXPAND PROVISION OF REAL ESTATE RELATED SERVICES. The Company's
complementary real estate related services, such as trustee sale services,
property management and disposition services and document services,
provide an additional source of revenue to the Company, much of which is
countercyclical to the title insurance business. The Company believes it
can leverage its relationships developed through the issuance of title
insurance to generate additional business for these services. The
provision of these value-added services to escrow companies, lenders, real
estate brokers and agents, also increases their familiarity with and
reliance upon the Company's title insurance services.

- RECRUIT HIGHLY QUALIFIED PERSONNEL. The Company believes that the
development of personal relationships between the Company's personnel and
its customers is crucial to the expansion of the Company's business. For
this purpose, the Company seeks to recruit experienced and talented
personnel who the Company believes have substantial business contacts in
relevant markets. The Company has implemented a 1998 Stock Incentive Plan
and intends to implement a Stock Purchase Plan to provide additional
incentives for its employees.

- LEVERAGE ACQUISITION OF NATIONAL. The Company has recently agreed to
acquire National in order to facilitate its entry into the markets in
which National is licensed and to permit the Company to directly
underwrite the title insurance policies in geographic areas not covered by
the Company's exclusive relationship with FNTIC. In addition, the Company
anticipates that National will provide the opportunity to create agency
relationships in a variety of geographic locations and generate revenues
through underwriting title policies issued by those agents and expand
escrow operations in other areas.

- PURSUE STRATEGIC ACQUISITIONS. The Company intends to pursue strategic
acquisitions of title insurance and real estate service companies in order
to penetrate new markets, increase its diversity of service offerings, and
add qualified personnel to its existing staff.

MARKETING AND SALES

The Company attempts to increase the volume of its title insurance and real
estate related services business primarily through customer solicitation by
sales personnel. The primary source of this business is from independent escrow
companies, real estate brokers and agents, developers, mortgage brokers,
mortgage bankers, financial institutions and attorneys. The Company believes
that the personal contacts maintained by its sales personnel with these
customers are critical to generating title insurance business. The Company
therefore actively encourages its branch personnel to continually develop new
business relationships with persons in the real estate business community. In
addition to generating business through direct solicitation and general
advertising, the Company believes that excellent service is an

important competitive factor in attracting and retaining customers, and measures
customer service in terms of quality and timeliness in the delivery of services.

RELATIONSHIP WITH FIDELITY NATIONAL FINANCIAL, INC.

The Company has a relationship with FNFI, resulting from FNFI's involvement
in the organization and growth of the Company, FNFI's equity ownership position
in the Company and existing business and contractual relationships between the
two companies. The Company's principal subsidiary, ATC, was a wholly owned
subsidiary of FNFI until July 1, 1997, when the Company acquired 60% of ATC's
outstanding common stock. As a result of the Reorganization, FNFI will own
approximately 43% of the outstanding Common Stock of the Company prior to this
offering. See "Reorganization" and "Principal Shareholders."

Operationally, the Company and FNTIC, a subsidiary of FNFI, continue to have
a close working relationship. FNTIC and ATC have entered into an Issuing Agency
Agreement pursuant to which ATC has agreed that until June 30, 2002 it will act
exclusively as an agent for FNTIC with respect to the procurement of title
insurance policies in 14 selected counties in California and Arizona, subject to
certain exceptions. This exclusive arrangement does not apply to other counties
into which the Company may expand in the future. Under the Issuing Agency
Agreement, in addition to furnishing title insurance products and services,
FNTIC provides a wide variety of administrative services for ATC, including
accounting, legal and human resources services. ATC pays FNTIC a management fee
of 1% of gross premiums for these services. This administrative services
arrangement is terminable by ATC upon 90 days notice to FNTIC.

ACQUISITION OF NATIONAL

ATC has agreed to purchase all of the outstanding capital stock of National
from a subsidiary of FNFI for a purchase price of $3.25 million, payable $1.25
million in cash and the remainder with interest at 10% over five years. The
Company intends to pay the purchase price with the proceeds of this offering.
See "Use of Proceeds." The closing of this acquisition is currently awaiting,
and is conditioned upon, approval from the New York State Department of
Insurance. See "Risk Factors--Risks Associated with the Acquisition of
National."

National is a title insurance underwriter, licensed to issue title insurance
in the State of New York and 34 other states and the U.S. Virgin Islands.
National does not currently underwrite title insurance policies through direct
operations or agency relationships and the Company will be required to commit
resources to establish direct operations and agency relationships in order to
realize the benefits of this acquisition.

The primary purpose of the acquisition is to acquire an underwriter, which
will enable the Company to generate underwriting fees and permit the Company to
expand geographically into counties and states in which the Company is not
presently licensed. The Company believes this expansion can be accomplished more
quickly and cost-effectively through the acquisition than through other means.
The Company also believes that the acquisition will expand the business
opportunities for its current and potential employees and affiliates, which will
aid in the Company's recruitment efforts, and will permit the Company to
generate additional revenue by writing title insurance policies in those
geographic areas which are not covered by ATC's exclusive agency arrangement
with FNTIC. See "Relationship with Fidelity National Financial, Inc."

COMPETITION

The title insurance industry is highly competitive in the attraction and
retention of customers and independent agents. The number of competing companies
and the size of such companies varies in the different geographic areas in which
the Company conducts its business. Generally, the Company is in competition with
many other title insurers and agents, with the most effective competition coming
from

companies which possess greater capital resources. Approximately 4,800 title
companies, less than 150 of which are underwriters, are members of the American
Land Title Association, the title insurance industry's national trade
association.

The title insurance industry, however is heavily concentrated; for example,
it is estimated that the seven largest title insurance underwriters, either
directly or through their agents, accounted for approximately 89% of the policy
premium revenue in the United States in 1997. In the Company's principal
markets, competitors currently include direct operations and agents of the title
insurance subsidiaries of FNFI, Chicago Title Corporation, The First American
Financial Corporation, LandAmerica Financial Group, Inc., Old Republic
International Corporation and Stewart Information Services Corporation, as well
as numerous independent agency operations at the local level. The Company may
also face competition from entrants into the industry and the markets it plans
to service.

The industry for escrow and other real estate related services provided by
the Company is also highly competitive and extremely fragmented. The Company's
competition with respect to such services includes not only other title
underwriters and title agents in the insurance industry, but also companies,
both local and national, that specialize in the provision of a particular
service.

Because the parties to a real estate transaction are usually concerned with
time schedules and costs associated with delays in closing the transaction,
competition is based primarily on the quality and timeliness of service. The
Company believes that its competitive position is enhanced by its quality
customer service. The Company believes that the price of title insurance is
typically not an important competitive factor.

GOVERNMENT REGULATION

Title companies, including underwriters, underwritten title companies and
independent agents, are subject to regulation under applicable state laws. As an
agent, the Company is subject to regulation in California and Arizona. Such
regulations include licensing requirements for the counties in which the Company
operates, and regulations relating to minimum levels of net worth and working
capital. Upon acquiring National, the Company will become subject to regulation
by the New York Department of Insurance and the regulatory requirements of those
states in which National is licensed to do business.

The laws of most states in which the Company presently transacts or will
transact business establish supervisory agencies with broad administrative
powers relating to issuing and revoking licenses to transact business, licensing
agents, approving policy forms, regulatory accounting principles, financial
practices, establishing reserve and capital and surplus requirements, defining
suitable investments for reserves, capital and surplus and approving rate
schedules.

Current regulations require that ATC maintain a minimum net worth of
$400,000 and that Santa Barbara Title Company maintain a minimum net worth of
$120,000. The net worth of ATC was $10.4 million as of December 31, 1997, and
$14.0 million as of June 30, 1998. The net worth of Santa Barbara Title Company
was $380,000 as of December 31, 1997 and $295,000 as of June 30, 1998.

As a condition to continued authority to issue policies in the states in
which the ATC conducts its business, ATC is required to pay certain fees and
file information regarding its officers, directors and financial condition.

EMPLOYEES

As of September 30, 1998, the Company, including its subsidiaries, had 871
full-time employees. The Company believes its success depends significantly on
attracting and retaining talented and experienced personnel. The Company locates
and recruits its personnel primarily through personal contacts in the industry,
and the Company's executive officers are actively involved in the recruitment
process. The

Company offers competitive packages of base and incentive compensation and
benefits in order to attract and motivate its employees. The Company believes
that its relations with employees are good.

PROPERTIES

The Company's executive offices are located in Irvine, California. All
offices of the Company are leased except for an approximately 11,000 square foot
branch office in Phoenix, Arizona, which the Company owns. This property was
acquired with the proceeds of a $472,500 note that bears interest at the
institution's prime lending rate and is due in full in December 1999. The note
is collateralized by a deed of trust on the Phoenix, Arizona property. The
Company believes that its facilities are adequate for its current level of
operations.

LEGAL PROCEEDINGS

The Company in the ordinary course of business is subject to claims made
under, and from time to time is named as defendants in legal proceedings
relating to, policies of insurance it has issued or other services performed on
behalf of insured policyholders and other customers. The Company also is
involved from time to time in routine litigation incidental to the conduct of
its business, apart from claims made under title insurance policies. There are
currently no material pending litigation proceedings to which the Company is a
party or to which any of its property is subject.

MANAGEMENT

The following table sets forth certain information regarding the Company's
directors and executive officers.

NAME AGE POSITION
- -------------------------------------------- --- --------------------------------------------------------------

William P. Foley, II........................ 53 Chairman of the Board of Directors
Michael C. Lowther.......................... 56 Chief Executive Officer and Director
Wayne D. Diaz............................... 50 President and Director
Carl A. Strunk.............................. 60 Executive Vice President and Chief Financial Officer
Dennis R. Duffy............................. 55 Executive Vice President and Director
Barbara A. Ferguson......................... 42 Executive Vice President and Director
M'Liss Jones Kane........................... 45 Executive Vice President, Secretary and General Counsel
Bruce Elieff(1)(2).......................... 42 Director
Robert Majorino(1)(2)....................... 49 Director

- ------------------------

(1) Member of the Audit Committee.

(2) Member of the Compensation Committee.

All directors hold office until the next annual meeting of shareholders or
the election and qualification of their successors. Officers are elected
annually by the Board of Directors and serve at the discretion of the Board.
There are no family relationships among any of the Company's directors or
executive officers.

The business experience, principal occupations and employment, as well as
periods of service, of each of the directors and executive officers of the
Company during at least the last five years are set forth below.

WILLIAM P. FOLEY, II joined the Company as its Chairman of the Board in June
1997. He has been Chairman of the Board of ATC since 1996. Mr. Foley is the
Chairman of the Board and Chief Executive Officer of FNFI and has been since its
formation in 1984. Mr. Foley was President of FNFI from its formation in 1984
until December 31, 1994. Mr. Foley is currently serving as Chairman of the Board
and Chief Executive Officer of CKE Restaurants, Inc., as Chairman of the Board
of Rally's Hamburgers, Inc., Checkers Drive-In Restaurants, Inc., Santa Barbara
Restaurant Group, Inc., and Star Buffet, Inc. Additionally, he is a member of
the Board of Directors of Data Works Corporation, Fresh Foods, Inc. and Micro
General Corporation.

MICHAEL C. LOWTHER has been Chief Executive Officer and a director of the
Company since its formation in November 1996, and of ATC since 1995. For
approximately 15 years prior to joining ATC, Mr. Lowther served as Chairman of
the Board and Chief Executive Officer of World Title Company which he co-founded
in 1980. He has 34 years of experience in the title industry.

WAYNE D. DIAZ has been President and a director of the Company since its
formation. During the five years prior to joining the Company, Mr. Diaz held the
position of Executive Vice President of FNTIC. Mr. Diaz has 18 years of
experience in the title industry.

CARL A. STRUNK joined the Company as its Executive Vice President and Chief
Financial Officer in August 1998. Mr. Strunk has been the Executive Vice
President and Chief Financial Officer of CKE Restaurants, Inc. since February
1997. Mr. Strunk is the Executive Vice President/Finance for FNFI and Santa
Barbara Restaurant Group, Inc. and has been with FNFI since 1992 and Santa
Barbara Restaurant Group, Inc. since December 1997. Mr. Strunk previously served
as President of Land Resources Corporation from 1986 to 1991. Mr. Strunk is a
Certified Public Accountant and is also a member of the Board of Directors of
Micro General Corporation.

DENNIS R. DUFFY has held his position of Executive Vice President and
director of the Company since 1996, and has over 30 years of experience in the
title industry. From 1995 to 1996, he was Regional Vice President--Operations of
Gateway Title Company. Mr. Duffy was the owner of Duffy's Pacific Enterprises,

a property management company, from 1993 to 1995. From 1985 to 1993, Mr. Duffy
was affiliated with a wholly-owned subsidiary of SAFECO, initially as President,
and subsequently as a consultant. Prior to that time, he worked in various
management positions with both Title Insurance and Trust Company (TICOR) and
SAFECO.

BARBARA A. FERGUSON joined the Company in August 1997 as Executive Vice
President and a director. From 1988 to 1997, Ms. Ferguson held various positions
with FNTIC, including Trust Accounting Manager, Banking Administrator, and
Senior Vice President and Manager of two separate divisions.

M'LISS JONES KANE was appointed Executive Vice President, General Counsel
and Secretary of the Company in August 1998 and has served as Senior Vice
President, General Counsel and Secretary of ATC since July 1998. Ms. Kane has
held various positions with FNFI since March 1995. She has been Senior Vice
President since March 1995 and Corporate Secretary since April 1995. Ms. Kane
also held the position of Corporate Counsel until September 1997, at which time
she was appointed as General Counsel of FNFI. From March 1990 to March 1995, Ms.
Kane served as the Vice President and General Counsel of SPI Pharmaceuticals,
Inc. and ICN Biomedicals, Inc., affiliates of ICN Pharmaceuticals, Inc. From
February 1988 to March 1990, Ms. Kane was the Senior Vice President, Corporate
Counsel and Secretary for Countrywide Credit Industries, Inc. Ms. Kane has also
served as Senior Vice President and Corporate Counsel for ICN Pharmaceuticals,
Inc.

BRUCE ELIEFF was elected to the Company's Board of Directors in August 1998.
Mr. Elieff is a principal of Sun Cal Companies, a real estate development firm
located in Southern California. He has held this position since 1977.

ROBERT L. MAJORINO was appointed to the Company's Board of Directors in
August 1998. Mr. Majorino is currently President and serves on the Board of
Directors of G.E.M.M.M. Corporation, a residential real estate brokerage located
in Southern California, which position he has held since 1993. Prior to that
time, he was the owner of Century 21 Ambassador Realty, a residential real
estate brokerage company.

DIRECTOR COMPENSATION

Directors who are not employees of the Company will be paid a fee of $2,000
per meeting they attend, plus reimbursement of reasonable expenses. Directors
who are employees of the Company will not receive compensation for their
services as directors.

EMPLOYMENT AGREEMENTS

In August 1998, the Company entered into an employment agreement with each
of Michael C. Lowther, Wayne D. Diaz, Dennis R. Duffy, and Barbara A. Ferguson.
Each employment agreement provides for a three year term and a possible merit
bonus granted at the sole discretion of the Board. The minimum base salary of
Messrs. Lowther, Diaz and Duffy under their respective employment agreements is
$260,000, $260,000 and $160,000, respectively. The minimum base salary for Ms.
Ferguson under her employment agreement is $160,000.

In the event of the termination of the employee by the Company without
"cause," each employment agreement provides that the Company shall pay to the
employee an amount equal to the product of the employee's minimum base salary in
effect upon termination plus the total bonus paid or payable to the employee for
the most recently ended calendar year multiplied by the greater of either the
number of years remaining thereunder or two years.

Upon termination of employment either by the employee or by the Company (in
breach of the employment agreement or without cause) following a "change in
control" of the Company, the employee would be entitled to receive (i) his or
her full salary through the date of termination; and (ii) an amount equal to the
product of the employee's minimum base salary in effect upon termination plus
the total bonus paid or payable to the employee for the most recently ended
calendar year multiplied by the greater of either the number of years remaining
hereunder or two years. In addition, upon termination due to a "change in
control," the employee is entitled to continue to participate in all employee
benefit plans and

programs in which such employee was entitled to participate prior to the date of
termination provided that such continuation is possible under the terms of the
plan or program for a period equal to either (i) the greater of the number of
years remaining in the term of employment or (ii) two years. If, however, any
payment required to be made by the Company to an employee upon termination due
to a "change in control," constitutes a "parachute payment" (as defined in
section 280G of the Internal Revenue Code), such payment shall be limited to the
highest amount of such payment which can be paid without constituting a
"parachute payment."

The employee may only elect to terminate the employment agreement due to a
"change in control" of the Company during the period commencing 60 days and
expiring 365 days after such "change in control."

BOARD COMMITTEES

The Board's Audit Committee will consist of Mr. Elieff and Mr. Majorino. The
Audit Committee will meet periodically with management and the Company's
independent accountants to review the results and scope of the audit and other
services provided by the Company's independent auditors and the need for
internal auditing procedures and the adequacy of internal controls.

The Compensation Committee will consist of Mr. Elieff and Mr. Majorino. The
Compensation Committee will establish salaries, incentives and other forms of
compensation for officers, directors and certain key employees, administer the
Company's various incentive compensation and benefit plans, including the
Company's 1998 Stock Incentive Plan, and recommend policies relating to such
plans.

EXECUTIVE COMPENSATION

The following table sets forth information concerning the compensation paid
by the Company for the fiscal year ended December 31, 1997 to the Chief
Executive Officer and executive officers of the Company whose annual
compensation exceeded $100,000 (the "Named Executive Officers").

SUMMARY COMPENSATION TABLE

ANNUAL
COMPENSATION(1)
--------------------- ALL OTHER
NAME AND PRINCIPAL POSITION SALARY BONUS COMPENSATION
- ---------------------------------------------------------------------------- ---------- --------- -------------

Michael C. Lowther, Chief Executive Officer................................. $ 200,568 $ 87,703 $ 3,150(2)
Wayne D. Diaz, President.................................................... $ 195,000 $ 87,703 $ 15,711(3)
Dennis R. Duffy, Executive Vice President................................... $ 124,133 $ 25,000 $ 6,578(4)

- ------------------------

(1) Excludes perquisites and other personal benefits, securities and properties
otherwise categorized as salary or bonuses which in the aggregate, for each
of the named persons did not exceed the lesser of either $50,000 or 10% of
the total annual salary reported for such person.

(2) Consists of $900 in premiums paid on a life insurance policy of which Mr.
Lowther is the beneficiary and $2,250 in automobile allowance.

(3) Consists of $261 in premiums paid on a life insurance policy of which Mr.
Diaz is the beneficiary, $8,700 in matching contributions made by FNFI
pursuant to FNFI's employee stock purchase plan and $6,750 in automobile
allowance.

(4) Consists of $578 in premiums paid on a life insurance policy of which Mr.
Duffy is the beneficiary and $6,000 in automobile allowance.

STOCK OPTIONS

The Company did not grant stock options to any Named Executive Officer
during fiscal year ended December 31, 1997. None of the Named Executive Officers
exercised or held stock options during the fiscal year ended December 31, 1997.

STOCK INCENTIVE PLAN

The Company's 1998 Stock Incentive Plan (the "Stock Incentive Plan")
authorizes up to 650,000 shares of Common Stock, plus an additional 200,000
shares of Common Stock on the date of each annual meeting of shareholders, for
issuance under the terms of the Stock Incentive Plan. The authorized number of
shares is subject to adjustment in the event of stock splits, stock dividends or
certain other similar changes in the capital structure of the Company. The Stock
Incentive Plan provides for grants of "incentive stock options" as defined in
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"),
nonqualified stock options and rights to purchase shares of Common Stock
("Purchase Rights"). Incentive stock options may be granted to officers and
other employees of the Company and its subsidiaries and affiliates (including
members of the Board of Directors if they are also employees). Nonqualified
stock options and Purchase Rights may be granted to officers, employees,
non-employee directors and officers, consultants and other service providers of
the Company and its subsidiaries and affiliates.

The Board of Directors, or a committee consisting of two or more members of
the Board of Directors, will administer the Stock Incentive Plan (the
"Administrator"). The Administrator has full power and authority to interpret
the Stock Incentive Plan, select the recipients of options and Purchase Rights,
determine and authorize the type, terms and conditions of, including vesting
provisions, and the number of shares subject to, grants under the Stock
Incentive Plan, and adopt, amend and rescind rules relating to the Stock
Incentive Plan. The term of options may not exceed 10 years from the date of
grant (5 years in the case of an incentive stock option granted from the date of
grant (5 years in the case of an incentive stock option granted to a person who
owns more than 10% of the combined voting power of all classes of stock of the
Company). The option exercise price for each share granted pursuant to an
incentive stock option may not be less than 100% of the fair market value of a
share of Common Stock at the time such option is granted (110% of fair market
value in the case of an incentive stock option granted to a person who owns more
than 10% of the combined voting power of all classes of stock of the Company).
There is no minimum purchase price for shares of Common Stock purchased pursuant
to a Purchase Right, and any such purchase price shall be determined by the
Administrator. The maximum number of shares for which options or Purchase Rights
may be granted to any one person during any one calendar year under the Stock
Incentive Plan is 300,000. The aggregate fair market value of the Common Stock
(determined as of the date of grant) with respect to which incentive stock
options granted under the Stock Incentive Plan or any other stock option plan of
the Company become exercisable for the first time by any optionee during any
calendar year may not exceed $100,000.

Except as otherwise provided by the Administrator, neither options nor
Purchase Rights granted under the Stock Incentive Plan may be transferred other
than by will or by the laws of descent and distribution. Shares purchased
pursuant to Purchase Rights generally shall be restricted for a period of time,
during which such shares may be repurchased by the Company, and therefore these
shares may not be sold, assigned, pledged or transferred until such time as the
Company no longer has the right to reacquire any such shares.

In the event that the outstanding shares of Common Stock are increased or
decreased or changed into or exchanged for a different number or kind of shares
or other securities of the Company by reason of a recapitalization, stock split,
combination of shares, reclassification, stock dividend or other change in the
capital structure of the Company while the Stock Incentive Plan is in effect,
appropriate adjustments shall be made by the Administrator to the aggregate
number and kind of shares subject to the Stock Incentive Plan, and the number
and kind of shares and the price per share subject to outstanding incentive
options, nonqualified the price per share subject to outstanding incentive
options, nonqualified options and

restricted shares in order to preserve, but not to increase, the benefits to
persons then holding incentive options, nonqualified options or restricted
shares.

In the event of a Change of Control (as defined below) of the Company the
time period relating to the exercise or realization of all outstanding options
and Purchase Rights shall automatically accelerate immediately prior to the
consummation of such Change of Control. For purposes of the Stock Incentive
Plan, "Change in Control" means (i) the acquisition, directly or indirectly, by
any person or group (within the meaning of Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended) of the beneficial ownership of securities of
the Company possessing more than fifty percent (50%) of the total combined
voting power of all outstanding securities of the Company; (ii) a merger or
consolidation in which the Company is not the surviving entity, except for a
transaction in which the holders of the outstanding voting securities of the
Company immediately prior to such merger or consolidation hold, in the
aggregate, securities possessing more than fifty percent (50%) of the total
combined voting power of all outstanding voting securities of the surviving
entity immediately after such merger or consolidation; (iii) a reverse merger in
which the Company is the surviving entity but in which securities possessing
more than fifty percent (50%) of the total combined voting power of all
outstanding voting securities of the Company are transferred to or acquired by a
person or persons different from the persons holding those securities
immediately prior to such merger; (iv) the sale, transfer or other disposition
(in one transaction or a series of related transactions) of all or substantially
all of the assets of the Company; or (v) the approval by the stockholders of a
plan or proposal for the liquidation or dissolution of the Company.

The Board of Directors may alter, amend, suspend or terminate the Stock
Incentive Plan at any time. Unless sooner terminated by the Board of Directors,
the Stock Incentive Plan will terminate in 2008. Upon completion of this
offering, the Company intends to grant options to purchase, subject to certain
vesting requirements, an aggregate of 320,000 shares of Common Stock pursuant to
the Stock Incentive Plan, at an exercise price per share equal to the initial
public offering price, of which options to purchase an aggregate of 175,280
shares of Common Stock are to be granted to the following directors or executive
officers of the Company:

NUMBER OF
NAME SHARES
- ---------------------------------------------------------------------------------- -----------

Michael C. Lowther................................................................ 27,640
Wayne D. Diaz..................................................................... 27,640
Carl A. Strunk.................................................................... 50,000
Dennis R. Duffy................................................................... 10,000
Barbara A. Ferguson............................................................... 10,000
M'Liss Jones Kane................................................................. 30,000
Bruce Elieff...................................................................... 10,000
Robert Majorino................................................................... 10,000
-----------
175,280
-----------
-----------

INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Company's Articles of Incorporation provide that the liability of the
Company's directors for monetary damages shall be eliminated to the fullest
extent permissible under California law. This is intended to eliminate the
personal liability of a director for monetary damages in an action brought by or
in the right of the Company for breach of a director's duties to the Company or
its shareholders subject to certain limitations in Section 204 of the California
Corporations Code described below.

The Articles also provide that the Company is authorized to provide
indemnification to its agents (as defined in Section 317 of the California
Corporations Code), through the Company's Bylaws or through agreements with such
agents or both, for breach of duty to the Company and its shareholders, in
excess of the indemnification otherwise permitted by Section 317 of the
California Corporations Code, subject to the limits on such excess
indemnification set forth in Section 204 of the California Corporations Code.

Section 317 of the California Corporations Code provides that a corporation
may indemnify an agent who is, or who is threatened to be made a party to any
proceeding (as that term is defined therein) for actions taken in their
corporate capacity upon a determination that such agent acted in good faith and
in a manner which such agent believed to be in the best interest of the
corporation. In addition, Section 317 provides for mandatory indemnification of
an agent who is successful on the merits in defense of any such proceeding.
Indemnification is prohibited under this section (with certain express
exceptions) in any circumstance where it appears that it would be inconsistent
with (i) any provision of the corporation's articles of incorporation or bylaws,
any resolution of the shareholders or any agreement in effect at the time of the
alleged cause of acton asserted in the proceeding; and (ii) any condition
expressly imposed by a court in approving a settlement.

In addition, the ability of a corporation to indemnify its agents and to
eliminate the liability of a director for monetary damages is further limited by
Section 204 of the California Corporations Code which provides that a
corporation may not provide for indemnification of agents or eliminate the
liability of a director for monetary damages for (i) acts or omissions that
involve intentional misconduct or a knowing and culpable violation of law; (ii)
for acts or omissions that a director believes to be contrary to the best
interests of the corporation or its shareholders or that involve the absence of
good faith on the part of the director; (iii) for any transaction from which a
director derived an improper personal benefit; (iv) for acts or omissions that
show a reckless disregard for the director's duty to the corporation or its
shareholders in circumstances in which the director was aware, or should have
been aware, in the ordinary course of performing a director's duties, of a risk
of serious injury to the corporation or its shareholders; (v) for acts or
omissions that constitute an unexcused pattern of inattention that amounts to an
abdication of the director's duty to the corporation or its shareholders; (vi)
with respect to certain transactions, or the approval of transactions in which a
director has a material financial interest; and (vii) expressly imposed by
statute, for approval of certain improper distributions to shareholders or
certain loans or guarantees.

The Bylaws of the Company provide for indemnification of the Company's
officers, directors, employees, and other agents to the extent and under the
circumstances permitted by California law. The Bylaws further provide that no
indemnification shall be made in the case of a derivative suit in respect to any
claim as to which such person has been adjudged to be liable to the corporation,
except with court approval, nor shall indemnification be made for amounts paid
in settling or otherwise disposing of a threatened or pending action, with or
without court approval, or for expenses incurred in defending a threatened or
pending action which is settled or otherwise disposed of without court approval.
Indemnification under the Bylaws is mandatory in the case of an agent of the
Company (present or past) who is successful on the merits in defense of a suit
against him or her in such capacity. In all other cases where indemnification is
permitted by the Bylaws, a determination to indemnify such person must be made
by a majority of a quorum of disinterested directors, a majority of
disinterested shareholders, or the court in which the suits is pending.

The Company has entered into agreements to indemnify its directors in
addition to the indemnification provided for in the Articles of Incorporation
and Bylaws. Among other things, these agreements provide that the Company will
indemnify, subject to certain requirements, each of the Company's directors for
certain expenses (including attorneys' fees), judgments, fines and settlement
amounts incurred by such person in any action or proceeding, including any
action by or in the right of the Company, on account of services by such person
as a director or officer of the Company, or as a director or officer of any
other company or enterprise to which the person provides services at the request
of the Company.

The above provisions may have the effect of reducing the likelihood of
derivative litigation against directors and may discourage or deter shareholders
or management from bringing a lawsuit against directors for breach of their duty
of care, even though such an action, if successful, might otherwise have
benefitted the Company and its shareholders. At present, there is no litigation
or proceeding pending involving a director of the Company as to which
indemnification is being sought, nor is the Company aware of any threatened
litigation that may result in claims for indemnification by any director.

PRINCIPAL SHAREHOLDERS

The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock and as adjusted to reflect
the sale of Common Stock offered hereby, by (i) each person known by the Company
to beneficially own more than 5% of the outstanding shares of Common Stock, (ii)
each of the Company's directors, (iii) each of the Named Executive Officers, and
(iv) all directors and executive officers of the Company as a group. Except as
otherwise indicated, the Company believes that the beneficial owners of the
Common Stock listed below, based on information furnished by such owners, have
sole investment and voting power with respect to such shares, subject to
community property laws where applicable.

PERCENT OF OUTSTANDING
SHARES COMMON STOCK OWNED
BENEFICIALLY ----------------------------------
NAME AND ADDRESS OF BENEFICIAL OWNER(1) OWNED BEFORE OFFERING AFTER OFFERING
- -------------------------------------------------- ----------- ----------------- ---------------

Fidelity National Financial, Inc.................. 2,099,996(2) 42.7% 34.1%
William P. Foley, II.............................. 332,904(3) 6.3% 5.1%
Michael C. Lowther................................ 981,807(4) 19.9% 15.9%
Wayne D. Diaz..................................... 981,807(4) 19.9% 15.9%
Dennis R. Duffy................................... 104,124(5) 2.1% 1.7%
Barbara A. Ferguson............................... 154,653(5) 3.1% 2.6%
Bruce Elieff...................................... 3,333(5) * *
Robert Majorino................................... 3,333(5) * *
All directors and executive officers as a group (9
persons)........................................ 2,587,226(6) 48.7% 39.5%

- ------------------------

* Less than 1%.

(1) The address of each of Messrs. Foley, Lowther, Duffy and Diaz and Ms.
Ferguson is 17911 Von Karman Avenue, Suite 200, Irvine, California 92614.
The address for FNFI is 17911 Von Karman Avenue, Suite 300, Irvine,
California 92614.

(2) Mr. Foley and Carol J. Foley beneficially own 18% of the common stock of
FNFI including 1,155,510 shares subject to currently exercisable stock
options. Mr. Richard Pickup beneficially owns 1,597,000 shares of the Common
Stock of FNFI, or 6.8%.

(3) Consists solely of shares issuable under presently exercisable options. Mr.
Foley is the Chairman of the Board of Directors and Chief Executive Officer
of FNFI.

(4) Includes 9,213 shares issuable under options to become exercisable within 60
days.

(5) Includes 3,333 shares issuable under options to become exercisable within 60
days.

(6) Includes 391,329 shares issuable under options presently exercisable or to
become exercisable within 60 days.

CERTAIN TRANSACTIONS

The Company has a relationship with FNFI, resulting from FNFI's involvement
in the organization and growth of the Company, FNFI's equity ownership position
in the Company and existing business and contractual relationships between the
two companies. Upon consummation of this offering (assuming no exercise of the
Underwriters' over-allotment option) FNFI will own approximately 34.1% of the
outstanding Common Stock of the Company. Mr. Foley, the Company's Chairman of
the Board, is the Chairman of the Board and Chief Executive Officer and a
principal shareholder of FNFI.

In July 1997, the Company acquired 60% of the outstanding common stock of
ATC from FNFI in exchange for $6.0 million. This price was negotiated between
FNFI and the Company's founders, Messrs. Lowther, Diaz and Duffy, based on ATC's
operations and financial results during 1996, on estimates of its growth
potential at the time and on the estimated value of the infrastructure
(including licenses) being acquired. FNFI acquired ATC in January 1996 for
approximately $772,000.

In August 1998, the Company agreed to acquire the remaining 40% of the
outstanding common stock of ATC from FNFI in exchange for shares of Common Stock
representing approximately 42.7% of the Company's outstanding shares. In
connection with that exchange, the shareholders of the Company, other than FNFI,
will assume approximately $1.2 million of Acquisition Debt from the Company, and
the remaining unpaid balance of the Acquisition Debt, in the amount of
approximately $3.5 million, will be repaid from the proceeds of a dividend to
the Company from ATC. The price and economic terms of the Reorganization were
based upon the agreement of the parties that a 42.7% interest in ANFI (40% fully
diluted) is of equal value to a 40% interest in ATC. These terms were negotiated
between officers of FNFI and Mr. Lowther, on behalf of the Company. The parties
determined that FNFI's proportional interest in the dividend paid by ATC to ANFI
(which FNFI would have shared absent the Reorganization), which dividend was
utilized to repay certain ANFI indebtedness, is approximately equal to the value
of the proportionate interest in ANFI subsidiaries, other than ATC, which FNFI
acquires as a result of the Reorganization. Consummation of this transaction is
subject to receipt of approval from the California Department of Insurance. See
"Reorganization."

In July 1997, the Company issued options to purchase 332,904 shares of
Common Stock to William P. Foley, II, the Company's Chairman of the Board. The
options are exercisable for a period of ten years at an exercise price of $0.66
per share.

FNTIC, a subsidiary of FNFI, and ATC have entered into an Issuing Agency
Agreement pursuant to which ATC has agreed that until June 30, 2002 it will act
exclusively as an agent for FNTIC with respect to the procurement of title
insurance policies in 14 selected counties in California and Arizona, subject to
certain exceptions. FNTIC receives 11% of the title premium as consideration for
underwriting the policies. ATC paid FNTIC approximately $4.1 million in 1997 and
$3.0 million in the first six months of 1998 under this agreement. Under the
Issuing Agency Agreement, FNTIC also provides a wide variety of administrative
services for ATC, including accounting and legal and human resources services.
ATC pays FNTIC a management fee of 1% of gross title premiums for these
services. This administrative services arrangement is terminable by ATC upon 90
days prior notice to FNTIC. The amounts of administrative fees paid to FNTIC
under this arrangement for 1997 and the first six months of 1998 were
approximately $375,000 and $274,000, respectively. The Company reimburses
subsidiaries of FNFI for expenses incurred on its behalf. Such reimbursements
aggregated $1,184,136 in 1997.

On March 16, 1998, ATC agreed to purchase all of the outstanding capital
stock of National from a subsidiary of FNFI for a purchase price of $3.25
million, payable $1.25 million in cash and the remainder with interest at 10%
over five years. This price had been offered by FNFI, and was accepted by the
Company, based on the Board's belief that the price was fair in light of the
amount of net assets to be acquired and the value of the insurance licenses held
by National. Due to the affiliated nature of the parties, the terms of the
agreement were not the result of an arm's length negotiation. The Company
intends to pay the deferred portion of the purchase price in full upon the
completion of this offering. See

"Use of Proceeds." When the acquisition is closed, National will be a
wholly-owned subsidiary of ATC. The closing of this acquisition is currently
awaiting, and is conditioned upon, approval from the New York State Department
of Insurance. See "Business--Acquisition of National."

After the closing, ATC will pay FNTIC a monthly management fee equal to 1%
of total gross title premiums generated by the Company regardless of which
underwriter is used. In addition, for a period of twenty four months following
the closing, ATC will pay to FNTIC $8,333.33 per month for claims processing
services, compliance with statutory reporting requirements and agency reporting
services. After the closing FNFI will continue to manage National's investment
portfolio for a fee equal to 1.67 basis points of the average investment balance
managed for the immediately preceding month. With respect to Trustee Sale
Guaranty commitments originated after the closing by ATC, ATC will be entitled
to underwrite the first $100,000 of such commitments with National and FNTIC
will reinsure the remaining portion of such commitment and pay FNTIC a fee equal
to 6% of the gross policy premium. If ATC has FNTIC underwrite the entire
commitment ATC will pay FNTIC a fee of 11% of the gross policy premium in
connection with each Trustee Sale Guaranty policy. With respect to post closing
non-Trustee Sale Guaranty commitments in a county where ATC is currently
licensed, ATC will underwrite the entire commitment with FNTIC and pay a fee
equal to 11% of the gross policy premium. With respect to post closing
non-Trustee Sale Guaranty commitments by ATC in counties where ATC is not
currently licensed, ATC will be able to elect to have National underwrite the
first $50,000 of such commitment. FNTIC will then reinsure the remainder of the
commitment and pay FNTIC a fee equal to 6% of the gross policy premium as a
reinsurance fee. If ATC elects to have FNTIC underwrite the entire commitment
ATC will pay a fee equal to 11% of the gross policy premium.

On January 28, 1998, ATC and FNTIC entered into a sublease pursuant to which
ATC subleases the Company's principal executive office from FNTIC. Such lease
provides for monthly rental payments to FNTIC of $33,494 and expires on July 11,
2000.

Messrs. Lowther, Diaz, and Duffy founded the Company in November 1996. In
March 1997, the Company issued 976,093, 976,093, 100,791 and 151,320 shares of
Common Stock to Mr. Lowther, Mr. Diaz, Mr. Duffy, and Ms. Ferguson,
respectively, for a purchase price of $.40 per share. These individuals
purchased the shares with funds received from personal loans (the "Shareholder
Loans"). The Company issued Common Stock to other employees of the Company in
March 1997 on the same terms and conditions. In August 1997, the Company
borrowed $6.0 million to refinance its then existing indebtedness of $4.8
million and to repay the Shareholder Loans. At that same time, Messrs. Lowther,
Diaz and Duffy and Ms. Ferguson guaranteed, in the aggregate, approximately
34.5% of the Company's new $6.0 million loan. The new loan bears interest at the
lender's prime rate.

In August 1998, the Company entered into Indemnification Agreements with all
of its directors and executive officers providing for indemnification rights in
certain circumstances. See "Management-- Indemnification of Officers and
Directors."

DESCRIPTION OF CAPITAL STOCK

The following description of the Company's capital stock and selected
provisions of its Articles of Incorporation and Bylaws is a summary and is
qualified in its entirety by the Company's Articles of Incorporation and Bylaws,
copies of which have been filed with the Securities and Exchange Commission as
exhibits to the Registration Statement of which this Prospectus is a part.

COMMON STOCK

The Company is authorized to issue 50,000,000 shares of Common Stock, no par
value. Shareholders have no preemptive rights and no right to convert their
Common Stock into any other securities. The holders of Common Stock are entitled
to one vote for each share held of record on all matters submitted to a vote of
the shareholders, except that holders of Common Stock are entitled to cumulative
voting with respect to the election of directors upon giving notice as required
by law. In cumulative voting, the holders of Common Stock are entitled to cast
for each share held the number of votes equal to the number of directors to be
elected. In the event of a liquidation, dissolution or winding up of the
Company, holders of Common Stock are entitled to share ratably in all assets
remaining after payment of liabilities and the liquidation preference of any
then outstanding Preferred Stock. There are no redemption or sinking fund
provisions applicable to the Common Stock. All outstanding shares are, and all
shares to be sold and issued as contemplated hereby will be, fully paid and
nonassessable and legally issued. The Board of Directors is authorized to issue
additional shares of Common Stock within the limits authorized by the Company's
charter and without shareholder action. As of August 21, 1998 there were
2,817,100 shares of Common Stock outstanding held by 25 holders of record.

PREFERRED STOCK

The Company's authorized preferred stock consists of 5,000,000 shares, no
par value (the "Preferred Stock"). The Board of Directors has the authority,
without further action by the shareholders, to issue from time to time shares of
Preferred Stock in one or more series and to fix the dividend rights and terms,
conversion rights, voting rights (whole, limited or none), redemption rights and
terms, liquidation preferences, sinking funds and any other rights, preferences,
privileges and restrictions applicable to each such series of Preferred Stock.
The purpose of authorizing the Board of Directors to determine such rights and
preferences is to eliminate delays associated with a shareholder vote on
specific issuances. The issuance of the Preferred Stock, while providing
flexibility in connection with possible acquisitions and other corporate
purposes, could, among other things, adversely affect the voting power of the
holders of Common Stock and, under certain circumstances, could make it more
difficult for a third party to gain control of the Company. Such issuance of
Preferred Stock could also adversely affect the distributions on and liquidation
preference of the Common Stock by creating more series of Preferred Stock with
distribution or liquidation preferences senior to the Common Stock. No shares of
Preferred Stock are currently outstanding and the Company currently has no plans
or proposals to issue any Preferred Stock.

TRANSFER AGENT

The Transfer Agent for the Company's Common Stock is U.S. Stock Transfer
Corporation, Glendale, California.

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the offering, the Company will have 6,167,096 shares of
Common Stock outstanding (excluding approximately 652,904 shares of Common Stock
issuable upon exercise of outstanding stock options). The 1,250,000 shares sold
by the Company in the offering will be freely tradeable without restriction or
further registration under the Securities Act, unless held by an "affiliate" of
the Company within the meaning of Rule 144 adopted under the Securities Act. Any
such affiliate would be subject to the resale limitations of Rule 144.

The remaining shares of outstanding Common Stock are "restricted securities"
(the "Restricted Shares") within the meaning of Rule 144 under the Securities
Act and may not be sold in the absence of a registration under the Securities
Act unless an exemption from registration is available, including an exemption
contained in Rule 144. In general, under Rule 144 as currently in effect, any
person (or persons whose shares are aggregated for purposes of Rule 144) who has
beneficially owned "restricted securities," as that term is defined in Rule 144,
for at least one year is entitled to sell, within any three-month period, a
number of shares that does not exceed the greater of (i) 1% of the then
outstanding shares of Common Stock of the Company, or (ii) the average weekly
trading volume in Common Stock during the four calendar weeks preceding such
sale, provided that certain public information about the Company, as required by
Rule 144, is then available and the seller complies with the manner of sale and
notification requirements of the rule. A person who is not an affiliate and has
not been an affiliate within three months prior to the sale and has, together
with any previous owners who were not affiliates, beneficially owned restricted
securities for at least two years is entitled to sell such shares under Rule
144(k) without regard to any of the volume limitations described above. None of
the Restricted Shares are presently eligible for sale upon compliance with Rule
144(k).

The officers, directors and substantially all shareholders of the Company
have agreed not to sell or otherwise transfer any shares of Common Stock, or any
securities convertible into or exercisable for shares of Common Stock, for the
180 days following the date of the Underwriting Agreement without the consent of
the Representative on behalf of the Underwriters. In addition, for the next 180
days such persons have also agreed not to sell or otherwise transfer shares of
Common Stock in excess of the amounts eligible for sale under Rule 144 and in
any event to effectuate any such sales or dispositions through Cruttenden Roth
Incorporated.

No predictions can be made of the effect, if any, that future sales of
shares of Common Stock, and grants of options to acquire shares of Common Stock,
or the availability of shares for future sale, will have on the market price of
the Common Stock prevailing from time to time. Sales of substantial amounts of
Common Stock in the public market, or the perception that such sales could
occur, could adversely affect the prevailing market prices of the Common Stock.
See "Principal Shareholders," "Description of Securities" and "Underwriting."

UNDERWRITING

Upon the terms and subject to the conditions set forth in an underwriting
agreement (the "Underwriting Agreement), the Underwriters named below, for whom
Cruttenden Roth Incorporated is acting as manager and representative (the
"Representative"), have severally agreed to purchase from the Company an
aggregate of 1,250,000 shares of Common Stock. The number of shares of Common
Stock that each Underwriter has agreed to purchase is set forth opposite its
name below:

NUMBER OF
UNDERWRITER SHARES
- --------------------------------------------------------------------------------- ----------

Cruttenden Roth Incorporated.....................................................

----------
Total.......................................................................... 1,250,000
----------
----------

The Underwriting Agreement provides that the obligations of the several
Underwriters to purchase shares of Common Stock are subject to the approval of
certain legal matters by counsel and to certain other conditions. If any of the
shares of Common Stock are purchased by the Underwriters pursuant to the
Underwriting Agreement, all such shares of Common Stock (other than the shares
of Common Stock covered by the overallotment option described below) must be so
purchased.

The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act, and to contribute
to payments that the Underwriters may be required to make in respect thereof.

The Underwriters propose to offer the shares of Common Stock directly to the
public at the initial public offering price set forth on the coverage page of
this Prospectus and to certain dealers (who may include the Underwriters) at
such price less a concession not to exceed $. per share. The Underwriters may
allow, and such dealers may reallow, a concession not to exceed $. per share
to any other Underwriter and certain other dealers. After the initial public
distribution of the shares offered hereby, the offering price and other selling
terms may be changed by the Representative. The Representative has advised the
Company that the Underwriters do not intend to confirm any shares to any
accounts over which they exercise discretionary control.

The Company has granted to the Underwriters an option, exercisable for 45
days from the date of this Prospectus, to purchase up to an aggregate of 187,500
additional shares of Common Stock at the initial public offering price less
underwriting discounts and commissions. Such option may be exercised solely for
the purpose of converting overallotments, if any, in connection with the
offering of the shares offered hereby. To the extent that the Underwriters
exercise such option, each of the Underwriters will be committed, subject to
certain conditions, to purchase a number of additional shares proportionate to
such Underwriter's initial commitment as indicated in the preceding table.

The offering of the shares offered hereby is made for delivery when, as and
if accepted by the Underwriters and subject to prior sale and to withdrawal,
cancellation or modification of the offering without notice. The Underwriters
reserve the right to reject an order for the purchase of shares in whole or in
part.

The Company has agreed to pay the Representative a nonaccountable expense
allowance of 2% of the gross proceeds of the offering to cover certain
underwriting costs and due diligence expenses related to this offering and to
sell to the Representative for nominal consideration the Representative's
Warrants to purchase from the Company up to 125,000 shares of Common Stock
(subject to certain antidilution adjustments) at an exercise price per share
equal to 120% of the initial public offering price per share. The exercise price
may be paid in cash or on a cashless net issuance basis by foregoing receipt of
a number of shares otherwise issuable upon exercise having a fair market value
equal to the aggregate exercise price. The Representative's Warrants will be
exercisable for a period beginning one year from the date of this Prospectus
until five years from the date of this Prospectus. The Representative's Warrants
may not be sold, transferred, assigned, pledged or hypothecated by the
Representative for a period of one year from the date of issuance except to
officers and partners of the Representative, the Underwriters or officers and
partners of the Underwriters. In addition, the Company has granted certain
demand and piggyback registration rights to the holders of the Representative's
Warrants, which enable them to register the resale of the Common Stock
underlying the Representative's Warrants under the Securities Act.

The Company, all directors and executive officers of the Company, and
certain stockholders and option holders of the Company have agreed that, without
the prior written consent of the Representative, they will not, with certain
limited exceptions, directly or indirectly, offer, sell, contract to sell, grant
any option to purchase or otherwise dispose of any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock or,
in any manner, transfer all or a portion of the economic consequences associated
with the ownership of the Common Stock, for a period of 180 days after the
Effective Date, other than the shares of Common Stock offered hereby. See
"Shares Eligible for Future Sale."

In connection with this offering, certain Underwriters and selling group
members and their respective affiliates may engage in transactions that
stabilize, maintain or otherwise affect the market price of the Common Stock.
Such transactions may include stabilization transactions effected in accordance
with Rule 104 of Regulation M under the Securities Exchange Act of 1934, as
amended, pursuant to which such persons may bid for or purchase shares of Common
Stock for the purpose of stabilizing the market price for shares of Common
Stock. The Underwriters also may create a short position for the account of the
Underwriters by selling more shares of Common Stock in connection with this
offering than they are committed to purchase from the Company and in such case
may purchase shares of Common Stock in the open market following the completion
of this offering to cover all or a portion of the shares of Common Stock or by
exercising the Underwriters' over-allotment option referred to above. In
addition, the Representative, on behalf of the Underwriters, may impose "penalty
bids" under contractual arrangements with the other Underwriters whereby it may
reclaim for an Underwriter (or a dealer participating in this offering) for the
account of the other Underwriters, the selling concession with respect to shares
of Common Stock that are distributed in this offering but subsequently purchased
for the account of the Underwriters in the open market. Any of the transactions
described in this paragraph may result in the maintenance of the price of the
Common Stock at a level above that which might otherwise prevail in the open
market. None of the transactions described in this paragraph is required, and,
if they are undertaken, may be discontinued at any time.

Prior to this offering, there has been no public market for the Common
Stock. The initial public offering price for the Common Stock offered hereby has
been determined by negotiation between the Company and the Representative. Among
the factors considered in determining the initial public offering price were
prevailing market conditions, revenues and earnings of the Company, market
valuations of other companies engaged in activities similar to the Company,
estimates of the business potential and prospects of the Company, the present
state of the Company's business operations, the history of and prospects for the
Company's business and the industry in which it competes, the Company's
management and other factors deemed relevant.

FNFI beneficially owns 2,099,996 shares of Common Stock, or approximately
43% of the outstanding shares of the Company, as well as more than 10% of the
outstanding common stock of Cruttenden Roth Incorporated. Under the Bylaws of
the NASD, when a member of the NASD, such as the Underwriter, participates in
the public distribution of securities of a company in which it or its affiliates
own 10% or more of the outstanding voting securities, and where there is no
"bona fide independent market" for such securities, the public offering price
can be no higher than recommended by a qualified independent underwriter. The
independent investment banking firm of , which may
participate as a member of the selling group in this offering (but will offer
for sale more than 10% of the Common Stock offered hereby), has recommended a
maximum initial public offering price of $ per share.
performed its "due diligence" with respect to the information contained in the
registration statement of which this Prospectus is a part. The NASD and the
Securities and Exchange Commission have indicated that, in their view,
may be deemed to be an underwriter as that term is defined in the
Securities Act.

LEGAL MATTERS

The validity of the issuance of the shares of Common Stock offered by this
Prospectus will be passed upon for the Company by Rutan & Tucker, LLP, Costa
Mesa, California. Certain matters in connection with the sale of Common Stock
offered hereby will be passed on for the Underwriters by Stradling Yocca Carlson
& Rauth, Newport Beach, California.

EXPERTS

The consolidated financial statements of American National Financial, Inc.
as of and for the year ended December 31, 1997, have been included herein and in
the Registration Statement in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, appearing elsewhere herein, and upon
the authority of said firm as experts in accounting and auditing.

The balance sheet of ANFI Predecessor as of December 31, 1996, and the
related statements of combined operations for each of the years in the two-year
period ended December 31, 1996 and for the six-month period ended June 30, 1997,
and the statements of shareholder's equity and cash flows for the year ended
December 31, 1996 and the six months ended June 30, 1997, have been included
herein and in the Registration Statement in reliance upon the report of KPMG
Peat Marwick LLP, independent certified public accountants, appearing elsewhere
herein, and upon the authority of said firm as experts in accounting and
auditing.

AVAILABLE INFORMATION

The Company has filed with the Securities and Exchange Commission,
Washington, D.C. 20549, a Registration Statement on Form S-1 under the
Securities Act, and the rules and regulations promulgated thereunder, with
respect to the Common Stock offered hereby. This Prospectus, which constitutes a
part of the Registration Statement, does not contain all of the information set
forth in the Registration Statement and the exhibits and schedules thereto.
While all material elements of the contracts and documents referenced in this
Prospectus are contained herein, statements contained in this Prospectus as to
the contents of any contract or other document referred to are not necessarily
complete, and in each instance reference is made to the full text of such
contract or other document which is filed as an exhibit to the Registration
Statement, each such statement being qualified in all respects by such
reference. For further information with respect to the Company and the Common
Stock offered hereby, reference is made to such Registration Statement and the
exhibits and schedules thereto. The Registration Statement, including the
exhibits and schedules thereto, may be inspected without charge at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's regional offices located at 7
World Trade Center, 13th Floor, New York, New York 10048 and at Citicorp Center,
50 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
documents may be obtained from the Commission at its principal office in
Washington, D.C. upon the payment of the charges prescribed by the Commission.

The Commission maintains a Web site that contains reports, proxy and
information statements and other information regarding issuers that file
electronically with the Commission. The Commission's address on the World Wide
Web is http://www.sec.gov.

The Company intends to distribute to its shareholders annual reports
containing financial statements audited by the Company's independent accountants
and quarterly reports for the first three quarters of each fiscal year
containing unaudited interim financial information.

INDEX TO FINANCIAL STATEMENTS

CONSOLIDATED FINANCIAL STATEMENTS FOR
AMERICAN NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

PAGE
-----

Independent Auditors' Report............................................................................... F-2

Consolidated Balance Sheet at December 31, 1997............................................................ F-3

Consolidated Statement of Operations for the Year Ended December 31, 1997.................................. F-4

Consolidated Statement of Cash Flows for the Year Ended December 31, 1997.................................. F-5

Consolidated Statement of Shareholders' Equity for the Year Ended December 31, 1997........................ F-6

Notes to Consolidated Financial Statements................................................................. F-7

FINANCIAL STATEMENTS FOR
ANFI PREDECESSOR (NOTE 1)

Independent Auditors' Report......................................................... F-16

Balance Sheet at December 31, 1996................................................... F-17

Statements of Combined Operations for the Years Ended December 31, 1995 and 1996 and
for the six months ended June 30, 1997............................................. F-18

Statement of Shareholder's Equity for the Year Ended December 31, 1996 and for the
six months ended June 30, 1997..................................................... F-19

Statement of Cash Flows for the Year Ended December 31, 1996 and for the six months
ended June 30, 1997................................................................ F-20

Notes to Financial Statements........................................................ F-21

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR
AMERICAN NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheet at June 30, 1998 (unaudited).................... F-27

Condensed Consolidated Statement of Operations for the Six Months Ended June 30, 1998
(unaudited)........................................................................ F-28

Condensed Consolidated Statement of Cash Flows for the Six Months Ended June 30, 1998
(unaudited)........................................................................ F-29

Notes to Condensed Consolidated Financial Statements (unaudited)..................... F-30

F-1

INDEPENDENT AUDITORS' REPORT

The Board of Directors
American National Financial, Inc.:

We have audited the consolidated balance sheet of American National
Financial, Inc. and subsidiaries as of December 31, 1997 and the related
consolidated statements of operations, shareholders' equity and cash flows for
the year then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on the consolidated financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of American
National Financial, Inc and subsidiaries as of December 31, 1997 and the results
of its operations and its cash flows for the year then ended in conformity with
generally accepted accounting principles.

KPMG Peat Marwick LLP

Orange County, California
August 26, 1998

F-2

AMERICAN NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET

DECEMBER 31,
1997
------------

ASSETS
Current assets:
Cash and cash equivalents......................................................................... $7,223,635
Accounts receivable, net of an allowance for doubtful accounts of $1,100,449...................... 6,809,177
Deferred income taxes............................................................................. 832,732
Prepaid expenses and other current assets......................................................... 903,002
------------
Total current assets.......................................................................... 15,768,546
Property and equipment, net....................................................................... 2,723,670
Title plants...................................................................................... 815,310
Deposits with Insurance Commissioner.............................................................. 105,000
Intangibles, net of accumulated amortization of $257,349.......................................... 2,952,417
------------
Total assets.................................................................................. $22,364,943
------------
------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable.................................................................................. $1,958,813
Other accrued expenses, including $587,750 to affiliate........................................... 3,403,219
Customer advances................................................................................. 1,155,536
Current portion of long-term debt................................................................. 936,672
Current portion of obligations under capital leases with affiliates............................... 660,176
Income taxes payable.............................................................................. 1,195,581
Due to affiliate.................................................................................. 1,411,170
------------
Total current liabilities..................................................................... 10,721,167
Long-term debt...................................................................................... 5,535,828
Obligations under capital leases with affiliates.................................................... 1,411,001
------------
Total liabilities............................................................................. 17,667,996
Minority interest in consolidated subsidiary........................................................ 3,574,100
Shareholders' equity:
Preferred stock, no par value, authorized, 5,000,000 shares;
issued and outstanding, none.................................................................... --
Common stock, no par value; authorized, 50,000,000 shares; issued and outstanding, 2,910,416
shares.......................................................................................... --
Additional paid in capital........................................................................ --
Retained earnings................................................................................. 1,122,847
------------
Total shareholders' equity.................................................................... 1,122,847
------------
Total liabilities and shareholders' equity.................................................... $22,364,943
------------
------------

See accompanying notes to consolidated financial statements.

F-3

AMERICAN NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997

Revenues:
Gross title insurance premiums................................................................... $ 20,640,707
Escrow fees...................................................................................... 7,352,399
Other service charges............................................................................ 5,532,203
-------------
Total revenues................................................................................. 33,525,309
-------------
Expenses:
Personnel costs.................................................................................. 16,185,144
Other operating expenses, includes $1,184,136 with affiliate..................................... 8,083,626
Fees to affiliated underwriters.................................................................. 2,614,410
Title plant rent and maintenance................................................................. 2,664,201
-------------
Total expenses................................................................................. 29,547,381
-------------
Earnings before income taxes and minority interest in net earnings of consolidated subsidiary...... 3,977,928
Provision for income taxes......................................................................... 1,774,417
-------------
Earnings before minority interest in net earnings of consolidated
subsidiary....................................................................................... 2,203,511
Minority interest in net earnings of consolidated subsidiary....................................... (1,080,664)
-------------
Net earnings....................................................................................... $ 1,122,847
-------------
-------------
Basic and diluted net earnings per share........................................................... $ 0.38

See accompanying notes to consolidated financial statements.

F-4

AMERICAN NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1997

Cash flows from operating activities:
Net earnings.................................................................. $ 1,122,847
Adjustments to reconcile net earnings to cash provided by operating
activities:
Depreciation and amortization............................................... 644,720
Minority interest in net income of consolidated subsidiary.................. 1,080,664
Changes in:
Accounts receivable, net.................................................. (2,493,048)
Prepaid expenses and other assets......................................... 94,379
Income taxes.............................................................. 341,909
Accounts payable and other accrued expenses............................... 2,156,510
Customer advances......................................................... (340,140)
Due to affiliate.......................................................... 233,544
------------
Total cash provided by operating activities........................... 2,841,385
------------
Cash flows from investing activities:
Collection of notes receivable................................................ 27,844
Purchases of property and equipment........................................... (999,087)
Acquisition of consolidated subsidiary, net of cash acquired.................. (816,584)
------------
Total cash used in investing activities............................... (1,787,827)
------------
Cash flows from financing activities:
Borrowings.................................................................... 6,472,500
Payments under capital lease obligations...................................... (302,423)
------------
Total cash provided in financing activities........................... 6,170,077
------------
Increase in cash and cash equivalents................................. 7,223,635
Cash and cash equivalents at beginning of year.................................. --
------------
Cash and cash equivalents at end of year........................................ $ 7,223,635
------------
------------
Supplemental disclosure of cash flow information:
Cash paid during the year:
Interest.................................................................... $ 473,285
Income taxes................................................................ 1,885,105
------------
------------

See accompanying notes to consolidated financial statements.

F-5

AMERICAN NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1997

COMMON STOCK ADDITIONAL TOTAL
----------------------- PAID IN RETAINED SHAREHOLDERS'
SHARES AMOUNT CAPITAL EARNINGS EQUITY
---------- ----------- ------------- ------------ -------------

Balance, December 31, 1996........................ -- $ -- $ -- $ -- $ --
Issuance of common stock.......................... 3,026,400 -- -- -- --
Forfeiture of common stock issued................. (115,984) -- -- -- --
Net earnings...................................... -- -- -- 1,122,847 1,122,847
---------- ----- ----- ------------ -------------
Balance, December 31, 1997........................ 2,910,416 $ -- $ -- $ 1,122,847 $ 1,122,847
---------- ----- ----- ------------ -------------
---------- ----- ----- ------------ -------------

See accompanying notes to consolidated financial statements.

F-6

AMERICAN NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997

(1) DESCRIPTION OF BUSINESS

American National Financial, Inc., formerly ATC Holdings, Inc., was
incorporated in the state of California in November 1996 as a holding company
for certain investments in title and real estate related service companies. In
March 1997, 3,026,400 of shares were issued to founding shareholders. Prior to
1997, American National Financial, Inc. and subsidiaries (collectively, "the
Company") had substantially no operations. In April, 1997, the Company received
$6,000,000 in proceeds from the issuance of short-term notes payable, of which
$870,000 was due to certain members of management and the remainder was due to a
financial institution, in connection with an agreement with Fidelity National
Financial, Inc. ("FNFI") to acquire a 60% interest in American Title Company
("ATC"). Upon consummation of the sale in July 1997, the Company paid FNFI
$6,000,000 for the 60% interest in ATC. In August 1997, the Company refinanced
all of the debt issued in April 1997.

The Company's principal operations are those of ATC. ATC is an underwritten
title company in the state of California and is engaged in the business of
providing title insurance services and other related services in connection with
real estate transactions. The Company operates throughout California and in
Maricopa County, Arizona. ATC functions as an exclusive agent of Fidelity
National Title Insurance Company ("FNTIC"), an affiliate and a wholly owned
subsidiary of FNFI. Title insurance policies are underwritten by FNTIC for an
underwriting fee. The underwriting agreement generally provides that ATC is
liable under any single policy for only the first $5,000 of losses. As a result
of the July 1997 transaction with the Company, FNFI agreed to make no claim on
ATC for claims arising from policies written prior to January 1, 1997.

The Company's other subsidiaries include Nations Title Insurance of Arizona,
Inc.; Landmark REO Management Services, Inc.; American Document Services, Inc.;
West Point Appraisal, Inc.; West Point Properties, Inc. and West Point Support
Services, Inc.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The accompanying consolidated financial statements include the accounts of
the Company and its wholly-owned and majority-owned subsidiaries. All material
intercompany profits, transactions and balances have been eliminated.

CASH AND CASH EQUIVALENTS

For purposes of reporting cash flows, highly liquid instruments purchased
with original maturities of three months or less are considered cash
equivalents. The carrying amounts reported in the consolidated balance sheet for
these instruments approximate their fair value.

ACCOUNTS RECEIVABLE

The carrying amounts reported in the consolidated balance sheet for accounts
receivable approximate their fair value. Accounts receivable is reported net of
allowance for doubtful accounts which represents management's estimates of those
balances that are uncollectible as of the balance sheet date.

F-7

AMERICAN NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997 (CONTINUED)

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost, less depreciation and
amortization. Depreciation is computed using the straight-line method based on
the estimated useful lives of the related assets which range from three to 30
years. Leasehold improvements are amortized on a straight-line basis over the
lesser of the term of the applicable lease or the estimated useful lives of such
assets.

TITLE PLANT

Title plant is historical title information organized and maintained for use
in performing title searches. The December 31, 1997 title plant balance relates
to a capital lease. See note 9. Costs incurred to maintain, update and operate
title plants are expensed as incurred. Title plant is not amortized as it is
considered to have an indefinite life if maintained.

INTANGIBLES

Intangible assets include acquired licenses to operate within various
counties and the cost in excess of net assets acquired in connection with the
ATC acquisition. Intangibles are amortized on a straight-line basis over a
composite life of 25 years. Impairment of intangible assets is monitored on a
continual basis and is assessed based on an analysis of the cash flows generated
by the underlying assets. No impairment of intangible assets has been
recognized.

CAPITAL LEASE OBLIGATION

Capital lease obligation with affiliates is recorded at the present value of
the minimum lease payments at the beginning of the lease term. The monthly
payments under the leases are allocated between a reduction of the obligation
and interest expense so as to produce a constant periodic rate of interest on
the remaining balance of the obligation.

REVENUE RECOGNITION

EXPENSES AND CLAIM LOSSES

Expenses are recognized when incurred. A provision for claim losses on title
policies is provided at the time of closing of the related real estate
transaction to cover anticipated losses up to $5,000 per policy under the
underwriting agreement with FNTIC.

INCOME TAXES

F-8

AMERICAN NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997 (CONTINUED)

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. The impact on
deferred taxes of changes in tax rates and laws, if any, are applied to the
years during which temporary differences are expected to be settled and
reflected in the consolidated financial statements in the period enacted.

EARNINGS PER SHARE

Basic earnings per share is computed by dividing net earnings available to
common shareholders by the weighted average number of common shares outstanding
during the period. Dilutive earnings per share is calculated by dividing net
earnings available to common shareholders plus the assumed conversions by
dilutive potential securities. The Company has granted certain options which
have been treated as common share equivalents for purposes of calculating
diluted earnings per share. The number of weighted average shares outstanding
used in both basic and diluted earnings per share was 2,971,983, as the options
granted during 1997 are not in the money and therefore are antidilutive at
December 31, 1997.

MANAGEMENT ESTIMATES

The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the consolidated
financial statements, and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.

(3) ACQUISITION

On July 1, 1997, the Company acquired 60% of the outstanding stock of ATC
for a purchase price of $6 million. The $6 million purchase price was paid in
cash and financed by a bank loan in the same amount. This transaction has been
accounted for as a purchase. Accordingly, assets and liabilities of ATC have
been reflected at their fair values at the date of acquisition for the 60% of
outstanding stock acquired and at historical cost for the 40% minority interest.
The earnings of ATC have been included in the accompanying consolidated
statement of operations since July 1, 1997, for the Company's 60% ownership
interest. See note 12.

Assets and liabilities of ATC at acquisition were as follows:

Cash and cash equivalents...................................................... $ 5,288,000
Accounts receivable............................................................ 4,316,129
Other Assets................................................................... 1,583,107
-------------
-------------

Amounts due to affiliates...................................................... 1,178,000
Payables and accrued expenses assumed at fair value............................ 4,100,000
-------------
-------------

Intangibles resulting from the 60% acquisition amounted to $2,460,000 and
are being amortized over a composite life of 25 years.

F-9

AMERICAN NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997 (CONTINUED)

(3) ACQUISITION (CONTINUED)

Selected unaudited pro forma combined results of operations for the year
ended December 31, 1997, assuming that the acquisition of 60% of ATC occurred on
January 1, 1997 is presented as follows:

Total revenue.................................................. $ 58,666,458
Net earnings................................................... 1,476,324

Basic and diluted earnings per share........................... .49

(4) PROPERTY AND EQUIPMENT

Property and equipment consists of the following as of December 31, 1997:

Furniture, fixtures and equipment............................... $ 2,044,598
Leasehold improvements.......................................... 429,406
Office building................................................. 667,888
------------
3,141,892
Accumulated depreciation and amortization....................... (418,222)
------------
$ 2,723,670
------------
------------

(5) INCOME TAXES

Income tax expense (benefit) for year ended December 31, 1997 consists of
the following:

---------------------------------------
CURRENT DEFERRED TOTAL
------------ ----------- ------------

Federal.............................................. $ 1,608,578 $ (240,469) $ 1,368,109
State and local...................................... $ 476,756 $ (70,448) $ 406,308
------------ ----------- ------------
$ 2,085,334 $ (310,917) $ 1,774,417
------------ ----------- ------------
------------ ----------- ------------

The effective tax rate for the period reported differs from the Federal
statutory income tax rate as follows:

Statutory Federal income tax rate................................... 35.0%
Non-deductible meals and entertainment.............................. 1.8
Amortization of intangibles......................................... 1.6
State taxes, net of Federal benefit................................. 6.6
Other............................................................... (.4)
---------
44.6%
---------
---------

F-10

AMERICAN NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997 (CONTINUED)

(5) INCOME TAXES (CONTINUED)
The deferred tax assets and liabilities at December 31, 1997 consist of the
following:

DEFERRED TAX DEFERRED TAX
ASSETS LIABILITIES
------------ -------------

Excess state income tax.......................................... $ 44,302 $ --
Excess book over tax provision for bad debts..................... 440,178 --
Employee benefit and vacation accruals........................... 701,925 --
Excess tax depreciation over book................................ -- (24,239)
Other............................................................ -- (329,434)
------------ -------------
Total deferred taxes............................................. $1,186,405 $ (353,673)
------------ -------------
------------ -------------

Based upon the Company's current and historical pre-tax earnings, management
believes it is more likely than not that the Company will realize the benefit of
its existing deferred tax assets. Management believes the existing net
deductible temporary differences will reverse during periods in which the
Company generates net taxable income. However, there can be no assurance that
the Company will generate any earnings or any specific level of continuing
earnings in future years. Certain tax planning or other strategies could be
implemented, if necessary, to supplement income from operations to fully realize
recorded tax benefits.

(6) NOTES PAYABLE

The Company has a $6,000,000 note payable to a financial institution that
bears interest at the institution's prime lending rate (8.50% at December 31,
1997) and is due in November 2002. The note requires monthly payments in the
amount of $33,334 beginning in May 1998. Interest is payable monthly.
Additionally, the Company must pay 75% of the excess cash flow of ATC (as
defined) as supplemental principal payments. This amount must be paid prior to
the end of the first quarter following the end of each fiscal year. The
additional cash payment under this provision is $670,000 which has been
classified as a current liability. The note is collateralized by a first
priority lien on all the Company's assets and all of its outstanding common
stock. The Company is also required to maintain tangible net worth of at least
$200,000 and working capital of at least $250,000 on a quarterly basis. As of
December 31, 1997, the Company is out of compliance with certain covenants
related to minimum tangible net worth and capital expenditure restrictions. The
financial institution has agreed to waive the minimum tangible net worth
covenant through June 30, 1998. The financial institution has agreed to waive,
through October 31, 1998, all capital expenditure restrictions. In April 1998,
the Company voluntarily prepaid $340,000 on the note.

The Company also has a $472,500 note payable to the same financial
institution that bears interest at the institution's prime lending rate (8.50%
at December 31, 1997) and is due in full in December 1999 with interest payable
monthly. The note is collateralized by a deed of trust on the office building.

F-11

AMERICAN NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997 (CONTINUED)

(6) NOTES PAYABLE (CONTINUED)

Future fixed principal maturities of these notes payable are as follows for
the years ending December 31 excluding the variable payment:

1998............................................................................ $ 266,672
1999............................................................................ 872,508
2000............................................................................ 400,008
2001............................................................................ 400,008
2002............................................................................ 4,533,304
------------
$ 6,472,500
------------
------------

The carrying value of the Company's notes payable approximate fair value.

(7) SHAREHOLDERS' EQUITY

STOCK SPLIT

In August 1998, the Company declared a 6.0528 for 1 stock split. All share
and per share information has been retroactively adjusted to reflect this stock
split.

CAPITAL RESTRICTIONS

Underwritten title companies are subject to certain regulation by insurance
regulatory or banking authorities, primarily relating to minimum net worth and
working capital. Minimum net worth of $400,000 and minimum working capital of
$10,000 is required for ATC.

STOCK ISSUANCE

The Company issued 3,026,400 shares to several key executives in March,
1997. The shares were deemed to have no value as of the date of issuance.
Subsequently, certain of these executives surrendered a total of 115,984 shares.

(8) EMPLOYEE BENEFIT PLANS

STOCK OPTION PLAN

In August 1998, the stockholders approved the adoption of the 1998 Stock
Incentive Plan (1998 Incentive Plan). Under the terms of the 1998 Incentive
Plan, the Company may grant incentive or nonqualified stock options to certain
key employees and non-employee directors or officers. The number of shares
issuable under the 1998 Incentive Plan is 650,000 shares at not less than 100%
and 85% of fair market value on the date of the grant for incentive options and
nonqualified options respectively. An additional 200,000 shares of Common Stock
may be authorized on the date of each annual meeting of shareholders. Officers
and other key employees of the Company or of an affiliated company are eligible
to receive incentive stock options. Officers and other key employees of the
Company or of an affiliated company, members of the Board and other service
providers are eligible to receive nonqualified stock options. The term and
provision for the termination of each option shall be fixed by the Board of
Directors, but no option may be exercisable more than 10 years after the date it
is granted. An incentive option granted to a person who is a 10% shareholder on

the date of the grant shall not be exercisable more

F-12

AMERICAN NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997 (CONTINUED)

(8) EMPLOYEE BENEFIT PLANS (CONTINUED)
than 5 years after the date it is granted. Each option shall vest and become
exercisable in one or more installments at such time or times and subject to
such conditions, including within limitation the achievement of specified
performance goals or objectives, as shall be determined by the Board of
Directors. No options have been granted under the 1998 Incentive Plan.

Concurrent with the acquisition of ATC, the chief executive officer of FNFI
was granted fully vested options for 332,904 shares of the Company's common
stock at an exercise price of $0.66 per share. The options expire in 10 years.
Such exercise price was considered in excess of the fair market value of the
common stock at the date of grant.

The Company has elected to follow Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees" (Opinion 25) and related
Interpretations in accounting for its 1997 Incentive Plan. As discussed below,
in management's opinion, the alternative fair value accounting provided for
under Statement of Accounting Standards No. 123, "Accounting for Stock Based
Compensation (Statement 123) requires use of option valuation models that were
not developed for use in valuing employee stock options. Under Opinion 25,
because the exercise price of the Company's stock options exceeds the market
price of the underlying stock on the date of the grant, no compensation expense
is recognized.

Pro forma information regarding net earnings and earnings per share is
required by Statement 123, and has been determined as if the Company had
accounted for its employee stock options under the minimum fair value method of
that Statement. The minimum fair value for these options was estimated at the
date of grant using a Black-Scholes option pricing model with the following
weighted-average assumptions. The risk free interest rate used for options
granted during 1997 was 6.45%. The expected dividend yield used for 1997 was 0%.
A weighted average expected life of 10 years was used.

For purpose of pro forma disclosures, the estimated fair value of the
options is amortized into expense over the options' vesting period. The
Company's pro forma information for the year ended December 31, 1997 follows:

Pro forma basic and diluted net earnings........................ $1,018,377
Pro forma basic and diluted earnings per share.................. $ .34
---------
---------

(9) COMMITMENTS AND CONTINGENCIES

LITIGATION

From time to time, the Company is subject to legal proceedings associated
with claims made under policies of insurance they have issued or other services
performed on behalf of insured policyholders and other customers. Management
believes that no such actions depart from customary litigation incidental to the
business of the Company and that resolution of all such litigation will not have
a material adverse effect on the Company.

TRUST DEPOSITS

In conducting its operations, ATC routinely holds customers' assets in
trust, pending completion of real estate transactions. Such amounts are
maintained in segregated bank accounts and have not been included in the
accompanying consolidated balance sheets. ATC has a contingent liability
relating to proper disposition of these balances for its customers, which
amounted to $63,735,628 at December 31, 1997.

F-13

AMERICAN NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997

(9) COMMITMENTS AND CONTINGENCIES (CONTINUED)

DEPOSITS WITH INSURANCE COMMISSIONER

ATC is required to maintain certain amounts on deposit with the Insurance
Commissioner in order to operate in certain counties.

OPERATING LEASES

ATC leases certain of its premises and equipment under operating leases that
expire at various dates. Several of these agreements include escalation clauses
and provide for purchases and renewal options for periods ranging from one to
five years. Certain of those leases are with subsidiaries of FNFI.

Future minimum operating lease payments are as follows:

TO NON
TOTAL TO AFFILIATE AFFILIATE
------------ ------------ --------------

1998............................................ $ 3,022,054 $ 441,098 $ 2,580,956
1999............................................ 2,454,143 517,200 1,936,943
2000............................................ 2,071,593 336,513 1,735,080
2001............................................ 1,357,519 39,617 1,317,902
2002............................................ 811,893 -- 811,893
Thereafter...................................... 323,454 -- 323,454
------------ ------------ --------------
Total future minimum operating lease
payments.................................... $ 10,040,656 $ 1,334,428 $ 8,706,228
------------ ------------ --------------
------------ ------------ --------------

Rent expense incurred under operating leases during 1997 totaled $2,373,097,
including $207,708 paid to an affiliate.

CAPITAL LEASES

In 1997, ATC entered into a capital lease arrangement with a subsidiary of
FNFI, which terminates in December 1999, for certain equipment. Also in 1997,
ATC entered into a capital lease agreement with FNTIC, which expires in June
2007, for three title plants. The gross amount of title plants recorded under
capital leases is $815,310 at December 31, 1997. The gross amount of equipment
recorded under capital lease is $1,558,290 at December 31, 1997. Accumulated
depreciation related to this equipment is $311,658 as of December 31, 1997.

Future minimum capital lease payments are as follows:

1998............................................................ $ 844,572
1999............................................................ 844,572
2000............................................................ 120,000
2001............................................................ 120,000
2002............................................................ 120,000
Thereafter...................................................... 540,000
------------
Total future minimum capital lease payments................... $ 2,589,144
Portion relating to interest.................................. 517,967
------------
Present value of minimum capital lease payments............... $ 2,071,177
------------
------------

F-14

AMERICAN NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1997

(9) COMMITMENTS AND CONTINGENCIES (CONTINUED)

Depreciation of the equipment held under capital leases is included in other
operating expenses for the year ended December 31, 1997.

(10) RELATED PARTY TRANSACTIONS

Fees to affiliated underwriters include a fee for underwriting services and
management services under an exclusive agency agreement with FNTIC. Underwriting
services are provided for five years commencing July 1997 for a fee of 11% of
gross title insurance premiums. Management services are cancellable with 90 days
notice and cost 1% of gross title insurance premiums.

ATC leases office space, title plants, and certain equipment from
subsidiaries of FNFI. See note 9. Additionally, the Company reimburses
subsidiaries of FNFI for expenses incurred on its behalf. Such reimbursements
aggregated $1,184,136 in 1997.

(11) SUBSEQUENT EVENT

ACQUISITIONS

On March 16, 1998, the ATC signed a stock purchase agreement with Fidelity
National Title Insurance Company of New York (FNNEW), a wholly-owned subsidiary
of FNFI, and National Title Insurance of New York Inc. (National), a
wholly-owned subsidiary of FNNEW, for the purchase of National. The sale is
subject to regulatory approval and certain other conditions. The purchase price
of $3,250,000 is payable in $1,250,000 cash and a note for $2,000,000. National
was acquired in April 1996 by FNFI and has not been actively underwriting
policies since the transaction closed. In connection with this transaction, ATC
advanced $1,150,000 to FNNEW in May 1998, which FNNEW contributed to the capital
of National. Such advances will be returned to ATC in the event the transaction
does not close.

On August 9, 1997, ATC signed a stock purchase agreement with Pacific Coast
Title of Santa Barbara County (PCT) for the purchase of 100% of the issued and
outstanding stock of Santa Barbara Title Company. The purchase price of $160,000
is payable in cash. The sale is subject to regulatory approval and certain other
conditions. On January 9, 1998, the Insurance Commissioner of the State of
California approved the transaction and the sale was consummated.

(12) PROPOSED REORGANIZATION

In August 1998, the Company agreed to acquire the remaining 40% of the
outstanding common stock of ATC from FNFI in exchange for 43% of the outstanding
common stock of the Company. The Company is currently awaiting regulatory
approval. The agreement will automatically be consummated upon regulatory
approval. The 40% interest will be accounted for at FNFI's cost basis. This
transaction has no effect on the carrying value of the 40% interest in ATC. In
connection with this transaction, the shareholders of the Company, other than
FNFI, will assume approximately $1.2 million of the note payable incurred in
connection with the Company's acquisition of ATC. The assumption of debt by the
non-FNFI shareholders will be accounted for as a capital contribution.
Additionally, the Company will use the proceeds of a dividend from ATC of
approximately $3.5 million to repay the remaining balance of the note payable.
Had the Reorganization taken place as of January 1, 1997, net earnings would
have been $3.1 million. Basic and fully diluted earnings per share would have
been $0.59.

F-15

INDEPENDENT AUDITORS' REPORT

The Board of Directors
American National Financial, Inc.:

We have audited the accompanying balance sheet of ANFI Predecessor, as
defined in note 1 to the financial statements, as of December 31, 1996 and the
related statements of combined operations for the years ended December 31, 1995
and 1996 and the six months ended June 30, 1997, and the statements of
shareholder's equity and cash flows for the year ended December 31, 1996 and the
six months ended June 30, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of ANFI Predecessor as of
December 31, 1996 and the results of its operations for the years ended December
31, 1995 and 1996 and the six months ended June 30, 1997 and its cash flows for
the year ended December 31, 1996 and the six months ended June 30, 1997 in
conformity with generally accepted accounting principles.

KPMG Peat Marwick LLP

Orange County, California
August 26, 1998

F-16

ANFI PREDECESSOR
BALANCE SHEET

ASSETS

DECEMBER 31,
1996
-------------

Current assets:
Cash and cash equivalents........................................................................ $ 25,667
Accounts receivable, net of an allowance for doubtful accounts of $885,150....................... 6,725,357
Prepaid expenses and other current assets........................................................ 108,618
Deferred income tax asset........................................................................ 688,716
Due from affiliates.............................................................................. 138,835
-------------
Total current assets......................................................................... 7,687,193
-------------
Other assets:
Property and equipment, net...................................................................... 136,968
Deposits with Insurance Commissioner............................................................. 105,000
Intangibles, net of accumulated amortization of $112,000......................................... 1,932,584
Other assets..................................................................................... 152,757
-------------
Total assets................................................................................. $ 10,014,502
-------------
-------------

LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Accounts payable................................................................................. $ 979,149
Other accrued expenses........................................................................... 1,322,176
Customer advances................................................................................ 217,036
Income taxes payable............................................................................. 742,899
-------------
Total liabilities.............................................................................. 3,261,260
-------------
Shareholder's equity:
Common stock, $100 par value. Authorized 1,000,000 shares; issued and outstanding 3,000 shares... 300,000
Additional paid-in capital....................................................................... 6,669,497
Accumulated deficiency........................................................................... (216,255)
-------------
Total shareholder's equity................................................................... 6,753,242
-------------
Total liabilities and shareholder's equity................................................... $ 10,014,502
-------------
-------------

See accompanying notes to financial statements.

F-17

ANFI PREDECESSOR
STATEMENTS OF COMBINED OPERATIONS

FOR THE SIX
FOR THE YEAR ENDED MONTHS
---------------------------- ENDED
DECEMBER 31, DECEMBER 31, JUNE 30,
1995 1996 1997
------------- ------------- -------------

Revenues:
Gross title insurance premiums.................................... $ 21,974,435 $ 36,599,994 $ 16,773,036
Escrow fees....................................................... 5,526,478 9,672,389 5,581,285
Other service charges............................................. 2,220,055 5,459,547 2,786,828
------------- ------------- -------------
Total revenues.................................................. 29,720,968 51,731,930 25,141,149
------------- ------------- -------------
Expenses:
Personnel costs................................................... 18,511,903 29,216,159 14,364,472
Other operating expenses.......................................... 9,962,476 14,472,708 5,622,823
Fees to affiliated underwriters................................... 2,628,195 4,151,343 1,851,918
Title plant rent and maintenance.................................. 2,405,134 4,106,803 2,009,188
------------- ------------- -------------
Total expenses...................................................... 33,507,708 51,947,013 23,848,401
------------- ------------- -------------
Earnings (losses) before income taxes............................... (3,786,740) (215,083) 1,292,748
Pro forma provision for income taxes................................ (1,387,186) 28,309 --
Provision for income taxes.......................................... -- (69,601) 549,902
------------- ------------- -------------
Net earnings (losses)............................................... (2,399,554) (173,791) 742,846
Less: Net earnings (losses) of
predecessors of American Title Company............................. (2,399,554) 42,464 --
------------- ------------- -------------
Net earnings (losses) of American Title Company................... $ -- $ (216,255) $ 742,846
------------- ------------- -------------
------------- ------------- -------------

See accompanying notes to financial statements.

F-18

ANFI PREDECESSOR
STATEMENT OF SHAREHOLDER'S EQUITY

RETAINED
COMMON STOCK ADDITIONAL EARNINGS TOTAL
----------------------- PAID-IN (ACCUMULATED SHAREHOLDER'S
SHARES AMOUNT CAPITAL DEFICIENCY) EQUITY
----------- ---------- ------------ ------------ -------------

Balance, January 1, 1996......................... 3,000 $ 300,000 $ 472,000 $ -- $ 772,000
Capital contribution -- predecessors of
American Title Company....................... -- -- 6,197,497 -- 6,197,497
Net losses..................................... -- -- -- (216,255) (216,255)
----- ---------- ------------ ------------ -------------
Balance, December 31, 1996....................... 3,000 300,000 6,669,497 (216,255) 6,753,242
Cash dividends................................. -- -- -- (1,500,000) (1,500,000)
Capital contribution -- subsidiaries........... -- -- 1,348,494 -- 1,348,494
Capital contribution -- cash................... -- -- 292,577 -- 292,577
Net earnings................................... -- -- -- 742,846 742,846
----- ---------- ------------ ------------ -------------
Balance, June 30, 1997........................... 3,000 $ 300,000 $ 8,310,568 $ (973,409) $ 7,637,159
----- ---------- ------------ ------------ -------------
----- ---------- ------------ ------------ -------------

See accompanying notes to financial statements.

F-19

ANFI PREDECESSOR
STATEMENT OF CASH FLOWS

FOR THE FOR THE SIX
YEAR ENDED MONTHS ENDED
DECEMBER 31, JUNE 30,
1996 1997
------------ -------------

Cash flows from operating activities:
Net earnings (losses)............................................................. $ (216,255) $ 742,846
Adjustments to reconcile net earnings (losses) to cash provided by operating
activities:
Depreciation and amortization................................................... 111,811 124,982
Changes in:
Accounts receivable........................................................... (3,245,468) 2,204,038
Prepaid expenses and other assets............................................. (79,939) (562,648)
Due from affiliates........................................................... -- 533,967
Payables and accruals......................................................... (1,086,587) 1,007,450
------------ -------------
Total cash provided by (used in) operating activities....................... (4,516,438) 4,050,635
------------ -------------
Cash flows from investing activities:
Net sales (purchase) of property and equipment.................................... 79,182 (216,935)
Net collection from notes receivable.............................................. 20,596 --
------------ -------------
Total cash provided by investing activities................................. 99,778 (216,935)
------------ -------------
Cash flows from financing activities:
Contribution from Parent.......................................................... 4,365,076 292,577
------------ -------------
Decrease (increase) in cash and cash equivalents............................ (51,584) 4,126,277
Cash and cash equivalents at beginning of year...................................... 77,251 25,667
------------ -------------
Cash and cash equivalents at end of year............................................ $ 25,667 $ 4,151,944
------------ -------------
------------ -------------

See accompanying notes to financial statements.

F-20

ANFI PREDECESSOR

NOTES TO FINANCIAL STATEMENTS

(1) BASIS OF PRESENTATION

The accompanying financial statements present the financial position and
results of operations of the divisions and/or subsidiaries of Fidelity National
Financial, Inc. ("FNFI") which were subsequently merged into or acquired by
American Title Company ("ATC" or "the Company"). ATC was acquired by FNFI in
January 1996 for $772,000 from an unaffiliated party. The purchase price
primarily represented the value of licenses to operate as an underwritten title
company in various counties in California. At the time of acquisition, the
operations of the acquired company were not significant. In July, 1997 60% of
ATC was sold to American National Financial, Inc. ("ANFI") for $6,000,000. ANFI
is owned by certain members of management of ATC. Reference to "ANFI
Predecessor" in these financial statements refers to operations of these
entities.

The predecessor operations included in the accompanying financial statements
are those of ATC since it was acquired by FNFI and other operations of FNFI
contributed to ATC as of June 30, 1997 that were operated as separate profit
centers but not separate legal entities. As separate profit centers or divisions
of FNFI, only operating activities of these divisions were segregated in FNFI's
accounting records. Cash balances and other balance sheet information was
co-mingled within the accounts of FNFI's subsidiaries that owned the respective
divisions. As such, the balance sheet and statements of shareholders' equity and
cash flows present the operations of ATC. The statements of combined operations
present operations of ATC and the divisions of FNFI, which were later
contributed to ATC, as if the combined operations were a single entity
throughout the periods presented.

(2) DESCRIPTION OF BUSINESS

ATC, an underwritten title company in the state of California, and the other
operations of FNFI that were contributed to ATC, are engaged in the business of
providing title insurance services and other related services in connection with
real estate transactions. The Company operates throughout California and in
Maricopa County, Arizona. ATC functions as an exclusive agent of Fidelity
National Title Insurance Company ("FNTIC"), an affiliate and a wholly owned
subsidiary of FNFI. Title insurance policies are underwritten by FNTIC for an
underwriting fee. The underwriting agreement generally provides that ATC is
liable under any single policy for only the first $5,000 of losses. As a result
of the sale of 60% of ATC to ANFI, FNFI agreed to make no claim on ATC for
claims arising from policies written prior to January 1, 1997.

(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The following briefly describes the significant accounting policies of the
Company which have been followed in preparing the accompanying financial
statements.

CASH AND CASH EQUIVALENTS

For purposes of reporting cash flows, highly liquid instruments purchased
with original maturity dates of three months or less are considered cash
equivalents. The carrying amounts reported in the balance sheets for these
instruments approximate their fair value.

F-21

ANFI PREDECESSOR

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
ACCOUNTS RECEIVABLE

The carrying amounts reported in the balance sheets for accounts receivable
approximate their fair value. Accounts receivable is reported net of allowance
for doubtful accounts and represents management's estimate of those balances
that are uncollectible as of the balance sheet date.

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost, less accumulated depreciation
and amortization. Depreciation is computed using the straight-line method based
on the estimated useful lives of the related assets, which range from three to
five years. Leasehold improvements are amortized on a straight-line basis over
the lesser of the term of the applicable lease or the estimated useful lives of
such assets.

INTANGIBLES

Intangible assets include acquired licenses to operate within various
counties and cost in excess of net assets acquired in connection with certain
acquisitions. Intangibles are amortized over a composite life of 25 years.

Impairment of intangible assets is monitored on a continual basis and is
assessed based on an analysis of the cash flows generated by the underlying
assets. No impairment of intangible assets has been recognized.

INCOME TAXES

Deferred tax assets and liabilities are recognized for temporary differences
between the financial reporting basis and the tax basis of the Company's assets
and liabilities and expected benefits of utilizing net operating loss and credit
carryforwards. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. The impact on
deferred taxes of changes in tax rates and laws, if any, are applied to the
years during which temporary differences are expected to be settled and
reflected in the financial statements in the period enacted.

REVENUE RECOGNITION

Title insurance premiums, escrow fees and other service charges are
recognized as revenue at the time of closing of the related real estate
transaction. Premiums from title policies written are presented at their gross
amount on the accompanying statement of combined operations, and the portion of
this premium that is remitted to the underwriter is reflected as fees to
affiliated underwriters. Related expenses are recognized when incurred. A
provision for losses on title policies is accrued at the time of closing of the
related real estate transaction to cover anticipated losses up to $5,000 per
policy under the underwriting agreement with FNTIC.

MANAGEMENT ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements, and the

F-22

ANFI PREDECESSOR

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.

(4) PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

1996
----------

Leasehold improvements............................................................ $ 239,923
Furniture, fixtures and equipment................................................. 58,142
----------
298,065
Accumulated depreciation and amortization......................................... (161,097)
----------
$ 136,968
----------
----------

(5) INCOME TAXES

ATC's operating results through July 1, 1997 are included in the income tax
returns of FNFI. ATC has a formal tax allocation agreement with FNFI whereby if
ATC has taxable income, ATC will pay FNFI a monthly amount equal to the GAAP
book tax provision established for Federal and state income taxes. If ATC has a
taxable loss, FNFI will pay to ATC an amount equal to the tax benefits received
by FNFI from the inclusion of ATC in the consolidated Federal and state income
tax returns even if ATC could not have utilized its losses and/or credits on a
separate return basis. The operating results of the divisions of FNFI included
in the statements of combined operations for the years ended December 31, 1995
and 1996 were included in the tax returns of FNFI.

All tax benefits generated by the branches were utilized to offset taxable
income generated by other FNFI subsidiaries. However, for purposes of these
financial statements, a pro forma tax benefit has been provided in the
statements of combined operations for 1995 and 1996 to reflect an estimate of
the tax benefit that would have been available if these operations had been
legally a part of ATC during these periods. The tax rate used for this estimate
is a combination of the statutory Federal and state tax rates.

Provision (benefit) for income taxes for the year ended December 31, 1996
and the six months ended June 30, 1997 consists of the following:

FOR THE YEAR ENDED DECEMBER 31,
1996
-------------------------------
CURRENT DEFERRED TOTAL
--------- --------- ---------
Federal.................................................... $ 495,191 $(550,860) $ (55,669)

State and local............................................ 123,924 (137,856) (13,932)
--------- --------- ---------
$ 619,115 $(688,716) $ (69,601)
--------- --------- ---------
--------- --------- ---------

FOR THE SIX MONTHS ENDED JUNE
30, 1997
-------------------------------
CURRENT DEFERRED TOTAL
--------- --------- ---------

Federal.................................................... $ 645,461 $(214,398) $ 431,063
State and local............................................ $ 177,947 $ (59,108) $ 118,839
--------- --------- ---------
$ 823,408 $(273,506) $ 549,902
--------- --------- ---------
--------- --------- ---------

F-23

ANFI PREDECESSOR

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(5) INCOME TAXES (CONTINUED)
The effective tax rate for the periods reported differs from the Federal
statutory income tax rate as follows:

FOR THE YEAR FOR THE
ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
1996 1997
--------------- -------------------

Statutory Federal income tax rate......................... (34.0%) 35.0%
Non-deductible meals and entertainment.................... 13.4 .9
State taxes, net of Federal benefit....................... (6.0) 6.3
Amortization of intangibles............................... -- .5
Other..................................................... 2.3 (.2)
----- -----
(24.3%) 42.5%
----- -----
----- -----

The deferred tax assets and liabilities at December 31, 1996 consist of the
following:

DEFERRED DEFERRED
TAX TAX
ASSETS LIABILITIES
----------- -----------

Excess book over tax provision for bad debts....................... $ 410,944 $ --
Employee benefit and vacation accruals............................. 277,772 --
----------- -----------
Total deferred taxes........................................... $ 688,716 $ --
----------- -----------
----------- -----------

(6) SHAREHOLDER'S EQUITY

The Company is subject to certain regulation by insurance regulatory
authorities, primarily relating to minimum net worth and working capital
requirements. In connection with the acquisition of the Company by FNFI in 1996,
minimum net worth of $400,000 and working capital of $10,000 is required for ATC
at December 31, 1996.

(7) COMMITMENTS AND CONTINGENCIES

LITIGATION

From time to time the Company is subject to legal proceedings associated
with claims made under policies of insurance they have issued or other services
performed on behalf of insured policyholders and other customers. Management
believes that no such actions depart from customary litigation incidental to the
business of the Company and that resolution of all such litigation will not have
a material adverse effect on the Company.

F-24

ANFI PREDECESSOR

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(7) COMMITMENTS AND CONTINGENCIES (CONTINUED)
TRUST DEPOSITS

In conducting its operations, the Company routinely holds customers' assets
in trust, pending completion of real estate transactions. Such amounts are
maintained in segregated bank accounts and have not been included in the
accompanying balance sheet. The Company has contingent liability relating to
proper disposition of these balances for its customers, which amounted to
$42,602,565 at December 31, 1996.

DEPOSITS WITH INSURANCE COMMISSIONER

The Company is required to maintain certain amounts on deposit with the
Insurance Commissioner in order to operate in certain counties. The required
deposit is reflected on the accompanying balance sheets at December 31, 1996.

OPERATING LEASES

The Company leases certain of its premises and equipment under leases that
expire at various dates. Several of these agreements include escalation clauses
and provide for purchases and renewal options for periods ranging from one to
five years.

Future minimum operating lease payments at December 31, 1996 are as follows:

1997............................................................ $2,439,937
1998............................................................ 1,894,742
1999............................................................ 922,414
2000............................................................ 545,747
2001............................................................ 298,664
Thereafter...................................................... 27,848
---------
Total future minimum operating lease payments................. $6,129,352
---------
---------

Rent expense for the years ended December 31, 1995 and 1996 and the six
months ended June 30, 1997 was $3,221,692, $3,998,555 and $2,011,781
respectively, of which $1,022,542, $1,374,308, and $630,753, respectively, are
amounts paid to affiliates.

UNDERWRITING AGREEMENT

On July 1, 1997, the Company signed an exclusive underwriting agreement with
FNTIC which is effective for five years. Under the agreement, the Company is
generally limited to write policies only for FNTIC within certain geographic
territories. Underwriting fees are based on a percentage of the gross title
insurance premiums written and approximate 12%. The 12% underwriting fee
includes a one percent fee paid to a FNFI affiliate for management services
provided by these affiliates for ATC.

(8) RELATED PARTY TRANSACTIONS

Amounts due from affiliates at December 31, 1996 were $138,835 primarily
related to amounts due under cost reimbursement agreements whereby a FNFI
subsidiary pays certain expenses for ATC, and is later reimbursed by ATC.

F-25

ANFI PREDECESSOR

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(9) SUBSEQUENT EVENTS

ACQUISITIONS

On March 16, 1998, the Company signed a stock purchase agreement with
Fidelity National Title Insurance Company of New York ("FNNEW"), a wholly-owned
subsidiary of FNFI, and National Title Insurance of New York Inc. ("National"),
a wholly-owned subsidiary of FNNEW, for the purchase of National. The sale is
subject to regulatory approval and certain other conditions. The purchase price
of $3,250,000 is payable in $1,250,000 cash and a note for $2,000,000. National
was acquired in April 1996 by FNFI and has not been actively underwriting
policies since that transaction closed. In connection with this transaction, ATC
advanced $1,150,000 to FNNEW in May 1998, which FNNEW contributed to the capital
of National. Such advance will be returned to ATC in the event the transaction
does not close.

On August 9, 1997, ATC signed a stock purchase agreement with Pacific Coast
Title of Santa Barbara County ("PCT") for the purchase of 100% of the issued and
outstanding stock of Santa Barbara Title Company. The purchase price of $160,000
is payable in cash. The sale is subject to regulatory approval and certain other
conditions. On January 9, 1998, the Insurance Commissioner of the State of
California approved the transaction and the sale was consummated.

F-26

AMERICAN NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)

JUNE 30,
1998
-------------

ASSETS
Current assets:
Cash and cash equivalents........................................................................ $ 6,153,584
Investments...................................................................................... 1,982,398
Accounts receivable, net of an allowance for doubtful accounts of $1,103,051..................... 8,713,496
Advance to related party......................................................................... 1,531,169
Deferred income tax.............................................................................. 832,732
Prepaid expenses and other current assets, including $1,536,679 with affiliate................... 1,076,607
-------------
Total current assets......................................................................... 20,289,986
Property and equipment........................................................................... 3,342,378
Deposits with Insurance Commissioner............................................................. 105,000
Title plants..................................................................................... 815,310
Intangibles, net of accumulated amortization of $400,138......................................... 2,979,106
-------------
Total assets................................................................................. $27,531,780
-------------
-------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable................................................................................. $ 6,762,585
Other accrued expenses........................................................................... 439,474
Customer advances................................................................................ 1,591,730
Current portion of long-term debt................................................................ 400,000
Current portion of obligations under capital leases with affiliates.............................. 697,273
Income taxes payable............................................................................. 1,589,866
Due to affiliates................................................................................ 197,421
-------------
Total current liabilities.................................................................... 11,678,349
Long-term debt..................................................................................... 4,972,490
Obligations under capital leases with affiliates................................................... 1,053,402
-------------
Total liabilities............................................................................ 17,704,241
Minority interest in consolidated subsidiary....................................................... 5,618,649
Shareholders' equity:
Preferred stock, no par value; authorized, 5,000,000 shares; issued and outstanding, none........ --
Common stock, $0 par value; authorized 50,000,000 shares; issued and outstanding 2,875,092
shares......................................................................................... --
Additional paid-in capital....................................................................... --
Retained earnings................................................................................ 4,208,890
-------------
Total shareholders' equity................................................................... 4,208,890
-------------
Total liabilities and shareholders' equity................................................... $27,531,780
-------------
-------------

See accompanying notes to condensed consolidated financial statements.

F-27

AMERICAN NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(UNAUDITED)

Revenues:
Gross title insurance premiums............................................... $27,421,155
Escrow fees.................................................................. 10,716,185
Other service charges........................................................ 7,138,011
----------
Total revenues............................................................. 45,275,351
----------
Expenses:
Personnel costs.............................................................. 22,522,387
Other operating expenses, includes $1,682,230 with affiliate................. 7,774,630
Fees to affiliated underwriters.............................................. 3,299,817
Title plant rent and maintenance............................................. 3,015,889
----------
Total expenses............................................................. 36,612,723
----------
Earnings before income taxes and minority interest in net earnings of
consolidated subsidiary...................................................... 8,662,628
Provision for income taxes..................................................... 3,532,039
----------
Earnings before minority interest in net earnings of consolidated
subsidiary................................................................... 5,130,589
Minority interest in net earnings of consolidated subsidiary................... (2,044,546)
----------
Net earnings................................................................... $3,086,043
----------
----------
Basic net earnings per share................................................... $ 1.06
Diluted net earnings per share................................................. $ 1.01

See accompanying notes to condensed consolidated financial statements.

F-28

AMERICAN NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(UNAUDITED)

Cash flows from operating activities:
Net earnings.................................................................. $3,086,043
Adjustments to reconcile net earnings to cash provided by operating
activities:
Depreciation and amortization............................................... 560,060
Minority interest in net income of consolidated subsidiary.................. 2,044,546
Changes in:
Accounts receivable, net.................................................. (1,904,319)
Prepaid expenses and other assets......................................... (173,605)
Short-term investments.................................................... (1,982,398)
Income taxes.............................................................. 394,285
Accounts payable and other accrued expenses............................... 1,840,022
Customer advances 436,194
Due to affiliate.......................................................... (1,213,749)
----------
Total cash provided by operating activities............................. 3,087,079
----------
Cash flows from investing activities:
Advance to related party...................................................... (1,531,169)
Purchases of property and equipment........................................... (1,205,457)
----------
Total cash used in investing activities................................. (2,736,626)
----------
Cash flows from financing activities:
Payments on long term debt.................................................... (1,100,002)
Payments under capital lease obligations...................................... (320,502)
----------
Total cash provided in financing activities............................. (1,420,504)
----------
Increase in cash and cash equivalents................................... (1,070,051)
Cash and cash equivalents at beginning of year.................................. 7,223,635
----------
Cash and cash equivalents at end of year........................................ $6,153,584
----------
----------
Supplemental disclosure of cash flow information:
Cash paid during the year:
Interest.................................................................... $ 261,099
Income taxes................................................................ 1,520,105
----------
----------

See accompanying notes to condensed consolidated financial statements.

F-29

AMERICAN NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
(UNAUDITED)

(1) BASIS OF FINANCIAL STATEMENTS

The condensed consolidated financial information includes the accounts of
American National Financial, Inc. and Subsidiaries (collectively, the "Company")
and has been prepared in accordance with generally accepted accounting
principles and the instruction of Article 10 of Regulation S-X. All adjustments,
consisting of normal recurring accruals considered necessary for a fair
presentation, have been included. Results for the six months ended June 30, 1998
are not necessarily indicative of the results that may be expected for the
entire year. This information should be read in conjunction with the Company's
Annual Report for the year ended December 31, 1997.

(2) COMPREHENSIVE INCOME

In June 1997, the FASB issued Statement of Financial Accounting Standards
No. 130, "Reporting Comprehensive Income" ("SFAS 130"). SFAS 130 establishes
standards for the reporting and display of comprehensive income and its
components (revenue, expenses, gains and losses) in a full set of general-
purpose financial statements. SFAS 130 requires all items that are necessary to
be recognized under accounting standards as components of comprehensive income
to be reported in a financial statement that is displayed with the same
prominence as other financial statements. The Company has no other comprehensive
income and accordingly the Statement has no impact on the presentation of the
Company's financial statements.

F-30

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THE OFFERING OTHER
THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR ANY OF THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL OR SOLICITATION OF ANY OFFER TO BUY ANY SECURITY OTHER THAN THE
SECURITIES OFFERED BY THIS PROSPECTUS, NOR DOES IT CONSTITUTE AN OFFER TO SELL
OR SOLICITATION OF ANY OFFER TO BUY THE SECURITIES BY ANYONE IN ANY JURISDICTION
IN WHICH SUCH OFFER TO SELL OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE
PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
------------------------

TABLE OF CONTENTS

PAGE
----

Prospectus Summary........................................................ 3
Risk Factors.............................................................. 6
The Company............................................................... 12
Reorganization............................................................ 12
Use of Proceeds........................................................... 15
Dividend Policy........................................................... 15
Dilution.................................................................. 16
Capitalization............................................................ 17
Selected Consolidated Financial and Operating Data........................ 18
Unaudited Pro Forma Combined Condensed Financial Information.............. 21
Management's Discussion and Analysis of Financial Condition and Results of
Operations.............................................................. 23
Business.................................................................. 32
Management................................................................ 43
Principal Shareholders.................................................... 49
Certain Transactions...................................................... 50
Description of Capital Stock.............................................. 52
Shares Eligible for Future Sale........................................... 53
Underwriting.............................................................. 54
Legal Matters............................................................. 56
Experts................................................................... 56
Available Information..................................................... 57
Index to Financial Statements............................................. F-1

------------------------

UNTIL , 1998 (25 DAYS AFTER THE COMMENCEMENT OF THIS OFFERING),
ALL DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.

1,250,000 SHARES

[LOGO]

COMMON STOCK

---------------------

PROSPECTUS

---------------------

[CRUTTENDEN ROTH INCORPORATED LOGO]

, 1998

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

It is estimated that the following expenses will be incurred in connection
with the proposed offering hereunder. All of such expenses will be borne by the
Company:

AMOUNT
----------

SEC filing fee.................................................................... $ 5,620
Legal fees and expenses........................................................... 125,000*
Accounting fees and expenses...................................................... 75,000*
Blue sky fees and expenses (including counsel fees)............................... 10,000*
Printing expenses................................................................. 75,000*
Nonaccountable Expense Allowance.................................................. 275,000*
Miscellaneous..................................................................... 4,380*
----------
TOTAL........................................................................... $ 570,000*
----------
----------

- ------------------------

* Estimated.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Underwriting Agreement (Exhibit 1.1 hereto) provides for indemnification
by the Underwriters of the Registrant and its officers and directors, and by the
Registrant of the Underwriters for certain liabilities arising under the
Securities Act or otherwise.

The Registrant's Articles of Incorporation provide that the liability of the
Registrant's directors for monetary damages shall be eliminated to the fullest
extent permissible under California law. This is intended to eliminate the
personal liability of a director for monetary damages in an action brought by or
in the right of the Registrant for breach of a director's duties to the
Registrant or its shareholders subject to certain limitations in Section 204 of
the California Corporations Code described below.

The Articles also provide that the Registrant is authorized to provide
indemnification to its agents (as defined in Section 317 of the California
Corporations Code), through the Registrant's Bylaws or through agreements with
such agents or both, for breach of duty to the Registrant and its shareholders,
in excess of the indemnification otherwise permitted by Section 317 of the
California Corporations Code, subject to the limits on such excess
indemnification set forth in Section 204 of the California Corporations Code.

Section 317 of the California Corporations Code provides that a corporation
may indemnify an agent who is, or who is threatened to be made a party to any
proceeding (as that term is defined therein) for actions taken in their
corporate capacity upon a determination that such agent acted in good faith and
in a manner which such agent believed to be in the best interest of the
corporation. In addition, Section 317 provides for mandatory indemnification of
an agent who is successful on the merits in defense of any such proceeding.
Indemnification is prohibited under this section (with certain express
exceptions) in any circumstances where it appears that it would be inconsistent
with (i) any provision of the corporation's articles of incorporation or bylaws,
any resolution of the shareholders or any agreement in effect at the time of the
alleged cause of action asserted in the proceeding; and (ii) any condition
expressly imposed by a court in approving a settlement.

II-1

director for monetary damages for (i) acts or omissions that involve intentional
misconduct or a knowing and culpable violation of law; (ii) for acts or
omissions that a director believes to be contrary to the best interests of the
corporation or its shareholders or that involve the absence of good faith on the
part of the director; (iii) for any transaction from which a director derived an
improper personal benefit; (iv) for acts or omissions that show a reckless
disregard for the director's duty to the corporation or its shareholders in
circumstances in which the director was aware, or should have been aware, in the
ordinary course of performing a director's duties, of a risk of serious injury
to the corporation or its shareholders; (v) for acts or omissions that
constitute an unexcused pattern of inattention that amounts to an abdication of
the director's duty to the corporation or its shareholders; (vi) with respect to
certain transactions, or the approval of transactions in which a director has a
material financial interest; and (vii) expressly imposed by statute, for
approval of certain improper distributions to shareholders or certain loans or
guarantees.

The Bylaws of the Registrant provide for indemnification of the Registrant's
officers, directors, employees, and other agents to the extent and under the
circumstances permitted by California law. The Bylaws further provide that no
indemnification shall be made in the case of a derivative suit in respect to any
claim as to which such person has been adjudged to be liable to the corporation,
except with court approval, nor shall indemnification be made for amounts paid
in settling or otherwise disposing of a threatened or pending action, with or
without court approval, or for expenses incurred in defending a threatened or
pending action which is settled or otherwise disposed of without court approval.
Indemnification under the Bylaws is mandatory in the case of an agent of the
Registrant (present or past) who is successful on the merits in defense of a
suit against him or her in such capacity. In all other cases where
indemnification is permitted by the Bylaws, a determination to indemnify such
person must be made by a majority of a quorum of disinterested directors, a
majority of disinterested shareholders, or the court in which the suits is
pending.

The Registrant has entered into agreements to indemnify its directors in
addition to the indemnification provided for in the Articles of Incorporation
and Bylaws. Among other things, these agreements provide that the Registrant
will indemnify, subject to certain requirements, each of the Registrant's
directors for certain expenses (including attorneys' fees), judgments, fines and
settlement amounts incurred by such person in any action or proceeding,
including any action by or in the right of the Registrant, on account of
services by such person as a director or officer of the Registrant, or as a
director or officer of any other company or enterprise to which the person
provides services at the request of the Registrant.

The above provisions may have the effect of reducing the likelihood of
derivative litigation against directors and may discourage or deter shareholders
or management from bringing a lawsuit against directors for breach of their duty
of care, even though such an action, if successful, might otherwise have
benefitted the Registrant and its shareholders. At present, there is no
litigation or proceeding pending involving a director of the Registrant as to
which indemnification is being sought, nor is the Registrant aware of any
threatened litigation that may result in claims for indemnification by any
director.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act, and is, therefore, unenforceable.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

In March 1997, the Registrant issued 3,026,400 shares of common stock to its
founding shareholders in connection with the initial capitalization of the
Registrant. The founding shareholders paid $0.40 per share in this transaction.
These securities were issued to the Registrant's founding shareholders, who were
also employees of the Registrant, pursuant to Section 4(2) of the Securities
Act.

II-2

In July 1997, the Registrant issued options to purchase 332,904 shares of
common stock to William P. Foley, II, the Chairman of the Board of Directors.
The options are exercisable for a period of five years at an exercise price of
$0.66 per share. These securities were issued in a private transaction to a
single accredited investor pursuant to Section 4(2) of the Securities Act and
Rule 506 promulgated thereunder.

Pursuant to the terms of the Reorganization, following receipt of Department
of Insurance approval of the Reorganization, the Company will issue 2,099,996
shares of Common Stock to FNFI in exchange for 40% of the outstanding shares of
common stock of ATC and subject to the other terms of the Reorganization. These
securities will be issued in a private transaction pursuant to Section 4(2) of
the Securities Act and Rule 506 promulgated thereunder.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) The following exhibits are filed herewith:

EXHIBIT
NUMBER DESCRIPTION
- ------ --------------------------------------------------------------------------

1.1 Form of Underwriting Agreement.+
1.2 Form of Representative's Warrant Agreement.+
2.1 Stock Purchase Agreement dated January 1, 1997 by and among the
Registrant, Fidelity National Financial, Inc. and American Title
Company, together with amendment.+
2.2 Stock Purchase Agreement dated December 31, 1996 by and among American
Title Company, Fidelity National Asset Recovery Services, Inc. and
Fidelity National Financial, Inc.+
2.3 Stock Purchase Agreement dated December 31, 1996 by and among American
Title Company, Nations Title Insurance of Arizona, Inc. and Fidelity
National Financial, Inc.+
2.4 Stock Purchase Agreement dated March 16, 1998 by and among Fidelity
National Title Insurance Company of New York, National Title Insurance
of New York, Inc. and American Title Company.+
2.5 Stock Purchase Agreement dated August 9, 1997 by and between Pacific Coast
Title of Santa Barbara County and American Title Company.+
2.6 Stock Exchange Agreement dated August 21, 1998 between the Registrant and
Fidelity National Financial, Inc.
3.1 Amended and Restated Articles of Incorporation.+
3.2 Bylaws of the Registrant, as amended.+
4.1 Form of Common Stock Certificate.*
5.1 Opinion of Rutan & Tucker, LLP.
10.1 1998 Stock Incentive Plan, together with form of Nonqualified Stock Option
Agreement and form of Incentive Stock Option Agreement.
10.2 Employment Agreement between the Registrant and Michael C. Lowther.*
10.3 Employment Agreement between the Registrant and Wayne D. Diaz.*
10.4 Employment Agreement between the Registrant and Dennis R. Duffy.*
10.5 Employment Agreement between the Registrant and Barbara Ferguson.*
10.6 Issuing Agency Agreement dated July 1, 1997 between Fidelity National
Title Insurance Company and American Title Company.+
10.7 Issuing Agency Agreement dated August 25, 1997 between Fidelity National
Title Insurance Company and Santa Barbara Title Company.+
10.8 Credit Agreement dated August 7, 1997 between the Registrant and Imperial
Bank.+
10.9 Note dated August 7, 1997 of the Registrant in favor of Imperial Bank.+
10.10 Addendum to Note dated August 7, 1997 between the Registrant and Imperial
Bank.+
10.11 Standard Sublease dated January 28, 1998 between American Title Company
and Fidelity National Financial, Inc.+

II-3

EXHIBIT
NUMBER DESCRIPTION
- ------ --------------------------------------------------------------------------

10.12 Form of Indemnification Agreement.*
10.13 Title Plant Lease Agreement dated July 1, 1997 between Fidelity National
Title Insurance Company and American Title Company.
21 List of Subsidiaries of Registrant.+
23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consent of Rutan & Tucker, LLP (included in the opinion filed as Exhibit
5.1).
24 Power of Attorney.+
27 Financial Data Schedule.+

- ------------------------

* To be filed by amendment.

+ Previously filed.

(b) The following financial statement schedules are filed herewith:

SCHEDULE I -- Balance Sheet of American National Financial, Inc. (Parent
Company only) as of December 31, 1997 and related Statements
of Operations and Retained Earnings and Cash Flows for the
year ended December 31, 1997, and accompanying notes.

SCHEDULE II -- Valuation and Qualifying Accounts of American National
Financial, Inc. and Subsidiaries for the year ended December
31, 1997 and of American National Financial, Inc.
(Predecessor) for the year ended December 31, 1996 and the
six months ended June 30, 1997.

ITEM 17. UNDERTAKINGS

The Registrant hereby undertakes to provide the Underwriters at the closing
specified in the Underwriting Agreement certificates in such denominations and
registered in such names as required by the Underwriters to permit prompt
delivery to each purchaser.

The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in the form
of Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.

(2) For purposes of determining any liability under the Securities Act,
each post-effective amendment that contains a form of Prospectus shall be
deemed to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described in Item 24 hereof, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person thereof in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.

II-4

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Irvine, California, on
October 21, 1998.

AMERICAN NATIONAL FINANCIAL, INC.

By: /s/ MICHAEL C. LOWTHER
-----------------------------------------
Michael C. Lowther,
CHIEF EXECUTIVE OFFICER

II-5

In accordance with the requirements of the Securities Act of 1933, this
Registration Statement was signed by the following persons in the capacities and
on the dates stated.

NAME TITLE DATE
- ------------------------------ -------------------------- -------------------

/s/ MICHAEL C. LOWTHER Chief Executive Officer
- ------------------------------ and Director (Principal October 21, 1998
Michael C. Lowther Executive Officer)

Executive Vice President
* and Chief Financial
- ------------------------------ Officer (Principal October 21, 1998
Carl A. Strunk Financial and Accounting
Officer)

*
- ------------------------------ Director October 21, 1998
William P. Foley, II

*
- ------------------------------ Director October 21, 1998
Wayne D. Diaz

*
- ------------------------------ Director October 21, 1998
Dennis R. Duffy

*
- ------------------------------ Director October 21, 1998
Bruce Elieff

*
- ------------------------------ Director October 21, 1998
Barbara A. Ferguson

*
- ------------------------------ Director October 21, 1998
Robert Majorino

*By: /s/ MICHAEL C. LOWTHER
-------------------------
Michael C. Lowther
ATTORNEY-IN-FACT

II-6

SCHEDULE I

AMERICAN NATIONAL FINANCIAL, INC.
(PARENT COMPANY)
BALANCE SHEET
DECEMBER 31, 1997

ASSETS

Current assets:
Cash and cash equivalents..................................................... $ 26,313
Receivables from subsidiary................................................... 900,000
Deferred tax asset............................................................ 127,108
----------
Total current assets........................................................ 1,053,421
Property and equipment, net................................................... 667,888
Investment in subsidiary...................................................... 6,435,562
----------
Total assets................................................................ $8,156,871
----------
----------

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
Accounts payable.............................................................. $ 11,792
Accounts payable to subsidiary................................................ 549,732
Current portion of long-term debt............................................. 936,672
----------
Total current liabilities................................................... 1,498,196
Long-term debt.................................................................. 5,535,828
----------
Total liabilities........................................................... 7,034,024
----------
Shareholders' equity:
Preferred stock, no par value, authorized, 5,000,000 shares; issued and
outstanding, none........................................................... --
Common stock, no par value; authorized, 50,000,000 shares; issued, 2,910,416
shares...................................................................... --
Additional paid in capital.................................................... --
Retained earnings............................................................. 1,122,847
----------
Total shareholders' equity.................................................. 1,122,847
----------
Total liabilities and shareholders' equity.................................. $8,156,871
----------
----------

See accompanying notes to financial statements

S-1

SCHEDULE I
(continued)

AMERICAN NATIONAL FINANCIAL, INC.
(PARENT COMPANY)
STATEMENT OF OPERATIONS AND RETAINED EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1997

Revenues:
Other service charges......................................................... $ 94,697
Expenses:
Other operating expenses...................................................... 412,466
---------
Losses before income tax expense and equity in earnings of subsidiaries......... (317,769)
Provision for income taxes...................................................... 127,108
---------
Losses before equity in earnings of subsidiaries................................ (190,661)
Equity in earnings of subsidiaries.............................................. 1,313,508
---------
Net earnings.................................................................... $1,122,847
---------
---------
Basic and diluted net earnings per share........................................ $ .38
Retained earnings, beginning of year............................................ $ --
Net earnings.................................................................. 1,122,847
---------
Retained earnings, end of year.................................................. $1,122,847
---------
---------

See accompanying notes to financial statements.

S-2

SCHEDULE I
(continued)

AMERICAN NATIONAL FINANCIAL, INC.
(PARENT COMPANY)
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1997

Cash flows from operating activities:
Net earnings.................................................................. $1,122,847
Adjustments to reconcile net earnings to cash provided by operating
activities:
Depreciation and amortization............................................... --
Equity in earnings of subsidiaries.......................................... (1,313,508)
Changes in:
Income taxes payable...................................................... (127,108)
Accounts payable.......................................................... 539,470
----------
Total cash provided by operating activities............................. 221,701
----------
Cash flows from investing activities:
Purchase of property and equipment............................................ (195,388)
Purchase of investment in subsidiary.......................................... (6,000,000)
----------
Total cash used in investing activities................................. (6,195,388)
----------
Cash flows from financing activities -- borrowings.............................. 6,000,000
----------
Total cash provided in financing activities............................. 6,000,000
----------
Increase in cash and cash equivalents................................... 26,313
Cash and cash equivalents at beginning of year.................................. --
----------
Cash and cash equivalents at end of year........................................ $ 26,313
----------
----------
Supplemental disclosure of cash flow information:
Cash paid during the year:
Interest.................................................................... $ 412,466
----------
Income taxes................................................................ $ 245,000
----------
----------

See accompanying notes to financial statements.

S-3

SCHEDULE I
(continued)

AMERICAN NATIONAL FINANCIAL, INC.
(PARENT COMPANY)
NOTES TO FINANCIAL STATEMENTS

(1) AMERICAN

American National Financial, Inc. (the "Company") transacts substantially
all of its business through its subsidiaries. The Parent Company Financial
Statements should be read in connection with the aforementioned Consolidated
Financial Statements and Notes thereto included elsewhere herein.

(2) NOTES PAYABLE

The Company has a $6,000,000 note payable to a financial institution that
bears interest at the institution's prime lending rate (8.5% at June 30, 1998)
and is due in November 2002. The note requires monthly payments in the amount of
$33,334 beginning in May 1998. Interest is payable monthly. The note is
collateralized by a first priority lien on all the Company's assets and all of
its outstanding common stock. The Company is also required to maintain tangible
net worth of at least $200,000 and working capital of at least $250,000 on a
quarterly basis. As of December 31, 1997, the Company is out of compliance with
certain covenants related to minimum tangible net worth and capital expenditure
restrictions. The financial institution has agreed to waive the minimum tangible
net worth covenant through June 30, 1998. The financial institution has agreed
to waive, through October 31, 1998, the capital expenditure restriction. In
April 1998, the Company voluntarily prepaid $1 million on the note.

Future fixed principal maturities of these notes payable are as follows for
the years ending December 31, excluding the variable payment:

1998............................................................ $ 266,672
1999............................................................ 872,508
2000............................................................ 400,008
2001............................................................ 400,008
2002............................................................ 4,533,304
---------
$6,472,500
---------
---------

The carrying value of the Company's notes payable approximates fair value.

(3) SUPPLEMENTARY CASH FLOW INFORMATION

The Company acquired certain property for use in operations in December 1997
for cash of $195,388 and a note in the amount of $472,500. A dividend in the
amount of $900,000 was declared by American Title Company in December 1997,
which is reflected as a receivable from subsidiary at December 31, 1997.

S-4

SCHEDULE II

AMERICAN NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
YEAR ENDED DECEMBER 31, 1997

COL. C
------------------------
COL. B ADDITIONS COL. E
----------- ------------------------ COL. D ----------
COL. A BALANCE AT CHARGED TO ----------- BALANCE AT
- ------------------------------------------------ BEGINNING COSTS AND OTHER DEDUCTIONS END OF
DESCRIPTION OF PERIOD EXPENSES (DESCRIBE) (DESCRIBE) PERIOD
- ------------------------------------------------ ----------- ----------- ----------- ----------- ----------

Trade receivables allowance..................... -- 553,039 837,005(2) 289,595(1) 1,100,449
Amortization of intangibles..................... -- 180,870 76,479(2) -- 257,349

- ------------------------

(1) Represents uncollectible accounts written off, change in reserve due to
reevaluation of specific items and change in reserve due to sale of certain
assets.

(2) Balances from July 1, 1997 acquisition of American Title Company and
subsidiaries by American
National Financial, Inc.

S-5

SCHEDULE II

ANFI PREDECESSOR
VALUATION AND QUALIFYING ACCOUNTS
YEAR ENDED DECEMBER 31, 1996 AND SIX MONTHS ENDED JUNE 30, 1997

COL. B COL. C COL. E
COL. ------------ ------------------------- COL. D ---------
A BALANCE CHARGED --------------- BALANCE
- -- AT BEGINNING TO COSTS OTHER DEDUCTIONS AT END
DESCRIPTION OF PERIOD AND EXPENSES (DESCRIBE) (DESCRIBE) OF PERIOD
- -- ------------ ------------ ---------- --------------- ---------

Year
ended
December
31,
1995
Allowance
for
doubtful
accounts... -- 220,358 -- -- --
Year
ended
December
31,
1996
Allowance
for
doubtful
accounts... $ -- 406,323 478,827(1) -- $ 885,150
Accumulated
amortization
of
intangibles.. -- 112,000 -- -- 112,000

Six
months
ended
June
30,
1997
Allowance
for
doubtful
accounts... $885,150 348,512 -- 421,733(2) $ 811,929
Accumulated
amortization
of
intangibles.. $112,000 91,426 -- $ 203,426

- ------------------------

(1) Represents amounts on the August 31, 1996 balance sheet of FNFI divisions
acquired by American Title Company.

(2) Represents uncollectible accounts written off.

S-6

EXHIBIT INDEX

EXHIBIT NO. DESCRIPTION PAGE
- ------------- --------------------------------------------------------------------------------------------- ---------

1.1 Form of Underwriting Agreement.+

1.2 Form of Representative's Warrant Agreement.+

2.1 Stock Purchase Agreement dated January 1, 1997 by and among the Registrant, Fidelity National
Financial, Inc. and American Title Company, together with amendment.+

2.2 Stock Purchase Agreement dated December 31, 1996 by and among American Title Company,
Fidelity National Asset Recovery Services, Inc. and Fidelity National Financial, Inc.+

2.3 Stock Purchase Agreement dated December 31, 1996 by and among American Title Company, Nations
Title Insurance of Arizona, Inc. and Fidelity National Financial, Inc.+

2.4 Stock Purchase Agreement dated March 16, 1998 by and among Fidelity National Title Insurance
Company of New York, National Title Insurance of New York, Inc. and American Title
Company.+

2.5 Stock Purchase Agreement dated August 9, 1997 by and between Pacific Coast Title of Santa
Barbara County and American Title Company.+

2.6 Stock Exchange Agreement dated August 21, 1998 between the Registrant and Fidelity National
Financial, Inc.

3.1 Amended and Restated Articles of Incorporation.+

3.2 Bylaws of the Registrant, as amended.+

4.1 Form of Common Stock Certificate.*

5.1 Opinion of Rutan & Tucker, LLP.

10.1 1998 Stock Incentive Plan, together with form of Nonqualified Stock Option Agreement and form
of Incentive Stock Option Agreement.

10.2 Employment Agreement between the Registrant and Michael C. Lowther.*

10.3 Employment Agreement between the Registrant and Wayne D. Diaz.*

10.4 Employment Agreement between the Registrant and Dennis R. Duffy.*

10.5 Employment Agreement between the Registrant and Barbara Ferguson.*

10.6 Issuing Agency Agreement dated July 1, 1997 between Fidelity National Title Insurance Company
and American Title Company.+

10.7 Issuing Agency Agreement dated August 25, 1997 between Fidelity National Title Insurance
Company and Santa Barbara Title Company.+

10.8 Credit Agreement dated August 7, 1997 between the Registrant and Imperial Bank.+

10.9 Note dated August 7, 1997 of the Registrant in favor of Imperial Bank.+

10.10 Addendum to Note dated August 7, 1997 between the Registrant and Imperial Bank.+

10.11 Standard Sublease dated January 28, 1998 between American Title Company and Fidelity National
Financial, Inc.+

10.12 Form of Indemnification Agreement.*

10.13 Title Plant Lease Agreement dated July 1, 1997 between Fidelity National Title Insurance
Company and American Title Company.

EXHIBIT NO. DESCRIPTION PAGE
- ------------- --------------------------------------------------------------------------------------------- ---------

21 List of Subsidiaries of Registrant.+

23.1 Consent of KPMG Peat Marwick LLP.

23.2 Consent of Rutan & Tucker, LLP (included in the opinion filed as Exhibit 5.1).

24 Power of Attorney+

27 Financial Data Schedule.+

- ------------------------

* To be filed by amendment.

+ Previously filed.