Fidelity National Financial, Inc. [FNF] Filings

10-Q 1 fnf-20210930.htm 10-Q fnf-20210930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)


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

For the quarterly period ended September 30, 2021


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

Commission File Number: 001-32630

FIDELITY NATIONAL FINANCIAL, INC.

(Exact name of registrant as specified in its charter)


Delaware						16-1725106
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

601 Riverside Avenue

Jacksonville, Florida, 32204

(Address of principal executive offices, including zip code)

(904) 854-8100

(Registrant’s telephone number, including area code)

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

Title of Each Class

Trading Symbol

Name of Each Exchange on Which Registered

FNF Common Stock, $0.0001 par value

FNF

New York Stock Exchange

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ or No¨

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


Large Accelerated Filer	☒	Accelerated Filer	☐
Non-accelerated Filer	☐	Smaller reporting Company	☐
		Emerging growth company	☐

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ or No ☒

The number of shares outstanding of the Registrant's common stock as of October 31, 2021 were:

FNF Common Stock 284,531,737

Table of Contents

FORM 10-Q

QUARTERLY REPORT

Quarter Ended September 30, 2021

TABLE OF CONTENTS


			Page

PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements:			2
Condensed Consolidated Balance Sheets (unaudited)			3
Condensed Consolidated Statements of Earnings (unaudited)			4
Condensed Consolidated Statements of Comprehensive Earnings (unaudited)			5
Condensed Consolidated Statements of Equity (unaudited)			6
Condensed Consolidated Statements of Cash Flows (unaudited)			8
Notes to Unaudited Condensed Consolidated Financial Statements			10
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			59
Item 3. Quantitative and Qualitative Disclosures about Market Risk			91
Item 4. Controls and Procedures			91

PART II. OTHER INFORMATION
Item 1. Legal Proceedings			92

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			92


Item 6. Exhibits			92
Signatures			93

Table of Contents

PART I: FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

Table of Contents

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in millions, except share data)


	September 30, 2021		December 31, 2020
	(Unaudited)
ASSETS
Investments:
Fixed maturity securities available for sale, at fair value, at September 30, 2021 and December 31, 2020, net of allowance for credit losses of $8 and $19, respectively, and includes pledged fixed maturity securities of $458 and $455, respectively, related to secured trust deposits	$	30,435	$	27,587
Preferred securities, at fair value	1,202		1,341
Equity securities, at fair value	1,393		995
Derivative investments	581		548
Mortgage loans, net of allowance for credit losses of $33 and $39 at September 30, 2021 and December 31, 2020, respectively	3,484		2,031
Investments in unconsolidated affiliates	2,160		1,294
Other long-term investments	492		482
Short-term investments, at September 30, 2021 and December 31, 2020 includes pledged short-term investments of $3 and $1, respectively, related to secured trust deposits	527		769
Total investments	40,274		35,047
Cash and cash equivalents, at September 30, 2021 and December 31, 2020 includes $694 and $270, respectively, of pledged cash related to secured trust deposits	5,148		2,719
Trade and notes receivables, net of allowance of $32 and $28 at September 30, 2021 and December 31, 2020, respectively	523		437


Reinsurance recoverable, net of allowance for credit losses of $19 and $21 at September 30, 2021 and December 31, 2020, respectively	3,518		3,211
Goodwill	4,515		4,495
Prepaid expenses and other assets	1,169		997
Lease assets	373		374
Other intangible assets, net	2,400		2,264
Title plants	400		404
Property and equipment, net	186		180

Assets of discontinued operations	—		327
Total assets	$	58,506	$	50,455
LIABILITIES AND EQUITY
Liabilities:
Contractholder funds	$	33,988	$	28,718
Future policy benefits	3,985		4,010
Accounts payable and accrued liabilities	2,969		2,402
Notes payable	3,097		2,662
Reserve for title claim losses	1,734		1,623
Funds withheld for reinsurance liabilities	1,508		806
Secured trust deposits	1,147		711
Lease liabilities	409		414
Income taxes payable	18		56
Deferred tax liability	277		300
Liabilities of discontinued operations	—		361
Total liabilities	49,132		42,063


Equity:

FNF common stock, $0.0001 par value; authorized 600,000,000 shares as of September 30, 2021 and December 31, 2020; outstanding of 284,743,161 and 291,448,627 as of September 30, 2021 and December 31, 2020, respectively, and issued of 324,064,003 and 322,622,948 as of September 30, 2021 and December 31, 2020, respectively	—		—

Preferred stock, $0.0001 par value; authorized 50,000,000 shares; issued and outstanding, none	—		—
Additional paid-in capital	5,790		5,720
Retained earnings	3,961		2,394
Accumulated other comprehensive earnings	1,005		1,304
Less: Treasury stock, 39,320,842 shares and 31,174,321 shares as of September 30, 2021 and December 31, 2020, respectively, at cost	(1,424)		(1,067)
Total Fidelity National Financial, Inc. shareholders’ equity	9,332		8,351
Non-controlling interests	42		41
Total equity	9,374		8,392
Total liabilities and equity	$	58,506	$	50,455

See Notes to Condensed Consolidated Financial Statements

Table of Contents

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Dollars in millions, except per share data)


	Three months ended September 30,				Nine months ended September 30,
	2021		2020		2021		2020
	(Unaudited)				(Unaudited)
Revenues:
Direct title insurance premiums	$	896	$	733	$	2,546	$	1,854
Agency title insurance premiums	1,318		981		3,632		2,497
Escrow, title-related and other fees	1,324		853		3,123		2,201

Interest and investment income	508		336		1,424		541
Recognized gains and losses, net	(154)		73		121		(85)
Total revenues	3,892		2,976		10,846		7,008
Expenses:

Personnel costs	894		782		2,596		2,088
Agent commissions	1,010		749		2,787		1,907

Other operating expenses	498		449		1,432		1,306
Benefits and other changes in policy reserves	185		251		734		406
Depreciation and amortization	252		100		540		189
Provision for title claim losses	100		77		278		196
Interest expense	27		29		83		62
Total expenses	2,966		2,437		8,450		6,154
Earnings from continuing operations before income taxes and equity in earnings of unconsolidated affiliates	926		539		2,396		854
Income tax expense	213		133		555		194
Earnings before equity in earnings of unconsolidated affiliates	713		406		1,841		660
Equity in earnings of unconsolidated affiliates	27		7		54		9
Net earnings from continuing operations	740		413		1,895		669
Net (loss) earnings from discontinued operations, net of tax	(3)		(28)		8		(23)
Net earnings	737		385		1,903		646
Less: Net earnings attributable to non-controlling interests	5		7		14		20
Net earnings attributable to Fidelity National Financial, Inc. common shareholders	$	732	$	378	$	1,889	$	626




Earnings per share
Basic
Net earnings per share from continuing operations attributable to common shareholders	$	2.60	$	1.40	$	6.57	$	2.32
Net (loss) earnings per share from discontinued operations attributable to common shareholders	(0.01)		(0.10)		0.03		(0.08)
Net earnings per share attributable to common shareholders, basic	$	2.59	$	1.30	$	6.60	$	2.24
Diluted
Net earnings per share from continuing operations attributable to common shareholders	$	2.58	$	1.39	$	6.53	$	2.29
Net (loss) earnings per share from discontinued operations attributable to common shareholders	(0.01)		(0.10)		0.03		(0.08)
Net earnings per share attributable to common shareholders, diluted	$	2.57	$	1.29	$	6.56	$	2.21

Weighted average common shares outstanding - basic	283		291		286		280
Weighted average common shares outstanding - diluted	285		293		288		283

See Notes to Condensed Consolidated Financial Statements

Table of Contents

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS

(In millions)


	Three months ended September 30,				Nine months ended September 30,

	2021		2020		2021		2020
	(Unaudited)				(Unaudited)
Net earnings	$	737	$	385	$	1,903	$	646

Other comprehensive earnings (loss):
Unrealized gain (loss) on investments and other financial instruments, net of adjustments to intangible assets and unearned revenue (excluding investments in unconsolidated affiliates) (1)	(65)		303		(232)		683
Unrealized gain (loss) on investments in unconsolidated affiliates (2)	8		(2)		18		5
Unrealized (loss) gain on foreign currency translation (3)	(5)		5		(6)		1
Reclassification adjustments for change in unrealized gains and losses included in net earnings (4)	(30)		(11)		(82)		(11)
Change in reinsurance liabilities held at fair value resulting from a change in the instrument-specific credit risk (5)	3		(4)		3		(1)
Other comprehensive (loss) earnings	(89)		291		(299)		677
Comprehensive earnings	648		676		1,604		1,323
Less: Comprehensive earnings attributable to non-controlling interests	5		7		14		20
Comprehensive earnings attributable to Fidelity National Financial, Inc. common shareholders	$	643	$	669	$	1,590	$	1,303

_______________________________________

(1)Net of income tax (benefit) expense of $(18) million and $81 million for the three-month periods ended September 30, 2021 and 2020, respectively, and $(64) million and $183 million for the nine-month periods ended September 30, 2021 and 2020, respectively.

(2)Net of income tax expense (benefit) of $3 million and $(1) million for the three-month periods ended September 30, 2021 and 2020, respectively, and $5 million and $1 million for the nine-month periods ended September 30, 2021 and 2020, respectively.

(3)Net of income tax (benefit) expense of less than $(1) million and $2 million for the three-month periods ended September 30, 2021 and 2020, respectively and less than $1 million for the nine-month periods ended September 30, 2021 and 2020.

(4)Net of income tax expense of $9 million and $3 million for the three-month periods ended September 30, 2021 and 2020, respectively, and $22 million and $3 million for the nine-month periods ended September 30, 2021 and 2020, respectively.

(5)Net of income tax expense (benefit) of $1 million and $(1) million for the three-month periods ended September 30, 2021 and 2020, respectively, and $1 million and $(1) million for the nine-month periods ended September 30, 2021 and 2020, respectively.

See Notes to Condensed Consolidated Financial Statements

Table of Contents

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(In millions, except per share data)

(Unaudited)


		Fidelity National Financial, Inc. Common Shareholders
							Accumulated
	FNF						Other									Redeemable
	Common				Additional		Comprehensive		Treasury				Non-			Non-
	Stock				Paid-in	Retained	Earnings		Stock				controlling	Total		controlling
		Shares	$				Capital		Earnings		(Loss)		Shares	$		Interests		Equity		Interests
Balance, June 30, 2020		318	$	—			$	5,431	$	1,417	$	429	27	$	(919)	$	(9)	$	6,349	$	344
Redemption of Servicelink non-controlling interest		—	—				158		—		—		—	—		47		$	205	(344)
F&G Acquisition		1	—				32		—		—		—	—		—		32
Exercise of stock options		1	—				11		—		—		—	—		—		11		—



Change in reinsurance liabilities held at fair value resulting from a change in instrument-specific credit risk		—	—				—		—		(4)		—

Fidelity National Financial, Inc. [FNF] Filings
10-Q	[2021-11-05]
10-Q	[2021-08-06]
10-Q	[2021-05-07]
10-K	[2021-03-01]
10-Q	[2020-11-06]
10-Q	[2020-08-10]
10-Q	[2020-04-28]
10-K	[2020-02-14]
10-Q	[2019-10-30]
10-Q	[2019-07-23]
10-Q	[2019-04-26]
10-K	[2019-02-19]
10-Q	[2018-10-26]
10-Q	[2018-08-06]
10-Q	[2018-05-03]
10-K	[2018-02-23]
10-Q	[2017-11-02]
10-Q	[2017-08-01]
10-Q	[2017-05-04]
10-K	[2017-02-27]
10-Q	[2016-11-03]
10-Q	[2016-08-09]
10-Q	[2016-05-02]
10-K	[2016-02-23]
10-Q	[2015-10-29]
10-Q	[2015-07-30]
10-Q	[2015-05-06]
10-K	[2015-03-02]
10-Q	[2014-11-10]
10-Q	[2014-08-01]
10-Q	[2014-05-08]
10-K	[2014-02-28]
10-Q	[2013-11-07]
10-Q	[2013-08-07]
10-Q	[2013-05-01]
10-K	[2013-02-27]
10-Q	[2012-11-08]
10-Q	[2012-07-27]
10-Q	[2012-04-27]
10-K	[2012-02-23]