Fidelity National Financial, Inc. [FNF] Filings

10-Q 1 fnf-20220930.htm 10-Q fnf-20220930

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, 2022


☐			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, 2022 were:

FNF Common Stock 272,132,047

Table of Contents

FORM 10-Q

QUARTERLY REPORT

Quarter Ended September 30, 2022

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			9
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			51
Item 3. Quantitative and Qualitative Disclosures about Market Risk			83
Item 4. Controls and Procedures			84

PART II. OTHER INFORMATION
Item 1. Legal Proceedings			85
Item 1A. Risk Factors			86
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			85


Item 6. Exhibits			85
Signatures			86

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, 2022		December 31, 2021
	(Unaudited)
ASSETS
Investments:
Fixed maturity securities available for sale, at fair value, at September 30, 2022 and December 31, 2021, at an amortized cost of $36,277 and $30,705, respectively, net of allowance for credit losses of $22 and $8, respectively, and includes pledged fixed maturity securities of $459 and $460, respectively, related to secured trust deposits	$	31,321	$	31,990
Preferred securities, at fair value	1,134		1,401
Equity securities, at fair value	704		1,263
Derivative investments	108		816
Mortgage loans, net of allowance for credit losses of $38 and $31 at September 30, 2022 and December 31, 2021, respectively	4,533		3,749
Investments in unconsolidated affiliates	2,986		2,486
Other long-term investments	648		579
Short-term investments, at September 30, 2022 and December 31, 2021 includes pledged short-term investments of $2 and $1, respectively, related to secured trust deposits	1,386		491
Total investments	42,820		42,775
Cash and cash equivalents, at September 30, 2022 and December 31, 2021 includes $423 and $480, respectively, of pledged cash related to secured trust deposits	2,474		4,360
Trade and notes receivables, net of allowance for credit losses of $34 and $32 at September 30, 2022 and December 31, 2021, respectively	530		557


Reinsurance recoverable, net of allowance for credit losses of $19 and $20 at September 30, 2022 and December 31, 2021, respectively	4,827		3,738
Goodwill	4,609		4,539
Prepaid expenses and other assets	2,069		1,203
Lease assets	397		376
Other intangible assets, net	3,838		2,557
Title plants	418		400
Property and equipment, net	182		185


Total assets	$	62,164	$	60,690
LIABILITIES AND EQUITY
Liabilities:
Contractholder funds	$	39,127	$	35,525
Future policy benefits	5,734		4,732
Accounts payable and accrued liabilities	2,438		2,696
Notes payable	2,693		3,096
Reserve for title claim losses	1,853		1,883
Funds withheld for reinsurance liabilities	2,900		1,676
Secured trust deposits	1,043		934
Lease liabilities	435		414
Income taxes payable	63		72
Deferred tax liability	79		205

Total liabilities	56,365		51,233


Equity:

FNF common stock, $0.0001 par value; authorized 600,000,000 shares as of September 30, 2022 and December 31, 2021; outstanding of 272,626,430 and 283,778,574 as of September 30, 2022 and December 31, 2021, respectively, and issued of 326,711,963 and 325,486,429 as of September 30, 2022 and December 31, 2021, respectively	—		—

Preferred stock, $0.0001 par value; authorized 50,000,000 shares; issued and outstanding, none	—		—
Additional paid-in capital	5,885		5,811
Retained earnings	5,069		4,369
Accumulated other comprehensive (loss) earnings	(3,186)		779
Less: Treasury stock, 54,085,533 shares and 41,707,855 shares as of September 30, 2022 and December 31, 2021, respectively, at cost	(2,056)		(1,545)
Total Fidelity National Financial, Inc. shareholders’ equity	5,712		9,414
Non-controlling interests	87		43
Total equity	5,799		9,457
Total liabilities and equity	$	62,164	$	60,690

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,
	2022		2021		2022		2021
	(Unaudited)				(Unaudited)
Revenues:
Direct title insurance premiums	$	688	$	896	$	2,314	$	2,546
Agency title insurance premiums	966		1,318		3,268		3,632
Escrow, title-related and other fees	1,372		1,324		3,444		3,123

Interest and investment income	411		508		1,352		1,424
Recognized gains and losses, net	(230)		(154)		(1,375)		121
Total revenues	3,207		3,892		9,003		10,846
Expenses:

Personnel costs	796		894		2,458		2,596
Agent commissions	747		1,010		2,521		2,787

Other operating expenses	430		498		1,329		1,432
Benefits and other changes in policy reserves	592		185		382		734
Depreciation and amortization	131		252		474		540
Provision for title claim losses	74		100		251		278
Interest expense	28		27		89		83
Total expenses	2,798		2,966		7,504		8,450
Earnings from continuing operations before income taxes and equity in earnings of unconsolidated affiliates	409		926		1,499		2,396
Income tax expense	115		213		434		555
Earnings before equity in earnings of unconsolidated affiliates	294		713		1,065		1,841
Equity in earnings of unconsolidated affiliates	—		27		16		54
Net earnings from continuing operations	294		740		1,081		1,895
Net (loss) earnings from discontinued operations, net of tax	—		(3)		—		8
Net earnings	294		737		1,081		1,903
Less: Net earnings attributable to non-controlling interests	5		5		13		14
Net earnings attributable to Fidelity National Financial, Inc. common shareholders	$	289	$	732	$	1,068	$	1,889




Earnings per share
Basic
Net earnings per share from continuing operations attributable to common shareholders	$	1.06	$	2.60	$	3.86	$	6.57
Net (loss) earnings per share from discontinued operations attributable to common shareholders	—		(0.01)		—		0.03
Net earnings per share attributable to common shareholders, basic	$	1.06	$	2.59	$	3.86	$	6.60
Diluted
Net earnings per share from continuing operations attributable to common shareholders	$	1.05	$	2.58	$	3.83	$	6.53
Net (loss) earnings per share from discontinued operations attributable to common shareholders	—		(0.01)		—		0.03
Net earnings per share attributable to common shareholders, diluted	$	1.05	$	2.57	$	3.83	$	6.56

Weighted average common shares outstanding - basic	273		283		277		286
Weighted average common shares outstanding - diluted	275		285		279		288

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,

	2022		2021		2022		2021
	(Unaudited)				(Unaudited)
Net earnings	$	294	$	737	$	1,081	$	1,903

Other comprehensive (loss) earnings:
Unrealized loss on investments and other financial instruments, net of adjustments to intangible assets and unearned revenue (excluding investments in unconsolidated affiliates) (1)	(1,028)		(65)		(4,066)		(232)
Unrealized gain on investments in unconsolidated affiliates (2)	1		8		8		18
Unrealized loss on foreign currency translation (3)	(17)		(5)		(29)		(6)
Reclassification adjustments for change in unrealized gains and losses included in net earnings (4)	48		(30)		122		(82)
Change in reinsurance liabilities held at fair value resulting from a change in the instrument-specific credit risk (5)	—		3		—		3
Other comprehensive loss	(996)		(89)		(3,965)		(299)
Comprehensive (loss) earnings	(702)		648		(2,884)		1,604
Less: Comprehensive earnings attributable to non-controlling interests	5		5		13		14
Comprehensive (loss) earnings attributable to Fidelity National Financial, Inc. common shareholders	$	(707)	$	643	$	(2,897)	$	1,590

_______________________________________

(1)Net of income tax (benefit) expense of $(291) million and $(18) million for the three months ended September 30, 2022 and 2021, respectively, and $(981) million and $(64) million for the nine month periods ended September 30, 2022 and 2021, respectively.

(2)Net of income tax expense of $1 million and $3 million for the three months ended September 30, 2022 and 2021, respectively, and $1 million and $5 million for the nine month periods ended September 30, 2022 and 2021, respectively.

(3)Net of income tax (benefit) expense of $(4) million and $(1) million for the three months ended September 30, 2022 and 2021, respectively, and $(6) million and $1 million for the nine months ended September 30, 2022 and 2021, respectively.

(4)Net of income tax (benefit) expense of $(12) million and $9 million for the three-month periods September 30, 2022 and 2021, respectively, and $(32) million and $22 million for the nine month periods ended September 30, 2022 and 2021, respectively.

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

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
	Common				Additional		Comprehensive			Treasury				Non-
	Stock				Paid-in	Retained	Earnings			Stock				controlling	Total
		Shares	$				Capital			Earnings		(Loss)		Shares	$		Interests		Equity
Balance, June 30, 2021		324	$	—			$	5,771		$	3,343	$	1,094	38	$	(1,362)	$	42	$	8,888


Exercise of stock options		—	—				9			—		—		—	—		—		9


Treasury stock repurchased		—	—				—			—		—		1	(62)		—		(62)
Change in reinsurance liabilities held at fair value resulting from a change in instrument-specific credit risk		—	—				—			—		3		—	—		—		3
Other comprehensive earnings - unrealized loss on investments and other financial instruments		—	—				—			—		(65)		—	—		—		(65)
Other comprehensive earnings - unrealized gain on investments in unconsolidated affiliates		—	—				—		<

Fidelity National Financial, Inc. [FNF] Filings
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10-Q	[2022-05-10]
10-K	[2022-02-25]
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]