United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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. ☐
| Item 2.02. | Results of Operations and Financial Condition | |||||||
On May 10, 2022 , Fidelity National Financial, Inc. (the "Company", "FNF") issued an earnings release announcing its financial results for the First Quarter of 2022. A copy of the FNF earnings release is attached as Exhibit 99.1 to this Current Report on Form 8-K. In addition, the Company is furnishing the quarterly financial supplement for its F&G operating segment as Exhibit 99.2 to this Current Report on Form 8-K.
The following information, including the Exhibits referenced in this Item 2.02, is being furnished pursuant to this Item 2.02 and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
| Item 8.01. | Other Events | |||||||
On March 16, 2022, FNF issued a press release announcing its intention to dividend to FNF shareholders, on a pro rata basis, 15% of the common stock of its wholly-owned subsidiary, F&G Annuities & Life, Inc. (“F&G”) (such distribution, the “Partial Spin-off”). F&G and FNF have confirmed the reservation by F&G of the ticker symbol “FG” with the New York Stock Exchange to be effective upon commencement of trading of F&G’s common stock in connection with the Partial Spin-off. FNF will continue to trade under the ticker symbol “FNF” on the New York Stock Exchange following the Partial Spin-off.
| Item 9.01. | Financial Statements and Exhibits | |||||||
(d) Exhibits
| Exhibit | Description | |||||||||||||
| 99.1 | ||||||||||||||
| 99.2 | ||||||||||||||
| 101 | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document. | |||||||||||||
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Fidelity National Financial, Inc. | |||||||||||||||||
| Date: | May 10, 2022 | By: | /s/ Anthony J. Park | ||||||||||||||
| Name: | Anthony J. Park | ||||||||||||||||
| Title: | Chief Financial Officer | ||||||||||||||||
FNF Reports First Quarter 2022 Financial Results
Jacksonville, Fla. – (May 10, 2022) - Fidelity National Financial, Inc. (NYSE:FNF) (the Company), a leading provider of title insurance and transaction services to the real estate and mortgage industries and a leading provider of insurance solutions serving retail annuity and life customers and institutional clients through FNF’s wholly-owned subsidiary, F&G, today reported financial results for the first quarter ended March 31, 2022.
Net earnings attributable to common shareholders for the first quarter of $397 million, or $1.40 per diluted share (per share), compared to $605 million, or $2.08 per share, for the first quarter of 2021. Net earnings attributable to common shareholders for the first quarter of 2022 includes $28 million of net favorable mark-to-market effects and $19 million of other unfavorable items; all of which are excluded from adjusted net earnings attributable to common shareholders.
Adjusted net earnings attributable to common shareholders (adjusted net earnings) for the first quarter of $388 million, or $1.37 per share, compared to $455 million, or $1.56 per share, for the first quarter of 2021. The decrease from the prior year quarter was primarily driven by Title’s significant decrease in refinance volume relative to robust levels seen early last year; partially offset by higher average fee per file, strong commercial orders closed and sustained levels of residential purchase orders closed. F&G’s adjusted net earnings for the first quarter of 2022 were $82 million, including $16 million of net unfavorable items, compared to $78 million, including $12 million of net favorable items, for the first quarter of 2021.
Company Highlights
•Stable Title Revenue: For the Title segment, total revenue of $2.4 billion, compared to $2.5 billion in total revenue in the first quarter of 2021. Total revenue, excluding recognized gains and losses, of $2.6 billion, in line with the first quarter of 2021
•Growth strategy drives strong sales for F&G: Total sales of $2.6 billion for the first quarter, a 57% increase over first quarter 2021 and an 18% increase over fourth quarter 2021, due to continued expansion in new channels
•Partial spin-off of F&G announced to unlock the value of both businesses: On March 16, 2022, FNF announced a planned transaction to distribute 15% ownership of F&G to FNF shareholders on a pro rata basis; FNF will retain control of F&G through an 85% ownership stake and remains committed to F&G’s growth and long-term success. The transaction is expected to close in late third quarter or early fourth quarter of 2022, subject to customary approvals
•Ample deployable capital supports shareholder value: FNF has repurchased 2.75 million shares for a total $134 million, at an average price of $48.68 per share, in the first quarter and paid common dividends at $0.44 per share for a total $124 million. FNF ended the first quarter with $1.5 billion in cash and short-term liquid investments at the holding company
William P. Foley, II, commented, “We had great performance in the first quarter, despite the economic and geopolitical challenges that persist, as we increased total revenue by 2% to $3.2 billion from the prior year. Our Title business was boosted by strong demand in the commercial market and home price appreciation in the residential purchase market, which offset the continued decline in refinance volumes in the rising interest rate environment. F&G continues to execute well on its diversified growth strategy and delivered strong sales in the first quarter which, in turn, drives growth in assets under management and profitability, particularly in a rising interest rate environment. F&G provides our company with a stable and countercyclical source of earnings that is poised to benefit as interest rates rise.”
Mr. Foley concluded, “We also remain committed to creating value for our shareholders and believe that our plan to dividend 15% ownership of F&G to FNF shareholders in the second half of this year will help to unlock the market value of both industry leading businesses. F&G has exceeded expectations since we closed on the acquisition in June of 2020 and, by retaining 85% ownership of F&G, we will continue to benefit from their growth which positions F&G to provide strong cash flows and earnings to FNF over the coming years. Looking forward, we expect to create shareholder value through continued investment in our business and returning capital to shareholders, as well as evaluating strategically aligned acquisitions, to maintain attractive returns for all of our stakeholders. With an ample capital position at our holding company, we deployed $258 million through our quarterly dividend and share repurchase program in the first quarter. This is ahead of pace with the $907 million of capital returned to our shareholders during full year 2021.”
Summary Financial Results
| (In millions, except per share data) | Three Months Ended | ||||||||||
| (in millions, except per share data) | March 31, 2022 | March 31, 2021 | |||||||||
| Total revenue | $ | 3,165 | $ | 3,100 | |||||||
| F&G total sales1 | $ | 2,589 | $ | 1,654 | |||||||
| Total assets | $ | 60,857 | $ | 51,489 | |||||||
| Adjusted pre-tax title margin | 17.1 | % | 19.9 | % | |||||||
| Net earnings attributable to common shareholders | $ | 397 | $ | 605 | |||||||
| Net earnings per share attributable to common shareholders | $ | 1.40 | $ | 2.08 | |||||||
Adjusted net earnings1 | $ | 388 | $ | 455 | |||||||
Adjusted net earnings per share1 | $ | 1.37 | $ | 1.56 | |||||||
| Weighted average common diluted shares | 283 | 291 | |||||||||
| Total common shares outstanding | 281 | 289 | |||||||||
Segment Financial Results
Title
This segment consists of the operations of the Company’s title insurance underwriters and related businesses, which provide core title insurance and escrow and other title-related services including loan sub-servicing, valuations, default services, and home warranty products.
First Quarter 2022 Highlights
Mike Nolan, Chief Executive Officer, said, “I am pleased with the stability of our Title business, as we delivered adjusted pre-tax title earnings of $437 million and an adjusted pre-tax title margin of 17.1% in the first quarter, despite significant uncertainty and volatility in the macro environment. Strength in residential purchase and commercial revenue helped to buffer the ongoing contraction in refinance volumes, which hold a significantly lower fee per file. Looking ahead in 2022, we believe that we are well-positioned to navigate the effects of a rising interest rate environment, with scale advantage as the nationwide market leader, efficiencies from our innovative technology enabled platform, and a disciplined operating strategy and proven track record of quickly adjusting our operating model for significant fluctuations in opened and closed orders.”
•Total revenue of $2.4 billion, compared to $2.5 billion in total revenue in the first quarter of 2021
•Total revenue, excluding recognized gains and losses, of $2.6 billion, in line with the first quarter of 2021
◦Direct title premiums of $767 million, a 3% increase over first quarter of 2021
◦Agency title premiums of $1.1 billion, a 4% increase over first quarter of 2021
1 See definition of non-GAAP measures below
◦Commercial revenue of $374 million, a 46% increase over first quarter of 2021
•Purchase orders opened decreased 1% on a daily basis and purchase orders closed decreased 1% on a daily basis from the first quarter of 2021
•Refinance orders opened decreased 57% on a daily basis and refinance orders closed decreased 58% on a daily basis from first quarter of 2021
•Commercial orders opened increased 6% and commercial orders closed increased 7% over first quarter of 2021
•Total fee per file of $2,891 for the first quarter, a 49% increase over first quarter of 2021
First Quarter 2022 Financial Results
•Pre-tax title margin of 10.4% and industry leading adjusted pre-tax title margin of 17.1% for the first quarter of 2022, compared to 17.4% and 19.9%, respectively, in the first quarter of 2021
•Pre-tax earnings from continuing operations in Title for the first quarter of $249 million, compared to $439 million for the first quarter of 2021
•Adjusted pre-tax earnings in Title for the first quarter of $437 million compared to $512 million for the first quarter of 2021. The decrease from the prior year quarter was primarily driven by the significant decrease in the volume of refinance orders closed relative to the robust levels seen last year; partially offset by the higher average fee per file reflective of the current mix of business, continued strength in commercial orders closed, and sustained levels of residential purchase orders closed
F&G
This segment consists of operations of FNF’s wholly-owned subsidiary F&G, a leading provider of insurance solutions serving retail annuity and life customers and funding agreement and pension risk transfer institutional clients.
First Quarter 2022
Chris Blunt, President and Chief Executive Officer of F&G, commented, “F&G is off to a strong start in 2022, as demonstrated by our first quarter results. We generated strong sales of $2.6 billion which, in turn, drove our assets under management to $38.6 billion. In the retail channels, we have seen record levels of submitted annuity premium in March and April, following an inflection point from pricing actions taken in response to the macro environment in the fourth quarter which carried into early first quarter. Momentum continues in our institutional channels and we closed our largest pension risk transfer transaction to-date in the first quarter, with over $500 million of premium transferred.”
Regarding the recently announced transaction to distribute 15% ownership of F&G to FNF shareholders, Mr. Blunt said, “We are making progress toward a targeted closing in late third quarter or early fourth quarter of 2022. Overall, we are well positioned for future growth opportunities and view the transition to being a publicly traded company as a vote of confidence for our business.”
•Total sales of $2.6 billion for the first quarter, an increase of 57% over the first quarter 2021 and an increase of 18% over fourth quarter 2021; reflects successful execution of F&G’s diversified growth strategy and a disciplined approach to pricing
•Retail sales of $1.5 billion for the first quarter, in line with near record sales in the first quarter 2021 and steady growth of 6% over fourth quarter 2021
•Institutional sales of $1.1 billion for the first quarter, includes a $527 million pension risk transfer transaction and $600 million of funding agreement issuances, compared to $125 million funding agreement issuance for the first quarter 2021; reflects expansion in new markets
•Average assets under management (AAUM) of $37.5 billion for the first quarter, an increase of 29% from $29.0 billion in the first quarter 2021, driven by net new business asset flows. Ending assets under management were $38.6 billion as of March 31, 2022
•Net earnings attributable to common shareholders for F&G of $236 million for the first quarter, compared to $289 million for the first quarter of 2021
•Adjusted net earnings for F&G of $82 million for the first quarter, compared to $78 million for the first quarter of 2021. Adjusted net earnings excluding notable items were $98 million in the first quarter, an increase of $32 million or 48% compared to $66 million in the prior year quarter, primarily driven by growth in assets under management
◦Net unfavorable items in first quarter of 2022 were $16 million, including $38 million of income tax expense due to a valuation allowance recorded against deferred tax assets related to the past sale of discontinued operations, partially offset by $22 million favorable items primarily comprised of gains on collateralized loan obligation (CLO) redemptions
◦Net favorable items in first quarter of 2021 were $12 million, primarily as a result of favorable mortality and gains on CLO redemptions
Conference Call
We will host a call with investors and analysts to discuss FNF’s first quarter 2022 results on Wednesday, May 11, 2022, beginning at 11:00 a.m. Eastern Time. A live webcast of the conference call will be available on the Events and Multimedia page of the FNF Investor Relations website at fnf.com. The conference call replay will be available via webcast through the FNF Investor Relations website at fnf.com. The telephone replay will be available from 2:00 p.m. Eastern Time on May 11, 2022, through May 18, 2022, by dialing 1-844-512-2921 (USA) or 1-412-317-6671 (International). The access code will be 13728494. An expanded quarterly financial supplement providing F&G segment results is available on the FNF Investor Relations website.
About Fidelity National Financial, Inc.
Fidelity National Financial, Inc. (NYSE: FNF) is a leading provider of title insurance and transaction services to the real estate and mortgage industries. FNF is the nation’s largest title insurance company through its title insurance underwriters - Fidelity National Title, Chicago Title, Commonwealth Land Title, Alamo Title and National Title of New York - that collectively issue more title insurance policies than any other title company in the United States. More information about FNF can be found at fnf.com.
About F&G
F&G is part of the FNF family of companies. F&G is committed to helping Americans turn their aspirations into reality. F&G is a leading provider of insurance solutions serving retail annuity and life customers and institutional clients and is headquartered in Des Moines, Iowa. For more information, please visit fglife.com.
Use of Non-GAAP Financial Information
Generally Accepted Accounting Principles (GAAP) is the term used to refer to the standard framework of guidelines for financial accounting. GAAP includes the standards, conventions, and rules accountants follow in recording and summarizing transactions and in the preparation of financial statements. In addition to reporting financial results in accordance with GAAP, this earnings release includes non-GAAP financial measures, which the Company believes are useful to help investors better understand its financial performance, competitive position and prospects for the future. These non-GAAP measures include adjusted net earnings per share, adjusted pre-tax title earnings, adjusted pre-tax title earnings as a percentage of adjusted title revenue (adjusted pre-tax title margin), adjusted net earnings attributable to common shareholders (adjusted net earnings), net investment spread, assets under management (AUM), average assets under management (AAUM) and sales.
Management believes these non-GAAP financial measures may be useful in certain instances to provide additional meaningful comparisons between current results and results in prior operating periods. Our non-GAAP measures may not be comparable to similarly titled measures of other organizations because other organizations may not calculate such non-GAAP measures in the same manner as we do.
The presentation of this financial information is not intended to be considered in isolation of or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. By disclosing these non-GAAP financial measures, FNF believes it offers investors a greater understanding of, and an enhanced level of transparency into, the means by which the Company’s management operates the Company.
Any non-GAAP measures should be considered in context with the GAAP financial presentation and should not be considered in isolation or as a substitute for GAAP net earnings, net earnings attributable to common shareholders, net earnings per share, or any other measures derived in accordance with GAAP as measures of operating performance or liquidity. Further, FNF's non-GAAP measures may be calculated differently from similarly titled
measures of other companies. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are provided below.
Forward-Looking Statements and Risk Factors
This press release contains forward-looking statements that involve a number of risks and uncertainties. Statements that are not historical facts, including statements regarding our expectations, hopes, intentions or strategies regarding the future are forward-looking statements. Forward-looking statements are based on management's beliefs, as well as assumptions made by, and information currently available to, management. Because such statements are based on expectations as to future financial and operating results and are not statements of fact, actual results may differ materially from those projected. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. The risks and uncertainties which forward-looking statements are subject to include, but are not limited to: the potential impact of the consummation of the F&G transaction on relationships, including with employees, suppliers, customers and competitors; changes in general economic, business, political and COVID-19 conditions, including changes in the financial markets; weakness or adverse changes in the level of real estate activity, which may be caused by, among other things, high or increasing interest rates, a limited supply of mortgage funding or a weak U. S. economy; our potential inability to find suitable acquisition candidates; our dependence on distributions from our title insurance underwriters as a main source of cash flow; significant competition that F&G and our operating subsidiaries face; compliance with extensive government regulation of our operating subsidiaries; and other risks detailed in the “Statement Regarding Forward-Looking Information,” “Risk Factors” and other sections of FNF's Form 10-K and other filings with the Securities and Exchange Commission (SEC).
FNF-E
SOURCE: Fidelity National Financial, Inc.
CONTACT:
Lisa Foxworthy-Parker
SVP of Investor & External Relations
Investors@fnf.com
515.330.3307
FIDELITY NATIONAL FINANCIAL, INC.
FIRST QUARTER SEGMENT INFORMATION
(In millions, except order information in thousands)
(Unaudited)
| Consolidated | Title | F&G | Corporate and Other | |||||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||||||||
| March 31, 2022 | ||||||||||||||||||||||||||
| Direct title premiums | $ | 767 | $ | 767 | $ | — | $ | — | ||||||||||||||||||
| Agency title premiums | 1,099 | 1,099 | — | — | ||||||||||||||||||||||
| Escrow, title related and other fees | 1,290 | 665 | 594 | 31 | ||||||||||||||||||||||
| Total title and escrow | 3,156 | 2,531 | 594 | 31 | ||||||||||||||||||||||
| Interest and investment income | 478 | 27 | 451 | — | ||||||||||||||||||||||
| Recognized gains and losses, net | (469) | (175) | (297) | 3 | ||||||||||||||||||||||
| Total revenue | 3,165 | 2,383 | 748 | 34 | ||||||||||||||||||||||
| Personnel costs | 823 | 776 | 30 | 17 | ||||||||||||||||||||||
| Agent commissions | 844 | 844 | — | — | ||||||||||||||||||||||
| Other operating expenses | 442 | 397 | 18 | 27 | ||||||||||||||||||||||
| Benefits & other policy reserve changes | 208 | — | 208 | — | ||||||||||||||||||||||
| Depreciation and amortization | 182 | 33 | 143 | 6 | ||||||||||||||||||||||
| Provision for title claim losses | 84 | 84 | — | — | ||||||||||||||||||||||
| Interest expense | 30 | — | 8 | 22 | ||||||||||||||||||||||
| Total expenses | 2,613 | 2,134 | 407 | 72 | ||||||||||||||||||||||
| Pre-tax earnings (loss) from continuing operations | $ | 552 | $ | 249 | $ | 341 | $ | (38) | ||||||||||||||||||
| Income tax expense (benefit) | 155 | 57 | 105 | (7) | ||||||||||||||||||||||
| Earnings (loss) from equity investments | 2 | 2 | — | — | ||||||||||||||||||||||
| Earnings (loss) from discontinued operations, net of tax | — | — | — | — | ||||||||||||||||||||||
| Non-controlling interests | 2 | 3 | — | (1) | ||||||||||||||||||||||
| Net earnings (loss) attributable to common shareholders | $ | 397 | $ | 191 | $ | 236 | $ | (30) | ||||||||||||||||||
| EPS from continuing operations attributable to common shareholders - basic | $ | 1.41 | ||||||||||||||||||||||||
| EPS from discontinued operations attributable to common shareholders - basic | — | |||||||||||||||||||||||||
| EPS attributable to common shareholders - basic | $ | 1.41 | ||||||||||||||||||||||||
| EPS from continuing operations attributable to common shareholders - diluted | $ | 1.40 | ||||||||||||||||||||||||
| EPS from discontinued operations attributable to common shareholders - diluted | — | |||||||||||||||||||||||||
| EPS attributable to common shareholders - diluted | $ | 1.40 | ||||||||||||||||||||||||
| Weighted average shares - basic | 281 | |||||||||||||||||||||||||
| Weighted average shares - diluted | 283 | |||||||||||||||||||||||||
FIDELITY NATIONAL FINANCIAL, INC.
FIRST QUARTER SEGMENT INFORMATION
(In millions, except order information in thousands)
(Unaudited)
| Consolidated | Title | F&G | Corporate and Other | |||||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||||||||
| March 31, 2022 | ||||||||||||||||||||||||||
| Net earnings (loss) attributable to common shareholders | $ | 397 | $ | 191 | $ | 236 | $ | (30) | ||||||||||||||||||
| Earnings from discontinued operations, net of tax | — | — | — | — | ||||||||||||||||||||||
| Net earnings (loss) from continuing operations attributable to common shareholders | $ | 397 | $ | 191 | $ | 236 | $ | (30) | ||||||||||||||||||
| Pre-tax earnings (loss) from continuing operations | $ | 552 | $ | 249 | $ | 341 | $ | (38) | ||||||||||||||||||
| Non-GAAP Adjustments | ||||||||||||||||||||||||||
| Recognized (gains) and losses, net | 139 | 175 | (33) | (3) | ||||||||||||||||||||||
| Indexed product related derivatives | (168) | — | (168) | — | ||||||||||||||||||||||
| Purchase price amortization | 23 | 13 | 6 | 4 | ||||||||||||||||||||||
| Transaction costs | 2 | — | — | 2 | ||||||||||||||||||||||
| Adjusted pre-tax earnings (loss) | $ | 548 | $ | 437 | $ | 146 | $ | (35) | ||||||||||||||||||
| Total non-GAAP, pre-tax adjustments | $ | (4) | $ | 188 | $ | (195) | $ | 3 | ||||||||||||||||||
| Income taxes on non-GAAP adjustments | (5) | (45) | 41 | (1) | ||||||||||||||||||||||
| Total non-GAAP adjustments | $ | (9) | $ | 143 | $ | (154) | $ | 2 | ||||||||||||||||||
| Adjusted net earnings (loss) from continuing operations attributable to common shareholders | $ | 388 | $ | 334 | $ | 82 | $ | (28) | ||||||||||||||||||
| Adjusted EPS from continuing operations attributable to common shareholders - diluted | 1.37 | |||||||||||||||||||||||||
FIDELITY NATIONAL FINANCIAL, INC.
FIRST QUARTER SEGMENT INFORMATION
(In millions, except order information in thousands)
(Unaudited)
| Consolidated | Title | F&G | Corporate and Other | |||||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||||||||
| March 31, 2021 | ||||||||||||||||||||||||||
| Direct title premiums | $ | 746 | $ | 746 | $ | — | $ | — | ||||||||||||||||||
| Agency title premiums | 1,058 | 1,058 | — | — | ||||||||||||||||||||||
| Escrow, title related and other fees | 851 | 745 | 64 | 42 | ||||||||||||||||||||||
| Total title and escrow | 2,655 | 2,549 | 64 | 42 | ||||||||||||||||||||||
| Interest and investment income | 402 | 29 | 373 | — | ||||||||||||||||||||||
| Recognized gains and losses, net | 43 | (59) | 102 | — | ||||||||||||||||||||||
| Total revenue | 3,100 | 2,519 | 539 | 42 | ||||||||||||||||||||||
| Personnel costs | 812 | 754 | 29 | 29 | ||||||||||||||||||||||
| Agent commissions | 807 | 807 | — | — | ||||||||||||||||||||||
| Other operating expenses | 458 | 405 | 28 | 25 | ||||||||||||||||||||||
| Benefits & other policy reserve changes | (26) | — | (26) | — | ||||||||||||||||||||||
| Depreciation and amortization | 183 | 33 | 144 | 6 | ||||||||||||||||||||||
| Provision for title claim losses | 81 | 81 | — | — | ||||||||||||||||||||||
| Interest expense | 28 | — | 8 | 20 | ||||||||||||||||||||||
| Total expenses | 2,343 | 2,080 | 183 | 80 | ||||||||||||||||||||||
| Pre-tax earnings (loss) | $ | 757 | $ | 439 | $ | 356 | $ | (38) | ||||||||||||||||||
| Income tax expense (benefit) | 166 | 103 | 72 | (9) | ||||||||||||||||||||||
| Earnings from equity investments | 13 | 8 | — | 5 | ||||||||||||||||||||||
| Earnings (loss) from discontinued operations, net of tax | 5 | — | 5 | — | ||||||||||||||||||||||
| Non-controlling interests | 4 | 4 | — | — | ||||||||||||||||||||||
| Net earnings (loss) attributable to common shareholders | $ | 605 | $ | 340 | $ | 289 | $ | (24) | ||||||||||||||||||
| EPS from continuing operations attributable to common shareholders - basic | $ | 2.07 | ||||||||||||||||||||||||
| EPS from discontinued operations attributable to common shareholders - basic | $ | 0.02 | ||||||||||||||||||||||||
| EPS attributable to common shareholders - basic | $ | 2.09 | ||||||||||||||||||||||||
| EPS from continuing operations attributable to common shareholders - diluted | $ | 2.06 | ||||||||||||||||||||||||
| EPS from discontinued operations attributable to common shareholders - diluted | $ | 0.02 | ||||||||||||||||||||||||
| EPS attributable to common shareholders - diluted | $ | 2.08 | ||||||||||||||||||||||||
| Weighted average shares - basic | 289 | |||||||||||||||||||||||||
| Weighted average shares - diluted | 291 | |||||||||||||||||||||||||
FIDELITY NATIONAL FINANCIAL, INC.
FIRST QUARTER SEGMENT INFORMATION
(In millions, except order information in thousands)
(Unaudited)
| Consolidated | Title | F&G | Corporate and Other | |||||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||||||||
| March 31, 2021 | ||||||||||||||||||||||||||
| Net earnings (loss) attributable to common shareholders | $ | 605 | $ | 340 | $ | 289 | $ | (24) | ||||||||||||||||||
| Earnings from discontinued operations, net of tax | $ | 5 | $ | — | $ | 5 | $ | — | ||||||||||||||||||
| Net earnings (loss) from continuing operations, attributable to common shareholders | $ | 600 | $ | 340 | $ | 284 | $ | (24) | ||||||||||||||||||
| Pre-tax earnings (loss) from continuing operations | 757 | 439 | 356 | (38) | ||||||||||||||||||||||
| Non-GAAP Adjustments | ||||||||||||||||||||||||||
| Recognized (gains) and losses, net | (23) | 59 | (82) | — | ||||||||||||||||||||||
| Indexed product related derivatives | (185) | — | (185) | — | ||||||||||||||||||||||
| Purchase price amortization | 25 | 14 | 7 | 4 | ||||||||||||||||||||||
| Transaction costs | 6 | — | 2 | 4 | ||||||||||||||||||||||
| Adjusted pre-tax earnings (loss) | $ | 580 | $ | 512 | $ | 98 | $ | (30) | ||||||||||||||||||
| Total non-GAAP, pre-tax adjustments | $ | (177) | $ | 73 | $ | (258) | $ | 8 | ||||||||||||||||||
| Income taxes on non-GAAP adjustments | 32 | (18) | 52 | (2) | ||||||||||||||||||||||
| Total non-GAAP adjustments | $ | (145) | $ | 55 | $ | (206) | $ | 6 | ||||||||||||||||||
| Adjusted net earnings attributable to common shareholders | $ | 455 | $ | 395 | $ | 78 | $ | (18) | ||||||||||||||||||
| Adjusted EPS attributable to common shareholders - diluted | $ | 1.56 | ||||||||||||||||||||||||
FIDELITY NATIONAL FINANCIAL, INC.
SUMMARY BALANCE SHEET INFORMATION
(In millions)
| March 31, 2022 | December 31, 2021 | |||||||||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||||||
| Cash and investment portfolio | $ | 46,520 | $ | 47,135 | ||||||||||||||||
| Goodwill | 4,539 | 4,539 | ||||||||||||||||||
| Title plant | 400 | 400 | ||||||||||||||||||
| Total assets | 60,857 | 60,690 | ||||||||||||||||||
| Notes payable | 3,095 | 3,096 | ||||||||||||||||||
| Reserve for title claim losses | 1,912 | 1,883 | ||||||||||||||||||
| Secured trust deposits | 970 | 934 | ||||||||||||||||||
| Non-controlling interests | 41 | 43 | ||||||||||||||||||
| Total equity and non-controlling interests | 8,118 | 9,457 | ||||||||||||||||||
| Total equity attributable to common shareholders | 8,077 | 9,414 | ||||||||||||||||||
Non-GAAP Measures and Other Information
Title
The table below reconciles pre-tax title earnings to adjusted pre-tax title earnings.
Three Months Ended | ||||||||
| (Dollars in millions) | March 31, 2022 | March 31, 2021 | ||||||
Pre-tax earnings | $ | 249 | $ | 439 | ||||
Non-GAAP adjustments before taxes | ||||||||
Recognized (gains) and losses, net | 175 | 59 | ||||||
Purchase price amortization | 13 | 14 | ||||||
Total non-GAAP adjustments | 188 | 73 | ||||||
Adjusted pre-tax earnings | $ | 437 | $ | 512 | ||||
Adjusted pre-tax margin | 17.1 | % | 19.9 | % | ||||
FIDELITY NATIONAL FINANCIAL, INC.
QUARTERLY OPERATING STATISTICS
(Unaudited)
| Q1 2022 | Q4 2021 | Q3 2021 | Q2 2021 | Q1 2021 | Q4 2020 | Q3 2020 | Q2 2020 | |||||||||||||||||||||||||||||||||||||||||||
| Quarterly Opened Orders ('000's except % data) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total opened orders* | 522 | 536 | 688 | 695 | 770 | 728 | 847 | 693 | ||||||||||||||||||||||||||||||||||||||||||
| Total opened orders per day* | 8.6 | 8.5 | 10.8 | 10.9 | 12.6 | 11.6 | 13.2 | 10.8 | ||||||||||||||||||||||||||||||||||||||||||
| Purchase % of opened orders | 62 | % | 53 | % | 50 | % | 53 | % | 42 | % | 38 | % | 40 | % | 37 | % | ||||||||||||||||||||||||||||||||||
| Refinance % of opened orders | 38 | % | 47 | % | 50 | % | 47 | % | 58 | % | 62 | % | 60 | % | 63 | % | ||||||||||||||||||||||||||||||||||
| Total closed orders* | 380 | 477 | 527 | 568 | 597 | 617 | 571 | 487 | ||||||||||||||||||||||||||||||||||||||||||
| Total closed orders per day* | 6.2 | 7.6 | 8.2 | 8.9 | 9.8 | 9.8 | 8.9 | 7.6 | ||||||||||||||||||||||||||||||||||||||||||
| Purchase % of closed orders | 55 | % | 51 | % | 50 | % | 47 | % | 34 | % | 38 | % | 42 | % | 35 | % | ||||||||||||||||||||||||||||||||||
| Refinance % of closed orders | 45 | % | 49 | % | 50 | % | 53 | % | 66 | % | 62 | % | 58 | % | 65 | % | ||||||||||||||||||||||||||||||||||
| Commercial (millions, except orders in '000's) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total commercial revenue | $ | 374 | $ | 546 | $ | 366 | $ | 347 | $ | 257 | $ | 322 | $ | 216 | $ | 184 | ||||||||||||||||||||||||||||||||||
| Total commercial opened orders | 66.1 | 64.5 | 66.8 | 69.4 | 62.2 | 57.0 | 58.1 | 43.9 | ||||||||||||||||||||||||||||||||||||||||||
| Total commercial closed orders | 37.4 | 46.1 | 40.1 | 42.3 | 34.8 | 39.5 | 30.6 | 25.7 | ||||||||||||||||||||||||||||||||||||||||||
| National commercial revenue | $ | 196 | $ | 313 | $ | 183 | $ | 176 | $ | 127 | $ | 177 | $ | 113 | $ | 96 | ||||||||||||||||||||||||||||||||||
| National commercial opened orders | 27.5 | 26.0 | 27.7 | 27.4 | 23.4 | 21.4 | 21.7 | 15.2 | ||||||||||||||||||||||||||||||||||||||||||
| National commercial closed orders | 14.6 | 18.1 | 14.8 | 14.9 | 11.2 | 13.4 | 9.8 | 8.8 | ||||||||||||||||||||||||||||||||||||||||||
| Total Fee Per File | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Fee per file | $ | 2,891 | $ | 3,023 | $ | 2,581 | $ | 2,444 | $ | 1,944 | $ | 2,116 | $ | 2,063 | $ | 1,889 | ||||||||||||||||||||||||||||||||||
| Residential fee per file | $ | 2,188 | $ | 2,158 | $ | 2,097 | $ | 2,030 | $ | 1,644 | $ | 1,661 | $ | 1,803 | $ | 1,614 | ||||||||||||||||||||||||||||||||||
| Total commercial fee per file | $ | 10,000 | $ | 11,800 | $ | 9,100 | $ | 8,200 | $ | 7,400 | $ | 8,200 | $ | 7,100 | $ | 7,200 | ||||||||||||||||||||||||||||||||||
| National commercial fee per file | $ | 13,400 | $ | 17,300 | $ | 12,400 | $ | 11,800 | $ | 11,300 | $ | 13,200 | $ | 11,500 | $ | 10,900 | ||||||||||||||||||||||||||||||||||
| Total Staffing | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total field operations employees | 13,400 | 13,600 | 13,700 | 13,500 | 13,200 | 12,800 | 12,300 | 10,900 | ||||||||||||||||||||||||||||||||||||||||||
| Actual title claims paid ($ millions) | $ | 54 | $ | 62 | $ | 55 | $ | 56 | $ | 46 | $ | 54 | $ | 50 | $ | 51 | ||||||||||||||||||||||||||||||||||
Title (continued)
FIDELITY NATIONAL FINANCIAL, INC.
MONTHLY TITLE ORDER STATISTICS
| Direct Orders Opened * | Direct Orders Closed * | |||||||||||||||||||||||||
| Month | / (% Purchase) | / (% Purchase) | ||||||||||||||||||||||||
| January 2022 | 166,000 | 57% | 119,000 | 50% | ||||||||||||||||||||||
| February 2022 | 165,000 | 61% | 118,000 | 54% | ||||||||||||||||||||||
| March 2022 | 191,000 | 68% | 143,000 | 60% | ||||||||||||||||||||||
| First Quarter 2022 | 522,000 | 62% | 380,000 | 55% | ||||||||||||||||||||||
| Direct Orders Opened * | Direct Orders Closed * | |||||||||||||||||||||||||
| Month | / (% Purchase) | / (% Purchase) | ||||||||||||||||||||||||
| January 2021 | 256,000 | 37% | 179,000 | 32% | ||||||||||||||||||||||
| February 2021 | 252,000 | 40% | 188,000 | 32% | ||||||||||||||||||||||
| March 2021 | 262,000 | 49% | 230,000 | 37% | ||||||||||||||||||||||
| First Quarter 2021 | 770,000 | 42% | 597,000 | 34% | ||||||||||||||||||||||
| * Includes an immaterial number of non-purchase and non-refinance orders | ||||||||||||||||||||||||||
F&G
The table below reconciles net earnings attributable to common shareholders to adjusted net earnings from continuing operations attributable to common shareholders.
| Three Months Ended | |||||||||||
| March 31, 2022 | March 31, 2021 | ||||||||||
| (Dollars in millions) | |||||||||||
| Net earnings (loss) attributable to common shareholders | $ | 236 | $ | 289 | |||||||
| Less: Earnings (loss) from discontinued operations, net of tax | — | 5 | |||||||||
| Net earnings (loss) from continuing operations attributable to common shareholders | $ | 236 | $ | 284 | |||||||
Non-GAAP adjustments(1,2): | |||||||||||
| Recognized (gains) and losses, net | (33) | (82) | |||||||||
| Indexed product related derivatives | (168) | (185) | |||||||||
| Purchase price amortization | 6 | 7 | |||||||||
| Transaction costs | — | 2 | |||||||||
| Income taxes on non-GAAP adjustments | 41 | 52 | |||||||||
Adjusted net earnings from continuing operations attributable to common shareholders(1) | $ | 82 | $ | 78 | |||||||
Adjusted net earnings from continuing operations attributable to common shareholders include $16 million of net unfavorable and $12 million of net favorable items in the three months ended March 31, 2022 and March 31, 2021, respectively.
The table below provides summary financial highlights.
| Three Months Ended | |||||||||||
| (Dollars in millions) | March 31, 2022 | March 31, 2021 | |||||||||
Average assets under management (AAUM)(1) | $ | 37,459 | $ | 29,016 | |||||||
Net investment spread - FIA(1) | 3.42 | % | 2.98 | % | |||||||
Net investment spread - All products(1) | 2.89 | % | 2.55 | % | |||||||
| Net earnings (loss) from continuing operations attributable to common shareholders | $ | 236 | $ | 284 | |||||||
Adjusted net earnings from continuing operations attributable to common shareholders(1) | $ | 82 | $ | 78 | |||||||
The table below provides a summary of sales highlights.
| Three Months Ended | ||||||||||||||
| (In millions) | March 31, 2022 | March 31, 2021 | ||||||||||||
Total annuity sales(1) | $ | 1,435 | $ | 1,514 | ||||||||||
Indexed universal life sales(1) | $ | 27 | $ | 15 | ||||||||||
Institutional sales(1)(3) | $ | 1,127 | $ | 125 | ||||||||||
Total sales(1) | $ | 2,589 | $ | 1,654 | ||||||||||
Footnotes:
1.Non-GAAP financial measure. See the Non-GAAP Measures section below for additional information.
2.Amounts are net of offsets related to value of business acquired (VOBA), deferred acquisition cost (DAC), deferred sale inducement (DSI) amortization, and unearned revenue (UREV) amortization, as applicable.
3.Institutional sales include funding agreements (FABN/FHLB) and pension risk transfer.
DEFINITIONS
The following represents the definitions of non-GAAP measures used by the Company.
Adjusted Net Earnings Attributable to Common Shareholders (Adjusted Net Earnings)
Adjusted net earnings is a non-GAAP economic measure we use to evaluate financial performance each period. Adjusted net earnings is calculated by adjusting net earnings (loss) from continuing operations attributable to common shareholders to eliminate:
i.Recognized (gains) and losses, net: the impact of net investment gains/losses, including changes in allowance for expected credit losses and other than temporary impairment ("OTTI") losses, recognized in operations; the impact of market volatility on the alternative asset portfolio that differ from management's expectation of returns over the life of these assets; and the effect of changes in fair value of the reinsurance related embedded derivative;
ii.Indexed product related derivatives: the impacts related to changes in the fair value, including both realized and unrealized gains and losses, of index product related derivatives and embedded derivatives, net of hedging cost;
iii.Purchase price amortization: the impacts related to the amortization of certain intangibles (internally developed software, trademarks and value of distribution asset (VODA)) recognized as a result of acquisition activities;
iv.Transaction costs: the impacts related to acquisition, integration and merger related items; and
v.Other "non-recurring", "infrequent" or "unusual items": Management excludes certain items determined to be “non-recurring”, “infrequent” or “unusual” from adjusted net earnings when incurred if it is determined these expenses are not a reflection of the core business and when the nature of the item is such that it is not reasonably likely to recur within two years and/or there was not a similar item in the preceding two years.
Adjustments to adjusted net earnings are net of the corresponding impact on amortization of intangibles, as appropriate. The income tax impact related to these adjustments is measured using an effective tax rate, as appropriate by tax jurisdiction. While these adjustments are an integral part of the overall performance of F&G, market conditions and/or the non-operating nature of these items can overshadow the underlying performance of the core business. Accordingly, management considers this to be a useful measure internally and to investors and analysts in analyzing the trends of our operations. Adjusted net earnings should not be used as a substitute for net earnings (loss). However, we believe the adjustments made to net earnings (loss) in order to derive adjusted net earnings provide an understanding of our overall results of operations.
Net Investment Spread
Net investment spread is the excess of net investment income, adjusted for market volatility on the alternative asset investment portfolio, earned over the sum of interest credited to policyholders and the cost of hedging our risk on indexed product policies. Management considers this non-GAAP financial measure to be useful internally and to investors and analysts when assessing the performance of the Company’s invested assets against the level of investment return provided to policyholders, inclusive of hedging costs.
Assets Under Management (AUM)
AUM is calculated as the sum of:
i.total invested assets at amortized cost, excluding derivatives, net of reinsurance qualifying for risk transfer in accordance with GAAP;
ii.related party loans and investments;
iii.accrued investment income;
iv.the net payable/receivable for the purchase/sale of investments, and
v.cash and cash equivalents excluding derivative collateral at the beginning of the period and the end of each month in the period, divided by the total number of months in the period plus one.
Management considers this non-GAAP financial measure to be useful internally and to investors and analysts when assessing the rate of return on assets available for reinvestment.
Average Assets Under Management (AAUM)
AAUM is calculated as AUM at the beginning of the period and the end of each month in the period, divided by the total number of months in the period plus one.
Management considers this non-GAAP financial measure to be useful internally and to investors and analysts when assessing the rate of return on assets available for reinvestment.
Sales
Annuity, IUL, funding agreement and non-life contingent PRT sales are not derived from any specific GAAP income statement accounts or line items and should not be viewed as a substitute for any financial measure determined in accordance with GAAP. Sales from these products are recorded as deposit liabilities (i.e. contractholder funds) within the Company's consolidated financial statements in accordance with GAAP. Life contingent PRT sales are recorded as premiums in revenues within the consolidated financial statements. Management believes that presentation of sales, as measured for management purposes, enhances the understanding of our business and helps depict longer term trends that may not be apparent in the results of operations due to the timing of sales and revenue recognition.
Exhibit 99.2
F&G Annuities & Life, Inc. (“F&G”) - An Operating Segment of Fidelity National Financial, Inc. (NYSE:FNF)
Financial Supplement
March 31, 2022
(Year Ended December 31)
The financial statements and financial exhibits included herein are unaudited. F&G is an operating segment of FNF ("the Company") and these financial statements and exhibits should be read in conjunction with the Company's periodic reports on Form 10-K, Form 10-Q and Form 8-K. F&G was acquired by FNF on June 1, 2020.
All dollar amounts are presented in millions.
Non-GAAP Financial Measures
Generally Accepted Accounting Principles (GAAP) is the term used to refer to the standard framework of guidelines for financial accounting. GAAP includes the standards, conventions, and rules accountants follow in recording and summarizing transactions and in the preparation of financial statements. In addition to reporting financial results in accordance with GAAP, this document includes non-GAAP financial measures, which the Company believes are useful to help investors better understand its financial performance, competitive position and prospects for the future. Management believes these non-GAAP financial measures may be useful in certain instances to provide additional meaningful comparisons between current results and results in prior operating periods. Our non-GAAP measures may not be comparable to similarly titled measures of other organizations because other organizations may not calculate such non-GAAP measures in the same manner as we do. The presentation of this financial information is not intended to be considered in isolation of or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. By disclosing these non-GAAP financial measures, the Company believes it offers investors a greater understanding of, and an enhanced level of transparency into, the means by which the Company’s management operates the Company. Any non-GAAP measures should be considered in context with the GAAP financial presentation and should not be considered in isolation or as a substitute for GAAP net earnings, net earnings attributable to common shareholders, or any other measures derived in accordance with GAAP as measures of operating performance or liquidity. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are provided within.
1
F&G - An Operating Segment of FNF
Financial Supplement - March 31, 2022
(All periods are unaudited)
| Page | |||||
| A. Financial Highlights | |||||
| Consolidated Financial Highlights | |||||
| Sales Results by Product | |||||
| Condensed Consolidated Balance Sheets | |||||
| Reconciliation of Total Shareholders' Equity to Total Shareholders' Equity Excluding AOCI | |||||
| Condensed Consolidated Statements of Operations | |||||
| Reconciliation from Net Earnings to Adjusted Net Earnings | |||||
| Notable Items | |||||
| Adjusted Net Earnings Statement | |||||
| Financial Strength Ratings | |||||
| B. Product Summary | |||||
| Total Product Net Investment Spread | |||||
| FIA Net Investment Spread | |||||
| Assets Under Management Rollforward and Average Assets Under Management | |||||
| Annuity Account Balance Rollforward | |||||
| Annuity Liability Characteristics | |||||
| C. Investment Summary | |||||
| Summary of Invested Assets by Asset Class | |||||
| Credit Quality of Fixed Maturity Securities | |||||
| Summary of Residential Mortgage Backed Securities by Collateral Type and NAIC Designation | |||||
| D. Counterparty Risk | |||||
| Top 5 Reinsurers | 16 | ||||
| E. Non-GAAP Financial Measures | |||||
2
F&G - An Operating Segment of FNF
Financial Supplement - March 31, 2022
(All periods are unaudited)
Consolidated Financial Highlights
| Three months ended | |||||||||||||||||||||||||||||
| March 31, 2022 | December 31, 2021 | September 30, 2021 | June 30, 2021 | March 31, 2021 | |||||||||||||||||||||||||
| Select Income Statement Data: | |||||||||||||||||||||||||||||
| Net earnings attributable to common shareholders | 236 | 121 | 373 | 82 | 289 | ||||||||||||||||||||||||
| Adjusted net earnings attributable to common shareholders ("Adjusted net earnings") (a) (c) | 82 | 90 | 101 | 92 | 78 | ||||||||||||||||||||||||
| Select Metrics: | |||||||||||||||||||||||||||||
| Average assets under management ("AAUM") (a) | 37,459 | 35,699 | 32,692 | 30,423 | 29,016 | ||||||||||||||||||||||||
| Assets under management ("AUM") (a) | 38,601 | 36,494 | 34,665 | 31,760 | 29,700 | ||||||||||||||||||||||||
| Net investment spread (a) | 2.89 | % | 2.89 | % | 2.85 | % | 2.95 | % | 2.55 | % | |||||||||||||||||||
| Adjusted return on assets (a) (b) (c) | 0.88 | % | 1.13 | % | 1.18 | % | 1.14 | % | 1.08 | % | |||||||||||||||||||
(a) Refer to "Non-GAAP Financial Measures Definitions"
(b) Adjusted return on assets is calculated on a year to date ("YTD") basis.
(c) Refer to page 7 "Notable Items" for further explanation of trends.
Sales Results by Product
| Three months ended | |||||||||||||||||||||||||||||
| March 31, 2022 | December 31, 2021 | September 30, 2021 | June 30, 2021 | March 31, 2021 | |||||||||||||||||||||||||
| Sales (a) | |||||||||||||||||||||||||||||
| Fixed indexed annuities (FIA) | 962 | 1,055 | 1,073 | 1,135 | 1,047 | ||||||||||||||||||||||||
| Fixed rate annuities (MYGA) | 473 | 301 | 458 | 512 | 467 | ||||||||||||||||||||||||
| Total annuity | 1,435 | 1,356 | 1,531 | 1,647 | 1,514 | ||||||||||||||||||||||||
| Indexed universal life (IUL) | 27 | 28 | 24 | 20 | 15 | ||||||||||||||||||||||||
| Funding agreements (FABN/FHLB) | 600 | 35 | 1,150 | 1,000 | 125 | ||||||||||||||||||||||||
| Pension risk transfer (PRT) | 527 | 776 | 371 | — | — | ||||||||||||||||||||||||
| Total Sales | $ | 2,589 | $ | 2,195 | $ | 3,076 | $ | 2,667 | $ | 1,654 | |||||||||||||||||||
| (a) Refer to "Non-GAAP Financial Measures Definitions." | |||||||||||||||||||||||||||||
3
F&G - An Operating Segment of FNF
Financial Supplement - March 31, 2022
(All periods are unaudited)
Condensed Consolidated Balance Sheets
| March 31, 2022 | December 31, 2021 | September 30, 2021 | June 30, 2021 | March 31, 2021 | |||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||
| Investments: | |||||||||||||||||||||||||||||
| Fixed maturity securities available for sale, at fair value, net of allowance for credit losses of $6 at March 31, 2022 | $ | 29,478 | $ | 29,962 | $ | 28,550 | $ | 27,616 | $ | 25,768 | |||||||||||||||||||
| Preferred securities, at fair value | 934 | 1,028 | 870 | 882 | 908 | ||||||||||||||||||||||||
| Equity securities, at fair value | 139 | 143 | 156 | 176 | 141 | ||||||||||||||||||||||||
| Derivative investments | 487 | 816 | 581 | 691 | 542 | ||||||||||||||||||||||||
| Mortgage loans, net of allowance for credit losses of $32 at March 31, 2022 | 4,217 | 3,749 | 3,484 | 2,794 | 2,374 | ||||||||||||||||||||||||
| Investments in unconsolidated affiliates | 2,696 | 2,350 | 2,022 | 1,667 | 1,281 | ||||||||||||||||||||||||
| Other long-term investments | 510 | 489 | 454 | 448 | 447 | ||||||||||||||||||||||||
| Short-term investments | 387 | 373 | 258 | 356 | 72 | ||||||||||||||||||||||||
| Total investments | $ | 38,848 | $ | 38,910 | $ | 36,375 | $ | 34,630 | $ | 31,533 | |||||||||||||||||||
| Cash and cash equivalents | 1,168 | 1,533 | 2,320 | 1,016 | 995 | ||||||||||||||||||||||||
| Trade and notes receivables | 3 | 3 | 11 | 11 | 11 | ||||||||||||||||||||||||
| Reinsurance recoverable, net of allowance for credit losses of $20 at March 31, 2022 (a) | 3,801 | 3,610 | 3,492 | 3,297 | 3,404 | ||||||||||||||||||||||||
| Goodwill (a) | 1,756 | 1,756 | 1,756 | 1,756 | 1,751 | ||||||||||||||||||||||||
| Prepaid expenses and other assets | 625 | 613 | 662 | 415 | 470 | ||||||||||||||||||||||||
| Lease assets | 9 | 8 | 8 | 8 | 8 | ||||||||||||||||||||||||
| Other intangible assets, net (a) | 2,699 | 2,234 | 2,086 | 2,060 | 2,061 | ||||||||||||||||||||||||
| Property and equipment, net | 14 | 13 | 13 | 13 | 13 | ||||||||||||||||||||||||
| Income taxes receivable | 46 | 50 | — | — | — | ||||||||||||||||||||||||
| Deferred tax asset (a) | 142 | — | — | 51 | 130 | ||||||||||||||||||||||||
| Assets of discontinued operations | — | — | — | — | 311 | ||||||||||||||||||||||||
| Total assets | $ | 49,111 | $ | 48,730 | $ | 46,723 | $ | 43,257 | $ | 40,687 | |||||||||||||||||||
| (a) These line items included adjustments that were recorded during the remeasurement period subsequent to the June 1, 2020 acquisition. The following adjustments were recorded as of the opening balance sheet at June 1, 2020 during the quarter ending June 30, 2021: Reinsurance recoverable, ($289), Goodwill, $5, Other intangible assets, net, $61, and Deferred tax asset, $1. | |||||||||||||||||||||||||||||
4
F&G - An Operating Segment of FNF
Financial Supplement - March 31, 2022
(All periods are unaudited)
Condensed Consolidated Balance Sheets (continued) | |||||||||||||||||||||||||||||
| March 31, 2022 | December 31, 2021 | September 30, 2021 | June 30, 2021 | March 31, 2021 | |||||||||||||||||||||||||
| Liabilities and Shareholders' Equity | |||||||||||||||||||||||||||||
| Contractholder funds | $ | 36,237 | $ | 35,525 | $ | 33,988 | $ | 32,166 | $ | 29,592 | |||||||||||||||||||
| Future policy benefits (b) | 5,217 | 4,732 | 3,985 | 3,670 | 3,959 | ||||||||||||||||||||||||
| Accounts payable and accrued liabilities (b) | 1,536 | 1,297 | 1,670 | 1,276 | 1,368 | ||||||||||||||||||||||||
| Income taxes payable | — | — | 3 | 17 | 5 | ||||||||||||||||||||||||
| Deferred tax liability | — | 24 | 9 | — | — | ||||||||||||||||||||||||
| Notes payable | 975 | 977 | 979 | 589 | 589 | ||||||||||||||||||||||||
| Funds withheld for reinsurance liabilities | 1,852 | 1,676 | 1,508 | 1,271 | 1,026 | ||||||||||||||||||||||||
| Lease liabilities | 14 | 14 | 14 | 14 | 14 | ||||||||||||||||||||||||
| Liabilities of discontinued operations | — | — | — | — | 339 | ||||||||||||||||||||||||
| Total liabilities | $ | 45,831 | $ | 44,245 | $ | 42,156 | $ | 39,003 | $ | 36,892 | |||||||||||||||||||
| Shareholders' equity: | |||||||||||||||||||||||||||||
| Additional paid-in-capital | 2,753 | 2,750 | 2,748 | 2,746 | 2,744 | ||||||||||||||||||||||||
| Retained earnings | 1,238 | 1,001 | 880 | 507 | 425 | ||||||||||||||||||||||||
| Accumulated other comprehensive income ("AOCI") | (711) | 734 | 939 | 1,001 | 626 | ||||||||||||||||||||||||
| Total shareholders' equity | $ | 3,280 | $ | 4,485 | $ | 4,567 | $ | 4,254 | $ | 3,795 | |||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 49,111 | $ | 48,730 | $ | 46,723 | $ | 43,257 | $ | 40,687 | |||||||||||||||||||
(b) Future policy benefits and Accounts payable and accrued liabilities included ($228) and $6 adjustments as of the opening balance sheet at June 1, 2020, respectively, during the quarter ending June 30, 2021.
Reconciliation of Total Shareholders' Equity to Total Shareholders' Equity Excluding AOCI
| March 31, 2022 | December 31, 2021 | September 30, 2021 | June 30, 2021 | March 31, 2021 | |||||||||||||||||||||||||
| Total shareholders' equity | $ | 3,280 | $ | 4,485 | $ | 4,567 | $ | 4,254 | $ | 3,795 | |||||||||||||||||||
| Less: AOCI | (711) | 734 | 939 | 1,001 | 626 | ||||||||||||||||||||||||
| Total shareholders' equity excluding AOCI (c) | $ | 3,991 | $ | 3,751 | $ | 3,628 | $ | 3,253 | $ | 3,169 | |||||||||||||||||||
| (c) Refer to "Non-GAAP Financial Measures Definitions" | |||||||||||||||||||||||||||||
5
F&G - An Operating Segment of FNF
Financial Supplement - March 31, 2022
(All periods are unaudited)
Condensed Consolidated Statements of Operations
| Three months ended | |||||||||||||||||||||||||||||
| March 31, 2022 | December 31, 2021 | September 30, 2021 | June 30, 2021 | March 31, 2021 | |||||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||||||
| Life insurance premiums and other fees (a) | $ | 594 | $ | 838 | $ | 431 | $ | 62 | $ | 64 | |||||||||||||||||||
| Interest and investment income | 451 | 511 | 481 | 487 | 373 | ||||||||||||||||||||||||
| Recognized gains and losses, net | (297) | 345 | 15 | 253 | 102 | ||||||||||||||||||||||||
| Total revenues | 748 | 1,694 | 927 | 802 | 539 | ||||||||||||||||||||||||
| Benefits and expenses: | |||||||||||||||||||||||||||||
| Benefits and other changes in policy reserves | 208 | 1,404 | 185 | 575 | (26) | ||||||||||||||||||||||||
| Personnel costs | 30 | 36 | 32 | 32 | 29 | ||||||||||||||||||||||||
| Other operating expenses | 18 | 29 | 22 | 26 | 28 | ||||||||||||||||||||||||
| Depreciation and amortization | 143 | 65 | 210 | 65 | 144 | ||||||||||||||||||||||||
| Interest expense | 8 | 8 | 6 | 7 | 8 | ||||||||||||||||||||||||
| Total benefits and expenses | 407 | 1,542 | 455 | 705 | 183 | ||||||||||||||||||||||||
| Pre-tax earnings | 341 | 152 | 472 | 97 | 356 | ||||||||||||||||||||||||
| Income tax expense | (105) | (31) | (96) | (21) | (72) | ||||||||||||||||||||||||
| Net earnings from continuing operations | 236 | 121 | 376 | 76 | 284 | ||||||||||||||||||||||||
| (Loss) earnings from discontinued operations, net of tax | — | — | (3) | 6 | 5 | ||||||||||||||||||||||||
| Net earnings attributable to common shareholders | $ | 236 | $ | 121 | $ | 373 | $ | 82 | $ | 289 | |||||||||||||||||||
(a) Included within "Escrow, title-related and other fees" in FNF 10-K/ 10-Q.
6
F&G - An Operating Segment of FNF
Financial Supplement - March 31, 2022
(All periods are unaudited)
Reconciliation from Net Earnings to Adjusted Net Earnings (a)
| Three months ended | |||||||||||||||||||||||||||||
| March 31, 2022 | December 31, 2021 | September 30, 2021 | June 30, 2021 | March 31, 2021 | |||||||||||||||||||||||||
| Net earnings from continuing operations | $ | 236 | $ | 121 | $ | 376 | $ | 76 | $ | 284 | |||||||||||||||||||
| Non-GAAP adjustments (a): | |||||||||||||||||||||||||||||
| Recognized (gains) and losses, net | (33) | (76) | (98) | (63) | (82) | ||||||||||||||||||||||||
| Indexed product related derivatives | (168) | 32 | 26 | 75 | (185) | ||||||||||||||||||||||||
| Purchase price amortization | 6 | 6 | 7 | 6 | 7 | ||||||||||||||||||||||||
| Transaction costs | — | — | 1 | 2 | 2 | ||||||||||||||||||||||||
| Other non-recurring items (b) | — | — | (284) | — | — | ||||||||||||||||||||||||
| Income taxes on non-GAAP adjustments | 41 | 7 | 73 | (4) | 52 | ||||||||||||||||||||||||
| Adjusted net earnings (a) | $ | 82 | $ | 90 | $ | 101 | $ | 92 | $ | 78 | |||||||||||||||||||
Notable Items
Each quarterly reporting period, we identify notable items that help explain the trends in our Adjusted net earnings as we believe these items provide further clarity to the financial performance of the business.
| Three months ended | |||||||||||||||||||||||||||||
| March 31, 2022 | December 31, 2021 | September 30, 2021 | June 30, 2021 | March 31, 2021 | |||||||||||||||||||||||||
| Adjusted net earnings (a) | $ | 82 | $ | 90 | $ | 101 | $ | 92 | $ | 78 | |||||||||||||||||||
| Notable items [(unfavorable)/favorable] | |||||||||||||||||||||||||||||
| Single premium immediate annuities ("SPIA") mortality & other reserve adjustments (c) | 4 | (7) | 7 | 3 | 7 | ||||||||||||||||||||||||
| Assumption review and unlocking (d) | — | — | — | 8 | — | ||||||||||||||||||||||||
| Other notable items (e) | (20) | 10 | 20 | 11 | 5 | ||||||||||||||||||||||||
(a) Refer to "Non-GAAP Financial Measures Definitions."
(b) Reflects adjustments to benefits and other changes in policy reserves and depreciation and amortization resulting from the implementation of a new actuarial valuation system.
(c) The release of annuity reserves associated with mortality of annuitants, which varies due to timing, volume and severity of experience, and other reserve adjustments.
(d) Reflects unlocking from updating our DAC, VOBA, DSI and cost of reinsurance amortization models for actual experience and equity market fluctuations.
(e) Costs incurred during research and exploration of potential merger or acquisition of a business or a group of insurance policies via asset acquisition or (inforce) reinsurance agreement, income from bond prepayment and CLO redemptions, changes in tax valuation and other net activity.
7
F&G - An Operating Segment of FNF
Financial Supplement - March 31, 2022
(All periods are unaudited)
Adjusted Net Earnings Statement (a)
| Three months ended | |||||||||||||||||||||||||||||
| March 31, 2022 | December 31, 2021 | September 30, 2021 | June 30, 2021 | March 31, 2021 | |||||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||||||
| Life insurance premiums and other fees (b) (i) | $ | 593 | $ | 840 | $ | 430 | $ | 62 | $ | 64 | |||||||||||||||||||
| Interest and investment income (c) | 448 | 431 | 381 | 377 | 333 | ||||||||||||||||||||||||
| Recognized gains and losses, net (d) | — | — | — | — | — | ||||||||||||||||||||||||
| Total revenues | 1,041 | 1,271 | 811 | 439 | 397 | ||||||||||||||||||||||||
| Benefits and expenses: | |||||||||||||||||||||||||||||
| Benefits and other changes in policy reserves (e) (i) | 775 | 1,023 | 577 | 214 | 188 | ||||||||||||||||||||||||
| Personnel costs | 30 | 36 | 32 | 32 | 29 | ||||||||||||||||||||||||
| Other operating expenses (f) | 18 | 29 | 22 | 24 | 26 | ||||||||||||||||||||||||
| Depreciation and amortization (g) | 64 | 61 | 49 | 46 | 48 | ||||||||||||||||||||||||
| Interest expense | 8 | 9 | 6 | 7 | 8 | ||||||||||||||||||||||||
| Total benefits and expenses | 895 | 1,158 | 686 | 323 | 299 | ||||||||||||||||||||||||
| Pre-tax earnings | 146 | 113 | 125 | 116 | 98 | ||||||||||||||||||||||||
| Income tax expense | (64) | (23) | (24) | (24) | (20) | ||||||||||||||||||||||||
| Adjusted net earnings (a) | $ | 82 | $ | 90 | $ | 101 | $ | 92 | $ | 78 | |||||||||||||||||||
| Notable items included in Adjusted net earnings (h) | $ | (16) | $ | 3 | $ | 27 | $ | 22 | $ | 12 | |||||||||||||||||||
(a) Refer to "Non-GAAP Financial Measures Definitions."
(b) Life insurance premiums and other fees are included within "Escrow, title-related and other fees" in FNF 10-K/ 10-Q, and have been adjusted to remove primarily the impact of unearned revenue on the adjustments below.
(c) Interest and investment income has been adjusted to remove the market volatility on the alternative investment portfolio that differ from management's expectation of returns over the life of these assets.
(d) Recognized gains and losses (net) have been adjusted to remove the effect of recognized (gains) losses including changes in allowance for expected credit losses and OTTI; changes in fair values of indexed product related derivatives and embedded derivatives, net of hedging costs; and the change in fair value of the reinsurance related embedded derivative.
(e) Benefits and other changes in policy reserves has been adjusted to remove the effects of the changes in fair values of indexed product embedded derivatives, changes in allowance for expected credit losses on reinsurance recoverables, the fair value impacts of assumed reinsurance, those resulting from the implementation of a new actuarial system at September 30, 2021, and changes in the SOP 03-1 reserve resulting from the adjustments above, as applicable.
(f) Other operating expenses have been adjusted to remove the effects of transaction costs.
(g) Depreciation and amortization has been adjusted to remove the impact on DAC, VOBA, and DSI of the adjustments above, as applicable, purchase price amortization and those resulting from the implementation of a new actuarial valuation system at September 30, 2021.
(h) Refer to page 7 "Notable Items" for further detail of notable items.
(i) Includes premiums from agreements related to our new PRT business beginning in the three months ended September 30, 2021.
8
F&G - An Operating Segment of FNF
Financial Supplement - March 31, 2022
(All periods are unaudited)
Financial Strength Ratings
| A.M. Best | S&P | Fitch | Moody's | |||||||||||||||||||||||
| Holding Company Ratings | ||||||||||||||||||||||||||
| F&G Annuities & Life, Inc. | ||||||||||||||||||||||||||
| Issuer Credit / Default Rating | Not Rated | BBB- | BBB | Ba2 | ||||||||||||||||||||||
| Outlook | Stable | Stable | Positive | |||||||||||||||||||||||
| CF Bermuda Holdings Limited | ||||||||||||||||||||||||||
| Issuer Credit / Default Rating | Not Rated | BBB- | BBB | Ba1 | ||||||||||||||||||||||
| Outlook | Stable | Stable | Positive | |||||||||||||||||||||||
| Fidelity & Guaranty Life Holdings, Inc. | ||||||||||||||||||||||||||
| Issuer Credit / Default Rating | bbb- | BBB- | BBB | Not Rated | ||||||||||||||||||||||
| Outlook | Stable | Stable | Stable | |||||||||||||||||||||||
| Senior Unsecured Notes | bbb- | BBB | BBB | Baa2 | ||||||||||||||||||||||
| Outlook | Stable | Stable | ||||||||||||||||||||||||
| Operating Subsidiary Ratings | ||||||||||||||||||||||||||
| Fidelity & Guaranty Life Insurance Company | ||||||||||||||||||||||||||
| Financial Strength Rating | A- | A- | A- | Baa1 | ||||||||||||||||||||||
| Outlook | Stable | Stable | Stable | Positive | ||||||||||||||||||||||
| Fidelity & Guaranty Life Insurance Company of New York | ||||||||||||||||||||||||||
| Financial Strength Rating | A- | A- | A- | Not Rated | ||||||||||||||||||||||
| Outlook | Stable | Stable | Stable | |||||||||||||||||||||||
| F&G Life Re Ltd | ||||||||||||||||||||||||||
| Financial Strength Rating | Not Rated | A- | A- | Baa1 | ||||||||||||||||||||||
| Outlook | Stable | Stable | Positive | |||||||||||||||||||||||
| F&G Cayman Re Ltd | ||||||||||||||||||||||||||
| Financial Strength Rating | Not Rated | Not Rated | A- | Not Rated | ||||||||||||||||||||||
| Outlook | Stable | |||||||||||||||||||||||||
9
F&G - An Operating Segment of FNF
Financial Supplement - March 31, 2022
(All periods are unaudited)
| Total Product Net Investment Spread | |||||||||||||||||||||||||||||
| Three months ended | |||||||||||||||||||||||||||||
| March 31, 2022 | December 31, 2021 | September 30, 2021 | June 30, 2021 | March 31, 2021 | |||||||||||||||||||||||||
| Net investment income | $ | 451 | $ | 511 | $ | 481 | $ | 487 | $ | 373 | |||||||||||||||||||
| AAUM (a) | 37,459 | 35,699 | 32,692 | 30,423 | 29,016 | ||||||||||||||||||||||||
| Yield on AAUM (a) | 4.82 | % | 5.73 | % | 5.89 | % | 6.40 | % | 5.15 | % | |||||||||||||||||||
| Alternative investment yield adjustment (a) | (0.04) | % | (0.90) | % | (1.23) | % | (1.43) | % | (0.56) | % | |||||||||||||||||||
| Adjusted Yield on AAUM (a) | 4.78 | % | 4.83 | % | 4.66 | % | 4.97 | % | 4.59 | % | |||||||||||||||||||
| Interest credits | $ | 75 | $ | 77 | $ | 63 | $ | 73 | $ | 74 | |||||||||||||||||||
| Option & futures costs | 84 | 80 | 75 | 70 | 65 | ||||||||||||||||||||||||
| Total interest credited and option costs | $ | 159 | $ | 157 | $ | 138 | $ | 143 | $ | 139 | |||||||||||||||||||
| Average account value | 33,532 | 32,340 | 30,469 | 28,273 | 27,252 | ||||||||||||||||||||||||
| Interest credited & option cost | 1.89 | % | 1.94 | % | 1.81 | % | 2.02 | % | 2.04 | % | |||||||||||||||||||
| Net investment spread (a) | 2.89 | % | 2.89 | % | 2.85 | % | 2.95 | % | 2.55 | % | |||||||||||||||||||
| (a) Refer to "Non-GAAP Financial Measures Definitions." | |||||||||||||||||||||||||||||
10
F&G - An Operating Segment of FNF
Financial Supplement - March 31, 2022
(All periods are unaudited)
| FIA Net Investment Spread | |||||||||||||||||||||||||||||
| Three months ended | |||||||||||||||||||||||||||||
| March 31, 2022 | December 31, 2021 | September 30, 2021 | June 30, 2021 | March 31, 2021 | |||||||||||||||||||||||||
| Net investment income | $ | 311 | $ | 367 | $ | 368 | $ | 377 | $ | 276 | |||||||||||||||||||
| AAUM (a) | 23,717 | 22,824 | 22,146 | 20,896 | 20,217 | ||||||||||||||||||||||||
| Yield on AAUM (a) | 5.25 | % | 6.43 | % | 6.65 | % | 7.22 | % | 5.46 | % | |||||||||||||||||||
| Alternative investment yield adjustment (a) | (0.16) | % | (1.19) | % | (1.81) | % | (2.20) | % | (0.81) | % | |||||||||||||||||||
| Adjusted Yield on AAUM (a) | 5.09 | % | 5.24 | % | 4.84 | % | 5.02 | % | 4.65 | % | |||||||||||||||||||
| Interest credits | $ | 9 | $ | 9 | $ | 2 | $ | 13 | $ | 15 | |||||||||||||||||||
| Option & futures costs | 84 | 80 | 75 | 70 | 65 | ||||||||||||||||||||||||
| Total interest credited and option costs | $ | 93 | $ | 89 | $ | 77 | $ | 83 | $ | 80 | |||||||||||||||||||
| Average account value | 22,244 | 21,513 | 20,680 | 19,842 | 19,028 | ||||||||||||||||||||||||
| Interest credited & option cost | 1.67 | % | 1.65 | % | 1.49 | % | 1.67 | % | 1.67 | % | |||||||||||||||||||
| Net investment spread (a) | 3.42 | % | 3.59 | % | 3.35 | % | 3.35 | % | 2.98 | % | |||||||||||||||||||
(a) Refer to "Non-GAAP Financial Measures Definitions."
11
F&G - An Operating Segment of FNF
Financial Supplement - March 31, 2022
(All periods are unaudited)
Assets Under Management Rollforward and Average Assets Under Management
| Three months ended | |||||||||||||||||||||||||||||
| March 31, 2022 | December 31, 2021 | September 30, 2021 | June 30, 2021 | March 31, 2021 | |||||||||||||||||||||||||
| AUM at beginning of period (a) | $ | 36,494 | $ | 34,665 | $ | 31,760 | $ | 29,700 | $ | 28,553 | |||||||||||||||||||
| Net new business asset flows | 2,223 | 2,050 | 2,747 | 2,327 | 1,269 | ||||||||||||||||||||||||
| Net reinsurance and other transactions | (116) | (221) | 158 | (267) | (122) | ||||||||||||||||||||||||
| AUM at end of period (a) | $ | 38,601 | $ | 36,494 | $ | 34,665 | $ | 31,760 | $ | 29,700 | |||||||||||||||||||
| AAUM (a) | $ | 37,459 | $ | 35,699 | $ | 32,692 | $ | 30,423 | $ | 29,016 | |||||||||||||||||||
Annuity Account Balance Rollforward (b)
| Three months ended | |||||||||||||||||||||||||||||
| March 31, 2022 | December 31, 2021 | September 30, 2021 | June 30, 2021 | March 31, 2021 | |||||||||||||||||||||||||
| Account balances at beginning of period: | $ | 26,673 | $ | 25,662 | $ | 24,774 | $ | 23,803 | $ | 22,992 | |||||||||||||||||||
| Net deposits | 1,073 | 1,321 | 1,311 | 1,390 | 1,265 | ||||||||||||||||||||||||
| Surrenders, withdrawals, deaths, etc. | (539) | (517) | (625) | (628) | (585) | ||||||||||||||||||||||||
| Net flows | 534 | 804 | 686 | 762 | 680 | ||||||||||||||||||||||||
| Premium and interest bonuses | 22 | 23 | 20 | 21 | 18 | ||||||||||||||||||||||||
| Fixed interest credited and index credits | 142 | 226 | 217 | 225 | 148 | ||||||||||||||||||||||||
| Guaranteed product rider fees | (40) | (42) | (35) | (37) | (35) | ||||||||||||||||||||||||
| Account balance at end of period | $ | 27,331 | $ | 26,673 | $ | 25,662 | $ | 24,774 | $ | 23,803 | |||||||||||||||||||
(a) Refer to "Non-GAAP Financial Measures Definitions."
(b) The rollforward reflects the vested account balance of our fixed index annuities and fixed rate annuities, net of reinsurance.
12
F&G - An Operating Segment of FNF
Financial Supplement - March 31, 2022
(All periods are unaudited)
Annuity Liability Characteristics
| Fixed Annuities Account Value | Fixed Index Annuities Account Value | |||||||||||||
| March 31, 2022 | ||||||||||||||
| SURRENDER CHARGE PERCENTAGES: | ||||||||||||||
| No surrender charge | $ | 342 | $ | 2,658 | ||||||||||
| 0.0% < 2.0% | 21 | 107 | ||||||||||||
| 2.0% < 4.0% | 34 | 816 | ||||||||||||
| 4.0% < 6.0% | 718 | 2,064 | ||||||||||||
| 6.0% < 8.0% | 1,681 | 3,493 | ||||||||||||
| 8.0% < 10.0% | 2,004 | 7,920 | ||||||||||||
| 10.0% or greater | — | 5,473 | ||||||||||||
| $ | 4,800 | $ | 22,531 | |||||||||||
| Fixed Annuities Account Value | Fixed Index Annuities Account Value | |||||||||||||
| March 31, 2022 | ||||||||||||||
| CREDITED RATE (INCLUDING BONUS INTEREST) VS. ULTIMATE MINIMUM GUARANTEED RATE DIFFERENTIAL: | ||||||||||||||
| No differential | $ | 499 | $ | 1,464 | ||||||||||
| 0.0% - 1.0% | 678 | 1,121 | ||||||||||||
| 1.0% - 2.0% | 1,731 | 4 | ||||||||||||
| 2.0% - 3.0% | 1,892 | — | ||||||||||||
| Allocated to index strategies | — | 19,942 | ||||||||||||
| $ | 4,800 | $ | 22,531 | |||||||||||
13
F&G - An Operating Segment of FNF
Financial Supplement - March 31, 2022
(All periods are unaudited)
Summary of Invested Assets by Asset Class
| March 31, 2022 | December 31, 2021 | ||||||||||||||||||||||||||||||||||||||||
| Amortized Cost | Fair Value | Percent | Amortized Cost | Fair Value | Percent | ||||||||||||||||||||||||||||||||||||
| Fixed maturity securities, available for sale: | |||||||||||||||||||||||||||||||||||||||||
| United States Government full faith and credit | $ | 261 | $ | 262 | 1 | % | $ | 50 | $ | 50 | — | % | |||||||||||||||||||||||||||||
| United States Government sponsored entities | 57 | 55 | — | % | 74 | 74 | — | % | |||||||||||||||||||||||||||||||||
| United States municipalities, states and territories | 1,380 | 1,309 | 3 | % | 1,386 | 1,441 | 4 | % | |||||||||||||||||||||||||||||||||
| Foreign Governments | 190 | 180 | — | % | 197 | 205 | 1 | % | |||||||||||||||||||||||||||||||||
| Corporate securities: | |||||||||||||||||||||||||||||||||||||||||
| Finance, insurance and real estate | 5,303 | 5,064 | 13 | % | 4,881 | 5,109 | 13 | % | |||||||||||||||||||||||||||||||||
| Manufacturing, construction and mining | 910 | 872 | 2 | % | 880 | 932 | 2 | % | |||||||||||||||||||||||||||||||||
| Utilities, energy and related sectors | 2,865 | 2,654 | 7 | % | 2,881 | 2,987 | 8 | % | |||||||||||||||||||||||||||||||||
| Wholesale/retail trade | 2,614 | 2,440 | 6 | % | 2,503 | 2,627 | 7 | % | |||||||||||||||||||||||||||||||||
| Services, media and other | 3,289 | 3,029 | 8 | % | 3,227 | 3,349 | 8 | % | |||||||||||||||||||||||||||||||||
| Hybrid securities | 806 | 819 | 2 | % | 812 | 881 | 2 | % | |||||||||||||||||||||||||||||||||
| Non-agency residential mortgage-backed securities | 735 | 698 | 2 | % | 648 | 648 | 2 | % | |||||||||||||||||||||||||||||||||
| Commercial mortgage-backed securities | 2,937 | 3,038 | 8 | % | 2,669 | 2,964 | 7 | % | |||||||||||||||||||||||||||||||||
| Asset-backed securities | 4,888 | 4,751 | 12 | % | 4,514 | 4,550 | 12 | % | |||||||||||||||||||||||||||||||||
| CLO securities | 4,249 | 4,307 | 11 | % | 4,002 | 4,145 | 11 | % | |||||||||||||||||||||||||||||||||
| Total fixed maturity securities, available for sale | $ | 30,484 | $ | 29,478 | 75 | % | $ | 28,724 | $ | 29,962 | 77 | % | |||||||||||||||||||||||||||||
| Equity securities | 1,107 | 1,073 | 3 | % | 1,135 | 1,171 | 3 | % | |||||||||||||||||||||||||||||||||
| Alternative investments: | |||||||||||||||||||||||||||||||||||||||||
| Private equity | 1,287 | 1,287 | 3 | % | 1,181 | 1,181 | 3 | % | |||||||||||||||||||||||||||||||||
| Real assets | 359 | 358 | 1 | % | 339 | 340 | 1 | % | |||||||||||||||||||||||||||||||||
| Credit | 1,051 | 1,051 | 3 | % | 829 | 829 | 2 | % | |||||||||||||||||||||||||||||||||
| Commercial mortgage loans | 2,231 | 2,147 | 6 | % | 2,168 | 2,265 | 6 | % | |||||||||||||||||||||||||||||||||
| Residential mortgage loans | 1,986 | 1,904 | 5 | % | 1,581 | 1,549 | 4 | % | |||||||||||||||||||||||||||||||||
| Other (primarily derivatives and company owned life insurance) | 1,006 | 997 | 3 | % | 971 | 1,305 | 3 | % | |||||||||||||||||||||||||||||||||
| Short term investments | 387 | 387 | 1 | % | 373 | 373 | 1 | % | |||||||||||||||||||||||||||||||||
| Total (a) | $ | 39,898 | $ | 38,682 | 100 | % | $ | 37,301 | $ | 38,975 | 100 | % | |||||||||||||||||||||||||||||
| (a) Asset duration of 5.9 years and 6.4 years vs. liability duration of 6.1 years and 7.1 years for the periods ending March 31, 2022 and December 31, 2021, respectively. | |||||||||||||||||||||||||||||||||||||||||
14
F&G - An Operating Segment of FNF
Financial Supplement - March 31, 2022
(All periods are unaudited)
Credit Quality of Fixed Maturity Securities
| March 31, 2022 | ||||||||||||||
| NAIC Designation | Fair Value | Percent | ||||||||||||
| 1 | $ | 16,168 | 55 | % | ||||||||||
| 2 | 10,905 | 37 | % | |||||||||||
| 3 | 1,669 | 6 | % | |||||||||||
| 4 | 608 | 2 | % | |||||||||||
| 5 | 74 | — | % | |||||||||||
| 6 | 54 | — | % | |||||||||||
| $ | 29,478 | 100 | % | |||||||||||
| March 31, 2022 | ||||||||||||||
| Rating Agency Rating | Fair Value | Percent | ||||||||||||
| AAA | $ | 862 | 3 | % | ||||||||||
| AA | 2,128 | 7 | % | |||||||||||
| A | 7,571 | 26 | % | |||||||||||
| BBB | 9,709 | 33 | % | |||||||||||
| Not rated | 7,091 | 24 | % | |||||||||||
| Total investment grade | 27,361 | 93 | % | |||||||||||
| BB | 1,175 | 4 | % | |||||||||||
| B and below | 408 | 1 | % | |||||||||||
| Not rated | 534 | 2 | % | |||||||||||
| Total below investment grade | 2,117 | 7 | % | |||||||||||
| $ | 29,478 | 100 | % | |||||||||||
15
F&G - An Operating Segment of FNF
Financial Supplement - March 31, 2022
(All periods are unaudited)
Summary of Residential Mortgage Backed Securities by Collateral Type and NAIC Designation
| March 31, 2022 | ||||||||||||||
| Total by collateral type | Amortized Cost | Fair Value | ||||||||||||
| Government Agency | $ | 57 | $ | 55 | ||||||||||
| Prime | 611 | 578 | ||||||||||||
| Subprime | 52 | 51 | ||||||||||||
| Alt-A | 72 | 69 | ||||||||||||
| $ | 792 | $ | 753 | |||||||||||
| March 31, 2022 | ||||||||||||||
| Total by NAIC designation | Amortized Cost | Fair Value | ||||||||||||
| 1 | $ | 777 | $ | 739 | ||||||||||
| 2 | 5 | 5 | ||||||||||||
| 3 | 4 | 4 | ||||||||||||
| 4 | 5 | 4 | ||||||||||||
| 5 | 1 | 1 | ||||||||||||
| $ | 792 | $ | 753 | |||||||||||
Top 5 Reinsurers
| March 31, 2022 | ||||||||||||||||||||||||||||||||
| Financial Strength Rating | ||||||||||||||||||||||||||||||||
| Parent Company/Principal Reinsurers | Reinsurance Recoverable (a) | AM Best | S&P | Fitch | Moody's | |||||||||||||||||||||||||||
| Wilton Re | $ | 1,279 | A+ | not rated | A+ | not rated | ||||||||||||||||||||||||||
| Aspida Life Re Ltd | 1,103 | A- | not rated | BBB | not rated | |||||||||||||||||||||||||||
| Somerset Reinsurance Ltd | 727 | A- | BBB+ | not rated | not rated | |||||||||||||||||||||||||||
| London Life Reinsurance Co. | 101 | A+ | not rated | not rated | not rated | |||||||||||||||||||||||||||
| Security Life of Denver | 100 | not rated | A- | A- | Baa1 | |||||||||||||||||||||||||||
(a) Reinsurance recoverables do not include unearned ceded premiums that would be recovered in the event of early termination of certain traditional life policies.
16
F&G - An Operating Segment of FNF
Financial Supplement - March 31, 2022
(All periods are unaudited)
Non-GAAP Financial Measures Definitions
The following represents the definitions of non-GAAP measures used by F&G, as an operating segment of FNF:
| Adjusted Net Earnings Attributable to Common Shareholders (Adjusted Net Earnings) | |||||||||||||||||||||||
| Adjusted net earnings is a non-GAAP economic measure we use to evaluate financial performance each period. Adjusted net earnings is calculated by adjusting net earnings (loss) from continuing operations attributable to common shareholders to eliminate: | |||||||||||||||||||||||
| (i) Recognized (gains) and losses, net: the impact of net investment gains/losses, including changes in allowance for expected credit losses and other than temporary impairment ("OTTI") losses, recognized in operations; the impact of market volatility on the alternative asset portfolio that differ from management's expectation of returns over the life of these assets; and the effect of changes in fair value of the reinsurance related embedded derivative; | |||||||||||||||||||||||
| (ii) Indexed product related derivatives: the impacts related to changes in the fair value, including both realized and unrealized gains and losses, of index product related derivatives and embedded derivatives, net of hedging cost; | |||||||||||||||||||||||
| (iii) Purchase price amortization: the impacts related to the amortization of certain intangibles (internally developed software, trademarks and value of distribution asset ("VODA")) recognized as a result of acquisition activities; | |||||||||||||||||||||||
| (iv) Transaction costs: the impacts related to acquisition, integration and merger related items; and | |||||||||||||||||||||||
| (v) Other "non-recurring", "infrequent" or "unusual items": Management excludes certain items determined to be “non-recurring”, “infrequent” or “unusual” from adjusted net earnings when incurred if it is determined these expenses are not a reflection of the core business and when the nature of the item is such that it is not reasonably likely to recur within two years and/or there was not a similar item in the preceding two years. | |||||||||||||||||||||||
| Adjustments to adjusted net earnings are net of the corresponding impact on amortization of intangibles, as appropriate. The income tax impact related to these adjustments is measured using an effective tax rate, as appropriate by tax jurisdiction. While these adjustments are an integral part of the overall performance of F&G, market conditions and/or the non-operating nature of these items can overshadow the underlying performance of the core business. Accordingly, management considers this to be a useful measure internally and to investors and analysts in analyzing the trends of our operations. Adjusted net earnings should not be used as a substitute for net earnings (loss). However, we believe the adjustments made to net earnings (loss) in order to derive adjusted net earnings provide an understanding of our overall results of operations. | |||||||||||||||||||||||
| Total Shareholders’ Equity Excluding AOCI | |||||||||||||||||||||||
| Total Shareholders’ Equity Excluding AOCI is based on Total Shareholders' Equity excluding the effect of AOCI. Since AOCI fluctuates from quarter to quarter due to unrealized changes in the fair value of available for sale investments, Management considers this non-GAAP financial measure to provide useful supplemental information internally and to investors and analysts assessing the level of earned equity on Total Shareholders' Equity. | |||||||||||||||||||||||
| Assets Under Management (AUM) | |||||||||||||||||||||||
| AUM is calculated as the sum of: | |||||||||||||||||||||||
| (i) total invested assets at amortized cost, excluding derivatives, net of reinsurance qualifying for risk transfer in accordance with GAAP; | |||||||||||||||||||||||
| (ii) related party loans and investments; | |||||||||||||||||||||||
| (iii) accrued investment income; | |||||||||||||||||||||||
| (iv) the net payable/receivable for the purchase/sale of investments, and | |||||||||||||||||||||||
| (v) cash and cash equivalents excluding derivative collateral at the beginning of the period and the end of each month in the period, divided by the total number of months in the period plus one. | |||||||||||||||||||||||
| Management considers this non-GAAP financial measure to be useful internally and to investors and analysts when assessing the rate of return on assets available for reinvestment. | |||||||||||||||||||||||
17
F&G - An Operating Segment of FNF
Financial Supplement - March 31, 2022
(All periods are unaudited)
| Non-GAAP Financial Measures Definitions (continued) | |||||||||||||||||||||||
| Average Assets Under Management (AAUM) | |||||||||||||||||||||||
| AAUM is calculated as AUM at the beginning of the period and the end of each month in the period, divided by the total number of months in the period plus one. | |||||||||||||||||||||||
| Management considers this non-GAAP financial measure to be useful internally and to investors and analysts when assessing the rate of return on assets available for reinvestment. | |||||||||||||||||||||||
| Yield on AAUM | |||||||||||||||||||||||
| Yield on AAUM is calculated by dividing annualized net investment income by AAUM. Management considers this non-GAAP financial measure to be useful internally and to investors and analysts when assessing the level of return earned on AAUM. | |||||||||||||||||||||||
| Alternative Investment Yield Adjustment | |||||||||||||||||||||||
| Alternative investment yield adjustment is the current period yield impact of market volatility on the alternative investment portfolio that differ from management's expectation of returns over the life of these assets. Management considers this non-GAAP financial measure to be useful internally and to investors and analysts when assessing the level of return earned on AAUM. | |||||||||||||||||||||||
| Adjusted Yield on AAUM | |||||||||||||||||||||||
| Adjusted Yield on AAUM is calculated by dividing annualized net investment income by AAUM, plus or minus the alternative investment yield adjustment. Management considers this non-GAAP financial measure to be useful internally and to investors and analysts when assessing the level of return earned on AAUM. | |||||||||||||||||||||||
| Net Investment Spread | |||||||||||||||||||||||
| Net investment spread is the excess of net investment income, adjusted for market volatility on the alternative asset investment portfolio, earned over the sum of interest credited to policyholders and the cost of hedging our risk on indexed product policies. Management considers this non-GAAP financial measure to be useful internally and to investors and analysts when assessing the performance of the Company’s invested assets against the level of investment return provided to policyholders, inclusive of hedging costs. | |||||||||||||||||||||||
| Adjusted Return on Assets | |||||||||||||||||||||||
| Adjusted Return on Assets is calculated by dividing annualized adjusted net earnings by year-to-date AAUM. Management considers this non-GAAP financial measure to be useful internally and to investors and analysts when assessing financial performance and profitability earned on AAUM. | |||||||||||||||||||||||
| Sales | |||||||||||||||||||||||
Annuity, IUL, funding agreement and non-life contingent PRT sales are not derived from any specific GAAP income statement accounts or line items and should not be viewed as a substitute for any financial measure determined in accordance with GAAP. Sales from these products are recorded as deposit liabilities (i.e. contractholder funds) within the Company's consolidated financial statements in accordance with GAAP. Life contingent PRT sales are recorded as premiums in revenues within the consolidated financial statements. Management believes that presentation of sales, as measured for management purposes, enhances the understanding of our business and helps depict longer term trends that may not be apparent in the results of operations due to the timing of sales and revenue recognition. | |||||||||||||||||||||||
18