FNF Reports Third Quarter 2020 Diluted EPS from Continuing Operations of $1.39 and Adjusted Diluted EPS from Continuing Operations of $1.48, Pre-Tax Title Margin of 20.4% and Adjusted Pre-Tax Title Margin of 21.2%

November 4, 2020 at 4:15 PM EST

JACKSONVILLE, Fla., Nov. 4, 2020 /PRNewswire/ -- Fidelity National Financial, Inc. (NYSE: FNF), a leading provider of title insurance and transaction services to the real estate and mortgage industries, today reported operating results for the period ended September 30, 2020.

  • Total revenue of approximately $3.0 billion in the third quarter versus $2.2 billion in the third quarter of 2019
  • Third quarter net earnings from continuing operations of $406 million and adjusted net earnings from continuing operations of $435 million versus net earnings of $250 million and adjusted net earnings of $304 million for the third quarter of 2019
  • Third quarter diluted EPS from continuing operations of $1.39 and adjusted diluted EPS from continuing operations of $1.48 versus diluted EPS of $0.90 and adjusted diluted EPS of $1.10 in the third quarter of 2019
  • Recognized gains were $73 million in the third quarter versus recognized gains of $4 million in the third quarter of 2019 primarily due to mark to market accounting treatment of equity and preferred stock securities whether the securities were disposed of in the quarter or continue to be held in our investment portfolio

Title

  • Total revenue of approximately $2.5 billion versus approximately $2.2 billion in total revenue in the third quarter of 2019
  • Total revenue, excluding recognized gains and losses, of approximately $2.5 billion versus approximately $2.2 billion in the third quarter of 2019, an increase of 13.5%
  • Pre-tax earnings of $507 million and adjusted pre-tax earnings of $528 million versus pre-tax earnings of $389 million and adjusted pre-tax earnings of $407 million in the third quarter of 2019
  • Pre-tax title margin of 20.4% and adjusted pre-tax title margin of 21.2% versus pre-tax title margin of 17.7% and adjusted pre-tax title margin of 18.6% in the third quarter of 2019
  • Third quarter refinance orders opened increased 83% on a daily basis and refinance orders closed increased 87% on a daily basis versus the third quarter of 2019; purchase orders opened increased 12% on a daily basis and purchase orders closed increased 8% on a daily basis versus the third quarter of 2019
  • Total commercial revenue of $216 million, a 28% decline versus total commercial revenue in the third quarter of 2019, driven by a 16% decrease in closed orders and 14% decline in total commercial fee per file; third quarter total commercial orders opened increased 4% compared to the prior year
  • Overall third quarter average fee per file of $2,063, a 16% decrease versus the third quarter of 2019

Title Orders

     

Direct Orders Opened *

   

Direct Orders Closed *

Month

 

 / (% Purchase)

 

 / (% Purchase)

July 2020

   

292,000

40%

   

187,000

43%

August 2020

   

283,000

40%

   

186,000

42%

September 2020

   

272,000

40%

   

198,000

40%

             

Third Quarter 2020

   

847,000

40%

   

571,000

42%

             
     

Direct Orders Opened *

   

Direct Orders Closed *

Month

 

 / (% Purchase)

   

 / (% Purchase)

July 2019

   

192,000

56%

   

134,000

59%

August 2019

   

214,000

48%

   

137,000

56%

September 2019

   

186,000

51%

   

138,000

51%

             

Third Quarter 2019

   

592,000

52%

   

409,000

55%

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

F&G

F&G, a leading provider of annuities and life insurance, reported operating results for the third quarter of 2020. As a result of acquisition accounting (purchase accounting or PGAAP), financial results for periods after June 1, 2020 are generally not comparable to the results of prior periods.  Certain metrics, such as sales and policyholder account values, are not affected by PGAAP and are comparable to prior period data.

  • Total Retail Annuity Sales of $1,068 million in the third quarter, an increase of 34 percent to the prior year, and an increase of 17 percent from the sequential quarter
  • Fixed Indexed Annuities (FIA) Sales of $815 million in the third quarter, an increase of 38 percent to the prior year, and a 6 percent decrease from the sequential quarter
  • Average Assets Under Management (AAUM) of $27.0 billion for the third quarter, up from $26.6 billion in the sequential period driven by net new business asset flows; and down from $27.9 billion in the prior year as a result of merger effects
  • Net Investment Spread: FIA spread for the third quarter of 347 basis points; Total Spread, including all product lines, for the third quarter of 261 basis points
  • Net Earnings Attributable to Common Shareholders of $38 million for the third quarter, including a $28 million loss from discontinued operations and $8 million net unfavorable mark-to-market and other items which are excluded from Adjusted Net Earnings
  • Adjusted Net Earnings From Continuing Operations Attributable to Common Shareholders of $74 million for the quarter

"We are very pleased with our third quarter results in which we experienced sequential improvement every month in closed orders per day," commented Chairman William P. Foley, II.  "We generated adjusted pre-tax title earnings of $528 million, a record quarter, and an adjusted pre-tax title margin of 21.2%, our best quarterly margin since the third quarter of 2003, as we benefited from the delayed spring selling season and sustained momentum in refinance. During the third quarter refinance opened and closed orders on a daily basis increased 83% and 87%, respectively. I would like to thank our employees for their continued efforts as we work together to ensure the health and safety of our employees while meeting our customers' needs in this challenging environment."  

"We are also excited about our technology investments as we continue to focus on improving the security, transparency, and overall closing experience for our customers. Our StartSafe initiative, which reached a significant milestone during the third quarter, helps create a safer and more user-friendly experience for consumers as they begin their real estate transactions, and reduces the chance of fraud in the process. We are also focused on transitioning real estate closings through the adoption of new digital technologies and experiences on a large scale and in a way that supports our nationwide network of trusted closing professionals. As we continue to expand our technology investments and bring to market new digital initiatives that will reimagine the real estate transaction experience for both real estate professionals and consumers, we see an opportunity to further reduce costs and increase market share.

"Turning to F&G, the company's recent entrance into the bank and broker dealer channel has surpassed our expectations as the F&G team continues to execute against its growth strategy, producing strong sales results in the third quarter.  Furthermore, the company's investment portfolio continues to perform well in the current environment.  Following the closing of F&G in early June, F&G had success entering into an agreement to sell F&G Reinsurance to Aspida Holdings, an indirect subsidiary of Ares Management.  This transaction represents a terrific outcome for F&G Reinsurance, its clients and employees, and FNF shareholders. In conjunction with this transaction, F&G also entered into a mutually beneficial multiyear guaranteed annuity flow reinsurance partnership. We expect the sale of F&G Reinsurance to close prior to year end." 

Mr. Foley concluded, "Lastly, we remain committed to maximizing value for our shareholders through our capital allocation strategy, focused on consistent dividend growth evident in our most recent dividend increase of 9%, growing our business and targeting $500 million of share repurchases, based on market conditions, over the course of the next twelve months."

Conference Call

We will host a call with investors and analysts to discuss third quarter 2020 FNF results on Thursday, November 5, 2020, beginning at 12:00 p.m. Eastern Time.  A live webcast of the conference call will be available on the Events and Multimedia page of the FNF Investor Relations website at fnf.com.  The conference call replay will be available via webcast through the FNF Investor Relations website at fnf.com. The telephone replay will be available from 3:00 p.m. Eastern Time on November 5, 2020, through November 12, 2020, by dialing 1-844-512-2921 (USA) or 1-412-317-6671 (International). The access code will be 13710928. An expanded quarterly financial supplement providing 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 annuity and life insurance products and is headquartered in Des Moines, Iowa. For more information, please visit www.fglife.bm.

Use of Non-GAAP Financial Information

Generally Accepted Accounting Principles (GAAP) is the term used to refer to the standard framework of guidelines for financial accounting. GAAP includes the standards, conventions, and rules accountants follow in recording and summarizing transactions and in the preparation of financial statements. In addition to reporting financial results in accordance with GAAP, FNF has provided non-GAAP financial measures, which it believes are useful to help investors better understand its financial performance, competitive position and prospects for the future. These non-GAAP measures include adjusted net earnings, adjusted 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), F&G adjusted earnings, F&G adjusted earnings attributable to common shareholders, F&G adjusted operating return on common shareholders' equity excluding AOCI, F&G net investment spread, F&G average assets under management and F&G sales.

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

Forward-Looking Statements and Risk Factors

This press release contains forward-looking statements that involve a number of risks and uncertainties. Statements that are not historical facts, including statements regarding our expectations, hopes, intentions or strategies regarding the future are forward-looking statements. Forward-looking statements are based on management's beliefs, as well as assumptions made by, 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 ability of FNF to successfully integrate F&G's operations and employees; the potential impact of the announcement or consummation of the proposed 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

FIDELITY NATIONAL FINANCIAL, INC.

THIRD QUARTER SEGMENT INFORMATION

(In millions, except order information in thousands)

(Unaudited)

 
   

Consolidated

 

Title

 

F&G

 

Corporate and
Other

Three Months Ended

       

September 30, 2020

       

Direct title premiums

 

$

733

   

$

733

   

$

   

$

 

Agency title premiums

 

981

   

981

   

   

 

Escrow, title related and other fees

 

853

   

742

   

60

   

51

 

Total title and escrow

 

2,567

   

2,456

   

60

   

51

 
                 

Interest and investment income

 

336

   

31

   

305

   

 

Recognized gains and losses, net

 

73

   

(3)

   

77

   

(1)

 

Total revenue

 

2,976

   

2,484

   

442

   

50

 
                 

Personnel costs

 

782

   

726

   

23

   

33

 

Agent commissions

 

749

   

749

   

   

 

Other operating expenses

 

449

   

386

   

33

   

30

 

Benefits & other policy reserve changes

 

251

   

   

251

   

 

Depreciation and amortization

 

100

   

39

   

56

   

5

 

Claim loss expense

 

77

   

77

   

   

 

Interest expense

 

29

   

   

7

   

22

 

Total expenses

 

2,437

   

1,977

   

370

   

90

 
                 

Pre-tax earnings (loss) from continuing operations

 

$

539

   

$

507

   

$

72

   

$

(40)

 
                 

  Income tax expense (benefit)

 

133

   

129

   

6

   

(2)

 

  Earnings (loss) from equity investments

 

7

   

5

   

   

2

 

  Loss from discontinued operations, net of tax

 

(28)

   

   

(28)

   

 

  Non-controlling interests

 

7

   

7

   

   

 
                 

Net earnings (loss) attributable to common shareholders

 

$

378

   

$

376

   

$

38

   

$

(36)

 
                 

EPS from continuing operations attributable to common shareholders - basic

 

$

1.40

             

EPS from discontinued operations attributable to common shareholders - basic

 

(0.10)

             

EPS attributable to common shareholders - basic

 

$

1.30

             
                 

EPS from continuing operations attributable to common shareholders - diluted

 

$

1.39

             

EPS from discontinued operations attributable to common shareholders - diluted

 

(0.10)

             

EPS attributable to common shareholders - diluted

 

$

1.29

             
                 

Weighted average shares - basic

 

291

             

Weighted average shares - diluted

 

293

             

 

FIDELITY NATIONAL FINANCIAL, INC.

THIRD QUARTER SEGMENT INFORMATION

(In millions, except order information in thousands)

(Unaudited)

 
   

Consolidated

 

Title

 

F&G

 

Corporate and
Other

Three Months Ended

       

September 30, 2020

       

Net earnings (loss) attributable to common shareholders

 

$

378

   

$

376

   

$

38

   

$

(36)

 
                 

  Loss from discontinued operations, net of tax

 

(28)

   

   

(28)

   

 
                 

Net earnings (loss) from continuing operations attributable to common shareholders

 

$

406

   

$

376

   

$

66

   

$

(36)

 
                 

Pre-tax earnings (loss) from continuing operations

 

$

539

   

$

507

   

$

72

   

$

(40)

 
                 

 Non-GAAP Adjustments

               

  Recognized (gains) and losses, net

 

(11)

   

3

   

(15)

   

1

 

  Indexed product related derivatives

 

14

   

   

14

   

 

  Debt issuance costs

 

1

   

   

   

1

 

  Purchase price amortization

 

29

   

18

   

7

   

4

 

  Transaction costs

 

12

   

   

10

   

2

 
                 

Adjusted pre-tax earnings (loss)

 

$

584

   

$

528

   

$

88

   

$

(32)

 
                 

Total non-GAAP, pre-tax adjustments

 

$

45

   

$

21

   

$

16

   

$

8

 

  Income taxes on non-GAAP adjustments

 

(15)

   

(5)

   

(8)

   

(2)

 

  Non-controlling interest on non-GAAP adjustments

 

(1)

   

(1)

   

   

 

Total non-GAAP adjustments

 

$

29

   

$

15

   

$

8

   

$

6

 
                 

Adjusted net earnings (loss) from continuing operations attributable to common shareholders

 

$

435

   

$

391

   

$

74

   

$

(30)

 
                 

Adjusted EPS from continuing operations attributable to common shareholders - diluted

 

$

1.48

             

 

FIDELITY NATIONAL FINANCIAL, INC.

THIRD QUARTER SEGMENT INFORMATION

(In millions, except order information in thousands)

(Unaudited)

 
   

Consolidated

 

Title

 

Corporate and
Other

Three Months Ended

     

September 30, 2019

     

Direct title premiums

 

$

660

   

$

660

   

$

 

Agency title premiums

 

827

   

827

   

 

Escrow, title related and other fees

 

693

   

653

   

40

 

Total title and escrow

 

2,180

   

2,140

   

40

 
             

Interest and investment income

 

57

   

51

   

6

 

Recognized gains and losses, net

 

4

   

3

   

1

 

Total revenue

 

2,241

   

2,194

   

47

 
             

Personnel costs

 

702

   

677

   

25

 

Agent commissions

 

630

   

630

   

 

Other operating expenses

 

473

   

393

   

80

 

Depreciation and amortization

 

44

   

38

   

6

 

Claim loss expense

 

67

   

67

   

 

Interest expense

 

12

   

   

12

 

Total expenses

 

1,928

   

1,805

   

123

 
             

Pre-tax earnings (loss)

 

$

313

   

$

389

   

$

(76)

 
             

  Income tax expense (benefit)

 

59

   

94

   

(35)

 

  Earnings from equity investments

 

2

   

1

   

1

 

  Non-controlling interests

 

6

   

5

   

1

 
             

Net earnings (loss) attributable to common shareholders

 

$

250

   

$

291

   

$

(41)

 
             

EPS attributable to common shareholders - basic

 

$

0.92

         

EPS attributable to common shareholders - diluted

 

$

0.90

         
             

Weighted average shares - basic

 

273

         

Weighted average shares - diluted

 

277

         

 

FIDELITY NATIONAL FINANCIAL, INC.

THIRD QUARTER SEGMENT INFORMATION

(In millions, except order information in thousands)

(Unaudited)

 
   

Consolidated

 

Title

 

Corporate and
Other

Three Months Ended

     

September 30, 2019

     

Net earnings (loss) attributable to common shareholders

 

$

250

   

$

291

   

$

(41)

 
             

Pre-tax earnings (loss)

 

$

313

   

$

389

   

$

(76)

 
             

Non-GAAP Adjustments

           

  Recognized (gains) and losses, net

 

(4)

   

(3)

   

(1)

 

  Purchase price amortization

 

26

   

21

   

5

 

  Transaction costs

 

52

   

   

52

 
             

Adjusted pre-tax earnings (loss)

 

$

387

   

$

407

   

$

(20)

 
             

Total non-GAAP, pre-tax adjustments

 

$

74

   

$

18

   

$

56

 

  Income taxes on non-GAAP adjustments

 

(17)

   

(4)

   

(13)

 

  Non-controlling interest on non-GAAP adjustments

 

(3)

   

(3)

   

 

Total non-GAAP adjustments

 

$

54

   

$

11

   

$

43

 
             

Adjusted net earnings attributable to common shareholders

 

$

304

   

$

302

   

$

2

 
             

Adjusted EPS attributable to common shareholders - diluted

 

$

1.10

         

 

FIDELITY NATIONAL FINANCIAL, INC. 

YTD SEGMENT INFORMATION

(In millions, except order information in thousands)

(Unaudited)

 
   

Consolidated

 

Title

 

F&G

 

Corporate and
Other

Nine Months Ended

       

September 30, 2020

       

Direct title premiums

 

$

1,854

   

$

1,854

   

$

   

$

 

Agency title premiums

 

2,497

   

2,497

   

   

 

Escrow, title related and other fees

 

2,201

   

2,007

   

80

   

114

 

Total title and escrow

 

6,552

   

6,358

   

80

   

114

 
                 

Interest and investment income

 

541

   

120

   

416

   

5

 

Recognized gains and losses, net

 

(85)

   

(147)

   

70

   

(8)

 

Total revenue

 

7,008

   

6,331

   

566

   

111

 
                 

Personnel costs

 

2,088

   

1,992

   

32

   

64

 

Agent commissions

 

1,907

   

1,907

   

   

 

Other operating expenses

 

1,306

   

1,140

   

45

   

121

 

Benefits & other policy reserve changes

 

406

   

   

406

   

 

Depreciation and amortization

 

189

   

113

   

59

   

17

 

Claim loss expense

 

196

   

196

   

   

 

Interest expense

 

62

   

1

   

10

   

51

 

Total expenses

 

6,154

   

5,349

   

552

   

253

 
                 

Pre-tax earnings (loss) from continuing operations

 

$

854

   

$

982

   

$

14

   

$

(142)

 
                 

  Income tax expense (benefit)

 

194

   

240

   

(8)

   

(38)

 

  Earnings (loss) from equity investments

 

9

   

8

   

   

1

 

  Loss from discontinued operations, net of tax

 

(23)

   

   

(23)

   

 

  Non-controlling interests

 

20

   

20

   

   

 
                 

Net earnings (loss) attributable to common shareholders

 

$

626

   

$

730

   

$

(1)

   

$

(103)

 
                 

EPS from continuing operations attributable to common shareholders - basic

 

$

2.32

             

EPS from discontinued operations attributable to common shareholders - basic

 

(0.08)

             

EPS attributable to common shareholders - basic

 

$

2.24

             
                 

EPS from continuing operations attributable to common shareholders - diluted

 

$

2.29

             

EPS from discontinued operations attributable to common shareholders - diluted

 

(0.08)

             

EPS attributable to common shareholders - diluted

 

$

2.21

             
                 

Weighted average shares - basic

 

280

             

Weighted average shares - diluted

 

283

             

 

FIDELITY NATIONAL FINANCIAL, INC.

YTD SEGMENT INFORMATION

(In millions, except order information in thousands)

(Unaudited)

 
   

Consolidated

 

Title

 

F&G

 

Corporate and
Other

Nine Months Ended

       

September 30, 2020

       

Net earnings (loss) attributable to common shareholders

 

$

626

   

$

730

   

$

(1)

   

$

(103)

 
                 

Loss from discontinued operations, net of tax

 

(23)

   

   

(23)

   

 
                 

Net earnings (loss) from continuing operations attributable to common shareholders

 

$

649

   

$

730

   

$

22

   

$

(103)

 
                 

Pre-tax earnings (loss) from continuing operations

 

$

854

   

$

982

   

$

14

   

$

(142)

 
                 

Non-GAAP Adjustments

               

  Recognized (gains) and losses, net

 

186

   

147

   

31

   

8

 

  Indexed product related derivatives

 

57

   

   

57

   

 

  Debt issuance costs

 

5

   

   

   

5

 

  Purchase price amortization

 

77

   

55

   

9

   

13

 

  Transaction costs

 

63

   

   

17

   

46

 

  Other adjustments

 

1

   

1

   

   

 
                 

Adjusted pre-tax earnings (loss)

 

$

1,243

   

$

1,185

   

$

128

   

$

(70)

 
                 

Total non-GAAP, pre-tax adjustments

 

$

389

   

$

203

   

$

114

   

$

72

 

  Income taxes on non-GAAP adjustments

 

(93)

   

(47)

   

(29)

   

(17)

 

  Non-controlling interest on non-GAAP adjustments

 

(7)

   

(6)

   

   

(1)

 

Total non-GAAP adjustments

 

$

289

   

$

150

   

$

85

   

$

54

 
                 

Adjusted net earnings (loss) from continuing operations attributable to common shareholders

 

$

938

   

$

880

   

$

107

   

$

(49)

 
                 

Adjusted EPS from continuing operations attributable to common shareholders - diluted

 

$

3.31

             

 

FIDELITY NATIONAL FINANCIAL, INC.

YTD SEGMENT INFORMATION

(In millions, except order information in thousands)

(Unaudited)

 
             

Nine Months Ended

 

Consolidated

 

Title

 

Corporate and
Other

September 30, 2019

     

Direct title premiums

 

$

1,725

   

$

1,725

   

$

 

Agency title premiums

 

2,133

   

2,133

   

 

Escrow, title related and other fees 

 

1,892

   

1,747

   

145

 

Total title and escrow

 

5,750

   

5,605

   

145

 
             

Interest and investment income

 

170

   

153

   

17

 

Recognized gains and losses, net

 

187

   

191

   

(4)

 

Total revenue

 

6,107

   

5,949

   

158

 
             

Personnel costs

 

1,979

   

1,881

   

98

 

Agent commissions

 

1,630

   

1,630

   

 

Other operating expenses

 

1,226

   

1,081

   

145

 

Depreciation and amortization

 

132

   

115

   

17

 

Claim loss expense

 

174

   

174

   

 

Interest expense

 

36

   

   

36

 

Total expenses

 

5,177

   

4,881

   

296

 
             

Pre-tax earnings (loss)

 

$

930

   

$

1,068

   

$

(138)

 
             

  Income tax expense (benefit)

 

210

   

260

   

(50)

 

  Earnings from equity investments

 

12

   

11

   

1

 

  Non-controlling interests

 

10

   

10

   

 
             

Net earnings (loss) attributable to common shareholders

 

$

722

   

$

809

   

$

(87)

 
             

EPS attributable to common shareholders - basic

 

$

2.64

         

EPS attributable to common shareholders - diluted

 

$

2.61

         
             

Weighted average shares - basic

 

273

         

Weighted average shares - diluted

 

277

         

 

FIDELITY NATIONAL FINANCIAL, INC.

YTD SEGMENT INFORMATION

(In millions, except order information in thousands)

(Unaudited)

 
   

Consolidated

 

Title

 

Corporate and
Other

Nine Months Ended

     

September 30, 2019

     

Net earnings (loss) attributable to common shareholders

 

$

722

   

$

809

   

$

(87)

 
             

Pre-tax earnings (loss)

 

$

930

   

$

1,068

   

$

(138)

 
             

Non-GAAP Adjustments

           

  Recognized (gains) and losses, net

 

(187)

   

(191)

   

4

 

  Purchase price amortization

 

78

   

64

   

14

 

  Transaction costs

 

58

   

   

58

 

  Other adjustments

 

1

   

1

   

 
             

Adjusted pre-tax earnings (loss)

 

$

880

   

$

942

   

$

(62)

 
             

Total non-GAAP, pre-tax adjustments

 

$

(50)

   

$

(126)

   

$

76

 

  Income taxes on non-GAAP adjustments

 

14

   

32

   

(18)

 

  Non-controlling interest on non-GAAP adjustments

 

(9)

   

(8)

   

(1)

 

Total non-GAAP adjustments

 

$

(45)

   

$

(102)

   

$

57

 
             

Adjusted net earnings (loss) attributable to common shareholders

 

$

677

   

$

707

   

$

(30)

 
             

Adjusted EPS attributable to common shareholders - diluted

 

$

2.44

         

 

FIDELITY NATIONAL FINANCIAL, INC.

SUMMARY BALANCE SHEET INFORMATION

(In millions)

 
   

September 30,
2020

 

December 31,
2019

   

(Unaudited)

 

(Unaudited)

Cash and investment portfolio

   

$

35,098

     

$

5,760

 

Goodwill

   

4,458

     

2,727

 

Title plant

   

404

     

404

 

Total assets

   

49,885

     

10,677

 

Notes payable

   

2,664

     

838

 

Reserve for title claim losses

   

1,555

     

1,509

 

Secured trust deposits

   

829

     

791

 

Redeemable non-controlling interests

   

     

344

 

Non-redeemable non-controlling interests

   

41

     

(17)

 

Total equity and non-controlling interests

   

7,182

     

5,709

 

Total equity attributable to common shareholders

   

7,141

     

5,382

 

 

Non-GAAP Measures and Other Information

Title

The table below reconciles pre-tax title earnings to adjusted pre-tax title earnings.

 

Three Months Ended

   

Nine Months Ended

 

September 30,
2020

September 30,
2019

   

September 30,
2020

September 30,
2019

Pre-tax earnings

$

507

 

$

389

     

$

982

 

$

1,068

 

Non-GAAP adjustments before taxes

           

  Recognized (gains) and losses, net

3

 

(3)

     

147

 

(191)

 

  Purchase price amortization

18

 

21

     

55

 

64

 

  Other adjustments

 

     

1

 

1

 

Total non-GAAP adjustments

21

 

18

     

203

 

(126)

 

Adjusted pre-tax earnings

$

528

 

$

407

     

$

1,185

 

$

942

 

Adjusted pre-tax margin

21.2

%

18.6

%

   

18.3

%

16.4

%

 

FIDELITY NATIONAL FINANCIAL, INC.

QUARTERLY OPERATING STATISTICS

(Unaudited)

 
   

Q3 2020

 

Q2 2020

 

Q1 2020

 

Q4 2019

 

Q3 2019

 

Q2 2019

 

Q1 2019

 

Q4 2018

Quarterly Opened Orders ('000's except % data)

Total opened orders*

 

847

   

693

   

682

   

492

   

592

   

544

   

438

   

379

 

Total opened orders per day*

 

13.2

   

10.8

   

11.0

   

7.8

   

9.3

   

8.5

   

7.2

   

6.0

 

Purchase % of opened orders

 

40

%

 

37

%

 

41

%

 

50

%

 

52

%

 

61

%

 

65

%

 

67

%

Refinance % of opened orders

 

60

%

 

63

%

 

59

%

 

50

%

 

48

%

 

39

%

 

35

%

 

33

%

Total closed orders*

 

571

   

487

   

377

   

417

   

409

   

359

   

263

   

301

 

Total closed orders per day*

 

8.9

   

7.6

   

6.1

   

6.6

   

6.4

   

5.6

   

4.3

   

4.8

 

Purchase % of closed orders

 

42

%

 

35

%

 

46

%

 

49

%

 

55

%

 

65

%

 

66

%

 

69

%

Refinance % of closed orders

 

58

%

 

65

%

 

54

%

 

51

%

 

45

%

 

35

%

 

34

%

 

31

%

                                 

Commercial (millions, except orders in '000's)

Total commercial revenue

 

$

216

   

$

184

   

$

245

   

$

321

   

$

301

   

$

286

   

$

231

   

$

328

 

Total commercial opened orders

 

58.1

   

43.9

   

56.3

   

55.1

   

56.0

   

58.6

   

49.8

   

46.0

 

Total commercial closed orders

 

30.6

   

25.7

   

31.0

   

39.1

   

36.4

   

34.0

   

30.0

   

35.2

 
                                 

National commercial revenue

 

$

113

   

$

96

   

$

132

   

$

186

   

$

172

   

$

163

   

$

122

   

$

195

 

National commercial opened orders

 

21.7

   

15.2

   

21.5

   

22.6

   

23.8

   

25.3

   

20.6

   

19.1

 

National commercial closed orders

 

9.8

   

8.8

   

10.7

   

16.2

   

14.1

   

12.7

   

10.5

   

13.2

 
                                 

Total Fee Per File

Fee per file

 

$

2,063

   

$

1,889

   

$

2,224

   

$

2,384

   

$

2,459

   

$

2,677

   

$

2,567

   

$

2,803

 

Residential fee per file

 

$

1,803

   

$

1,614

   

$

1,744

   

$

1,792

   

$

1,928

   

$

2,075

   

$

1,964

   

$

2,003

 

Total commercial fee per file

 

$

7,100

   

$

7,200

   

$

7,900

   

$

8,200

   

$

8,300

   

$

8,400

   

$

7,700

   

$

9,300

 

National commercial fee per file

 

$

11,500

   

$

10,900

   

$

12,300

   

$

11,500

   

$

12,200

   

$

12,900

   

$

11,600

   

$

14,800

 
                                 

Total Staffing

Total field operations employees

 

12,300

   

10,900

   

12,500

   

12,300

   

12,200

   

12,000

   

11,700

   

11,800

 
                                 

Actual title claims paid ($ millions)

 

$

50

   

$

51

   

$

48

   

$

53

   

$

52

   

$

66

   

$

49

   

$

58

 
 

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

 

F&G

The table below reconciles the reported after-tax net loss from continuing operations to adjusted earnings from continuing operations attributable to common shareholders.

 

Three months ended

   

Four months ended

 

September 30, 2020

   

September 30, 2020

Net earnings (loss) from continuing operations attributable to common shareholders

$

66

     

$

22

 

Non-GAAP adjustments (1,2):

       

Recognized (gains) and losses, net

(15)

     

31

 

Indexed product related derivatives

14

     

57

 

Purchase price amortization

7

     

9

 

Transaction costs

10

     

17

 

Income taxes on non-GAAP adjustments

(8)

     

(29)

 

     Adjusted earnings (loss) from continuing operations attributable to common shareholders

$

74

     

$

107

 

Adjusted earnings from continuing operations include $10 million of favorable items in the current quarter and $18 million in the year-to-date period.

The table below provides summary financial highlights. 

 

Three Months Ended

 

Four months ended

(In millions)

September 30, 2020

 

September 30, 2020

Average assets under management (AAUM)(1)

$

26,990

   

$

26,898

 

Net investment spread - FIA(1)

3.47

%

 

3.48

%

Net investment spread - All products(1)

2.61

%

 

2.83

%

Net earnings (loss) from continuing operations

$

66

   

$

22

 

Adjusted earnings from continuing operations attributable to common shareholders(1)

$

74

   

$

107

 

The table below provides a summary of sales, which are not affected by PGAAP and are comparable to prior period data.

   

Three Months Ended

 

Nine Months Ended

(In millions)

 

September 30, 2020

 

September 30, 2019

 

September 30, 2020

 

September 30, 2019

Fixed indexed annuity (FIA) sales(1)

 

$

815

   

$

590

   

$

2,512

   

$

2,025

 

Total retail annuity sales(1)

 

$

1,068

   

$

797

   

$

3,026

   

$

2,972

 

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.

DEFINITIONS  

The following represents the definitions of non-GAAP measures used by F&G.

Adjusted Earnings

Adjusted Earnings is a non-GAAP economic measure we use to evaluate financial performance each period. Adjusted earnings is calculated by adjusting net earnings (loss) from continuing operations 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; 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, and the fair value accounting impact of assumed reinsurance, 

(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, and 

(iv) Transaction costs: the impacts related to acquisition, integration and merger related items.

Adjustments to Adjusted 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 Earnings Attributable to Common Shareholders

Adjusted Earnings attributable to common shareholders is a non-GAAP economic measure we use to evaluate financial performance attributable to our common shareholders each period. Adjusted Earnings attributable to common shareholders is calculated by adjusting net earnings (loss) available to common shareholders to eliminate the same items as described in the Adjusted Earnings paragraph above. While these adjustments are an integral part of the overall performance of the Company, 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.   

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.

Average Assets Under Management (AAUM)

AAUM is calculated as the sum of: 

(i) total invested assets at amortized cost, excluding derivatives; 

(ii) related party loans and investments;

(iii) accrued investment income;

(iv) funds withheld at fair value; 

(v) the net payable/receivable for the purchase/sale of investments, and

(iv) 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.

Sales (FIA Sales and Total Retail Annuity Sales) 

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. Annuity and IUL sales are recorded as deposit liabilities (i.e. contractholder funds) within the Company's unaudited condensed consolidated financial statements in accordance with GAAP.  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.

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