SEC Filing - Fidelity National Financial

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fnf-20220331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)


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

For the quarterly period ended March 31, 2022


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

Commission File Number: 001-32630

https://cdn.kscope.io/fea802061ebe2b8d2a5ed20e5456d5e7-fnf-20220331_g1.jpg

FIDELITY NATIONAL FINANCIAL, INC.

(Exact name of registrant as specified in its charter)


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

601 Riverside Avenue

Jacksonville, Florida, 32204

(Address of principal executive offices, including zip code)

(904) 854-8100

(Registrant’s telephone number, including area code)

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

Title of Each Class

Trading Symbol

Name of Each Exchange on Which Registered

FNF Common Stock, $0.0001 par value

FNF

New York Stock Exchange

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

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

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


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

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

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

The number of shares outstanding of the Registrant's common stock as of April 30, 2022 were:

FNF Common Stock 280,703,586

Table of Contents

FORM 10-Q

QUARTERLY REPORT

Quarter Ended March 31, 2022

TABLE OF CONTENTS


			Page

PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements:			2
Condensed Consolidated Balance Sheets (unaudited)			3
Condensed Consolidated Statements of Earnings (unaudited)			4
Condensed Consolidated Statements of Comprehensive Earnings (unaudited)			5
Condensed Consolidated Statements of Equity (unaudited)			6
Condensed Consolidated Statements of Cash Flows (unaudited)			7
Notes to Unaudited Condensed Consolidated Financial Statements			8
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			47
Item 3. Quantitative and Qualitative Disclosures about Market Risk			77
Item 4. Controls and Procedures			77

PART II. OTHER INFORMATION
Item 1. Legal Proceedings			78

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			78


Item 6. Exhibits			79
Signatures			79

Table of Contents

PART I: FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

Table of Contents

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in millions, except share data)


	March 31, 2022		December 31, 2021
	(Unaudited)
ASSETS
Investments:
Fixed maturity securities available for sale, at fair value, at March 31, 2022 and December 31, 2021, at an amortized cost of $32,508 and $30,705, respectively, net of allowance for credit losses of $11 and $8, respectively, and includes pledged fixed maturity securities of $450 and $460, respectively, related to secured trust deposits	$	31,478	$	31,990
Preferred securities, at fair value	1,283		1,401
Equity securities, at fair value	1,061		1,263
Derivative investments	487		816
Mortgage loans, net of allowance for credit losses of $32 and $31 at March 31, 2022 and December 31, 2021, respectively	4,217		3,749
Investments in unconsolidated affiliates	2,849		2,486
Other long-term investments	606		579
Short-term investments, at March 31, 2022 and December 31, 2021 includes pledged short-term investments of $1 related to secured trust deposits	1,746		491
Total investments	43,727		42,775
Cash and cash equivalents, at March 31, 2022 and December 31, 2021 includes $521 and $480, respectively, of pledged cash related to secured trust deposits	2,793		4,360
Trade and notes receivables, net of allowance of $32 at March 31, 2022 and December 31, 2021	529		557


Reinsurance recoverable, net of allowance for credit losses of $20 at March 31, 2022 and December 31, 2021	3,918		3,738
Goodwill	4,539		4,539
Prepaid expenses and other assets	1,357		1,203
Lease assets	373		376
Other intangible assets, net	3,034		2,557
Title plants	400		400
Property and equipment, net	187		185


Total assets	$	60,857	$	60,690
LIABILITIES AND EQUITY
Liabilities:
Contractholder funds	$	36,237	$	35,525
Future policy benefits	5,217		4,732
Accounts payable and accrued liabilities	2,769		2,696
Notes payable	3,095		3,096
Reserve for title claim losses	1,912		1,883
Funds withheld for reinsurance liabilities	1,852		1,676
Secured trust deposits	970		934
Lease liabilities	410		414
Income taxes payable	179		72
Deferred tax liability	98		205

Total liabilities	52,739		51,233


Equity:

FNF common stock, $0.0001 par value; authorized 600,000,000 shares as of March 31, 2022 and December 31, 2021; outstanding of 281,117,483 and 283,778,574 as of March 31, 2022 and December 31, 2021, respectively, and issued of 325,573,748 and 325,486,429 as of March 31, 2022 and December 31, 2021, respectively	—		—

Preferred stock, $0.0001 par value; authorized 50,000,000 shares; issued and outstanding, none	—		—
Additional paid-in capital	5,826		5,811
Retained earnings	4,642		4,369
Accumulated other comprehensive (loss) earnings	(712)		779
Less: Treasury stock, 44,456,265 shares and 41,707,855 shares as of March 31, 2022 and December 31, 2021, respectively, at cost	(1,679)		(1,545)
Total Fidelity National Financial, Inc. shareholders’ equity	8,077		9,414
Non-controlling interests	41		43
Total equity	8,118		9,457
Total liabilities and equity	$	60,857	$	60,690

See Notes to Condensed Consolidated Financial Statements

Table of Contents

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Dollars in millions, except per share data)


	Three months ended March 31,
	2022		2021
	(Unaudited)
Revenues:
Direct title insurance premiums	$	767	$	746
Agency title insurance premiums	1,099		1,058
Escrow, title-related and other fees	1,290		851

Interest and investment income	478		402
Recognized gains and losses, net	(469)		43
Total revenues	3,165		3,100
Expenses:

Personnel costs	823		812
Agent commissions	844		807

Other operating expenses	442		458
Benefits and other changes in policy reserves	208		(26)
Depreciation and amortization	182		183
Provision for title claim losses	84		81
Interest expense	30		28
Total expenses	2,613		2,343
Earnings from continuing operations before income taxes and equity in earnings of unconsolidated affiliates	552		757
Income tax expense	155		166
Earnings before equity in earnings of unconsolidated affiliates	397		591
Equity in earnings of unconsolidated affiliates	2		13
Net earnings from continuing operations	399		604
Net earnings from discontinued operations, net of tax	—		5
Net earnings	399		609
Less: Net earnings attributable to non-controlling interests	2		4
Net earnings attributable to Fidelity National Financial, Inc. common shareholders	$	397	$	605




Earnings per share
Basic
Net earnings per share from continuing operations attributable to common shareholders	$	1.41	$	2.07
Net earnings per share from discontinued operations attributable to common shareholders	—		0.02
Net earnings per share attributable to common shareholders, basic	$	1.41	$	2.09
Diluted
Net earnings per share from continuing operations attributable to common shareholders	$	1.40	$	2.06
Net earnings per share from discontinued operations attributable to common shareholders	—		0.02
Net earnings per share attributable to common shareholders, diluted	$	1.40	$	2.08

Weighted average common shares outstanding - basic	281		289
Weighted average common shares outstanding - diluted	283		291

See Notes to Condensed Consolidated Financial Statements

Table of Contents

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS

(In millions)


	Three months ended March 31,

	2022		2021
	(Unaudited)
Net earnings	$	399	$	609

Other comprehensive (loss) earnings:
Unrealized loss on investments and other financial instruments, net of adjustments to intangible assets and unearned revenue (excluding investments in unconsolidated affiliates) (1)	(1,528)		(545)
Unrealized gain on investments in unconsolidated affiliates (2)	6		9
Unrealized loss on foreign currency translation (3)	(2)		(2)
Reclassification adjustments for change in unrealized gains and losses included in net earnings (4)	33		(46)

Other comprehensive loss	(1,491)		(584)
Comprehensive (loss) earnings	(1,092)		25
Less: Comprehensive earnings attributable to non-controlling interests	2		4
Comprehensive (loss) earnings attributable to Fidelity National Financial, Inc. common shareholders	$	(1,094)	$	21

_______________________________________

(1)Net of income tax benefit of $291 million and $146 million for the three months ended March 31, 2022 and 2021, respectively.

(2)Net of income tax expense of $2 million and $3 million for the three months ended March 31, 2022 and 2021, respectively.

(3)Net of income tax benefit of less than $1 million for the three months ended March 31, 2022 and 2021.

(4)Net of income tax (benefit) expense of $(9) million and $12 million for the three months ended March 31, 2022 and 2021, respectively.

See Notes to Condensed Consolidated Financial Statements

Table of Contents

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(In millions, except per share data)

(Unaudited)


		Fidelity National Financial, Inc. Common Shareholders
							Accumulated
	FNF						Other
	Common				Additional		Comprehensive		Treasury				Non-
	Stock				Paid-in	Retained	Earnings		Stock				controlling	Total
		Shares	$				Capital		Earnings		(Loss)		Shares	$		Interests		Equity
Balance, January 1, 2021		322	$	—			$	5,720	$	2,394	$	1,304	31	$	(1,067)	$	41	$	8,392


Exercise of stock options		1	—				21		—		—		—	—		—		21


Treasury stock repurchased		—	—				—		—		—		3	(112)		—		(112)

Other comprehensive loss - unrealized loss on investments and other financial instruments		—	—				—		—		(545)		—	—		—		(545)
Other comprehensive earnings - unrealized gain on investments in unconsolidated affiliates		—	—				—		—		9		—	—		—		9
Other comprehensive loss - unrealized loss on foreign currency translation		—	—				—		—		(2)		—	—		—		(2)
Reclassification adjustments for change in unrealized gains and losses included in net earnings		—	—				—		—		(46)		—	—		—		(46)

Stock-based compensation		—	—				11		—		—		—	—		—		11

Dividends declared, $0.36 per common share		—	—				—		(106)		—		—	—		—		(106)



Subsidiary dividends declared to non-controlling interests		—	—				—		—		—		—	—		(5)		(5)
Net earnings		—	—				—		605		—		—	—		4		609
Balance, March 31, 2021		323	$	—			$	5,752	$	2,893	$	720	34	$	(1,179)	$	40	$	8,226

Balance, January 1, 2022		325	$	—			$	5,811	$	4,369	$	779	42	$	(1,545)	$	43	$	9,457


Exercise of stock options		1	—				2		—		—		—	—		—		2
Treasury stock repurchased		—	—				—		—		—		3	(134)		—		(134)

Other comprehensive loss - unrealized loss on investments and other financial instruments		—	—				—		—		(1,528)		—	—		—		(1,528)
Other comprehensive earnings - unrealized gain on investments in unconsolidated affiliates		—	—				—		—		6		—	—		—		6
Other comprehensive loss - unrealized loss on foreign currency translation		—	—				—		—		(2)		—	—		—		(2)
Reclassification adjustments for change in unrealized gains and losses included in net earnings		—	—				—		—		33		—	—		—		33


Stock-based compensation		—	—				13		—		—		—	—		—		13


Dividends declared, $0.44 per common share		—	—				—		(124)		—		—	—		—		(124)







Subsidiary dividends declared to non-controlling interests		—	—				—		—		—		—	—		(4)		(4)

Net earnings		—	—				—		397		—		—	—		2		399
Balance, March 31, 2022		326	$	—			$	5,826	$	4,642	$	(712)	45	$	(1,679)	$	41	$	8,118

See Notes to Condensed Consolidated Financial Statements

Table of Contents

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)


	For the three months ended March 31,

	2022		2021
	(Unaudited)
Cash flows from operating activities:
Net earnings	$	399	$	609
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	182