SEC Filing - Fidelity National Financial

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fnf-20230331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q


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

For the quarterly period ended March 31, 2023


☐			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/36fea8c18fcae4484bed062a36f6b61d-FNF_Updated_Marks.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, 2023 were:

FNF Common Stock 272,191,238

Table of Contents

FORM 10-Q

QUARTERLY REPORT

Quarter Ended March 31, 2023

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 Ope rations (unaudited)			4
Condensed Consolidated Statements of Comprehensive Earnings (Loss) (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			72
Item 3. Quantitative and Qualitative Disclosures about Market Risk			101
Item 4. Controls and Procedures			101

PART II. OTHER INFORMATION
Item 1. Legal Proceedings			103
Item 1A. Risk Factors			103
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			104


Item 6. Exhibits			105
Signatures			106

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, 2023		December 31, 2022
	(Unaudited)
ASSETS
Investments:
Fixed maturity securities available for sale, at fair value, at March 31, 2023 and December 31, 2022, at an amortized cost of $40,219 and $37,708, respectively, net of allowance for credit losses of $20 and $39, respectively, and includes pledged fixed maturity securities of $471 and $448, respectively, related to secured trust deposits	$	36,110	$	33,095
Preferred securities, at fair value	851		903
Equity securities, at fair value	734		678
Derivative investments	432		244
Mortgage loans, net of allowance for credit losses of $60 and $42 at March 31, 2023 and December 31, 2022, respectively	4,984		4,554
Investments in unconsolidated affiliates	2,889		2,642
Other long-term investments	691		664
Short-term investments, at March 31, 2023 and December 31, 2022 includes pledged short-term investments of $1 and $6, respectively, related to secured trust deposits	1,346		2,590
Total investments	48,037		45,370
Cash and cash equivalents, at March 31, 2023 and December 31, 2022 includes $343 and $242, respectively, of pledged cash related to secured trust deposits	2,821		2,286
Trade and notes receivables, net of allowance for credit losses of $33 and $33 at March 31, 2023 and December 31, 2022, respectively	428		467


Reinsurance recoverable, net of allowance for credit losses of $9 and $10 at March 31, 2023 and December 31, 2022, respectively	6,362		5,418
Goodwill	4,791		4,635
Prepaid expenses and other assets	1,991		2,068
Market risk benefits asset	106		117
Lease assets	367		376
Other intangible assets, net	4,158		3,811
Title plants	416		416
Property and equipment, net	177		179


Total assets	$	69,654	$	65,143
LIABILITIES AND EQUITY
Liabilities:
Contractholder funds	$	43,379	$	40,843
Future policy benefits	5,371		5,021
Accounts payable and accrued liabilities	2,343		2,326
Market risk benefits liability	324		282
Notes payable	3,696		3,238
Reserve for title claim losses	1,791		1,810
Funds withheld for reinsurance liabilities	4,830		3,703
Secured trust deposits	801		862
Lease liabilities	410		418

Deferred tax liability	61		71

Total liabilities	63,006		58,574


Equity:

FNF common stock, $0.0001 par value; authorized 600,000,000 shares as of March 31, 2023 and December 31, 2022; outstanding of 272,194,249 and 272,309,890 as of March 31, 2023 and December 31, 2022, respectively, and issued of 327,747,431 and 327,757,349 as of March 31, 2023 and December 31, 2022, respectively	—		—

Preferred stock, $0.0001 par value; authorized 50,000,000 shares; issued and outstanding, none	—		—
Additional paid-in capital	5,871		5,870
Retained earnings	5,044		5,225
Accumulated other comprehensive loss	(2,610)		(2,870)
Less: Treasury stock, 55,553,182 shares and 55,447,459 shares as of March 31, 2023 and December 31, 2022, respectively, at cost	(2,113)		(2,109)
Total Fidelity National Financial, Inc. shareholders’ equity	6,192		6,116
Non-controlling interests	456		453
Total equity	6,648		6,569
Total liabilities and equity	$	69,654	$	65,143

See Notes to Condensed Consolidated Financial Statements

Table of Contents

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in millions, except per share data)


	Three months ended March 31,
	2023		2022
	(Unaudited)
Revenues:
Direct title insurance premiums	$	428	$	767
Agency title insurance premiums	550		1,099
Escrow, title-related and other fees	880		1,292

Interest and investment income	611		478
Recognized gains and losses, net	5		(469)
Total revenues	2,474		3,167
Expenses:

Personnel costs	677		823
Agent commissions	420		844

Other operating expenses	360		442
Benefits and other changes in policy reserves	812		203
Market risk benefit losses	59		70
Depreciation and amortization	134		115
Provision for title claim losses	44		84
Interest expense	42		30
Total expenses	2,548		2,611
(Loss) earnings from continuing operations before income taxes and equity in earnings of unconsolidated affiliates	(74)		556
Income tax expense	14		156
(Loss) earnings before equity in earnings of unconsolidated affiliates	(88)		400
Equity in (loss) earnings of unconsolidated affiliates	—		2


Net (loss) earnings	(88)		402
Less: Net (loss) earnings attributable to non-controlling interests	(29)		2
Net (loss) earnings attributable to Fidelity National Financial, Inc. common shareholders	$	(59)	$	400




Earnings per share
Basic
Net earnings per share from continuing operations attributable to common shareholders	$	(0.22)	$	1.42

Net earnings per share attributable to common shareholders, basic	$	(0.22)	$	1.42
Diluted
Net earnings per share from continuing operations attributable to common shareholders	$	(0.22)	$	1.41

Net earnings per share attributable to common shareholders, diluted	$	(0.22)	$	1.41

Weighted average common shares outstanding - basic	270		281
Weighted average common shares outstanding - diluted	271		283

See Notes to Condensed Consolidated Financial Statements

Table of Contents

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS (LOSS)

(In millions)


	Three months ended March 31,

	2023		2022
	(Unaudited)
Net (loss) earnings	$	(88)	$	402

Other comprehensive earnings (loss):
Unrealized gain (loss) on investments and other financial instruments (excluding investments in unconsolidated affiliates) (1)	349		(1,904)
Unrealized gain on investments in unconsolidated affiliates (2)	11		7
Unrealized gain (loss) on foreign currency translation (3)	1		(2)
Reclassification adjustments for change in unrealized gains and losses included in net earnings (4)	35		25
Changes in current discount rate - future policy benefits (5)	(100)		292
Changes in instrument-specific credit risk - market risk benefits (6)	7		33

Other comprehensive earnings attributable to non-controlling interest (7)	(43)		—
Other comprehensive earnings (loss)	260		(1,549)
Comprehensive earnings (loss)	172		(1,147)
Less: Comprehensive (loss) earnings attributable to non-controlling interests	(29)		2
Comprehensive earnings (loss) attributable to Fidelity National Financial, Inc. common shareholders	$	201	$	(1,149)

_______________________________________

(1)Net of income tax expense (benefit) of $88 million and $(387) million for the three months ended March 31, 2023 and 2022, respectively.

(2)Net of income tax expense of $3 million and $2 million for the three months ended March 31, 2023 and 2022, respectively.

(3)Net of income tax expense of less than $1 million for the three months ended March 31, 2023 and 2022.

(4)