FIDELITY NATIONAL FINANCIAL, INC. – 10-K – Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the Consolidated
Financial Statements and the Notes thereto and Selected Financial Data included
elsewhere in this Annual Report.

Overview

For a description of our business, including descriptions of segments, see the
discussion under Business in Item 1 of Part I of this Annual Report, which is
incorporated by reference into this Item 7 of Part II of this Annual Report.

Business Trends and Conditions

Title

Our Title segment revenue is closely related to the level of real estate
activity that includes sales, mortgage financing and mortgage refinancing.
Declines in the level of real estate activity or the average price of real
estate sales will adversely affect our title insurance revenues.

We have found that residential real estate activity is generally dependent on
the following factors:

Advertisement

•mortgage interest rates;
•mortgage funding supply;
•housing inventory and home prices;
•supply and demand for commercial real estate; and
•the strength of the United States economy, including employment levels.

While we cannot predict the severity and duration of the impacts related to
COVID-19, the most recent forecast of the MBA, as of January 21, 2022, estimated
(actual for fiscal year 2020) the size of the U.S. residential mortgage
originations market as shown in the following table for 2020 – 2024 in its
“Mortgage Finance Forecast” (in trillions):

                                                              2024       2023       2022       2021       2020
      Purchase transactions                                  $ 1.8      $ 1.8      $ 1.7      $ 1.7      $ 1.5
      Refinance transactions                                 $ 0.7      $ 0.7      $ 0.9      $ 2.3      $ 2.6
      Total U.S. mortgage originations forecast              $ 2.5      $

2.5 $ 2.6 $ 4.0 $ 4.1


As of January 21, 2022, the MBA expects residential purchase transactions to
steadily increase through 2023 before leveling out in 2024. Additionally, the
MBA expects residential refinance transactions to steadily decrease in 2022 and
2023 before leveling out in 2024 as interest rates are expected to rise. The MBA
expects overall mortgage originations to decrease in 2022 and thereafter.

In recent years, total originations have been reflective of a strong residential
real estate market driven by increasing home prices and low mortgage interest
rates. Mortgage rates rose consistently between 2016 and the beginning of 2019.
Concerns over a slowing global economy and the impact of a prolonged trade war
resulted in interest rate cuts in the second half of 2019, which significantly
increased refinance transactions and slightly increased purchase transactions
when compared to 2018. In the beginning of 2020, refinance and purchase
transactions remained strong until the outbreak of COVID-19.

On March 15, 2020, the Federal Reserve took emergency action and reduced its
benchmark interest rate by a full percentage point to nearly zero. Following
this emergency action, average interest rates for a 30-year fixed rate mortgages
fell throughout the remainder of 2020, bottoming out at 2.65% on January 7,
2021. The outbreak of COVID-19 resulted in significant uncertainty in the
economic outlook in the second quarter of 2020, and as a result real estate
activity decreased significantly as consumers moved to the sidelines to assess
the ongoing impact of COVID-19. However, real estate activity began to rebound
in June 2020, with increases in purchase activity and a surge in refinance
transactions as a result of historically low interest rates.

Residential purchase and refinance activity remained strong in 2021. However,
with the surge in residential refinance transactions in 2020, residential
refinance transactions began to slow in 2021 as the population of eligible
refinance candidates declined. Interest rates on a 30-year, fixed rate mortgage
averaged 3.1% in 2021, up from 2.8% in 2020. Despite the recent increase in
interest rates and fluctuation in existing-home sales, the market is still
outperforming pre-pandemic levels.

Other economic indicators used to measure the health of the U.S. economy,
including the unemployment rate and consumer confidence, indicated that the
United States was on strong footing prior to the outbreak of COVID-19. However,
the impact of COVID-19 reduced the outlook related to these economic indicators
in March 2020. According to the U.S. Department of Labor's Bureau of Labor, the
unemployment rate was at a historically low 3.5% in February 2020 but
subsequently fluctuated dramatically before reaching 6.7% in December 2020. In
2021, the unemployment rate fell to 3.9% in December of 2021. Additionally, the
Conference Board's monthly Consumer Confidence Index remained at high levels
through

                                       45

——————————————————————————–

Table of Contents

February 2020 before falling as a result of the COVID-19 outbreak. Consumer
confidence has since rebounded, reaching its peak in June 2021 before decreasing
in the third quarter of 2021 due to concerns over inflation. Consumer confidence
remained flat in the fourth quarter of 2021.

Because commercial real estate transactions tend to be generally driven by
supply and demand for commercial space and occupancy rates in a particular area
rather than by interest rate fluctuations, we believe that our commercial real
estate title insurance business is less dependent on the industry cycles
discussed above than our residential real estate title business. Commercial real
estate transaction volume is also often linked to the availability of financing.
Factors including U.S. tax reform and a shift in U.S. monetary policy have had,
or are expected to have, varying effects on availability of financing in the
U.S. Lower corporate and individual tax rates and corporate tax-deductibility of
capital expenditures have provided increased capacity and incentive for
investments in commercial real estate. In recent years prior to the COVID-19
pandemic, we experienced strong demand in commercial real estate markets. In
2020, we experienced decreases in commercial volumes and commercial fee-per-file
as a result of the outbreak of COVID-19. Commercial volumes and commercial
fee-per-file recovered in the second half of 2020 and remained elevated
throughout 2021.

We continually monitor mortgage origination trends and believe that, based on
our ability to produce industry leading operating margins through all economic
cycles, we are well positioned to adjust our operations for adverse changes in
real estate activity and to take advantage of increased volume when demand
increases.

See Item 1A of Part I of this Annual Report for further discussion of risk
factors related to COVID-19.

Seasonality. Historically, real estate transactions have produced seasonal
revenue fluctuations in the real estate industry. The first calendar quarter is
typically the weakest quarter in terms of revenue due to the generally low
volume of home sales during January and February. The second and third calendar
quarters are typically the strongest quarters in terms of revenue, primarily due
to a higher volume of residential transactions in the spring and summer months.
The fourth quarter is typically strong due to the desire of commercial entities
to complete transactions by year-end. Seasonality in 2020 and 2021 deviated from
historical patterns due to COVID-19. We have noted short-term fluctuations
through recent years in resale and refinance transactions as a result of changes
in interest rates.

Geographic Operations. Our direct title operations are divided into
approximately 180 profit centers. Each profit center processes title insurance
transactions within its geographical area, which is usually identified by a
county, a group of counties forming a region, or a state, depending on the
management structure in that part of the country. We also transact title
insurance business through a network of approximately 5,400 agents, primarily in
those areas in which agents are the more prevalent title insurance provider.
Substantially all of our revenues are generated in the United States.

The following table sets forth the approximate dollar and percentage volumes of
our title insurance premium revenue by state:

                                        Year Ended December 31,
                        2021                      2020                      2019
                Amount          %         Amount          %         Amount          %
                                         (Dollars in millions)
California     $ 1,251        14.6  %    $   958        15.2  %    $   764        14.3  %
Texas            1,112        13.0  %        778        12.3           734        13.8
Florida            799         9.3           540         8.6           492         9.2
Pennsylvania       439         5.1           303         4.8           252         4.7
Illinois           436         5.1           312         5.0           273         5.1
All others       4,516        52.9         3,407        54.1         2,827        52.9
Totals         $ 8,553       100.0  %    $ 6,298       100.0  %    $ 5,342       100.0  %










                                       46
--------------------------------------------------------------------------------
  Table     of Contents
F&G

The following factors represent some of the key trends and uncertainties that
have influenced the development of our F&G segment and its historical financial
performance, and we believe these key trends and uncertainties will continue to
influence the business and financial performance of our F&G segment in the
future.

COVID-19 Pandemic

While still evolving, the COVID-19 pandemic has already caused significant
economic and financial turmoil in the U.S. and around the world. At this time,
it is still not possible to estimate the longer term-effects the COVID-19
pandemic could have on our F&G segment or our consolidated financial statements.
Increased economic uncertainty and increased unemployment that could potentially
result from the spread of COVID-19 and its variants may result in F&G
policyholders seeking sources of liquidity and withdrawing at rates greater than
was previously expected. Additionally, adverse events or conditions resulting
from COVID-19 could also have a negative effect on its sales of new policies and
could result in more volatility from the impact of mortality experience. As of
December 31, 2021, F&G's investment portfolio has recovered from earlier
volatility and F&G has not seen a sustained elevated level of adverse
policyholder experience from the impact of COVID-19 on the overall business. The
full extent to which the COVID-19 pandemic impacts our F&G segment's financial
condition, results of operations, liquidity or prospects will depend on future
developments which cannot be predicted at this time.

Market Conditions

Market volatility has affected, and may continue to affect, our business and
financial performance in varying ways. Volatility can pressure sales and reduce
demand as consumers hesitate to make financial decisions. To enhance the
attractiveness and profitability of our products and services, we continually
monitor the behavior of our customers, as evidenced by annuitization rates and
lapse rates, which vary in response to changes in market conditions. See Item 1A
of Part I of this Annual Report for further discussion of risk factors that
could affect market conditions.

Interest Rate Environment

Some of our F&G products include guaranteed minimum crediting rates, most
notably our fixed rate annuities. As of December 31, 2021, our reserves, net of
reinsurance, and average crediting rate on our fixed rate annuities were $5.0
billion and 3%, respectively. We are required to pay the guaranteed minimum
crediting rates even if earnings on our investment portfolio decline, which
would negatively impact earnings. In addition, we expect more policyholders to
hold policies with comparatively high guaranteed rates for a longer period in a
low interest rate environment. Conversely, a rise in average yield on our
investment portfolio would increase earnings if the average interest rate we pay
on our products does not rise correspondingly. Similarly, we expect that
policyholders would be less likely to hold policies with existing guarantees as
interest rates rise and the relative value of other new business offerings are
increased, which would negatively impact our earnings and cash flows.

See “Item 7A. Quantitative and Qualitative Disclosure about Market Risk” for a
more detailed discussion of interest rate risk.

Aging of the U.S. Population

We believe that the aging of the U.S. population will increase the demand for
our FIA and IUL products. As the "baby boomer" generation prepares for
retirement, we believe that demand for retirement savings, growth, and income
products will grow. Over 10,000 people will turn 65 each day in the United
States over the next 15 years, and according to the U.S. Census Bureau, the
proportion of the U.S. population over the age of 65 is expected to grow from
17% in 2021 to 21% in 2035. The impact of this growth may be offset to some
extent by asset outflows as an increasing percentage of the population begins
withdrawing assets to convert their savings into income.

Industry Factors and Trends Affecting Our Results of Operations

We operate in the sector of the insurance industry that focuses on the needs of
middle-income Americans. The underserved middle-income market represents a major
growth opportunity for us. As a tool for addressing the unmet need for
retirement planning, we believe that many middle-income Americans have grown to
appreciate the financial certainty that we believe annuities such as our FIA
products afford. Accordingly, the FIA market grew from nearly $12 billion of
sales in 2002 to $58 billion of sales in 2020. Additionally, this market demand
has positively impacted the IUL market as it has expanded from $100 million of
annual premiums in 2002 to $3 billion of annual premiums in 2020.



                                       47

——————————————————————————–

Table of Contents

Critical Accounting Policies and Estimates

The accounting estimates described below are those we consider critical in
preparing our Consolidated Financial Statements. Management is required to make
estimates and assumptions that can affect the reported amounts of assets and
liabilities and disclosures with respect to contingent assets and liabilities at
the date of the Consolidated Financial Statements and the reported amounts of
revenues and expenses during the reporting period. Actual amounts could differ
from those estimates. See Note A Business and Summary of Significant Accounting
Policies to our Consolidated Financial Statements included in Item 8 of Part II
of this Annual Report for additional description of the significant accounting
policies that have been followed in preparing our Consolidated Financial
Statements.

Reserve for Title Claim Losses

Title companies issue two types of policies, owner's and lender's policies,
since both the new owner and the lender in real estate transactions want to know
that their interest in the property is insured against certain title defects
outlined in the policy. An owner's policy insures the buyer against such defects
for as long as he or she owns the property (as well as against warranty claims
arising out of the sale of the property by such owner). A lender's policy
insures the priority of the lender's security interest over the claims that
other parties may have in the property. The maximum amount of liability under a
title insurance policy is generally the face amount of the policy plus the cost
of defending the insured's title against an adverse claim; however, occasionally
we do incur losses in excess of policy limits. While most non-title forms of
insurance, including property and casualty, provide for the assumption of risk
of loss arising out of unforeseen future events, title insurance serves to
protect the policyholder from risk of loss for events that predate the issuance
of the policy.

Unlike many other forms of insurance, title insurance requires only a one-time
premium for continuous coverage until another policy is warranted due to changes
in property circumstances arising from refinance, resale, additional liens, or
other events. Unless we issue the subsequent policy, we receive no notice that
our exposure under our policy has ended and, as a result, we are unable to track
the actual terminations of our exposures.

Our reserve for title claim losses includes reserves for known claims as well as
for losses that have been incurred but not yet reported to us ("IBNR"), net of
recoupments. We reserve for each known claim based on our review of the
estimated amount of the claim and the costs required to settle the claim.
Reserves for IBNR claims are estimates that are established at the time the
premium revenue is recognized and are based upon historical experience and other
factors, including industry trends, claim loss history, legal environment,
geographic considerations, and the types of policies written. We also reserve
for losses arising from closing and disbursement functions due to fraud or
operational error.

The table below summarizes our reserves for known claims and incurred but not
reported claims related to title insurance:

                                                   December 31,           %             December 31,             %
                                                           2021                             2020
                                                 (in millions)                          (in millions)
Known claims                                    $        337             17.9  %       $        226             13.9  %
IBNR                                                   1,546             82.1                 1,397             86.1
Total Reserve for Title Claim Losses            $      1,883            100.0  %       $      1,623            100.0  %


Although claims against title insurance policies can be reported relatively soon
after the policy has been issued, claims may be reported many years later.
Historically, approximately 60% of claims are paid within approximately five
years of the policy being written. By their nature, claims are often complex,
vary greatly in dollar amounts and are affected by economic and market
conditions, as well as the legal environment existing at the time of settlement
of the claims. Estimating future title loss payments is difficult because of the
complex nature of title claims, the long periods of time over which claims are
paid, significantly varying dollar amounts of individual claims and other
factors.

Our process for recording our reserves for title claim losses begins with
analysis of our loss provision rate. We forecast ultimate losses for each policy
year based upon historical policy year loss emergence and development patterns
and adjust these to reflect policy year and policy type differences that affect
the timing, frequency and severity of claims. We also use a technique that
relies on historical loss emergence and on a premium-based exposure measurement.
The latter technique is particularly applicable to the most recent policy years,
which have few reported claims relative to an expected ultimate claim volume.
After considering historical claim losses, reporting patterns and current market
information, and analyzing quantitative and qualitative data provided by our
legal, claims and underwriting departments, we determine a loss provision rate,
which is recorded as a percentage of current title premiums. This loss provision
rate is set to provide for losses on current year policies, but due to
development of prior years and our long claim duration, it periodically includes
amounts of estimated adverse or positive development on prior years' policies.
Any significant adjustments to strengthen or release loss reserves resulting
from the comparison with our actuarial analysis are made in addition to this
loss provision rate.  At each quarter end, our recorded reserve for claim losses
is initially the result of taking the prior recorded reserve for claim losses,
adding the current provision

                                       48
--------------------------------------------------------------------------------
  Table     of Contents
and subtracting actual paid claims, resulting in an amount that management then
compares to the range of reasonable estimates provided by the actuarial
calculation.

We recorded our loss provision rate at 4.5% for the years ended December 31,
2021, 2020 and 2019. Of such annual loss provision rates, 4.5%, for each of the
years ended December 31, 2021, 2020 and 2019, respectively, related to losses on
policies written in the current year, and the remainder, if any related to
developments on prior year policies. The provision rate in 2021, 2020, and 2019
is supported by stability in payments for prior policy years, and qualitative
factors that would indicate consistency, including consistency in lender
underwriting standards, extension of credit to quality borrowers, a high
proportion of refinance activity, better claims expense management, better
mechanic's lien underwriting practices, and better fraud awareness by lenders,
title insurers and settlement agents.

Due to the uncertainty inherent in the process and due to the judgment used by
both management and our actuary, our ultimate liability may be greater or less
than our carried reserves. If the recorded amount is within the actuarial range
but not at the central estimate, we assess the position within the actuarial
range by analysis of other factors in order to determine that the recorded
amount is our best estimate. These factors, which are both qualitative and
quantitative, can change from period to period, and include items such as
current trends in the real estate industry (which we can assess, but for which
there is a time lag in the development of the data), any adjustments from the
actuarial estimates needed for the effects of unusually large or small claims,
improvements in our claims management processes, and other cost saving measures.
If the recorded amount is not within a reasonable range of our actuary's central
estimate, we may have to record a charge or credit and reassess the loss
provision rate on a go forward basis. We will continue to reassess the provision
to be recorded in future periods consistent with this methodology.

The table below presents our title insurance loss development experience for the
past three years:

                                                             2021         2020         2019
                                                                      (In millions)
Beginning balance                                          $ 1,623      $ 1,509      $ 1,488

Change in reinsurance recoverable                               94           34            1
Claims loss provision related to:
Current year                                                   385          283          240
Prior years                                                      -            -            -
Total title claim loss provision                               385          283          240
Claims paid, net of recoupments related to:
Current year                                                   (14)         (11)         (11)
Prior years                                                   (205)        (192)        (209)
Total title claims paid, net of recoupments                   (219)        (203)        (220)
Ending balance of claim loss reserve for title insurance   $ 1,883      $ 1,623      $ 1,509
Title premiums                                             $ 8,553      $ 6,298      $ 5,342


                                                                    2021                2020                2019
Provision for title insurance claim losses as a percentage of
title insurance premiums:
Current year                                                           4.5  %              4.5  %              4.5  %
Prior years                                                              -                   -                   -
Total provision                                                        4.5  %              4.5  %              4.5  %

Actual claims payments consist of loss payments and claims management expenses
offset by recoupments and were as follows (in millions):

                                                                             Claims Management                                Net Loss
                                                       Loss Payments             Expenses              Recoupments            Payments
Year ended December 31, 2021                         $          171          $          124          $        (76)         $       219
Year ended December 31, 2020                                    120                     122                   (39)                 203
Year ended December 31, 2019                                    139                     112                   (31)                 220




                                       49
--------------------------------------------------------------------------------
  Table     of Contents
As of December 31, 2021 and 2020, our recorded reserves were $1,883 million and
$1,623 million, respectively, which we determined were reasonable and
represented our best estimate and these recorded amounts were within a
reasonable range of the central estimates provided by our actuaries. Our
recorded reserves were $59 million above the mid-point of the provided range of
$1.5 billion to $2.0 billion of our actuarial estimates as of December 31, 2021.
Our recorded reserves were $62 million above the mid-point of the provided range
of our actuarial estimates of $1.4 billion to $1.8 billion as of December 31,
2020.

During 2021, 2020, and 2019, payment patterns were consistent with our
actuaries' and management's expectations. Also, compared to prior years we have
seen a leveling off of the ultimate loss ratios in more mature policy years,
particularly 2006-2009. While we still see claims opened on these policy years,
the proportion of our claims inventory represented by these policy years has
continued to decrease. Additionally, we continued to see positive development
relating to the 2010 through 2021 policy years, which we believe is indicative
of more stringent underwriting standards by us and the lending industry.
Further, we have seen significant positive development in residential owner's
policies due to increased payments on residential lender's policies, which
inherently limit the potential loss on the related owner's policy to the
differential in coverage amount between the amount insured under the owner's
policy and the amount paid under the residential lender's policy. Also, any
residential lender's policy claim paid relating to a property that is in
foreclosure negates any potential loss under an owner's policy previously issued
on the property as the owner has no equity in the property. Our ending open
claim inventory decreased from approximately 10,700 claims at December 31, 2020
to approximately 9,600 claims at December 31, 2021. If actual claims loss
development varies from what is currently expected and is not offset by other
factors, it is possible that our recorded reserves may fall outside a reasonable
range of our actuaries' central estimate, which may require additional reserve
adjustments in future periods.

An approximate $86 million increase (decrease) in our annualized provision for
title claim losses would occur if our loss provision rate were 1% higher
(lower), based on 2021 title premiums of $8,553 million. A 10% increase
(decrease) in our reserve for title claim losses, as of December 31, 2021, would
result in an increase (decrease) in our provision for title claim losses of
approximately $188 million.

Reserves for Future Policy Benefits and Product Guarantees

The determination of future policy benefit reserves is dependent on actuarial
assumptions. The principal assumptions used to establish liabilities for future
policy benefits are based on our experience. These assumptions are established
at issue of the contract and include mortality, morbidity, contract full and
partial surrenders, investment returns, annuitization rates and expenses. The
assumptions used require considerable judgment. We review overall policyholder
experience at least annually and update these assumptions when deemed necessary
based on additional information that becomes available. For traditional life and
immediate annuity products, assumptions used in the reserve calculation can only
be changed if the reserve is deemed to be insufficient. For all other insurance
products, changes in assumptions will be used to calculate reserves. These
changes in assumptions will also incorporate changes in risk free rates and
option market values. Changes in, or deviations from, the assumptions previously
used can significantly affect our reserve levels and related results of
operations.

Mortality is the incidence of death amongst policyholders triggering the payment
of underlying insurance coverage by the insurer. In addition, mortality also
refers to the ceasing of payments on life-contingent annuities due to the death
of the annuitant. We utilize a combination of actual and industry experience
when setting our mortality assumptions.

A surrender rate is the percentage of account value surrendered by the
policyholder. A lapse rate is the percentage of account value canceled by us due
to nonpayment of premiums. We make estimates of expected full and partial
surrenders of our fixed annuity products. Our surrender rate experience in the
twelve months ended December 31, 2021 and the seven month period ended December
31, 2020 on the fixed annuity products averaged 7% and 4%, respectively, which
is within our assumed ranges. Management's best estimate of surrender behavior
incorporates actual experience over the entire period, as we believe that, over
the duration of the policies, we will experience the full range of policyholder
behavior and market conditions. If actual surrender rates are significantly
different from those assumed, such differences could have a significant effect
on our reserve levels and related results of operations.

The assumptions used to establish the liabilities for our product guarantees
require considerable judgment and are established as management's best estimate
of future outcomes. We periodically review these assumptions and, if necessary,
update them based on additional information that becomes available. Changes in
or deviations from the assumptions used can significantly affect our reserve
levels and related results of operations.

At issue, and at each subsequent valuation, we determine the present value of
the cost of the Guaranteed Minimum Withdrawaal Benefit ("GMWB") rider benefits
and certain Guaranteed Minimum Death Benefit ("GMDB") riders in excess of
benefits that are funded by the account value. We also calculate the present
value of total expected policy assessments, including investment margins, if
applicable. We accumulate a reserve equal to the portion of these assessments
that would be required to fund the future benefits less benefits paid to date.
In making these projections, a number of assumptions are made and we update
these assumptions as experience emerges, and determined necessary. We began
issuing our GMWB products in 2008, and future experience could lead to
significant changes in our assumptions. If emerging experience deviates from our
                                       50

——————————————————————————–

Table of Contents

assumptions on GMWB utilizations, such deviations could have a significant
effect on our reserve levels and related results of operations.

Our aggregate reserves for contractholder funds, future policy benefits and
product guarantees on a direct and net basis as of December 31, 2021 are
summarized as follows:

                                                                                  Reinsurance
(Dollars in millions)                                           Direct            Recoverable              Net
Fixed indexed annuities                                       $ 23,370          $           -          $ 23,370
Fixed rate annuities                                             6,369                 (1,689)            4,680
Immediate annuities                                              3,657                   (133)            3,524
Universal life                                                   1,981                   (983)              998
Traditional life                                                 1,823                   (805)            1,018
Funding agreement backed notes ("FABN")                          1,904                      -             1,904
Pension risk transfer ("PRT")                                    1,153                      -             1,153

Total                                                         $ 40,257          $      (3,610)         $ 36,647


Fixed indexed annuities ("FIA") and indexed universal life ("IUL") products
contain an embedded derivative; a feature that permits the holder to elect an
interest rate return or an equity-index linked component, where interest
credited to the contract is linked to the performance of various equity indices.
The FIA/ IUL embedded derivatives are valued at fair value and included in the
liability for contractholder funds in our Consolidated Balance Sheets with
changes in fair value included as a component of Benefits and other changes in
policy reserves in our Consolidated Statements of Earnings.

Valuation of Fixed Maturity, Preferred and Equity Securities, and Derivatives
and Reinsurance Recoverable.

Our fixed maturity securities have been designated as available-for-sale and are
carried at fair value, net of allowance for expected credit losses, with
unrealized gains and losses included in accumulated other comprehensive income
(loss) ("AOCI"), net of associated adjustments for deferred acquisition costs
("DAC"), value of business acquired ("VOBA"), deferred sales inducements
("DSI"), unearned revenue ("UREV"), SOP 03-1 reserves, and deferred income
taxes. Our equity securities are carried at fair value with unrealized gains and
losses included in net income (loss). Realized gains and losses on the sale of
investments are determined on the basis of the cost of the specific investments
sold and are credited or charged to income on a trade date basis.

Management's assessment of all available data when determining fair value of the
AFS securities is necessary to appropriately apply fair value accounting.
Management utilizes information from independent pricing services, who take into
account perceived market movements and sector news, as well as a security's
terms and conditions, including any features specific to that issue that may
influence risk and marketability. Depending on the security, the priority of the
use of observable market inputs may change as some observable market inputs may
not be relevant or additional inputs may be necessary. We generally obtain one
value from our primary external pricing service. In situations where a price is
not available from the independent pricing service, we may obtain broker quotes
or prices from additional parties recognized to be market participants. We
believe the broker quotes are prices at which trades could be executed based on
historical trades executed at broker-quoted or slightly higher prices. When
quoted prices in active markets are not available, the determination of
estimated fair value is based on market standard valuation methodologies,
including discounted cash flows, matrix pricing, or other similar techniques.

We validate external valuations at least quarterly through a combination of
procedures that include the evaluation of methodologies used by the pricing
services, comparisons to valuations from other independent pricing services,
analytical reviews and performance analysis of the prices against trends, and
maintenance of a securities watch list. See Note D Fair Value of Financial
Instruments and Note E Investments to our Consolidated Financial Statements
included in Item 8 of Part II of this Annual Report.

The fair value of derivative assets and liabilities is based upon valuation
pricing models and represents what we would expect to receive or pay at the
balance sheet date if we canceled the options, entered into offsetting
positions, or exercised the options. Fair values for these instruments are
determined internally using a conventional model and market observable inputs,
including interest rates, yield curve volatilities and other factors. Credit
risk related to the counterparty is considered when estimating the fair values
of these derivatives. However, we are largely protected by collateral
arrangements with counterparties when individual counterparty exposures exceed
certain thresholds. The fair value of futures contracts at the balance sheet
date represents the cumulative unsettled variation margin (open trade equity net
of cash settlements). The fair values of the embedded derivatives in our FIA and
IUL contracts are derived using market value of options, use of current and
budgeted option cost, swap rates, mortality rates, surrender rates, partial
withdrawals, and non-performance spread and are classified as Level 3. The
discount rate used to determine the fair value of our FIA/ IUL embedded
derivative liabilities includes an adjustment to reflect the risk that these
obligations will not be fulfilled ("non-performance risk"). For the period ended
December 31, 2021, our non-performance risk adjustment was based on the expected
loss due to default in debt obligations for
                                       51

——————————————————————————–

Table of Contents

similarly rated financial companies. See Note D Fair Value of Financial
Instruments and Note F Derivative Financial Instruments to our Consolidated
Financial Statements included in Item 8 of Part II of this Annual Report.

As discussed in Note O Reinsurance of our Consolidated Financial Statements
included in Item 8 of Part II of this Report, F&G entered into a reinsurance
agreement with Kubera Insurance (SAC) Ltd. ("Kubera") effective December 31,
2018, to cede certain multi-year guaranteed annuities ("MYGA") and deferred
annuity GAAP and statutory reserves on a coinsurance funds withheld basis, net
of applicable existing reinsurance. Effective October 31, 2021, this agreement
was novated from Kubera to Somerset. Additionally, F&G entered into a
reinsurance agreement with Aspida Re effective January 1, 2021, to cede a quota
share of certain deferred annuity business on a funds withheld basis. Fair value
movements in the funds withheld balances associated with these arrangements
create an obligation for F&G to pay Somerset and Aspida Re at a later date,
which results in embedded derivatives. These embedded derivatives are considered
total return swaps with contractual returns that are attributable to the assets
and liabilities associated with the reinsurance arrangements. The fair value of
the total return swaps are based on the change in fair value of the underlying
assets held in the funds withheld portfolio. Investment results for the assets
that support the coinsurance with funds withheld reinsurance arrangement,
including gains and losses from sales, are passed directly to the reinsurer
pursuant to contractual terms of the reinsurance arrangement. The reinsurance
related embedded derivatives are reported in Accounts payable and accrued
liabilities on the Consolidated Balance Sheets and the related gains or losses
are reported in Recognized gains and losses, net on the Consolidated Statements
of Earnings.

We categorize our fixed maturity securities, preferred securities, equity
securities and derivatives into a three-level hierarchy based on the priority of
the inputs to the valuation technique. The fair value hierarchy gives the
highest priority to quoted prices in active markets for identical assets (Level
1) and the lowest priority to unobservable inputs (Level 3). If the inputs used
to measure fair value fall within different levels of the hierarchy, the
category level is based on the lowest priority level input that is significant
to the fair value measurement of the instrument. The following table presents
the fair value of fixed maturity securities and equity securities by pricing
source and hierarchy level as of December 31, 2021 and 2020.

                                                                               As of December 31, 2021
                                                 Quoted Prices in                                    Significant
                                                Active Markets for            Significant            Unobservable
(Dollars in millions)                            Identical Assets          Observable Inputs            Inputs               Total
                                                    (Level 1)                  (Level 2)              (Level 3)
Fixed maturity securities
available-for-sale and equity
securities:
Prices via third party pricing services        $           1,892          $ 

26,389 $ 920 $ 29,201
Priced via independent broker quotations

                       -                         -                4,538               4,538
Priced via other methods                                       -                         -                   66                  66
Total                                          $           1,892          $         26,389          $     5,524          $   33,805
% of Total                                                     6  %                     78  %                16  %              100  %


                                                                               As of December 31, 2020
                                                 Quoted Prices in                                    Significant
                                                Active Markets for            Significant            Unobservable
(Dollars in millions)                            Identical Assets          Observable Inputs            Inputs               Total
                                                    (Level 1)                  (Level 2)              (Level 3)
Fixed maturity securities
available-for-sale and equity
securities:
Prices via third party pricing services        $           1,823          $ 

24,883 $ 1,167 $ 27,873
Priced via independent broker quotations

                       -                         -                2,095               2,095
Priced via other methods                                       -                         -                    5                   5
Total                                          $           1,823          $         24,883          $     3,267          $   29,973
% of Total                                                     6  %                     83  %                11  %              100  %


Goodwill

We have made acquisitions that have resulted in a significant amount of
goodwill. As of December 31, 2021 and 2020, goodwill was $4,539 million and
$4,495 million, respectively. The majority of our goodwill as of December 31,
2021 relates to goodwill recorded in connection with the Chicago Title merger in
2000, our acquisition of ServiceLink in 2014 and our acquisition of F&G in 2020.
Refer to Note N Goodwill to our Consolidated Financial Statements included in
Item 8 of Part II of this Annual Report for a summary of recent changes in our
Goodwill balance.
                                       52

——————————————————————————–

Table of Contents

In evaluating the recoverability of goodwill, we perform a qualitative analysis
at the reporting unit level to determine whether it is more likely than not that
the fair value of our recorded goodwill exceeds its carrying value. Based on the
results of this analysis, an annual goodwill impairment test may be completed
based on an analysis of the discounted future cash flows generated by the
underlying assets. The process of determining whether or not goodwill is
impaired or recoverable relies on projections of future cash flows, operating
results and market conditions. Future cash flow estimates are based partly on
projections of market conditions such as the volume and mix of refinance and
purchase transactions and interest rates, which are beyond our control and are
likely to fluctuate. While we believe that our estimates of future cash flows
are reasonable, these estimates are not guarantees of future performance and are
subject to risks and uncertainties that may cause actual results to differ from
what is assumed in our impairment tests. Such analyses are particularly
sensitive to changes in estimates of future cash flows and discount rates.
Changes to these estimates might result in material changes in fair value and
determination of the recoverability of goodwill, which may result in charges
against earnings and a reduction in the carrying value of our goodwill in the
future. We completed annual goodwill impairment analyses in the fourth quarter
of each period presented using a September 30 measurement date. For the years
ended December 31, 2021, 2020 and 2019, we determined there were no events or
circumstances that indicated that the carrying value exceeded the fair value.

VOBA, DAC and DSI

Our intangible assets include an intangible asset reflecting the value of
insurance and reinsurance contracts acquired (VOBA), DAC, and DSI.

VOBA is an intangible asset that reflects the amount recorded as insurance
contract liabilities less the estimated fair value of in-force contracts ("VIF")
in a life insurance company acquisition. It represents the portion of the
purchase price that is allocated to the value of the rights to receive future
cash flows from the business in force at the acquisition date. VOBA is a
function of the VIF, current GAAP reserves, GAAP assets, and deferred tax
liability. The VIF is determined by the present value of statutory distributable
earnings less opening required capital, and is sensitive to assumptions
including the discount rate, surrender rates, partial withdrawals, utilization
rates, projected investment spreads, mortality, and expenses.

DAC consists principally of commissions. Additionally, acquisition costs that
are incremental, direct costs of successful contract acquisition are capitalized
as DAC. Indirect or unsuccessful acquisition costs, maintenance, product
development and overhead expenses are charged to expense as incurred. DSI
consists of contract enhancements such as premium and interest bonuses credited
to policyholder account balances.

DAC, DSI, and VOBA are subject to loss recognition testing on a quarterly basis
or when an event occurs that may warrant loss recognition.

For annuity and IUL products, DAC, DSI and VOBA are generally being amortized in
proportion to estimated gross profits from net investment spread margins,
surrender charges and other product fees, policy benefits, maintenance expenses,
mortality, and recognized gains and losses on investments. Current and future
period gross profits for FIA contracts also include the impact of amounts
recorded for the change in fair value of derivatives and the change in fair
value of embedded derivatives. At each valuation date, the most recent quarter's
estimated gross profits are updated with actual gross profits and the
assumptions underlying future estimated gross profits are evaluated for
continued reasonableness. If the update of assumptions causes estimated gross
profits to increase, DAC, DSI and VOBA amortization will decrease, resulting in
lower amortization expense in the period. The opposite result occurs when the
assumption update causes estimated gross profits to decrease. Current period
amortization is adjusted retrospectively through an unlocking process when
estimates of current or future gross profits (including the impact of recognized
investment gains and losses) to be realized from a group of products are
revised. Our estimates of future gross profits are based on actuarial
assumptions related to the underlying policies' terms, lives of the policies,
duration of contract, yield on investments supporting the liabilities, cost to
fund policy obligations, and level of expenses necessary to maintain the polices
over their entire lives.

Changes in assumptions can have a significant impact on DAC, DSI and VOBA,
amortization rates and results of operations. Assumptions are management's best
estimate of future outcomes, and require considerable judgment. We periodically
review assumptions against actual experience, and update our assumptions based
on historical results and our best estimates of future experience when
additional information becomes available.

  Estimated future gross profits are sensitive to changes in interest rates,
which are the most significant component of gross profits. Assumptions related
to interest rate spreads and credit losses also impact estimated gross profits
for products with credited rates. These assumptions are based on the current
investment portfolio yields and credit quality, estimated future crediting
rates, capital markets, and estimates of future interest rates and defaults.
Significant assumptions also include policyholder behavior assumptions, such as
surrender, lapse, and annuitization rates. We use a combination of actual and
industry experience when setting and updating our policyholder behavior
assumptions.

We perform sensitivity analyses to assess the impact that certain assumptions
have on DAC, DSI, VOBA. The following table presents the estimated instantaneous
net impact to income before income taxes of various assumption changes on our
                                       53

——————————————————————————–

Table of Contents

DAC, DSI, and VOBA. The effects, increase or (decrease), presented are not
representative of the aggregate impacts that could result if a combination of
such changes to interest rates and other assumptions occurred.

                                                                             As of December 31,
(Dollars in millions)                                                       

2021

A change to the long-term interest rate assumption of -50 basis
points

                                                                      $              (91)

A change to the long-term interest rate assumption of +50 basis
points

                                                                                      75
An assumed 10% increase in surrender rate                                                   (4)


Assumptions regarding shifts in market factors may be overly simplistic and not
indicative of actual market behavior in stress scenarios.

Lower assumed interest rates or higher assumed annuity surrender rates tend to
decrease the balances of DAC, DSI and VOBA, thus decreasing income before income
taxes. Higher assumed interest rates or lower assumed annuity surrender rates
tend to increase the balances of DAC, DSI and VOBA, thus increasing income
before income taxes.


Accounting for Income Taxes

As part of the process of preparing the consolidated financial statements, we
are required to determine income taxes in each of the jurisdictions in which we
operate. This process involves estimating actual current tax expense together
with assessing temporary differences resulting from differing recognition of
items for income tax and accounting purposes. These differences result in
deferred income tax assets and liabilities, which are included within the
Consolidated Balance Sheets. We must then assess the likelihood that deferred
income tax assets will be recovered from future taxable income and, to the
extent we believe that recovery is not likely, establish a valuation allowance.
To the extent we establish a valuation allowance or increase this allowance in a
period, we must reflect this increase as expense within Income tax expense in
the Consolidated Statement of Earnings. Determination of income tax expense
requires estimates and can involve complex issues that may require an extended
period to resolve. Further, the estimated level of annual pre-tax income can
cause the overall effective income tax rate to vary from period to period. We
believe that our tax positions comply with applicable tax law and that we
adequately provide for any known tax contingencies. We believe the estimates and
assumptions used to support our evaluation of tax benefit realization are
reasonable. Final determination of prior-year tax liabilities, either by
settlement with tax authorities or expiration of statutes of limitations, could
be materially different than estimates reflected in assets and liabilities and
historical income tax provisions. The outcome of these final determinations
could have a material effect on our income tax provision, net income or cash
flows in the period that determination is made.

Refer to Note T Income Taxes to our Consolidated Financial Statements in Item 8
of Part II of this Annual Report for details.

                                       54
--------------------------------------------------------------------------------
  Table     of Contents
Results of Operations

Consolidated Results of Operations

Net Earnings. The following table presents certain financial data for the years
indicated:

                                                                                  Year Ended December 31,
                                                                           2021              2020             2019
                                                                                       (In millions)
Revenues:
Direct title insurance premiums                                        $   3,571          $ 2,699          $ 2,381
Agency title insurance premiums                                            4,982            3,599            2,961
Escrow, title-related and other fees                                       4,795            3,092            2,584

Interest and investment income                                             1,961              900              225
Recognized gains and losses, net                                             334              488              318
Total revenues                                                            15,643           10,778            8,469
Expenses:
Personnel costs                                                            3,528            2,951            2,696
Agent commissions                                                          3,821            2,749            2,258

Other operating expenses                                                   1,929            1,759            1,681
Benefits and other changes in policy reserves                              2,138              866                -
Depreciation and amortization                                                645              296              178
Provision for title claim losses                                             385              283              240
Interest expense                                                             114               90               47
Total expenses                                                            12,560            8,994            7,100

Earnings before income taxes and equity in earnings of
unconsolidated affiliates

                                                  3,083            1,784            1,369
Income tax expense                                                           713              322              308
Equity in earnings of unconsolidated affiliates                               64               15               15
Net earnings from continuing operations                                $   2,434          $ 1,477          $ 1,076


 Revenues.

Total revenues increased by $4,865 million in 2021 compared to 2020, primarily
attributable to increases in both direct and agency premiums, increases in
escrow title-related and other fees and increases in interest and investment
income, partially offset by a decrease in recognized gains on our investment
holdings. Total revenue in 2020 increased $2,309 million compared to 2019,
primarily attributable to increases in both direct and agency premiums,
increases in escrow title-related and other fees and increases in interest and
investment income and recognized gains on our investment holdings.

See Note L Revenue Recognition to our Consolidated Financial Statements included
in Item 8 of Part II of this Annual Report for a breakout of our consolidated
revenues.

Total net earnings from continuing operations increased by $957 million in 2021
compared to 2020, and increased by $401 million in 2020 compared to 2019.

The change in revenue and net earnings from our reportable segments is discussed
in further detail at the segment level below.

Interest and investment income levels are primarily a function of securities
markets, interest rates and the amount of cash available for investment.
Interest and investment income was $1,961 million, $900 million, and $225
million for the years ended December 31, 2021, 2020, and 2019, respectively. The
increase in 2021 as compared to 2020 is primarily attributable to a full year of
activity in our F&G segment. The increase in 2020 as compared to 2019 is
primarily attributable to the addition of our F&G segment, partially offset by
decreased interest income from lower average balances and of cash and cash
equivalents and short term investments, and lower investment yields as a result
of declining interest rates year-over-year.
                                       55

——————————————————————————–

Table of Contents

Recognized gains and losses, net totaled $334 million, $488 million, and $318
million for the years ended December 31, 2021, 2020, and 2019, respectively.
Recognized gains and losses, net for the year ended December 31, 2021 are
primarily attributable to realized gains on derivatives of $655 million, gains
on sales of fixed maturity securities of $114 million and gains on sales of
mortgages and other assets of $13 million, partially offset by losses on sales
of equity and preferred securities of $19 million and non-cash net valuation
losses on equity and preferred securities of $429 million. Recognized gains and
losses, net for the year ended December 31, 2020 are primarily attributable to
non-cash valuation gains on equity and preferred security holdings of $208
million, realized gains on derivatives of $192 million, gains on sales of fixed
maturity, preferred and equity securities of $148 million, losses on other
assets of $25 million and losses on mortgage loans of $32 million. Recognized
gains and losses, net for the year ended December 31, 2019 are primarily
attributable to non-cash valuation gains on equity and preferred security
holdings of $316 million, non-cash valuation gains on other long-term
investments of $11 million, gains on sales of equity securities of $10 million,
partially offset by impairments of lease assets of $8 million, net realized
losses of $5 million on sales and maturities of fixed maturity investment
securities, and $7 million of other net realized losses.

See Note E Investments to our Consolidated Financial Statements included in Item
8 of Part II of this Annual Report for a breakout of our consolidated interest
and investment income and realized gains and losses.


Expenses.

Our operating expenses consist primarily of Personnel costs; Other operating
expenses, which in our Title segment are incurred as orders are received and
processed; Agent commissions, which are incurred as title agency revenue is
recognized; and Benefits and other changes in policy reserves, which in our F&G
segment are charged to earnings in the period they are earned by the
policyholder based on their selected strategy. For traditional life and
immediate annuities, policy benefit claims are charged to expense in the period
that the claims are incurred, net of reinsurance recoveries. Title insurance
premiums, escrow and title-related fees are generally recognized as income at
the time the underlying transaction closes or other service is provided. Direct
title operations revenue often lags approximately 45-60 days behind expenses and
therefore gross margins may fluctuate. The changes in the market environment,
mix of business between direct and agency operations and the contributions from
our various business units have historically impacted margins and net earnings.
We have implemented programs and have taken necessary actions to maintain
expense levels consistent with revenue streams. However, a short-term lag exists
in reducing controllable fixed costs and certain fixed costs are incurred
regardless of revenue levels.

Personnel costs include base salaries, commissions, benefits, stock-based
compensation and bonuses paid to employees, and are one of our most significant
operating expenses.

Agent commissions represent the portion of premiums retained by our third-party
agents pursuant to the terms of their respective agency contracts.

Benefit expenses for deferred annuity, FIA and IUL policies include index
credits and interest credited to contractholder account balances and benefit
claims in excess of contract account balances, net of reinsurance recoveries.
Other changes in policy reserves include the change in the fair value of the FIA
embedded derivative and the change in the reserve for secondary guarantee
benefit payments. Other changes in policy reserves also include the change in
reserves for life insurance products.

Other operating expenses consist primarily of facilities expenses, title plant
maintenance, premium taxes (which insurance underwriters are required to pay on
title premiums in lieu of franchise and other state taxes), appraisal fees and
other cost of sales on ServiceLink product offerings and other title-related
products, postage and courier services, computer services, professional
services, travel expenses, general insurance and bad debt expense on our trade
and notes receivable.

The Provision for title claim losses includes an estimate of anticipated title
and title-related claims, and escrow losses.

The change in expenses attributable to our reportable segments is discussed in
further detail at the segment level below.

Income tax expense was $713 million, $322 million, and $308 million for the
years ended December 31, 2021, 2020, and 2019 respectively. Income tax expense
as a percentage of earnings before income taxes was 23.1%, 18.0%, and 22.5% in
the years ended December 31, 2021, 2020, and 2019 respectively. The increase in
income tax expense as a percentage of earnings before taxes in 2021 when
compared to 2020 and the decrease in income tax expense as a percentage of
earnings before taxes in 2020 as compared to 2019 is primarily attributable to
valuation allowance releases and the tax status change recorded by F&G in 2020.






                                       56
--------------------------------------------------------------------------------
  Table     of Contents
Title
The following table presents the results of operations of our Title segment for
the years indicated:

                                                                                  Year Ended December 31,
                                                                           2021              2020             2019
                                                                                       (In millions)
Revenues:
Direct title insurance premiums                                        $   3,571          $ 2,699          $ 2,381
Agency title insurance premiums                                            4,982            3,599            2,961
Escrow, title-related and other fees                                       3,228            2,782            2,389
Interest and investment income                                               109              151              202
Recognized gains and losses, net                                            (393)             143              326
Total revenues                                                            11,497            9,374            8,259
Expenses:
Personnel costs                                                            3,292            2,778            2,562
Agent commissions                                                          3,821            2,749            2,258
Other operating expenses                                                   1,725            1,536            1,509
Depreciation and amortization                                                138              149              154
Provision for title claim losses                                             385              283              240
Interest expense                                                               -                1                -
Total expenses                                                             9,361            7,496            6,723

Earnings from continuing operations, before income taxes and
equity in earnings of unconsolidated affiliates

                        $   2,136          $ 1,878          $ 1,536
Orders opened by direct title operations (in thousands)                    2,689            2,950            2,066
Orders closed by direct title operations (in thousands)                    2,169            2,052            1,448
Fee per file by direct title operations (in dollars)                   $   

2,467 $ 2,067 $ 2,511



Total revenues for the Title segment increased by $2,123 million, or 23%, in the
year ended December 31, 2021 when compared to 2020. Total revenues increased by
$1,115 million or 14% in the year ended December 31, 2020 when compared to 2019.
The increase in the year ended December 31, 2021 as compared to 2020 is
primarily attributable to increases in both our direct and agency premiums, and
increases in escrow, title-related and other fees, partially offset by a
decrease in interest and investment income, and an increase in non-cash
valuation losses on our equity and preferred investment holdings. The increase
in the year ended December 31, 2020 as compared to 2019 is primarily
attributable to increases in both our direct and agency premiums, and increases
in escrow, title-related and other fees, partially offset by decreases in
interest and investment income, and non-cash valuation gains on our equity and
preferred investment holdings.

The following table presents the percentages of title insurance premiums
generated by our direct and agency operations:

                                                                                        Year Ended December 31,
                                                              2021                               2020                               2019
                                                     Amount             %               Amount              %              Amount             %
                                                                                         (Dollars in Millions)
Title premiums from direct operations              $ 3,571             41.8  %       $   2,699             42.9  %       $ 2,381             44.6  %
Title premiums from agency operations                4,982             58.2              3,599             57.1            2,961             55.4
Total title premiums                               $ 8,553            100.0  %       $   6,298            100.0  %       $ 5,342            100.0  %



Title premiums increased by 36% in the year ended December 31, 2021 as compared
to 2020. The increase is primarily attributable to an increase in Title premiums
from direct operations of $872 million, or 32%, and an increase in Title
premiums from agency operations of $1,383 million, or 38%. Title premiums
increased 18% in the year ended December 31, 2020 as compared to 2019. The
increase was a result of an increase in Title premiums from direct operations of
$318 million, or 13%, and an increase in Title premiums from agency operations
of $638 million, or 22%.

                                       57

——————————————————————————–

Table of Contents

The following table presents the percentages of opened and closed title
insurance orders generated by purchase and refinance transactions by our direct
operations:

Year Ended December 31,

                                                                    2021                  2020                  2019

Opened title insurance orders from purchase transactions
(1)

                                                                    48.9  %               39.0  %               56.7  %
Opened title insurance orders from refinance
transactions (1)                                                       51.1                  61.0                  43.3
                                                                      100.0  %              100.0  %              100.0  %

Closed title insurance orders from purchase transactions
(1)

                                                                    44.9  %               39.8  %               57.6  %
Closed title insurance orders from refinance
transactions (1)                                                       55.1                  60.2                  42.4
                                                                      100.0  %              100.0  %              100.0  %

_______________________________________

(1) Percentages exclude consideration of an immaterial number of non-purchase
and non-refinance orders.

Title premiums from direct operations increased in the year ended December 31,
2021 as compared to 2020. The increase is primarily attributable to an increase
in total closed order volume, driven by an increase in purchase order volume and
an increase in fee per file, partially offset by a decline in refinance volume.
Title premiums from direct operations increased in 2020 as compared to 2019,
primarily due to an increase in total closed order volume, driven by an increase
in refinance order volume, partially offset by a decline in total fee per file.
The residential refinance market has considerably lower fees per closed order
than commercial or residential purchase transactions.

We experienced an increase in closed title insurance order volumes from purchase
transactions and a decrease in closed order volume from refinance transactions
in the year ended December 31, 2021 as compared to 2020. Total closed order
volumes were 2,169,000 in the year ended December 31, 2021 compared to 2,052,000
in the year ended December 31, 2020, an overall increase of 5.7%. The decrease
in refinance transactions in 2021 is primarily attributable to the surge in
residential refinance transactions in 2020 and the first half of 2021, resulting
in a decline in the population of eligible refinance candidates in the second
half of 2021. Closed order volumes were 2,052,000 in the year ended December 31,
2020 compared with 1,448,000 in the year ended December 31, 2019, an overall
increase of 41.7%. The increase in refinance transactions in 2020 is primarily
due to lower average interest rates when compared to 2019.

Total opened title insurance order volumes decreased in the year ended
December 31, 2021, as compared to 2020. The decrease in the year ended 2021 was
attributable to decreased opened title orders from refinance transactions,
partially offset by an increase in purchase transactions. Total opened title
insurance order volumes increased in the year ended December 31, 2020, as
compared to 2019. The increase in the year ended 2020 was attributable to
increased opened title orders from purchase and refinance transactions.

The average fee per file in our direct operations was $2,467 in the year ended
December 31, 2021, compared to $2,067 in the year ended December 31, 2020. The
increase in average fee per file in 2021 as compared to 2020 reflects an
increased proportion of purchase transactions relative to total closed orders
and a stronger commercial market compared to 2020. The fee per file tends to
change as the mix of refinance and purchase transactions changes, because
purchase transactions involve the issuance of both a lender's policy and an
owner's policy, resulting in higher fees, whereas refinance transactions only
require a lender's policy, resulting in lower fees. The average fee per file in
our direct operations in the year ended December 31, 2019 was $2,511. The
decrease in average fee per file in 2020 as compared to 2019 reflects an
increased proportion of refinance transactions relative to total closed orders
and a weaker commercial market compared to the corresponding prior year period.

Title premiums from agency operations increased $1,383 million, or 38%, in the
year ended December 31, 2021 as compared to 2020, and increased $638 million, or
22%, in the year ended December 31, 2020 as compared to 2019. The current trends
in the agency business reflect an improving residential purchase environment in
many markets throughout the country and a concerted effort by management to
increase remittances with existing agents as well as cultivate new relationships
with potential new agents. In addition, lower mortgage rates have resulted in a
surge in refinance business with agents, which is further impacted by changes in
underlying real estate activity in the geographic regions in which the
independent agents operate.


                                       58
--------------------------------------------------------------------------------
  Table     of Contents
Escrow, title-related and other fees increased by $446 million, or 16%, in the
year ended December 31, 2021 as compared to 2020, and increased by $393 million,
or 16%, in the year ended December 31, 2020 as compared to 2019. Escrow fees,
which are more closely related to our direct operations, increased by $225
million, or 19%, in the year ended December 31, 2021, as compared to 2020, and
increased $271 million, or 30%, in the year ended December 31, 2020 as compared
to 2019. The increases in the year ended December 31, 2021 as compared to 2020
are primarily due to the increase in closed order volume. The increase in the
year ended December 31, 2020 as compared to 2019 is primarily due to stronger
residential refinance revenue, which has relatively higher escrow fees than
residential purchase and commercial transactions. Other fees in the Title
segment, excluding escrow fees, increased by $221 million, or 14%, in the year
ended December 31, 2021 as compared to 2020, and increased $122 million, or 8%,
in the year ended December 31, 2020 as compared to 2019. The increase in Other
fees in the year ended December 31, 2021 as compared to 2020, and the increase
in Other fees in the year ended December 31, 2020 as compared to 2019 was
primarily driven by an increase in revenues related to our ServiceLink business
in addition to increases in various individually immaterial items. The change in
both escrow fees and other fees is directionally consistent with the change in
title premiums from direct operations in 2021 and 2020.

Interest and investment income levels are primarily a function of securities
markets, interest rates and the amount of cash available for investment.
Interest and investment income decreased $42 million, or 28%, in the year ended
December 31, 2021, as compared to 2020, and decreased $51 million in the year
ended December 31, 2020 as compared to 2019. The decrease in the year ended
December 31, 2021 as compared to 2020 was primarily attributable to decreased
average fixed maturity portfolio balances, decreased dividends on preferred and
common stocks and a decline in interest on cash and short-term investments. The
decrease in the year ended December 31, 2020 as compared to 2019 was primarily
driven by a decline in interest income related to the Company's tax-deferred
property exchange business and a decline in interest on cash and short-term
investments, due to a decline in short-term rates in 2020 as compared to 2019.

Recognized net losses were $393 million in the year ended December 31, 2021.
Recognized net gains were $143 million and $326 million in the years ended
December 31, 2020 and 2019, respectively. The variability in recognized gains
and losses, net is primarily attributable to fluctuations in non-cash valuation
changes on our equity and preferred security holdings in addition to various
other individually immaterial items.

Personnel costs include base salaries, commissions, benefits, stock-based
compensation and bonuses paid to employees, and are one of our most significant
operating expenses. Personnel costs increased $514 million, or 19%, in the year
ended December 31, 2021, as compared to 2020, and increased $216 million, or 8%
in the year ended December 31, 2020 as compared to 2019. The increases in the
year ended December 31, 2021 as compared to 2020, and the year ended December
31, 2020 as compared to 2019 are primarily attributable to increased commissions
driven by the increases in year-over-year closed title order volumes. Personnel
costs as a percentage of total revenues from direct title premiums and escrow,
title-related and other fees were 48%, 51% and 54% for the years ended
December 31, 2021, 2020 and 2019, respectively. Average employee count in the
Title segment was 27,297, 24,638, and 23,484 in the years ended December 31,
2021, 2020 and 2019, respectively.

Other operating expenses increased by $189 million, or 12%, in the year ended
December 31, 2021 as compared to 2020, and increased $27 million, or 2%, in the
year ended December 31, 2020 compared to 2019. Other operating expenses as a
percentage of total revenue excluding agency premiums, interest and investment
income, and recognized gains and losses were 25%, 28% and 32% in the years ended
December 31, 2021, 2020 and 2019, respectively.

Agent commissions represent the portion of premiums retained by agents pursuant
to the terms of their respective agency contracts. Agent commissions and the
resulting percentage of agent premiums that we retain vary according to regional
differences in real estate closing practices and state regulations.

The following table illustrates the relationship of agent premiums and agent
commissions:

                                                                                       Year Ended December 31,
                                                             2021                               2020                               2019
                                                    Amount             %               Amount              %              Amount             %
                                                                                        (Dollars in millions)
Agent premiums                                    $ 4,982            100.0  %       $   3,599            100.0  %       $ 2,961            100.0  %
Agent commissions                                   3,821             76.7              2,749             76.4            2,258             76.3
Net retained agent premiums                       $ 1,161             23.3  %       $     850             23.6  %       $   703             23.7  %





                                       59

——————————————————————————–

Table of Contents

The claim loss provision for title insurance was $385 million, $283 million, and
$240 million for the years ended December 31, 2021, 2020, and 2019 respectively.
The provision reflects a provision rate of 4.5% of title premiums in all
periods. We continually monitor and evaluate our loss provision level, actual
claims paid, and the loss reserve position each quarter. This loss provision
rate is set to provide for losses on current year policies, but due to
development of prior years and our long claim duration, it periodically includes
amounts of estimated adverse or positive development on prior years' policies.

F&G

Segment Overview

Through our wholly owned F&G subsidiary, which we acquired on June 1, 2020, we
provide our principal annuity and life insurance products through the insurance
subsidiaries composing our F&G segment, FGL Insurance and FGL NY Insurance. Our
customers range across a variety of age groups and are concentrated in the
middle-income market. Our Fixed Indexed Annuity ("FIA") products provide for
pre-retirement wealth accumulation and post-retirement income management. Our
Indexed Universal Life Insurance ("IUL") products provide wealth protection and
transfer opportunities. Life and annuity products are primarily distributed
through Independent Marketing Organizations ("IMOs") and independent insurance
agents, and beginning in 2020, independent broker dealers and banks.
Additionally, we provide funding agreements and pension risk transfer ("PRT")
solutions to various institutions through consultants and brokers.

In setting the features and pricing of new FIA products relative to our targeted
net margin, we take into account our expectations regarding (1) net investment
spread (see Non-GAAP Financial Measures section), which is the difference
between the net investment income we earn and the sum of the interest credited
to policyholders and the cost of hedging our risk on the policies; (2) fees,
including surrender charges and rider fees, partly offset by vesting bonuses
that we pay our policyholders; and (3) a number of related expenses, including
benefits and changes in reserves, acquisition costs, and general and
administrative expenses.

Key Components of Our Historical Results of Operations

Through our insurance subsidiaries, we issue a broad portfolio of deferred
annuities (fixed indexed and fixed rate annuities), indexed universal life
insurance, immediate annuities, funding agreements and pension risk transfer
solutions. A deferred annuity is a type of contract that accumulates value on a
tax deferred basis and typically begins making specified periodic or lump sum
payments a certain number of years after the contract has been issued. Indexed
universal life insurance is a complementary type of contract that accumulates
value in a cash value account and provides a payment to designated beneficiaries
upon the policyholder's death. An immediate annuity is a type of contract that
begins making specified payments within one annuity period (e.g., one month or
one year) and typically makes payments of principal and interest earnings over a
period of time.

Under U.S. GAAP, premium collections for fixed indexed annuities, fixed rate
annuities, immediate annuities and PRT without life contingency, and deposits
received for funding agreements are reported in the financial statements as
deposit liabilities (i.e., contractholder funds) instead of as sales or
revenues. Similarly, cash payments to customers are reported as decreases in the
liability for contractholder funds and not as expenses. Sources of revenues for
products accounted for as deposit liabilities are net investment income,
surrender, cost of insurance and other charges deducted from contractholder
funds, and net realized gains (losses) on investments. Components of expenses
for products accounted for as deposit liabilities are interest-sensitive and
index product benefits (primarily interest credited to account balances or the
hedging cost of providing index credits to the policyholder), amortization of
DAC, DSI, and VOBA, other operating costs and expenses, and income taxes.

F&G hedges certain portions of its exposure to product related equity market
risk by entering into derivative transactions. We purchase derivatives
consisting predominantly of call options and, to a lesser degree, futures
contracts (specifically for FIA contracts) on the equity indices underlying the
applicable policy. These derivatives are used to offset the statutory reserve
impact of the index credits due to policyholders under the FIA and IUL
contracts. The majority of all such call options are one-year options purchased
to match the funding requirements underlying the FIA/IUL contracts. We attempt
to manage the cost of these purchases through the terms of our FIA/IUL
contracts, which permit us to change caps, spread, or participation rates on
each policy's annual anniversary, subject to certain guaranteed minimums that
must be maintained. The call options and futures contracts are marked to fair
value with the change in fair value included as a component of net investment
gains (losses). The change in fair value of the call options and futures
contracts includes the gains and losses recognized at the expiration of the
instruments' terms or upon early termination and the changes in fair value of
open positions.


                                       60

——————————————————————————–

Table of Contents

Earnings from products accounted for as deposit liabilities are primarily
generated from the excess of net investment income earned over the sum of
interest credited to policyholders and the cost of hedging our risk on FIA/IUL
policies, known as the net investment spread. With respect to FIAs/IULs, the
cost of hedging our risk includes the expenses incurred to fund the index
credits. Proceeds received upon expiration or early termination of call options
purchased to fund annual index credits are recorded as part of the change in
fair value of derivatives, and are largely offset by an expense for index
credits earned on annuity contractholder fund balances.

Our profitability depends in large part upon the amount of assets under
management ("AUM" - see Non-GAAP Financial Measures section), the net investment
spreads earned on our AUM, our ability to manage our operating expenses and the
costs of acquiring new business (principally commissions to agents and bonuses
credited to policyholders). As we grow AUM, earnings generally increase. AUM
increases when cash inflows, which include sales, exceed cash outflows. Managing
net investment spreads involves the ability to maximize returns on our AUM and
minimize risks such as interest rate changes and defaults or impairment of
investments. It also includes our ability to manage interest rates credited to
policyholders and costs of the options and futures purchased to fund the annual
index credits on the FIA/IULs. We analyze returns on average assets under
management ("AAUM" - see Non-GAAP Financial Measures section) pre- and post-DAC,
DSI and VOBA as well as pre- and post-tax to measure our profitability in terms
of growth and improved earnings.

In June 2021, we established a funding agreement-backed notes program (the "FABN
Program"), pursuant to which FGL Insurance may issue funding agreements to a
special purpose statutory trust (the "Trust") for spread lending purposes. The
maximum aggregate principal amount permitted to be outstanding at any one time
under the FABN Program is currently $5.0 billion. We also issue funding
agreements through the Federal Home Loan Bank of Atlanta ("FHLB").

In July 2021, we entered the PRT market, pursuant to which FGL Insurance and FGL
NY Insurance may issue group annuity contracts to discharge pension plan
liabilities from a pension plan sponsor. Life contingent pension risk transfer
premiums are included in life insurance premiums and other fees below.

Non-GAAP Financial Measures

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.

Adjusted net earnings attributable to common shareholders ("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.
                                       61

——————————————————————————–

Table of Contents

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.

For example, we could have strong operating results in a given period, yet
report net income that is materially less, if during such period the fair value
of our derivative assets hedging the FIA and IUL index credit obligations
decreased due to general equity market conditions but the embedded derivative
liability related to the index credit obligation did not decrease in the same
proportion as the derivative assets because of non-equity market factors such as
interest rate and non-performance credit spread movements. Similarly, we could
also have poor operating results in a given period yet show net earnings (loss)
that is materially greater, if during such period the fair value of the
derivative assets increases but the embedded derivative liability did not
increase in the same proportion as the derivative assets. We hedge our index
credits with a combination of static and dynamic strategies, which can result in
earnings volatility, the effects of which are generally likely to reverse over
time. Our management and board of directors review adjusted net earnings and net
earnings (loss) as part of their examination of our overall financial results.
However, these examples illustrate the significant impact derivative and
embedded derivative movements can have on our net earnings (loss). Accordingly,
our management performs a review and analysis of these items, as part of their
review of our hedging results each period.

Amounts attributable to the fair value accounting for derivatives hedging the
FIA and IUL index credits and the related embedded derivative liability
fluctuate from period to period based upon changes in the fair values of call
options purchased to fund the annual index credits, changes in the interest
rates and non-performance credit spreads used to discount the embedded
derivative liability, and the fair value assumptions reflected in the embedded
derivative liability. The accounting standards for fair value measurement
require the discount rates used in the calculation of the embedded derivative
liability to be based on risk-free interest rates adjusted for our
non-performance as of the reporting date. The impact of the change in fair
values of FIA-related derivatives, embedded derivatives and hedging costs has
been removed from net earnings (loss) in calculating adjusted net earnings.

AUM is a non-GAAP measure we use to assess the rate of return on assets
available for reinvestment. AUM 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) 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.

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 rate of return on assets
available for reinvestment.

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 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 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 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
                                       62

——————————————————————————–

Table of Contents

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.

Sales

Annuity, IUL and funding agreement 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. 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.


                                       63

——————————————————————————–

Table of Contents

F&G Results of Operations

The results of operations of our F&G segment for the year ended December 31,
2021
and seven months ended December 31, 2020 (following our June 1, 2020
acquisition of F&G), were as follows:

                                                                     Twelve months ended                                 Seven months ended
                                                                                                    December 31,                                       December 31,
                                                                                                        2021                                               2020
                                                                                                                 (In millions)
Revenues:
Life insurance premiums and other fees (a)                                                          $    1,395                                        $ 

138

Interest and investment income                                                                           1,852                                          

743

Recognized gains and losses, net                                                                           715                                                352
Total revenues                                                                                           3,962                                              1,233
Expenses:
Benefits and other changes in policy reserves                                                            2,138                                                866
Personnel costs                                                                                            129                                                 65
Other operating expenses                                                                                   105                                                 75
Depreciation and amortization                                                                              484                                                123
Interest expense                                                                                            29                                                 18
    Total expenses                                                                                       2,885                                          

1,147

Earnings before income taxes                                                                             1,077                                          

86

Income tax (expense) benefit                                                                              (220)                                                75

Net earnings                                                                                        $      857                                        $       161
Earnings (loss) from discontinued operations, net of tax                                                     8                                                (25)
Net earnings                                                                                        $      865                                        $       136

(a) Included within Escrow, title-related and other fees in
Consolidated Statements of Earnings


The following table summarizes sales by product type of our F&G segment, which
are not affected by the June 1, 2020 Business Combination, and are comparable to
prior period data:

                                           Year ended December 31,
                                                               2021         2020
                                                                 (In millions)
Fixed indexed annuities (FIA)                                $ 4,310      $ 

3,459

Fixed rate annuities (MYGA)                                    1,738        

776

Total annuity                                                  6,048        

4,235

Indexed universal life (IUL)                                      87        

50

Funding agreements (FABN/FHLB)                                 2,310          200
Pension risk transfer (PRT)                                    1,147            -
Flow reinsurance                                                   -          352
Total Sales                                                  $ 9,592      $ 4,837



•FIA and MYGA sales were strong during the year ended December 31, 2021 compared
to the year ended December 31, 2020 and reflect F&G's productive and expanding
retail distribution through independent agents, banks and broker dealers.

•Funding agreements and pension risk transfer sales during the year ended
December 31, 2021 reflect F&G’s expansion into institutional markets during 2021
and are subject to fluctuation period to period.

                                       64
--------------------------------------------------------------------------------
  Table     of Contents
Revenues

Life insurance premiums and other fees

Life insurance premiums and other fees primarily reflect premiums on
life-contingent pension risk transfers and traditional life insurance products,
which are recognized as revenue when due from the policyholder, as well as the
cost of insurance on IUL policies, policy rider fees primarily on FIA policies,
and surrender charges assessed against policy withdrawals in excess of the
policyholder's allowable penalty-free amounts (up to 10% of the prior year's
value, subject to certain limitations). The following table summarizes the Life
insurance premiums and other fees, included within Escrow, title-related and
other fees on the Consolidated Statements of Earnings (in millions), for the
year ended December 31, 2021 and seven months ended December 31, 2020 (following
our June 1 acquisition of F&G):
                                                                                        Seven months
                                                                        Year ended          ended

                                                                                        December 31,         December 31,
                                                                                            2021                 2020
                                                                                                     (In millions)
Life-contingent pension risk transfer premiums                                          $    1,146          $         -
Traditional life insurance premiums                                                             18                   13
Life-contingent immediate annuity premiums                                                      13                   10

Surrender charges                                                                               33                   13
Cost of insurance fees and other income                                                        185                  102
Life insurance premiums and other fees                                                  $    1,395          $       138



•Pension risk transfer premiums for the twelve months ended December 31, 2021
reflect new PRT deals for the period.

•Traditional life insurance premiums for the twelve months ended December 31,
2021, and seven months ended December 31, 2020 are related to the return of
premium riders on traditional life contracts. FGL Insurance has ceded the
majority of its traditional life business to unaffiliated third party
reinsurers. While the base contract has been reinsured, we continue to retain
the return of premium rider.

•Immediate annuity premiums for the twelve months ended December 31, 2021 and
seven months ended December 31, 2020 reflect policyholder behavior for
annuitizations.

•Surrender charges for the twelve months ended December 31, 2021 and seven
months ended December 31, 2020 reflect amounts assessed against policy
withdrawals in excess of the policyholder’s allowable penalty-free amounts.

•Cost of insurance fees and other income for the twelve months ended
December 31, 2021 and seven months ended December 31, 2020 primarily reflects
GMWB rider fees of $137 million and $72 million, respectively, and cost of
insurance charges on IUL policies, net of unearned revenue deferrals, of $31
million and $22 million, respectively. GMWB rider fees are based on the
policyholder's benefit base and are collected at the end of the policy year.


                                       65

——————————————————————————–

Table of Contents

Interest and investment income

Below is a summary of interest and investment income:

                                                                        Year ended                                       Seven months ended
                                                                                        December 31,                                                December 31,
                                                                                            2021                                                        2020
                                                                                           (In millions)
Fixed maturity securities, available-for-sale                                           $    1,213                                                 $       643
Equity securities                                                                               58                                                          42
Mortgage loans                                                                                 131                                                          50

Limited partnerships                                                                           589                                                          76
Other investments                                                                               24                                                           8
Gross investment income                                                                      2,015                                                         819
Investment expense                                                                            (163)                                                        (76)
Interest and investment income                                                          $    1,852                                                 $    

743

Our net investment spread and AAUM are summarized as follows (annualized) (see
Non-GAAP Financial Measures Section):

                                                                                    Year ended       Seven months ended
                                                                                                                            December 31, 2021        December 31, 2020
                                                                                                                                       (Dollars in millions)
Yield on AAUM (at amortized cost)                                                                                                      5.80  %                  4.66  %
Alternative investment yield adjustment                                                                                               (1.04) %                  0.07  %
Adjusted yield on AAUM                                                                                                                 4.76  %                  4.73  %
Less: Interest credited and option cost                                                                                               (1.95) %                 (1.99) %
Net investment spread                                                                                                                  2.81  %                  2.74  %
AAUM                                                                                                                        $           31,938       $           27,322


•AAUM for the twelve months ended December 31, 2021 and seven months ended
December 31, 2020 reflect new business asset flows.

•The $1,852 million NII for the twelve months ended December 31, 2021 was
primarily driven by $1,213 million in fixed maturity securities, $589 million of
interest and investment income related to our investments in limited
partnerships, $24 million in other investments and $131 million in mortgage
loans, partially offset by $163 million in investment expenses. The $743 million
NII for the seven months ended December 31, 2020 was primarily driven by $643
million in fixed maturity securities, $76 million of interest and investment
income related to our investments in limited partnerships, and $50 million in
mortgage loans, partially offset by $76 million in investment expenses.

•The alternative investment yield adjustment reflects the yield impact of market
volatility on the alternative investment portfolio that differ from management's
expectation of returns over the life of these assets.
                                       66

——————————————————————————–

Table of Contents

Recognized gains and losses, net

Below is a summary of the major components included in recognized gains and
losses, net:

                                                                                                    Seven months
                                                                               Year ended               ended
                                                                              December 31,          December 31,
                                                                                  2021                  2020
                                                                                         (In millions)

Net realized and unrealized gains (losses) on fixed maturity
available-for-sale securities, equity securities and other invested
assets

                                                                       $         58          $        179
Change in allowance for expected credit losses                                          4                   (19)

Net realized and unrealized gains (losses) on certain derivatives
instruments

                                                                           614                   237
Change in fair value of reinsurance related embedded derivatives                       34                   (53)

Change in fair value of other derivatives and embedded derivatives

             5                     8
Recognized gains and losses, net                                            

$ 715 $ 352



•For the year ended December 31, 2021 and seven months ended December 31, 2020,
net realized and unrealized gains on fixed maturity available-for-sale
securities, equity securities and other invested assets is primarily the result
of realized gains on fixed maturity available-for-sale securities, partially
offset and increased by mark-to-market movement on our equity securities,
respectively.

•Allowance for expected credit losses during the year ended December 31, 2021
decreased primarily due to improved economic conditions for residential mortgage
loans, partially offset by higher reserves for commercial mortgage loans. As of
the June 1, 2020 acquisition of F&G, due to purchase accounting adjustments, our
expected credit loss reserve was valued at $0. For the seven months ended
December 31, 2020, the expected credit loss reserve increased primarily due to
reserves established for residential mortgage loans.

•For the year ended December 31, 2021 and the seven months ended December 31,
2020, net realized and unrealized gains on certain derivative instruments
primarily relates to the net realized and unrealized gains on options and
futures used to hedge FIA and IUL products, including gains on option and
futures expiration. See the table below for primary drivers of gains (losses) on
certain derivatives.

•The fair value of reinsurance related embedded derivative is based on the
change in fair value of the underlying assets held in the funds withheld ("FWH")
portfolio.

We utilize a combination of static (call options) and dynamic (long futures
contracts) instruments in our hedging strategy. A substantial portion of the
call options and futures contracts are based upon the S&P 500 Index with the
remainder based upon other equity, bond and gold market indices.
                                       67

——————————————————————————–

Table of Contents

The components of the realized and unrealized gains (losses) on certain
derivative instruments hedging our indexed annuity and universal life products
are summarized in the table below:

                                                                              Year ended             Seven months ended
                                                                           December 31, 2021         December 31, 2020
                                                                                      (Dollars in millions)
Call Options:
Gains on option expiration                                                $            437          $            62
Change in unrealized (losses) gains                                                    160                      167
Futures contracts:
Gains on futures contracts expiration                                                    9                       21
Change in unrealized losses                                                             (1)                      (6)
Foreign currency forward:
Gains (losses) on foreign currency forward                                               9                       (7)
Total net change in fair value                                            $            614          $           237

Point-to-Point Change in S&P 500 Index during twelve and seven
month periods

                                                                           27  %                    23    %


•Realized gains and losses on certain derivative instruments are directly
correlated to the performance of the indices upon which the call options and
futures contracts are based and the value of the derivatives at the time of
expiration compared to the value at the time of purchase. Gains on option
expiration reflect the movement during the twelve months ended December 31, 2021
and the seven months ended December 31, 2020, on options settled during the
period.

•The change in unrealized gains (losses) due to fair value of call options is
primarily driven by the underlying performance of the S&P 500 Index during each
respective year relative to the S&P 500 Index on the policyholder buy dates.

•The net change in fair value of the call options and futures contracts was
primarily driven by movements in the S&P 500 Index relative to the policyholder
buy dates.

The average index credits to policyholders are as follows:

                                                    Year ended          

Seven months ended

                                                 December 31, 2021      

December 31, 2020

      Average Crediting Rate                                   5  %                    3  %
      S&P 500 Index:
      Point-to-point strategy                                  4  %                    5  %
      Monthly average strategy                                 3  %                    2  %
      Monthly point-to-point strategy                          7  %                    -  %
      3 year high water mark                                  16  %                   19  %


•Actual amounts credited to contractholder fund balances may differ from the
index appreciation due to contractual features in the FIA and certain IUL
contracts (caps, spreads and participation rates), which allow F&G to manage the
cost of the options purchased to fund the annual index credits.

•The credits for the periods presented were based on comparing the S&P 500 Index
on each issue date in the period to the same issue date in the respective prior
year periods.
                                       68

——————————————————————————–

Table of Contents

Benefits and expenses

Benefits and other changes in policy reserves

Below is a summary of the major components included in Benefits and other
changes in policy reserves:

                                                                                               Seven months
                                                                          Year ended               ended
                                                                         December 31,          December 31,
                                                                             2021                  2020
                                                                                    (In millions)

FIA/ IUL market related liability movements                             $       (378)         $        317
Index credits, interest credited & bonuses                                     1,005                   319
Annuity payments                                                                 574                    74

PRT agreements                                                                 1,157                     -
Other                                                                           (220)                  156
Total benefits and other changes in policy reserves                     $   

2,138 $ 866



•The FIA/IUL market related liability movements during the twelve and seven
months ended December 31, 2021 and December 31, 2020, respectively, are mainly
driven by changes in the equity markets, non-performance spreads, and risk free
rates during the periods. Additionally, 2021 includes the system implementation
and assumption review process impacts discussed below. The change in risk free
rates decreased the FIA market related liability by $145 million and $63 million
during the twelve and seven months ended December 31, 2021 and 2020,
respectively. During the twelve and seven months ended December 31, 2021 and
2020, the change in non-performance spread decreased the FIA market related
liability by $34 million and increased the FIA market related liability by $205
million, respectively. The remaining change in market value of the market
related liability movements was driven by equity market impacts. See table in
the net investment gains/losses discussion above for summary and discussion of
net unrealized gains (losses) on certain derivative instruments.

•Annually, typically in the third quarter, we review assumptions associated with
reserves for policy benefits and product guarantees. In addition, during the
third quarter of 2021, we implemented a new actuarial valuation system, and as a
result, our third quarter 2021 assumption updates include model refinements and
assumption updates resulting from the implementation. The system implementation
and assumption review process included refinements in the calculation of the
fair value of the embedded derivative component of our fixed indexed annuities.
These changes, taken together, resulted in a decrease in contractholder funds
and future policy reserves of $397 million.

•The index credits, interest credited and bonuses were primarily due to index
credits on FIA policies. Refer to average policyholder index discussion above
for details on drivers.

•PRT agreements for the twelve months ended December 31, 2021 reflect new PRT
deals for the period.

Personnel Costs and Other Operating Expenses

Below is a summary of personnel costs and other operating expenses:

                                                                                           Seven months
                                                                      Year ended               ended
                                                                     December 31,          December 31,
                                                                         2021                  2020
                                                                                (In millions)
Personnel costs                                                     $        129          $         65
Other operating expenses                                                     105                    75

Total personnel costs and other operating expenses                  $       

234 $ 140

•Personnel costs for the twelve months ended December 31, 2021 and seven months
ended December 31, 2020 primarily reflect employee-related expenses.

•Other operating expenses for the twelve months ended December 31, 2021 and
seven months ended December 31, 2020 reflect certain operating expenses other
than personnel costs and non-deferred acquisition costs.
                                       69

——————————————————————————–

Table of Contents

Depreciation and amortization

Below is a summary of the major components included in depreciation and
amortization:

                                                                                                Seven months
                                                                           Year ended               ended
                                                                          December 31,          December 31,
                                                                              2021                  2020
                                                                                     (In millions)
Amortization of DAC, VOBA, and DSI                                       $        517          $        131
Interest                                                                          (44)                  (22)
Unlocking                                                                         (12)                   (2)
Amortization of other intangible assets and other depreciation                     23                    16
Total depreciation and amortization                                      $  

484 $ 123



•Amortization of DAC, VOBA, and DSI is based on current and future expected
gross margins (pre-tax operating income before amortization) and includes the
system implementation discussed below. The amortization for the year ended
December 31, 2021 and the seven months ended December 31, 2020 is the result of
actual gross profits ("AGPs") in the periods.

•Annually, typically in the third quarter, we review assumptions associated with
the amortization of intangibles. In addition, during the third quarter of 2021,
we implemented a new actuarial valuations system and as a result, our third
quarter 2021 assumption updates include model refinements and assumption updates
resulting from the implementation. The changes, taken together, increased
amortization of intangibles by $136 million.

Other items affecting net earnings

Income tax expense (benefit)

Below is a summary of the major components included in income tax expense
(benefit):

                                                                            Year ended             Seven months ended
                                                                       

December 31, 2021 December 31, 2020

                                                                                    (Dollars in millions)
Income before taxes                                                    $           1,077          $            86

Income tax expense before valuation allowance                                        234                      (21)

Change in valuation allowance                                                        (14)                     (54)
Federal income tax expense (benefit)                                   $             220          $           (75)
Effective rate                                                                        20  %                   (87)   %


•Income tax benefit for the period ended December 31, 2020 was $75 million. The
income tax benefit was primarily driven by various valuation allowance releases
as a result of merger activity, partially offset by taxes on income.

•See “Note T – Income Taxes” for further information.




                                       70

——————————————————————————–

Table of Contents

Adjusted Net Earnings (See Non-GAAP Financial Measures section)

The table below shows the adjustments made to reconcile net earnings to adjusted
net earnings :

                                                                                              Seven months
                                                                         Year ended               ended
                                                                        December 31,          December 31,
                                                                            2021                  2020
                                                                                   (In millions)
Net earnings                                                           $        857          $        161
Non-GAAP adjustments:
Recognized (gains), net                                                        (319)                  (45)
Indexed product related derivatives                                             (52)                  111

Purchase price amortization                                                      26                    16

Transaction costs                                                                 5                    21
Other non-recurring items (a)                                                  (284)                    -
Income taxes on non-GAAP adjustments                                            128                   (29)
Adjusted net earnings                                                  $        361          $        235
(a) Reflects adjustments to benefits and other changes in policy reserves and depreciation
and amortization resulting from the implementation of a new actuarial valuation system



•Adjusted net earnings for the twelve months ended December 31, 2021 primarily
reflects net investment income for the period, partially offset by product costs
and other expenses, and includes $31 million of net favorable mortality
primarily driven by the single premium immediate annuity ("SPIA") line of
business, partially offset by $(19) million net unfavorable mortality driven by
the indexed universal life ("IUL") line of business, $8 million of favorable DAC
unlocking and $46 million of other net favorable items, primarily net investment
income related to CLO redemptions held at a discount to par.

•Adjusted net earnings for the seven months ended December 31, 2020 primarily
reflects net investment income for the period, partially offset by product costs
and other expenses, and includes $14 million of net favorable mortality driven
by the SPIA line of business, and $72 million of other net favorable items,
primarily related to a favorable income tax benefit.


                                       71

——————————————————————————–

Table of Contents

Investment Portfolio

The types of assets in which we may invest are influenced by various state laws,
which prescribe qualified investment assets applicable to insurance companies.
Within the parameters of these laws, we invest in assets giving consideration to
four primary investment objectives: (i) maintain robust absolute returns;
(ii) provide reliable yield and investment income; (iii) preserve capital and
(iv) provide liquidity to meet policyholder and other corporate obligations.

Our investment portfolio is designed to contribute stable earnings and balance
risk across diverse asset classes and is primarily invested in high quality
fixed income securities.

As of December 31, 2021 and December 31, 2020, the fair value of our investment
portfolio was approximately $39 billion and $31 billion, respectively, and was
divided among the following asset classes and sectors:

                                                           December 31, 2021                         December 31, 2020
                                                   Fair Value            Percent             Fair Value            Percent
                                                                              (Dollars in millions)
Fixed maturity securities, available for sale:
  United States Government full faith and credit  $      50                      -  %       $      45                      -  %
  United States Government sponsored entities            74                      -  %             106                      -  %
  United States municipalities, states and
territories                                           1,441                      4  %           1,309                      4  %
  Foreign Governments                                   205                      1  %             140                      -  %
Corporate securities:
  Finance, insurance and real estate                  5,109                     13  %           4,572                     15  %
  Manufacturing, construction and mining                932                      2  %             936                      3  %
  Utilities, energy and related sectors               2,987                      8  %           2,762                      9  %
  Wholesale/retail trade                              2,627                      7  %           2,106                      7  %
  Services, media and other                           3,349                      8  %           2,793                      9  %
Hybrid securities                                       881                      2  %             963                      3  %
Non-agency residential mortgage-backed securities       648                      2  %             694                      2  %
Commercial mortgage-backed securities                 2,964                      7  %           2,806                      9  %
Asset-backed securities                               4,550                     12  %           1,999                      6  %
Collateral loan obligations ("CLO")                   4,145                     11  %           4,268                     14  %
Total fixed maturity available for sale
securities                                           29,962                     77  %          25,499                     81  %
Equity securities (a)                                 1,171                      3  %           1,047                      3  %
Alternative investments:
  Private equity                                      1,181                      3  %             614                      2  %
  Real assets                                           340                      1  %             288                      1  %
  Credit                                                829                      2  %             254                      1  %
Commercial mortgage loans                             2,265                      6  %             926                      3  %
Residential mortgage loans                            1,549                      4  %           1,123                      4  %
Other (primarily derivatives and company owned
life insurance)                                       1,305                      3  %             997                      4  %
Short term investments                                  373                      1  %             456                      1  %
Total investments                                 $  38,975                    100  %       $  31,204                    100  %

(a) Includes investment grade non-redeemable preferred stocks ($928 million and
$853 million at December 31, 2021 and 2020, respectively).

Insurance statutes regulate the type of investments that our life insurance
subsidiaries are permitted to make and limit the amount of funds that may be
used for any one type of investment. In light of these statutes and regulations,
and our business and investment strategy, we generally seek to invest in
(i) corporate securities rated investment grade by established nationally
recognized statistical rating organizations (each, an "NRSRO"), (ii) U.S.
Government and government-sponsored agency securities, or (iii) securities of
comparable investment quality, if not rated.
                                       72
--------------------------------------------------------------------------------
  Table     of Contents
As of December 31, 2021 and December 31, 2020, our fixed maturity
available-for-sale ("AFS") securities portfolio was approximately $30 billion
and $25 billion, respectively. The following table summarizes the credit
quality, by NRSRO rating, of our fixed income portfolio:
                                         December 31, 2021                  December 31, 2020
                                      Fair Value         Percent         Fair Value         Percent
   Rating                                               (Dollars in millions)
   AAA                            $            660           2  %    $            488           2  %
   AA                                        2,181           7  %               1,590           6  %
   A                                         7,667          26  %               7,040          28  %
   BBB                                      10,462          35  %               9,669          38  %
   Not rated (b)                             6,642          22  %               4,336          17  %
   Total investment grade                   27,612          92  %              23,123          91  %
   BB                                        1,372           5  %               1,493           6  %
   B and below (a)                             432           1  %                 612           2  %
   Not rated (b)                               546           2  %                 271           1  %
   Total below investment grade              2,350           8  %               2,376           9  %
   Total                          $         29,962         100  %    $         25,499         100  %

(a) Includes $68 million and $106 million at December 31, 2021 and December 31,
2020
, respectively, of non-agency RMBS that carry a NAIC 1 designation.

(b) Securities denoted as not-rated by an NRSRO were classified as investment or
non-investment grade according to the securities’ respective NAIC designation.

The NAIC's Securities Valuation Office ("SVO") is responsible for the day-to-day
credit quality assessment and valuation of securities owned by state regulated
insurance companies. Insurance companies report ownership of securities to the
SVO when such securities are eligible for regulatory filings. The SVO conducts
credit analysis on these securities for the purpose of assigning an NAIC
designation or unit price. Typically, if a security has been rated by an NRSRO,
the SVO utilizes that rating and assigns an NAIC designation based upon the
following system:

                     NAIC Designation       NRSRO Equivalent Rating
                            1                       AAA/AA/A
                            2                         BBB
                            3                          BB
                            4                          B
                            5                    CCC and lower
                            6                  In or near default



The NAIC uses designation methodologies for non-agency RMBS, including RMBS
backed by subprime mortgage loans and for commercial mortgage-backed securities
("CMBS"). The NAIC's objective with the designation methodologies for these
structured securities is to increase accuracy in assessing expected losses and
to use the improved assessment to determine a more appropriate capital
requirement for such structured securities. Prior to 2021, the NAIC designations
for structured securities, including subprime and Alternative A-paper ("Alt-A")
RMBS, were based upon a comparison of the bond's amortized cost to the NAIC's
loss expectation for each security. Securities where modeling does not generate
an expected loss in all scenarios are given the highest designation of NAIC 1.
In 2021, the NAIC eliminated the comparison of non-legacy (issued after 2012)
bond's amortized cost to the NAIC's loss expectation and instead assigned a NAIC
designation based on the loss expectation alone. Several of our RMBS securities
carry a NAIC 1 designation while the NRSRO rating indicates below investment
grade. The revised methodologies reduce regulatory reliance on rating agencies
and allow for greater regulatory input into the assumptions used to estimate
expected losses from such structured securities. In the tables below, we present
the rating of structured securities based on ratings from the NAIC rating
methodologies described above (which in some cases do not correspond to rating
agency designations). All NAIC designations (e.g., NAIC 1-6) are based on the
NAIC methodologies.

                                       73

——————————————————————————–

Table of Contents

The table below presents our fixed maturity securities by NAIC designation as of
December 31, 2021 and December 31, 2020 (dollars in millions):

                                                 December 31, 2021
  NAIC Designation       Amortized Cost       Fair Value       Percent of Total Fair Value
         1              $        15,636      $    15,848                              54  %
         2                       10,779           11,441                              38  %
         3                        1,603            1,850                               6  %
         4                          567              669                               2  %
         5                           80               93                               -  %
         6                           59               61                               -  %
Total                   $        28,724      $    29,962                             100  %
                                                 December 31, 2020
  NAIC Designation       Amortized Cost       Fair Value       Percent of Total Fair Value
         1              $        11,696      $    12,370                              49  %
         2                        9,753           10,659                              42  %
         3                        1,373            1,595                               6  %
         4                          616              700                               3  %
         5                          162              174                               -  %
         6                            1                1                               -  %
Total                   $        23,601      $    25,499                             100  %


                                       74

——————————————————————————–

Table of Contents

Investment Industry Concentration

The tables below present the top ten industry categories of our fixed maturity
and equity securities and FHLB common stock, including the fair value and
percent of total fixed maturity and equity securities and FHLB common stock fair
value as of December 31, 2021 and 2020 (dollars in millions):

                                                                            

December 31, 2021

                                                                                            Percent of Total
Top 10 Industry Concentration                                             Fair Value           Fair Value
ABS Other                                                                $   4,550                     15  %
CLO securities                                                               4,145                     13  %
Banking                                                                      2,919                      9  %
Whole loan collateralized mortgage obligation ("CMO")                        2,622                      8  %
Life insurance                                                               1,795                      6  %
Electric                                                                     1,701                      6  %
Municipal                                                                    1,441                      5  %
Healthcare                                                                     947                      3  %
Technology                                                                     932                      3  %
Other Financial Institution                                                    760                      2  %
Total                                                                    $  21,812                     70  %

                                                                                  December 31, 2020
                                                                                            Percent of Total
Top 10 Industry Concentration                                             Fair Value           Fair Value
CLO securities                                                           $   4,268                     16  %
Banking                                                                      2,592                     10  %
Whole loan collateralized mortgage obligation ("CMO")                        2,343                      9  %
ABS other                                                                    1,873                      7  %
Life insurance                                                               1,657                      6  %
Electric                                                                     1,548                      6  %
Municipal                                                                    1,308                      5  %
CMBS                                                                           795                      3  %
Technology                                                                     784                      3  %
Healthcare                                                                     658                      2  %
Total                                                                    $  17,826                     67  %


The amortized cost and fair value of fixed maturity AFS securities by
contractual maturities as of December 31, 2021 and 2020, are shown below. Actual
maturities may differ from contractual maturities because issuers may have the
right to call or prepay obligations.
                                       75

——————————————————————————–

  Table     of Contents

                                                                   December 31, 2021                             December 31, 2020
                                                          Amortized Cost           Fair Value           Amortized Cost           Fair Value
                                                                                            (In millions)
Corporate, Non-structured Hybrids, Municipal and
Government securities:
Due in one year or less                                 $           105          $       106          $           111          $       112
Due after one year through five years                             1,724                1,754                    1,055                1,107
Due after five years through ten years                            2,141                2,201                    1,808                1,918
Due after ten years                                              12,842               13,515                   11,436               12,489
                                                        $        16,812    

$ 17,576 $ 14,410 $ 15,626
Other securities, which provide for periodic payments:
Asset-backed securities

                                 $         8,516     

$ 8,695 $ 1,920 $ 1,999
CLO securities

                                                        -                    -                    4,021                4,268
Commercial-mortgage-backed securities                             2,669                2,964                    2,468                2,806
Structured hybrids                                                    5                    5                        -                    -
Residential mortgage-backed securities                              722                  722                      782                  800
Subtotal                                                $        11,912     

$ 12,386 $ 9,191 $ 9,873
Total fixed maturity available-for-sale securities $ 28,724

     $    29,962          $        23,601          $    25,499


Non-Agency RMBS Exposure

Our investment in non-agency RMBS securities is predicated on the conservative
and adequate cushion between purchase price and NAIC 1 rating, general lack of
sensitivity to interest rates, positive convexity to prepayment rates and
correlation between the price of the securities and the unfolding recovery of
the housing market.

The fair value of our investments in subprime and Alt-A RMBS securities was $52
million and $75 million as of December 31, 2021, respectively, and $68 million
and $94 million as of December 31, 2020, respectively.

The following tables summarize our exposure to subprime and Alt-A RMBS by credit
quality using NAIC designations, NRSRO ratings and vintage year as of
December 31, 2021 and December 31, 2020 (dollars in millions):

                                                          December 31, 2021                               December 31, 2020
NAIC Designation:                                 Fair Value           Percent of Total           Fair Value           Percent of Total
1                                             $           116                     91  %       $           153                     94  %
2                                                           4                      3  %                     1                      1  %
3                                                           2                      2  %                     2                      1  %
4                                                           1                      1  %                     3                      2  %
5                                                           4                      3  %                     3                      2  %
6                                                           -                      -  %                     -                      -  %
Total                                         $           127                    100  %       $           162                    100  %

NRSRO:
AAA                                           $             -                      -  %       $             1                      1  %
AA                                                         15                     12  %                     4                      2  %
A                                                           5                      4  %                    17                     10  %
BBB                                                        12                      9  %                    17                     10  %
Not rated - Above investment grade (a)                     24                     19  %                    19                     12  %
BB and below                                               71                     56  %                   104                     65  %
Total                                         $           127                    100  %       $           162                    100  %

Vintage:

2007                                                       31                     24  %                    37                     23  %
2006                                                       34                     27  %                    43                     27  %
2005 and prior                                             62                     49  %                    82                     50  %

Total                                         $           127                    100  %       $           162                    100  %


                                       76
--------------------------------------------------------------------------------
  Table     of Contents
(a) Securities denoted as not-rated by an NRSRO were classified as investment or
non-investment grade according to the securities' respective NAIC designation.

ABS and CLO Exposures

Our ABS exposures are largely diversified by underlying collateral and issuer
type. Our CLO exposures are generally senior tranches of CLOs which have
leveraged loans as their underlying collateral.

As of December 31, 2021, the CLO and ABS positions were trading at a net
unrealized gain position of $145 million and $37 million, respectively. As of
December 31, 2020, the CLO and ABS positions were trading at a net unrealized
gain position of $247 million and $79 million, respectively.



Municipal Bond Exposure

Our municipal bond exposure is a combination of general obligation bonds (fair
value of $258 million and an amortized cost of $247 million as of December 31,
2021) and special revenue bonds (fair value of $1,183 million and amortized cost
of $1,138 million as of December 31, 2021).

Across all municipal bonds, the largest issuer represented 7% of the category,
less than 1% of the entire portfolio and is rated NAIC 1. Our focus within
municipal bonds is on NAIC 1 rated instruments, and 91% of our municipal bond
exposure is rated NAIC 1.

Mortgage Loans

We rate all CMLs to quantify the level of risk. We place those loans with higher
risk on a watch list and closely monitor them for collateral deficiency or other
credit events that may lead to a potential loss of principal and/or interest. If
we determine the value of any CML to be impaired (i.e., when it is probable that
we will be unable to collect on amounts due according to the contractual terms
of the loan agreement), the carrying value of the CML is reduced to either the
present value of expected cash flows from the loan, discounted at the loan's
effective interest rate, or fair value of the collateral. For those mortgage
loans that are determined to require foreclosure, the carrying value is reduced
to the fair value of the underlying collateral, net of estimated costs to obtain
and sell at the point of foreclosure. The carrying value of the impaired loans
is reduced by establishing a specific write-down recorded in Recognized gains
and losses, net in the Consolidated Statements of Earnings included in Item 8 of
Part II of this Annual Report.

LTV and DSC ratios are utilized as part of the review process described above.
As of December 31, 2021, our mortgage loans on real estate portfolio had a
weighted average DSC ratio of 2.4 times, and a weighted average LTV ratio of
56%. See Note E to the Consolidated Financial Statements included in Item 8 of
Part II of this Annual Report for additional information regarding our LTV and
DSC ratios.

F&G’s RMLs are closed end, amortizing loans and 100% of the properties are
located in the United States. F&G diversifies its RML portfolio by state to
attempt to reduce concentration risk. RMLs have a primary credit quality
indicator of either a performing or nonperforming loan. F&G defines
non-performing RMLs as those that are 90 or more days past due and/or in
nonaccrual status, which is assessed monthly.












                                       77

——————————————————————————–

Table of Contents

Unrealized Losses

The amortized cost and fair value of the fixed maturity securities and the
equity securities that were in an unrealized loss position as of December 31,
2021
and 2020, were as follows (in millions):

                                                                                           December 31, 2021
                                                                                                Allowance for
                                                                              Amortized           Expected            Unrealized
                                                Number of securities             Cost           Credit Losses           Losses              Fair Value

Fixed maturity securities, available for sale:

 United States Government full faith and
credit                                                      9               

$ 36 $ – $ – $ 36

 United States Government sponsored agencies               41                       42                   -                    (1)                  41
 United States municipalities, states and
territories                                                50                      503                   -                   (11)                 492
  Foreign Governments                                      28                       27                   -                     -                   27
Corporate securities:
 Finance, insurance and real estate                       366                    1,365                   -                   (31)               1,334
 Manufacturing, construction and mining                    97                      281                   -                    (3)                 278
 Utilities, energy and related sectors                    280                    1,243                   -                   (46)               1,197
 Wholesale/retail trade                                   313                    1,188                   -                   (33)               1,155
 Services, media and other                                339                    1,486                   -                   (39)               1,447
Hybrid securities                                           3                        3                   -                     -                    3
Non-agency residential mortgage backed
securities                                                 46                      316                  (2)                   (3)                 311
Commercial mortgage backed securities                      89                      616                  (1)                  (11)                 604
Asset backed securities                                   375                    4,603                  (2)                  (38)               4,563
Total fixed maturity available for sale
securities                                              2,036                   11,709                  (5)                 (216)              11,488
Equity securities                                          20                      259                   -                   (33)                 226
Total investments                                       2,056                $  11,968          $       (5)         $       (249)         $    11,714

                                                                                           December 31, 2020
                                                                                                Allowance for
                                                                              Amortized           Expected            Unrealized
                                                Number of securities             Cost           Credit Losses           Losses              Fair Value
Fixed maturity securities, available for sale:
United States Government full faith and credit              4               

$ 5 $ – $ – $ 5
United States Government sponsored agencies

                11                       23                   -                     -                   23
United States municipalities, states and
territories                                                14                      117                   -                    (2)                 115
Foreign Governments                                         -                        -                   -                     -                    -
Corporate securities:
Finance, insurance and real estate                         21                      347                   -                    (3)                 344

Utilities, energy and related sectors                      12                      185                   -                    (3)                 182
Wholesale/retail trade                                     11                       86                   -                    (1)                  85
Services, media and other                                  13                      221                   -                    (7)                 214
Hybrid securities                                           1                        1                   -                     -                    1
Non-agency residential mortgage backed
securities                                                 29                       32                  (1)                   (1)                  30
Commercial mortgage backed securities                      19                       51                   -                    (3)                  48
Asset backed securities                                    66                      517                   -                   (18)                 499
Total fixed maturity available for sale
securities                                                201                    1,585                  (1)                  (38)               1,546
Equity securities                                           1                       16                   -                     -                   16
Total investments                                         202                $   1,601          $       (1)         $        (38)         $     1,562


                                       78
--------------------------------------------------------------------------------
  Table     of Contents
The gross unrealized loss position on the fixed maturity available-for-sale
fixed and equity portfolio was $249 million and $38 million as of December 31,
2021 and 2020, respectively. Most components of the portfolio exhibited price
depreciation as treasury rates increased, offset by narrower credit spreads. The
total amortized cost of all securities in an unrealized loss position was
$11,968 million and $1,601 million as of December 31, 2021 and 2020,
respectively. The average market value/book value of the investment category
with the largest unrealized loss position was 96% for Utilities, energy and
related sectors as of December 31, 2021. In the aggregate, Utilities, energy and
related sectors represented 18% of the total unrealized loss position as of
December 31, 2021. The average market value/book value of the investment
category with the largest unrealized loss position was 97% for Asset backed
securities as of December 31, 2020. In the aggregate, Asset backed securities
represented 47% of the total unrealized loss position as of December 31, 2020.

The amortized cost and fair value of fixed maturity available for sale
securities under watch list analysis and the number of months in a loss position
with investment grade securities (NRSRO rating of BBB/Baa or higher) were as
follows (dollars in millions):

                                                                            

December 31, 2021

                                                                                                                  Allowance for         Gross Unrealized
                                      Number of securities           Amortized Cost          Fair Value            Credit Loss               Losses
Investment grade:
Less than six months                              4                $            82          $       79          $            -          $           (3)
Six months or more and less than
twelve months                                     2                             34                  32                       -                      (2)
Twelve months or greater                          -                              -                   -                       -                       -
Total investment grade                            6                            116                 111                       -                      (5)

Below investment grade:
Less than six months                              -                              -                   -                       -                       -
Six months or more and less than
twelve months                                     -                              -                   -                       -                       -
Twelve months or greater                          2                             16                  14                       -                      (2)
Total below investment grade                      2                             16                  14                       -                      (2)
Total                                             8                $           132          $      125          $            -          $           (7)

                                                                                      December 31, 2020
                                                                                                                  Allowance for         Gross Unrealized
                                      Number of securities           Amortized Cost          Fair Value            Credit Loss               Losses
Investment grade:
Less than six months                              3                $           102          $       95          $           (6)         $           (1)
Six months or more and less than
twelve months                                     -                              -                   -                       -                       -
Twelve months or greater                          -                              -                   -                       -                       -
Total investment grade                            3                            102                  95                      (6)                     (1)

Below investment grade:
Less than six months                              1                              -                   -                       -                       -
Six months or more and less than
twelve months                                     -                              -                   -                       -                       -
Twelve months or greater                          -                              -                   -                       -                       -
Total below investment grade                      1                              -                   -                       -                       -
Total                                             4                $           102          $       95          $           (6)         $           (1)



                                       79

——————————————————————————–

Table of Contents

Expected Credit Losses and Watch List

F&G prepares a watch list to identify securities to evaluate for expected credit
losses. Factors used in preparing the watch list include fair values relative to
amortized cost, ratings and negative ratings actions and other factors. Detailed
analysis is performed for each security on the watch list to further assess the
presence of credit impairment loss indicators and, where present, calculate an
allowance for expected credit loss or direct write-down of a security's
amortized cost. At December 31, 2021, our watch list included seven securities
in an unrealized loss position with an amortized cost of $132 million, allowance
for expected credit losses of $0 million, unrealized losses of $7 million and a
fair value of $125 million.

At December 31, 2020, our watch list included four securities in an unrealized
loss position with an amortized cost of $102 million, allowance for expected
credit losses of $6 million, unrealized losses of $1 million and a fair value of
$95 million.

The watch list excludes structured securities due to a revision of processes as
a result of ASU 2016-13.

There were 36 structured securities to which we had a potential credit
disclosure with a fair value of $45 million and $65 million as of December 31,
2021 and 2020, respectively. Our analysis of these structured securities, which
included cash flow testing, resulted in allowances for expected credit losses of
$8 million and $3 million as of December 31, 2021 and 2020, respectively.

Exposure to Sovereign Debt

Our investment portfolio had no direct exposure to European sovereign debt as of
December 31, 2021 and 2020.

As of December 31, 2021 and 2020, we also had no material exposure risk related
to financial investments in Puerto Rico.

Interest and investment income

For discussion regarding our net investment income and net investment gains
(losses) refer to Note E to the Consolidated Financial Statements included in
Item 8 of Part II of this Annual Report.

AFS Securities

For additional information regarding our AFS securities, including the amortized
cost, gross unrealized gains (losses), and fair value as well as the amortized
cost and fair value of fixed maturity AFS securities by contractual maturities,
as of December 31, 2021 and 2020, refer to Note E Investments to the
Consolidated Financial Statements included in Item 8 of Part II of this Annual
Report.

Concentrations of Financial Instruments

For detail regarding our concentration of financial instruments refer to Item
7A. of Part II of this Annual Report.

Derivatives

We are exposed to credit loss in the event of nonperformance by our
counterparties on call options. We attempt to reduce this credit risk by
purchasing such options from large, well-established financial institutions.

We also hold cash and cash equivalents received from counterparties for call
option collateral, as well as U.S. Government securities pledged as call option
collateral, if our counterparty's net exposures exceed pre-determined
thresholds.

We are required to pay counterparties the effective federal funds rate each day
for cash collateral posted to F&G for daily mark to market margin changes.
We reduce the negative interest cost associated with cash collateral posted from
counterparties under various ISDA agreements by reinvesting derivative cash
collateral. This program permits collateral cash received to be invested in
short term Treasury securities, bank deposits and commercial paper rated A1/P1,
which are included in Cash and cash equivalents in the accompanying Consolidated
Balance Sheets.

See Note F Derivative Financial Instruments to the Consolidated Financial
Statements included in Item 8 of Part II of this Annual Report for additional
information regarding our derivatives and our exposure to credit loss on call
options.




                                       80
--------------------------------------------------------------------------------
  Table     of Contents
Corporate and Other

The Corporate and Other segment consists of the operations of the parent holding
company, our various real estate brokerage businesses and our real estate
technology subsidiaries. This segment also includes certain other unallocated
corporate overhead expenses and eliminations of revenues and expenses between it
and our Title segment.

The following table presents the results of operations of our Corporate and
Other segment for the years indicated:

Year Ended December 31,

                                                                            2021                2020             2019
                                                                                        (In millions)
Revenues:

Escrow, title-related and other fees                                  $     172              $   172          $   195
Interest and investment income                                                -                    6               23
Recognized gains and losses, net                                             12                   (7)              (8)
Total revenues                                                              184                  171              210
Expenses:
Personnel costs                                                             107                  108              134

Other operating expenses                                                     99                  148              172
Depreciation and amortization                                                23                   24               24

Interest expense                                                             85                   71               47
Total expenses                                                              314                  351              377

Loss from continuing operations, before income taxes and equity
in earnings of unconsolidated affiliates

                              $    (130)             $  (180)         $  (167)



The revenue in the Corporate and Other segment for all years represents revenue
generated by our non-title real estate technology and brokerage subsidiaries as
well as mark-to-market valuation changes on certain corporate deferred
compensation plans.

Total revenues in the Corporate and Other segment increased $13 million, or 8%
in the year ended December 31, 2021 as compared to 2020, and decreased $39
million, or 19%, in the year ended December 31, 2020 as compared to 2019. The
increase in the year ended December 31, 2021 as compared to 2020 is primarily
attributable to increased Recognized gains and losses, net of approximately $19
million, partially offset by decreased interest and investment income of $6
million associated with a year-over-year reduction in fixed-income investment
holdings. The decrease in the year ended December 31, 2020 as compared to 2019
is primarily attributable to valuation losses associated with our deferred
compensation plan assets in 2020 and decreased interest and investment income of
$17 million associated with a year-over-year reduction in cash holdings.

Personnel costs in the Corporate and Other segment decreased $1 million, or 1%
in the year ended December 31, 2021 as compared to 2020, and decreased $26
million, or 19%, in the year ended December 31, 2020 compared to 2019. The
decrease in the year ended December 31, 2020 as compared to 2019 is attributable
to the aforementioned decrease in the valuation of deferred compensation plan
assets compared to the corresponding period in 2019.

Other operating expenses in the Corporate and Other segment decreased $49
million, or 33%, in the year ended December 31, 2021 as compared to 2020, and
decreased $24 million, or 14% in the year ended December 31, 2020 as compared to
2019. The decrease in 2021 as compared to 2020 is primarily attributable to a
decrease in F&G transaction costs of approximately $38 million and reduced real
estate brokerage expenses of $24 million in 2021 related to previous
divestitures, partially offset by growth in our real estate technology
businesses. The decrease in the year ended December 31, 2020 as compared to 2019
is primarily attributable to the reverse termination fee paid in 2019 related to
the abandoned Stewart Information Services Corporation acquisition, partially
offset by F&G acquisition costs in 2020

Interest expense increased $14 million, or 20%, in the year ended December 31,
2021 as compared to 2020, and increased $24 million, or 51%, in the year ended
December 31, 2020 as compared to 2019. The increase in the year ended December
31, 2021 as compared to 2020 is primarily attributable to increased average debt
outstanding in 2021 associated with issuance of our 3.20% Notes in September
2021 as well as having a full year outstanding of our 3.40% Notes and our 2.45%
Notes issued in 2020. The increase in the year ended December 31, 2020 as
compared to 2019 is primarily attributable to increased average debt outstanding
in 2020 associated with the Term Loan Credit Agreement, our 3.40% Notes and our
2.45% Notes.


                                       81
--------------------------------------------------------------------------------
  Table     of Contents
Liquidity and Capital Resources

Cash Requirements. Our current cash requirements include personnel costs,
operating expenses, claim payments, taxes, payments of interest and principal on
our debt, capital expenditures, business acquisitions, stock repurchases and
dividends on our common stock. We paid dividends of $1.56 per share in 2021, or
approximately $446 million to our common shareholders. On February 16, 2022, our
Board of Directors declared cash dividends of $0.44 per share, payable on
March 31, 2022, to FNF common shareholders of record as of March 17, 2022. There
are no restrictions on our retained earnings regarding our ability to pay
dividends to our shareholders, although there are limits on the ability of
certain subsidiaries to pay dividends to us, as described below. The declaration
of any future dividends is at the discretion of our Board of Directors.
Additional uses of cash flow are expected to include acquisitions, stock
repurchases and debt repayments, including the repayment of $400 million in
outstanding principal amount associated with our 5.50% Notes due in September
2022.

As of December 31, 2021, we had cash and cash equivalents of $4,360 million,
short term investments of $491 million and available capacity under our
Revolving Credit Facility of $800 million. On September 17, 2021, we completed
our underwritten public offering of $450 million aggregate principal amount of
our 3.20% Notes due 2051, pursuant to our registration statement on Form S-3
(File No. 333-239002) and the related prospectus supplement. The net proceeds
from the registered offering of the 3.20% Notes were approximately $443 million,
after deducting underwriting discounts, commissions and offering expenses. We
plan to use the net proceeds from the offering for general corporate purposes.
For further information related to the 3.20% Notes, refer to Note G Notes
Payable to the Consolidated Financial Statements included in Item 8 of Part II
of this Annual Report. We continually assess our capital allocation strategy,
including decisions relating to the amount of our dividend, reducing debt,
repurchasing our stock, investing in growth of our subsidiaries, making
acquisitions and/or conserving cash. We believe that all anticipated cash
requirements for current operations will be met from internally generated funds,
through cash dividends from subsidiaries, cash generated by investment
securities, potential sales of non-strategic assets, potential issuances of
additional debt or equity securities, and borrowings on our Revolving Credit
Facility. Our short-term and long-term liquidity requirements are monitored
regularly to ensure that we can meet our cash requirements. We forecast the
needs of all of our subsidiaries and periodically review their short-term and
long-term projected sources and uses of funds, as well as the asset, liability,
investment and cash flow assumptions underlying such forecasts.

Our title insurance subsidiaries generate cash from premiums earned and their
respective investment portfolios, and these funds are adequate to satisfy the
payments of claims and other liabilities. Due to the magnitude of our title
segment investment portfolio in relation to our title claim loss reserves, we do
not specifically match durations of our investments to the cash outflows
required to pay claims, but do manage outflows on a shorter time frame.

Our two significant sources of internally generated funds are dividends and
other payments from our subsidiaries. As a holding company, we receive cash from
our subsidiaries in the form of dividends and as reimbursement for operating and
other administrative expenses we incur. The reimbursements are paid within the
guidelines of management agreements among us and our subsidiaries. Our insurance
subsidiaries are restricted by state regulation in their ability to pay
dividends and make distributions. Each applicable state of domicile regulates
the extent to which our title underwriters can pay dividends or make other
distributions. As of December 31, 2021, $2,375 million of our net assets were
restricted from dividend payments without prior approval from the relevant
departments of insurance. We anticipate that our title insurance subsidiaries
will pay or make dividends to us in 2021 of approximately $831 million. Our
underwritten title companies and non-insurance subsidiaries are not regulated to
the same extent as our insurance subsidiaries.

The maximum dividend permitted by law is not necessarily indicative of an
insurer's actual ability to pay dividends, which may be constrained by business
and regulatory considerations, such as the impact of dividends on surplus, which
could affect an insurer's ratings or competitive position, the amount of
premiums that can be written and the ability to pay future dividends. Further,
depending on business and regulatory conditions, we may in the future need to
retain cash in our underwriters or even contribute cash to one or more of them
in order to maintain their ratings or their statutory capital position. Such a
requirement could be the result of investment losses, reserve charges, adverse
operating conditions in the current economic environment or changes in statutory
accounting requirements by regulators.

Cash flow from our operations will be used for general corporate purposes
including to reinvest in operations, repay debt, pay dividends, repurchase
stock, pursue other strategic initiatives and/or conserve cash.

Operating Cash Flow. Our cash flows provided by operations for the years ended
December 31, 2021, 2020, 2019 were $4,090 million, $1,578 million, and $1,121
million respectively. The increase in cash provided by operating activities of
$2,512 million in 2021 as compared to 2020 is primarily attributable to the
increase in pre-tax earnings in 2021, non-cash valuation changes in equity,
preferred and derivative securities of $821 million, increased cash inflows
associated with the change in future policy benefits of $726 million, increased
cash inflows associated with the change in funds withheld from reinsurers of
$865 million, partially offset by gains on sales of investments and other assets
of $668 million, increased cash outflows associated with increased deferred
policy acquisition costs and deferred sales inducements of $409 million and the
timing of

                                       82

——————————————————————————–

Table of Contents

receipts and payments of prepaid assets, payables, receivables and income taxes.
The primary driver of the increased cash flows associated with the change in
future policy benefits in 2021 as compared to 2020 was cash received for PRT
transactions associated with our F&G business. The increase in cash provided by
operating activities of $457 million in 2020 as compared to 2019 is primarily
attributable to the increase in pre-tax earnings in 2020 and the addition of
interest credited to contractholder account balances of $750 million in 2020,
partially offset by deferred policy acquisition costs and deferred sales
inducements of $266 million in 2020, charges assessed to contractholders for
mortality and administration of $100 million in 2020, and the timing of receipts
and payments of prepaid assets, payables, receivables and income taxes.

Investing Cash Flows. Our cash used in investing activities for the years ended
December 31, 2021, 2020, and 2019 were $7,449 million, $2,331 million, and $520
million respectively. The increase in cash used in investing activities of
$5,118 million in 2021 as compared to 2020 is primarily associated with
increased purchases of investment securities of $11,055 million, increased
investment in unconsolidated affiliates of $1,419 million, partially offset by
increased proceeds from sales, calls and maturities of investment securities of
$6,204 million, increased distributions from unconsolidated affiliates of $250
million and reduced cash outflows associated with acquisitions of $818 million.
The increase in cash used in investing activities of $1,811 million in 2020 as
compared to 2019 is primarily attributable to the net cash outflow of $1,076
million associated with the F&G acquisition, increased purchases of investment
securities of $4,092 million and additional investments in unconsolidated
affiliates of $293 million, partially offset by increased sales, calls, and
maturities of investment securities of $2,761 million, sales and maturities of
short-term investments of $540 million and increased distributions from
unconsolidated affiliates of $195 million. The increased activity related to
purchases, sales and calls of investment securities in the 2020 period is
primarily associated with our F&G segment.

Capital Expenditures. Total capital expenditures for property and equipment and
capitalized software were $131 million, $110 million, and $96 million for the
year ended December 31, 2021, 2020, and 2019 respectively.

Financing Cash Flows. Our cash flows provided by (used in) financing activities
for the year ended December 31, 2021, 2020, and 2019 were $5,000 million and
$2,096 million, and $(482) million respectively. The increase in cash provided
by financing activities of $2,904 million in 2021 as compared to 2020 is
primarily associated with increased cash inflows associated with the change in
contractholder accounts of $3,595 million, increased cash inflows associated
with the change in secured trust deposits of $304 million and reduced debt
service payments of $1,000 million, partially offset by reduced debt offerings
and borrowings of $1,797 million and increased purchases of treasury stock of
$227 million. The increase in cash provided by financing activities of $2,578
million in 2020 as compared to 2019 is primarily attributable to cash inflows
from the offerings of our 3.40% Notes of $648 million and 2.45% Notes of $593
million, and increased cash inflows from contractholder account deposits of
$2,967 million, partially offset by increased cash outflows from contractholder
withdrawals of $1,327 million, increased purchases of treasury stock of $150
million and the purchase of the outstanding Class A units of ServiceLink held by
minority owners of $90 million. The increased activity in contractholder
deposits and withdrawals in the 2020 period is associated with our F&G segment.

Financing Arrangements. For a description of our financing arrangements see Note
G Notes Payable included in Item 8 of Part II of this Annual Report, which is
incorporated by reference into this Item 7 of Part II.

Obligations - Contractual and Other. As of December 31, 2021, our required
annual payments relating to contractual and other obligations were as follows:

                                      2022             2023             2024             2025             2026            Thereafter            Total
                                                                                       (In millions)

Notes payable principal repayment $ 400 $ – $ – $ 550 $ – $ 2,150 $ 3,100
Operating lease payments

               145              116               83               44               26                   27               441
Pension and other benefit payments      15               14               13               12               11                   90               155
Annuity and universal life
products                             2,995            3,404            2,975            3,093            3,022               28,962            44,451
Pension risk transfer annuity
payments                                92               88               85               81               77                  875             1,298
Funding agreements (FABN/FHLB)         308              506              855              375              750                  649             3,443
Title claim loss estimated
payments                               210              210              220              179              121                  943             1,883
Interest on fixed rate notes
payable                                132              117              117              117              117                  571             1,171
Total                              $ 4,297          $ 4,455          $ 4,348          $ 4,451          $ 4,124          $    34,267          $ 55,942




                                       83
--------------------------------------------------------------------------------
  Table     of Contents
As of December 31, 2021, we had title insurance reserves of $1,883 million. The
amounts and timing of these obligations are estimated and are not set
contractually. While we believe that historical loss payments are a reasonable
source for projecting future claim payments, there is significant inherent
uncertainty in this payment pattern estimate because of the potential impact of
changes in:

•future mortgage interest rates, which will affect the number of real estate and
refinancing transactions and; therefore, the rate at which title insurance
claims will emerge;
•the legal environment whereby court decisions and reinterpretations of title
insurance policy language to broaden coverage could increase total obligations
and influence claim payout patterns;
•events such as fraud, escrow theft, multiple property title defects,
foreclosure rates and individual large loss events that can substantially and
unexpectedly cause increases in both the amount and timing of estimated title
insurance loss payments; and
•loss cost trends whereby increases or decreases in inflationary factors
(including the value of real estate) will influence the ultimate amount of title
insurance loss payments.

Based on historical title insurance claim experience, we anticipate the above
payment patterns. The uncertainty and variation in the timing and amount of
claim payments could have a material impact on our cash flows from operations in
a particular period.

We sponsor certain frozen pension and other post-retirement benefit plans. See
Note U. Employee Benefit Plans to our Consolidated Financial Statements included
in Item 8 of Part II of this Annual Report for further information.

Capital Stock Transactions. On July 17, 2018, our Board of Directors approved a
three-year stock repurchase program effective August 1, 2018 (the "2018
Repurchase Program") under which we may purchase up to 25 million shares of our
FNF common stock through July 31, 2021. On August 3, 2021, our Board of
Directors approved the 2021 Repurchase Program under which we may purchase up to
25 million shares of our FNF common stock through July 31, 2024. We may make
repurchases from time to time in the on market, in block purchases or in
privately negotiated transactions, depending on market conditions and other
factors. We repurchased 10,180,000 shares of FNF common stock during the year
ended December 31, 2021 for approximately $461 million, or an average of $45.22
per share. Subsequent to December 31, 2021 and through market close on February
23, 2022, we repurchased a total of 250,000 shares for $13 million, or an
average of $52.60 under the 2021 Repurchase Program. Since the original
commencement of the 2021 Repurchase Program, we repurchased a total of 3,230,000
FNF common shares for an aggregate amount of $161 million, or an average of
$49.90 per share.

Equity and Preferred Security Investments. Our equity and preferred security
investments may be subject to significant volatility. Currently prevailing
accounting standards require us to record the change in fair value of equity and
preferred security investments held as of any given period end within earnings.
Our results of operations in future periods is anticipated to be subject to such
volatility.

Off-Balance Sheet Arrangements. In conducting our operations, we routinely hold
customers' assets in escrow, pending completion of real estate transactions, and
are responsible for the proper disposition of these balances for our customers.
Certain of these amounts are maintained in segregated bank accounts and have not
been included in the accompanying Consolidated Balance Sheets, consistent with
Generally Accepted Accounting Principles and industry practice. These balances
amounted to $30.5 billion and $26.5 billion at December 31, 2021 and 2020,
respectively. As a result of holding these customers' assets in escrow, we have
ongoing programs for realizing economic benefits during the year through
favorable borrowing and vendor arrangements with various banks.

We have unfunded investment commitments as of December 31, 2021 based upon the
timing of when investments are executed compared to when the actual investments
are funded, as some investments require that funding occur over a period of
months or years. Please refer to Note E Investments and Note H Commitments and
Contingencies to the Consolidated Financial Statements included in Item 8 of
Part II of this Annual Report for additional details on unfunded investment
commitments.

FHLB Collateral. We are currently a member of the FHLB and are required to
maintain a collateral deposit that backs any funding agreements issued. We use
these funding agreements as part of a spread enhancement strategy. We have the
ability to obtain funding from the FHLB based on a percentage of the value of
our assets, subject to the availability of eligible collateral. Collateral is
pledged based on the outstanding balances of FHLB funding agreements. The amount
of funding varies based on the type, rating and maturity of the collateral
posted to the FHLB. Generally, U.S. government agency notes and mortgage-backed
securities are pledged to the FHLB as collateral. Market value fluctuations
resulting from changes in interest rates, spreads and other risk factors for
each type of asset are monitored and additional collateral is either pledged or
released as needed.


                                       84

——————————————————————————–

  Table     of Contents
Our borrowing capacity under these credit facilities does not have an expiration
date as long as we maintain a satisfactory level of creditworthiness based on
the FHLB's credit assessment. As of December 31, 2021 and 2020, we had $1,543
million and $1,203 million, respectively, in FHLB non-putable funding agreements
included under contractholder funds on our consolidated balance sheet. As of
December 31, 2021 and 2020, we had assets with a fair value of approximately
$2,420 million and $1,471 million, respectively, which collateralized the FHLB
funding agreements. Assets pledged to the FHLB are included in fixed maturities,
AFS, on our consolidated balance sheets.

Collateral-Derivative Contracts. Under the terms of our ISDA agreements, we may
receive from, or deliver to, counterparties collateral to assure that all terms
of the ISDA agreements will be met with regard to the Credit Support Annex
("CSA"). The terms of the CSA call for us to pay interest on any cash received
equal to the federal funds rate. As of December 31, 2021 and 2020, respectively,
$790 million and $491 million of collateral was posted by our counterparties as
they did not meet the net exposure thresholds. Collateral requirements are
monitored on a daily basis and incorporate changes in market values of both the
derivatives contract as well as the collateral pledged. Market value
fluctuations are due to changes in interest rates, spreads and other risk
factors.



Source

Leave a Reply

Your email address will not be published.