UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)


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

For the quarterly period ended ~~September 30, 2021~~March 31, 2022


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

Commission File Number: 001-32630

FIDELITY NATIONAL FINANCIAL, INC.

(Exact name of registrant as specified in its charter)


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

601 Riverside Avenue

Jacksonville, Florida, 32204

(Address of principal executive offices, including zip code)

(904) 854-8100

(Registrant’s telephone number, including area code)

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

Title of Each Class

Trading Symbol

Name of Each Exchange on Which Registered

FNF Common Stock, $0.0001 par value

FNF

New York Stock Exchange

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

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

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


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

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

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

The number of shares outstanding of the Registrant's common stock as of ~~October 31, 2021~~April 30, 2022 were:

FNF Common Stock ~~284,531,737~~280,703,586

Table of Contents

FORM 10-Q

QUARTERLY REPORT

Quarter Ended ~~September 30, 2021~~March 31, 2022

TABLE OF CONTENTS


			Page

PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements:			2
Condensed Consolidated Balance Sheets (unaudited)			3
Condensed Consolidated Statements of Earnings (unaudited)			4
Condensed Consolidated Statements of Comprehensive Earnings (unaudited)			5
Condensed Consolidated Statements of Equity (unaudited)			6
Condensed Consolidated Statements of Cash Flows (unaudited)			87
Notes to Unaudited Condensed Consolidated Financial Statements			108
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			5947
Item 3. Quantitative and Qualitative Disclosures about Market Risk			9177
Item 4. Controls and Procedures			9177

PART II. OTHER INFORMATION
Item 1. Legal Proceedings			9278

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			9278


Item 6. Exhibits			9279
Signatures			9379

Table of Contents

PART I: FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

Table of Contents

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in millions, except share data)


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
		(Unaudited)					(Unaudited)
ASSETS	ASSETS					ASSETS
Investments:	Investments:					Investments:
Fixed maturity securities available for sale, at fair value, at September 30, 2021 and December 31, 2020, net of allowance for credit losses of $8 and $19, respectively, and includes pledged fixed maturity securities of $458 and $455, respectively, related to secured trust deposits		$	30,435	$	27,587
Fixed maturity securities available for sale, at fair value, at March 31, 2022 and December 31, 2021, at an amortized cost of $32,508 and $30,705, respectively, net of allowance for credit losses of $11 and $8, respectively, and includes pledged fixed maturity securities of $450 and $460, respectively, related to secured trust deposits						Fixed maturity securities available for sale, at fair value, at March 31, 2022 and December 31, 2021, at an amortized cost of $32,508 and $30,705, respectively, net of allowance for credit losses of $11 and $8, respectively, and includes pledged fixed maturity securities of $450 and $460, respectively, related to secured trust deposits	$	31,478	$	31,990
Preferred securities, at fair value	Preferred securities, at fair value	1,202		1,341		Preferred securities, at fair value	1,283		1,401
Equity securities, at fair value	Equity securities, at fair value	1,393		995		Equity securities, at fair value	1,061		1,263
Derivative investments	Derivative investments	581		548		Derivative investments	487		816
Mortgage loans, net of allowance for credit losses of $33 and $39 at September 30, 2021 and December 31, 2020, respectively		3,484		2,031
Mortgage loans, net of allowance for credit losses of $32 and $31 at March 31, 2022 and December 31, 2021, respectively						Mortgage loans, net of allowance for credit losses of $32 and $31 at March 31, 2022 and December 31, 2021, respectively	4,217		3,749
Investments in unconsolidated affiliates	Investments in unconsolidated affiliates	2,160		1,294		Investments in unconsolidated affiliates	2,849		2,486
Other long-term investments	Other long-term investments	492		482		Other long-term investments	606		579
Short-term investments, at September 30, 2021 and December 31, 2020 includes pledged short-term investments of $3 and $1, respectively, related to secured trust deposits		527		769
Short-term investments, at March 31, 2022 and December 31, 2021 includes pledged short-term investments of $1 related to secured trust deposits						Short-term investments, at March 31, 2022 and December 31, 2021 includes pledged short-term investments of $1 related to secured trust deposits	1,746		491
Total investments	Total investments	40,274		35,047		Total investments	43,727		42,775
Cash and cash equivalents, at September 30, 2021 and December 31, 2020 includes $694 and $270, respectively, of pledged cash related to secured trust deposits		5,148		2,719
Trade and notes receivables, net of allowance of $32 and $28 at September 30, 2021 and December 31, 2020, respectively		523		437
Cash and cash equivalents, at March 31, 2022 and December 31, 2021 includes $521 and $480, respectively, of pledged cash related to secured trust deposits						Cash and cash equivalents, at March 31, 2022 and December 31, 2021 includes $521 and $480, respectively, of pledged cash related to secured trust deposits	2,793		4,360
Trade and notes receivables, net of allowance of $32 at March 31, 2022 and December 31, 2021						Trade and notes receivables, net of allowance of $32 at March 31, 2022 and December 31, 2021	529		557

Reinsurance recoverable, net of allowance for credit losses of $19 and $21 at September 30, 2021 and December 31, 2020, respectively		3,518		3,211
Reinsurance recoverable, net of allowance for credit losses of $20 at March 31, 2022 and December 31, 2021						Reinsurance recoverable, net of allowance for credit losses of $20 at March 31, 2022 and December 31, 2021	3,918		3,738
Goodwill	Goodwill	4,515		4,495		Goodwill	4,539		4,539
Prepaid expenses and other assets	Prepaid expenses and other assets	1,169		997		Prepaid expenses and other assets	1,357		1,203
Lease assets	Lease assets	373		374		Lease assets	373		376
Other intangible assets, net	Other intangible assets, net	2,400		2,264		Other intangible assets, net	3,034		2,557
Title plants	Title plants	400		404		Title plants	400		400
Property and equipment, net	Property and equipment, net	186		180		Property and equipment, net	187		185

Assets of discontinued operations		—		327

Total assets	Total assets	$	58,506	$	50,455	Total assets	$	60,857	$	60,690
LIABILITIES AND EQUITY	LIABILITIES AND EQUITY					LIABILITIES AND EQUITY
Liabilities:	Liabilities:					Liabilities:
Contractholder funds	Contractholder funds	$	33,988	$	28,718	Contractholder funds	$	36,237	$	35,525
Future policy benefits	Future policy benefits	3,985		4,010		Future policy benefits	5,217		4,732
Accounts payable and accrued liabilities	Accounts payable and accrued liabilities	2,969		2,402		Accounts payable and accrued liabilities	2,769		2,696
Notes payable	Notes payable	3,097		2,662		Notes payable	3,095		3,096
Reserve for title claim losses	Reserve for title claim losses	1,734		1,623		Reserve for title claim losses	1,912		1,883
Funds withheld for reinsurance liabilities	Funds withheld for reinsurance liabilities	1,508		806		Funds withheld for reinsurance liabilities	1,852		1,676
Secured trust deposits	Secured trust deposits	1,147		711		Secured trust deposits	970		934
Lease liabilities	Lease liabilities	409		414		Lease liabilities	410		414
Income taxes payable	Income taxes payable	18		56		Income taxes payable	179		72
Deferred tax liability	Deferred tax liability	277		300		Deferred tax liability	98		205
Liabilities of discontinued operations		—		361

Total liabilities	Total liabilities	49,132		42,063		Total liabilities	52,739		51,233

Equity:	Equity:					Equity:

FNF common stock, $0.0001 par value; authorized 600,000,000 shares as of September 30, 2021 and December 31, 2020; outstanding of 284,743,161 and 291,448,627 as of September 30, 2021 and December 31, 2020, respectively, and issued of 324,064,003 and 322,622,948 as of September 30, 2021 and December 31, 2020, respectively		—		—
FNF common stock, $0.0001 par value; authorized 600,000,000 shares as of March 31, 2022 and December 31, 2021; outstanding of 281,117,483 and 283,778,574 as of March 31, 2022 and December 31, 2021, respectively, and issued of 325,573,748 and 325,486,429 as of March 31, 2022 and December 31, 2021, respectively						FNF common stock, $0.0001 par value; authorized 600,000,000 shares as of March 31, 2022 and December 31, 2021; outstanding of 281,117,483 and 283,778,574 as of March 31, 2022 and December 31, 2021, respectively, and issued of 325,573,748 and 325,486,429 as of March 31, 2022 and December 31, 2021, respectively	—		—

Preferred stock, $0.0001 par value; authorized 50,000,000 shares; issued and outstanding, none	Preferred stock, $0.0001 par value; authorized 50,000,000 shares; issued and outstanding, none	—		—		Preferred stock, $0.0001 par value; authorized 50,000,000 shares; issued and outstanding, none	—		—
Additional paid-in capital	Additional paid-in capital	5,790		5,720		Additional paid-in capital	5,826		5,811
Retained earnings	Retained earnings	3,961		2,394		Retained earnings	4,642		4,369
Accumulated other comprehensive earnings		1,005		1,304
Less: Treasury stock, 39,320,842 shares and 31,174,321 shares as of September 30, 2021 and December 31, 2020, respectively, at cost		(1,424)		(1,067)
Accumulated other comprehensive (loss) earnings						Accumulated other comprehensive (loss) earnings	(712)		779
Less: Treasury stock, 44,456,265 shares and 41,707,855 shares as of March 31, 2022 and December 31, 2021, respectively, at cost						Less: Treasury stock, 44,456,265 shares and 41,707,855 shares as of March 31, 2022 and December 31, 2021, respectively, at cost	(1,679)		(1,545)
Total Fidelity National Financial, Inc. shareholders’ equity	Total Fidelity National Financial, Inc. shareholders’ equity	9,332		8,351		Total Fidelity National Financial, Inc. shareholders’ equity	8,077		9,414
Non-controlling interests	Non-controlling interests	42		41		Non-controlling interests	41		43
Total equity	Total equity	9,374		8,392		Total equity	8,118		9,457
Total liabilities and equity	Total liabilities and equity	$	58,506	$	50,455	Total liabilities and equity	$	60,857	$	60,690

See Notes to Condensed Consolidated Financial Statements

Table of Contents

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

~~CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS~~

~~(Dollars in millions, except per share data)~~

Three months ended September 30, Nine months ended September 30,
2021 2020 2021 2020
(Unaudited) (Unaudited)
Revenues:
Direct title insurance premiums $ 896 $ 733 $ 2,546 $ 1,854
Agency title insurance premiums 1,318 981 3,632 2,497
Escrow, title-related and other fees 1,324 853 3,123 2,201
Interest and investment income 508 336 1,424 541
Recognized gains and losses, net (154) 73 121 (85)
Total revenues 3,892 2,976 10,846 7,008
Expenses:
Personnel costs 894 782 2,596 2,088
Agent commissions 1,010 749 2,787 1,907
Other operating expenses 498 449 1,432 1,306
Benefits and other changes in policy reserves 185 251 734 406
Depreciation and amortization 252 100 540 189
Provision for title claim losses 100 77 278 196
Interest expense 27 29 83 62
Total expenses 2,966 2,437 8,450 6,154
Earnings from continuing operations before income taxes and equity in earnings of unconsolidated affiliates 926 539 2,396 854
Income tax expense 213 133 555 194
Earnings before equity in earnings of unconsolidated affiliates 713 406 1,841 660
Equity in earnings of unconsolidated affiliates 27 7 54 9
Net earnings from continuing operations 740 413 1,895 669
Net (loss) earnings from discontinued operations, net of tax (3) (28) 8 (23)
Net earnings 737 385 1,903 646
Less: Net earnings attributable to non-controlling interests 5 7 14 20
Net earnings attributable to Fidelity National Financial, Inc. common shareholders $ 732 $ 378 $ 1,889 $ 626
Earnings per share
Basic
Net earnings per share from continuing operations attributable to common shareholders $ 2.60 $ 1.40 $ 6.57 $ 2.32
Net (loss) earnings per share from discontinued operations attributable to common shareholders (0.01) (0.10) 0.03 (0.08)
Net earnings per share attributable to common shareholders, basic $ 2.59 $ 1.30 $ 6.60 $ 2.24
Diluted
Net earnings per share from continuing operations attributable to common shareholders $ 2.58 $ 1.39 $ 6.53 $ 2.29
Net (loss) earnings per share from discontinued operations attributable to common shareholders (0.01) (0.10) 0.03 (0.08)
Net earnings per share attributable to common shareholders, diluted $ 2.57 $ 1.29 $ 6.56 $ 2.21
Weighted average common shares outstanding - basic 283 291 286 280
Weighted average common shares outstanding - diluted 285 293 288 283

See Notes to Condensed Consolidated Financial Statements

Table of Contents

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

~~CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS~~

~~(In millions)~~

Three months ended September 30, Nine months ended September 30,

2021 2020 2021 2020
(Unaudited) (Unaudited)
Net earnings $ 737 $ 385 $ 1,903 $ 646
Other comprehensive earnings (loss):
Unrealized gain (loss) on investments and other financial instruments, net of adjustments to intangible assets and unearned revenue (excluding investments in unconsolidated affiliates) (1) (65) 303 (232) 683
Unrealized gain (loss) on investments in unconsolidated affiliates (2) 8 (2) 18 5
Unrealized (loss) gain on foreign currency translation (3) (5) 5 (6) 1
Reclassification adjustments for change in unrealized gains and losses included in net earnings (4) (30) (11) (82) (11)
Change in reinsurance liabilities held at fair value resulting from a change in the instrument-specific credit risk (5) 3 (4) 3 (1)
Other comprehensive (loss) earnings (89) 291 (299) 677
Comprehensive earnings 648 676 1,604 1,323
Less: Comprehensive earnings attributable to non-controlling interests 5 7 14 20
Comprehensive earnings attributable to Fidelity National Financial, Inc. common shareholders $ 643 $ 669 $ 1,590 $ 1,303

~~(1)~~Net of income tax (benefit) expense of $(18) million and $81 million for the three-month periods ended September 30, 2021 and 2020, respectively, and $(64) million and $183 million for the nine-month periods ended September 30, 2021 and 2020, respectively.

~~(2)~~Net of income tax expense (benefit) of $3 million and $(1) million for the three-month periods ended September 30, 2021 and 2020, respectively, and $5 million and $1 million for the nine-month periods ended September 30, 2021 and 2020, respectively.

~~(3)~~Net of income tax (benefit) expense of less than $(1) million and $2 million for the three-month periods ended September 30, 2021 and 2020, respectively and less than $1 million for the nine-month periods ended September 30, 2021 and 2020.

~~(4)~~Net of income tax expense of $9 million and $3 million for the three-month periods ended September 30, 2021 and 2020, respectively, and $22 million and $3 million for the nine-month periods ended September 30, 2021 and 2020, respectively.

~~(5)~~Net of income tax expense (benefit) of $1 million and $(1) million for the three-month periods ended September 30, 2021 and 2020, respectively, and $1 million and $(1) million for the nine-month periods ended September 30, 2021 and 2020, respectively.

See Notes to Condensed Consolidated Financial Statements

Table of Contents

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Dollars in millions, except per share data)


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

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

Personnel costs	823		812
Agent commissions	844		807

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




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

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

See Notes to Condensed Consolidated Financial Statements

Table of Contents

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS

(In millions)


	Three months ended March 31,

	2022		2021
	(Unaudited)
Net earnings	$	399	$	609

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

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

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

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

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

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

See Notes to Condensed Consolidated Financial Statements

Table of Contents

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(In millions, except per share data)

(Unaudited)

Fidelity National Financial, Inc. Common Shareholders
Accumulated
FNF Other Redeemable
Common Additional Comprehensive Treasury Non- Non-
Stock Paid-in Retained Earnings Stock controlling Total controlling
Shares $ Capital Earnings (Loss) Shares $ Interests Equity Interests
Balance, June 30, 2020 318 $ — $ 5,431 $ 1,417 $ 429 27 $ (919) $ (9) $ 6,349 $ 344
Redemption of Servicelink non-controlling interest — — 158 — — — — 47 $ 205 (344)
F&G Acquisition 1 — 32 — — — — — 32
Exercise of stock options 1 — 11 — — — — — 11 —
Change in reinsurance liabilities held at fair value resulting from a change in instrument-specific credit risk — — — — (4) — — — (4) —
Other comprehensive earnings - unrealized gain on investments and other financial instruments — — — — 303 — — — 303 —
Other comprehensive earnings - unrealized gain on investments in unconsolidated affiliates — — — — (2) — — — (2) —
Other comprehensive earnings - unrealized gain on foreign currency translation — — — — 5 — — — 5 —
Reclassification adjustments for change in unrealized gains and losses included in net earnings — — — — (11) — — — (11) —
Stock-based compensation — — 10 — — — — — 10 —
Dividends declared, $0.33 per common share — — — (97) — — — — (97) —
Subsidiary dividends declared to non-controlling interests — — — — — — — (4) (4) —
Net earnings — — — 378 — — — 7 385 —
Balance, September 30, 2020 320 $ — $ 5,642 $ 1,698 $ 720 27 $ (919) $ 41 $ 7,182 $ —
Balance, June 30, 2021 324 $ — $ 5,771 $ 3,343 $ 1,094 38 $ (1,362) $ 42 $ 8,888 $ —
Exercise of stock options — — 9 — — — — — 9 —
Treasury stock repurchased — — — — — 1 (62) — (62) —
Change in reinsurance liabilities held at fair value resulting from a change in instrument-specific credit risk — — — — 3 — — — 3 —
Other comprehensive earnings — unrealized loss on investments and other financial instruments — — — — (65) — — — (65) —
Other comprehensive earnings — unrealized gain on investments in unconsolidated affiliates — — — — 8 — — — 8 —
Other comprehensive loss— unrealized losses on foreign currency translation — — — — (5) — — — (5) —
Reclassification adjustments for change in unrealized gains and losses included in net earnings — — — — (30) — — — (30) —
Stock-based compensation — — 10 — — — — — 10 —
Dividends declared, $0.40 per common share — — — (114) — — — — (114) —
Subsidiary dividends declared to non-controlling interests — — — — — — — (5) (5) —
Net earnings — — — 732 — — — 5 737 —
Balance, September 30, 2021 324 $ — $ 5,790 $ 3,961 $ 1,005 39 $ (1,424) $ 42 $ 9,374 $ —


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


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


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

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

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

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



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

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


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

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


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


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







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

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

See Notes to Condensed Consolidated Financial Statements

Table of Contents

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

~~CONDENSED CONSOLIDATED STATEMENTS OF EQUITY~~

~~(In millions, except per share data)~~

~~(Unaudited)~~

Fidelity National Financial, Inc. Common Shareholders
Accumulated
FNF Other Redeemable
Common Additional Comprehensive Treasury Non- Non-
Stock Paid-in Retained Earnings Stock controlling Total controlling
Shares $ Capital Earnings (Loss) Shares $ Interests Equity Interests
Balance, December 31, 2019 292 $ — $ 4,581 $ 1,356 $ 43 17 $ (598) $ (17) $ 5,365 $ 344
F&G acquisition 25 — 826 — — 7 (217) — 609
Redemption of Servicelink non-controlling interest — — 158 — — — — 47 205 (344)
Exercise of stock options 3 — 48 — — — — — 48 —
Treasury stock repurchased — — — — — 3 (104) — (104) —
Change in reinsurance liabilities held at fair value resulting from a change in instrument-specific credit risk — — — — (1) — — (1) —
Other comprehensive earnings - unrealized gain on investments and other financial instruments — — — — 683 — — — 683 —
Other comprehensive earnings - unrealized gain on investments in unconsolidated affiliates — — — — 5 — — — 5 —
Other comprehensive loss - unrealized loss on foreign currency translation — — — — 1 — — — 1 —
Reclassification adjustments for change in unrealized gains and losses included in net earnings — — — — (11) — — — (11) —
Stock-based compensation — — 29 — — — — — 29 —
Dividends declared, $0.99 per common share — — — (284) — — — — (284) —
Subsidiary dividends declared to non-controlling interests — — — — — — — (9) (9) —
Net earnings — — — 626 — — — 20 646 —
Balance, September 30, 2020 320 $ — $ 5,642 $ 1,698 $ 720 27 $ (919) $ 41 $ 7,182 $ —
Balance, December 31, 2020 323 $ — $ 5,720 $ 2,394 $ 1,304 31 $ (1,067) $ 41 $ 8,392 $ —
Purchase of incremental share in consolidated subsidiaries — — — — — — — 1 1 —
Exercise of stock options 1 — 41 — — — — — 41 —
Treasury stock repurchased — — — — — 8 (357) — (357) —
Change in reinsurance liabilities held at fair value resulting from a change in instrument-specific credit risk — — — — 3 — — — 3 —
Other comprehensive loss — unrealized loss on investments and other financial instruments — — — — (232) — — — (232) —
Other comprehensive earnings — unrealized gain on investments in unconsolidated affiliates — — — — 18 — — — 18 —
Other comprehensive gain — unrealized gain on foreign currency translation — — — — (6) — — — (6) —
Reclassification adjustments for change in unrealized gains and losses included in net earnings — — — — (82) — — — (82) —
Stock-based compensation — — 29 — — — — — 29 —
Dividends declared, $1.12 per common share — — — (322) — — — — (322) —
Subsidiary dividends declared to non-controlling interests — — — — — — — (14) (14) —
Net earnings — — — 1,889 — — — 14 1,903 —
Balance, September 30, 2021 324 $ — $ 5,790 $ 3,961 $ 1,005 39 $ (1,424) $ 42 $ 9,374 $ —

~~See Notes to Condensed Consolidated Financial Statements~~

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~~FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES~~

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

For the nine months ended September 30,

2021 2020
(Unaudited)
Cash flows from operating activities:
Net earnings (loss) $ 1,903 $ 646
Adjustments to reconcile net earnings to net cash provided by operating activities:
            Depreciation and amortization 540 189
            Equity in earnings of unconsolidated affiliates (54) (9)
            (Gain) loss on sales of investments and other assets and asset impairments, net (412) 81
            Loss on the sale of businesses 14 —
            Interest credited/index credits to contractholder account balances 239 344
            Deferred policy acquisition costs and deferred sales inducements (473) (139)
            Charges assessed to contractholders for mortality and admin (130) (53)
            Non-cash lease costs 104 114
            Operating lease payments (113) (115)
            Distributions from unconsolidated affiliates, return on investment 29 —
            Stock-based compensation cost 31 29
            Change in valuation of derivatives, equity and preferred securities, net 290 4
Changes in assets and liabilities, net of effects from acquisitions:
Change in collateral returned (posted) — (1)
Change in reinsurance recoverable 79 70
Change in future policy benefits 203 (58)
Change in funds withheld from reinsurers 685 (6)
Net increase in trade receivables (81) (27)
Net increase in reserve for title claim losses 111 46
Net change in income taxes (60) 5
Net change in other assets and other liabilities (305) (155)
Net cash provided by operating activities 2,600 965
Cash flows from investing activities:
Proceeds from sales, calls and maturities of investment securities 6,278 1,930
Proceeds from sales of property and equipment and title plants 3 9
Additions to property and equipment and capitalized software (93) (75)
Purchases of investment securities (10,278) (2,548)
Net proceeds from (purchases of) sales and maturities of short-term investment securities 92 791
Additions to notes receivable (13) —
Collections of notes receivable 3 —
Acquisitions and dispositions (64) (1,076)
Additional investments in unconsolidated affiliates (992) (148)
Distributions from unconsolidated affiliates, return of investment 89 78
Proceeds from sales of unconsolidated affiliates 112 —
Net other investing activities — (1)
Net cash used in investing activities (4,863) (1,040)

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							For the three months ended March 31,
FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(In millions)
							For the three months ended March 31,

							(Unaudited)
Cash flows from operating activities:						Cash flows from operating activities:
Net earnings						Net earnings	$	399	$	609
Adjustments to reconcile net earnings to net cash provided by operating activities:						Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization						Depreciation and amortization	182		183
Equity in earnings of unconsolidated affiliates						Equity in earnings of unconsolidated affiliates	(2)		(13)
Gain on sales of investments and other assets and asset impairments, net						Gain on sales of investments and other assets and asset impairments, net	(30)		(71)
Change in NAV of limited partnerships, net						Change in NAV of limited partnerships, net	(112)		—
Interest credited/index credits to contractholder account balances						Interest credited/index credits to contractholder account balances	(380)		(62)
Deferred policy acquisition costs and deferred sales inducements						Deferred policy acquisition costs and deferred sales inducements	(169)		(134)
Charges assessed to contractholders for mortality and admin						Charges assessed to contractholders for mortality and admin	(49)		(41)
Non-cash lease costs						Non-cash lease costs	35		34
Operating lease payments						Operating lease payments	(37)		(38)
Distributions from unconsolidated affiliates, return on investment						Distributions from unconsolidated affiliates, return on investment	25		7
Stock-based compensation cost						Stock-based compensation cost	13		11
Change in valuation of derivatives, equity and preferred securities, net						Change in valuation of derivatives, equity and preferred securities, net	499		(18)
Changes in assets and liabilities, net of effects from acquisitions:						Changes in assets and liabilities, net of effects from acquisitions:

Change in reinsurance recoverable						Change in reinsurance recoverable	(12)		(38)
Change in future policy benefits						Change in future policy benefits	485		(51)
Change in funds withheld from reinsurers						Change in funds withheld from reinsurers	181		217
Net decrease in trade receivables						Net decrease in trade receivables	27		14

Net increase in reserve for title claim losses						Net increase in reserve for title claim losses	30		60
Net change in income taxes						Net change in income taxes	142		144
Net change in other assets and other liabilities						Net change in other assets and other liabilities	(560)		(148)
Net cash provided by operating activities						Net cash provided by operating activities	667		665
Cash flows from investing activities:						Cash flows from investing activities:

Proceeds from sales, calls and maturities of investment securities						Proceeds from sales, calls and maturities of investment securities	1,984		1,586
Proceeds from sales of property and equipment						Proceeds from sales of property and equipment	5		—

Additions to property and equipment and capitalized software						Additions to property and equipment and capitalized software	(43)		(22)
Purchases of investment securities						Purchases of investment securities	(3,810)		(3,283)
Net (purchases of) proceeds from sales and maturities of short-term investment securities						Net (purchases of) proceeds from sales and maturities of short-term investment securities	(1,255)		645
Additions to notes receivable						Additions to notes receivable	(4)		—
Collections of notes receivable						Collections of notes receivable	3		—
Acquisitions and dispositions						Acquisitions and dispositions	(20)		(5)
Additional investments in unconsolidated affiliates						Additional investments in unconsolidated affiliates	(309)		(1)
Distributions from unconsolidated affiliates, return of investment						Distributions from unconsolidated affiliates, return of investment	34		24

Net other investing activities						Net other investing activities	1		(4)
Net cash used in investing activities						Net cash used in investing activities	(3,414)		(1,060)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Borrowings		—		1,000
Debt offering		449		1,246
Debt costs/equity issuance additions		(6)		(18)
Debt service payments		—		(1,000)

Dividends paid	Dividends paid	(320)		(282)		Dividends paid	(124)		(104)
Subsidiary dividends paid to non-controlling interest shareholders	Subsidiary dividends paid to non-controlling interest shareholders	(14)		(9)		Subsidiary dividends paid to non-controlling interest shareholders	(4)		(5)
Exercise of stock options	Exercise of stock options	39		47		Exercise of stock options	2		21

Net change in secured trust deposits	Net change in secured trust deposits	437		38		Net change in secured trust deposits	36		23
Additional investment in consolidated subsidiaries		1		(90)

Payment of contingent consideration for prior period acquisitions	Payment of contingent consideration for prior period acquisitions	(3)		(9)		Payment of contingent consideration for prior period acquisitions	(1)		(2)
Contractholder account deposits	Contractholder account deposits	6,820		1,481		Contractholder account deposits	2,123		1,522
Contractholder account withdrawals	Contractholder account withdrawals	(2,350)		(730)		Contractholder account withdrawals	(723)		(641)
Purchases of treasury stock	Purchases of treasury stock	(361)		(104)		Purchases of treasury stock	(129)		(112)
Net cash provided by financing activities	Net cash provided by financing activities	4,692		1,570		Net cash provided by financing activities	1,180		702
Net increase in cash and cash equivalents		2,429		1,495
Net (decrease) increase in cash and cash equivalents						Net (decrease) increase in cash and cash equivalents	(1,567)		307
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	2,719		1,376		Cash and cash equivalents at beginning of period	4,360		2,719
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	5,148	$	2,871	Cash and cash equivalents at end of period	$	2,793	$	3,026

See Notes to Condensed Consolidated Financial Statements

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FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note A — Basis of Financial Statements

The financial information in this report presented for interim periods is unaudited and includes the accounts of Fidelity National Financial, Inc. and its subsidiaries (collectively, “we,” “us,” “our,” the "Company" or “FNF”) prepared in accordance with U.S. generally accepted accounting principles ("GAAP") and the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All adjustments made were of a normal, recurring nature. This report should be read in conjunction with our Annual Report on Form 10-K (our "Annual Report") for the year ended December 31, ~~2020.~~2021.

Description of the Business

We are a leading provider of (i) title insurance, escrow and other title-related services, including ~~trust activities, trustee sales guarantees, recordings and reconveyances~~loan sub-servicing, valuations, default services and home warranty products, (ii) technology ~~and transaction services~~ to the real estate and mortgage industries and (iii) annuity and life insurance products. FNF is one of the nation’s largest title insurance companies operating through its title insurance underwriters - Fidelity National Title Insurance Company ("FNTIC"), Chicago Title Insurance Company ("Chicago Title"), Commonwealth Land Title Insurance Company ("Commonwealth Title"), Alamo Title Insurance and National Title Insurance of New York Inc. - which collectively issue more title insurance policies than any other title company in the United States. Through our subsidiary, ServiceLink Holdings, LLC ("ServiceLink"), we provide mortgage transaction services, including title-related services and facilitation of production and management of mortgage loans. We are also a leading provider of insurance solutions serving retail annuity and life ~~insurance products, providing deferred annuities, including fixed index annuities ("FIA"), fixed rate annuities, immediate annuities, indexed universal life ("IUL") insurance, funding agreements~~customers and ~~pension risk transfer ("PRT") solutions~~institutional clients through our wholly-owned subsidiary, F&G Annuities & Life ("F&G").

For information about our reportable segments refer to Note H Segment Information.

Recent Developments

~~3.20% Senior Notes~~F&G Distribution

On September 17, 2021, we completed our underwritten public offering of $450 million aggregate principal amount of our 3.20% Notes due September 17, 2051 (the "3.20% Notes"), 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 O ~~Notes Payable~~.

~~Approval of the 2021 Repurchase Program~~

~~On August 3, 2021,~~March 14, 2022, our Board of Directors approved a ~~new~~ ~~three-year~~dividend to our shareholders, on a pro rata basis, of 15% of the common stock ~~repurchase program effective August 3, 2021~~of F&G (the ~~"2021 Repurchase Program"~~"F&G Distribution") ~~under which we may purchase up~~. We intend to ~~25 million shares~~retain control of F&G through our 85% ownership stake. The proposed F&G Distribution is subject to various conditions including the final approval of our ~~FNF common stock through July 31, 2024. We may make repurchases from time~~Board of Directors, the effectiveness of appropriate filings with the U.S Securities and Exchange Commission (the "SEC"), and any applicable regulatory approvals. The record date and distribution settlement date will be determined by our Board of Directors prior to ~~time in~~ the ~~open market, in block purchases or in privately negotiated transactions, depending on market conditions and other factors.~~

~~Merger of Alight, Inc. ("Alight") and Foley Trasimene Acquisition Corp. ("FTAC")~~

On January 25, 2021, each of our wholly-owned subsidiaries, FNTIC, Commonwealth Title and Chicago Title (collectively, the "FTAC Subscribers") entered into common stock subscription agreements (the "FTAC Subscription Agreements") with Alight (f/k/a Acrobat Holdings, Inc.) and FTAC to purchase in the aggregate $150 million (the "Alight Purchase Price") of Class A Common Stock, par value $.001 per share, of Alight at a purchase price of $10.00 per share.

~~On June 29, 2021, we funded the Alight Purchase Price. Additionally, Alight paid the FTAC Subscribers a fee of 2.5%~~distribution. Upon completion of the ~~Alight Purchase Price upon closing~~F&G Distribution, our shareholders as of the ~~transactions~~record date are expected to own stock in ~~accordance with the Business Combination Agreement dated January 25, 2021,~~both publicly traded companies. The proposed F&G Distribution is intended to be structured as ~~amended and restated~~ ~~April 29, 2021, by and among FTAC, Alight and other parties thereto~~.

~~On July 2, 2021, FTAC merged with Alight. The newly combined company operates as Alight, Inc.~~a taxable dividend to our shareholders and is traded on the New York Stock Exchange ("NYSE") under the symbol "ALIT." As of September 30, 2021 our shares of Alight are fully registered and are included in equity securities within the accompanying unaudited

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~~Condensed Consolidated Balance Sheets.~~

~~F&G Enters Funding Agreement Backed Note ("FABN") Market~~

In June 2021, we established a funding agreement-backed notes program (the “FABN Program”), pursuant to which Fidelity & Guaranty Life Insurance Company (“FGL Insurance”) may issue funding agreements to a special purpose statutory trust (the “Trust”) for spread lending purposes. The maximum aggregate principal amount permittedtargeted to be ~~outstanding at any one time under~~completed in late third quarter or early fourth quarter of 2022. However, there can be no assurance regarding the ~~FABN Program is $5.0 billion. As of September 30, 2021, we had approximately $1.9 billion outstanding under~~timeframe for completing the ~~FABN program.~~

F&G ~~Enters Pension Risk Transfer ("PRT") Market~~

~~In July 2021, we entered~~Distribution or that the PRT market, pursuant to which FGL Insurance and Fidelity & Guaranty Life Insurance Company of New York ("FGL NY Insurance") may issue group annuity contracts to discharge pension plan liabilities from a pension plan sponsor. As of September 30, 2021, we closed pension risk transfer transactions which represent pension obligations of $371 million. In October 2021, we secured an additional $564 million in PRT transactions.

~~Merger of Paysafe Limited ("Paysafe") and Foley Trasimene Acquisition Corp. II ("FTAC II")~~

On December 7, 2020, each of our wholly-owned subsidiaries, FNTIC, Commonwealth Title, Chicago Title and F&G (collectively, the "FTAC II Subscribers"), entered into common stock subscription agreements with Paysafe and FTAC II to purchase in the aggregate $500 million (the "Purchase Price") of common shares, par value $0.001 per share, of Paysafe at a purchase price of $10.00 per share ("the PIPE Investment"). On March 30, 2021, FTAC II merged with Paysafe, an exempted limited company incorporated under the laws of Bermuda and a leading integrated payments platform (the "FTAC II Paysafe Merger"), in accordance with the agreement and plan of merger dated December 7, 2020. The newly combined company operates as Paysafe and is traded on the NYSE under the symbol PSFE. The FTAC II Paysafe Merger was funded with the cash held in trust at FTAC II, forward purchase commitments, private investment in public equity ("PIPE") commitments and equity of Paysafe.

~~On March 30, 2021, the FTAC II Subscribers funded the subscription agreements and received 50 million common shares of Paysafe. As of September 30, 2021, we hold approximately 7%~~conditions of the outstanding common shares of Paysafe, which are included in equity securities in the accompanying unaudited Condensed Consolidated Balance Sheets. In connection with the PIPE Investment, we received a fee of 1.6% of the Purchase Price as described in the agreement and plan of merger dated December 7, 2020.F&G Distribution will be met.

Income Tax

Income tax expense was ~~$213~~$155 million and ~~$133~~$166 million in the ~~three-month periods~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020, respectively, and $555 million and $194 million in the nine month periods ended September 30, 2021 and 2020,~~ respectively. Income tax expense as a percentage of earnings before income taxes was ~~23%~~28% and ~~25%~~22% in the ~~three-month periods~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020, respectively, and 23% and 23% in the nine-month periods ended September 30, 2021 and 2020,~~ respectively. The ~~decrease~~increase in income tax expense as a percentage of earnings before taxes in the ~~three-month~~three months ended March 31, 2022 as compared to the corresponding period ~~ended September 30,~~in 2021 is primarily attributable to ~~discrete unfavorable~~the recording of a valuation allowance in the 2022 period for tax ~~adjustments~~benefits associated with ~~our acquisition~~deferred tax assets, related to realized losses on the past sales of ~~F&G in the prior year period.~~discontinued operations, for which it is more likely than not that we will not be able to realize for tax purposes.

Earnings Per Share

Basic earnings per share, as presented on the Condensed Consolidated Statement of Earnings, is computed by dividing net earnings available to common shareholders in a given period by the weighted average number of common shares outstanding during such period. In periods when earnings are positive, diluted earnings per share is calculated by dividing net earnings available to common shareholders by the weighted average number of common shares outstanding plus ~~the impact of~~ assumed conversions of potentially dilutive securities. For periods when we recognize a net loss, diluted ~~earnings~~loss per share is equal to basic ~~earnings~~loss per share as the impact of assumed conversions

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of potentially dilutive securities is considered to be antidilutive. We have granted certain stock options, shares of restricted stock and certain other convertible share based payments, which have been treated as common share equivalents for purposes of calculating diluted earnings per share for periods in which positive earnings have been reported.

Options or other instruments, which provide the ability to purchase shares of our common stock that are antidilutive, are excluded from the computation of diluted earnings per share. There were fewer than 1 million

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antidilutive instruments outstanding during the three months ended March 31, 2022 and ~~nine-month periods ended September 30,~~ 2021. ~~There were 2 million and 1 million antidilutive securities outstanding during the three and nine-month periods ended September 30, 2020, respectively.~~

~~Discontinued Operations~~

In connection with the F&G acquisition, certain third party offshore reinsurance businesses acquired were deemed discontinued operations and are presented as such within our Condensed Consolidated Statements of Earnings for the three and nine-month periods ended September 30, 2021. We have sold Front Street Re Cayman Ltd (“FSRC”) to Archipelago, and the closing of the transaction was effective May 31, 2021. The transaction did not have a material impact to our financial results. As of September 30, 2021, we no longer have discontinued operations.

~~Management Estimates~~

The preparation of these unaudited condensed consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Periodically, and at least annually, typically in the third quarter, we review the assumptions associated with reserves for policy benefits, product guarantees, and amortization of intangibles. Additionally, during the three-months ended September 30, 2021, we implemented a new actuarial valuation system. 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 that occurred in the three-months ended September 30, 2021, included refinements in the calculation of the fair value of the embedded derivative component of our fixed index annuities within contractholder funds and updates to the surrender rates, guaranteed minimum withdrawal benefit (“GMWB”) utilization, IUL premium persistency, maintenance expenses, and earned rate assumptions to reflect our current and expected future experience. These changes, taken together, resulted in a decrease in contractholder funds and future policy reserves of $425 million and a decrease to intangible assets of $136 million. These model refinements and assumptions are also used in the SOP 03-1 liability for GMWB benefits and resulted in an increase in the liability of $28 million for the period ended September 30, 2021. There was no material change to underlying policyholder behavior during the three-months ended September 30, 2021. The majority of the changes represent one-time adjustments in the three-months ended September 30, 2021 related to the cumulative impact of the system implementation and are not expected to re-occur in the future.

Recent Accounting Pronouncements

~~Adopted Pronouncements~~

In December 2019, the FASB issued ASU 2019-12 Income Taxes - Simplifying the Accounting for Income Taxes (Topic 740), which simplifies various aspects of the income tax accounting guidance and will be applied using different approaches depending on what the specific amendment relates to and, for public entities, are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. We adopted this standard as of January 1, 2021, and it had no impact on our unaudited Condensed Consolidated Financial Statements upon adoption.

In October 2020, the FASB issued ASU 2020-08, Codification Improvements to Subtopic 310-20, Receivables - Nonrefundable Fees and Other Costs. The amendments in this update clarify that callable debt securities should be re-evaluated each reporting period to determine if the amortized cost exceeds the amount repayable by the issuer at the next earliest call date, and, if so, the excess should be amortized to the next call date. We adopted this standard as of January 1, 2021 and are applying this guidance on a prospective basis. This pronouncement had no impact on our unaudited Condensed Consolidated Financial Statements upon adoption.

Pronouncements Not Yet Adopted

In August 2018, the FASB issued ASU 2018-12, Financial Services-Insurance (Topic 944), Targeted Improvements to the Accounting for Long-Duration Contracts, effective for fiscal years beginning after December 15, 2022 including interim periods within those fiscal years. This update introduced the following requirements: assumptions used to measure cash flows for traditional and limited-payment contracts must be reviewed at least annually with the effect of changes in those assumptions being recognized in the statement of operations; the discount rate applied to measure the liability for future policy benefits and limited-payment contracts must be updated at each reporting date with the effect of changes in the rate being recognized in other

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comprehensive income; market risk benefits associated with deposit contracts must be measured at fair value, with the effect of the change in the fair value attributable to a change in the instrument-specific credit risk being recognized in other comprehensive income; deferred acquisition costs are no longer required to be amortized in proportion to premiums, gross profits, or gross margins; instead, those balances must be amortized on a constant level basis over the expected term of the related contracts; deferred acquisition costs must be written off for unexpected contract terminations; and disaggregated rollforwards of beginning to ending balances of the liability for future policy benefits, policyholder account balances, market risk benefits, separate account liabilities and deferred acquisition costs, as well as information about significant inputs, judgments, assumptions, and methods used in measurement are required to be disclosed.

The amendments in this ASU may be early adopted as of the beginning of an annual reporting period for which financial statements have not yet been issued, including interim financial statements. We dowill not ~~expect to~~ early adopt this standard. We have identified specific areas that will be impacted by the new guidance. This guidance will bring significant changes to how we account for certain insurance and annuity products within our business. As we continue to make progress on adopting this new guidance, we will be able to provide a better assessment of the specific impacts to our consolidated financial statements.

In March 2022, the FASB issued ASU 2022-02, Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. The amendments in this update eliminate the Troubled Debt Restructuring ("TDR") recognition and measurement guidance for creditors and, instead, require that an entity evaluate whether the modification represents a new loan or a continuation of an existing loan. The amendments also enhance existing disclosure requirements and introduce new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty. Additionally, these amendments require that an entity disclose current-period gross write-offs by year of origination for financing receivables and net investment in leases within the scope of Subtopic 326-20. The guidance is effective for entities that have adopted ASU 2016-13 Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments (Topic 326) for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, though early adoption is permitted. We do not currently expect to early adopt this standard and are in the process of assessing ~~the accounting, reporting and/or process changes that will be required to comply as well as the~~this standard and its impact ~~of the new guidance~~ on our ~~consolidated financial statements.~~accounting and disclosures.

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Note B — Summary of Reserve for Title Claim Losses

A summary of the reserve for title claim losses follows:


		Nine months ended September 30,							Three months ended March 31,
		2021			2020				2022			2021
		(Dollars in millions)							(Dollars in millions)
Beginning balance	Beginning balance	$	1,623		$	1,509		Beginning balance	$	1,883		$	1,623

Change in insurance recoverable	Change in insurance recoverable	(10)			(1)			Change in insurance recoverable	(1)			25
Claim loss provision related to:	Claim loss provision related to:							Claim loss provision related to:
Current year	Current year	278			196			Current year	84			81
Prior years		—			—

Total title claim loss provision	Total title claim loss provision	278			196			Total title claim loss provision	84			81
Claims paid, net of recoupments related to:	Claims paid, net of recoupments related to:							Claims paid, net of recoupments related to:
Current year	Current year	(6)			(4)			Current year	(1)			—
Prior years	Prior years	(151)			(145)			Prior years	(53)			(46)
Total title claims paid, net of recoupments	Total title claims paid, net of recoupments	(157)			(149)			Total title claims paid, net of recoupments	(54)			(46)
Ending balance of claim loss reserve for title insurance	Ending balance of claim loss reserve for title insurance	$	1,734		$	1,555		Ending balance of claim loss reserve for title insurance	$	1,912		$	1,683
Provision for title insurance claim losses as a percentage of title insurance premiums	Provision for title insurance claim losses as a percentage of title insurance premiums	4.5		%	4.5		%	Provision for title insurance claim losses as a percentage of title insurance premiums	4.5		%	4.5		%

Several lawsuits have been filed by various parties against Chicago Title Company and Chicago Title Insurance Company as its alter ego (collectively, the “Named Companies”), among others. Generally, plaintiffs claim they are investors who were solicited by Gina Champion-Cain through her former company, ANI Development LLC ("ANI"), or other affiliates to provide funds that purportedly were to be used for high-interest, short-term loans to parties seeking to acquire California alcoholic beverage licenses. Plaintiffs contend they were told that under California state law, alcoholic beverage license applicants are required to deposit into escrow an amount equal to the license purchase price while their applications remain pending with the State. Plaintiffs further alleged that employees of Chicago Title Company participated with Ms. Champion-Cain and her entities in a fraud scheme involving an escrow account maintained by Chicago Title Company into which the plaintiffs’ funds were deposited.

The following lawsuits are pending in the Superior Court of San Diego County for the State of ~~California.~~California and have been set for jury trial on December 2, 2022. While they have not been consolidated into one action, they have been deemed by the court to be related and are assigned to the same judge for purposes of judicial economy.

On December 13, 2019, a lawsuit styled, Kim Funding, LLC, Kim H. Peterson, Joseph J. Cohen, ~~and~~ ABC Funding Strategies, LLC,Payson R. Stevens; Kamaljit K. Kapur and The Payson R. Stevens & Kamaljit Kaur Kapur Trust Dated March 28, 2014 v. Chicago Title Co., Chicago Title Ins. Co., Thomas Schwiebert, Adelle Ducharme, and Betty Elixman, was filed in San Diego County Superior Court. Plaintiffs claim losses of more than $250 million as a result of the alleged fraud scheme, and also seek statutory, treble, and punitive ~~damages.~~damages, as well as the recovery of attorneys fees. The Named Companies have filed a cross-complaint against Ms. Champion-Cain, ~~among~~and others. ~~A demurrer to the~~The Named ~~Companies’ cross-complaint has been filed and is set for hearing on November 19, 2021.~~

~~Table~~Companies have reached a conditional settlement with members of ~~Contents~~ABC Funding Strategies, LLC

plaintiffs under confidential terms.

On March 6, 2020, a lawsuit styled, Wakefield Capital, LLC, Wakefield Investments, LLC, 2Budz Holding, LLC, Doug and Kristine Heidrich, and Jeff and Heidi Orr v. Chicago Title Co. and Chicago Title Ins. Co., was filed in San Diego County Superior Court. Plaintiffs claim losses in excess of $7 million as a result of the alleged fraud scheme, and also seek punitive damages, recovery of attorneys’ fees, and disgorgement.

On June 29, 2020, a lawsuit styled, Susan Heller Fenley Separate Property Trust, DTD 03/04/2010, Susan Heller Fenley Inherited Roth IRA, Shelley Lynn Tarditi Trust and ROJ, LLC v. Chicago Title Co., Chicago Title Ins. Co., Thomas Schwiebert, Adelle Ducharme, and Betty Elixman, was filed in San Diego County Superior Court. Plaintiffs claim losses in excess of $6 million as a result of the alleged fraud scheme, and also seek statutory, treble, and punitive damages. The Named Companies have filed a cross-complaint against Ms. Champion-Cain, ~~among~~and others. ~~A demurrer to the Named Companies’ cross-complaint has been filed and is set for hearing on November 19, 2021.~~

~~On June 29, 2020, a lawsuit styled,~~ ~~Yuan Yu and Polly Yu v. Chicago Title Co., Chicago Title Ins. Co., Thomas Schwiebert, Adelle Ducharme, and Betty Elixman, was filed in San Diego County Superior Court. Plaintiffs claim losses in excess~~Table of $1 million as a result of the alleged fraud scheme, and also seek statutory, treble, and punitive damages. The Named Companies have filed a cross-complaint against Ms. Champion-Cain, among others. A demurrer to the Named Companies’ cross-complaint has been filed and is set for hearing on November 19, 2021.Contents

On July 7, 2020, a cross-claim styled, Laurie Peterson v. Chicago Title Co., Chicago Title Ins. Co., Thomas Schwiebert, Adelle Ducharme, and Betty Elixman, was filed in an existing lawsuit styled, Banc of California, National Association v. Laurie Peterson, which is pending in San Diego County Superior Court. Cross-complaint plaintiff was sued by a bank to recover in excess of $35 million that she allegedly guaranteed to repay for certain investments made by the Banc of California in the alcoholic beverage license scheme. Cross-complaint plaintiff has, in turn, sued the Named Companies in that action seeking in excess of $250 million in monetary losses as well as exemplary damages and attorneys’ fees. The Named Companies have filed a cross-complaint against Ms. Champion-Cain, ~~among~~and others. ~~A demurrer to the Named Companies’ cross-complaint has been filed and is set for hearing on November 19, 2021.~~

On September 3, 2020, a cross-claim styled, Kim H. Peterson Trustee of the Peterson Family Trust dated April 14 1992 v. Chicago Title Co., Chicago Title Ins. Co., Thomas Schwiebert, Adelle Ducharme, and Betty Elixman, was filed in an existing lawsuit styled, CalPrivate Bank v. Kim H. Peterson Trustee of the Peterson Family Trust dated April 14 1992, which is pending in Superior Court of San Diego County for the State of California. Cross-complaint plaintiff was sued by a bank to recover in excess of $12 million that the trustee allegedly guaranteed to repay for certain investments made by CalPrivate Bank in the alcoholic beverage license scheme. Cross-complaint plaintiff has, in turn, sued the Named Companies in that action seeking in excess of $250 million in monetary losses as well as exemplary damages and attorneys’ fees.

On ~~October 1, 2020, a lawsuit styled,~~ ~~Ovation Fin. Holdings 2 LLC, Ovation Fund Mgmt. II, LLC, Banc of California, N.A. v. Chicago Title Ins. Co.~~, was filed in San Diego County Superior Court. Plaintiffs claim losses of more than $75 million, as well as consequential and punitive damages. The Named Companies have filed a cross-complaint against Ms. Champion-Cain, among others. A demurrer to the Named Companies’ cross-complaint has been filed and is set for hearing on November 19, 2021.

On November 2, 2020, a lawsuit styled, CalPrivate Bank v. Chicago Title Co. and Chicago Title Ins. Co., was also filed in the Superior Court of San Diego County for the State of California. Plaintiff claims losses in excess of $12 million based upon business loan advances made in the alcoholic beverage license scheme and ~~also~~ seeks punitive damages and the recovery of attorneys’ fees. The Named Companies have filed a cross-complaint against Ms. Champion-Cain, ~~among~~and others.~~A demurrer to the Named Companies’ cross-complaint has been filed and is set for hearing on November 19, 2021.~~

~~On February 24, 2021, a putative class action lawsuit styled,~~The following matters pending in the Superior Court of San Diego County for the State of California have conditionally settled under confidential terms: Yuan Yu and Polly Yu v. Chicago Title Co., et al.,Ovation Fin. Holdings 2 LLC, Ovation Fund Mgmt. II, LLC, Banc of California, N.A. v. Chicago Title Ins. Co., and Blake E. Allred and Melissa M. Allred v. Chicago Title Co., ~~Chicago Title Ins. Co., was filed in the Superior Court of San Diego County for the State of California. Plaintiffs are seeking compensatory, statutory, treble, and punitive damages.~~et al.

In addition, Chicago Title Company has resolved claims from both individual and groups of alleged investors under confidential terms during pre-suit mediations. As of September 30, 2021, the Company has recorded an incurred claim loss reserve for legal fees which is includedAdditionally, in ~~its consolidated reserve for title claim losses. The~~

~~Table of Contents~~

~~Company has also recorded an insurance recoverable for amounts it expects to recover from its insurance carriers relating to these matters.~~

In connection with the alcoholic beverage license scheme, the ~~Securities and Exchange Commission (“SEC”)~~SEC filed a lawsuit in the United States District Court for the Southern District of California against Ms. Champion-Cain and certain of her affiliated entities asserting claims for securities fraud. A receiver was appointed by the court to preserve the assets of ~~those named defendants,~~the defendant affiliated entities (the “receivership entities”), pay ~~defendants’~~their debts, operate the businesses and ~~operate defendants’ businesses. The~~pursue any claims they may have against third-parties. Pursuant to the authority granted to her by the federal court on the SEC action, on January 7, 2022, a lawsuit styled, Krista Freitag v. Chicago Title Co. and Chicago Title Ins. Co., was filed in San Diego County Superior Court by the receiver on behalf of the receivership entities against the Named Companies. The receiver seeks compensatory, incidental, consequential, and punitive damages, and seeks the recovery of attorneys’ fees. The Named Companies have filed a demurrer seeking dismissal of the receiver’s complaint. The Named Companies also filed a motion in the SEC ~~litigation has scheduled a comprehensive mediation~~action seeking permission to ~~take place in January 2022 among~~sue ANI, via the receiver, to pursue indemnity and ~~various non-parties, including~~ other claims against the receivership entities as joint tortfeasors in the state court actions. On February 28, 2022, the Named Companies’ motion was granted permitting them to sue ANI in the pending state court actions. On April 26, 2022, the Named Companies reached a conditional settlement with the receiver, which is subject to court approval.

Chicago Title Company has also resolved a number of other pre-suit claims and ~~remaining investors/lenders who were allegedly defrauded~~previously-disclosed lawsuits from both individual and ~~have some interest in~~groups of alleged investors under confidential terms. Based on the ~~SEC litigation or in the related state court litigation set forth above.~~

~~At this time, the Company is unable to ascertain its liability, if any,~~facts and ~~is unable to make an estimate of a reasonably possible claim loss for any~~circumstances of the ~~unresolved~~remaining claims, ~~due to~~including the complex nature of the claims and litigation, the early procedural status of each claim (involving unresolved questions of fact without any rulings on the merits or determinations of liability), the extent of discovery not yet conducted, potential insurance coverage, and an incomplete evaluation of possible defenses, counterclaims, crossclaims or third-party claims that may exist. Moreover, it is likely thatsettlements already reached, we have recorded reserves included in ~~some instances, the claims listed above are duplicative. As further information becomes available, the Company will continue to evaluate the adequacy of its consolidated~~our reserve for title claim ~~losses. As of September 30, 2021, the Company believes that its reserves~~losses which we believe are adequate to cover losses related to this matter, and ~~other claims.~~we believe that our reserves for title claim losses are adequate.

We continually update loss reserve estimates as new information becomes known, new loss patterns emerge or as other contributing factors are considered and incorporated into the analysis of reserve for claim losses. 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.

Due to the uncertainty inherent in the process and to the judgment used by management, the ultimate liability may be greater or less than our current reserves. If actual claims loss development varies from what is currently expected and is not offset by other factors, it is possible that additional reserve adjustments may be required in future periods in order to maintain our recorded reserve within a reasonable range of our actuary's central estimate.

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Note C — Fair Value of Financial Instruments

Our measurement of fair value is based on assumptions used by market participants in pricing the asset or liability, which may include inherent risk, restrictions on the sale or use of an asset, or non-performance risk, which may include our own credit risk. We estimate an exchange price is the price in an orderly transaction between market participants to sell the asset or transfer the liability (“exit price”) in the principal market, or the most advantageous market for that asset or liability in the absence of a principal market as opposed to the price that would be paid to acquire the asset or assume a liability (“entry price”). We categorize financial instruments carried at fair value into a three-level fair value hierarchy, based on the priority of inputs to the respective valuation technique. The three-level hierarchy for fair value measurement is defined as follows:

Level 1 - Values are unadjusted quoted prices for identical assets and liabilities in active markets accessible at the measurement date.

Level 2 - Inputs include quoted prices for similar assets or liabilities in active markets, quoted prices from those willing to trade in markets that are not active, or other inputs that are observable or can be corroborated by market data for the term of the instrument. Such inputs include market interest rates and volatilities, spreads, and yield curves.

Level 3 - Certain inputs are unobservable (supported by little or no market activity) and significant to the fair value measurement. Unobservable inputs reflect the Company’s best estimate of what hypothetical market participants would use to determine a transaction price for the asset or liability at the reporting date based on the best information available in the circumstances.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the investment.

When a determination is made to classify an asset or liability within Level 3 of the fair value hierarchy, the determination is based upon the significance of the unobservable inputs to the overall fair value measurement. Because certain securities trade in less liquid or illiquid markets with limited or no pricing information, the determination of fair value for these securities is inherently more difficult. In addition to the unobservable inputs, Level 3 fair value investments may include observable components, which are components that are actively quoted or can be validated to market-based sources.

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The carrying amounts and estimated fair values of our financial instruments for which the disclosure of fair values is required, including financial assets and liabilities measured and carried at fair value on a recurring basis, with the exception of investment contracts, portions of other long-term investments and debt which are disclosed later within this footnote, was summarized according to the hierarchy previously described, as follows (in millions):


		September 30, 2021											March 31, 2022
		Level 1		Level 2		Level 3		Fair Value		Carrying Amount			Level 1		Level 2		Level 3		Fair Value		Carrying Amount
Assets	Assets											Assets
Cash and cash equivalents	Cash and cash equivalents	$	5,148	$	—	$	—	$	5,148	$	5,148	Cash and cash equivalents	$	2,793	$	—	$	—	$	2,793	$	2,793
Fixed maturity securities, available-for-sale:	Fixed maturity securities, available-for-sale:											Fixed maturity securities, available-for-sale:
Asset-backed securities	Asset-backed securities	—		4,947		3,244		8,191		8,191		Asset-backed securities	—		4,897		4,161		9,058		9,058
Commercial mortgage-backed securities	Commercial mortgage-backed securities	—		2,988		36		3,024		3,024		Commercial mortgage-backed securities	—		3,012		40		3,052		3,052
Corporates	Corporates	37		14,027		1,113		15,177		15,177		Corporates	35		14,365		1,141		15,541		15,541
Hybrids	Hybrids	132		791		—		923		923		Hybrids	126		723		—		849		849
Municipals	Municipals	—		1,325		43		1,368		1,368		Municipals	—		1,335		37		1,372		1,372
Residential mortgage-backed securities	Residential mortgage-backed securities	—		347		394		741		741		Residential mortgage-backed securities	—		761		—		761		761
U.S. Government	U.S. Government	805		—		—		805		805		U.S. Government	587		—		—		587		587
Foreign Governments	Foreign Governments	—		188		18		206		206		Foreign Governments	—		241		17		258		258
Short term investments												Short term investments	1,403		324		19		1,746		1,746
Preferred securities												Preferred securities	449		833		1		1,283		1,283
Equity securities	Equity securities	1,349		—		9		1,358		1,358		Equity securities	1,004		—		10		1,014		1,014
Preferred securities		448		751		3		1,202		1,202
Derivative investments	Derivative investments	—		581		—		581		581		Derivative investments	—		487		—		487		487
Short term investments		333		2		192		527		527
Reinsurance related embedded derivative, included in other assets												Reinsurance related embedded derivative, included in other assets	—		50		—		50		50
Other long-term investments	Other long-term investments	—		—		51		51		51		Other long-term investments	—		—		70		70		70

Total financial assets at fair value	Total financial assets at fair value	$	8,252	$	25,947	$	5,103	$	39,302	$	39,302	Total financial assets at fair value	$	6,397	$	27,028	$	5,496	$	38,921	$	38,921
Liabilities	Liabilities											Liabilities

Derivatives:	Derivatives:											Derivatives:
FIA embedded derivatives, included in contractholder funds		—		—		3,439		3,439		3,439
FIA/ IUL embedded derivatives, included in contractholder funds												FIA/ IUL embedded derivatives, included in contractholder funds	—		—		3,395		3,395		3,395
Reinsurance related embedded derivatives, included in accounts payable and accrued liabilities	Reinsurance related embedded derivatives, included in accounts payable and accrued liabilities	—		84		—		84		84		Reinsurance related embedded derivatives, included in accounts payable and accrued liabilities	—		1		—		1		1

Total financial liabilities at fair value	Total financial liabilities at fair value	$	—	$	84	$	3,439	$	3,523	$	3,523	Total financial liabilities at fair value	$	—	$	1	$	3,395	$	3,396	$	3,396

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		December 31, 2020											December 31, 2021
		Level 1		Level 2		Level 3		Fair Value		Carrying Amount			Level 1		Level 2		Level 3		Fair Value		Carrying Amount
Assets	Assets											Assets
Cash and cash equivalents	Cash and cash equivalents	$	2,719	$	—	$	—	$	2,719	$	2,719	Cash and cash equivalents	$	4,360	$	—	$	—	$	4,360	$	4,360
Fixed maturity securities, available-for-sale:	Fixed maturity securities, available-for-sale:											Fixed maturity securities, available-for-sale:
Asset-backed securities	Asset-backed securities	—		4,916		1,350		6,266		6,266		Asset-backed securities	—		4,736		3,959		8,695		8,695
Commercial mortgage-backed securities	Commercial mortgage-backed securities	—		2,803		26		2,829		2,829		Commercial mortgage-backed securities	—		2,944		35		2,979		2,979
Corporates	Corporates	25		13,421		1,289		14,735		14,735		Corporates	37		15,322		1,135		16,494		16,494
Hybrids	Hybrids	175		815		4		994		994		Hybrids	132		780		—		912		912
Municipals	Municipals	—		1,360		43		1,403		1,403		Municipals	—		1,458		43		1,501		1,501
Residential mortgage-backed securities	Residential mortgage-backed securities	—		342		483		825		825		Residential mortgage-backed securities	—		731		—		731		731
U.S. Government	U.S. Government	342		—		—		342		342		U.S. Government	394		—		—		394		394
Foreign Governments	Foreign Governments	—		176		17		193		193		Foreign Governments	—		266		18		284		284
Short term investments												Short term investments	168		2		321		491		491
Preferred securities												Preferred securities	506		893		2		1,401		1,401
Equity securities	Equity securities	791		—		5		796		796		Equity securities	1,206		—		9		1,215		1,215
Preferred securities		490		851		—		1,341		1,341
Subscription agreements (1)		—		199		—		199		199

Derivative investments	Derivative investments	—		548		—		548		548		Derivative investments	—		816		—		816		816
Short term investments		769		—		—		769		769
Other long-term investments	Other long-term investments	—		—		50		50		50		Other long-term investments	—		—		78		78		78

Total financial assets at fair value	Total financial assets at fair value	$	5,311	$	25,431	$	3,267	$	34,009	$	34,009	Total financial assets at fair value	$	6,803	$	27,948	$	5,600	$	40,351	$	40,351
Liabilities	Liabilities											Liabilities
Fair value of future policy benefits		—		—		5		5		5

Derivatives:	Derivatives:											Derivatives:
FIA embedded derivatives, included in contractholder funds		—		—		3,404		3,404		3,404
FIA/ IUL embedded derivatives, included in contractholder funds												FIA/ IUL embedded derivatives, included in contractholder funds	—		—		3,883		3,883		3,883
Reinsurance related embedded derivatives, included in accounts payable and accrued liabilities	Reinsurance related embedded derivatives, included in accounts payable and accrued liabilities	—		101		—		101		101		Reinsurance related embedded derivatives, included in accounts payable and accrued liabilities	—		73		—		73		73

Total financial liabilities at fair value	Total financial liabilities at fair value	$	—	$	101	$	3,409	$	3,510	$	3,510	Total financial liabilities at fair value	$	—	$	73	$	3,883	$	3,956	$	3,956

~~(1) Included within equity securities in the accompanying Condensed Consolidated Balance Sheets as of December 31, 2020.~~

Valuation Methodologies

Fixed Maturity ~~Securities &~~Preferred and Equity Securities

We measure the fair value of our securities based on assumptions used by market participants in pricing the security. The most appropriate valuation methodology is selected based on the specific characteristics of the fixed maturity or equity security, and we will then consistently apply the valuation methodology to measure the security’s fair value. Our fair value measurement is based on a market approach, which utilizes prices and other relevant information generated by market transactions involving identical or comparable securities. Sources of inputs to the market approach include third-party pricing services, independent broker quotations, or pricing matrices. We use observable and unobservable inputs in our valuation methodologies. Observable inputs include benchmark yields, reported trades, broker-dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data including market research publications. In addition, market indicators and industry and economic events are monitored and further market data will be acquired when certain thresholds are met.

For certain security types, additional inputs may be used, or some of the inputs described above may not be applicable. The significant input used in the fair value measurement of equity securities for which the market approach valuation technique is employed is yield for comparable securities. Increases or decreases in the yields would result in lower or higher, respectively, fair value measurements. For broker-quoted only securities, quotes from market makers or broker-dealers are obtained from sources 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.

We analyze the third-party valuation methodologies and related inputs to perform assessments to determine the appropriate level within the fair value hierarchy. However, we did not adjust prices received from third parties as of ~~September 30, 2021~~March 31, 2022 or December 31, ~~2020.~~2021.

~~Table of Contents~~

Derivative Financial Instruments

The fair value of call options ~~are~~is based upon valuation pricing models, which 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, based on industry accepted valuation pricing models which use market-observable inputs, including interest rates, yield curve volatilities, and other factors.

Table of Contents

The fair value of futures contracts (specifically for FIA contracts) represents the cumulative unsettled variation margin (open trade equity, net of cash settlements), which represents what we would expect to receive or pay at the balance sheet date if we canceled the contracts or entered into offsetting positions. These contracts are classified as Level 1.

The fair value measurement of the ~~FIA~~FIA/IUL embedded derivatives included in contractholder funds is determined through a combination of market observable information and significant unobservable inputs using the option budget method. The market observable inputs are the market value of option and treasury rates. The significant unobservable inputs are the budgeted option cost (i.e., the expected cost to purchase call options in future periods to fund the equity indexed linked feature), surrender rates, mortality multiplier and non-performance spread. The mortality multiplier at ~~September 30, 2021~~March 31, 2022 was applied to the 2012 ~~individual~~Individual Annuity mortality tables. Increases or decreases in the market value of an option in isolation would result in a higher or lower, respectively, fair value measurement. Increases or decreases in treasury rates, mortality multiplier, surrender rates, or non-performance spread in isolation would result in a lower or higher fair value measurement, respectively. Generally, a change in any one unobservable input would not directly result in a change in any other unobservable input. ~~Also refer to Managements Estimates in Note A~~ ~~Basis of Financial Statements~~ regarding the implementation of a new actuarial valuation system and assumption updates during the three-months ended September 30, 2021. The system implementation and assumption review process included refinements in the calculation of the fair value of the embedded derivative component of our fixed index annuities.

The fair value of the reinsurance-related embedded derivatives in the funds withheld reinsurance agreements with Kubera Insurance (SAC) Ltd. ("Kubera") (effective October 31, 2021, this agreement was novated from Kubera to Somerset Reinsurance Ltd. ("Somerset"), a certified third party reinsurer) and ~~Aspida Holdings~~ASPIDA Life Re Ltd ("~~Aspida"~~Aspida Re")~~, third party insurers,~~ are estimated based upon the fair value of the assets supporting the funds withheld from reinsurance liabilities. The fair value of the assets is based on a quoted market price of similar assets (Level 2), and therefore the fair value of the embedded derivative is based on market-observable inputs and classified as Level 2. See Note L F&GReinsurance ~~below and Note P~~ ~~Reinsurance~~ ~~in our Annual Report on Form 10-K for the year ended December 31, 2020~~ for further discussion on F&G reinsurance agreements.

Other long-term investments

We hold a fund-linked note which provides for an additional payment at maturity based on the value of an embedded derivative based on the actual return of a dedicated return fund. Fair value of the ~~available-for-sale~~ embedded derivative is based on an unobservable input, the net asset value of the fund at the balance sheet ~~date and is considered to be a Level 3 fair value measurement.~~date. The embedded derivative is similar to a call option on the net asset value of the fund with a strike price of zero since F&G will not be required to make any additional payments at maturity of the fund-linked note in order to receive the net asset value of the fund on the maturity date. A Black-Scholes model determines the net asset value of the fund as the fair value of the call option regardless of the values used for the other inputs to the option pricing model. The net asset value of the fund is provided by the fund manager at the end of each calendar month and represents the value an investor would receive if it withdrew its investment on the balance sheet date. Therefore, the key unobservable input used in the Black-Scholes model is the value of the fund. As the value of the fund increases or decreases, the fair value of the embedded derivative will increase or decrease. See further discussion on the available-for-sale embedded derivative in Note E Derivative Financial Instruments.

The fair value of the credit-linked note is based on a weighted average of a broker quote and a discounted cash flow ~~analysis and is considered to be a Level 3 fair value measurement.~~analysis. The discounted cash flow approach is based on the expected portfolio cash flows and amortization schedule reflecting investment expectations, adjusted for assumptions on the portfolio's default and recovery rates, and the note's discount rate. The fair value of the note is provided by the fund manager at the end of each quarter.

Quantitative information regarding significant unobservable inputs used for recurring Level 3 fair value measurements of financial instruments carried at fair value as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 are as follows:

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Fair Value at

Valuation Technique

Unobservable Input(s)

Range (Weighted average)

Fair Value at

Valuation Technique

Unobservable Input(s)

Range (Weighted average)

September 30, 2021

March 31, 2022

(in millions)

September 30, 2021

(in millions)

March 31, 2022

Assets

Asset-backed securities

3,105

Broker-quoted

Offered quotes

53.66% - 145.43% (97.03%)

Asset-backed securities

4,064

Broker-quoted

Offered quotes

44.79% - 728.00% (94.48%)

Asset-backed securities

139

Third-Party Valuation

Offered quotes

95.55% - 107.08% (103.58%)

Asset-backed securities

Third-Party Valuation

Offered quotes

86.52% - 103.47% (101.78%)

Commercial mortgage-backed securities

Broker-quoted

Offered quotes

101.04% - 127.33% (117.40%)

Commercial mortgage-backed securities

Broker-quoted

Offered quotes

120.24% - 120.24% (120.24%)

Commercial mortgage-backed securities

Third Party Valuation

Offered quotes

77.78% - 92.37%

(86.30%)

Corporates

344

Broker-quoted

Offered quotes

93.33% - 113.92% (103.68%)

Corporates

456

Broker-quoted

Offered quotes

0.00% - 124.44% (94.94%)

Corporates

Discounted Cash Flow

Discount Rate

44.00% - 100.00% (78.00%)

Corporates

Discounted Cash Flow

Discount Rate

44.00% - 100.00% (77.00%)

Corporates

756

Third-Party Valuation

Offered quotes

86.58% - 121.41% (108.34%)

Corporates

671

Third-Party Valuation

Offered quotes

81.09% - 113.62% (99.17%)

Municipals

Third-Party Valuation

Offered quotes

134.75% - 134.75% (134.75%)

Municipals

Third-Party Valuation

Offered quotes

118.69% - 118.69% (118.69%)

Residential mortgage-backed securities

394

Broker-quoted

Offered quotes

0.00% - 115.44% (115.44%)

Foreign governments

Third-Party Valuation

Offered quotes

108.78% - 116.83% (111.29%)

Short-term

192

Broker-quoted

Offered quotes

100.00% - 100.00%

(100.00%)

Foreign Governments

Third-Party Valuation

Offered quotes

104.86% - 113.31% (107.50%)

Short term investments

Third-Party Valuation

Offered quotes

94.33% - 95.49%

(94.91%)

Preferred securities

Income-Approach

Yield

2.49%

Preferred securities

Income-Approach

Yield

2.43%

Equity securities

Black Scholes model

Risk Free Rate

0.50% - 0.50% (0.50%)

Equity securities

Black Scholes model

Risk Free Rate

1.00% - 1.00% (1.00%)

Strike Price

$1.50 - $1.50 ($1.50)

Strike Price

$1.50 - $1.50 ($1.50)

Volatility

150.00% - 150.00% (150.00%)

Volatility

81.00% - 81.00% (81.00%)

Dividend Yield

0.00% - 0.00% (0.00%)

Dividend Yield

0.00% - 0.00% (0.00%)

Equity securities

Broker Quoted

Offered quotes

44.00% - 100.00% (78.00%)

Equity securities

Broker Quoted

Offered quotes

$50.00 - $55.00 ($52.50)

Equity securities

Discounted Cash Flow

Discount rate

13.37% - 13.37% (13.37%)

Equity securities

Discounted Cash Flow

Discount rate

11.10% - 11.10% (11.10%)

Market Comparable Company Analysis

EBITDA multiple

6.6x - 6.6x (6.6x)

Market Comparable Company Analysis

EBITDA multiple

4.8x - 4.8x (4.8x)

Other long-term assets:

Other long-term investments:

Available-for-sale embedded derivative

Third-Party Valuation

Market value of fund

100.00%

Available-for-sale embedded derivative

Black Scholes model

Market value of fund

100.00%

Credit Linked Note

Broker-quoted

Offered quotes

100.00%

Credit Linked Note

Broker-quoted

Offered quotes

100.00%

Investment in affiliate

Market Comparable Company Analysis

EBITDA multiple

8x-8x

Total financial assets at fair value

5,103

Total financial assets at fair value

5,496

Liabilities

Derivatives:

FIA embedded derivatives, included in contractholder funds

3,439

Discounted cash flow

Market value of option

0.00% - 28.41% (2.48%)

Derivative investments:

FIA/ IUL embedded derivatives, included in contractholder funds

3,395

Discounted cash flow

Market value of option

0.00% - 26.75% (1.74%)

Swap rates

0.01% - 2.41% (1.21%)

Swap rates

0.17% - 2.59% (1.38%)

Mortality multiplier

100.00% - 100.00% (100.00%)

Mortality multiplier

100.00% - 100.00% (100.00%)

Surrender rates

0.25% - 70.00% (6.19%)

Surrender rates

0.25% - 70.00% (6.24%)

Partial withdrawals

2.00% - 21.74% (2.72%)

Partial withdrawals

2.00% - 23.26% (2.73%)

Non-performance spread

0.30% - 0.93% (0.62%)

Non-performance spread

0.49% - 1.23% (1.01%)

Option cost

0.00% - 4.97% (1.81%)

Option cost

0.00% - 4.97% (1.82%)

Total financial liabilities at fair value

3,439

Total financial liabilities at fair value

3,395

2016

Table of Contents

Fair Value at

Valuation Technique

Unobservable Input(s)

Range (Weighted average)

Fair Value at

Valuation Technique

Unobservable Input(s)

Range (Weighted average)

December 31, 2020

December 31, 2021

(in millions)

December 31, 2020

(in millions)

December 31, 2021

Assets

Asset-backed securities

1,175

Broker-quoted

Offered quotes

85% - 126.15% (103.96%)

Asset-backed securities

3,844

Broker-quoted

Offered quotes

52.56% - 260.70%

(97.06%)

Asset-backed securities

175

Third-Party Valuation

Offered quotes

0.00% - 107.25% (79.87%)

Asset-backed securities

115

Third-Party Valuation

Offered quotes

93.02% - 108.45%

(104.95%)

Commercial mortgage-backed securities

Broker-quoted

Offered quotes

126.70% - 126.70%

(126.70%)

Commercial mortgage-backed securities

Broker-quoted

Offered quotes

131.59% - 131.59% (131.59%)

Commercial mortgage-backed securities

Third Party Valuation

Offered quotes

97.91% - 97.91%

(97.91%)

Corporates

388

Broker-quoted

Offered quotes

75.20% - 114.68% ( 103.36%)

Corporates

380

Broker-quoted

Offered quotes

0.00% - 109.69%

(100.91%)

Corporates

901

Third-Party Valuation

Offered quotes

88.42% - 125.83% (109.47%)

Corporates

741

Third-Party Valuation

Offered quotes

85.71% - 119.57%

(107.72%)

Hybrids

Third-Party Valuation

Offered quotes

112.06% - 112.06% ( 112.06%)

Corporates

Discounted Cash Flow

Discount Rate

44.00% - 100.00% (62.00%)

Municipals

Third-Party Valuation

Offered quotes

133.53% - 133.53% (133.53%)

Municipals

Third-Party Valuation

Offered quotes

135.09% - 135.09%

(135.09%)

Residential mortgage-backed securities

483

Broker-quoted

Offered quotes

112.58% - 112.58% (112.58%)

Foreign governments

Third-Party Valuation

Offered quotes

107.87% - 113.80% (109.72%)

Foreign Governments

Third-Party Valuation

Offered quotes

107.23% - 116.44%

(110.11%)

Short term investments

321

Broker-quoted

Offered quotes

100.00% - 100.00%

(100.00%)

Preferred securities

Income-Approach

Yield

2.43%

Equity securities

Income-Approach

Yield

2.61%

Equity securities

Broker Quoted

Offered quotes

$6.23 - $6.23 ($6.23)

Equity securities

Black Scholes model

Risk Free Rate

0.29% - 0.29% (0.29%)

Equity securities

Black Scholes model

Risk Free Rate

1.00% -1.00% (1.00%)

Strike Price

$1.50 - $1.50 ($1.50)

Strike Price

$1.50 - $1.50 ($1.50)

Volatility

1.00% - 1.00% (1.00%)

Volatility

81.00% - 81.00%

(81.00%)

Dividend Yield

0.00% - 0.00% (0.00%)

Dividend Yield

0.00% - 0.00% (0.00%)

Equity securities

Discounted Cash Flow

Discount rate

10.60% - 10.60% (10.60%)

Equity securities

Discounted Cash Flow

Discount rate

12.70% - 12.70%

(12.70%)

Market Comparable Company Analysis

EBITDA multiple

6.6x - 6.6x (6.6x)

Market Comparable Company Analysis

EBITDA multiple

5.9x - 5.9x (5.9x)

Other long-term assets:

Other long-term investments:

Available-for-sale embedded derivative

Third-Party Valuation

Market value of fund

100.00%

Available-for-sale embedded derivative

Black Scholes model

Market value of fund

100.00%

Credit Linked Note

Broker-quoted

Offered quotes

100.00%

Credit Linked Note

Broker-quoted

Offered quotes

100.00%

Investment in affiliate

Market Comparable Company Analysis

EBITDA multiple

8x-8x

Total financial assets at fair value

3,267

Total financial assets at fair value

5,600

Liabilities

Future policy benefits

Discounted cash flow

Non-performance spread

0.00%

Future policy benefits

—

Discounted cash flow

Non-performance spread

0.50%

Derivative investments:

FIA/ IUL embedded derivatives, included in contractholder funds

3,883

Discounted cash flow

Market value of option

0.00% - 38.72%

(3.16%)

Swap rates

0.05% - 1.94%

(1.00%)

Mortality multiplier

100.00% - 100.00%

(100.00%)

Surrender rates

0.25% - 70.00%

(6.26%)

Partial withdrawals

2.00% - 23.26%

(2.72%)

Non-performance spread

0.43% - 1.01% (0.68%)

Risk margin to reflect uncertainty

0.50%

Option cost

0.07% - 4.97%

(1.83%)

Derivatives:

FIA embedded derivatives, included in contractholder funds

3,404

Discounted cash flow

Market value of option

0.00% - 67.65% (2.25%)

Treasury rates

0.08% - 1.65% (0.87%)

Mortality multiplier

100.00% - 100.00% (100.00%)

Surrender rates

0.25% - 55.00% (5.24%)

Partial withdrawals

2.00% - 3.50% (2.58%)

Non-performance spread

0.74% - 0.74% (0.74%)

Option cost

0.05% - 16.61% (2.25%)

Total financial liabilities at fair value

3,409

Total financial liabilities at fair value

3,883

2117

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The following tables summarize changes to the Company’s financial instruments carried at fair value and classified within Level 3 of the fair value hierarchy for the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 and ~~2020.~~2021. This summary excludes any impact of amortization of value of business acquired (“VOBA”), deferred acquisition cost (“DAC”), and deferred sales inducements (“DSI”). The gains and losses below may include changes in fair value due in part to observable inputs that are a component of the valuation methodology.


		Three months ended September 30, 2021																						Three months ended March 31, 2022
		(in millions)																						(in millions)
		Balance at Beginning of Period			Total Gains (Losses)					Purchases		Sales		Settlements			Net transfer In (Out) of Level 3 (a)			Balance at End of Period					Change in Unrealized Gains (Losses) Incl in OCI				Balance at Beginning of Period				Total Gains (Losses)												Purchases						Sales					Settlements					Net transfer In (Out) of Level 3 (a)					Balance at End of Period					Change in Unrealized Gains (Losses) Incl in OCI
				Included in Earnings			Included in AOCI									Change in Unrealized Gains (Losses) Incl in OCI			Balance at Beginning of Period				Included in Earnings									Included in AOCI	Purchases			Sales			Settlements			Net transfer In (Out) of Level 3 (a)						Balance at End of Period
Assets	Assets
Fixed maturity securities available-for-sale:	Fixed maturity securities available-for-sale:																											Fixed maturity securities available-for-sale:
Asset-backed securities	Asset-backed securities	$	2,309		$	(1)		$	14	$	1,188	$	(97)	$	(125)		$	(44)				$	3,244				$	11	Asset-backed securities		$	3,959					$	—					$	(130)					$	400				$	—				$	(152)				$	84				$	4,161				$	(138)
Commercial mortgage-backed securities	Commercial mortgage-backed securities	25			—			(1)		12		—		—			—			36					—			Commercial mortgage-backed securities	35						—						(2)						—						—					—					7					40					(2)
Corporates	Corporates	1,201			(1)			(3)		19		(14)		(89)			—			1,113					(2)			Corporates	1,135				—						(74)						80						—					(26)					26					1,141					(73)

Municipals	Municipals	43			—			—		—		—		—			—			43					—			Municipals	43				—						(6)						—						—					—					—					37					(5)
Residential mortgage-backed securities	Residential mortgage-backed securities	443			—			(3)		4		—		(50)			—			394					1			Residential mortgage-backed securities	—				—						—						—						—					—					—					—					—
Foreign Governments	Foreign Governments	17			—			1		—		—		—			—			18					—			Foreign Governments	18				—						(1)						—						—					—					—					17					(1)
Short-Term		303			—			1		192		—		(304)			—			192					1
Short term investments																												Short term investments	321				—						(1)						20						—					—					(321)					19					(1)

Equity and preferred securities		10			(1)			1		2		—		—			—			12					—
Other long-term assets:
Preferred securities																												Preferred securities	2				—						(1)						—						—					—					—					1					(1)
Equity securities																												Equity securities	9				—						—						1						—					—					—					10					—
Other long-term investments:																												Other long-term investments:

Available-for-sale embedded derivative	Available-for-sale embedded derivative	30			1			—		—		—		—			—			31					—			Available-for-sale embedded derivative	34				(4)						—						—						—					—					—					30					—

Investment in affiliate																												Investment in affiliate	21				—						—						—						—					—					—					21					—
Credit linked note	Credit linked note	19			—			1		—		—		—			—			20					—			Credit linked note	23				—						(3)						—						—					(1)					—					19					—

Total assets at Level 3 fair value		$	4,400		$	(2)		$	11	$	1,417	$	(111)	$	(568)		$	(44)		$	5,103				$	11
Total Level 3 assets at fair value																												Total Level 3 assets at fair value	$	5,600			$	(4)					$	(218)					$	501					$	—				$	(179)				$	(204)				$	5,496				$	(221)
Liabilities	Liabilities																											Liabilities

FIA embedded derivatives, included in contractholder funds		3,759			(320)			—		—		—		—			—			3,439					—
FIA/ IUL embedded derivatives, included in contractholder funds																												FIA/ IUL embedded derivatives, included in contractholder funds	3,883				(488)						—						—						—					—					—					3,395					—

Total liabilities at Level 3 fair value		$	3,759		$	(320)		$	—	$	—	$	—	$	—		$	—		$	3,439				$	—
Total Level 3 liabilities at fair value																												Total Level 3 liabilities at fair value	$	3,883			$	(488)					$	—					$	—					$	—				$	—				$	—				$	3,395				$	—

(a) The net transfers out of Level 3 during the three months ended ~~September 30, 2021~~March 31, 2022 were exclusively to Level 2.

2218

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		Three months ended September 30, 2020																						Three months ended March 31, 2021
		(in millions)																						(in millions)
		Balance at Beginning of Period			Total Gains (Losses)					Purchases		Sales		Settlements			Net transfer In (Out) of Level 3 (a)			Balance at End of Period					Change in Unrealized Gains (Losses) Incl in OCI				Balance at Beginning of Period				Total Gains (Losses)												Purchases						Sales					Settlements					Net transfer In (Out) of Level 3 (a)					Balance at End of Period					Change in Unrealized Gains (Losses) Incl in OCI
				Included in Earnings			Included in AOCI									Change in Unrealized Gains (Losses) Incl in OCI			Balance at Beginning of Period				Included in Earnings									Included in AOCI	Purchases			Sales			Settlements			Net transfer In (Out) of Level 3 (a)						Balance at End of Period
Assets	Assets
Fixed maturity securities available-for-sale:	Fixed maturity securities available-for-sale:																											Fixed maturity securities available-for-sale:
Asset-backed securities	Asset-backed securities	$	1,016		$	(1)		$	11	$	118	$	(1)	$	(109)		$	(90)				$	944				$	12	Asset-backed securities		$	1,350					$	—					$	(23)					$	358				$	—				$	(92)				$	—				$	1,593				$	(4)
Commercial mortgage-backed securities	Commercial mortgage-backed securities	26			—			—		—		—		—			—			26					1			Commercial mortgage-backed securities	26						—						(1)						—						—					—					—					25					1
Corporates	Corporates	1,264			(1)			21		3		—		(20)			—			1,267					19			Corporates	1,289				6						(39)						40						(5)					(31)					(14)					1,246					19
Hybrids	Hybrids	4			—			—		—		—		—			—			4					—			Hybrids	4				—						—						—						—					(4)					—					—					—
Municipals	Municipals	40			—			2		—		—		—			—			42					2			Municipals	43				—						(2)						—						—					—					—					41					4
Residential mortgage-backed securities	Residential mortgage-backed securities	509			—			12		5		—		(25)			—			501					14			Residential mortgage-backed securities	483				—						12						5						—					(13)					—					487					27
Foreign Governments	Foreign Governments	16			—			—		—		—		—			—			16					—			Foreign Governments	17				—						—						—						—					—					—					17					2

Equity securities	Equity securities	1			1			—		2		—		—			—			4					—			Equity securities	5				1						—						3						—					—					—					9					—
Other long-term assets:
Other long-term investments:																												Other long-term investments:

Available-for-sale embedded derivative	Available-for-sale embedded derivative	21			2			—		—		—		—			—			23					—			Available-for-sale embedded derivative	27				2						—						—						—					—					—					29					—

Credit linked note	Credit linked note	23			—			—		—		—		—			—			23					—			Credit linked note	23				—						(4)						—						—					—					—					19					—

Total assets at Level 3 fair value		$	2,920		$	1		$	46	$	128	$	(1)	$	(154)		$	(90)		$	2,850				$	48
Total Level 3 assets at fair value																												Total Level 3 assets at fair value	$	3,267			$	9					$	(57)					$	406					$	(5)				$	(140)				$	(14)				$	3,466				$	49
Liabilities	Liabilities																											Liabilities
Future policy benefits	Future policy benefits	$	5		$	—		$	—	$	—	$	—	$	—		$	—		$	5				$	—		Future policy benefits	$	5			$	—					$	—					$	—					$	—				$	(1)				$	—				$	4				$	—
FIA embedded derivatives, included in contractholder funds		2,952			209			—		—		—		—			—			3,161					—
FIA/IUL embedded derivatives, included in contractholder funds																												FIA/IUL embedded derivatives, included in contractholder funds	3,404				(111)						—						—						—					—					—					3,293					—

Total liabilities at Level 3 fair value		$	2,957		$	209		$	—	$	—	$	—	$	—		$	—		$	3,166				$	—
Total Level 3 liabilities at fair value																												Total Level 3 liabilities at fair value	$	3,409			$	(111)					$	—					$	—					$	—				$	(1)				$	—				$	3,297				$	—

~~Table~~(a) The net transfers out of ~~Contents~~

Nine months ended September 30, 2021
Balance at Beginning
of Period Total Gains (Losses) Purchases Sales Settlements Net transfer In (Out) of
Level 3 (a) Balance at End of
Period Change in Unrealized Incl in OCI
Included in
Earnings Included in
AOCI
Assets
Fixed maturity securities available-for-sale:
Asset-backed securities $ 1,350 $ (1) $ 11 $ 2,359 $ (97) $ (307) $ (71) $ 3,244 $ 25
Commercial mortgage-backed securities 26 — (2) 12 — — — 36 1
Corporates 1,289 8 (29) 76 (22) (196) (13) 1,113 35
Hybrids 4 — — — — (4) — — —
Municipals 43 — — — — — — 43 7
Residential mortgage-backed securities 483 — (1) 14 — (102) — 394 22
Foreign Governments 17 — 1 — — — — 18 2
Short-Term — — 2 494 — (304) — 192 1
Equity and preferred securities 5 1 2 4 — — — 12 —
Other invested assets:
Available-for-sale embedded derivative 27 4 — — — — — 31 —
Credit linked note 23 — (3) — — — — 20 —
Total assets at Level 3 fair value $ 3,267 $ 12 $ (19) $ 2,959 $ (119) $ (913) $ (84) $ 5,103 $ 93
Future policy benefits $ 5 $ — $ — $ — $ (4) $ (1) $ — $ — $ —
FIA embedded derivatives, included in contractholder funds 3,404 35 — — — — — 3,439 —
Total liabilities at Level 3 fair value $ 3,409 $ 35 $ — $ — $ (4) $ (1) $ — $ 3,439 $ —

~~Table of Contents~~

Nine months ended September 30, 2020
Balance at Beginning
of Period Total Gains (Losses) Purchases Sales Settlements Net transfer In (Out) of
Level 3 (a) Balance at End of
Period Change in Unrealized Incl in OCI
F&G Acquisition Included in
Earnings Included in
AOCI
Assets
Fixed maturity securities available-for-sale:
Asset-backed securities $ — $ 854 $ (1) $ 20 $ 209 $ (1) $ (114) $ (23) $ 944 $ 21
Commercial mortgage-backed securities — 26 — — — — — — 26 1
Corporates 17 1,238 (4) 47 3 — (34) — 1,267 45
Hybrids — 4 — — — — — — 4 —
Municipals — 38 — 4 — — — — 42 5
Residential mortgage-backed securities — 534 — (3) 6 — (29) (7) 501 1
Foreign Governments — 16 — — — — — — 16 —
Equity securities 1 1 — — 2 — — — 4 —
Other invested assets:
Available-for-sale embedded derivative — 20 3 — — — — — 23 —
Other long-term investment 120 — (61) — — — — (59) — —
Credit linked note — 23 — — — — — — 23 —
Total assets at Level 3 fair value $ 138 $ 2,754 $ (63) $ 68 $ 220 $ (1) $ (177) $ (89) $ 2,850 $ 73
Liabilities
Future policy benefits $ — $ 5 $ — $ — $ — $ — $ — $ — $ 5 $ —
FIA embedded derivatives, included in contractholder funds — 2,852 309 — — — — — 3,161 —
Total liabilities at Level 3 fair value $ — $ 2,857 $ 309 $ — $ — $ — $ — $ — $ 3,166 $ —
Level 3 during the three months ended March 31, 2021 were exclusively to Level 2.

Valuation Methodologies and Associated Inputs for Financial Instruments Not Carried at Fair Value

The following discussion outlines the methodologies and assumptions used to determine the fair value of our financial instruments not carried at fair value. Considerable judgment is required to develop these assumptions used to measure fair value. Accordingly, the estimates shown are not necessarily indicative of the amounts that would be realized in a one-time, current market exchange of all of our financial instruments.

~~Mortgage Loans~~

The fair value of mortgage loans is established using a discounted cash flow method based on internal credit rating, maturity and future income. This yield-based approach is sourced from our third-party vendor. The internal ratings for mortgages in good standing are based on property type, location, market conditions, occupancy, debt service coverage, loan-to-value, quality of tenancy, borrower, and payment record. The inputs used to measure the fair value of our mortgage loans are classified as Level 3 within the fair value hierarchy.

~~Policy Loans (included within Other long-term investments)~~

Fair values for policy loans are estimated from a discounted cash flow analysis, using interest rates currently being offered for loans with similar credit risk. Loans with similar characteristics are aggregated for purposes of the calculations.

~~Company Owned Life Insurance~~

Company owned life insurance (COLI) is a life insurance program used to finance certain employee benefit expenses. The fair value of COLI is based on net realizable value, which is generally cash surrender value. COLI is classified as Level 3 within the fair value hierarchy.

~~Table of Contents~~

~~Other Invested Assets (included within Other long-term investments)~~

The fair value of the bank loan is estimated using a discounted cash flow method with the discount rate based on weighted average cost of capital ("WACC"). This yield-based approach is sourced from a third-party vendor and the WACC establishes a market participant discount rate by determining the hypothetical capital structure for the asset should it be underwritten as of each period end. Other invested assets are classified as Level 3 within the fair value hierarchy.

~~Investment Contracts~~

Investment contracts include deferred annuities, FIAs, indexed universal life policies ("IULs"), funding agreements and PRT and immediate annuities contracts without life contingencies. The fair value of deferred annuity, FIA, and IUL contracts is based on their cash surrender value (i.e. the cost the Company would incur to extinguish the liability) as these contracts are generally issued without an annuitization date. The fair value of funding agreements and PRT and immediate annuities contracts without life contingencies is derived by calculating a new fair value interest rate using the updated yield curve and treasury spreads as of the respective reporting date. The Company is not required to, and has not, estimated the fair value of the liabilities under contracts that involve significant mortality or morbidity risks, as these liabilities fall within the definition of insurance contracts that are exceptions from financial instruments that require disclosures of fair value.

~~Other~~

Federal Home Loan Bank of Atlanta ("FHLB") common stock, Accounts receivable and Notes receivable are carried at cost, which approximates fair value. FHLB common stock is classified as Level 2 within the fair value hierarchy. Accounts receivable and Notes receivable are classified as Level 3 within the fair value hierarchy.

~~Debt~~

The fair value of debt is based on quoted market prices of other debt with similar characteristics. The inputs used to measure the fair value of our outstanding debt are classified as Level 2 within the fair value hierarchy.

The following tables provide the carrying value and estimated fair value of our financial instruments that are carried on the unaudited Condensed Consolidated Balance Sheets at amounts other than fair value, summarized according to the fair value hierarchy previously described.

September 30, 2021
(in millions)
Level 1 Level 2 Level 3 Total Estimated Fair Value Carrying Amount
Assets
FHLB common stock $ — $ 72 $ — $ 72 $ 72
Commercial mortgage loans — — 2,011 2,011 1,984
Residential mortgage loans — — 1,473 1,473 1,500
Policy loans — — 37 37 37
Other invested assets — — 5 5 5
Company-owned life insurance — — 327 327 327
Trade and notes receivables, net of allowance — — 523 523 523
Total $ — $ 72 $ 4,376 $ 4,448 $ 4,448
Liabilities
Investment contracts, included in contractholder funds $ — $ — $ 26,953 $ 26,953 $ 30,425
Debt — 3,247 — 3,247 3,097
Total $ — $ 3,247 $ 26,953 $ 30,200 $ 33,522

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December 31, 2020
(in millions)
Level 1 Level 2 Level 3 Total Estimated Fair Value Carrying Amount
Assets
FHLB common stock $ — $ 66 $ — $ 66 $ 66
Commercial mortgage loans — — 926 926 903
Residential mortgage loans — — 1,123 1,123 1,128
Policy loans — — 33 33 33
Other invested assets — — 28 28 28
Company-owned life insurance — — 305 305 305
Trade and notes receivables, net of allowance — — 437 437 437
Total $ — $ 66 $ 2,852 $ 2,918 $ 2,900
Liabilities
Investment contracts, included in contractholder funds $ — $ — $ 21,719 $ 21,719 $ 25,199
Debt — 2,896 — 2,896 2,662
Total $ — $ 2,896 $ 21,719 $ 24,615 $ 27,861

The following table includes assets that have not been classified in the fair value hierarchy as the value of these investments are measured using the equity method of accounting or the net asset value ("NAV") per share practical expedient (in millions):

Carrying Value After Measurement
(in millions)
September 30, 2021 December 31, 2020
Investments in unconsolidated affiliates (equity method of accounting) $ 138 $ 146
Equity securities (NAV) 35 —
Investments in unconsolidated affiliates (NAV) 2,022 1,148

For investments for which NAV is used as a practical expedient for fair value, we do not have any significant restrictions in our ability to liquidate their positions in these investments, other than obtaining general partner approval, nor do we believe it is probable a price less than NAV would be received in the event of a liquidation. Equity method investments are reported on a lag of up to three months for investee information not received timely.

We review the fair value hierarchy classifications each reporting period. Changes in the observability of the valuation attributes may result in a reclassification of certain financial assets or liabilities. Such reclassifications are reported as transfers in and out of Level 3, or between other levels, at the beginning fair value for the reporting period in which the changes occur. The transfers into and out of Level 3 were related to changes in the primary pricing source and changes in the observability of external information used in determining the fair value.

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~~Note D — Investments~~

Our fixed maturity securities investments 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 AOCI, net of associated adjustments for DAC, VOBA, DSI, unearned revenue ("UREV"), SOP 03-1 reserves, and deferred income taxes. Our equity securities investments are carried at fair value with unrealized gains and losses included in net earnings. The Company’s consolidated investments at September 30, 2021 and December 31, 2020 are summarized as follows (in millions):

September 30, 2021
Amortized Cost Allowance for Expected Credit Losses Gross Unrealized Gains Gross Unrealized Losses Fair Value Carrying Value
Available-for-sale securities
Asset-backed securities $ 7,916 $ (3) $ 293 $ (15) $ 8,191 $ 8,191
Commercial mortgage-backed securities 2,619 (1) 411 (5) 3,024 3,024
Corporates 14,441 — 887 (151) 15,177 15,177
Hybrids 834 — 89 — 923 923
Municipals 1,306 — 71 (9) 1,368 1,368
Residential mortgage-backed securities 714 (4) 33 (2) 741 741
U.S. Government 808 — 5 (8) 805 805
Foreign Governments 199 — 8 (1) 206 206
Total available-for-sale securities $ 28,837 $ (8) $ 1,797 $ (191) $ 30,435 $ 30,435

December 31, 2020
Amortized Cost Allowance for Expected Credit Losses Gross Unrealized Gains Gross Unrealized Losses Fair Value Carrying Value
Available-for-sale securities
Asset-backed securities $ 5,941 $ — $ 343 $ (18) $ 6,266 $ 6,266
Commercial mortgage-backed/asset-backed securities 2,490 — 342 (3) 2,829 2,829
Corporates 13,582 (16) 1,184 (15) 14,735 14,735
Hybrids 914 — 80 — 994 994
Municipals 1,333 — 72 (2) 1,403 1,403
Residential mortgage-backed securities 806 (3) 23 (1) 825 825
U.S. Government 332 — 10 — 342 342
Foreign Governments 179 — 14 — 193 193
Total available-for-sale securities $ 25,577 $ (19) $ 2,068 $ (39) $ 27,587 $ 27,587

~~Securities held on deposit with various state regulatory authorities had a fair value of $21,198 million and $16,714 million at September 30, 2021 and December 31, 2020, respectively.~~

~~As of September 30, 2021 and December 31, 2020, the Company held no material investments that were non-income producing for a period greater than twelve months.~~

As of September 30, 2021 and December 31, 2020, the Company's accrued interest receivable balance was $255 million and $235 million, respectively. Accrued interest receivable is classified within Prepaid expenses and other assets within the unaudited Condensed Consolidated Balance Sheets.

In accordance with our FHLB agreements, the investments supporting the funding agreement liabilities are pledged as collateral to secure the FHLB funding agreement liabilities and are not available to the Company for general purposes. The collateral investments had a fair value of $2,278 million and $1,622 million as of September 30, 2021 and December 31, 2020, respectively.

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The amortized cost and fair value of fixed maturity available-for-sale securities by contractual maturities, as applicable, are shown below. Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations.

September 30, 2021
(in millions)
Amortized Cost Fair Value
Corporates, Non-structured Hybrids, Municipal and Government securities:
Due in one year or less $ 387 $ 391
Due after one year through five years 2,668 2,758
Due after five years through ten years 2,593 2,683
Due after ten years 11,914 12,616
Subtotal 17,562 18,448
Other securities which provide for periodic payments:
Asset-backed securities 7,916 8,190
Commercial mortgage-backed securities 2,619 3,024
Structured hybrids 26 32
Residential mortgage-backed securities 714 741
Subtotal 11,275 11,987
Total fixed maturity available-for-sale securities $ 28,837 $ 30,435

~~Allowance for Expected Credit Loss~~

We regularly review available for sale ("AFS") securities for declines in fair value that we determine to be credit related. For our fixed maturity securities, we generally consider the following in determining whether our unrealized losses are credit related, and if so, the magnitude of the credit loss:

•~~The extent to which the fair value is less than the amortized cost basis;~~

•~~The reasons for the decline in value (credit event, currency or interest-rate related, including general credit spread widening);~~

•The financial condition of and near-term prospects of the issuer (including issuer's current credit rating and the probability of full recovery of principal based upon the issuer's financial strength);

•~~Delinquencies and nonperforming assets of underlying collateral;~~

•~~Expected future default rates;~~

•~~Collateral value by vintage, geographic region, industry concentration or property type;~~

•~~Subordination levels or other credit enhancements as of the balance sheet date as compared to origination; and~~

•~~Contractual and regulatory cash obligations and the issuer's plans to meet such obligations.~~

We recognize an allowance for expected credit losses on fixed maturity securities in an unrealized loss position when it is determined, using the factors discussed above, a component of the unrealized loss is related to credit. We measure the credit loss using a discounted cash flow model that utilizes the single best estimate cash flow and the recognized credit loss is limited to the total unrealized loss on the security (i.e. the fair value floor). Cash flows are discounted using the implicit yield of bonds at their time of purchase and the current book yield for asset and mortgage backed securities as well as variable rate securities. We recognize the expected credit losses in Recognized gains and losses, net in the Consolidated Statements of Earnings, with an offset for the amount of non-credit impairments recognized in AOCI. We do not measure a credit loss allowance on accrued investment income because we write-off accrued interest through to interest and investment income when collectability concerns arise.

~~We consider the following in determining whether write-offs of a security’s amortized cost is necessary:~~

• ~~We believe amounts related to securities have become uncollectible; or~~

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• ~~We intend to sell a security; or~~

• ~~It is more likely than not that we will be required to sell a security prior to recovery.~~

If we intend to sell a fixed maturity security or it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis and the fair value of the security is below amortized cost, we will write down the security to current fair value, with a corresponding charge, net of any amount previously recognized as an allowance for expected credit loss, to Recognized gains and losses, net in the accompanying Consolidated Statements of Earnings. If we do not intend to sell a fixed maturity security or it is more likely than not that we will not be required to sell a fixed maturity security before recovery of its amortized cost basis but believe amounts related to a security are uncollectible (generally based on proximity to expected credit loss), an impairment is deemed to have occurred and the amortized cost is written down to the estimated recovery value with a corresponding charge, net of any amount previously recognized as an allowance for expected credit loss, to Recognized gains and losses, net in the accompanying Consolidated Statements of Earnings. The remainder of unrealized loss is held in AOCI.

The activity in the allowance for expected credit losses of available-for-sale securities aggregated by investment category were as follows for the three and nine-month periods ended September 30, 2021 (in millions):

Three Months Ended September 30, 2021
Additions Reductions
Balance at Beginning of Period For credit losses on securities for which losses were not previously recorded For initial credit losses on purchased securities accounted for as PCD financial assets (1) (Additions) reductions in allowance recorded on previously impaired securities For securities sold during the period For securities intended/required to be sold prior to recovery of amortized cost basis Write-offs charged against the allowance Recoveries of amounts previously written off Balance at End of Period
Available-for-sale securities
Asset-backed securities $ (4) $ — $ — $ 1 $ — $ — $ — — $ (3)
Commercial mortgage-backed securities (1) — — — — — — — (1)
Corporates (5) — — — — — 5 — —
Residential mortgage-backed securities (3) — — (1) — — — — (4)
Total available-for-sale securities $ (13) $ — $ — $ — $ — $ — $ 5 $ — $ (8)

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Nine Months Ended September 30, 2021
Additions Reductions
Balance at Beginning of Period For credit losses on securities for which losses were not previously recorded For initial credit losses on purchased securities accounted for as PCD financial assets (1) (Additions) reductions in allowance recorded on previously impaired securities For securities sold during the period For securities intended/required to be sold prior to recovery of amortized cost basis Writeoffs charged against the allowance Recoveries of amounts previously written off Balance at End of Period
Available-for-sale securities
Asset-backed securities $ — $ — $ (1) $ (2) — $ — $ — $ — $ — $ (3)
Commercial mortgage-backed securities — (1) — — — — — — — (1)
Corporates (16) — — 4 — — — 8 4 —
Residential mortgage-backed securities (3) — — (1) — — — — — (4)
Total available-for-sale securities $ (19) $ (1) $ (1) $ 1 $ — $ — $ — $ 8 $ 4 $ (8)

~~(1) Purchased credit deteriorated financial assets ("PCD")~~

Purchased credit-deteriorated available-for-sale debt securities ("PCD"s) are AFS securities purchased at a discount, where part of that discount is attributable to credit. Credit loss allowances are calculated for these securities as of the date of their acquisition, with the initial allowance serving to increase amortized cost. The following table summarizes purchases of PCD AFS securities during the three and nine-month periods ended September 30, 2021 (in millions).


	~~Three months ended~~		~~Nine months ended~~
~~Purchased credit-deteriorated available-for-sale debt securities~~	~~September 30, 2021~~		~~September 30, 2021~~
~~Purchase price~~	$	—	$	4
~~Allowance for credit losses at acquisition~~	—		1

~~AFS purchased credit-deteriorated par value~~	$	—	$	5

The fair value and gross unrealized losses of AFS securities, excluding securities in an unrealized loss position with an allowance for expected credit loss, aggregated by investment category and duration of fair value below amortized cost as of September 30, 2021 and December 31, 2020 were as follows (dollars in millions):

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September 30, 2021
Less than 12 months 12 months or longer Total
Fair Value Gross Unrealized
Losses Fair Value Gross Unrealized
Losses Fair Value Gross Unrealized
Losses
Available-for-sale securities
Asset-backed securities $ 1,462 $ (10) $ 121 $ (5) $ 1,583 $ (15)
Commercial mortgage-backed securities 258 (4) 3 (2) 261 (6)
Corporates 4,190 (130) 219 (20) 4,409 (150)
Hybrids 2 — — — 2 —
Municipals 234 (7) 53 (2) 287 (9)
Residential mortgage-backed securities 55 (1) 11 (1) 66 (2)
U.S. Government 567 (8) 2 — 569 (8)
Foreign Government 13 (1) — — 13 (1)
Total available-for-sale securities $ 6,781 $ (161) $ 409 $ (30) $ 7,190 $ (191)
Total number of available-for-sale securities in an unrealized loss position less than twelve months 916
Total number of available-for-sale securities in an unrealized loss position twelve months or longer 53
Total number of available-for-sale securities in an unrealized loss position 969

December 31, 2020
Less than 12 months 12 months or longer Total
Fair Value Gross Unrealized
Losses Fair Value Gross Unrealized
Losses Fair Value Gross Unrealized
Losses
Available-for-sale securities
Asset-backed securities $ 477 $ (18) $ — $ — $ 477 $ (18)
Commercial mortgage-backed securities 51 (3) — — 51 (3)
Corporates 865 (15) 36 — 901 (15)
Hybrids 1 — — — 1 —
Municipals 115 (2) — — 115 (2)
Residential mortgage-backed securities 30 (1) — — 30 (1)
U.S. Government 11 — — — 11 —
Total available-for-sale securities $ 1,550 $ (39) $ 36 $ — $ 1,586 $ (39)
Total number of available-for-sale securities in an unrealized loss position less than twelve months 222
Total number of available-for-sale securities in an unrealized loss position twelve months or longer 11
Total number of available-for-sale securities in an unrealized loss position 233

We determined the increase in unrealized losses as of September 30, 2021 was caused by higher treasury rates, offset by narrower spreads in certain sectors. This in part is expected as the economy continues its anticipated path to recovery. For securities in an unrealized loss position as of September 30, 2021 an expected credit loss was not determined, and we believe that the unrealized loss is being driven by interest rate increases or near-term illiquidity and uncertainty of the impact of COVID-19 on the economy as opposed to issuer specific credit concerns. Specific to asset-backed and mortgage-backed securities for which an expected credit loss was not determined, the effect of any increased expectations of underlying collateral defaults has not risen to the level of impacting the tranches of those securities.

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Mortgage Loans

Policy Loans (included within Other long-term investments)

Company Owned Life Insurance

Company owned life insurance ("COLI") is a life insurance program used to finance certain employee benefit expenses. The fair value of COLI is based on net realizable value, which is generally cash surrender value. COLI is classified as Level 3 within the fair value hierarchy.

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Other Invested Assets (included within Other long-term investments)

Investment Contracts

Investment contracts include deferred annuities (FIAs and fixed rate annuities), indexed universal life policies ("IULs"), funding agreements and PRT and immediate annuity contracts without life contingencies. The FIA/ IUL embedded derivatives, included in contractholder funds, are excluded as they are carried at fair value. The fair value of the FIA, fixed rate annuity and IUL contracts is based on their cash surrender value (i.e. the cost the Company would incur to extinguish the liability) as these contracts are generally issued without an annuitization date. The fair value of funding agreements and PRT and immediate annuities contracts without life contingencies is derived by calculating a new fair value interest rate using the updated yield curve and treasury spreads as of the respective reporting date. The Company is not required to, and has not, estimated the fair value of the liabilities under contracts that involve significant mortality or morbidity risks, as these liabilities fall within the definition of insurance contracts that are exceptions from financial instruments that require disclosures of fair value.

Other

Debt

The fair value of debt is based on quoted market prices. The inputs used to measure the fair value of our outstanding debt are classified as Level 2 within the fair value hierarchy.


	March 31, 2022
	(in millions)
	Level 1		Level 2		Level 3		Total Estimated Fair Value		Carrying Amount
Assets
FHLB common stock	$	—	$	79	$	—	$	79	$	79
Commercial mortgage loans	—		—		2,147		2,147		2,231
Residential mortgage loans	—		—		1,904		1,904		1,986
Policy loans	—		—		40		40		40
Other invested assets	—		—		67		67		67
Company-owned life insurance	—		—		350		350		350

Trade and notes receivables, net of allowance	—		—		529		529		529
Total	$	—	$	79	$	5,037	$	5,116	$	5,282

Liabilities
Investment contracts, included in contractholder funds	$	—	$	—	$	29,031	$	29,031	$	32,903
Debt	—		2,929		—		2,929		3,095

Total	$	—	$	2,929	$	29,031	$	31,960	$	35,998

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	December 31, 2021
	(in millions)
	Level 1		Level 2		Level 3		Total Estimated Fair Value		Carrying Amount
Assets
FHLB common stock	$	—	$	72	$	—	$	72	$	72
Commercial mortgage loans	—		—		2,265		2,265		2,168
Residential mortgage loans	—		—		1,549		1,549		1,581
Policy loans	—		—		39		39		39
Other invested assets	—		—		57		57		57
Company-owned life insurance	—		—		333		333		333
Trade and notes receivables, net of allowance	—		—		557		557		557
Total	$	—	$	72	$	4,800	$	4,872	$	4,807

Liabilities
Investment contracts, included in contractholder funds	$	—	$	—	$	27,448	$	27,448	$	31,529
Debt	—		3,218		—		3,218		3,096
Total	$	—	$	3,218	$	27,448	$	30,666	$	34,625

The following table includes assets that have not been classified in the fair value hierarchy as the value of these investments are measured using the equity method of accounting or net asset value ("NAV") is used as a practical expedient in determining fair value:


	Carrying Amount (in millions)
	March 31, 2022		December 31, 2021
Investments in unconsolidated affiliates	$	153	$	136
Equity securities (NAV)	47		48
Investments in unconsolidated affiliates (a)	2,696		2,350
	$	2,896	$	2,534
(a) The fair value of these investments using the NAV practical expedient and their carrying amount are generally equal.

For investments for which NAV is used as a practical expedient for fair value, we do not have any significant restrictions in our ability to liquidate our positions in these investments, other than obtaining general partner approval, nor do we believe it is probable a price less than NAV would be received in the event of a liquidation. We account for our investment in unconsolidated affiliates using the equity method of accounting. Equity method investments are reported on a lag of up to three months for investee information not received timely.

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Note D — Investments

Our fixed maturity securities investments have been designated as available-for-sale ("AFS"), and are carried at fair value, net of allowance for expected credit losses, with unrealized gains and losses included in AOCI, net of associated adjustments for DAC, VOBA, DSI, unearned revenue ("UREV"), SOP 03-1 reserves, and deferred income taxes. Our preferred and equity securities investments are carried at fair value with unrealized gains and losses included in net earnings. The Company’s consolidated investments at March 31, 2022 and December 31, 2021 are summarized as follows (in millions):


	March 31, 2022
	Amortized Cost		Allowance for Expected Credit Losses		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Carrying Value
Available-for-sale securities
Asset-backed securities	$	9,137	$	(1)	$	129	$	(207)	$	9,058	$	9,058
Commercial mortgage-backed securities	2,951		(2)		170		(67)		3,052		3,052
Corporates	16,480		(3)		188		(1,124)		15,541		15,541
Hybrids	832		—		31		(14)		849		849
Municipals	1,444		—		17		(89)		1,372		1,372
Residential mortgage-backed securities	801		(5)		4		(39)		761		761
U.S. Government	594		—		3		(10)		587		587
Foreign Governments	269		—		3		(14)		258		258
Total available-for-sale securities	$	32,508	$	(11)	$	545	$	(1,564)	$	31,478	$	31,478


	December 31, 2021
	Amortized Cost		Allowance for Expected Credit Losses		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Carrying Value
Available-for-sale securities
Asset-backed securities	$	8,516	$	(3)	$	220	$	(38)	$	8,695	$	8,695
Commercial mortgage-backed/asset-backed securities	2,684		(2)		308		(11)		2,979		2,979
Corporates	15,822		—		830		(158)		16,494		16,494
Hybrids	838		—		74		—		912		912
Municipals	1,445		—		67		(11)		1,501		1,501
Residential mortgage-backed securities	731		(3)		7		(4)		731		731
U.S. Government	393		—		3		(2)		394		394
Foreign Governments	276		—		9		(1)		284		284
Total available-for-sale securities	$	30,705	$	(8)	$	1,518	$	(225)	$	31,990	$	31,990

Securities held on deposit with various state regulatory authorities had a fair value of $15,578 million and $22,343 million at March 31, 2022 and December 31, 2021, respectively.

As of March 31, 2022 and December 31, 2021, the Company held no material investments that were non-income producing for a period greater than twelve months.

As of March 31, 2022 and December 31, 2021, the Company's accrued interest receivable balance was $278 million and $253 million, respectively. Accrued interest receivable is classified within Prepaid expenses and other assets within the unaudited Condensed Consolidated Balance Sheets.

In accordance with our FHLB agreements, the investments supporting the funding agreement liabilities are pledged as collateral to secure the FHLB funding agreement liabilities and are not available to us for general purposes. The collateral investments had a fair value of $2,840 million and $2,469 million as of March 31, 2022 and December 31, 2021, respectively.

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


	March 31, 2022				December 31, 2021
	(in millions)				(in millions)
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Corporates, Non-structured Hybrids, Municipal and Government securities:
Due in one year or less	$	439	$	444	$	426	$	431
Due after one year through five years	3,320		3,249		2,998		3,051
Due after five years through ten years	2,378		2,295		2,389		2,458
Due after ten years	13,456		12,590		12,930		13,608
Subtotal	19,593		18,578		18,743		19,548
Other securities which provide for periodic payments:
Asset-backed securities	9,137		9,058		8,516		8,695
Commercial mortgage-backed securities	2,951		3,052		2,684		2,979
Structured hybrids	26		29		31		37
Residential mortgage-backed securities	801		761		731		731
Subtotal	12,915		12,900		11,962		12,442
Total fixed maturity available-for-sale securities	$	32,508	$	31,478	$	30,705	$	31,990

Allowance for Expected Credit Loss

We regularly review AFS securities for declines in fair value that we determine to be credit related. For our fixed maturity securities, we generally consider the following in determining whether our unrealized losses are credit related, and if so, the magnitude of the credit loss:

•The extent to which the fair value is less than the amortized cost basis;

•The reasons for the decline in value (credit event, currency or interest-rate related, including general credit spread widening);

•Current delinquencies and nonperforming assets of underlying collateral;

•Expected future default rates;

•Collateral value by vintage, geographic region, industry concentration or property type;

•Subordination levels or other credit enhancements as of the balance sheet date as compared to origination; and

•Contractual and regulatory cash obligations and the issuer's plans to meet such obligations.

We recognize an allowance for current expected credit losses on fixed maturity securities in an unrealized loss position when it is determined, using the factors discussed above, a component of the unrealized loss is related to credit. We measure the credit loss using a discounted cash flow model that utilizes the single best estimate cash flow and the recognized credit loss is limited to the total unrealized loss on the security (i.e. the fair value floor). Cash flows are discounted using the implicit yield of bonds at their time of purchase and the current book yield for asset and mortgage backed securities as well as variable rate securities. We recognize the expected credit losses in Recognized gains and losses, net in the Consolidated Statements of Earnings, with an offset for the amount of non-credit impairments recognized in AOCI. We do not measure a credit loss allowance on accrued investment income because we write-off accrued interest through to interest and investment income when collectability concerns arise.

We consider the following in determining whether write-offs of a security’s amortized cost is necessary:

• We believe amounts related to securities have become uncollectible; or

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• We intend to sell a security; or

• It is more likely than not that we will be required to sell a security prior to recovery.

The activity in the allowance for expected credit losses of AFS securities aggregated by investment category were as follows for the three months ended March 31, 2022 and 2021 (in millions):


	Three Months Ended March 31, 2022
			Additions						Reductions
	Balance at Beginning of Period		For credit losses on securities for which losses were not previously recorded		For initial credit losses on purchased securities accounted for as PCD financial assets (1)		(Additions) reductions in allowance recorded on previously impaired securities		For securities sold during the period		For securities intended/required to be sold prior to recovery of amortized cost basis		Write-offs charged against the allowance		Recoveries of amounts previously written off		Balance at End of Period
Available-for-sale securities
Asset-backed securities	$	(3)	$	—	$	—	$	—	$	2	$	—	$	—	—		$	(1)
Commercial mortgage-backed securities	(2)		—		—		—		—		—		—		—		(2)
Corporates	—		(3)		—		—		—		—		—		—		(3)


Residential mortgage-backed securities	(3)		—		—		(2)		—		—		—		—		(5)


Total available-for-sale securities	$	(8)	$	(3)	$	—	$	(2)	$	2	$	—	$	—	$	—	$	(11)

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	Three Months Ended March 31, 2021
			Additions						Reductions
	Balance at Beginning of Period		For credit losses on securities for which losses were not previously recorded		For initial credit losses on purchased securities accounted for as PCD financial assets (1)		(Additions) reductions in allowance recorded on previously impaired securities		For securities sold during the period		For securities intended/required to be sold prior to recovery of amortized cost basis		Write-offs charged against the allowance		Recoveries of amounts previously written off		Balance at End of Period
Available-for-sale securities

Commercial mortgage-backed securities	$	—	$	(1)	$	—	$	—	$	—	$	—	$	—	$	—	$	(1)
Corporates	(16)		—		—		7		—		—		3		3		$	(3)


Residential mortgage-backed securities	(3)		—		—		—		—		—		—		—		$	(3)


Total available-for-sale securities	$	(19)	$	(1)	$	—	$	7	$	—	$	—	$	3	$	3	$	(7)

(1) Purchased credit deteriorated financial assets ("PCD")

PCDs are AFS securities purchased at a discount, where part of that discount is attributable to credit. Credit loss allowances are calculated for these securities as of the date of their acquisition, with the initial allowance serving to increase amortized cost. There were no purchases of PCD AFS securities during the three months ended March 31, 2022 or 2021.

The fair value and gross unrealized losses of AFS securities, excluding securities in an unrealized loss position with an allowance for expected credit loss, aggregated by investment category and duration of fair value below amortized cost as of March 31, 2022 and December 31, 2021 were as follows (dollars in millions):


	March 31, 2022
	Less than 12 months				12 months or longer				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Available-for-sale securities
Asset-backed securities	$	5,910	$	(179)	$	348	$	(28)	$	6,258	$	(207)
Commercial mortgage-backed securities	1,205		(62)		44		(5)		1,249		(67)
Corporates	10,103		(817)		1,613		(307)		11,716		(1,124)
Hybrids	407		(14)		2		—		409		(14)
Municipals	954		(72)		131		(17)		1,085		(89)
Residential mortgage-backed securities	609		(37)		19		(2)		628		(39)
U.S. Government	327		(9)		30		(1)		357		(10)
Foreign Government	152		(11)		12		(3)		164		(14)
Total available-for-sale securities	$	19,667	$	(1,201)	$	2,199	$	(363)	$	21,866	$	(1,564)
Total number of available-for-sale securities in an unrealized loss position less than twelve months											3,321
Total number of available-for-sale securities in an unrealized loss position twelve months or longer											223
Total number of available-for-sale securities in an unrealized loss position											3,544

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	December 31, 2021
	Less than 12 months				12 months or longer				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Available-for-sale securities
Asset-backed securities	$	4,410	$	(31)	$	146	$	(7)	$	4,556	$	(38)
Commercial mortgage-backed securities	603		(11)		1		—		604		(11)
Corporates	5,391		(132)		394		(26)		5,785		(158)
Hybrids	3		—		—		—		3		—
Municipals	410		(5)		85		(6)		495		(11)
Residential mortgage-backed securities	325		(3)		11		(1)		336		(4)
U.S. Government	219		(2)		4		—		223		(2)
Foreign Government	82		(1)		5		—		87		(1)
Total available-for-sale securities	$	11,443	$	(185)	$	646	$	(40)	$	12,089	$	(225)
Total number of available-for-sale securities in an unrealized loss position less than twelve months											2,056
Total number of available-for-sale securities in an unrealized loss position twelve months or longer											68
Total number of available-for-sale securities in an unrealized loss position											2,124

We determined the increase in unrealized losses as of March 31, 2022 was caused by higher treasury rates as well as wider spreads. This is in part due to the Federal Reserve's action to increase rates in efforts to combat inflation. Inflation in the first quarter of 2022 has been compounded by supply chain issues stemming from additional COVID-19 restrictions in China, as well as higher energy prices as a result of the Russian-Ukrainian conflict. For securities in an unrealized loss position as of March 31, 2022, our allowance for expected credit loss was $11 million. We believe that unrealized loss position for which we have not recorded an allowance for expected credit loss as of March 31, 2022 was primarily attributable to interest rate increases, near-term illiquidity, and uncertainty caused by Russia's invasion of Ukraine as opposed to issuer specific credit concerns.

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Mortgage Loans

Our mortgage loans are collateralized by commercial and residential properties.

Commercial Mortgage Loans

Commercial mortgage loans ("CMLs") represented approximately 6%7% of our total investments as of ~~September 30, 2021.~~March 31, 2022. We primarily invest in mortgage loans on income producing properties including hotels, industrial properties, retail buildings, multifamily properties and office buildings. We diversify our CML portfolio by geographic region and property type to attempt to reduce concentration risk. We continuously evaluate CMLs based on relevant current information to ensure properties are performing at a consistent and acceptable level to secure the related debt. The distribution of CMLs, gross of valuation allowances, by property type and geographic region is reflected in the following tables (dollars in millions):

September 30, 2021
Gross Carrying Value % of Total
Property Type:
Hotel 19 1 %
Industrial - General 486 24 %
Industrial - Warehouse 13 1 %
Multifamily 791 40 %
Office 127 6 %
Retail 303 15 %
Other 168 9 %
Student Housing 83 4 %
Total commercial mortgage loans, gross of valuation allowance $ 1,990 100 %
Allowance for expected credit loss (6)
Total commercial mortgage loans $ 1,984
U.S. Region:
East North Central $ 50 3 %
East South Central 80 4 %
Middle Atlantic 246 11 %
Mountain 171 9 %
New England 144 7 %
Pacific 630 32 %
South Atlantic 416 21 %
West North Central 12 1 %
West South Central 159 8 %
Various 82 4 %
Total commercial mortgage loans, gross of valuation allowance $ 1,990 100 %
Allowance for expected credit loss (6)
Total commercial mortgage loans $ 1,984

~~Table of Contents~~


		December 31, 2020				March 31, 2022				December 31, 2021
		Gross Carrying Value		% of Total				Gross Carrying Value		% of Total		Gross Carrying Value		% of Total
Property Type:	Property Type:						Property Type:

Hotel	Hotel	$	19	2	%		Hotel	$	19	1	%	$	19	1	%
Industrial - General	Industrial - General	302		33	%		Industrial - General	486		22	%	497		23	%
Industrial - Warehouse		12		1	%
Mixed Use							Mixed Use	12		1	%	13		1	%
Multifamily	Multifamily	165		18	%		Multifamily	979		43	%	894		41	%
Office	Office	140		15	%		Office	342		15	%	343		16	%
Retail	Retail	142		17	%		Retail	108		5	%	121		6	%
Student Housing							Student Housing	83		4	%	83		4	%
Other	Other	125		14	%		Other	208		9	%	204		8	%
Total commercial mortgage loans, gross of valuation allowance	Total commercial mortgage loans, gross of valuation allowance	$	905	100	%		Total commercial mortgage loans, gross of valuation allowance	$	2,237	100	%	$	2,174	100	%
Allowance for expected credit loss	Allowance for expected credit loss	(2)					Allowance for expected credit loss	(6)				(6)
Total commercial mortgage loans	Total commercial mortgage loans	$	903				Total commercial mortgage loans	$	2,231			$	2,168

U.S. Region:	U.S. Region:						U.S. Region:
East North Central	East North Central	$	61	7	%		East North Central	$	134	6	%	$	137	6	%
East South Central	East South Central	80		9	%		East South Central	76		3	%	79		4	%
Middle Atlantic	Middle Atlantic	100		11	%		Middle Atlantic	293		13	%	293		13	%
Mountain	Mountain	48		5	%		Mountain	289		13	%	236		11	%
New England	New England	79		9	%		New England	149		7	%	149		7	%
Pacific	Pacific	333		37	%		Pacific	648		29	%	649		30	%
South Atlantic	South Atlantic	133		15	%		South Atlantic	492		22	%	459		21	%
West North Central	West North Central	13		1	%		West North Central	4		—	%	12		1	%
West South Central	West South Central	58		6	%		West South Central	152		7	%	160		7	%

Total commercial mortgage loans, gross of valuation allowance	Total commercial mortgage loans, gross of valuation allowance	$	905	100	%		Total commercial mortgage loans, gross of valuation allowance	$	2,237	100	%	$	2,174	100	%
Allowance for expected credit loss	Allowance for expected credit loss	(2)					Allowance for expected credit loss	(6)				(6)
Total commercial mortgage loans	Total commercial mortgage loans	$	903				Total commercial mortgage loans	$	2,231			$	2,168

Loan-to-value ("LTV") and debt service coverage ("DSC") ratios are measures commonly used to assess the risk and quality of mortgage loans. The LTV ratio is expressed as a percentage of the amount of the loan relative to the value of the underlying property. A LTV ratio in excess of 100% indicates the unpaid loan amount exceeds the underlying collateral. The DSC ratio, based upon the most recently received financial statements, is expressed as a percentage of the amount of a property’s net income to its debt service payments. A DSC ratio of less than 1.00 indicates that a property’s operations do not generate sufficient income to cover debt payments. We normalize our DSC ratios to a 25-year amortization period for purposes of our general loan allowance evaluation.

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The following table presents the recorded investment in CMLs by LTV and DSC ratio categories and estimated fair value by the indicated loan-to-value ratios at ~~September 30,~~March 31, 2022 and December 31, 2021 (dollars in millions):


		Debt-Service Coverage Ratios						Total Amount	% of Total		Estimated Fair Value			% of Total		Debt-Service Coverage Ratios								Total Amount			% of Total	Estimated Fair Value		% of Total
		>1.25		1.00 - 1.25		<1.00							>1.25				1.00 - 1.25									% of Total
September 30, 2021
March 31, 2022																			March 31, 2022
LTV Ratios:																			LTV Ratios:
Less than 50%																			Less than 50%	$	608	$	21	$	9			$	638	29	%	$	631	29	%
50% to 60%																			50% to 60%	512		—		—				512		23	%	494		23	%
60% to 75%																			60% to 75%	1,078		—		—				1,078		48	%	1,016		47	%
75% to 85%																			75% to 85%	$	—	$	9	$	—			$	9	1	%	6		1	%
Commercial mortgage loans																			Commercial mortgage loans	$	2,198	$	30	$	9			$	2,237	100	%	$	2,147	100	%

December 31, 2021																			December 31, 2021
LTV Ratios:	LTV Ratios:																		LTV Ratios:
Less than 50%	Less than 50%	$	441	$	33	$	166		$	640	32	%		$	661		33	%	Less than 50%	$	626	$	33	$	9			$	668	31	%	$	745	33	%
50% to 60%	50% to 60%	386		—		—			386		19	%		394			20	%	50% to 60%	470		—		—				470		22	%	481		21	%
60% to 75%	60% to 75%	964		—		—			964		49	%		955			47	%	60% to 75%	1,036		—		—				1,036		47	%	1,039		46	%
Commercial mortgage loans	Commercial mortgage loans	$	1,791	$	33	$	166		$	1,990	100	%		$	2,010		100	%	Commercial mortgage loans	$	2,132	$	33	$	9			$	2,174	100	%	$	2,265	100	%

December 31, 2020
LTV Ratios:
Less than 50%		$	520	$	18	$	—		$	538	60	%		$	557		60	%
50% to 60%		237		9		—			246		27	%		251			27	%
60% to 75%		121		—		—			121		13	%		119			13	%
Commercial mortgage loans		$	878	$	27	$	—		$	905	100	%		$	927		100	%

We recognize a mortgage loan as delinquent when payments on the loan are greater than 30 days past due. At ~~September 30,~~March 31, 2022 we had one CML that was delinquent in principal or interest payments as shown in the risk rating exposure table below. At December 31, 2021 we had no CMLs that were delinquent in principal or interest payments.

Allowance for Expected Credit Loss ~~for Commercial Mortgages~~

We estimate expected credit losses for our commercial mortgage loan portfolio using a probability of default/loss given default model. Significant inputs to this model include the ~~loans'~~loans current performance, underlying collateral type, location, contractual life, LTV, and DSC. The model projects losses using a two year reasonable and supportable forecast and then reverts over a three year period to market-wide historical loss experience. Changes in our allowance for expected credit losses on commercial mortgage loans are recognized in Recognized gains and losses, net in the accompanying unaudited Condensed Consolidated Statements of Earnings.

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Residential Mortgage Loans

Residential mortgage loans ("RMLs") represented approximately 4%5% of our total investments as of ~~September 30, 2021.~~March 31, 2022. Our residential mortgage loans are closed end, amortizing loans and 100% of the properties are located in the United States. We diversify our RML portfolio by state to attempt to reduce concentration risk. The distribution of RMLs by state with highest-to-lowest concentration are reflected in the following tables (dollars in millions):


		September 30, 2021					March 31, 2022
U.S. State:	U.S. State:	Unpaid Principal Balance		% of Total		U.S. State:	Gross Carrying Value		% of Total
Florida	Florida	$	216	14	%	Florida	$	288	14	%
Texas	Texas	154		10	%	Texas	218		11	%
New Jersey	New Jersey	147		10	%	New Jersey	170		8	%
California						California	141		7	%
Pennsylvania						Pennsylvania	134		7	%
New York						New York	131		7	%
Georgia						Georgia	115		6	%
All Other States (1)	All Other States (1)	983		66	%	All Other States (1)	813		40	%
Total residential mortgage loans	Total residential mortgage loans	$	1,500	100	%	Total residential mortgage loans	$	2,010	100	%

(1) The individual concentration of each state is equal to or less than 9%5% as of ~~September 30, 2021.~~March 31, 2022.

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		December 31, 2020					December 31, 2021
U.S. State:	U.S. State:	Unpaid Principal Balance		% of Total		U.S. State:	Gross Carrying Value		% of Total
California		$	164	15	%
Florida	Florida	188		16	%	Florida	$	234	15	%
Texas						Texas	170		10	%
New Jersey	New Jersey	96		8	%	New Jersey	153		10	%
All other states(1)	All other states(1)	704		61	%	All other states(1)	1,047		65	%
Total residential mortgage loans	Total residential mortgage loans	$	1,152	100	%	Total residential mortgage loans	$	1,604	100	%

(1) The individual concentration of each state is less than 8%9% as of December 31, ~~2020.~~2021.

Residential mortgage loans have a primary credit quality indicator of either a performing or nonperforming loan. We define non-performing residential mortgage loans as those that are 90 or more days past due or in ~~non-accrual~~nonaccrual status which is assessed monthly. The credit quality of RMLs as of ~~September 30,~~March 31, 2022 and December 31, 2021, was as follows (dollars in millions):


		September 30, 2021				December 31, 2020					March 31, 2022				December 31, 2021
Performance indicators:	Performance indicators:	Carrying Value		% of Total		Carrying Value		% of Total		Performance indicators:	Carrying Value		% of Total		Carrying Value		% of Total
Performing	Performing	$	1,429	94	%	$	1,059	91	%	Performing	$	1,947	97	%	$	1,533	95	%
Non-performing	Non-performing	98		6	%	106		9	%	Non-performing	65		3	%	73		5	%
Total residential mortgage loans, gross of valuation allowance	Total residential mortgage loans, gross of valuation allowance	$	1,527	100	%	$	1,165	100	%	Total residential mortgage loans, gross of valuation allowance	$	2,012	100	%	$	1,606	100	%
Allowance for expected loan loss	Allowance for expected loan loss	(27)		—	%	(37)		—	%	Allowance for expected loan loss	(26)		—	%	(25)		—	%
Total residential mortgage loans	Total residential mortgage loans	$	1,500	100	%	$	1,128	100	%	Total residential mortgage loans	$	1,986	100	%	$	1,581	100	%

~~Loans segregated by risk rating exposure as of September 30, 2021 and December 31, 2020, were as follows (in millions):~~

September 30, 2021
Amortized Cost by Origination Year
2021 2020 2019 2018 2017 Prior Total
Residential mortgages
Current (less than 30 days past due) $ 623 $ 310 $ 334 $ 56 $ 36 $ 19 $ 1,378
30-89 days past due 10 14 39 — 1 2 66
Over 90 days past due — 29 48 3 — — 80
Total residential mortgages $ 633 $ 353 $ 421 $ 59 $ 37 $ 21 $ 1,524
Commercial mortgages
Current (less than 30 days past due) $ 1,111 $ 543 $ — $ 6 $ — $ 330 $ 1,990
30-89 days past due — — — — — — —
Over 90 days past due — — — — — — —
Total commercial mortgages $ 1,111 $ 543 $ — $ 6 $ — $ 330 $ 1,990

~~Table of Contents~~

December 31, 2020
Amortized Cost by Origination Year
2020 2019 2018 2017 2016 Prior Total
Residential mortgages
Current (less than 30 days past due) $ 311 $ 545 $ 68 $ 42 $ 62 $ 2 $ 1,030
30-89 days past due 2 22 2 — — — 26
Over 90 days past due 26 74 3 — — — 103
Total residential mortgages $ 339 $ 641 $ 73 $ 42 $ 62 $ 2 $ 1,159
Commercial mortgages
Current (less than 30 days past due) $ 542 $ — $ 6 $ — $ 11 $ 346 $ 905
30-89 days past due — — — — — — —
Over 90 days past due — — — — — — —
Total commercial mortgage $ 542 $ — $ 6 $ — $ 11 $ 346 $ 905

September 30, 2021
Amortized Cost by Origination Year
2021 2020 2019 2018 2017 Prior Total
Commercial mortgages
LTV
Less than 50% $ 85 $ 229 $ — $ 6 $ — $ 320 $ 640
50% to 60% 184 192 — — — 10 386
60% to 75% 842 122 — — — — 964
Total commercial mortgages $ 1,111 $ 543 $ — $ 6 $ — $ 330 $ 1,990
Commercial mortgages
DSCR
Greater than 1.25x $ 1,079 $ 417 $ — $ 4 $ — $ 290 $ 1,790
1.00x - 1.25x — — — 2 — 31 33
Less than 1.00x 32 126 — — — 9 167
Total commercial mortgages $ 1,111 $ 543 $ — $ 6 $ — $ 330 $ 1,990

December 31, 2020
Amortized Cost by Origination Year
2020 2019 2018 2017 2016 Prior Total
Commercial mortgages
LTV
Less than 50% $ 228 $ — $ 6 $ — $ — $ 303 $ 537
50% to 60% 192 — — — 11 43 246
60% to 75% 122 — — — — — 122
Total commercial mortgages $ 542 $ — $ 6 $ — $ 11 $ 346 $ 905
Commercial mortgages
DSCR
Greater than 1.25x $ 542 $ — $ 6 $ — $ 11 $ 319 $ 878
1.00x - 1.25x — — — — — 27 27
Less than 1.00x — — — — — — —
Total commercial mortgages $ 542 $ — $ 6 $ — $ 11 $ 346 $ 905

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Loans segregated by risk rating exposure as of March 31, 2022 and December 31, 2021, were as follows (in millions):


	March 31, 2022

	Amortized Cost by Origination Year
	2022		2021		2020		2019		2018		Prior		Total
Residential mortgages
Current (less than 30 days past due)	$	377	$	916	$	264	$	276	$	38	$	48	$	1,919
30-89 days past due	—		10		6		12		—		—		28
Over 90 days past due	—		1		15		45		2		—		63
Total residential mortgages	$	377	$	927	$	285	$	333	$	40	$	48	$	2,010
Commercial mortgages
Current (less than 30 days past due)	$	89	$	1,301	$	543	$	—	$	—	$	295	$	2,228
30-89 days past due	—		—		—		—		—		9		9
Over 90 days past due	—		—		—		—		—		—		—
Total commercial mortgages	$	89	$	1,301	$	543	$	—	$	—	$	304	$	2,237


	December 31, 2021

	Amortized Cost by Origination Year
	2021		2020		2019		2018		2017		Prior		Total
Residential mortgages
Current (less than 30 days past due)	$	795	$	293	$	323	$	50	$	36	$	21	$	1,518
30-89 days past due	5		4		6		1		—		—		16
Over 90 days past due	1		23		46		2		—		—		72
Total residential mortgages	$	801	$	320	$	375	$	53	$	36	$	21	$	1,606
Commercial mortgages
Current (less than 30 days past due)	$	1,301	$	543	$	—	$	6	$	—	$	324	$	2,174
30-89 days past due	—		—		—		—		—		—		—
Over 90 days past due	—		—		—		—		—		—		—
Total commercial mortgage	$	1,301	$	543	$	—	$	6	$	—	$	324	$	2,174


	March 31, 2022

	Amortized Cost by Origination Year
	2022		2021		2020		2019		2018		Prior		Total
Commercial mortgages
LTV
Less than 50%	$	4	$	120	$	229	$	—	$	—	$	285	$	638
50% to 60%	43		267		192		—		—		10		512
60% to 75%	42		914		122		—		—		—		1,078
75% to 85%	—		—		—		—		—		9		9
Total commercial mortgages	$	89	$	1,301	$	543	$	—	$	—	$	304	$	2,237
Commercial mortgages
DSCR
Greater than 1.25x	$	89	$	1,301	$	543	$	—	$	—	$	265	$	2,198
1.00x - 1.25x	—		—		—		—		—		30		30
Less than 1.00x	—		—		—		—		—		9		9
Total commercial mortgages	$	89	$	1,301	$	543	$	—	$	—	$	304	$	2,237

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	December 31, 2021

	Amortized Cost by Origination Year
	2021		2020		2019		2018		2017		Prior		Total
Commercial mortgages
LTV
Less than 50%	$	120	$	229	$	—	$	6	$	—	$	313	$	668
50% to 60%	267		192		—		—		—		11		470
60% to 75%	914		122		—		—		—		—		1,036
Total commercial mortgages	$	1,301	$	543	$	—	$	6	$	—	$	324	$	2,174
Commercial mortgages
DSCR
Greater than 1.25x	$	1,301	$	543	$	—	$	4	$	—	$	284	$	2,132
1.00x - 1.25x	—		—		—		2		—		31		33
Less than 1.00x	—		—		—		—		—		9		9
Total commercial mortgages	$	1,301	$	543	$	—	$	6	$	—	$	324	$	2,174

Non-accrual loans by amortized cost as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, were as ~~follows:~~follows (in millions):


Amortized cost of loans on non-accrual	Amortized cost of loans on non-accrual	September 30, 2021		December 31, 2020		Amortized cost of loans on non-accrual	March 31, 2022		December 31, 2021
Residential mortgage:	Residential mortgage:	$	80	$	99	Residential mortgage:	$	63	$	72
Commercial mortgage:	Commercial mortgage:	—		—		Commercial mortgage:	—		—
Total non-accrual loans	Total non-accrual loans	$	80	$	99	Total non-accrual loans	$	63	$	72

Immaterial interest income was recognized on non-accrual financing receivables for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021.

It is our policy to cease to accrue interest on loans that are over 90 days delinquent. For loans less than 90 days delinquent, interest is accrued unless it is determined that the accrued interest is not collectible. If a loan becomes over 90 days delinquent, it is our general policy to initiate foreclosure proceedings unless a workout arrangement to bring the loan current is in place. As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, we had ~~$80~~$63 million and ~~$103~~$72 million, respectively, of mortgage loans that were over 90 days past due, of which ~~$48~~$39 million ~~and $24 million, respectively, were~~was in the process of ~~foreclosure.~~foreclosure for both periods. We will continue to evaluate these policies with regard to the economic challenges for mortgage debtors related to COVID-19. Our ability to initiate foreclosure proceedings may be limited by legislation passed and executive orders issued in response to COVID-19.

Allowance for Expected Credit Loss ~~for Residential Mortgages~~

We estimate expected credit losses for our residential mortgage loan portfolio using a probability of default/loss given default model. Significant inputs to this model include the loans' current performance, underlying collateral type, location, contractual life, LTV, and Debt to Income or FICO. The model projects losses using a two year reasonable and supportable forecast and then reverts over a three year period to market-wide historical loss experience. Changes in our allowance for expected credit losses on mortgage loans are recognized in Recognized gains and losses, net in the accompanying unaudited Condensed Consolidated Statements of Earnings.

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The allowances for our mortgage loan portfolio is summarized as ~~follows:~~follows (in millions):


		Three months ended September 30, 2021						Nine months ended September 30, 2021							Three months ended March 31, 2022

		Residential Mortgage		Commercial Mortgage		Total		Residential Mortgage		Commercial Mortgage		Total			Residential Mortgage		Commercial Mortgage		Total
Beginning Balance	Beginning Balance	$	28	$	6	$	34	37		2		39		Beginning Balance	$	25	$	6	$	31
Provision for loan losses	Provision for loan losses	(1)		—		(1)		$	(10)	$	4	$	(6)	Provision for loan losses	1		—		1

Ending Balance	Ending Balance	$	27	$	6	$	33	$	27	$	6	$	33	Ending Balance	$	26	$	6	$	32


		Three months ended September 30, 2020						Four months ended September 30, 2020							Three months ended March 31, 2021

		Residential Mortgage		Commercial Mortgage		Total		Residential Mortgage		Commercial Mortgage		Total			Residential Mortgage		Commercial Mortgage		Total
Beginning Balance	Beginning Balance	$	26	$	1	$	27	—		—		—		Beginning Balance	$	37	$	2	$	39
Provision for loan losses	Provision for loan losses	7		1		8		$	26	$	2	$	28	Provision for loan losses	(6)		3		(3)
For initial credit losses on purchased loans accounted for as PCD financial assets		—		—		—		7		—		7

Ending Balance	Ending Balance	$	33	$	2	$	35	$	33	$	2	$	35	Ending Balance	$	31	$	5	$	36

An allowance for expected credit loss is not measured on accrued interest income for commercial mortgage loans as we have a process to write-off interest on loans that enter into non-accrual status (over 90 days past due). Allowances for expected credit losses are measured on accrued interest income for residential mortgage loans and were immaterial as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021.

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Interest and Investment Income

The major sources of Interest and investment income reported on the accompanying unaudited Condensed Consolidated Statements of Earnings were as follows (in millions):


		Three months ended				Nine months ended					Three months ended
		September 30, 2021		September 30, 2020		September 30, 2021		September 30, 2020			March 31, 2022		March 31, 2021
Fixed maturity securities, available-for-sale	Fixed maturity securities, available-for-sale	$	313	$	286	$	944	$	419	Fixed maturity securities, available-for-sale	$	332	$	307
Equity securities	Equity securities	6		5		16		14		Equity securities	8		5
Preferred securities	Preferred securities	13		15		45		40		Preferred securities	15		14
Mortgage loans	Mortgage loans	34		24		90		31		Mortgage loans	39		23

Invested cash and short-term investments	Invested cash and short-term investments	4		—		5		8		Invested cash and short-term investments	5		—

Limited partnerships	Limited partnerships	168		25		412		25		Limited partnerships	113		80
Tax deferred property exchange income	Tax deferred property exchange income	4		5		13		28		Tax deferred property exchange income	3		4
Other investments	Other investments	9		7		24		19		Other investments	9		8
Gross investment income	Gross investment income	551		367		1,549		584		Gross investment income	524		441
Investment expense	Investment expense	(43)		(31)		(125)		(43)		Investment expense	(46)		(39)
Interest and investment income	Interest and investment income	$	508	$	336	$	1,424	$	541	Interest and investment income	$	478	$	402

Recognized Gains and Losses, net

Details underlying Recognized gains and losses, net reported on the accompanying unaudited Condensed Consolidated Statements of Earnings were as follows (in millions):


		Three months ended				Nine months ended					Three months ended
		September 30, 2021		September 30, 2020		September 30, 2021		September 30, 2020			March 31, 2022		March 31, 2021
Net realized gains on fixed maturity available-for-sale securities		$	22	$	20	$	75	$	36
Net realized (losses) gains on fixed maturity available-for-sale securities										Net realized (losses) gains on fixed maturity available-for-sale securities	$	(36)	$	40
Net realized/unrealized losses on equity securities ~~(2)~~(1)	Net realized/unrealized losses on equity securities ~~(2)~~(1)	(193)		(6)		(281)		(63)		Net realized/unrealized losses on equity securities ~~(2)~~(1)	(148)		(46)
Net realized/unrealized (losses) gains on preferred securities (3)		(4)		46		2		(28)
Realized gains (losses) on other invested assets		—		(10)		8		(23)
Net realized/unrealized losses on preferred securities (2)										Net realized/unrealized losses on preferred securities (2)	(91)		(10)
Realized losses on other invested assets										Realized losses on other invested assets	(1)		(3)
Change in allowance for expected credit losses	Change in allowance for expected credit losses	1		(11)		7		(35)		Change in allowance for expected credit losses	(4)		10
Derivatives and embedded derivatives:	Derivatives and embedded derivatives:									Derivatives and embedded derivatives:
Realized gains on certain derivative instruments	Realized gains on certain derivative instruments	138		30		318		39		Realized gains on certain derivative instruments	50		60
Unrealized (losses) gains on certain derivative instruments		(141)		16		(34)		21
Unrealized losses on certain derivative instruments										Unrealized losses on certain derivative instruments	(358)		(35)
Change in fair value of reinsurance related embedded derivatives ~~(1)~~(3)	Change in fair value of reinsurance related embedded derivatives ~~(1)~~(3)	23		(14)		23		(35)		Change in fair value of reinsurance related embedded derivatives ~~(1)~~(3)	122		27
Change in fair value of other derivatives and embedded derivatives	Change in fair value of other derivatives and embedded derivatives	—		2		3		3		Change in fair value of other derivatives and embedded derivatives	(3)		—
Realized gains on derivatives and embedded derivatives		20		34		310		28
Realized gains (losses) on derivatives and embedded derivatives										Realized gains (losses) on derivatives and embedded derivatives	(189)		52
Recognized gains and losses, net	Recognized gains and losses, net	$	(154)	$	73	$	121	$	(85)	Recognized gains and losses, net	$	(469)	$	43

(1) Includes net valuation losses of $166 million and and $46 million for the three months ended March 31, 2022 and 2021, respectively.

(2) Includes net valuation losses of $90 million and $3 million for the three months ended March 21, 2022 and 2021, respectively.

(3) Change in fair value of reinsurance related embedded derivatives is due to ~~held for sale unaffiliated third party business under the fair value option election, and~~ activity related to the ~~FGL Insurance~~reinsurance treaties with Kubera (novated from Kubera to Sommerset effective October 31, 2021) and ~~Kubera reinsurance treaty.~~

(2) Includes net valuation (losses) gains of $(194) million and less than $1 million for the three months ended September 30, 2021 and 2020, respectively, and net valuation losses of $(285) million and $56 million for the nine months ended September 30, 2021 and 2020, respectively.

(3) Includes net valuation (losses) gains of $(1) million and $18 million for the three months ended September 30, 2021 and 2020, respectively, and net valuation gains of $4 million and $(55) million for the nine months ended September 30, 2021 and 2020, respectively.

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Aspida Re.

The proceeds from the sale of fixed-maturity ~~available for-sale-securities~~securities and the gross gains and losses associated with those transactions were as follows (in millions):


		Three months ended				Nine months ended					Three months ended
		September 30, 2021		September 30, 2020		September 30, 2021		September 30, 2020			March 31, 2022		March 31, 2021
Proceeds	Proceeds	$	1,816	$	493	$	2,685	$	1,007	Proceeds	$	1,032	$	424
Gross gains	Gross gains	30		24		98		53		Gross gains	3		32
Gross losses	Gross losses	(8)		(5)		(24)		(12)		Gross losses	(37)		(8)

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Unconsolidated Variable Interest Entities

We own investments in VIEs that are not consolidated within our financial ~~statements, and 1 investment in a~~statements. A VIE is an entity that ~~is consolidated within our financial statements. VIEs do~~does not have sufficient equity to finance ~~their~~its own activities without additional financial support, ~~and certain of its~~where investors lack certain characteristics of a controlling financial ~~interest.~~interest, or where the entity is structured with non-substantive voting rights. VIEs are consolidated by their ‘primary beneficiary’, a designation given to an entity that receives both the benefits from the VIE as well as the substantive power to make its key economic decisions. While we participate in the benefits from VIEs in which we invest, but do not consolidate, as the substantive power to make the key economic decisions for each respective VIE resides with entities not under our common control. It is for this reason that ~~the~~ we are not considered the primary beneficiary for the VIE investments that are not consolidated.

We invest in various limited partnerships ~~which may be VIEs,~~and limited liability companies primarily as a passive investor. These investments are primarily in credit funds with a bias towards current income, real assets, or private equity. Limited partnership and limited liability company interests are accounted for under the equity method and are included in Investments in unconsolidated affiliates on our unaudited Condensed Consolidated Balance Sheets. In addition, we invest in structured investments which may be VIEs, but for which we are not the primary beneficiary. These structured investments typically invest in fixed income investments and are managed by third parties and include asset-backed securities, commercial mortgage-backed securities and residential mortgage-backed securities included in fixed maturity securities available for sale on our unaudited Condensed Consolidated Balance Sheets.

Our maximum exposure to loss with respect to these VIEs is limited to the investment carrying amounts reported in our unaudited Condensed Consolidated Balance Sheets for limited partnerships and the amortized costs of our fixed maturity securities, in addition to any required unfunded commitments (also refer to Note F - Commitments and ~~Contingencies)~~Contingencies).

The following table summarizes the carrying value and the maximum loss exposure of our unconsolidated VIEs as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021.


		September 30, 2021				December 31, 2020					March 31, 2022				December 31, 2021
		Carrying Value		Maximum Loss Exposure		Carrying Value		Maximum Loss Exposure			Carrying Value		Maximum Loss Exposure		Carrying Value		Maximum Loss Exposure
Investment in limited partnerships	Investment in limited partnerships	$	2,022	$	2,950	$	1,156	$	1,550	Investment in limited partnerships	$	2,675	$	3,751	$	2,350	$	3,496
Fixed maturity securities	Fixed maturity securities	11,928		12,209		9,873		9,513		Fixed maturity securities	12,849		13,591		12,382		12,802
Total unconsolidated VIE investments	Total unconsolidated VIE investments	$	13,950	$	15,159	$	11,029	$	11,063	Total unconsolidated VIE investments	$	15,524	$	17,342	$	14,732	$	16,298

Investment ~~with Related Party~~in Cannae Holdings, Inc. ("Cannae")

Included in equity securities as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 are 4,775,598 and 5,775,598 ~~and 5,706,134,~~shares, respectively, ~~shares~~ of Cannae ~~Holdings, Inc. ("Cannae")~~ common stock (NYSE: CNNE). The fair value of ~~our related party~~this investment based on quoted market prices is ~~$180~~$114 million and ~~$253~~$203 million as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively. During the three months ended March 31, 2022, we sold 1 million shares of CNNE common stock back to Cannae for approximately $24 million in the aggregate. In order to maintain the tax-free treatment of the November 17, 2017 split-off of Cannae from us, we are obligated to dispose of our remaining shares of CNNE common stock by November 17, 2022.

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Note E — Derivative Financial Instruments

The carrying amounts of derivative instruments, including derivative instruments embedded in ~~FIA~~FIA/IUL contracts, and reinsurance ~~contracts, as of September 30, 2021 and December 31, 2020~~ is as follows (in millions):


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Assets:	Assets:					Assets:
Derivative investments:	Derivative investments:					Derivative investments:
Call options	Call options	$	580	$	548	Call options	$	487	$	816
Futures contracts		—		—
Foreign currency forward		1		—

Other long-term investments:	Other long-term investments:					Other long-term investments:
Other embedded derivatives	Other embedded derivatives	30		27		Other embedded derivatives	30		33
Prepaid expenses and other assets:						Prepaid expenses and other assets:
Reinsurance related embedded derivatives						Reinsurance related embedded derivatives	50		—
							$	567	$	849

		$	611	$	575


Liabilities:	Liabilities:					Liabilities:
Contractholder funds:	Contractholder funds:					Contractholder funds:
FIA embedded derivative		$	3,439	$	3,404
FIA/ IUL embedded derivatives						FIA/ IUL embedded derivatives	$	3,395	$	3,883

Accounts payable and accrued liabilities:	Accounts payable and accrued liabilities:					Accounts payable and accrued liabilities:

Reinsurance related embedded derivative		84		101
Reinsurance related embedded derivatives						Reinsurance related embedded derivatives	1		73

		$	3,523	$	3,505		$	3,396	$	3,956

The change in fair value of derivative instruments included in the accompanying unaudited Condensed Consolidated Statements of Earnings is as follows (in millions):


		Three Months Ended				Nine Months Ended		Four Months Ended			Three Months Ended
		September 30, 2021		September 30, 2020		September 30, 2021		September 30, 2020			March 31, 2022		March 31, 2021
Net investment gains (losses):	Net investment gains (losses):									Net investment gains (losses):
Call options	Call options	$	(6)	$	43	$	273	$	55	Call options	$	(314)	$	22
Futures contracts	Futures contracts	—		7		4		9		Futures contracts	3		—
Foreign currency forward		3		(4)		7		(4)
Foreign currency forwards										Foreign currency forwards	3		4
Other derivatives and embedded derivatives	Other derivatives and embedded derivatives	(1)		2		2		3		Other derivatives and embedded derivatives	(3)		—
Reinsurance related embedded derivatives	Reinsurance related embedded derivatives	23		(14)		23		(35)		Reinsurance related embedded derivatives	122		27
Total net investment gains (losses)	Total net investment gains (losses)	$	19	$	34	$	309	$	28	Total net investment gains (losses)	$	(189)	$	53

Benefits and other changes in policy reserves:	Benefits and other changes in policy reserves:									Benefits and other changes in policy reserves:
FIA embedded derivatives		$	(320)	$	209	$	35	$	309
FIA/ IUL embedded derivatives										FIA/ IUL embedded derivatives	$	(488)	$	(111)

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Additional Disclosures

~~FIA~~FIA/IUL Embedded Derivative and Call Options and Futures

We have FIA ~~Contracts~~and IUL contracts that permit the holder to elect an interest rate return or an equity index linked component, where interest credited to the contracts is linked to the performance of various equity indices, primarily the S&P 500 Index. This feature represents an embedded derivative under GAAP. The ~~FIA~~FIA/IUL embedded ~~derivative is~~derivatives are valued at fair value and included in the liability for contractholder funds in the accompanying unaudited Condensed Consolidated Balance Sheets with changes in fair value included as a component of Benefits and other changes in policy reserves in the unaudited Condensed Consolidated Statements of Earnings. See a description of the fair value methodology used in Note C Fair Value of Financial Instruments. ~~Also refer to Managements Estimates in Note A~~ ~~Basis of Financial Statements~~ regarding the implementation of a new actuarial valuation system and assumption updates during the three-months ended September 30, 2021. The system implementation and assumption review process included refinements in the calculation of the fair value of the embedded derivative component of our fixed index annuities.

We purchase derivatives consisting of a combination of call options and futures contracts (specifically for FIA contracts) on the applicable market indices to fund the index credits due to ~~FIA~~FIA/IUL contractholders. The call options are one, two, three, and five year options purchased to match the funding requirements of the underlying policies. On the respective anniversary dates of the index policies, the index used to compute the interest credit is reset and we purchase new call options to fund the next index credit. We manage the cost of these purchases through the terms of our ~~FIA~~FIA/IUL contracts, which permit us to change caps, spreads or participation rates, subject to guaranteed minimums, on each contract’s anniversary date. The change in the fair value of the call options and futures contracts is generally designed to offset the portion of the change in the fair value of the ~~FIA~~FIA/IUL embedded ~~derivative~~derivatives related to index performance through the current credit period. The call options and futures contracts are marked to fair value with the change in fair value included as a component of Recognized gains and losses, net. The change in fair value of the call options and futures contracts includes the gains and losses recognized at the expiration of the instrument term or upon early termination and the changes in fair value of open positions.

Other market exposures are hedged periodically depending on market conditions and our risk tolerance. Our ~~FIA~~FIA/IUL hedging strategy economically hedges the equity returns and exposes us to the risk that unhedged market exposures result in divergence between changes in the fair value of the liabilities and the hedging assets. We use a variety of techniques, including direct estimation of market sensitivities, to monitor this risk daily. We intend to continue to adjust the hedging strategy as market conditions and our risk tolerance changes.

Credit Risk

We are exposed to credit loss in the event of non-performance by our counterparties on the call options and reflect assumptions regarding this non-performance risk in the fair value of the call options. The non-performance risk is the net counterparty exposure based on the fair value of the open contracts less collateral held. We maintain a policy of requiring all derivative contracts to be governed by an International Swaps and Derivatives Association (“ISDA”) Master Agreement.

Information regarding our exposure to credit loss on the call options we hold ~~as of September 30, 2021 and December 31, 2020,~~ is presented in the following table (in millions):


			September 30, 2021										March 31, 2022
Counterparty	Counterparty	Credit Rating (Fitch/Moody's/S&P) (1)	Notional Amount		Fair Value		Collateral		Net Credit Risk		Counterparty	Credit Rating (Fitch/Moody's/S&P) (1)	Notional Amount		Fair Value		Collateral		Net Credit Risk
Merrill Lynch	Merrill Lynch	AA/*/A+	$	2,180	$	67	$	27	$	40	Merrill Lynch	AA/*/A+	$	3,745	$	79	$	39	$	40

Morgan Stanley	Morgan Stanley	*/Aa3/A+	2,051		61		67		—		Morgan Stanley	*/Aa3/A+	1,679		14		17		—
Barclay's Bank	Barclay's Bank	A+/A1/A	5,508		154		165		—		Barclay's Bank	A+/A1/A	5,324		161		166		—
Canadian Imperial Bank of Commerce	Canadian Imperial Bank of Commerce	AA/Aa2/A+	2,499		87		94		—		Canadian Imperial Bank of Commerce	AA/Aa2/A+	3,178		84		93		—
Wells Fargo	Wells Fargo	A+/A1/BBB+	2,575		87		90		—		Wells Fargo	A+/A1/BBB+	2,535		73		77		—
Goldman Sachs	Goldman Sachs	A/A2/BBB+	383		11		13		—		Goldman Sachs	A/A2/BBB+	410		11		11		—
Credit Suisse	Credit Suisse	A/A1/A+	2,184		78		89		—		Credit Suisse	A/A1/A+	1,289		16		16		—
Truist	Truist	A+/A2/A	1,135		35		37		—		Truist	A+/A2/A	1,880		49		53		—
Total	Total		$	18,515	$	580	$	582	$	40	Total		$	20,040	$	487	$	472	$	40

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			December 31, 2020										December 31, 2021
Counterparty	Counterparty	Credit Rating (Fitch/Moody's/S&P) (1)	Notional Amount		Fair Value		Collateral		Net Credit Risk		Counterparty	Credit Rating (Fitch/Moody's/S&P) (1)	Notional Amount		Fair Value		Collateral		Net Credit Risk
Merrill Lynch	Merrill Lynch	AA-/*/A+	$	1,932	$	75	$	32	$	43	Merrill Lynch	AA/*/A+	$	3,307	$	128	$	86	$	42

Morgan Stanley	Morgan Stanley	A/A2/BBB+	1,503		40		41		—		Morgan Stanley	*/Aa3/A+	2,184		86		92		—
Barclay's Bank	Barclay's Bank	A+/A1/A	4,639		180		169		11		Barclay's Bank	A+/A1/A	5,197		231		233		—
Canadian Imperial Bank of Commerce	Canadian Imperial Bank of Commerce	AA/Aa2/A+	2,276		86		85		1		Canadian Imperial Bank of Commerce	AA/Aa2/A+	2,936		147		151		—
Wells Fargo	Wells Fargo	A+/A2/BBB+	2,900		106		105		1		Wells Fargo	A+/A1/BBB+	2,445		89		90		—
Goldman Sachs	Goldman Sachs	A/A3/BBB+	634		15		15		—		Goldman Sachs	A/A2/BBB+	307		10		10		—
Credit Suisse	Credit Suisse	A/Aa3/A+	1,373		27		25		2		Credit Suisse	A/A1/A+	1,485		74		75		—
Truist	Truist	A+/A2/A	652		19		19		—		Truist	A+/A2/A	1,543		51		53		—
Total	Total		$	15,909	$	548	$	491	$	58	Total		$	19,404	$	816	$	790	$	42

(1) An * represents credit ratings that were not available.

Collateral Agreements

We are required to maintain minimum ratings as a matter of routine practice as part of our over-the-counter derivative agreements on ISDA forms. Under some ISDA agreements, we have agreed to maintain certain financial strength ratings. A downgrade below these levels provides the counterparty under the agreement the right to terminate the open option contracts between the parties, at which time any amounts payable by us or the counterparty would be dependent on the market value of the underlying option contracts. Our current rating does not allow any counterparty the right to terminate ISDA agreements. In certain transactions, both us and the counterparty have entered into a collateral support agreement requiring either party to post collateral when the net exposures exceed pre-determined thresholds. For all counterparties, except Merrill Lynch, this threshold is set to zero. As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020, respectively,~~2021 counterparties posted ~~$582~~$472 million and ~~$491~~$790 million, respectively, of collateral of which ~~$429~~$364 million and ~~$415~~$576 million, respectively, is included in cash and cash equivalents with an associated payable for this collateral included in accounts payable and accrued liabilities on the unaudited Condensed Consolidated Balance Sheet. Accordingly, the maximum amount of loss due to credit risk that we would incur if parties to the call options failed completely to perform according to the terms of the contracts was $40 million at ~~September 30, 2021~~March 31, 2022 and ~~$58~~$42 million at December 31, ~~2020.~~2021.

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 reinvest derivative cash collateral to reduce the interest cost. Cash collateral is invested in overnight investment sweep products which are included in cash and cash equivalents in the accompanying unaudited Condensed Consolidated Balance Sheets.

We held ~~354~~309 and ~~384~~329 futures contracts at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively. The fair value of the futures contracts represents the cumulative unsettled variation margin (open trade equity, net of cash settlements). We provide cash collateral to the counterparties for the initial and variation margin on the futures contracts which is included in cash and cash equivalents in the accompanying unaudited Condensed Consolidated Balance Sheets. The amount of cash collateral held by the counterparties for such contracts was $3 million ~~and $4 million~~ at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020, respectively.~~2021.

Reinsurance Related Embedded Derivatives

F&G entered into a reinsurance agreement with Kubera effective December 31, 2018, to cede certain multi-year guaranteed annuity ("MYGA") and deferred annuity business 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 creates an obligation for ~~FGL Insurance~~F&G to pay ~~Kubera~~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 swap is based on the change in fair value of the

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underlying assets held in the funds withheld portfolio. Investment results for the assets that support the

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coinsurance with funds withheld reinsurance arrangements, including gains and losses from sales, were passed directly to the reinsurers pursuant to contractual terms of the reinsurance arrangements. The reinsurance related embedded derivatives are reported in prepaid expenses and other assets if in a net gain position, or accounts payable and accrued liabilities, if in a net loss position, on the unaudited Condensed Consolidated Balance Sheets and the related gains or losses are reported in Recognized gains and losses, net on the unaudited Condensed Consolidated Statements of Earnings.

Note F — Commitments and Contingencies

Legal and Regulatory Contingencies

In the ordinary course of business, we are involved in various pending and threatened litigation matters related to our operations, some of which include claims for punitive or exemplary damages. With respect to our title insurance operations, this customary litigation includes but is not limited to a wide variety of cases arising out of or related to title and escrow claims, for which we make provisions through our loss reserves. See Note B Summary of Reserve for Title Claim Losses for further discussion. Additionally, like other companies, our ordinary course litigation includes a number of class action and purported class action lawsuits, which make allegations related to aspects of our operations. We believe that no actions, other than the matters discussed below, if any, depart from customary litigation incidental to our business.

We review lawsuits and other legal and regulatory matters (collectively “legal proceedings”) on an ongoing basis when making accrual and disclosure decisions. When assessing reasonably possible and probable outcomes, management bases its decision on its assessment of the ultimate outcome assuming all appeals have been exhausted. For legal proceedings in which it has been determined that a loss is both probable and reasonably estimable, a liability based on known facts and ~~which~~that represents our best estimate has been recorded. Our accrual for legal and regulatory matters was ~~$12~~$15 million and ~~$13~~$12 million as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively. None of the amounts we have currently recorded are considered to be material to our financial condition individually or in the aggregate. Actual losses may materially differ from the amounts recorded and the ultimate outcome of our pending legal proceedings is generally not yet determinable. While some of these matters could be material to our operating results or cash flows for any particular period if an unfavorable outcome results, at present we do not believe that the ultimate resolution of currently pending legal proceedings, either individually or in the aggregate, will have a material adverse effect on our financial condition.

NaN lawsuits have been filed related to FNF’s acquisition of F&G. On August 4, 2020, a stockholder derivative lawsuit styled, City of Miami General Employees’ and Sanitation Employees’ Retirement Trust v. Fidelity National Financial, et al., was filed in the Court of Chancery of the State of Delaware against the Company, its Board of Directors and others alleging breach of fiduciary duties as directors and officers relating to FNF’s acquisition of F&G. ~~Our~~The Company's Board of Directors (“Board”) ~~has~~ designated a Special Litigation Committee (the “SLC”) consisting of 3 of the Board’s Directors, and has authorized the SLC, among other things, to investigate and evaluate the claims and allegations asserted in the lawsuit. The Board ~~has also given~~gave the SLC the sole authority and power to consider and determine whether or not prosecution of the claims asserted in the lawsuit is in the best interest of the Company and ~~our~~its shareholders, and what action we should take with respect to the lawsuit. ~~The~~On January 24, 2022, the SLC, acting on behalf of FNF, and the other parties ~~have agreed~~ to ~~stay~~the lawsuit reached an agreement in principle to settle the action ~~until November 24, 2021,~~subject to ~~allow sufficient time~~various terms and conditions. On April 1, 2022, the parties entered into a definitive settlement agreement, which was filed with the court. The settlement has been presented to the court for ~~the SLC~~approval, with a hearing scheduled for June 21, 2022, and if approved, is expected to ~~investigate the allegations and provide its evaluation.~~be finalized shortly thereafter.

On August 17, 2020, a lawsuit styled, In the Matter of FGL Holdings, was filed in the Grand Court of the Cayman Islands where dissenting shareholders, Kingfishers LP, Kingstown 1740 Fund LP, Kingstown Partners II LP, Kingstown Partners Master Ltd., and Ktown LP, have asserted statutory appraisal rights relative to their ownership of 12,000,000 shares of F&G stock in connection with the acquisition. They seek a judicial determination of the fair value of their shares of F&G stock under the law of the Cayman Islands, together with interest. ~~Discovery~~The parties have exchanged expert reports, and the matter is ~~ongoing.~~scheduled for trial during the second quarter of 2022. We do not believe the result in either case will have a material adverse effect on our financial condition.

From time to time we receive inquiries and requests for information from state insurance departments, attorneys general and other regulatory agencies about various matters relating to our business. Sometimes these take the form of civil investigative demands or subpoenas. We cooperate with all such inquiries and we have

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responded to or are currently responding to inquiries from multiple governmental agencies. Also, regulators and courts have been dealing with issues arising from foreclosures and related processes and documentation. Various governmental entities are studying the title insurance product, market, pricing, and business practices, and potential regulatory and legislative changes, which may materially affect our business and operations. From time to time, we are assessed fines for violations of regulations or other matters or enter into settlements with

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such authorities which may require us to pay fines or claims or take other actions. We do not anticipate such fines and settlements, either individually or in the aggregate, will have a material adverse effect on our financial condition.

F&G Commitments

In our F&G segment, we have unfunded investment commitments as of ~~September 30, 2021~~March 31, 2022 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. A summary of unfunded commitments by invested asset class as of ~~September 30, 2021~~March 31, 2022 is included below (in millions):


	~~September 30, 2021~~March 31, 2022
Asset Type
Unconsolidated VIEs:
Limited partnerships	$	~~928~~1,076
Whole loans	~~741~~513
Fixed ~~Maturity~~maturity securities, ABS	~~247~~212
Other fixed maturity securities, AFS	~~105~~101
Commercial mortgage loans	~~109~~40

Other assets	~~111~~146
~~Other invested assets~~Residential mortgage loans	141
Total	$	~~2,255~~2,089

Note G — Dividends

On ~~November 2, 2021,~~May 10, 2022, our Board of Directors declared cash dividends of $0.44 per share, payable on ~~December 31, 2021,~~June 30, 2022, to FNF common shareholders of record as of ~~December 17, 2021.~~June 16, 2022.

Note H — Segment Information

Summarized financial information concerning our reportable segments is shown in the following tables. ~~On June 1, 2020, we completed our acquisition of F&G. As a result, the tables for the nine months ended September 30, 2020 present four months of F&G activity.~~

As of and for the three months ended ~~September 30, 2021:~~March 31, 2022:

Title F&G Corporate and Other Total
(In millions)
Title premiums $ 2,214 $ — $ — $ 2,214
Other revenues 849 431 44 1,324
Revenues from external customers 3,063 431 44 3,538
Interest and investment income, including recognized gains and losses, net (142) 496 — 354
Total revenues 2,921 927 44 3,892
Depreciation and amortization 36 210 6 252
Interest expense — 6 21 27
Earnings (loss) from continuing operations before income taxes and equity in earnings (loss) of unconsolidated affiliates 486 472 (32) 926
Income tax expense (benefit) 126 96 (9) 213
Earnings (loss) from continuing operations before equity in earnings (loss) of unconsolidated affiliates 360 376 (23) 713
Equity in earnings of unconsolidated affiliates 26 — 1 27
Net earnings (loss) from continuing operations $ 386 $ 376 $ (22) $ 740
Assets $ 9,994 $ 46,723 $ 1,789 $ 58,506
Goodwill 2,493 1,756 266 4,515


	Title		F&G		Corporate and Other		Total
	(In millions)
Title premiums	$	1,866	$	—	$	—	$	1,866
Other revenues	665		594		31		1,290
Revenues from external customers	2,531		594		31		3,156
Interest and investment income, including recognized gains and losses, net	(148)		154		3		9
Total revenues	2,383		748		34		3,165
Depreciation and amortization	33		143		6		182
Interest expense	—		8		22		30
Earnings (loss) from continuing operations before income taxes and equity in earnings (loss) of unconsolidated affiliates	249		341		(38)		552
Income tax expense (benefit)	57		105		(7)		155
Earnings (loss) from continuing operations before equity in earnings (loss) of unconsolidated affiliates	192		236		(31)		397
Equity in earnings of unconsolidated affiliates	2		—		—		2
Net earnings (loss) from continuing operations	$	194	$	236	$	(31)	$	399
Assets	$	9,478	$	49,107	$	2,272	$	60,857
Goodwill	2,517		1,756		266		4,539

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As of and for the three months ended ~~September 30, 2020:~~

Title F&G Corporate and Other Total
(In millions)
Title premiums $ 1,714 $ — $ — $ 1,714
Other revenues 742 60 51 853
Revenues from external customers 2,456 60 51 2,567
Interest and investment income, including recognized gains and losses, net 28 382 (1) 409
Total revenues 2,484 442 50 2,976
Depreciation and amortization 39 56 5 100
Interest expense — 7 22 29
Earnings (loss) from continuing operations before income taxes and equity in earnings of unconsolidated affiliates 507 72 (40) 539
Income tax expense (benefit) 129 6 (2) 133
Earnings (loss) from continuing operations before equity in earnings (loss) of unconsolidated affiliates 378 66 (38) 406
Equity in earnings (loss) of unconsolidated affiliates 5 — 2 7
Net earnings (loss) from continuing operations $ 383 $ 66 $ (36) $ 413
Assets $ 9,107 $ 39,716 $ 1,062 $ 49,885
Goodwill 2,461 1,731 266 4,458

~~As of and for the nine months ended September 30,~~March 31, 2021:

Title F&G Corporate and Other Total
(In millions)
Title premiums $ 6,178 $ — $ — $ 6,178
Other revenues 2,433 557 133 3,123
Revenues from external customers 8,611 557 133 9,301
Interest and investment income, including recognized gains and losses, net (175) 1,711 9 1,545
Total revenues 8,436 2,268 142 10,846
Depreciation and amortization 103 419 18 540
Interest expense — 21 62 83
Earnings (loss) from continuing operations before income taxes and equity in earnings (loss) of unconsolidated affiliates 1,569 925 (98) 2,396
Income tax expense (benefit) 389 189 (23) 555
Earnings (loss) from continuing operations before equity in earnings (loss) of unconsolidated affiliates 1,180 736 (75) 1,841
Equity in earnings of unconsolidated affiliates 48 — 6 54
Net earnings (loss) from continuing operations $ 1,228 $ 736 $ (69) $ 1,895
Assets $ 9,994 $ 46,723 $ 1,789 $ 58,506
Goodwill 2,493 1,756 266 4,515

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~~As of and for the nine months ended September 30, 2020:~~

Title F&G Corporate and Other Total
(In millions)
Title premiums $ 4,351 $ — $ — $ 4,351
Other revenues 2,007 80 114 2,201
Revenues from external customers 6,358 80 114 6,552
Interest and investment income, including recognized gains and losses, net (27) 486 (3) 456
Total revenues 6,331 566 111 7,008
Depreciation and amortization 113 59 17 189
Interest expense 1 10 51 62
Earnings (loss) from continuing operations before income taxes and equity in earnings of unconsolidated affiliates 982 14 (142) 854
Income tax expense (benefit) 240 (8) (38) 194
Earnings (loss) from continuing operations before equity in earnings (loss) of unconsolidated affiliates 742 22 (104) 660
Equity in earnings (loss) of unconsolidated affiliates 8 — 1 9
Net earnings (loss) $ 750 $ 22 $ (103) $ 669
Assets $ 9,107 $ 39,716 $ 1,062 $ 49,885
Goodwill 2,461 1,731 266 4,458


	Title		F&G		Corporate and Other		Total
	(In millions)
Title premiums	$	1,804	$	—	$	—	$	1,804
Other revenues	745		64		42		851
Revenues from external customers	2,549		64		42		2,655
Interest and investment income, including recognized gains and losses, net	(30)		475		—		445
Total revenues	2,519		539		42		3,100
Depreciation and amortization	33		144		6		183
Interest expense	—		8		20		28
Earnings (loss) from continuing operations before income taxes and equity in earnings of unconsolidated affiliates	439		356		(38)		757
Income tax expense (benefit)	103		72		(9)		166
Earnings (loss) from continuing operations before equity in earnings (loss) of unconsolidated affiliates	336		284		(29)		591
Equity in earnings (loss) of unconsolidated affiliates	8		—		5		13
Net earnings (loss) from continuing operations	$	344	$	284	$	(24)	$	604
Assets	$	9,389	$	40,614	$	1,486	$	51,489
Goodwill	2,481		1,751		266		4,498

The activities in our segments include the following:

•Title. This segment consists of the operations of our title insurance underwriters and related businesses. This segment provides core title insurance and escrow and other title-related services including ~~trust activities, trustee sales guarantees,~~loan sub-servicing, valuations, default services, and home warranty products. This segment also includes our transaction services business, which includes other title-related services used in the production and management of mortgage loans, including mortgage loans that experience default.

•F&G. This segment primarily consists of the operations of our annuities and life insurance related businesses. This segment issues a broad portfolio of annuity and life products, including deferred annuities (fixed ~~index~~indexed and fixed rate annuities), immediate annuities and indexed universal life ~~insurance,~~insurance. This segment also provides funding agreements and ~~PRT solutions.~~pension risk transfer solutions ("PRT").

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

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Note I — Supplemental Cash Flow Information

The following supplemental cash flow information is provided with respect to certain cash payment and non-cash investing and financing activities.


		Nine months ended September 30,					Three months ended March 31,
		2021		2020			2022		2021
Cash paid for:	Cash paid for:					Cash paid for:
Interest	Interest	$	85	$	47	Interest	$	36	$	29
Income taxes	Income taxes	488		191		Income taxes	9		7
Deferred sales inducements	Deferred sales inducements	65		25		Deferred sales inducements	16		21
Non-cash investing and financing activities:	Non-cash investing and financing activities:					Non-cash investing and financing activities:
Equity financing associated with the acquisition of F&G		$	—	$	609

Change in proceeds of sales of investments available for sale receivable in period	Change in proceeds of sales of investments available for sale receivable in period	(215)		(67)		Change in proceeds of sales of investments available for sale receivable in period	81		(9)
Change in purchases of investments available for sale payable in period	Change in purchases of investments available for sale payable in period	465		93		Change in purchases of investments available for sale payable in period	277		164

Lease liabilities recognized in exchange for lease right-of-use assets	Lease liabilities recognized in exchange for lease right-of-use assets	32		39		Lease liabilities recognized in exchange for lease right-of-use assets	15		5
Remeasurement of lease liabilities	Remeasurement of lease liabilities	65		39		Remeasurement of lease liabilities	15		13

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Note J — Revenue Recognition

Disaggregation of Revenue

Our revenue consists of:


				Three months ended September 30,				Nine months ended September 30,							Three months ended March 31,
				2021		2020		2021		2020					2022		2021
Revenue Stream	Revenue Stream	Income Statement Classification	Segment	Total Revenue								Revenue Stream	Income Statement Classification	Segment	Total Revenue
Revenue from insurance contracts:	Revenue from insurance contracts:			(in millions)								Revenue from insurance contracts:			(in millions)
Direct title insurance premiums	Direct title insurance premiums	Direct title insurance premiums	Title	$	896	$	733	$	2,546	$	1,854	Direct title insurance premiums	Direct title insurance premiums	Title	$	767	$	746
Agency title insurance premiums	Agency title insurance premiums	Agency title insurance premiums	Title	1,318		981		3,632		2,497		Agency title insurance premiums	Agency title insurance premiums	Title	1,099		1,058
Life insurance premiums, insurance and investment product fees, and other	Life insurance premiums, insurance and investment product fees, and other	Escrow, title-related and other fees	F&G	431		60		557		80		Life insurance premiums, insurance and investment product fees, and other	Escrow, title-related and other fees	F&G	594		64
Home warranty	Home warranty	Escrow, title-related and other fees	Title	57		51		144		140		Home warranty	Escrow, title-related and other fees	Title	34		39
Total revenue from insurance contracts	Total revenue from insurance contracts			2,702		1,825		6,879		4,571		Total revenue from insurance contracts			2,494		1,907
Revenue from contracts with customers:	Revenue from contracts with customers:											Revenue from contracts with customers:
Escrow fees	Escrow fees	Escrow, title-related and other fees	Title	359		334		1,057		814		Escrow fees	Escrow, title-related and other fees	Title	265		324
Other title-related fees and income	Other title-related fees and income	Escrow, title-related and other fees	Title	226		189		663		516		Other title-related fees and income	Escrow, title-related and other fees	Title	196		205
ServiceLink, excluding title premiums, escrow fees, and subservicing fees	ServiceLink, excluding title premiums, escrow fees, and subservicing fees	Escrow, title-related and other fees	Title	108		92		295		284		ServiceLink, excluding title premiums, escrow fees, and subservicing fees	Escrow, title-related and other fees	Title	94		90

Real estate technology	Real estate technology	Escrow, title-related and other fees	Corporate and other	37		29		105		81		Real estate technology	Escrow, title-related and other fees	Corporate and other	38		32
Real estate brokerage		Escrow, title-related and other fees	Corporate and other	—		7		—		19

Other	Other	Escrow, title-related and other fees	Corporate and other	7		15		28		14		Other	Escrow, title-related and other fees	Corporate and other	(7)		10
Total revenue from contracts with customers	Total revenue from contracts with customers			737		666		2,148		1,728		Total revenue from contracts with customers			586		661
Other revenue:	Other revenue:											Other revenue:
Loan subservicing revenue	Loan subservicing revenue	Escrow, title-related and other fees	Title	99		76		274		253		Loan subservicing revenue	Escrow, title-related and other fees	Title	76		87
Interest and investment income	Interest and investment income	Interest and investment income	Various	508		336		1,424		541		Interest and investment income	Interest and investment income	Various	478		402
Recognized gains and losses, net	Recognized gains and losses, net	Recognized gains and losses, net	Various	(154)		73		121		(85)		Recognized gains and losses, net	Recognized gains and losses, net	Various	(469)		43
Total revenues	Total revenues	Total revenues		$	3,892	$	2,976	$	10,846	$	7,008	Total revenues	Total revenues		$	3,165	$	3,100

Our Direct title insurance premiums are recognized as revenue at the time of closing of the underlying transaction as the earnings process is then considered complete. Regulation of title insurance rates varies by

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state. Premiums are charged to customers based on rates predetermined in coordination with each states' respective Department of Insurance. Cash associated with such revenue is typically collected at closing of the underlying real estate transaction. Premium revenues from agency title operations are recognized when the underlying title order and transaction closing, if applicable, are complete.

Revenues from our home warranty business are generated from contracts with customers to provide warranty for major home appliances. Substantially all of our home warranty contracts are one year in length and revenue is recognized ratably over the term of the contract.

Escrow fees and Other title-related fees and income in our Title segment are closely related to Direct title insurance premiums and are primarily associated with managing the closing of real estate transactions, including the processing of funds on behalf of the transaction participants, gathering and recording the required closing documents, providing notary and home inspection services, and other real estate or title-related activities. Revenue is primarily recognized upon closing of the underlying real estate transaction or completion of services. Cash associated with such revenue is typically collected at closing.

Revenues from ServiceLink, excluding its title premiums, escrow fees and loan subservicing fees primarily include revenues from real estate appraisal services and foreclosure processing and facilitation services. Revenues from real estate appraisal services are recognized when all appraisal work is complete, a final report is issued to the client and the client is billed. Revenues from foreclosure processing and facilitation services are primarily recognized upon completion of the services and when billing to the client is complete.

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Life insurance premiums in our F&G segment reflect premiums for life-contingent PRT, traditional life insurance products and life-contingent immediate annuity ~~products and life-contingent PRT~~ products which are recognized as revenue when due from the policyholder. We have ceded the majority of our traditional life business to unaffiliated third party reinsurers. While the base contract has been reinsured, we continue to retain the return of premium rider. Insurance and investment product fees and other consist primarily of the cost of insurance ~~fees~~ on IUL policies, ~~UREV~~unearned revenue ("UREV") 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.

Premium and annuity deposit collections for FIA, fixed rate annuities, immediate annuities and PRT without life contingency, and amounts 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 include 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.

Real estate technology revenues are primarily comprised of subscription fees for use of software provided to real estate professionals. Subscriptions are only offered on a month-by-month basis and fees are billed monthly. Revenue is recognized in the month services are provided.

Real estate brokerage revenues are primarily comprised of commission revenues earned in association with the facilitation of real estate transactions and are recognized upon closing of the sale of the underlying real estate transaction.

Loan subservicing revenues are generated by certain subsidiaries of ServiceLink and are associated with the servicing of mortgage loans on behalf of its customers. Revenue is recognized when the underlying work is performed and billed. Loan subservicing revenues are subject to the recognition requirements of ASC Topic 860.

Interest and investment income consists primarily of interest ~~recognized~~payments received on fixed maturity security holdings ~~limited partnership returns~~ and dividends ~~recognized~~received on equity and preferred security holdings ~~net~~along with the investment income of ~~investment expense.~~limited partnerships.

We do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less, primarily related to revenue from our home warranty business, and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed.

Contract Balances

The following table provides information about trade receivables and deferred revenue:


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
		(In millions)					(In millions)
Trade receivables	Trade receivables	$	484	$	404	Trade receivables	$	497	$	524
Deferred revenue (contract liabilities)	Deferred revenue (contract liabilities)	108		117		Deferred revenue (contract liabilities)	231		144

Deferred revenue is recorded primarily for our home warranty contracts. Revenues from home warranty products are recognized over the life of the policy, which is primarily one year. The unrecognized portion is recorded as deferred revenue in accounts payable and other accrued liabilities in the unaudited Condensed Consolidated Balance Sheets. During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and March 31, 2021, we recognized ~~$56~~

$38 million~~Table of Contents~~

~~million~~ and ~~$87~~$41 million of revenue, respectively, which was included in deferred revenue at the beginning of the respective period.

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Note K ~~— Value~~—Value of Business Acquired, Deferred Acquisition Costs and Deferred Sales Inducements

A summary of the changes in the carrying amounts of our VOBA, DAC and DSI intangible assets ~~are~~is as follows (in millions):


		VOBA		DAC		DSI		Total			VOBA		DAC		DSI		Total
Balance at December 31, 2020		$	1,466	$	222	$	36	$	1,724
Balance at January 1, 2022										Balance at January 1, 2022	$	1,185	$	761	$	88	$	2,034

Deferrals	Deferrals	—		427		65		492		Deferrals	—		154		16		170
Amortization	Amortization	(376)		(34)		(26)		(436)		Amortization	(94)		(39)		(11)		(144)
Interest	Interest	23		8		1		32		Interest	7		6		—		13
Unlocking	Unlocking	(1)		1		(1)		(1)		Unlocking	(6)		(1)		2		(5)
Adjustment for net unrealized investment losses (gains)		38		(18)		(1)		19
Purchase price allocation adjustments		61		—		—		61
Balance at September 30, 2021		$	1,211	$	606	$	74	$	1,891
Adjustment for net unrealized investment (gains) losses										Adjustment for net unrealized investment (gains) losses	318		88		21		427

Balance at March 31, 2022										Balance at March 31, 2022	$	1,410	$	969	$	116	$	2,495

		VOBA		DAC		DSI		Total			VOBA		DAC		DSI		Total
Balance at December 31, 2019		$	—	$	—	$	—	$	—
F&G acquisition		1,903		—		—		1,903
Balance at January 1, 2021										Balance at January 1, 2021	$	1,466	$	222	$	36	$	1,724

Deferrals	Deferrals	—		130		25		155		Deferrals	—		133		21		154
Amortization	Amortization	(56)		(3)		(2)		(61)		Amortization	(132)		(8)		(8)		(148)
Interest	Interest	12		1		—		13		Interest	8		2		—		10
Unlocking	Unlocking	(1)		—		—		(1)		Unlocking	1		—		—		1
Adjustment for net unrealized investment (gains) losses	Adjustment for net unrealized investment (gains) losses	(228)		(15)		(4)		(247)		Adjustment for net unrealized investment (gains) losses	132		(5)		—		127
Balance at September 30, 2020		$	1,630	$	113	$	19	$	1,762

Balance at March 31, 2021										Balance at March 31, 2021	$	1,475	$	344	$	49	$	1,868

Annually, typically in the third quarter, we review assumptions associated with the amortization of intangibles. In addition, during the three months ended September 30, 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.

Amortization of VOBA, DAC, and DSI is based on the current and future expected gross margins or profits recognized, including investment gains and losses. The interest accrual rate utilized to calculate the accretion of interest on VOBA ranged from 0% to 4.71%. The adjustment for unrealized net investment losses (gains) represents the amount of VOBA, DAC, and DSI that would have been amortized if such unrealized gains and losses had been recognized. This is referred to as the “shadow adjustments” as the additional amortization is reflected in AOCI rather than the unaudited Condensed Consolidated Statements of Earnings. As of ~~September 30,~~March 31, 2022 and March 31, 2021, ~~and September 30, 2020,~~ the VOBA balances included cumulative adjustments for net unrealized investment gains (losses) of ~~$245~~$(86) million and ~~$228~~$152 million, respectively, the DAC balances included cumulative adjustments for net unrealized investment gains (losses) of ~~$44~~$(49) million and ~~$15~~$30 million, respectively, and the DSI balance included net unrealized investment gains (losses) of $6$(15) million and $4 million, respectively.

~~Table of Contents~~

For the ~~inforce~~in-force liabilities as of ~~September 30, 2021,~~March 31, 2022, the estimated amortization expense for VOBA in future fiscal periods is as follows (in millions):


		Estimated Amortization Expense			Estimated Amortization Expense
Fiscal Year	Fiscal Year			Fiscal Year

2021		$	(17)
2022	2022	40		2022	$	(19)
2023	2023	165		2023	120
2024	2024	159		2024	157
2025	2025	153		2025	150
2026				2026	138

Thereafter	Thereafter	956		Thereafter	778

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Note L — F&G Reinsurance

F&G reinsures portions of its policy risks with other insurance companies. The use of indemnity reinsurance does not discharge an insurer from liability on the insurance ceded. The insurer is required to pay in full the amount of its insurance liability regardless of whether it is entitled to or able to receive payment from the reinsurer. The portion of risks exceeding F&G's retention limit is reinsured. F&G primarily seeks reinsurance coverage in order to limit its exposure to mortality losses and enhance capital management. If the underlying policy being reinsured is an insurance contract, F&G follows reinsurance accounting when there is adequate risk transfer or deposit accounting if there is inadequate risk transfer. If the underlying policy being reinsured is an investment contract, the effects of the agreement are accounted for as a separate investment contract.

The ~~effect~~effects of reinsurance on net premiums earned and net benefits incurred (benefits paid and reserve changes) for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and March 31, 2021 ~~and the three and four months ended September 30, 2020 (following our June 1, 2020 acquisition of F&G)~~ were as follows (in millions):


		Three months ended								Nine months ended				Four months ended					Three months ended		Three months ended
		September 30, 2021				September 30, 2020				September 30, 2021				September 30, 2020						March 31, 2022		March 31, 2021
		Net Premiums Earned		Net Benefits Incurred		Net Premiums Earned		Net Benefits Incurred		Net Premiums Earned		Net Benefits Incurred		Net Premiums Earned		Net Benefits Incurred						Net Premiums Earned		Net Benefits Incurred		Net Premiums Earned		Net Benefits Incurred
Direct	Direct	$	412	$	461	$	48	$	308	$	500	$	1,646	$	65	$	463	Direct				$	567	$	513	$	44	$	293

Ceded	Ceded	(32)		(276)		(36)		(57)		(103)		(912)		(49)		(57)		Ceded				(32)		(305)		(33)		(319)
Net	Net	$	380	$	185	$	12	$	251	$	397	$	734	$	16	$	406	Net				$	535	$	208	$	11	$	(26)

Amounts payable or recoverable for reinsurance on paid and unpaid claims are not subject to periodic or maximum limits. F&G did not write off any significant reinsurance balances during the ~~nine~~three months ended ~~September 30, 2021 or four months ended September 30, 2020.~~March 31, 2022 and March 31, 2021. F&G did not commute any ceded reinsurance treaties during the ~~nine~~three months ended ~~September 30, 2021 or four months ended September 30, 2020.~~March 31, 2022 and March 31, 2021.

Following the adoption of ASC 326, F&G estimates expected credit losses on reinsurance recoverables using a probability of default/loss given default model. Significant inputs to the model include the ~~reinsurers~~reinsurer's credit risk, expected timing of recovery, industry-wide historical default experience, senior unsecured bond recovery rates, and credit enhancement features. As of March 31, 2022 and March 31, 2021, the ~~June 1, 2020 acquisition of F&G, due to purchase accounting adjustments, our~~ expected credit loss reserve was ~~valued at $0. During the three~~$20 million and ~~nine months ended September 30, 2021 and the three and four months ended September 30, 2020,~~$21 million, respectively. There were no changes in the expected credit loss reserve ~~decreased from $21 million to $19 million~~during the three months ended March 31, 2022 and ~~increased from $0 to $22 million, respectively.~~March 31, 2021.

No policies issued by F&G have been reinsured with any foreign company, which is controlled, either directly or indirectly, by a party not primarily engaged in the business of insurance.

F&G has not entered into any reinsurance agreements in which the reinsurer may unilaterally cancel any reinsurance for reasons other than non-payment of premiums or other similar credit issues.

Effective May 1, 2020, F&G entered into an indemnity reinsurance agreement with Canada Life Assurance Company United States Branch, a third party reinsurer, to reinsure FIA policies with guaranteed minimum withdrawal benefits ("GMWB"). In accordance with the terms of this agreement, F&G cedes a quota share percentage of the net retention of guarantee payments in excess of account value for GMWB. Effective January 1, 2021, F&G amended this agreement to include the GMWB rider for its SecureIncome 7 product. The effects of this agreement are not accounted for as reinsurance as it does not satisfy the risk transfer requirements for GAAP, since it is not “reasonably possible” that the reinsurer may realize significant loss from assuming the insurance risk.

On January 15, 2021, F&G executed a Funds Withheld Coinsurance Agreement with ASPIDA Life Re Ltd ("Aspida Re"), a Bermuda reinsurer. In accordance with the terms of this agreement, F&G cedes to the reinsurer, on a fifty percent (50%) funds withheld coinsurance basis, certain multiyear guaranteed annuity business written effective January 1, 2021. The effects of this agreement are accounted for as a separate investment contract.

~~On May~~F&G has an indemnity reinsurance agreement with Hannover Life Reassurance Company of America (Bermuda) Ltd. ("Hannover Re"), a third party reinsurer, to cede a quota share percentage of the net retention of guarantee payments in excess of account value for guaranteed minimum withdrawal benefit ("GMWB") and guaranteed minimum death benefit ("GMDB") guarantees associated with an in-force block of its FIA and fixed deferred annuity contracts. The effects of this agreement are not accounted for as reinsurance as it does not satisfy the risk transfer requirements for GAAP; therefore, deposit accounting is applied. F&G incurred risk charge fees of $5 million during the three months ended March 31, 2022 and March 31, 2021 ~~2 Novation Agreements were executed by~~in relation to this reinsurance agreement.

F&G has a reinsurance agreement with Kubera to cede certain FIA statutory reserves on a coinsurance funds withheld basis, net of applicable existing reinsurance. In accordance with the terms of this agreement, F&G cedes a quota share percentage of FIA policies for certain issue years to Kubera. Effective October 31, 2021, this agreement was amended to increase the ceded reserves from approximately $4 billion to approximately $10 billion. As the policies ceded to Kubera are investment contracts, there is no significant insurance risk present and ~~among Freestone Re Ltd., an exempted company incorporated in~~therefore the Cayman Islands with limited liability (the “New Reinsurer”), Front Street Re (Cayman) Ltd., an exempted company incorporated in the Cayman Islands with limited liability (the “Original Reinsurer”) and FGL Insurance. The effective dates of the agreements are April 1, 2021. As thesereinsurance agreement is accounted for as a separate investment

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~~agreements~~contract. F&G incurred risk charge fees of $4 million and $1 million during the three months ended March 31, 2022 and March 31, 2021, respectively, in relation to this reinsurance agreement.

Effective May 1, 2020, F&G entered into an indemnity reinsurance agreement with Canada Life Assurance Company United States Branch, a third party reinsurer, to reinsure FIA policies with GMWB. In accordance with the terms of this agreement, F&G cedes a quota share percentage of the net retention of guarantee payments in excess of account value for GMWB. This treaty was subsequently amended effective January 1, 2021 and January 1, 2022, and now covers FIA policies with GMWB issued from January 1, 2020 to December 31, 2023. The effects of this agreement are ~~intercompany both before~~not accounted for as reinsurance as it does not satisfy the risk transfer requirements for GAAP; therefore, deposit accounting is applied. F&G incurred risk charge fees of $1 million and ~~after~~$0 million during the ~~novation, they are eliminated~~three months ended March 31, 2022 and March 31, 2021, respectively, in ~~consolidation for GAAP reporting.~~relation to this reinsurance agreement.

Concentration of Reinsurance Risk

F&G has a significant concentration of reinsurance risk with third party reinsurers, Wilton Reassurance Company (“Wilton Re”), ~~Kubera~~Aspida Re, and ~~Aspida Re~~Somerset that could have a material impact on ~~the Company’s~~our financial position in the event that any of these reinsurers ~~fail~~fails to perform ~~their~~its obligations under the various reinsurance treaties. Wilton Re is a wholly-owned subsidiary of Canada Pension Plan Investment Board ("CPPIB"). CPPIB has an AAA issuer credit rating from Standard & Poor's Ratings Services ("S&P") as of ~~September 30, 2021. Kubera is not rated, however, management has attempted to mitigate the risk of non-performance through the funds withheld arrangement. As of September 30, 2021,~~March 31, 2022. Aspida Re has aan A- issuer credit rating from AM Best and a BBBissuer credit rating from Fitch as of March 31, 2022, and the risk of non-performance is further mitigated through the funds withheld arrangement. AsSomerset has an A- issuer credit rating from AM Best and a BBB+ issuer credit rating from S&P as of ~~September 30, 2021,~~March 31, 2022, and the risk of non-performance is further mitigated through the funds withheld arrangement. At March 31, 2022, the net ~~amount~~amounts recoverable from Wilton Re, ~~Kubera, and~~ Aspida Re, ~~was $1,287~~and Somerset were $1,279 million, ~~$789~~$1,103 million, and ~~$717~~$727 million, respectively. ~~The Company monitors~~We monitor both the financial condition of individual reinsurers and risk concentration arising from similar activities and economic characteristics of reinsurers to attempt to reduce the risk of default by such reinsurers. ~~The Company believes~~We believe that all amounts due from Wilton Re, ~~Kubera~~Aspida Re, and ~~Aspida Re~~Somerset for periodic treaty settlements are collectible as of ~~September 30, 2021.~~

On March 6, 2019, Scottish Re (U.S.), Inc. (“SRUS”), a Delaware domestic life and health reinsurer of F&G, was ordered into receivership for purposes of rehabilitation. As of September 30, 2021, the net amount recoverable from SRUS was $30 million. The financial exposure related to these ceded reserves are substantially mitigated via a reinsurance agreement whereby Wilton Re assumes treaty non-performance including credit risk for this business. Wilton Re is currently meeting all conditions related to these assumed obligations.

On July 9, 2019, Pavonia Life Insurance Company of Michigan (“Pavonia”), a Michigan domiciled life, accident, and health insurance company, was placed into rehabilitation. While the court order indicated that Pavonia had a stable financial condition and lack of non-insurance affiliated investments, the Director of the Michigan Department of Insurance and Financial Services (“MDIFS") has concerns relating to Pavonia's parent company. To insulate Pavonia from its parent until a pending acquisition transaction could be consummated, MDIFS placed Pavonia under supervision and rehabilitation. As of September 30, 2021, the net amount recoverable from Pavonia was $76 million. On July 15, 2021, Aspida Holdings Ltd. (“Aspida”) acquired Global Bankers Insurance Group, LLC, the parent company of Pavonia, and is now known as Aspida Financial Services, LLC (“Aspida Financial”). Following the acquisition, Pavonia is no longer in rehabilitation. We believe any financial exposure related to these ceded reserves would be substantially mitigated via a reinsurance agreement whereby Wilton Re assumes treaty non-performance including credit risk for this business.31, 2022.

There have been no other material changes in the reinsurance and the intercompany reinsurance agreements described in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

Note M — F&G Insurance Subsidiary Financial Information and Regulatory Matters

Our U.S. insurance subsidiaries, FGL Insurance, FGL NY Insurance, and Raven Re, file financial statements with state insurance regulatory authorities and the National Association of Insurance Commissioners (“NAIC”) that are prepared in accordance with Statutory Accounting Principles (“SAP”) prescribed or permitted by such authorities, which may vary materially from GAAP. Prescribed SAP includes the Accounting Practices and Procedures Manual of the NAIC as well as state laws, regulations and administrative rules. Permitted SAP encompasses all accounting practices not so prescribed. The principal differences between SAP financial statements and financial statements prepared in accordance with GAAP are that SAP financial statements do not reflect DAC, DSI and VOBA, some bond portfolios may be carried at amortized cost, assets and liabilities are presented net of reinsurance, contractholder liabilities are generally valued using more conservative assumptions and certain assets are non-admitted. Accordingly, SAP operating results and SAP capital and surplus may differ substantially from amounts reported in the GAAP basis financial statements for comparable items.

F&G Cayman Re ~~Ltd., Freestone Re Ltd. (Cayman)~~Ltd and F&G Life Re Ltd (Bermuda) file financial statements with their respective regulators that are based on U.S. GAAP.

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FGL Insurance applies Iowa-prescribed accounting practices that permit Iowa-domiciled insurers to report equity call options used to economically hedge FIA index credits at amortized cost for statutory accounting purposes and to calculate FIA statutory reserves such that index credit returns will be included in the reserve only after crediting to the annuity contract. This resulted in a ~~$39~~$135 million and ~~$144~~$106 million decrease to statutory capital and surplus at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively.

FGL Insurance’s statutory carrying value of Raven Reinsurance Company ("Raven Re") reflects the effect of permitted practices Raven Re received to treat the available amount of a letter of credit as an admitted asset which increased Raven Re’s statutory capital and surplus by $65 million and $85 million at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021, respectively.

Raven Re is also permitted to follow Iowa prescribed statutory accounting practice for its reserves on reinsurance assumed from FGL ~~Insurance which increased (decreased) Raven Re’s statutory capital and surplus by $(1) million at September 30, 2021 and by $5 million at December 31, 2020.~~Insurance. Without such permitted statutory accounting practices, Raven Re’s

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statutory capital and surplus (deficit) ~~would be $30 million as of September 30, 2021 and $(6) million as of December 31, 2020,~~ and its risk-based capital would not fall below the minimum regulatory requirements. The letter of credit facility is collateralized by NAIC 1 rated debt securities. If the permitted practice was revoked, the letter of credit could be replaced by the collateral assets with Nomura’s consent. FGL Insurance’s statutory carrying value of Raven Re was ~~$114~~$95 million and ~~$84~~$115 million at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively.

As of ~~September 30, 2021,~~March 31, 2022, FGL NY Insurance did not follow any prescribed or permitted statutory accounting practices that differ from the NAIC's statutory accounting practices.

The prescribed and permitted statutory accounting practices have no impact on our unaudited Condensed Consolidated Financial Statements which are prepared in accordance with GAAP.

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~~Note N — Acquisitions~~

~~F&G~~

~~On June 1, 2020, we acquired 100% of the outstanding equity of F&G for approximately $2.7 billion.~~

~~The purchase price is as follows (in millions):~~


~~Cash paid for outstanding F&G shares~~	$	~~1,903~~
~~Less: Cash Acquired~~	~~827~~
~~Net cash paid for F&G~~	~~1,076~~
~~Value of FNF share consideration~~	~~806~~
~~Value of outstanding converted equity awards attributed to services already rendered~~	28

~~Total net consideration paid~~	$	~~1,910~~

The acquisition was accounted for as a business combination under FASB Accounting Standards Codification Topic 805, Business Combinations ("Topic 805").The purchase price has been allocated to F&G's assets acquired and liabilities assumed based on our estimates of their fair values as of June 1, 2020. Goodwill has been recorded based on the amount that the purchase price exceeds the fair value of the net assets acquired. Goodwill consists primarily of intangible assets that do not qualify for separate recognition. The goodwill recorded is not expected to be deductible for tax purposes, except for $16 million related to a prior F&G transaction.

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~~The final purchase price allocation is as follows (dollars in millions):~~


	~~Fair Value~~
~~Fixed maturity securities~~	$	~~22,389~~
~~Preferred securities~~	~~876~~
~~Equity securities~~	52
~~Derivative instruments~~	~~313~~
~~Mortgage loans~~	~~1,755~~
~~Investments in unconsolidated affiliates~~	~~1,049~~
~~Other long-term investments~~	~~430~~
~~Short-term investments~~	37

~~Trade and notes receivable~~	1
~~Reinsurance recoverable~~	~~2,998~~

~~Goodwill~~	~~1,756~~
~~Prepaid expenses and other assets~~	~~379~~
~~Lease assets~~	8
~~Other intangible assets~~	~~2,107~~

~~Deferred tax asset~~	~~269~~
~~Assets of discontinued operations~~	~~2,392~~
~~Total assets acquired~~	~~36,811~~

~~Contractholder funds~~	~~26,451~~
~~Future policy benefits~~	~~3,871~~
~~Accounts payable and accrued liabilities~~	~~897~~
~~Notes payable~~	~~589~~
~~Funds withheld for reinsurance liabilities~~	~~816~~

~~Lease liabilities~~	9


~~Liabilities of discontinued operations~~	~~2,268~~
~~Total liabilities assumed~~	~~34,901~~



~~Net assets acquired~~	$	~~1,910~~

~~The gross carrying value and weighted average estimated useful lives of Other intangible assets acquired in the F&G acquisition consist of the following (dollars in millions):~~

Gross Carrying Value Weighted Average
Estimated Useful Life
(in years)
Other intangible assets:
Value of business acquired $ 1,908 Various
Value of distribution network acquired 140 15
Trademarks and licenses 38 10
Software 21 2
Total Other intangible assets 2,107

During the nine months ended September 30, 2021, we adjusted the provisional amounts as of June 1, 2020 that were recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of the acquisition date. Such adjustments resulted in an increase in Other intangible assets of approximately $61 million, a decrease in Reinsurance recoverable of approximately $289 million, a decrease in Future policy benefits of $227 million, an increase in Goodwill of $5 million, and various other, individually immaterial items. There was no material impact on earnings as a result of the measurement period adjustments recorded. As of June 1, 2021, we completed purchase price allocation as of the acquisition date.

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~~Note O — Notes Payable~~

~~Notes payable consists of the following:~~

September 30, 2021 December 31, 2020
(In millions)
4.50% Notes, net of discount $ 444 $ 443
5.50% Notes, net of discount 399 399
3.40% Notes, net of discount 643 643
2.45% Notes, net of discount 593 592
3.20% Notes, net of discount 443 —
Revolving Credit Facility (4) (4)
5.50% F&G Notes 579 589
$ 3,097 $ 2,662

On September 17, 2021, we completed our underwritten public offering of $450 million aggregate principal amount of our 3.20% Notes, pursuant to our registration statement on Form S-3 ASR (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.

On October 29, 2020, we entered into the Fifth Restated Credit Agreement for our Amended Revolving Credit Facility with Bank of America, N.A., as administrative agent and the other agents party thereto. Among other changes, the Fifth Restated Credit Agreement amends the Fourth Restated Credit Agreement to extend the maturity date from April 27, 2022 to October 29, 2025. The material terms of the Fourth Restated Credit Agreement are set forth in our Annual Report for the year ended December 31, 2019. As of September 30, 2021, there was no principal outstanding, $2 million of unamortized debt issuance costs, and $800 million of available borrowing capacity under the Revolving Credit Facility.

On September 15, 2020, we completed our underwritten public offering of $600 million aggregate principal amount of our 2.45% Notes due March 15, 2031 (the "2.45% Notes") pursuant to an effective registration statement filed with the SEC. The net proceeds from the registered offering of the 2.45% Notes were approximately $593 million, after deducting underwriting discounts and commissions and offering expenses. We used the net proceeds from the offering (i) to repay all our $260 million outstanding indebtedness under the Term Loan, and (ii) for general corporate purposes.

On June 12, 2020, we completed our underwritten public offering of $650 million aggregate principal amount of the 3.40% Notes due June 15, 2030 (the “3.40% Notes”) pursuant to an effective registration statement filed with the SEC. The net proceeds from the registered offering of the 3.40% Notes were approximately $642 million, after deducting underwriting discounts, and commissions and offering expenses. We used the net proceeds from the offering (i) to repay $640 million of the outstanding principal amount under the Term Loan, and (ii) for general corporate purposes.

On June 1, 2020, as a result of the F&G acquisition, we assumed $550 million aggregate principal amount of 5.50% senior notes due 2025 (the "5.50% F&G Notes"), originally issued on April 20, 2018 at 99.5% of face value for proceeds of $547 million.

On August 13, 2018, we completed an offering of $450 million in aggregate principal amount of 4.50% notes due August 2028 (the "4.50% Notes"), pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended. The 4.50% Notes were priced at 99.252% of par to yield 4.594% annual interest. We pay interest on the 4.50% Notes semi-annually on the 15th of February and August, beginning February 15, 2019. The 4.50% Notes contain customary covenants and events of default for investment grade public debt, which primarily relate to failure to make principal or interest payments. On May 16, 2019, we completed an offering to exchange the 4.50% Notes for substantially identical notes registered pursuant to Rule 424 under the Securities Act of 1933 (the "4.50% Notes Exchange"). There were no material changes to the terms of the 4.50% Notes as a result of the 4.50% Notes Exchange and all holders of the 4.50% Notes accepted the offer to exchange.

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On August 28, 2012, we completed an offering of $400 million in aggregate principal amount of 5.50% notes due September 2022 (the "5.50% Notes"), pursuant to an effective registration statement previously filed with the SEC. The material terms of the 5.50% Notes are set forth in our Annual Report for the year ended December 31, 2019.

Gross principal maturities of notes payable at September 30, 2021 are as follows (in millions):
2021 (remaining) $ —
2022 400
2023 —
2024 —
2025 550
Thereafter 2,150
$ 3,100

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The statements contained in this Quarterly Report on Form 10-Q that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding our expectations, hopes, intentions or strategies regarding the future. All forward-looking statements included in this document are based on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements. It is important to note that our actual results could vary materially from those forward-looking statements contained herein due to many factors, including, but not limited to: the ~~ability of FNF to successfully integrate F&G's operations and employees; the~~ potential impact of ~~the~~our completed F&G acquisition on relationships, including ~~with~~ employees, suppliers, customers and competitors; changes in general economic, business and political and COVID-19 conditions, including changes in the financial markets; weakness or adverse changes in the level of real estate activity, which may be caused by, among other things, high or increasing interest rates, a limited supply of mortgage funding, a weak U.S. economy; our potential inability to find suitable acquisition candidates, acquisitions in lines of business that will not necessarily be limited to our traditional areas of focus, or difficulties in consummating and integrating acquisitions; our dependence on distributions from our title insurance underwriters as our main source of cash flow; significant competition that our operating subsidiaries face; compliance with extensive government regulation of our operating subsidiaries; and other risks detailed in the “Statement Regarding Forward-Looking Information,” “Risk Factors” and other sections of our Annual Report on Form 10-K (our "Annual Report") for the year ended December 31, ~~2020~~2021 and other filings with the SEC.

The following discussion should be read in conjunction with our Annual Report.

Overview

For a description of our business, including descriptions of segments and recent business developments, see the discussion in Note A Basis of Financial Statements in the accompanying unaudited Condensed Consolidated Financial Statements included in Item 1 of Part I of this Report, which is incorporated by reference into this Part I, Item 2.

Business Trends and Conditions

Title

Our Title segment revenue is closely related to the level of real estate activity which 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:

•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 negative impacts related to the outbreak of COVID-19, the~~The most recent forecast of the Mortgage Bankers Association ("MBA"), as of ~~October~~April ~~17, 2021,~~13, 2022, estimates (actual for fiscal year ~~2020)~~2021) the size of the U.S. residential mortgage originations market as shown in the following table for ~~2020~~2021 - ~~2023~~2024 in its "Mortgage Finance Forecast" (in trillions):


		2023		2022		2021		2020			2024		2023		2022		2021
Purchase transactions	Purchase transactions	$	1.8	$	1.7	$	1.6	$	1.5	Purchase transactions	$	1.8	$	1.8	$	1.7	$	1.6
Refinance transactions	Refinance transactions	$	0.7	$	0.9	$	2.2	$	2.6	Refinance transactions	$	0.7	$	0.7	$	0.8	$	2.3
Total U.S. mortgage originations forecast	Total U.S. mortgage originations forecast	$	2.5	$	2.6	$	3.8	$	4.1	Total U.S. mortgage originations forecast	$	2.5	$	2.5	$	2.5	$	3.9

As of ~~October 17, 2021,~~April 13, 2022, the MBA expects residential purchase transactions to ~~steadily~~slightly increase in ~~2021~~2022 and ~~beyond from 2020 levels.~~beyond. Additionally the MBA expects residential refinance transactions to decrease in ~~2021~~2022 and beyond as interest rates are expected to rise while the supply of refinance candidates decreases. The MBA expects overall mortgage originations to decrease in 2022 and then remain relatively flat through 2024.

Following the Federal Reserve's emergency action to reduce its benchmark interest rate to near zero in response to COVID-19, there was an increase in purchase activity and a surge in refinance activity beginning in the second quarter of 2020 and continuing through 2021. In the second half of 2021, ~~and beyond as a result of record~~ refinance ~~originations in 2020.~~activity began to

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~~In recent years, total originations have been reflective~~slow as the population of ~~a strong residential real estate market driven by increasing home prices~~eligible refinance candidates declined 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~~slightly increased. While refinance activity declined in the second half of 2021, it still exceeded pre-pandemic activity levels. Purchase activity remained strong throughout 2021 with variations in activity being consistent with historical seasonality.

A shortage in the ~~2019, which significantly increased refinance transactions~~supply of homes for sale, increasing home prices, rising mortgage interest rates, inflation and ~~slightly increased purchase transactions when compared to 2018. In~~disrupted labor markets created some volatility in the residential real estate market in 2021 and the beginning of ~~2020, refinance and purchase transactions remained strong until~~2022. Additionally, geopolitical uncertainties associated with the ~~outbreak~~war in the Ukraine have created additional volatility in the global economy in the first half of ~~COVID-19.~~2022. Existing-home sales decreased 3% in the three months ended March 31, 2022 as compared to the corresponding period in 2021 while median existing-home sales prices rose to $361,533 in the three months ended March 31, 2022, a 15 % increase over of the corresponding period in 2021. Total housing inventory as of March 31, 2022 totaled 950,00 units, down 9.5% from the corresponding period in 2021.

~~On March 11, 2020,~~During the ~~World Health Organization declared that the novel coronavirus or COVID-19 “can be characterized as a pandemic,” which is defined as a worldwide spread~~first quarter of ~~a new disease for which most people do not have immunity. On March 15, 2020,~~2022 the Federal Reserve ~~took emergency action and reduced its~~raised the benchmark interest rate by ~~a full percentage point~~25 basis points in an effort to ~~nearly zero. Following this emergency action, average~~combat inflation, the first increase since 2018. Average interest rates for a 30-year fixed rate ~~mortgages fell throughout~~mortgage rose to 3.8% for the ~~remainder~~three months ended March 31, 2022 as compared to 2.9% for the corresponding period of ~~the year, bottoming out at 2.65% on January 7,~~ 2021. ~~The outbreak of COVID-19 resulted in significant uncertainty in the economic outlook~~Mortgage interest rates have continued to increase in the second quarter of ~~2020, and as a result real estate activity decreased significantly as consumers moved to~~2022, surpassing 5% in April, their highest levels since 2010. In May, the ~~sidelines to assess~~Federal Reserve further raised 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~~benchmark interest ~~rates.~~

Residential purchase and refinance activity has remained strong in the first three quarters of 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. Mortgage interest rates averaged 2.9% in the third quarter of 2021. Despite the recent increase in interest rates and fluctuation in existing-home sales, the market is still outperforming pre-pandemic levels.rate by an additional 50 basis points.

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~~have continued 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~~improve. The unemployment rate was ~~at a historically~~3.6% in March 2022, which was near the record low of 3.5% in February 2020, ~~but subsequently rose~~as compared to ~~a record 14.8%~~6.0% in ~~April 2020 before declining to a still-elevated level of 6.7% in December 2020. In 2021, the unemployment rate has continued to fall to 4.8% in September~~March 2021. ~~Additionally, the Conference Board's monthly Consumer Confidence Index remained at high levels through February 2020 before falling as a result of the COVID-19 outbreak.~~ Consumer confidence, which has remained volatile since ~~rebounded, reaching its peak in June~~the outbreak of ~~2021 before decreasing in the third quarter~~COVID-19, was relatively high as of ~~2021 due to~~March 2022, supported by strong employment growth despite geopolitical uncertainties and concerns over ~~inflation and the spread of the Delta variant.~~inflation.

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,~~2022 and 2021, we ~~have~~ experienced strong demand in commercial real estate markets and ~~from 2015 through 2019, we~~therefore experienced ~~historically~~relatively high volumes and fee-per-file in our commercial ~~business. In 2020, we experienced decreases in commercial volumes and commercial fee-per-file as a result of the outbreak of COVID-19.~~business when compared to historical results. In the ~~second half~~first quarter of ~~2020 and~~2022 our average fee per file was $13,248, a first quarter all-time high, as compared to $11,290 in the ~~first three quarters of 2021, commercial volumes have continued to recover.~~corresponding period in 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.

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. We have noted short-term fluctuations through recent years in resale and refinance transactions as a result of changes in interest rates. Due to COVID-19 and the Federal Reserve's action to reduce the benchmark rate to near zero in response to the pandemic, seasonality deviated from historical patterns in ~~2020 and we continue to see deviations in~~ 2021.

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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 ~~continuously~~still evolving, the COVID-19 pandemic has caused significant economic and financial turmoil in the U.S. and around the world. ~~These conditions may continue in the near term.~~ 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

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economic uncertainty and increased unemployment ~~resulting~~that could potentially result from ~~the economic impacts of~~ 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. ~~If policyholder lapse and surrender rates significantly exceed expectations, it could have an~~Additionally, adverse ~~effect on our F&G segment's financial condition, results of operations, liquidity and cash flows. Such~~ events or conditions resulting from COVID-19 could also have ~~an adverse~~a negative effect on its sales of new ~~policies.~~policies and could result in more volatility from the impact of mortality experience. As of March 31, 2022, F&G ~~is monitoring~~has not seen a sustained elevated level of adverse policyholder experience from the impact of COVID-19 on ~~its investment portfolio and~~ the ~~potential for ratings changes caused by the sudden slowdown of economic activity.~~overall business. The full extent to which the COVID-19 pandemic impacts our F&G segment's financial condition, results of operations, ~~financial condition,~~ liquidity or prospects will depend on future developments which cannot be ~~predicted.~~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 our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 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 ~~September 30, 2021, the Company's~~March 31, 2022, 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 of Part II of our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 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 fixed indexed annuities ("FIA") and indexed universal life ("IUL") products. As the “baby boomer” generation prepares for retirement, we believe that demand for retirement savings, growth, and income products will grow. ~~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~~

~~Demographics and macroeconomic factors are increasing the demand for our FIA and IUL products. Over~~It is projected that 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 ~~2020~~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 ~~the Company.~~us. As a tool for addressing the unmet need for retirement planning, we believe that many middle-income Americans have grown

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to appreciate the ~~“sleep at night protection”~~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 $66 billion of sales in 2021. Additionally, this market demand has positively impacted the IUL market as it has expanded from $100 million of annual premiums in 2002 to $2 billion of annual premiums in 2021.

See Item 7 of Part II of our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 for a more detailed discussion of industry factors and trends affecting our Results of Operations.

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Results of Operations

Consolidated Results of Operations

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


		Three months ended September 30,				Nine months ended September 30,					Three months ended March 31,
		2021		2020		2021		2020			2022		2021
		(In millions)									(In millions)
Revenues:	Revenues:									Revenues:
Direct title insurance premiums	Direct title insurance premiums	$	896	$	733	$	2,546	$	1,854	Direct title insurance premiums	$	767	$	746
Agency title insurance premiums	Agency title insurance premiums	1,318		981		3,632		2,497		Agency title insurance premiums	1,099		1,058
Escrow, title-related and other fees	Escrow, title-related and other fees	1,324		853		3,123		2,201		Escrow, title-related and other fees	1,290		851

Interest and investment income	Interest and investment income	508		336		1,424		541		Interest and investment income	478		402
Recognized gains and losses, net	Recognized gains and losses, net	(154)		73		121		(85)		Recognized gains and losses, net	(469)		43
Total revenues	Total revenues	3,892		2,976		10,846		7,008		Total revenues	3,165		3,100
Expenses:	Expenses:									Expenses:
Benefits and other changes in policy reserves	Benefits and other changes in policy reserves	185		251		734		406		Benefits and other changes in policy reserves	208		(26)
Personnel costs	Personnel costs	894		782		2,596		2,088		Personnel costs	823		812
Agent commissions	Agent commissions	1,010		749		2,787		1,907		Agent commissions	844		807

Other operating expenses	Other operating expenses	498		449		1,432		1,306		Other operating expenses	442		458

Depreciation and amortization	Depreciation and amortization	252		100		540		189		Depreciation and amortization	182		183
Provision for title claim losses	Provision for title claim losses	100		77		278		196		Provision for title claim losses	84		81
Interest expense	Interest expense	27		29		83		62		Interest expense	30		28
Total expenses	Total expenses	2,966		2,437		8,450		6,154		Total expenses	2,613		2,343
Earnings before income taxes and equity in earnings of unconsolidated affiliates	Earnings before income taxes and equity in earnings of unconsolidated affiliates	926		539		2,396		854		Earnings before income taxes and equity in earnings of unconsolidated affiliates	552		757
Income tax expense	Income tax expense	213		133		555		194		Income tax expense	155		166
Equity in earnings of unconsolidated affiliates	Equity in earnings of unconsolidated affiliates	27		7		54		9		Equity in earnings of unconsolidated affiliates	2		13
Net earnings from continuing operations	Net earnings from continuing operations	$	740	$	413	$	1,895	$	669	Net earnings from continuing operations	$	399	$	604

Revenues.

Total revenues increased by ~~$916~~$65 million in the three months ended ~~September 30, 2021 and increased by $3,838 million in the nine months ended September 30, 2021~~March 31, 2022 compared to the corresponding ~~periods~~period in ~~2020.~~2021.

Net earnings ~~increased~~decreased by ~~$327~~$205 million in the three months ended ~~September 30, 2021 and increased by $1,226 million in the nine months ended September 30, 2021~~March 31, 2022 compared to the corresponding ~~periods~~period in ~~2020.~~2021.

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

Expenses.

Our operating expenses consist primarily of Personnel costs; Other operating expenses, which in our title business 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

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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

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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 ~~$213~~$155 million and ~~$133~~$166 million in the ~~three-month periods~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020, respectively, and $555 million and $194 million in the nine-month periods ended September 30, 2021 and 2020,~~ respectively. Income tax expense as a percentage of earnings before income taxes was ~~23%~~28% and ~~25%~~22% in the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020, respectively and 23% and 23% in the nine-month periods ended September 30, 2021 and 2020,~~ respectively. The ~~decrease~~increase in income tax expense as a percentage of earnings before taxes in the ~~three-month~~three months ended March 31, 2022 as compared to the corresponding period in 2021 ~~compared to the 2020 period~~ is primarily attributable to ~~discrete unfavorable~~the recording of a valuation allowance in the 2022 period for tax ~~adjustments~~benefits associated with ~~our acquisition~~deferred tax assets, related to realized losses on the past sales of ~~F&G in the 2020 period.~~

discontinued operations, for which it is more likely than not that we will not be able to realize for tax purposes.

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Title

The following table presents the results from operations of our Title segment:


		Three months ended September 30,				Nine months ended September 30,					Three months ended March 31,
		2021		2020		2021		2020			2022		2021
		(In millions)									(In millions)
Revenues:	Revenues:									Revenues:
Direct title insurance premiums	Direct title insurance premiums	$	896	$	733	$	2,546	$	1,854	Direct title insurance premiums	$	767	$	746
Agency title insurance premiums	Agency title insurance premiums	1,318		981		3,632		2,497		Agency title insurance premiums	1,099		1,058
Escrow, title-related and other fees	Escrow, title-related and other fees	849		742		2,433		2,007		Escrow, title-related and other fees	665		745
Interest and investment income	Interest and investment income	27		31		83		120		Interest and investment income	27		29
Recognized gains and losses, net	Recognized gains and losses, net	(169)		(3)		(258)		(147)		Recognized gains and losses, net	(175)		(59)
Total revenues	Total revenues	2,921		2,484		8,436		6,331		Total revenues	2,383		2,519
Expenses:	Expenses:									Expenses:
Personnel costs	Personnel costs	838		726		2,418		1,992		Personnel costs	776		754
Agent commissions	Agent commissions	1,010		749		2,787		1,907		Agent commissions	844		807
Other operating expenses	Other operating expenses	451		386		1,281		1,140		Other operating expenses	397		405
Depreciation and amortization	Depreciation and amortization	36		39		103		113		Depreciation and amortization	33		33
Provision for title claim losses	Provision for title claim losses	100		77		278		196		Provision for title claim losses	84		81
Interest expense		—		—		—		1

Total expenses	Total expenses	2,435		1,977		6,867		5,349		Total expenses	2,134		2,080
Earnings (loss) from continuing operations, before income taxes and equity in earnings of unconsolidated affiliates		$	486	$	507	$	1,569	$	982
Earnings from continuing operations, before income taxes and equity in earnings of unconsolidated affiliates										Earnings from continuing operations, before income taxes and equity in earnings of unconsolidated affiliates	$	249	$	439
Orders opened by direct title operations (in thousands)	Orders opened by direct title operations (in thousands)	688		847		2,153		2,222		Orders opened by direct title operations (in thousands)	522		770
Orders closed by direct title operations (in thousands)	Orders closed by direct title operations (in thousands)	527		571		1,692		1,435		Orders closed by direct title operations (in thousands)	380		597
Fee per file (in dollars)	Fee per file (in dollars)	$	2,581	$	2,063	$	2,310	$	2,046	Fee per file (in dollars)	$	2,891	$	1,944

Total revenues for the Title segment ~~increased~~decreased by ~~$437~~$136 million, or ~~18%~~5%, in the three months ended ~~September 30, 2021 and increased by $2,105 million, or 33%, in the nine months ended September 30, 2021~~March 31, 2022 from the corresponding ~~periods~~period in ~~2020.~~2021.

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


		Three months ended September 30,								Nine months ended September 30,									Three months ended March 31,
				% of				% of				% of				% of					% of				% of
		2021		Total		2020		Total		2021		Total		2020		Total			2022		Total		2021		Total
		(Dollars in millions)																	(Dollars in millions)
Title premiums from direct operations	Title premiums from direct operations	$	896	40	%	$	733	43	%	$	2,546	41	%	$	1,854	43	%	Title premiums from direct operations	$	767	41	%	$	746	41	%
Title premiums from agency operations	Title premiums from agency operations	1,318		60		981		57		3,632		59		2,497		57		Title premiums from agency operations	1,099		59		1,058		59
Total title premiums	Total title premiums	$	2,214	100	%	$	1,714	100	%	$	6,178	100	%	$	4,351	100	%	Total title premiums	$	1,866	100	%	$	1,804	100	%

Title premiums increased by ~~$500~~$62 million, or ~~29%~~3% in the three months ended ~~September 30, 2021 as compared to~~March 31, 2022 from the corresponding period in ~~2020.~~2021. The increase iswas comprised of an increase in Title premiums from direct operations of ~~$163~~$21 million, or ~~22%~~3%, and an increase in Title premiums from agency operations of ~~$337~~$41 million, or ~~34%~~4%.

~~Title premiums increased by $1,827 million, or 42% in the nine months ended September 30, 2021 as compared to the corresponding period in 2020.~~

~~The increase is comprised of an increase in Title premiums from~~

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~~direct operations of $692 million, or 37%, and an increase in Title premiums from agency operations of $1,135 million, or 45%.~~

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


		Three months ended September 30,				Nine months ended September 30,					Three months ended March 31,
		2021		2020		2021		2020			2022		2021
Opened title insurance orders from purchase transactions (1)	Opened title insurance orders from purchase transactions (1)	50	%	40	%	48	%	39	%	Opened title insurance orders from purchase transactions (1)	62	%	42	%
Opened title insurance orders from refinance transactions (1)	Opened title insurance orders from refinance transactions (1)	50		60		52		61		Opened title insurance orders from refinance transactions (1)	38		58
		100	%	100	%	100	%	100	%		100	%	100	%

Closed title insurance orders from purchase transactions (1)	Closed title insurance orders from purchase transactions (1)	50	%	42	%	43	%	41	%	Closed title insurance orders from purchase transactions (1)	55	%	34	%
Closed title insurance orders from refinance transactions (1)	Closed title insurance orders from refinance transactions (1)	50		58		57		59		Closed title insurance orders from refinance transactions (1)	45		66
		100	%	100	%	100	%	100	%		100	%	100	%

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

Title premiums from direct operations increased in the three ~~and nine-month periods~~months ended ~~September 30, 2021 as compared to~~March 31, 2022 from the corresponding ~~periods~~period in ~~2020.~~2021. The increase ~~in the three-month period is~~was primarily attributable to an increase in the average fee per file, which was driven by increases in the residential ~~purchase~~ and commercial purchase markets, ~~when compared to the corresponding period in 2020,~~ partially offset by a decrease in closed order ~~volume in the 2021 period. The increase~~ ~~in the nine-month period~~ is primarily attributable to an increase in total closed order volume, driven by increases in both residential purchase and refinance order volume, as well as increases in both residential and commercial fee per file.volume.

We experienced ~~an increase~~a significant decrease in closed title insurance order ~~volumes~~volume from ~~purchase transactions in the three month period ended September 30, 3021 and an increase in closed title insurance order volumes from purchase and~~ refinance transactions ~~in the nine-month period ended September 30, 2021 as compared to the corresponding periods in 2020. Total closed order volumes were 527,000~~ in the three months ended ~~September 30, 2021 compared to 571,000~~March 31, 2022 from the corresponding period in 2021. Closed title insurance volume from purchase transactions was relatively flat in the three months ended ~~September 30, 2020 and 1,692,000~~March 31, 2022 when compared to the corresponding period in 2021. Total closed order volume was 380,000 in the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 compared to ~~1,435,000~~597,000 in the ~~nine~~three months ended ~~September 30, 2020.~~March 31, 2021. This represented an overall decrease of ~~8% and an increase of 18%~~36% in the three ~~and nine-month periods~~months ended ~~September 30, 2021, respectively,~~March 31, 2022 from the corresponding ~~periods~~period in ~~2020.~~2021. The decrease ~~in the three-month period in 2021 is~~was primarily attributable to higher average mortgage interest rates and 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 byin the three months ended September 30, 2021. Additionally, continued economic uncertainty in certain markets has created some volatility in the residential real estate market. The increase in the nine-month period in 2021 is primarily attributable to lower average interest rates and higher consumer confidenceMarch 31, 2022 when compared to the corresponding period in ~~2020.~~2021.

Total opened title insurance order ~~volumes~~volume decreased in the three ~~and nine-month periods~~months ended ~~September 30, 2021, as compared to~~March 31, 2022 from the corresponding ~~periods~~period in ~~2020. The decreases~~ ~~are~~2021. The decrease was attributable to decreased opened title orders from refinance ~~transactions, partially offset by increased open title orders from~~and purchase transactions.

The average fee per file in our direct operations was ~~$2,581 and $2,310~~$2,891 in the three ~~and nine-month periods~~months ended ~~September 30, 2021, respectively,~~March 31, 2022 compared to ~~$2,063 and $2,046~~$1,944 in the three ~~and nine-month periods~~months ended ~~September 30, 2020, respectively.~~March 31, 2021. The increase in average fee per file reflects an increased proportion of purchase transactions relative to total closed orders and an increased commercial market compared to the corresponding ~~prior year periods.~~period in 2021. 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.

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Title premiums from agency operations increased ~~$337~~$41 million, or ~~34%~~4%, in the three months ended ~~September 30, 2021 and increased $1,135 million, or 45%, in the nine months ended September 30, 2021~~March 31, 2022 from the corresponding ~~periods~~period in ~~2020.~~2021. The current trends in the agency business reflect a strong 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.

Escrow, title-related and other fees ~~increased~~decreased by ~~$107~~$80 million, or ~~14%~~11%, in the three months ended ~~September 30, 2021 and increased $426 million or 21% in the nine months ended September 30, 2021~~March 31, 2022 from the corresponding ~~periods~~period in ~~2020.~~2021. Escrow fees, which are more closely related to our direct operations, ~~increased~~decreased by ~~$24~~ $59 million, or 7%18%, in the three months ended ~~September 30, 2021 and $242 million, or 30%,~~March 31, 2022 from the corresponding period in ~~the nine months ended September 30, 2021 as compared~~2021. The decrease was primarily attributable to the ~~corresponding perio~~dsdecrease in ~~2020.~~ ~~The increases are primarily driven by the related increase in direct title premiums.~~ ~~Othe~~rrefinance transactions, which have higher escrow fees ~~in the Title segment,~~per transaction than purchase transactions. Other fees, excluding escrow fees, ~~increased~~decreased by ~~$83~~$21 million, or ~~20%~~5%, in the three months ended ~~September 30, 2021 and increased by $184 million, or 15%, in the nine months ended September 30, 2021 compared to~~March 31, 2022 from the corresponding ~~periods~~period in ~~2020.~~ 2021. The ~~increases~~decrease in Other fees was ~~primarily driven by~~ ~~increases~~attributable to decreases in various ~~individually~~ immaterial items.

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 $4$2 million, or ~~13%~~7%, in the

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three months ended ~~September 30, 2021 and decreased $37 million, or 31%,~~March 31, 2022 from the corresponding period in ~~the nine months ended September 30, 2021 as~~2021. The decrease was primarily attributable to lower yields on our fixed maturity portfolio when compared to the corresponding period in ~~2020.~~ The decrease in the three-month period is primarily attributable to decreased average fixed maturity portfolio balances and decreased dividends on preferred stocks in the 2021 period as compared to the corresponding period in 2020, and various other individually immaterial items. The decrease in the nine-month period is primarily attributable to ~~a decline in interest rates on our cash and short-term investments and the aforementioned decreases in dividends on common and preferred stocks in the 2021 period as compared to the corresponding period in 2020.~~2021.

Net recognized losses were ~~$169~~$175 million and $3$59 million in the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020, respectively. Net recognized losses were $258 million and $147 million in the nine months ended September 30, 2021 and 2020,~~ 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 ~~$112~~$22 million, or ~~15%~~3%, in the three months ended ~~September 30, 2021 and increased $426 million, or 21% in the nine months ended September 30, 2021compared~~March 31, 2022 compared to the corresponding ~~periods~~period in ~~2020.~~2021. The increase iswas primarily attributable to increased salaries, bonuses, and commissions ~~in the 2021 period~~ associated with increased headcount to manage ~~the surge in refinance and~~ strong ~~purchase orders compared to the prior year period.~~order activity. Personnel costs as a percentage of total revenues from direct title premiums and escrow, title-related and other fees were ~~48%~~54% and ~~49%~~51% for the ~~three-month periods~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020, respectively and 49% and 52%, respectively, for the nine-month periods ended September 30, 2021 and 2020.~~respectively. Average employee count in the Title segment was ~~27,799~~26,974 and ~~24,874~~26,344 in the ~~three-month periods~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020, respectively, and 27,164 and 24,225 in the nine-month periods ended September 30, 2021 and 2020,~~ respectively.

Other operating expenses ~~increased~~decreased by ~~$65~~$8 million, or ~~17%~~2%, in the three months ended ~~September 30, 2021 and increased by $141 million, or 12% in the nine months ended September 30, 2021~~March 31, 2022 from the corresponding ~~periods~~period in ~~2020.~~2021. Other operating expenses as a percentage of total revenue excluding agency premiums, interest and investment income, and recognized gains and losses were ~~26%~~28% and ~~26%~~27% in the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020, respectively and 26% and 30% in the nine months ended September 30, 2021 and 2020,~~ 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.

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The following table illustrates the relationship of agent premiums and agent commissions, which has remained relatively consistent since ~~2020:~~2021:


		Three months ended September 30,								Nine months ended September 30,									Three months ended March 31,
		2021		%		2020		%		2021		%		2020		%			2022		%		2021		%
		(Dollars in millions)																	(Dollars in millions)
Agent premiums	Agent premiums	$	1,318	100	%	$	981	100	%	$	3,632	100	%	$	2,497	100	%	Agent premiums	$	1,099	100	%	$	1,058	100	%
Agent commissions	Agent commissions	1,010		77	%	749		76	%	2,787		77	%	1,907		76	%	Agent commissions	844		77	%	807		76	%
Net retained agent premiums	Net retained agent premiums	$	308	23	%	$	232	24	%	$	845	23	%	$	590	24	%	Net retained agent premiums	$	255	23	%	$	251	24	%

The claim loss provision for title insurance was ~~$100~~$84 million and ~~$77~~$81 million for the ~~three-month periods~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020, respectively, and $278 million and $196 million for the nine-month periods ended September 30, 2021 and 2020,~~ respectively. The provision reflects an average 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~~have five distribution channels across retail and institutional markets. Our three retail channels include agent-based independent marketing organizations ("IMOs"), banks and broker dealers. We have deep, long-tenured relationships with our ~~principal life~~network of leading IMOs and ~~annuity products through~~their agents to serve the ~~insurance subsidiaries composing our F&G segment, FGL Insurance and FGL NY Insurance. Our customers range across a variety~~needs of ~~age groups and are concentrated in~~ the middle-income ~~market. Our FIAs provide for pre-retirement wealth accumulation~~market and ~~post-retirement income management. Our IUL~~develop competitive annuity and life products ~~provide wealth protection~~to align with their evolving needs. Upon FNF’s ownership and ~~transfer opportunities. Life~~F&G’s subsequent rating upgrades in mid-2020, we launched into banks and ~~annuity products are primarily distributed through Independent Marketing Organizations ("IMOs") and independent insurance agents, and beginning~~broker dealers. Further, in ~~2020, independent broker dealers and banks. Additionally,~~2021, we ~~provide~~launched two institutional channels to originate funding ~~agreements~~agreement-backed notes (“FABN”) and pension risk transfer ("PRT") transactions. The FABN program offers funding agreements to institutional clients by means of capital markets transactions through investment banks. The PRT solutions ~~to various institutions through~~business was launched by building an experienced team and then working with brokers and institutional consultants ~~and brokers.~~for distribution. These markets leverage our existing team's spread-based capabilities as well as our strategic partnership with Blackstone Inc.

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In setting the features and pricing of ~~new FIA~~our flagship fixed indexed annuity ("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.

~~Sales~~

On March 14, 2022, our Board of Directors approved a dividend to our shareholders, on a pro rata basis, of 15% of the common stock of F&G (the "F&G Distribution"). We ~~regularly monitor~~intend to retain majority control of F&G through our 85% ownership stake. The proposed F&G Distribution is subject to various conditions including the final approval of our Board of Directors, the effectiveness of appropriate filings with the U.S Securities and ~~report~~Exchange Commission (the "SEC"), and any applicable regulatory approvals. The record date and distribution settlement date will be determined by our Board of Directors prior to the ~~production volume metric titled “Sales”. Sales~~distribution. Upon completion of the F&G Distribution, our shareholders as of the record date are ~~not derived from any specific GAAP income statement accounts or line items and should not~~expected to own stock in both publicly traded companies. The proposed F&G Distribution is intended to be ~~viewed~~structured as a ~~substitute~~taxable dividend to our shareholders and is targeted to be completed in late third quarter or early fourth quarter of 2022. However, there can be no assurance regarding the timeframe for ~~any financial measure determined in accordance with GAAP. Sales are measured as~~completing the ~~gross volume sold during a given period. Management believes~~F&G Distribution or that ~~presentation~~the conditions of ~~sales, as measured for management purposes, enhances~~ the ~~understanding of our business and helps depict longer term trends that may not~~F&G Distribution will be ~~apparent in the results of operations due to the timing of sales and revenue recognition.~~met.

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 ("PRT") 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, ~~and~~ 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) ~~within the Company's unaudited Condensed Consolidated Financial Statements included in Item 1 of Part 1 of this Report,~~ 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.

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Through our insurance subsidiaries, we issue a broad portfolio of deferred annuities (fixed indexed and fixed rate annuities), indexed universal life insurance, immediate annuities, and funding agreements. 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. 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.

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 $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.~~

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~~FIA/IUL contracts. We attempt to manage the cost of these purchases through the terms of our ~~FIA~~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.

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~~FIA/IUL policies, known as the net investment spread. With respect to ~~FIAs,~~FIAs/IULs, the cost of hedging our risk

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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,~~average assets under management ("AAUM" - see Non-GAAP Financial Measures section), 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 ~~FIAs or~~ FIA/IULs. We analyze returns on ~~average assets under management ("AAUM" - see Non-GAAP Financial Measures section)~~AAUM 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 PRT 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 ~~that certain~~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 ~~such~~these non-GAAP financial measures to the most directly comparable GAAP measures are ~~included herein.~~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;~~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;

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(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)~~("VODA")) recognized as a result of acquisition activities;

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

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(v) Other "non-recurring", "infrequent" or "unusual items": Management excludes certain items determined to be “non-recurring”, “infrequent” or “unusual” from adjusted net earnings when incurred if it is determined these expenses are not a reflection of the core business and when the nature of the item is such that it is not reasonably likely to recur within two years and/or there was not a similar item in the preceding two years.

Adjustments to ~~Adjusted~~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~~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~~FIA and IUL-related derivatives, embedded derivatives and hedging costs has been removed from net earnings (loss) in calculating adjusted net earnings.

~~AAUM~~AUM is a non-GAAP measure we use to assess the rate of return on assets available for reinvestment. ~~AAUM~~AUM is calculated as the sum of:

(i) total invested assets at amortized cost, excluding ~~derivatives;~~derivatives, net of reinsurance qualifying for risk transfer in accordance with GAAP;

(ii) related party loans and investments;

(iii) accrued investment income;

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

(v) cash and cash equivalents, excluding derivative collateral,

at the beginning of the period and the end of each month in the period, divided by the total number of months in the period plus one.

Management considers this non-GAAP financial measure to be useful internally and to investors and analysts when assessing the rate of return on assets available for reinvestment.

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.

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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.~~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 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, funding agreement and non-life contingent PRT sales are not derived from any specific GAAP income statement accounts or line items and should not be viewed as a substitute for any financial measure determined in accordance with GAAP. Sales from these products are recorded as deposit liabilities (i.e. contractholder funds) within the Company's unaudited Condensed Consolidated Financial Statements in accordance with GAAP. Life contingent PRT sales are recorded as premiums in revenues within the consolidated financial statements. Management believes that presentation of sales, as measured for management purposes, enhances the understanding of our business and helps depict longer term trends that may not be apparent in the results of operations due to the timing of sales and revenue recognition.

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F&G Results of Operations

The results of operations of our F&G segment for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and March 31, 2021 ~~and the three and four months ended September 30, 2020 (following our June 1, 2020 acquisition of F&G)~~ were as follows (in millions):


												Three months ended
		Three months ended				Nine months ended			Four months ended			March 31, 2022		March 31, 2021
		September 30, 2021		September 30, 2020		September 30, 2021			September 30, 2020
Revenues:	Revenues:										Revenues:
Life insurance premiums and other fees (a)	Life insurance premiums and other fees (a)	$	431	$	60	$	557		$	80	Life insurance premiums and other fees (a)	$	594	$	64
Interest and investment income	Interest and investment income	481		305		1,341			416		Interest and investment income	451		373
Recognized gains and losses, net	Recognized gains and losses, net	15		77		370			70		Recognized gains and losses, net	(297)		102
Total revenues	Total revenues	927		442		2,268			566		Total revenues	748		539
Expenses:	Expenses:										Expenses:
Benefits and other changes in policy reserves	Benefits and other changes in policy reserves	185		251		734			406		Benefits and other changes in policy reserves	208		(26)
Personnel costs	Personnel costs	32		23		93			32		Personnel costs	30		29
Other operating expenses	Other operating expenses	22		33		76			45		Other operating expenses	18		28
Depreciation and amortization	Depreciation and amortization	210		56		419			59		Depreciation and amortization	143		144
Interest expense	Interest expense	6		7		21			10		Interest expense	8		8
Total expenses	Total expenses	455		370		1,343			552		Total expenses	407		183

Earnings from continuing operations, before income taxes		472		72		925			14
Earnings before income taxes											Earnings before income taxes	341		356

Income tax (expense) benefit	Income tax (expense) benefit	(96)		(6)		(189)			8		Income tax (expense) benefit	(105)		(72)

Net earnings from continuing operations	Net earnings from continuing operations	$	376	$	66	$	736		$	22	Net earnings from continuing operations	$	236	$	284
(Losses) earnings from discontinued operations, net of tax		(3)		(28)		8			(23)
Net earnings attributable to common shareholders		$	373	$	38	$	744		$	(1)
Earnings (loss) from discontinued operations, net of tax											Earnings (loss) from discontinued operations, net of tax	—		5
Net earnings											Net earnings	$	236	$	289
(a) Included within Escrow, title-related and other fees in Condensed Consolidated Statements of Earnings	(a) Included within Escrow, title-related and other fees in Condensed Consolidated Statements of Earnings							(a) Included within Escrow, title-related and other fees in Condensed Consolidated Statements of Earnings

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


	Three months ended
	March 31, 2022		March 31, 2021

Fixed index annuities (FIA)	$	962	$	1,047
Fixed rate annuities (MYGA)	473		467
Total annuity	1,435		1,514
Index universal life (IUL)	27		15
Funding agreements (FABN/FHLB)	600		125
Pension risk transfer (PRT)	527		—

Total Sales	$	2,589	$	1,654

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Three months ended Nine months ended
September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020
Fixed index annuities (FIA) $ 1,073 $ 815 $ 3,255 $ 2,512
Fixed rate annuities (MYGA) 458 253 1,437 414
Total annuity 1,531 1,068 4,692 2,926
Index universal life (IUL) 24 14 59 37
Funding agreements (FABN/FHLB) 1,150 — 2,275 100
Pension risk transfer (PRT) 371 — 371 —
Flow reinsurance — 51 — 315
Total sales $ 3,076 $ 1,133 $ 7,397 $ 3,378

•FIA and MYGA sales ~~were strong~~ during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 were in line with the three months ended March 31, 2021, ~~compared~~and reflect pricing actions taken in response to the ~~three and nine months ended September 30, 2020 and reflect~~macro environment in the ~~Company's productive and expanding retail distribution through independent agents, banks and broker dealers.~~fourth quarter of 2021which carried into early first quarter 2022 results.

•Funding agreements reflect $400 million and ~~pension risk transfer sales~~$200 million of new FABN and FHLB agreements during the three ~~and nine~~ months ended ~~September 30, 2021 reflect~~March 31, 2022, under an investment strategy to expand into institutional markets, compared to a $125 million FHLB agreement during the ~~Company's expansion into Institutional markets during~~three months ended March 31, 2021, and are subject to fluctuation period to period.

•PRT sales during the three months ended March 31, 2022 of $527 million compared to $0 million during the three months ended March 31, 2021 reflect entrance into the PRT market in the second half of 2021.

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Revenues

Life insurance premiums and other fees

Life insurance premiums and other fees primarily reflect ~~insurance~~ premiums ~~for~~on life-contingent PRTs and traditional life insurance products, which are recognized as revenue when due from the policyholder, ~~premiums on pension risk transfers,~~ as well as policy rider fees primarily on FIA policies, 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 Condensed Consolidated Statements of Earnings (in millions):, for the three months ended March 31, 2022 and March 31, 2021:


		Three months ended				Nine months ended	Four months ended				Three months ended
		September 30, 2021		September 30, 2020			September 30, 2021		September 30, 2020				March 31, 2022		March 31, 2021

Life-contingent pension risk transfer premiums												Life-contingent pension risk transfer premiums	$	525	$	—
Traditional life insurance premiums	Traditional life insurance premiums	$	6	$	6		$	14	$	8		Traditional life insurance premiums	5		7
Life-contingent immediate annuity premiums	Life-contingent immediate annuity premiums	4		5			12		8			Life-contingent immediate annuity premiums	5		4
Life-contingent pension risk transfer		371		—			371		—
Surrender charges	Surrender charges	7		4			25		6			Surrender charges	10		9
Cost of insurance fees and other income		43		45			135		58
Policyholder fees and other income												Policyholder fees and other income	49		44
Life insurance premiums and other fees	Life insurance premiums and other fees	$	431	$	60		$	557	$	80		Life insurance premiums and other fees	$	594	$	64

•~~Traditional life~~Life insurance premiums and other fees for the three ~~and nine~~ months ended ~~September 30, 2021, and~~March 31, 2022 reflect an increase compared to the three ~~and four~~ months ended September 30, 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 three and nine months ended September 30, 2021, and three and four months ended September 30, 2020 reflect policyholder behavior for annuitizations.~~

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•~~Pension risk transfer premiums for the three and nine months ended September 30, 2021 reflect new PRT deals for the period.~~

•~~Cost of insurance fees and other income for the three and nine months ended September 30,~~March 31, 2021 primarily ~~reflects GMWB rider fees~~due to entrance into the PRT market in the second half of $32 million and $99 million, respectively, and cost of insurance charges on IUL policies of $26 million and $73 million respectively, partially offset by unearned revenue deferrals. For the three and four months ended September 30, 2020, this line item primarily reflects GMWB rider fees of $29 million and $38 million, respectively, and cost of insurance charges on IUL policies of $21 million and $27 million respectively, partially offset by unearned revenue deferrals. GMWB rider fees are based on the policyholder's benefit base and are collected at the end of the policy year.2021.

Interest and investment income

Below is a summary of interest and investment income (in millions):


														Three months ended
		Three months ended				Nine months ended			Four months ended			March 31, 2022				March 31, 2021
		September 30, 2021		September 30, 2020			September 30, 2021			September 30, 2020
Fixed maturity securities, available-for-sale	Fixed maturity securities, available-for-sale	$	300	$	271		$	903		$	370		Fixed maturity securities, available-for-sale	$	319		$	292
Equity securities	Equity securities	12		12			40			24			Equity securities	15			12
Mortgage loans	Mortgage loans	34		24			90			31			Mortgage loans	39			23

Limited partnerships													Limited partnerships	113			80
Other investments	Other investments	177		29			429			32			Other investments	10			4
Gross investment income	Gross investment income	523		336			1,462			457			Gross investment income	496			411
Investment expense	Investment expense	(42)		(31)			(121)			(41)			Investment expense	(45)			(38)
Interest and investment income	Interest and investment income	$	481	$	305		$	1,341		$	416		Interest and investment income	$	451		$	373

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


		Three months ended						Nine months ended				Four months ended				Three months ended
		September 30, 2021			September 30, 2020				September 30, 2021				September 30, 2020					March 31, 2022			March 31, 2021
Yield on AAUM (at amortized cost)	Yield on AAUM (at amortized cost)	5.89		%	4.52		%		5.82		%		4.64		%		Yield on AAUM (at amortized cost)	4.82		%	5.15		%
Alternative investment yield adjustment	Alternative investment yield adjustment	(1.23)		%	0.13		%		(1.09)		%		0.20		%		Alternative investment yield adjustment	(0.04)		%	(0.56)		%
Adjusted yield on AAUM	Adjusted yield on AAUM	4.66		%	4.65		%		4.73		%		4.84		%		Adjusted yield on AAUM	4.78		%	4.59		%
Less: Interest credited and option cost	Less: Interest credited and option cost	(1.81)		%	(2.03)		%		(1.95)		%		(2.00)		%		Less: Interest credited and option cost	(1.89)		%	(2.04)		%
Net investment spread	Net investment spread	2.85		%	2.62		%		2.78		%		2.84		%		Net investment spread	2.89		%	2.55		%
AAUM	AAUM	$	32,692		$	26,990			$	30,706			$	26,898			AAUM	$	37,459		$	29,016

•~~The increase in AAUM for the three and nine months ended September 30, 2021 and the three and four months ended September 30, 2020 reflect net new business asset flows.~~

•The $481 million and $1,341 million Net Investment Income ("NII") for the three and nine months ended September 30, 2021, respectively, was the result of yield on AAUM including strong alternative asset returns and invested asset growth during the period. The $305 million and $416 million NII for the three and four months ended September 30, 2020, respectively, was primarily driven by $271 and $370 million in fixed maturity securities, respectively, and $12 and $24 million in equity securities, respectively. This is partially offset by $31 and $41 million in investment expenses for the three and four months ended September 30, 2020, respectively.

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•~~The~~AAUM was higher for the three months ended March 31, 2022 compared to the three months ended March 31, 2021, reflecting net new business asset flows, offset by net reinsurance and other activity.

•Interest and investment income was higher for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 primarily due to $109 million invested asset growth, partially offset by $23 million lower returns on alternative ~~investment yield adjustment reflects the yield impact~~investments and $8 million of ~~market volatility on the alternative investment portfolio.~~all other rate impacts.

Recognized gains and losses, net

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


														Three months ended
		Three months ended				Nine months ended			Four months ended			March 31, 2022				March 31, 2021
		September 30, 2021		September 30, 2020			September 30, 2021			September 30, 2020
Net realized and unrealized gains (losses) on fixed maturity available-for-sale securities, equity securities and other invested assets	Net realized and unrealized gains (losses) on fixed maturity available-for-sale securities, equity securities and other invested assets	$	(6)	$	50		$	58		$	59		Net realized and unrealized gains (losses) on fixed maturity available-for-sale securities, equity securities and other invested assets	$	(107)		$	46
Change in allowance for expected credit losses	Change in allowance for expected credit losses	1		(7)			3			(17)			Change in allowance for expected credit losses	(1)			4
Net realized and unrealized gains (losses) on certain derivatives instruments	Net realized and unrealized gains (losses) on certain derivatives instruments	(3)		46			284			60			Net realized and unrealized gains (losses) on certain derivatives instruments	(308)			25
Change in fair value of reinsurance related embedded derivatives	Change in fair value of reinsurance related embedded derivatives	23		(14)			23			(35)			Change in fair value of reinsurance related embedded derivatives	122			27
Change in fair value of other derivatives and embedded derivatives	Change in fair value of other derivatives and embedded derivatives	—		2			2			3			Change in fair value of other derivatives and embedded derivatives	(3)			—
Recognized gains and losses, net	Recognized gains and losses, net	$	15	$	77		$	370		$	70		Recognized gains and losses, net	$	(297)		$	102

•For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 net realized and unrealized gains (losses) on fixed maturity available-for-sale securities, equity securities and other invested assets includes $34 million of realized losses on fixed maturity available-for-sale securities, $69 million of unrealized losses due to mark-to-market movement on our equity securities and $4 million of realized losses on other invested assets. For the three months ended March 31, 2021 net realized and unrealized gains (losses) on fixed maturity available-for-sale securities, equity securities and other invested assets ~~is primarily the result~~includes $41 million of realized gains on fixed maturity available-for-sale ~~securities. For the three and four months ended September 30, 2020, net realized~~securities, $3 million of unrealized gains ~~on available-for-sale securities, fixed maturity securities, equity securities and other invested assets is primarily the result of~~due to mark-to-market movement on our equity securities and ~~trading gains.~~

•~~Allowance for expected~~$2 million of realized gains on other invested assets. There were no credit ~~losses decreased during~~related impairments in either of the for the three and nine months ended September 30, 2021 primarily due to bonds and mortgage loans, and increased for the three and four months ended September 30, 2020 primarily due to residential mortgage loans.periods.

•For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022, and March 31, 2021, ~~and the three and four months ended September 30, 2020,~~ net realized and unrealized gains (losses) on certain derivative instruments primarily relates to the realized and unrealized gains and losses on futures and options used to hedge FIA and IUL products and gains on option 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.

~~Table of Contents~~

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.

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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 (dollars in millions):


																		Three months ended
		Three months ended						Nine months ended				Four months ended				March 31, 2022					March 31, 2021
		September 30, 2021			September 30, 2020				September 30, 2021				September 30, 2020
Call Options:	Call Options:																Call Options:
Gains on option expiration	Gains on option expiration	$	134		$	24			$	303			$	26			Gains on option expiration	$	45			$	55
Change in unrealized (losses) gains		(140)			19				(30)				29
Change in unrealized (losses)																	Change in unrealized (losses)	(359)				(33)
Futures contracts:	Futures contracts:																Futures contracts:
Gains on futures contracts expiration	Gains on futures contracts expiration	—			9				8				17				Gains on futures contracts expiration	2				1
Change in unrealized losses		—			(2)				(4)				(8)
Change in unrealized gains (losses)																	Change in unrealized gains (losses)	1				(2)
Foreign currency forward:	Foreign currency forward:																Foreign currency forward:
Gains (losses) on foreign currency forward		3			(4)				7				(4)
Gains on foreign currency forward																	Gains on foreign currency forward	3				4
Total net change in fair value	Total net change in fair value	$	(3)		$	46			$	284			$	60			Total net change in fair value	$	(308)			$	25

Annual Point-to-Point Change in S&P 500 Index during the period		1		%	9		%		16		%		10		%
Annual Point-to-Point Change in S&P 500 Index during the periods																	Annual Point-to-Point Change in S&P 500 Index during the periods	14		%		51		%

•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 three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and March 31, 2021, ~~and three and four months ended September 30, 2020,~~ on options settled during the period.

•The change in unrealized gains and 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 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.~~

~~Table of Contents~~

The average index credits to policyholders are as follows:


		Three months ended				Nine months ended			Four months ended			Three months ended
		September 30, 2021		September 30, 2020			September 30, 2021			September 30, 2020				March 31, 2022		March 31, 2021
Average Crediting Rate	Average Crediting Rate	6	%	3	%		5	%		2	%		Average Crediting Rate	3	%	3	%
S&P 500 Index:	S&P 500 Index:												S&P 500 Index:
Point-to-point strategy	Point-to-point strategy	4	%	5	%		5	%		5	%		Point-to-point strategy	3	%	5	%
Monthly average strategy	Monthly average strategy	4	%	2	%		3	%		3	%		Monthly average strategy	3	%	1	%
Monthly point-to-point strategy	Monthly point-to-point strategy	11	%	—	%		7	%		—	%		Monthly point-to-point strategy	2	%	2	%
3 year high water mark	3 year high water mark	19	%	21	%		14	%		20	%		3 year high water mark	15	%	10	%

•Actual amounts credited to contractholder fund balances may differ from the index appreciation due to contractual features in the FIA contracts 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. ~~Surrender charges were higher in the prior year periods, primarily due to a higher number~~

Table of ~~universal life policy surrenders.~~Contents

~~Expenses~~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 (in millions):

Three months ended Nine months ended Four months ended
September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020
FIA embedded derivative impact $ (547) $ 57 $ (611) $ 126
Index credits, interest credited & bonuses 289 133 725 174
Annuity payments 312 (1) 399 11
Other 131 62 221 95
Total benefits and other changes in policy reserves $ 185 $ 251 $ 734 $ 406


	Three months ended
	March 31, 2022		March 31, 2021


FIA/IUL market related liability movements	$	(559)	$	(273)
Index credits, interest credited & bonuses	199		191

PRT change in reserves	536		—
Annuity payments and other	32		56
Total benefits and other changes in policy reserves	$	208	$	(26)

•~~Annually, typically in the third quarter, we review assumptions associated with reserves for policy benefits and product guarantees. In addition,~~The FIA/IUL market related liability movements during the three months ended ~~September 30~~March 31, 2022 and March 31, 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 system implementation included refinements in the calculation of the fair value of the embedded derivative component of our fixed index annuities. These changes, taken together, resulted in a decrease in contractholder funds and future policy reserves of $397 million.

•~~In addition to the above, the FIA fair value option liability decreased,~~respectively, are mainly driven by ~~the~~ changes in the equity markets, ~~change in~~ non-performance ~~spread,~~spreads, and risk free rates during the ~~period.~~periods. The change in risk free rates and non-performance spreads decreased the FIA ~~embedded derivative~~market related liability by ~~$15~~$306 million and ~~$146~~$201 million during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and March 31, 2021, respectively. The change in non-performance spread increased the FIA embedded liability by $34 million and $95 million during the three and four months ended September 30, 2020, respectively, partially offset by a $7 million decrease in the liability due to movement of risk-free rates in both prior year periods. The remaining change in market value of the ~~derivative assets hedging our FIA policies~~market related liability movements was driven by ~~the system implementation discussed above and~~ 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.

~~Table of Contents~~

•~~The index~~Index credits, interest credited & bonuses for the three months ended March 31, 2022 were in line with the three months ended March 31, 2021 and were primarily due to index credits on FIA policies. Refer to average policyholder index discussion above for details on drivers.

~~Depreciation~~•PRT change in reserves were higher for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 and ~~amortization~~reflect new PRT activity for the period and F&G's entrance into the PRT market in the second half of 2021.

Amortization of intangibles

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


		Three months ended				Nine months ended			Four months ended			Three months ended
		September 30, 2021		September 30, 2020			September 30, 2021			September 30, 2020				March 31, 2022		March 31, 2021
Amortization of DAC, VOBA, and DSI	Amortization of DAC, VOBA, and DSI	$	204	$	58		$	436		$	61		Amortization of DAC, VOBA, and DSI	$	144	$	148
Interest	Interest	(12)		(9)			(32)			(12)			Interest	(13)		(10)
Unlocking	Unlocking	18		1			1			1			Unlocking	5		(1)
Amortization of other intangible assets and other depreciation	Amortization of other intangible assets and other depreciation	$	—	$	6		$	14		$	9		Amortization of other intangible assets and other depreciation	7		7
Total depreciation and amortization	Total depreciation and amortization	$	210	$	56		$	419		$	59		Total depreciation and amortization	$	143	$	144

•Annually, typically in the third quarter, we review assumptions associated with the amortization of intangibles. In addition, during the three months ended September 30 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.

•Amortization of DAC, VOBA, and DSI is based on current and future expected gross margins (pre-tax operating income before amortization). The amortization for the periods presented is the result of actual gross profits ("AGPs") in the period.

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Other items affecting net earnings

Income tax expense (benefit)

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


		Three months ended						Nine months ended				Four months ended				Three months ended
		September 30, 2021			September 30, 2020				September 30, 2021				September 30, 2020					March 31, 2022			March 31, 2021
Income before taxes	Income before taxes	$	472		$	72			$	925			$	14			Income before taxes	$	341		$	356

Income tax expense before valuation allowance	Income tax expense before valuation allowance	96			14				203				1				Income tax expense before valuation allowance	67			72

Change in valuation allowance	Change in valuation allowance	—			(8)				(14)				(9)				Change in valuation allowance	38			—
Federal income tax expense (benefit)	Federal income tax expense (benefit)	$	96		$	6			$	189			$	(8)			Federal income tax expense (benefit)	$	105		$	72
Effective rate	Effective rate	20		%	8		%		20		%		(57)		%		Effective rate	31		%	20		%

•Income tax expense for the three months ended March 31, 2022 was $105 million, inclusive of a change in the valuation allowance of $38 million, compared to income tax expense of $72 million for the three months ended March 31, 2021. The effective rate for the three months ended March 31, 2022, excluding the change in valuation allowance, was 20%, in line with the effective rate for the three months ended March 31, 2021.

•The increase in income tax expense was primarily attributable to the recording of a valuation allowance in the 2022 period for tax benefits associated with deferred tax assets, related to realized losses on the past sales of discontinued operations, for which it is more likely than not that we will not be able to realize for tax purposes.

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

The table below shows the adjustments made to reconcile Net earnings from continuing operations ~~attributable to common shareholders~~ to Adjusted net earnings ~~from continuing operations attributable to common shareholders~~ (in millions):


	Three months ended
	March 31, 2022		March 31, 2021
Net earnings from continuing operations	$	236	$	284
Non-GAAP adjustments:
Recognized (gains), net	(33)		(82)
Indexed product related derivatives	(168)		(185)


Purchase price amortization	6		7

Transaction costs	—		2

Income taxes on non-GAAP adjustments	41		52
Adjusted net earnings	$	82	$	78
Notable items included in adjusted net earnings (discussed below)	$	(16)	$	12

•Adjusted net earnings increased from $78 million for the three months ended March 31, 2021 to $82 million for the three months ended March 31, 2022. The March 31, 2022 results include $16 million of net unfavorable items including $38 million of income tax expense due to a valuation allowance recorded against deferred tax assets related to the past sale of discontinued operations, partially offset by $22 million favorable items primarily comprised of gains on collateralized loan obligation ("CLO") redemptions. Comparatively, adjusted net earnings for the three months ended March 31, 2021 included $12 million of net favorable items, primarily as a result of favorable mortality and gains on CLO redemptions.

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Three months ended Nine months ended Four months ended
September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020
Net earnings from continuing operations attributable to common shareholders $ 376 $ 66 $ 736 $ 22
Non-GAAP adjustments:
Recognized gains and losses, net (98) (15) (243) 31
Indexed product related derivatives 26 14 (84) 57
Purchase price amortization 7 7 20 9
Transaction costs 1 10 5 17
Other non-recurring items (a) (284) — (284) —
Income taxes on non-GAAP adjustments 73 (8) 121 (29)
Adjusted net earnings from continuing operations attributable to common shareholders $ 101 $ 74 $ 271 $ 107
Notable items included in adjusted net earnings attributable to common shareholders (discussed below) $ 27 $ 10 $ 61 $ (9)
(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 three months ended September 30, 2021 primarily reflects net investment income for the period, partially offset by product costs and other expenses, and includes $7 million of net favorable mortality driven by the single premium immediate annuity ("SPIA") line of business, and $20 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 nine months ended September 30, 2021 primarily reflects net investment income for the period, partially offset by product costs and other expenses, and includes $17 million of net favorable mortality driven by the SPIA line of business, $8 million of net benefit from lower DAC amortization from unlocking, and $36 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 three and four months ended September 30, 2020, primarily reflects net investment income for the period, partially offset by product costs and other expenses, and included a $10 million and $14 million, respectively of net favorable actual to expected mortality within the SPIA line of business. Adjusted net earnings for the four months ended September 30, 2020 also included $4 million bond prepayment income.

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 ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the fair value of our investment portfolio was approximately ~~$36~~$39 billion and ~~$31~~$39 billion, respectively, and was divided among the following asset classes and sectors (dollars in millions):

~~Table of Contents~~

September 30, 2021 December 31, 2020
Fair Value Percent Fair Value Percent
Fixed maturity securities, available for sale:
    United States Government full faith and credit $ 472 1 % $ 45 — %
    United States Government sponsored entities 85 — % 106 — %
    United States municipalities, states and territories 1,301 4 % 1,309 4 %
    Foreign Governments 137 1 % 140 — %
Corporate securities:
    Finance, insurance and real estate 4,758 13 % 4,572 15 %
    Manufacturing, construction and mining 920 3 % 936 3 %
    Utilities, energy and related sectors 2,764 9 % 2,762 9 %
    Wholesale/retail trade 2,345 6 % 2,106 7 %
    Services, media and other 3,032 8 % 2,793 9 %
Hybrid securities 893 2 % 963 3 %
Non-agency residential mortgage-backed securities 646 2 % 694 2 %
Commercial mortgage-backed securities 3,006 8 % 2,806 9 %
Asset-backed securities 3,830 11 % 1,999 6 %
Collateral loan obligations ("CLO") 4,361 12 % 4,268 14 %
Total fixed maturity available for sale securities 28,550 80 % 25,499 81 %
Alternative investments:
   Private equity 933 2 % 614 2 %
   Real assets 321 1 % 288 1 %
   Credit 768 2 % 254 1 %
Equity securities (a) 1,026 2 % 1,047 3 %
Commercial mortgage loans 2,011 5 % 926 3 %
Residential mortgage loans 1,473 4 % 1,123 4 %
Other (primarily derivatives and company owned life insurance) 1,035 3 % 997 4 %
Short term investments 258 1 % 456 1 %
Total investments $ 36,375 100 % $ 31,204 100 %

~~(a) Includes investment grade non-redeemable preferred stocks ($755 million and $853 million, respectively).~~


	March 31, 2022				December 31, 2021
	Fair Value		Percent		Fair Value		Percent

Fixed maturity securities, available for sale:
United States Government full faith and credit	$	262	1	%	$	50	—	%
United States Government sponsored entities	55		—	%	74		—	%
United States municipalities, states and territories	1,309		3	%	1,441		4	%
Foreign Governments	180		—	%	205		1	%
Corporate securities:
Finance, insurance and real estate	5,064		13	%	5,109		13	%
Manufacturing, construction and mining	872		2	%	932		2	%
Utilities, energy and related sectors	2,654		7	%	2,987		8	%
Wholesale/retail trade	2,440		6	%	2,627		7	%
Services, media and other	3,029		8	%	3,349		8	%
Hybrid securities	819		2	%	881		2	%
Non-agency residential mortgage-backed securities	698		2	%	648		2	%
Commercial mortgage-backed securities	3,038		8	%	2,964		7	%
Asset-backed securities	4,751		12	%	4,550		12	%
Collateral loan obligations ("CLO")	4,307		11	%	4,145		11	%
Total fixed maturity available for sale securities	29,478		75	%	29,962		77	%
Equity securities (a)	1,073		3	%	1,171		3	%
Alternative investments:
Private equity	1,287		3	%	1,181		3	%
Real assets	358		1	%	340		1	%
Credit	1,051		3	%	829		2	%
Commercial mortgage loans	2,147		6	%	2,265		6	%
Residential mortgage loans	1,904		5	%	1,549		4	%
Other (primarily derivatives and company owned life insurance)	997		3	%	1,305		3	%
Short term investments	387		1	%	373		1	%
Total investments	$	38,682	100	%	$	38,975	100	%
(a) Includes investment grade non-redeemable preferred stocks ($833 million and $928 million as of March 31, 2022 and December 31, 2021, 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”~~

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“NRSRO”), (ii) U.S. Government and government-sponsored agency securities, or (iii) securities of comparable investment quality, if not rated.

~~Table of Contents~~

As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, our fixed maturity available-for-sale ("AFS") securities portfolio was approximately $29 billion and ~~$25~~$30 billion, respectively. The following table summarizes the credit quality, by NRSRO rating, of our fixed income portfolio (dollars in millions):


		September 30, 2021				December 31, 2020				March 31, 2022				December 31, 2021
Rating	Rating	Fair Value		Percent		Fair Value		Percent			Rating	Fair Value		Percent		Fair Value		Percent
AAA	AAA	$	982	3	%	$	488	2	%		AAA	$	862	3	%	$	660	2	%
AA	AA	1,921		7	%	1,590		6	%		AA	2,128		7	%	2,181		7	%
A	A	7,273		25	%	7,040		28	%		A	7,571		26	%	7,667		26	%
BBB	BBB	9,804		34	%	9,669		38	%		BBB	9,709		33	%	10,462		35	%
Not rated (b)	Not rated (b)	5,869		21	%	4,336		17	%		Not rated (b)	7,091		24	%	6,642		22	%
Total investment grade	Total investment grade	25,849		90	%	23,123		91	%		Total investment grade	27,361		93	%	27,612		92	%
BB	BB	1,621		6	%	1,493		6	%		BB	1,175		4	%	1,372		5	%
B and below (a)	B and below (a)	565		2	%	612		2	%		B and below (a)	408		1	%	432		1	%
Not rated (b)	Not rated (b)	515		2	%	271		1	%		Not rated (b)	534		2	%	546		2	%
Total below investment grade	Total below investment grade	2,701		10	%	2,376		9	%		Total below investment grade	2,117		7	%	2,350		8	%
Total	Total	$	28,550	100	%	$	25,499	100	%		Total	$	29,478	100	%	$	29,962	100	%

(a) Includes ~~$83~~$63 million and ~~$106~~$68 million at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively, of non-agency residential mortgage-backed securities ("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 ~~has adopted revised~~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 ~~revised~~ designation methodologies for these structured securities was to increase accuracy in assessing expected losses and to use the improved assessment to determine a more appropriate capital requirement for such structured securities. ~~The~~Prior to 2021, the NAIC designations for structured securities, including subprime and Alternative A-paper ("Alt-A") RMBS, ~~are~~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. ~~A number~~In 2021, the NAIC eliminated the comparison of non-legacy (issues 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 revised 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 ~~revised~~ NAIC methodologies.

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The table below presents our fixed maturity securities by NAIC designation as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 (dollars in millions):


		September 30, 2021							March 31, 2022
NAIC Designation	NAIC Designation	Amortized Cost		Fair Value		Percent of Total Fair Value		NAIC Designation	Amortized Cost		Fair Value		Percent of Total Fair Value
1	1	$	14,367	$	14,770	52	%	1	$	17,015	$	16,168	55	%
2	2	10,140		10,899		38	%	2	11,216		10,905		37	%
3	3	1,667		1,927		7	%	3	1,567		1,669		6	%
4	4	651		747		2	%	4	562		608		2	%
5	5	136		149		1	%	5	68		74		—	%
6	6	59		58		—	%	6	56		54		—	%
Total	Total	$	27,020	$	28,550	100	%	Total	$	30,484	$	29,478	100	%

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

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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 ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 (dollars in millions):


		September 30, 2021					March 31, 2022
Top 10 Industry Concentration	Top 10 Industry Concentration	Fair Value		Percent of Total Fair Value		Top 10 Industry Concentration	Fair Value		Percent of Total Fair Value
ABS Other						ABS Other	$	4,751	16	%
CLO securities	CLO securities	$	4,361	15	%	CLO securities	4,311		14	%
ABS Other		3,830		13	%
Banking	Banking	2,618		9	%	Banking	2,971		10	%
Whole loan collateralized mortgage obligation ("CMO")	Whole loan collateralized mortgage obligation ("CMO")	2,556		9	%	Whole loan collateralized mortgage obligation ("CMO")	2,792		9	%
Life insurance	Life insurance	1,770		6	%	Life insurance	1,629		5	%
Electric	Electric	1,565		5	%	Electric	1,557		5	%
Municipal	Municipal	1,301		3	%	Municipal	1,310		4	%
Healthcare						Healthcare	872		3	%
Technology	Technology	859		3	%	Technology	836		3	%
Healthcare		790		3	%
CMBS		783		3	%
Other Financial Institution						Other Financial Institution	685		2	%
Total	Total	$	20,433	69	%	Total	$	21,714	71	%

		December 31, 2020					December 31, 2021
Top 10 Industry Concentration	Top 10 Industry Concentration	Fair Value		Percent of Total Fair Value		Top 10 Industry Concentration	Fair Value		Percent of Total Fair Value
ABS Other						ABS Other	$	4,550	15	%
CLO securities	CLO securities	$	4,268	16	%	CLO securities	4,145		13	%
Banking	Banking	2,592		10	%	Banking	2,919		9	%
Whole loan collateralized mortgage obligation ("CMO")	Whole loan collateralized mortgage obligation ("CMO")	2,343		9	%	Whole loan collateralized mortgage obligation ("CMO")	2,622		8	%
ABS other		1,873		7	%
Life insurance	Life insurance	1,657		6	%	Life insurance	1,795		6	%
Electric	Electric	1,548		6	%	Electric	1,701		6	%
Municipal	Municipal	1,308		5	%	Municipal	1,441		5	%
CMBS		795		3	%
Healthcare						Healthcare	947		3	%
Technology	Technology	784		3	%	Technology	932		3	%
Healthcare		658		2	%
Other Financial Institutions						Other Financial Institutions	760		2	%
Total	Total	$	17,826	67	%	Total	$	21,812	70	%

Table of Contents

The amortized cost and fair value of fixed maturity AFS securities by contractual maturities as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021 (dollars in millions), are shown below. Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations.

~~Table of Contents~~


		September 30, 2021				December 31, 2020				March 31, 2022				December 31, 2021
(In millions)		Amortized Cost		Fair Value		Amortized Cost		Fair Value
												Amortized Cost		Fair Value		Amortized Cost		Fair Value
Corporate, Non-structured Hybrids, Municipal and Government securities:	Corporate, Non-structured Hybrids, Municipal and Government securities:										Corporate, Non-structured Hybrids, Municipal and Government securities:
Due in one year or less	Due in one year or less	$	84	$	85	$	111	$	112		Due in one year or less	$	112	$	115	$	105	$	106
Due after one year through five years	Due after one year through five years	1,523		1,572		1,055		1,107			Due after one year through five years	1,993		1,942		1,724		1,754
Due after five years through ten years	Due after five years through ten years	2,373		2,451		1,808		1,918			Due after five years through ten years	2,151		2,075		2,141		2,201
Due after ten years	Due after ten years	11,818		12,514		11,436		12,489			Due after ten years	13,362		12,497		12,842		13,515
Subtotal	Subtotal	$	15,798	$	16,622	$	14,410	$	15,626		Subtotal	$	17,618	$	16,629	$	16,812	$	17,576
Other securities which provide for periodic payments:
Other securities, which provide for periodic payments:											Other securities, which provide for periodic payments:
Asset-backed securities	Asset-backed securities	$	3,752	$	3,830	$	1,920	$	1,999		Asset-backed securities	$	9,137	$	9,058	$	8,516	$	8,695
CLO securities		4,164		4,361		4,021		4,268

Commercial-mortgage-backed securities	Commercial-mortgage-backed securities	2,602		3,007		2,468		2,806			Commercial-mortgage-backed securities	2,937		3,038		2,669		2,964

Structured hybrids											Structured hybrids	—		—		5		5
Residential mortgage-backed securities	Residential mortgage-backed securities	704		730		782		800			Residential mortgage-backed securities	792		753		722		722
Subtotal	Subtotal	$	11,222	$	11,928	$	9,191	$	9,873		Subtotal	$	12,866	$	12,849	$	11,912	$	12,386
Total fixed maturity available-for-sale securities	Total fixed maturity available-for-sale securities	$	27,020	$	28,550	$	23,601	$	25,499		Total fixed maturity available-for-sale securities	$	30,484	$	29,478	$	28,724	$	29,962

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,~~NAIC's valuation of the securities, general lack of sensitivity to interest rates, positive convexity to prepayment rates and correlation between the price of the securities and the ~~unfolding recovery~~strength of the U.S. housing market.

The fair value of our investments in subprime and Alt-A RMBS securities was ~~$56~~$49 million and ~~$80~~$69 million as of ~~September 30, 2021,~~March 31, 2022, respectively, and ~~$68~~$52 million and ~~$94~~$75 million as of December 31, ~~2020,~~2021, respectively.

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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 ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 (dollars in millions):


		September 30, 2021				December 31, 2020				March 31, 2022				December 31, 2021
NAIC Designation:	NAIC Designation:	Fair Value		Percent of Total		Fair Value		Percent of Total			NAIC Designation:	Fair Value		Percent of Total		Fair Value		Percent of Total
1	1	$	126	93	%	$	153	94	%		1	$	108	90	%	$	116	91	%
2	2	2		1	%	1		1	%		2	4		3	%	4		3	%
3	3	2		1	%	2		1	%		3	3		3	%	2		2	%
4	4	5		4	%	3		2	%		4	3		3	%	1		1	%
5	5	1		1	%	3		2	%		5	1		1	%	4		3	%
6	6	—		—	%	—		—	%		6	—		—	%	—		—	%
Total	Total	$	136	100	%	$	162	100	%		Total	$	119	100	%	$	127	100	%

NRSRO:	NRSRO:										NRSRO:
AAA	AAA	$	1	1	%	$	1	1	%		AAA	$	—	—	%	$	—	—	%
AA	AA	16		12	%	4		2	%		AA	15		13	%	15		12	%
A	A	5		4	%	17		10	%		A	5		4	%	5		4	%
BBB	BBB	14		10	%	17		10	%		BBB	11		9	%	12		9	%
Not rated - Above investment grade (a)	Not rated - Above investment grade (a)	18		13	%	19		12	%		Not rated - Above investment grade (a)	23		19	%	24		19	%
BB and below	BB and below	82		60	%	104		65	%		BB and below	65		55	%	71		56	%
Total	Total	$	136	100	%	$	162	100	%		Total	$	119	100	%	$	127	100	%

Vintage:	Vintage:										Vintage:

2007	2007	33		24	%	37		23	%		2007	29		24	%	31		24	%
2006	2006	36		26	%	43		27	%		2006	32		27	%	34		27	%
2005 and prior	2005 and prior	67		50	%	82		50	%		2005 and prior	58		49	%	62		49	%

Total	Total	$	136	100	%	$	162	100	%		Total	$	119	100	%	$	127	100	%

(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 ~~September 30,~~March 31, 2022, the CLO and ABS positions were trading at a net unrealized gain/(loss) position of $59 million and $(137) million, respectively. As of December 31, 2021, the CLO and ABS positions were trading at a net unrealized gain position of ~~$200~~$145 million and ~~$78 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~~$37 million, respectively.

Municipal Bond Exposure

Our municipal bond exposure is a combination of general obligation bonds (fair value of ~~$258~~$226 million and an amortized cost of ~~$246~~$239 million as of ~~September 30, 2021)~~March 31, 2022) and special revenue bonds (fair value of ~~$1,043~~$1,084 million and an amortized cost of ~~$995~~$1,141 million as of ~~September 30,~~March 31, 2021).

Across all municipal bonds, the largest issuer represented 7%6% 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 ~~90%~~92% of our municipal bond exposure is rated NAIC 1.

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Mortgage Loans

We rate all commercial mortgage loans ("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 unaudited Condensed Consolidated Statements of Earnings.

LTV and DSC ratios are utilized as part of the review process described above. As of ~~September 30, 2021,~~March 31, 2022, our mortgage loans on real estate portfolio had a weighted average DSC ratio of ~~2.2~~2.4 times, and a weighted average LTV ratio of ~~53%~~56%. See Note D to the unaudited Condensed Consolidated Financial Statements included in Item 1 of Part I of this Report for additional information regarding our LTV and DSC ratios.

F&G's residential mortgage loans ("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.

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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 ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, were as follows (in millions):


		September 30, 2021											March 31, 2022
		Number of securities		Amortized Cost		Allowance for Expected Credit Losses		Unrealized Losses		Fair Value			Number of securities	Amortized Cost		Allowance for Expected Credit Losses		Unrealized Losses		Fair Value
Fixed maturity securities, available for sale:	Fixed maturity securities, available for sale:											Fixed maturity securities, available for sale:
United States Government full faith and credit	United States Government full faith and credit	$	8	$	472	$	—	$	(7)	$	465	United States Government full faith and credit	10	$	122	$	—	$	(1)	$	121
United States Government sponsored agencies	United States Government sponsored agencies	26		24		—		—		24		United States Government sponsored agencies	57	48		—		(2)		46
United States municipalities, states and territories	United States municipalities, states and territories	32		294		—		(9)		285		United States municipalities, states and territories	122	1,128		—		(88)		1,040
Foreign Governments	Foreign Governments	1		8		—		—		8		Foreign Governments	48	171		—		(12)		159
Corporate securities:	Corporate securities:											Corporate securities:
Finance, insurance and real estate	Finance, insurance and real estate	146		955		—		(28)		927		Finance, insurance and real estate	685	4,149		—		(288)		3,861
Manufacturing, construction and mining	Manufacturing, construction and mining	38		170		—		(3)		167		Manufacturing, construction and mining	165	683		—		(51)		632
Utilities, energy and related sectors	Utilities, energy and related sectors	103		949		—		(36)		913		Utilities, energy and related sectors	426	2,351		—		(249)		2,102
Wholesale/retail trade	Wholesale/retail trade	139		1,058		—		(35)		1,023		Wholesale/retail trade	482	2,074		—		(215)		1,859
Services, media and other	Services, media and other	160		1,265		—		(47)		1,218		Services, media and other	547	2,756		—		(294)		2,462
Hybrid securities	Hybrid securities	1		2		—		—		2		Hybrid securities	26	423		—		(14)		409
Non-agency residential mortgage backed securities	Non-agency residential mortgage backed securities	29		58		(2)		(1)		55		Non-agency residential mortgage backed securities	93	641		(3)		(37)		601
Commercial mortgage backed securities	Commercial mortgage backed securities	43		267		(1)		(5)		261		Commercial mortgage backed securities	166	1,318		(2)		(67)		1,249
Asset backed securities	Asset backed securities	197		1,599		—		(15)		1,584		Asset backed securities	534	6,469		(1)		(207)		6,261
Total fixed maturity available for sale securities	Total fixed maturity available for sale securities	923		7,121		(3)		(186)		6,932		Total fixed maturity available for sale securities	3,361	22,333		(6)		(1,525)		20,802
Equity securities	Equity securities	8		122		—		(11)		111		Equity securities	45	655		—		(73)		582
Total investments	Total investments	$	931	$	7,243	$	(3)	$	(197)	$	7,043	Total investments	3,406	$	22,988	$	(6)	$	(1,598)	$	21,384

		December 31, 2020											December 31, 2021
		Number of securities		Amortized Cost		Allowance for Expected Credit Losses		Unrealized Losses		Fair Value			Number of securities	Amortized Cost		Allowance for Expected Credit Losses		Unrealized Losses		Fair Value
Fixed maturity securities, available for sale:	Fixed maturity securities, available for sale:											Fixed maturity securities, available for sale:
United States Government full faith and credit	United States Government full faith and credit	$	4	$	5	$	—	$	—	$	5	United States Government full faith and credit	9	$	36	$	—	$	—	$	36
United States Government sponsored agencies	United States Government sponsored agencies	11		23		—		—		23		United States Government sponsored agencies	41	42		—		(1)		41
United States municipalities, states and territories	United States municipalities, states and territories	14		117		—		(2)		115		United States municipalities, states and territories	50	503		—		(11)		492

Foreign Governments												Foreign Governments	28	27		—		—		27
Corporate securities:	Corporate securities:											Corporate securities:
Finance, insurance and real estate	Finance, insurance and real estate	21		347		—		(3)		344		Finance, insurance and real estate	366	1,365		—		(31)		1,334

Manufacturing, construction and mining												Manufacturing, construction and mining	97	281		—		(3)		278
Utilities, energy and related sectors	Utilities, energy and related sectors	12		185		—		(3)		182		Utilities, energy and related sectors	280	1,243		—		(46)		1,197
Wholesale/retail trade	Wholesale/retail trade	11		86		—		(1)		85		Wholesale/retail trade	313	1,188		—		(33)		1,155
Services, media and other	Services, media and other	13		221		—		(7)		214		Services, media and other	339	1,486		—		(39)		1,447
Hybrid securities	Hybrid securities	1		1		—		—		1		Hybrid securities	3	3		—		—		3
Non-agency residential mortgage backed securities	Non-agency residential mortgage backed securities	29		32		(1)		(1)		30		Non-agency residential mortgage backed securities	46	316		(2)		(3)		311
Commercial mortgage backed securities	Commercial mortgage backed securities	19		51		—		(3)		48		Commercial mortgage backed securities	89	616		(1)		(11)		604
Asset backed securities	Asset backed securities	66		517		—		(18)		499		Asset backed securities	375	4,603		(2)		(38)		4,563
Total fixed maturity available for sale securities	Total fixed maturity available for sale securities	201		1,585		(1)		(38)		1,546		Total fixed maturity available for sale securities	2,036	11,709		(5)		(216)		11,488
Equity securities	Equity securities	1		16		—		—		16		Equity securities	20	259		—		(33)		226
Total investments	Total investments	$	202	$	1,601	$	(1)	$	(38)	$	1,562	Total investments	2,056	$	11,968	$	(5)	$	(249)	$	11,714

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The gross unrealized loss position on the fixed maturity available-for-sale fixed and equity portfolio was ~~$197~~$1,598 million and ~~$38~~$249 million as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively. Most components of the portfolio exhibited price depreciation caused by higher treasury rates ~~offset by narrower spreads in certain sectors.~~and wider spreads. The total amortized cost of all securities in an unrealized loss position was ~~$7,243~~$22,988 million and ~~$1,601~~$11,968 million as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively. The average market value/book value of the investment category with the largest unrealized loss position was 89% for Services, media and other as of March 31, 2022. In aggregate, Services, media and other represented 18% of the total unrealized loss position as of March 31, 2022. The average market value/book value of the investment category with the largest unrealized loss position was 96% for ~~Services, media~~Utilities, energy and other as of September 30, 2021. In aggregate, Services, media and other represented 24% of the total unrealized loss position as of September 30, 2021. The average market value/book value of the investment category with the largest unrealized loss position was 97% for Asset backed securitiesrelated sectors as of December 31, ~~2020.~~2021. In aggregate, ~~Asset backed securities~~Utilities, energy and related sectors represented ~~47%~~18% of the total unrealized loss position as of December 31, ~~2020.~~2021.

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) as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, were as follows (dollars in millions):


		September 30, 2021										March 31, 2022
		Number of securities	Amortized Cost		Fair Value		Allowance for Credit Loss		Gross Unrealized Losses			Number of securities	Amortized Cost		Fair Value		Allowance for Credit Loss		Gross Unrealized Losses
Investment grade:	Investment grade:										Investment grade:
Less than six months	Less than six months	2	$	18	$	17	$	—	$	(1)	Less than six months	8	$	170	$	154	$	—	$	(16)
Six months or more and less than twelve months	Six months or more and less than twelve months	6	132		127		—		(5)		Six months or more and less than twelve months	2	31		22		—		(9)
Twelve months or greater	Twelve months or greater	—	—		—		—		—		Twelve months or greater	1	63		54		—		(9)
Total investment grade	Total investment grade	8	150		144		—		(6)		Total investment grade	11	264		230		—		(34)

Below investment grade:	Below investment grade:										Below investment grade:
Less than six months	Less than six months	—	—		—		—		—		Less than six months	1	11		9		—		(2)
Six months or more and less than twelve months	Six months or more and less than twelve months	4	46		42		—		(4)		Six months or more and less than twelve months	—	—		—		—		—
Twelve months or greater	Twelve months or greater	2	12		9		—		(3)		Twelve months or greater	—	—		—		—		—
Total below investment grade	Total below investment grade	6	58		51		—		(7)		Total below investment grade	1	11		9		—		(2)
Total	Total	14	$	208	$	195	$	—	$	(13)	Total	12	$	275	$	239	$	—	$	(36)

		December 31, 2020										December 31, 2021
		Number of securities	Amortized Cost		Fair Value		Allowance for Credit Loss		Gross Unrealized Losses			Number of securities	Amortized Cost		Fair Value		Allowance for Credit Loss		Gross Unrealized Losses
Investment grade:	Investment grade:										Investment grade:
Less than six months	Less than six months	3	$	102	$	95	$	(6)	$	(1)	Less than six months	4	$	82	$	79	$	—	$	(3)
Six months or more and less than twelve months	Six months or more and less than twelve months	—	—		—		—		—		Six months or more and less than twelve months	2	34		32		—		(2)
Twelve months or greater	Twelve months or greater	—	—		—		—		—		Twelve months or greater	—	—		—		—		—
Total investment grade	Total investment grade	3	102		95		(6)		(1)		Total investment grade	6	116		111		—		(5)

Below investment grade:	Below investment grade:										Below investment grade:
Less than six months	Less than six months	1	—		—		—		—		Less than six months	—	—		—		—		—
Six months or more and less than twelve months	Six months or more and less than twelve months	—	—		—		—		—		Six months or more and less than twelve months	—	—		—		—		—
Twelve months or greater	Twelve months or greater	—	—		—		—		—		Twelve months or greater	2	16		14		—		(2)
Total below investment grade	Total below investment grade	1	—		—		—		—		Total below investment grade	2	16		14		—		(2)
Total	Total	4	$	102	$	95	$	(6)	$	(1)	Total	8	$	132	$	125	$	—	$	(7)

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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 ~~September 30, 2021,~~March 31, 2022, our watch list included twelve securities in an unrealized loss position with an amortized cost of ~~$208~~$275 million, allowance for expected credit losses of $0 million, unrealized losses of ~~$13~~$36 million and a fair value of ~~$195~~$239 million.

At December 31, ~~2020,~~2021, our watch list included ~~four~~seven securities in an unrealized loss position with an amortized cost of ~~$102~~$132 million, allowance for expected credit losses of $6$0 million, unrealized losses of $1$7 million and a fair value of ~~$95~~$125 million.

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

There were 2634 and 36 structured securities with a fair value of ~~$38~~$42 million and ~~$65~~$45 million to which we had potential credit exposure as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively. Our analysis of these structured securities, which included cash flow testing, resulted in allowances for expected credit losses of $7$6 million and $3$8 million as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively.

Exposure to Sovereign Debt

~~Our investment portfolio had~~There have been no ~~direct~~material changes in the exposure to ~~European~~ sovereign debt ~~as of September 30, 2021 and~~described in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~

~~As of September 30, 2021 and December 31, 2020, the Company also had no material exposure risk related to financial investments in Puerto Rico.~~2021.

Interest and investment income

For discussion regarding our net investment income and net investment gains (losses) refer to Note D to the unaudited Condensed Consolidated Financial Statements included in Item 1 of Part I of this 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 ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, refer to Note D to the unaudited Condensed Consolidated Financial Statements included in Item 1 of Part I of this Report.

Concentrations of Financial Instruments

There have been no material changes in the concentrations of financial instruments described in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

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.

~~The Company is~~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. ~~The Company reduces~~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 unaudited Condensed Consolidated Balance Sheets.

See Note E to the unaudited Condensed Consolidated Financial Statements included in Item 1 of Part I of this Report for additional information regarding our derivatives and our exposure to credit loss on call options.

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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 ~~from~~of operations of our Corporate and Other ~~segment:~~segment (in millions):


		Three months ended September 30,				Nine months ended September 30,					Three months ended March 31,
		2021		2020		2021		2020			2022		2021
		(In millions)				(In millions)
Revenues:	Revenues:									Revenues:

Escrow, title-related and other fees	Escrow, title-related and other fees	$	44	$	51	$	133	$	114	Escrow, title-related and other fees	$	31	$	42
Interest and investment income		—		—		—		5

Recognized gains and losses, net	Recognized gains and losses, net	—		(1)		9		(8)		Recognized gains and losses, net	3		—
Total revenues	Total revenues	44		50		142		111		Total revenues	34		42
Expenses:	Expenses:									Expenses:
Personnel costs	Personnel costs	24		33		85		64		Personnel costs	17		29

Other operating expenses	Other operating expenses	25		30		75		121		Other operating expenses	27		25
Depreciation and amortization	Depreciation and amortization	6		5		18		17		Depreciation and amortization	6		6

Interest expense	Interest expense	21		22		62		51		Interest expense	22		20
Total expenses	Total expenses	76		90		240		253		Total expenses	72		80
Loss from continuing operations, before income taxes and equity in earnings of unconsolidated affiliates	Loss from continuing operations, before income taxes and equity in earnings of unconsolidated affiliates	$	(32)	$	(40)	$	(98)	$	(142)	Loss from continuing operations, before income taxes and equity in earnings of unconsolidated affiliates	$	(38)	$	(38)

The revenue in the Corporate and Other segment ~~for all periods~~ 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 decreased $6$8 million, or ~~12%~~19%, in the ~~three-month period~~three months ended ~~September 30, 2021 and increased $31 million, or 28% in the nine-month period ended September 30, 2021~~March 31, 2022 from the corresponding ~~periods~~period in ~~2020.~~2021. The decrease ~~in the three-month 2021 period when compared to the 2020 period is attributable to various immaterial items. The increase in the nine-month 2021 period when compared to the 2020 period is~~was primarily attributable to ~~year-over-year increases~~a decrease in ~~valuation gains of $27 million~~valuations associated with our deferred compensation plan assets ~~and increased real estate technology revenues~~ of ~~$23~~$16 million, partially offset by ~~reduced brokerage revenue of $19 million.~~various immaterial items.

Personnel costs in the Corporate and Other segment decreased $9$12 million, or ~~27%~~41%, in the ~~three-month period~~three months ended ~~September 30, 2021 and increased $21 million, or 33% in the nine-month period ended September 30, 2021~~March 31, 2022 from the corresponding period in ~~2020.~~2021. The decrease ~~in the three-month period and the increase in the nine-month period compared to the corresponding periods in 2020 are~~was primarily attributable to ~~variability in expense associated with~~ the aforementioned ~~valuation changes~~decrease in valuations associated with our deferred compensation plan assets.

Other operating expenses in the Corporate and Other segment ~~decreased $5~~increased $2 million, or ~~17%~~8%, in the ~~three-month period~~three months ended ~~September 30, 2021 and decreased $46 million, or 38% in the nine-month period ended September 30, 2021~~March 31, 2022 from the corresponding ~~periods~~period in ~~2020.~~2021. The ~~decrease in the three-month 2021 period when compared to the 2020 period is~~increase was primarily attributable to ~~decreased brokerage~~increased expenses in the 2021 period. The decrease in the nine-month 2021 period when compared to the 2020 period is primarily attributable to a decrease in F&G transaction costs of approximately $38 million and reduced real estate brokerage expenses of $18 million in the 2021 period related to previous divestitures, partially offset by growth inassociated with our real estate technology ~~businesses.~~businesses of $4 million, partially offset by other immaterial items.

Interest expense in the Corporate and Other segment ~~decreased~~increased $1$2 million, or 5%10%, in the ~~three-month period~~three months ended ~~September 30, 2021 and increased~~ ~~$11 million or 22%, in the nine-month period ended September 30, 2021~~March 31, 2022 from the corresponding ~~periods~~period in ~~2020.~~2021. The increase ~~in the nine-month period is~~was primarily attributable to increased average debt outstanding in the ~~2021 period.~~three months ended March 31, 2022 from the corresponding period in 2021.

~~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 ~~$0.40~~$0.44 per share in the ~~third~~first quarter of ~~2021,~~2022, or approximately ~~$113~~$124 million to our common shareholders. On ~~November 2, 2021~~May 10, 2022, our Board of Directors declared cash dividends of $0.44 per share, payable on ~~December 31, 2021~~June 30, 2022, to FNF common shareholders of record as of ~~December 17, 2021~~June 16, 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.

As of ~~September 30, 2021,~~March 31, 2022, we had cash and cash equivalents of ~~$5,148~~$2,793 million, short term investments of ~~$527~~$1,746 million and available capacity under our Revolving Credit Facility of $800 million. 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

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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 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 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, ~~2020, $2,559~~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 in the remainder of ~~2021~~2022 of approximately ~~$144~~$626 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 ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ totaled ~~$2,600~~$667 million and ~~$965~~$665 million, respectively. The increase in cash provided by operating activities in the ~~2021~~ period in 2022 of ~~$1,635~~$2 million is primarily attributable to the increase in ~~pre-tax earnings, excluding non-cash valuation losses in the 2021 period, the net change in funds withheld from reinsurers of $691 million, increases in~~ future policy benefits of ~~$261~~$536 million, which was primarily related to cash received for PRT transactions, the change in income taxes of $61 million and other individually immaterial items, partially offset by the decrease in pre-tax earnings in the 2022 period of $210 million and the timing of receipts and payments of prepaid assets and payables, decreased deferred policy acquisition costs and deferred sales inducements of $334 million, and increased net gains on sales of investments and other assets of $516 million. The increased activity in the 2021 period is primarily a result of our acquisition of F&G.payables.

~~Table of Contents~~

Investing Cash Flows. Our cash flows used in investing activities for the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ were ~~$4,863~~$3,414 million and ~~$1,040~~$1,060 million, respectively. The increase in cash used in investing activities ~~of $3,823 million~~ in the ~~2021~~ period in 2022 of $2,354 million is primarily attributable to increased purchases of investment securities of ~~$7,730,~~$527 million, increases in our investments in unconsolidated affiliates of ~~$844~~$308 million, and ~~decreased~~net purchases of short-term investments of $1,255 million in the period in 2022 as compared to net proceeds from ~~the~~ sales and maturities of short-term investments of ~~$699~~$645 million in the corresponding period in 2021, partially offset by increased sales, calls, and maturities of investment securities of ~~$4,348~~$398 million and ~~decreases in net cash used in acquisitions and dispositions of $1,012 million. The change in activity in the 2021 period is primarily a result of our acquisition of F&G.~~other individually immaterial items.

Capital Expenditures. Total capital expenditures for property and equipment and capitalized software were ~~$93~~$43 million and ~~$75~~$22 million for the ~~nine-month periods~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively.

Financing Cash Flows. Our cash flows provided by financing activities for the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ were ~~$4,692~~$1,180 million and ~~$1,570~~$702 million, respectively. The increase in cash provided by financing activities in the period in 2022 of ~~$3,122~~$478 million ~~from the comparable 2020 period~~ is primarily attributable to increased cash inflows from contractholder account deposits of ~~$5,339 million, reduced debt service payments of $1,000 million, decreased investment in consolidated subs of $89 million and the net change in secured trust deposits of $399~~$601 million, partially offset by increased cash outflows from contractholder withdrawals of ~~$1,620~~$82 million, increased purchases of treasury stock of ~~$257~~$17 million and increased dividend payments of ~~$38 million and a decrease in net borrowings~~$20 million.

Table of ~~$1,797 million. The activity related to contractholder deposits and withdrawals in the 2021 period is a result of our acquisition of F&G.~~Contents

Financing Arrangements.For a description of our financing arrangements see Note OG Notes Payableincluded in Item 8 of Part III of ~~this quarterly report~~our Annual Report on Form ~~10-Q.~~10-K for the year ended December 31, 2021.

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. We may make repurchases from time to time in the open market, in block purchases or in privately negotiated transactions, depending on market conditions and other factors. On October 28, 2020, we announced that we intend to purchase approximately $500 million of FNF common shares over the next 12 months, based on market conditions. On August 3, 2021, our Board of Directors approved the 2021 Repurchase Program (the "Repurchase Program") under which we may purchase up to 25 million shares of our FNF common stock through July 31, 2024. We repurchased ~~8,125,000~~2,750,000 shares of FNF common stock during the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 for approximately ~~$356~~$134 million, at an average price of ~~$43.87~~$48.68 per share. Subsequent to ~~September 30, 2021~~March 31, 2022 and through market close on ~~October 31, 2021,~~May 9, 2022, we repurchased a total of ~~105,000~~300,000 shares for $5approximately $14 million, at an average price of ~~$45.72~~$46.59 under this program. Since the original commencement of the Repurchase ~~Programs,~~Program, we repurchased a total of ~~18,460,000~~6,030,000 FNF common shares for ~~$711~~approximately $296 million, at an average price of ~~$38.53~~$49.07 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. Other than our unfunded investment commitments discussed below, there have been no significant changes to our off-balance sheet arrangements since our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

We have unfunded investment commitments as of ~~September 30, 2021~~March 31, 2022 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 F Commitments and Contingencies to the unaudited Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report for additional details on unfunded investment commitments.

Critical Accounting Policies

There have been no material changes to our critical accounting policies described in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

~~Table of Contents~~

Item 3. Quantitative and Qualitative Disclosures about Market Risk

There have been no material changes in the market risks described in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

Item 4. Controls and Procedures

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended. Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is: (a) recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms; and (b) accumulated and communicated to management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

~~In the second quarter of 2020 we completed our acquisition of F&G (see Note N~~ ~~Acquisitionsto the unaudited Condensed Consolidated Financial Statements included in Item 1 of Part I of this Report for additional details on the acquisition of F&G~~). F&G's controls have been integrated into our overall internal control over financial reporting program. Other than the integration of F&G into our overall internal control over financial reporting program thereThere were no changes in our internal control over financial reporting that occurred during the ~~nine months~~quarter ended ~~September 30, 2021~~March 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial ~~reporting, other than described above.~~reporting.

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PART II

Item 1. Legal Proceedings

See discussion of legal proceedings in Note F Commitment and Contingencies to the unaudited Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report, which is incorporated by reference into this Item 1 of Part II.

Item 1A. Risk Factors

The risk factors disclosed in "Item 1A. Risk Factors" included in our Annual Report on Form 10-K for the year ended December 31, 2021, are hereby incorporated by reference. In addition, we identified the following additional risk factor during the three months ended March 31,2022:

Risk Factors Related to the F&G Distribution

The proposed F&G Distribution is subject to inherent risks

As previously announced, we plan to dividend to our shareholders, on a pro rata basis, 15% of the common stock of our wholly-owned subsidiary, F&G, targeted to be completed in the late third quarter or early fourth quarter of 2022. The F&G Distribution is subject to inherent risks and uncertainties, including, but not limited to: diversion of management's attention and the potential impact of the consummation of the F&G Distribution on relationships, including with employees, suppliers, customers and competitors; our ability to successfully realize the anticipated benefits of the F&G Distribution; the ability to satisfy any necessary conditions (including any applicable regulatory approvals) to consummate the F&G Distribution within the estimated timeframe or at all; the final terms and conditions of the F&G Distribution, including the nature of agreements and arrangements between FNF and F&G following any such transaction, the costs of any such transaction, and the nature and amount of indebtedness incurred by F&G. We cannot provide any assurances regarding the timeframe for completing the F&G Distribution, nor can we provide any assurances that we will be successful in completing the proposed F&G Distribution.

The F&G Distribution could adversely affect our earnings

F&G contributes a significant portion of our earnings. We have begun to pursue the F&G Distribution. Although there can be no assurance that this process will result in a consummated transaction, any separation of a portion of F&G's business could adversely affect our earnings.

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

The following table summarizes repurchases of equity securities by FNF during the three months ended ~~September 30, 2021:~~March 31, 2022:

Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (2)
7/1/2021 - 7/31/2021 400,000 $ 43.71 400,000 7,570,000
8/1/2021 - 8/31/2021 475,000 48.43 475,000 24,525,000
9/1/2021 - 9/30/2021 450,000 46.30 450,000 24,075,000
Total 1,325,000 $ 46.29 1,325,000


Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (2)

1/1/2022 - 1/31/2022	250,000	$	52.60	250,000	21,770,000
2/1/2022 - 2/29/2022	200,000	47.28		200,000	21,570,000
3/1/2022 - 3/31/2022	2,300,000	48.37		2,300,000	19,270,000
Total	2,750,000	$	48.68	2,750,000

(1) On August 3, 2021 our Board of Directors approved the ~~2021~~ Repurchase Program, ~~effective August 3, 2021,~~ under which we may purchase up to 25 million shares of our FNF common stock through July 31, 2024. The 2021 Repurchase Program replaces the 2018 Repurchase Program approved by our Board of Directors on July 17, 2018, pursuant to which we were authorized to purchase up to 25 million shares of our FNF common stock through July 31, 2021.

(2) As of the last day of the applicable month.

~~Item 6. Exhibits~~

~~(a) Exhibits:~~

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Item 6. Exhibits

(a) Exhibits:






~~4.1~~10.1						~~Seventh Supplemental Indenture, dated as of September 17, 2021,~~Amendment effective February 1, 2022 to Amended and Restated Employment Agreement between Fidelity National Financial, Inc. and ~~The Bank~~Michael Nolan, effective as of ~~New York Mellon Trust Company, N.A.~~March 2, 2016 (incorporated by reference to Exhibit ~~4.1~~10.1 to the Registrant's Current Report on Form 8-K filed on ~~September~~February 17, ~~2021)~~2022)(1).

~~4.2~~10.2						~~Form~~Amendment effective February 1, 2022 to Amended and Restated Employment Agreement between Fidelity National Financial, Inc. and Raymond R. Quirk, effective as of ~~Notes (included in exhibit 4.1 hereto which is incorporated~~October 10, 2008 (incorporated by reference to Exhibit ~~4.1~~10.2 to the Registrant's Current Report on Form 8-K filed on ~~September~~February 17, ~~2021)~~2022)(1).









31.1						Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2						Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1						Certification by Chief Executive Officer of Periodic Financial Reports pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.

32.2						Certification by Chief Financial Officer of Periodic Financial Reports pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.

101.INS						Inline XBRL Instance Document*

101.SCH						Inline XBRL Taxonomy Extension Schema Document

101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document

101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document

101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document

104						Cover Page Interactive Data File formatted in Inline XBRL and contained in Exhibit 101.

(1) A management or compensatory plan or arrangement required to be filed as an exhibit to this report pursuant to Item 601 of Regulation S-K
* The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date:

~~November 5, 2021~~May 10, 2022

FIDELITY NATIONAL FINANCIAL, INC.

(registrant)

By:

/s/ Anthony J. Park

Anthony J. Park

Chief Financial Officer
(Principal Financial and Accounting Officer)

9379


	For the nine months ended September 30,

	2021		2020
	(Unaudited)
Cash flows from operating activities:
Net earnings (loss)	$	1,903	$	646
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	540		189
Equity in earnings of unconsolidated affiliates	(54)		(9)
(Gain) loss on sales of investments and other assets and asset impairments, net	(412)		81
Loss on the sale of businesses	14		—
Interest credited/index credits to contractholder account balances	239		344
Deferred policy acquisition costs and deferred sales inducements	(473)		(139)
Charges assessed to contractholders for mortality and admin	(130)		(53)
Non-cash lease costs	104		114
Operating lease payments	(113)		(115)
Distributions from unconsolidated affiliates, return on investment	29		—
Stock-based compensation cost	31		29
Change in valuation of derivatives, equity and preferred securities, net	290		4
Changes in assets and liabilities, net of effects from acquisitions:
Change in collateral returned (posted)	—		(1)
Change in reinsurance recoverable	79		70
Change in future policy benefits	203		(58)
Change in funds withheld from reinsurers	685		(6)
Net increase in trade receivables	(81)		(27)


Net increase in reserve for title claim losses	111		46
Net change in income taxes	(60)		5
Net change in other assets and other liabilities	(305)		(155)
Net cash provided by operating activities	2,600		965
Cash flows from investing activities:

Proceeds from sales, calls and maturities of investment securities	6,278		1,930
Proceeds from sales of property and equipment and title plants	3		9


Additions to property and equipment and capitalized software	(93)		(75)
Purchases of investment securities	(10,278)		(2,548)
Net proceeds from (purchases of) sales and maturities of short-term investment securities	92		791
Additions to notes receivable	(13)		—
Collections of notes receivable	3		—
Acquisitions and dispositions	(64)		(1,076)
Additional investments in unconsolidated affiliates	(992)		(148)
Distributions from unconsolidated affiliates, return of investment	89		78
Proceeds from sales of unconsolidated affiliates	112		—







Net other investing activities	—		(1)
Net cash used in investing activities	(4,863)		(1,040)



	Nine months ended September 30, 2020
	Balance at Beginning of Period				Total Gains (Losses)				Purchases		Sales		Settlements		Net transfer In (Out) of Level 3 (a)		Balance at End of Period		Change in Unrealized Incl in OCI
			F&G Acquisition		Included in Earnings		Included in AOCI
Assets
Fixed maturity securities available-for-sale:
Asset-backed securities	$	—	$	854	$	(1)	$	20	$	209	$	(1)	$	(114)	$	(23)	$	944	$	21
Commercial mortgage-backed securities	—		26		—		—		—		—		—		—		26		1
Corporates	17		1,238		(4)		47		3		—		(34)		—		1,267		45
Hybrids	—		4		—		—		—		—		—		—		4		—
Municipals	—		38		—		4		—		—		—		—		42		5
Residential mortgage-backed securities	—		534		—		(3)		6		—		(29)		(7)		501		1
Foreign Governments	—		16		—		—		—		—		—		—		16		—
Equity securities	1		1		—		—		2		—		—		—		4		—
Other invested assets:

Available-for-sale embedded derivative	—		20		3		—		—		—		—		—		23		—


Other long-term investment	120		—		(61)		—		—		—		—		(59)		—		—
Credit linked note	—		23		—		—		—		—		—		—		23		—

Total assets at Level 3 fair value	$	138	$	2,754	$	(63)	$	68	$	220	$	(1)	$	(177)	$	(89)	$	2,850	$	73
Liabilities
Future policy benefits	$	—	$	5	$	—	$	—	$	—	$	—	$	—	$	—	$	5	$	—
FIA embedded derivatives, included in contractholder funds	—		2,852		309		—		—		—		—		—		3,161		—

Total liabilities at Level 3 fair value	$	—	$	2,857	$	309	$	—	$	—	$	—	$	—	$	—	$	3,166	$	—


	Gross Carrying Value		Weighted Average Estimated Useful Life (in years)

Other intangible assets:

Value of business acquired	$	1,908	Various
Value of distribution network acquired	140		15
Trademarks and licenses	38		10
Software	21		2
Total Other intangible assets	2,107


Gross principal maturities of notes payable at September 30, 2021 are as follows (in millions):
2021 (remaining)	$	—
2022	400
2023	—
2024	—
2025	550
Thereafter	2,150
	$	3,100