0001331875fnf:A550FGSeniorNotesDueMay2025Member2022-12-31

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, 2022~~March 31, 2023


☐			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, 2022~~April 30, 2023 were:

FNF Common Stock ~~272,132,047~~272,191,238

Table of Contents

FORM 10-Q

QUARTERLY REPORT

Quarter Ended ~~September 30, 2022~~March 31, 2023

TABLE OF CONTENTS


			Page

PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements:			2
Condensed Consolidated Balance Sheets (unaudited)			3
Condensed Consolidated Statements of ~~Earnings~~Ope rations (unaudited)			4
Condensed Consolidated Statements of Comprehensive Earnings (Loss) (unaudited)			5
Condensed Consolidated Statements of Equity (unaudited)			6
Condensed Consolidated Statements of Cash Flows (unaudited)			87
Notes to Unaudited Condensed Consolidated Financial Statements			98
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			5172
Item 3. Quantitative and Qualitative Disclosures about Market Risk			83101
Item 4. Controls and Procedures			84101

PART II. OTHER INFORMATION
Item 1. Legal Proceedings			85103
Item 1A. Risk Factors			86103
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			85104


Item 6. Exhibits			85105
Signatures			86106

Table of Contents

PART I: FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

Table of Contents

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in millions, except share data)


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


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


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

Deferred tax liability	61		71

Total liabilities	63,006		58,574


Equity:

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

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

September 30,
2022 December 31,
2021
(Unaudited)
ASSETS
Investments:
Fixed maturity securities available for sale, at fair value, at September 30, 2022 and December 31, 2021, at an amortized cost of $36,277 and $30,705, respectively, net of allowance for credit losses of $22 and $8, respectively, and includes pledged fixed maturity securities of $459 and $460, respectively, related to secured trust deposits $ 31,321 $ 31,990
Preferred securities, at fair value 1,134 1,401
Equity securities, at fair value 704 1,263
Derivative investments 108 816
Mortgage loans, net of allowance for credit losses of $38 and $31 at September 30, 2022 and December 31, 2021, respectively 4,533 3,749
Investments in unconsolidated affiliates 2,986 2,486
Other long-term investments 648 579
Short-term investments, at September 30, 2022 and December 31, 2021 includes pledged short-term investments of $2 and $1, respectively, related to secured trust deposits 1,386 491
Total investments 42,820 42,775
Cash and cash equivalents, at September 30, 2022 and December 31, 2021 includes $423 and $480, respectively, of pledged cash related to secured trust deposits
2,474 4,360
Trade and notes receivables, net of allowance for credit losses of $34 and $32 at September 30, 2022 and December 31, 2021, respectively 530 557
Reinsurance recoverable, net of allowance for credit losses of $19 and $20 at September 30, 2022 and December 31, 2021, respectively 4,827 3,738
Goodwill 4,609 4,539
Prepaid expenses and other assets 2,069 1,203
Lease assets 397 376
Other intangible assets, net 3,838 2,557
Title plants 418 400
Property and equipment, net 182 185
Total assets $ 62,164 $ 60,690
LIABILITIES AND EQUITY
Liabilities:
Contractholder funds $ 39,127 $ 35,525
Future policy benefits 5,734 4,732
Accounts payable and accrued liabilities 2,438 2,696
Notes payable 2,693 3,096
Reserve for title claim losses 1,853 1,883
Funds withheld for reinsurance liabilities 2,900 1,676
Secured trust deposits 1,043 934
Lease liabilities 435 414
Income taxes payable 63 72
Deferred tax liability 79 205
Total liabilities 56,365 51,233
Equity:
FNF common stock, $0.0001 par value; authorized 600,000,000 shares as of September 30, 2022 and December 31, 2021; outstanding of 272,626,430 and 283,778,574 as of September 30, 2022 and December 31, 2021, respectively, and issued of 326,711,963 and 325,486,429 as of September 30, 2022 and December 31, 2021, respectively — —
Preferred stock, $0.0001 par value; authorized 50,000,000 shares; issued and outstanding, none — —
Additional paid-in capital 5,885 5,811
Retained earnings 5,069 4,369
Accumulated other comprehensive (loss) earnings (3,186) 779
Less: Treasury stock, 54,085,533 shares and 41,707,855 shares as of September 30, 2022 and December 31, 2021, respectively, at cost (2,056) (1,545)
Total Fidelity National Financial, Inc. shareholders’ equity 5,712 9,414
Non-controlling interests 87 43
Total equity 5,799 9,457
Total liabilities and equity $ 62,164 $ 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,
2022 2021 2022 2021
(Unaudited) (Unaudited)
Revenues:
Direct title insurance premiums $ 688 $ 896 $ 2,314 $ 2,546
Agency title insurance premiums 966 1,318 3,268 3,632
Escrow, title-related and other fees 1,372 1,324 3,444 3,123
Interest and investment income 411 508 1,352 1,424
Recognized gains and losses, net (230) (154) (1,375) 121
Total revenues 3,207 3,892 9,003 10,846
Expenses:
Personnel costs 796 894 2,458 2,596
Agent commissions 747 1,010 2,521 2,787
Other operating expenses 430 498 1,329 1,432
Benefits and other changes in policy reserves 592 185 382 734
Depreciation and amortization 131 252 474 540
Provision for title claim losses 74 100 251 278
Interest expense 28 27 89 83
Total expenses 2,798 2,966 7,504 8,450
Earnings from continuing operations before income taxes and equity in earnings of unconsolidated affiliates 409 926 1,499 2,396
Income tax expense 115 213 434 555
Earnings before equity in earnings of unconsolidated affiliates 294 713 1,065 1,841
Equity in earnings of unconsolidated affiliates — 27 16 54
Net earnings from continuing operations 294 740 1,081 1,895
Net (loss) earnings from discontinued operations, net of tax — (3) — 8
Net earnings 294 737 1,081 1,903
Less: Net earnings attributable to non-controlling interests 5 5 13 14
Net earnings attributable to Fidelity National Financial, Inc. common shareholders $ 289 $ 732 $ 1,068 $ 1,889
Earnings per share
Basic
Net earnings per share from continuing operations attributable to common shareholders $ 1.06 $ 2.60 $ 3.86 $ 6.57
Net (loss) earnings per share from discontinued operations attributable to common shareholders — (0.01) — 0.03
Net earnings per share attributable to common shareholders, basic $ 1.06 $ 2.59 $ 3.86 $ 6.60
Diluted
Net earnings per share from continuing operations attributable to common shareholders $ 1.05 $ 2.58 $ 3.83 $ 6.53
Net (loss) earnings per share from discontinued operations attributable to common shareholders — (0.01) — 0.03
Net earnings per share attributable to common shareholders, diluted $ 1.05 $ 2.57 $ 3.83 $ 6.56
Weighted average common shares outstanding - basic 273 283 277 286
Weighted average common shares outstanding - diluted 275 285 279 288

~~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,

2022 2021 2022 2021
(Unaudited) (Unaudited)
Net earnings $ 294 $ 737 $ 1,081 $ 1,903
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) (1,028) (65) (4,066) (232)
Unrealized gain on investments in unconsolidated affiliates (2) 1 8 8 18
Unrealized loss on foreign currency translation (3) (17) (5) (29) (6)
Reclassification adjustments for change in unrealized gains and losses included in net earnings (4) 48 (30) 122 (82)
Change in reinsurance liabilities held at fair value resulting from a change in the instrument-specific credit risk (5) — 3 — 3
Other comprehensive loss (996) (89) (3,965) (299)
Comprehensive (loss) earnings (702) 648 (2,884) 1,604
Less: Comprehensive earnings attributable to non-controlling interests 5 5 13 14
Comprehensive (loss) earnings attributable to Fidelity National Financial, Inc. common shareholders $ (707) $ 643 $ (2,897) $ 1,590

~~(1)~~Net of income tax (benefit) expense of $(291) million and $(18) million for the three months ended September 30, 2022 and 2021, respectively, and $(981) million and $(64) million for the nine month periods ended September 30, 2022 and 2021, respectively.

~~(2)~~Net of income tax expense of $1 million and $3 million for the three months ended September 30, 2022 and 2021, respectively, and $1 million and $5 million for the nine month periods ended September 30, 2022 and 2021, respectively.

~~(3)~~Net of income tax (benefit) expense of $(4) million and $(1) million for the three months ended September 30, 2022 and 2021, respectively, and $(6) million and $1 million for the nine months ended September 30, 2022 and 2021, respectively.

~~(4)~~Net of income tax (benefit) expense of $(12) million and $9 million for the three-month periods September 30, 2022 and 2021, respectively, and $(32) million and $22 million for the nine month periods ended September 30, 2022 and 2021, respectively.

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

See Notes to Condensed Consolidated Financial Statements

Table of Contents

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in millions, except per share data)


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

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

Personnel costs	677		823
Agent commissions	420		844

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


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




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

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

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

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

See Notes to Condensed Consolidated Financial Statements

Table of Contents

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS (LOSS)

(In millions)


	Three months ended March 31,

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

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

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

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

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

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

(4)Net of income tax expense of $9 million and $7 million for the three months ended March 31, 2023 and 2022, respectively.

(5)Net of income tax (benefit) expense of $(27) million and $78 million for the three months ended March 31, 2023 and 2022, respectively.

(6)Net of income tax expense of $2 million and $9 million for the three months ended March 31, 2023 and 2022, respectively.

(7)Net of income tax benefit of $11 million for the three months ended March 31, 2023.

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																							Fidelity National Financial, Inc. Common Shareholders
								Accumulated																							Accumulated
		FNF						Other															FNF								Other
		Common				Additional		Comprehensive		Treasury				Non-									Common				Additional				Comprehensive		Treasury				Non-
		Stock				Paid-in	Retained	Earnings		Stock				controlling	Total								Stock				Paid-in		Retained		Earnings		Stock				controlling		Total
			Shares	$				Capital		Earnings		(Loss)		Shares	$			Interests		Equity							Shares		$						Capital		Earnings		(Loss)		Shares	$	Interests	Equity
Balance, June 30, 2021			324	$	—			$	5,771	$	3,343	$	1,094	38	$	(1,362)		$	42	$	8,888
Balance, January 1, 2022																	Balance, January 1, 2022					325			$	—		$	5,811	$	4,818	$	879	42		$	(1,545)	$	43	$	10,006

Exercise of stock options	Exercise of stock options		—	—				9		—		—		—	—			—		9				Exercise of stock options			1		—						3		—		—		—	—	—	3

Treasury stock repurchased	Treasury stock repurchased		—	—				—		—		—		1	(62)			—		(62)				Treasury stock repurchased			—		—						—		—		—		3	(134)	—	(134)
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	Other comprehensive earnings - unrealized loss on investments and other financial instruments		—	—				—		—		(65)		—	—			—		(65)				Other comprehensive earnings - unrealized loss on investments and other financial instruments			—		—						—		—		(1,904)		—	—	—	(1,904)
Other comprehensive earnings - unrealized gain on investments in unconsolidated affiliates	Other comprehensive earnings - unrealized gain on investments in unconsolidated affiliates		—	—				—		—		8		—	—			—		8				Other comprehensive earnings - unrealized gain on investments in unconsolidated affiliates			—		—						—		—		7		—	—	—	7
Other comprehensive earnings - unrealized gain on foreign currency translation	Other comprehensive earnings - unrealized gain on foreign currency translation		—	—				—		—		(5)		—	—			—		(5)				Other comprehensive earnings - unrealized gain on foreign currency translation			—		—						—		—		(2)		—	—	—	(2)
Reclassification adjustments for change in unrealized gains and losses included in net earnings	Reclassification adjustments for change in unrealized gains and losses included in net earnings		—	—				—		—		(30)		—	—			—		(30)				Reclassification adjustments for change in unrealized gains and losses included in net earnings			—		—						—		—		25		—	—	—	25

Change in instrument-specific credit risk - market risk benefits																	Change in instrument-specific credit risk - market risk benefits															33								33
Change in current discount rate - liability for future policy benefits																	Change in current discount rate - liability for future policy benefits															292								292
Stock-based compensation	Stock-based compensation		—	—				10		—		—		—	—			—		10				Stock-based compensation			—		—						12		—		—		—	—	—	12

Dividends declared, $0.40 per common share			—	—				—		(114)		—		—	—			—		(114)
Dividends declared, $0.44 per common share																	Dividends declared, $0.44 per common share					—			—			—		(124)		—		—		—		—		(124)

Subsidiary dividends declared to non-controlling interests	Subsidiary dividends declared to non-controlling interests		—	—				—		—		—		—	—			(5)		(5)				Subsidiary dividends declared to non-controlling interests			—		—						—		—		—		—	—	(4)	(4)
Net earnings	Net earnings		—	—				—		732		—		—	—			5		737				Net earnings			—		—						—		400		—		—	—	2	402
Balance, September 30, 2021			324	$	—			$	5,790	$	3,961	$	1,005	39	$	(1,424)		$	42	$	9,374
Balance, March 31, 2022																	Balance, March 31, 2022					326			$	—		$	5,826	$	5,094	$	(670)	45		$	(1,679)	$	41	$	8,612

Balance, June 30, 2022			326	$	—			$	5,843	$	4,901	$	(2,190)	49	$	(1,851)		$	43	$	6,746
Balance, January 1, 2023																	Balance, January 1, 2023					328			$	—		$	5,870	$	5,225	$	(2,870)	55		$	(2,109)	$	453	$	6,569

Exercise of stock options			1	—				30		—		—		—	—			—		30

Treasury stock repurchased	Treasury stock repurchased		—	—				—		—		—		5	(205)			—		(205)				Treasury stock repurchased			—		—						—		—		—		—	(4)	—	(4)

Other comprehensive loss - unrealized loss on investments and other financial instruments			—	—				—		—		(1,028)		—	—			—		(1,028)
Purchase of incremental share in consolidated subs																	Purchase of incremental share in consolidated subs					—			—			(12)		—		—		—		—		(8)		(20)
Other comprehensive earnings - unrealized gain on investments and other financial instruments																	Other comprehensive earnings - unrealized gain on investments and other financial instruments					—			—			—		—		349		—		—		—		349
Other comprehensive earnings - unrealized gain on investments in unconsolidated affiliates	Other comprehensive earnings - unrealized gain on investments in unconsolidated affiliates		—	—				—		—		1		—	—			—		1				Other comprehensive earnings - unrealized gain on investments in unconsolidated affiliates			—		—						—		—		11		—	—	—	11
Other comprehensive loss - unrealized loss on foreign currency translation			—	—				—		—		(17)		—	—			—		(17)
Other comprehensive earnings - unrealized gain on foreign currency translation																	Other comprehensive earnings - unrealized gain on foreign currency translation					—			—			—		—		1		—		—		—		1
Reclassification adjustments for change in unrealized gains and losses included in net earnings	Reclassification adjustments for change in unrealized gains and losses included in net earnings		—	—				—		—		48		—	—			—		48				Reclassification adjustments for change in unrealized gains and losses included in net earnings			—		—						—		—		35		—	—	—	35

Change in current discount rate — liability for future policy benefits																	Change in current discount rate — liability for future policy benefits					—			—			—		—		(100)		—		—		—		(100)
Change in instrument-specific credit risk - market risk benefits																	Change in instrument-specific credit risk - market risk benefits					—			—			—		—		7		—		—		—		7
Other comprehensive loss associated with noncontrolling interests																	Other comprehensive loss associated with noncontrolling interests					—			—			—		—		(43)		—		—		43		—
Stock-based compensation	Stock-based compensation		—	—				12		—		—		—	—			—		12				Stock-based compensation			—		—						13		—		—		—	—	—	13

Dividends declared, $0.44 per common share			—	—				—		(121)		—		—	—			—		(121)
Dividends declared, $0.45 per common share																	Dividends declared, $0.45 per common share					—			—			—		(122)		—		—		—		—		(122)

NCI associated with current period acquisitions			—	—				—		—		—		—	—			45		45

Subsidiary dividends declared to non-controlling interests	Subsidiary dividends declared to non-controlling interests		—	—				—		—		—		—	—			(6)		(6)				Subsidiary dividends declared to non-controlling interests			—		—						—		—		—		—	—	(3)	(3)

Net earnings			—	—				—		289		—		—	—			5		294
Balance, September 30, 2022			327	$	—			$	5,885	$	5,069	$	(3,186)	54	$	(2,056)		$	87	$	5,799
Net loss																	Net loss					—			—			—		(59)		—		—		—		(29)		(88)
Balance, March 31, 2023																	Balance, March 31, 2023					328			$	—		$	5,871	$	5,044	$	(2,610)	55		$	(2,113)	$	456	$	6,648

See Notes to Condensed Consolidated Financial Statements

Table of Contents

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

~~CONDENSED CONSOLIDATED STATEMENTS OF EQUITY~~

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

~~(Unaudited)~~

Fidelity National Financial, Inc. Common Shareholders
Accumulated
FNF Other
Common Additional Comprehensive Treasury Non-
Stock Paid-in Retained Earnings Stock controlling Total
Shares $ Capital Earnings (Loss) Shares $ Interests Equity
Balance, 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 loss - unrealized loss 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
Balance, December 31, 2021 325 $ — $ 5,811 $ 4,369 $ 779 42 $ (1,545) $ 43 $ 9,457
Exercise of stock options 2 — 38 — — — — — 38
Treasury stock repurchased — — — — — 12 (511) — (511)
Other comprehensive loss — unrealized loss on investments and other financial instruments — — — — (4,066) — — — (4,066)
Other comprehensive earnings — unrealized gain on investments in unconsolidated affiliates — — — — 8 — — — 8
Other comprehensive gain — unrealized gain on foreign currency translation — — — — (29) — — — (29)
Reclassification adjustments for change in unrealized gains and losses included in net earnings — — — — 122 — — — 122
Stock-based compensation — — 36 — — — — 1 37
Dividends declared, $1.32 per common share — — — (368) — — — — (368)
NCI associated with current period acquisitions — — — — — — — 45 45
Subsidiary dividends declared to non-controlling interests — — — — — — — (15) (15)
Net earnings — — — 1,068 — — — 13 1,081
Balance, September 30, 2022 327 $ — $ 5,885 $ 5,069 $ (3,186) 54 $ (2,056) $ 87 $ 5,799

~~See Notes to Condensed Consolidated Financial Statements~~

~~Table of Contents~~

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

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)


		For the nine months ended September 30,					For the three months ended March 31,

		2022		2021			2023		2022
		(Unaudited)					(Unaudited)
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net earnings		$	1,081	$	1,903
Net (loss) earnings						Net (loss) earnings	$	(88)	$	402
Adjustments to reconcile net earnings to net cash provided by operating activities:	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	474		540		Depreciation and amortization	134		115
Equity in earnings of unconsolidated affiliates	Equity in earnings of unconsolidated affiliates	(16)		(54)		Equity in earnings of unconsolidated affiliates	—		(2)
Gain on sales of investments and other assets and asset impairments, net		250		(412)
Loss on the sale of businesses		—		14
Loss (gain) on sales of investments and other assets and asset impairments, net						Loss (gain) on sales of investments and other assets and asset impairments, net	213		(30)

Interest credited/index credits to contractholder account balances	Interest credited/index credits to contractholder account balances	(961)		239		Interest credited/index credits to contractholder account balances	542		(386)
Change in market risk benefits, net						Change in market risk benefits, net	60		70
Deferred policy acquisition costs and deferred sales inducements	Deferred policy acquisition costs and deferred sales inducements	(574)		(473)		Deferred policy acquisition costs and deferred sales inducements	(251)		(169)
Charges assessed to contractholders for mortality and admin	Charges assessed to contractholders for mortality and admin	(155)		(130)		Charges assessed to contractholders for mortality and admin	(58)		(52)
Non-cash lease costs	Non-cash lease costs	107		104		Non-cash lease costs	35		36
Operating lease payments	Operating lease payments	(115)		(113)		Operating lease payments	(39)		(37)
Distributions from unconsolidated affiliates, return on investment	Distributions from unconsolidated affiliates, return on investment	81		29		Distributions from unconsolidated affiliates, return on investment	36		25
Stock-based compensation cost	Stock-based compensation cost	37		31		Stock-based compensation cost	14		13
Change in NAV of limited partnerships, net	Change in NAV of limited partnerships, net	(119)		(409)		Change in NAV of limited partnerships, net	(57)		(112)
Change in valuation of derivatives, equity and preferred securities, net	Change in valuation of derivatives, equity and preferred securities, net	1,110		290		Change in valuation of derivatives, equity and preferred securities, net	(216)		499
Changes in assets and liabilities, net of effects from acquisitions:	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	128		79		Change in reinsurance recoverable	(79)		47
Change in future policy benefits	Change in future policy benefits	1,002		203		Change in future policy benefits	224		428
Change in funds withheld from reinsurers	Change in funds withheld from reinsurers	1,251		685		Change in funds withheld from reinsurers	1,124		181
Net decrease (increase) in trade receivables		114		(81)
Net decrease in trade receivables						Net decrease in trade receivables	45		27

Net (decrease) increase in reserve for title claim losses	Net (decrease) increase in reserve for title claim losses	(30)		111		Net (decrease) increase in reserve for title claim losses	(19)		30
Net change in income taxes	Net change in income taxes	201		(60)		Net change in income taxes	(28)		143
Net change in other assets and other liabilities	Net change in other assets and other liabilities	(889)		104		Net change in other assets and other liabilities	(174)		(561)
Net cash provided by operating activities	Net cash provided by operating activities	2,977		2,600		Net cash provided by operating activities	1,418		667
Cash flows from investing activities:	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	4,813		6,278		Proceeds from sales, calls and maturities of investment securities	1,091		1,984

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	(107)		(93)		Additions to property and equipment and capitalized software	(34)		(43)
Purchases of investment securities	Purchases of investment securities	(10,175)		(10,278)		Purchases of investment securities	(4,077)		(3,810)
Net (purchases of) proceeds from sales and maturities of short-term investment securities		(1,367)		92
Net proceeds from sales and maturities (purchases) of short-term investment securities						Net proceeds from sales and maturities (purchases) of short-term investment securities	1,249		(1,255)
Additions to notes receivable	Additions to notes receivable	(96)		(13)		Additions to notes receivable	(4)		(4)

Acquisitions and dispositions	Acquisitions and dispositions	(161)		(64)		Acquisitions and dispositions	(273)		(20)
Additional investments in unconsolidated affiliates	Additional investments in unconsolidated affiliates	(931)		(992)		Additional investments in unconsolidated affiliates	(327)		(309)
Distributions from unconsolidated affiliates, return of investment	Distributions from unconsolidated affiliates, return of investment	121		89		Distributions from unconsolidated affiliates, return of investment	90		34
Proceeds from sales of unconsolidated affiliates		—		112

Net other investing activities	Net other investing activities	13		6		Net other investing activities	—		4
Net cash used in investing activities	Net cash used in investing activities	(7,890)		(4,863)		Net cash used in investing activities	(2,285)		(3,414)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:

Debt offering	Debt offering	—		449		Debt offering	500		—

Debt service payments		(400)		—
Debt costs/equity issuance additions						Debt costs/equity issuance additions	(10)		—
F&G Credit Agreement repayments, net						F&G Credit Agreement repayments, net	(35)		—
Dividends paid	Dividends paid	(365)		(320)		Dividends paid	(122)		(124)
Subsidiary dividends paid to non-controlling interest shareholders	Subsidiary dividends paid to non-controlling interest shareholders	(15)		(14)		Subsidiary dividends paid to non-controlling interest shareholders	(7)		(4)
Exercise of stock options	Exercise of stock options	38		39		Exercise of stock options	—		2

Additional investment in consolidated subsidiary						Additional investment in consolidated subsidiary	(20)		—
Net change in secured trust deposits	Net change in secured trust deposits	109		437		Net change in secured trust deposits	(61)		36

Payment of contingent consideration for prior period acquisitions						Payment of contingent consideration for prior period acquisitions	(2)		(1)
Contractholder account deposits	Contractholder account deposits	6,570		6,820		Contractholder account deposits	2,115		2,123
Contractholder account withdrawals	Contractholder account withdrawals	(2,401)		(2,350)		Contractholder account withdrawals	(950)		(723)

Purchases of treasury stock	Purchases of treasury stock	(504)		(361)		Purchases of treasury stock	(6)		(129)
Net other financing activities		(5)		(8)

Net cash provided by financing activities	Net cash provided by financing activities	3,027		4,692		Net cash provided by financing activities	1,402		1,180
Net (decrease) increase in cash and cash equivalents		(1,886)		2,429
Net increase (decrease) in cash and cash equivalents						Net increase (decrease) in cash and cash equivalents	535		(1,567)
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	4,360		2,719		Cash and cash equivalents at beginning of period	2,286		4,360
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	2,474	$	5,148	Cash and cash equivalents at end of period	$	2,821	$	2,793

See Notes to Condensed Consolidated Financial Statements

Table of Contents

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, ~~2021.~~2022.

Description of the Business

We are a leading provider of (i) title insurance, escrow and other title-related services, including loan sub-servicing, valuations, default services and home warranty products, (ii) technology 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 customers and institutional clients through our ~~wholly-owned~~majority-owned subsidiary, F&G Annuities & Life ("F&G").

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

Recent Developments

~~Repayment of 5.50%~~7.40% F&G Senior Notes

On ~~September 1, 2022, we repaid the remaining $400~~January 13, 2023, F&G completed its issuance and sale of $500 million ~~in outstanding principal~~aggregate amount of ~~our 5.50%~~its 7.40% Senior Notes due ~~September 2022.~~2028 (the "7.40% F&G Notes"), pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended. F&G intends to use the net proceeds from the offering for general corporate purposes, including to support the growth of assets under management and for F&G's future liquidity requirements. For further information about the 7.40% F&G Notes refer to Note O Notes Payable.

~~Acquisition of AllFirst~~ Title ~~Insurance Agency ("AllFirst")~~Point Acquisition

On ~~August 9, 2022,~~January 1, 2023, we ~~acquired approximately 74%~~completed our previously announced acquisition of ~~the outstanding equity of AllFirst~~TitlePoint for ~~approximately $127~~$224 million in cash, ~~consideration. AllFirst~~subject to customary working capital adjustments. TitlePoint enables searches for detailed property information, images of documents and ~~its portfolio brands, FirsTitle, Excel Title Group, Allegiance Title Company, Guaranty Title, Smith Brothers Abstract, Aggieland Title Company,~~maps from hundreds of counties across the U.S and ~~Guaranty Title New Mexico provide title examination, title plant, abstract, and settlement services for residential, commercial, farm and ranch sales, and energy projects~~is a leader in ~~121 counties throughout Texas, Oklahoma, New Mexico, and Arkansas.~~the science of real estate property research technology. For further information ~~related to~~about the TitlePoint acquisition ~~of AllFirst,~~ refer to Note N ~~Acquisitions.~~Acquisitions

~~Note Receivable from Cannae~~

In November 2017, in conjunction with the split-off of our former portfolio company investments into a separate company, Cannae Holdings, Inc. ("Cannae"), we issued to Cannae a revolver note, which we and Cannae amended and restated on May 12, 2022 (as amended and restated, the "Cannae Revolver").

The Cannae Revolver in the aggregate principal amount of up to $100 million accrues interest quarterly at the Adjusted Term SOFR Rate, as defined in the Amended and Restated Revolver Note, plus 450 basis points and matures on November 17, 2025. The maturity date is automatically extended for additional ~~five-year terms unless notice of non-renewal is otherwise provided by either FNF or Cannae, in their sole discretion.~~

~~During the nine months ended September 30, 2022, Cannae borrowed approximately $85 million under the Cannae Revolver.~~

We account for the Cannae Revolver as a financing receivable. Interest income is recorded ratably in periods in which principal is outstanding. Uncollectible financing receivables are written off or impaired when, based on all available information, it is probable that a loss has occurred.

~~Table of Contents~~

~~F&G Distribution~~

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 intend to retain control of F&G through our approximate 85% ownership stake. The proposed F&G Distribution is intended to be structured as a taxable dividend to our shareholders and 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 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 distribution. Upon completion of the F&G Distribution, our shareholders as of the record date are expected to own stock in both publicly traded companies. On October 26, 2022, F&G filed Amendment number 2 to its Form 10 registration statement with the SEC. The proposed F&G Distribution is targeted to be completed in the fourth quarter of 2022. However, there can be no assurance regarding the timeframe for completing the F&G Distribution or that the conditions of the F&G Distribution will be met.

Income Tax

Income tax expense was ~~$115~~$14 million and ~~$213~~$156 million in the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021, respectively, and $434 million and $555 million in the nine months ended September 30, 2022 and 2021,~~ respectively. Income tax expense as a percentage of earnings before income taxes was ~~28%~~(19)% and ~~23%~~28% in the three months ~~periods~~ ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021, respectively, and 29% and 23% in the nine months ended September 30, 2022 and 2021,~~ respectively. The ~~increase~~change in income tax expense as a percentage of (loss) earnings before taxes in the three months ended ~~September 30, 2022~~March 31, 2023 as compared to the corresponding period in ~~2021~~2022 is primarily attributable to the recording of a valuation allowance in the 2022 ~~period for~~period. The valuation allowance is associated with tax benefits ~~associated with~~from deferred tax assets related to recognized valuation losses on equity securities ~~for which it is~~that we will more likely than ~~not that we will~~ not be able to realize for tax purposes. ~~The increase in income~~Additionally, the tax expense as a percentage of earnings before taxes in the nine months ended September 30, 2022 as compared to the corresponding period in 2021 is primarily attributable to the recording of a valuation allowance in the 2022 period for tax benefitsbenefit associated with ~~deferred tax assets related to realized losses on~~ the ~~past sales of discontinued operations and the aforementioned recognized~~ valuation losses on equity securities ~~for which it is more likely than not that we will not be able to realize for tax purposes.~~in the three months ended March 31, 2023 was further reduced by an increase in the valuation allowance in 2023.

Earnings Per Share

Basic earnings per share, as presented on the Condensed Consolidated Statement of ~~Earnings,~~Operations, 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

Table of Contents

earnings per share is calculated by dividing net earnings available to common shareholders by the weighted average number of common shares outstanding plus assumed conversions of potentially dilutive securities. For periods when we recognize a net loss, diluted loss per share is equal to basic loss per share as the impact of assumed conversions of potentially dilutive securities is considered to be antidilutive. We have granted certain stock options and 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 antidilutive instruments outstanding during the three and nine months ended September 30, 2022 and 2021.~~

Recent Accounting Pronouncements

Adopted Pronouncements ~~Not Yet Adopted~~

In August 2018, the Financial Accounting Standards Board ~~("FASB"~~(“FASB”) issued ASU 2018-12, ~~Financial Services-Insurance (Topic 944), Targeted Improvements to the Accounting for Long-Duration Contracts,~~ as clarified and amended by ASU 2019-09, Financial Services-Insurance: Effective Date and ASU 2020-11, Financial Services-Insurance: Effective Date and Early Application, 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 accumulated other

~~Table of Contents~~

comprehensive ~~income; market~~income (loss) (“AOCI”); Market risk benefits ~~("MRBs"~~(“MRB”) associated with deposit contracts must be measured at fair value, with the effect of the change in the fair value recognized in earnings, except for the change attributable to ~~a change in the~~ instrument-specific credit risk, ~~being~~which is recognized in ~~other comprehensive income;~~AOCI; 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~~roll forwards of beginning to ending balances of the liability for future policy benefits, policyholder account balances, MRBs, 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~~We adopted ~~as of the beginning of an annual reporting period for which financial statements have not yet been issued, including interim financial statements.~~

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 and expand disclosures. As part of the implementation process, to date our progress includes, but is not limited to the following: identifying and documenting contracts and contract features in scope of the guidance; identifying actuarial models, systems, and processes to be updated; building and running models; generating and analyzing preliminary output; evaluating and finalizing key accounting policies; evaluating transition requirements and impacts; and establishing, documenting, and executing appropriate internal controls. We will not early adopt this standard, ~~and have selected the full retrospective transition method,~~ which ~~requires~~required the new guidance be applied as of the beginning of the earliest period presented or January 1, 2021, referred to as the transition ~~date.~~date, and elected the full retrospective transition method. As a result of adoption, the Company recorded a cumulative-effect adjustment, which increased opening 2021 retained earnings by $73 million, net of tax.

~~Adoption~~

Summary of ~~this standard~~Updated Significant Accounting Policies

Since our Annual Report on Form 10-K for the year ended December 31, 2022, as a result of the adoption of ASU 2018-12 we have updated the following significant accounting policies, which have been followed in preparing the accompanying unaudited Condensed Consolidated Financial Statements:

Investments

Fixed Maturity Securities Available-for-Sale

Fixed maturity securities are purchased to support our investment strategies, which are developed based on factors including rate of return, maturity, credit risk, duration, tax considerations and regulatory requirements. Our investments in fixed maturity securities 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 within AOCI, net of deferred income taxes. Fair values for fixed maturity securities are principally a function of current market conditions and are primarily valued based on quoted prices in markets that are not active or model inputs that are observable or unobservable. We recognize investment income on fixed maturities based on the effective interest method, which results in the recognition of a constant rate of return on the investment equal to the prevailing rate at the time of purchase or at the time of subsequent adjustments of book value. Realized gains and losses on sales of our fixed maturity securities are determined on the first-in first-out cost basis. We generally record security transactions on a trade date basis except for private placements, which are recorded on a settlement date basis. Realized gains and losses on sales of fixed maturity securities are reported within Recognized gains and losses, net in the accompanying Condensed Consolidated Statements of Operations. Fixed maturity securities AFS are subject to an allowance for credit loss and changes in the allowance are reported in net earnings as a component of Recognized gains and losses, net. For details on our policy around allowance for expected credit losses on AFS securities, refer to Note D Investments.

Table of Contents

VOBA, DAC, DSI and URL

Our intangible assets include the value of insurance and reinsurance contracts acquired (hereafter referred to as VOBA), deferred acquisition costs ("DAC") and deferred sales inducements ("DSI").

VOBA is an intangible asset that reflects the amount recorded as insurance contract liabilities less the estimated fair value of in-force contracts (“VIF”) in a life insurance company acquisition. It represents the portion of the purchase price that is allocated to the value of the rights to receive future cash flows from the business in force at the acquisition date. VOBA is a function of the VIF, current GAAP reserves, GAAP assets, and deferred tax liability. The VIF is determined by the present value of statutory distributable earnings less opening required capital. DAC consists principally of commissions and other acquisition costs that are related directly to the successful sale of new or renewal insurance contracts. Indirect or unsuccessful acquisition costs, maintenance, product development and overhead expenses are charged to expense as incurred. DSI represents up front bonus credits and persistency or vesting bonuses credited to policyholder account balances.

VOBA, DAC, and DSI are amortized on a constant level basis for the grouped contracts over the expected term of the related contracts to ~~increase total stockholders’ equity~~approximate straight-line amortization. Contracts are grouped by product type and feature and issue year into cohorts consistent with the grouping used in estimating the associated liability, where applicable. The constant level amortization bases of VOBA, DAC and DSI varies by product type. For universal life and indexed universal life ("IUL") insurance products, the constant level basis used is face amount in force. For deferred annuities (fixed indexed annuities ("FIA") and fixed rate annuities), the constant level basis used is initial premium deposit for DAC and DSI and vested account value as of the ~~transition~~acquisition date ~~January 1, 2021, up~~for VOBA. For immediate annuity contracts, the VOBA balance is amortized in alignment with the Company’s accounting policy of amortizing the deferred profit liability (“DPL”). All amortization bases are adjusted by full lapses, which includes deaths, full surrenders, annuitizations and maturities, where applicable.

The constant level bases used for amortization are projected using mortality and lapse assumptions that are based on Company’s experience, industry data, and other factors and are consistent with those used for the Future Policy Benefits ("FPB"), where applicable. If those projected assumptions change in future periods, they will be reflected in the cohort level amortization basis at that time. Unexpected contract terminations, due to ~~$200 million, net of tax. The most significant drivers of this transition adjustment~~higher mortality and/or lapse experience than expected, are recognized in the ~~reversal of intangible balances previously recorded~~current period as ~~an adjustment to unrealized gains (losses) on available for sale securities, the remeasurement~~a reduction of the ~~liability~~capitalized balances. All balances are reduced for actual experience in excess of expected experience with changes in future ~~policyholder benefits using a discount rate assumption that reflects upper-medium grade fixed-income instruments,~~estimates recognized prospectively over the remaining expected grouped contract term. The impact of changes in projected assumptions and the ~~recognition~~impact of ~~MRBs. As we continue~~actual experience that is different from expectations both impact the ~~implementation process~~amortization of these intangible assets, which is reported within Depreciation and amortization in the ~~adjustments~~accompanying unaudited Condensed Consolidated Statements of Operations.

Some of our IUL policies require payment of fees or other policyholder assessments in advance for services that will be rendered over the estimated ~~are subject to change.~~

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 expect this guidance to have a material impact on our Consolidated Financial Statements and related disclosures upon adoption. We do not currently plan to early adopt this standard.

In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. The amendments in this update affect all entities that have investments in equity securities measured at fair value that are subject to a contractual sale restriction and clarify that a contractual restriction on the sale of an equity security is not considered partlives of the ~~unit~~policies or contracts. These payments are established as unearned revenue liabilities (“URL”) upon receipt and included in Accounts payable and other accrued liabilities in the Condensed Consolidated Balance Sheets. URL is amortized like DAC over the estimated lives of these policies. As of March 31, 2023 and December 31, 2022, our URL balance was $190 million and $160 million, respectively

Contractholder Funds

Contractholder funds include deferred annuities (FIAs and fixed rate annuities), IULs, funding agreements and non-life contingent (“NLC”) immediate annuities (which includes NLC pension risk transfer ("PRT") annuities). The liabilities for contractholder funds for fixed rate annuities, funding agreements and NLC immediate annuities (which includes NLC PRT annuities) consist of contract account balances that accrue to the benefit of the ~~equity security~~contractholders. The liabilities for FIA and ~~therefore, is not considered in measuring fair value. The amendments also clarify that an entity cannot, as a separate unit~~IUL policies consist of ~~account, recognize and measure a contractual sale restriction. Additionally,~~ the ~~amendments require~~value of the ~~following disclosures for equity securities subject to contractual sale restrictions:~~host contract plus the fair value of ~~equity securities~~the indexed crediting feature of the policy, which is accounted for as an embedded derivative. The embedded derivative liability is carried at fair value in Contractholder funds in the accompanying Condensed Consolidated Balance Sheets with changes in fair value reported in Benefits and other changes in policy reserves in the accompanying Condensed Consolidated Statements of Operations. See a description of the fair value methodology used in Note C Fair Value of Financial Instruments.

Table of Contents

Future Policy Benefits

The FPB is determined as the present value of future policy benefits and related claims expenses to be paid to or on behalf of the policyholder less the present value of future net premiums to be collected from policyholders. The FPB for traditional life policies and life-contingent immediate annuity policies (which includes life-contingent PRT annuities) are estimated using current assumptions that include discount rate, mortality and surrender/lapse terminations for traditional life insurance policies only, and expenses. The expense assumption is locked-in at contract issuance and not subsequently reviewed or updated. The initial assumptions are based on generally accepted actuarial methods and a combination of internal and industry experience. Policies are terminated through surrenders, lapses and maturities, where surrenders represent the voluntary terminations of policies by policyholders, lapses represent cancellations by us due to nonpayment of premiums, and maturities are determined by policy contract terms. Surrender assumptions are based upon policyholder behavior experience adjusted for expected future conditions.

For traditional life policies and life-contingent immediate annuity policies, contracts are grouped into cohorts by product type, legal entity, and issue year, or acquisition year for cohorts established as of the F&G acquisition date, June 1, 2020. Life-contingent PRT annuities are grouped into cohorts by deal and legal entity. At contract inception, a net premium ratio (“NPR”) is determined, which is calculated based on discounted future cash flows projected using best estimate assumptions and is capped at 100%, as net premiums cannot exceed gross premiums. Cohorts with NPRs less than 100% are not used to offset cohorts with NPRs greater than 100%.

The NPR is adjusted for changes in cash flow assumptions and for differences between actual and expected experience. We assess the appropriateness of all future cash flow assumptions, excluding the expense assumption, on a quarterly basis and perform an in-depth review of future cash flow assumptions in the third quarter of each year. Updates are made when evidence suggests a revision is necessary. Updates for actual experience, which includes actual cash flows and insurance in-force, are performed on a quarterly basis. These updated cash flows are used to calculate a revised NPR, which is used to derive an updated liability as of the beginning of the current reporting period, discounted at the original contract issuance date. The updated liability is compared with the carrying amount of the liability as of that same date before the revised NPR. The difference between these amounts is the remeasurement gain or loss, presented parenthetically within Benefits and other changes in policy reserves in the accompanying Condensed Consolidated Statements of Operations. In subsequent periods, the revised NPR, which is capped at 100%, is used to measure the FPB, subject to ~~contractual sale restrictions~~future revisions. If the NPR is greater than 100%, and therefore capped at 100%, the liability is increased and expensed immediately to reflect the amount necessary for net premiums to equal gross premiums. As the liability assumptions are reviewed and updated, if deemed necessary, at least annually, if conditions improve whereby the contracts are no longer expected to have net premiums in excess of gross premiums, the improvements would be captured in the remeasurement process and reflected in the ~~balance sheet,~~accompanying unaudited Condensed Consolidated Statements of Operations in the ~~nature~~period of improvement.

For traditional life policies and ~~remaining~~life-contingent immediate annuity policies (which includes life-contingent PRT annuities), the discount rate assumption is an equivalent single rate that is derived based on A-credit-rated fixed-income instruments with similar duration to the liability. We selected fixed-income instruments that have been A-rated by Bloomberg. In order to reflect the duration characteristics of the ~~restriction(s),~~liability, we will use an implied forward yield curve and linear interpolation will be used for durations that have limited or no market observable points on the ~~circumstances that could cause a lapse~~curve. The discount rate assumption is updated quarterly and used to remeasure the liability at the reporting date, with the resulting change reflected in the ~~restriction(s). The amendments~~accompanying unaudited Condensed Consolidated Statements of Comprehensive Earnings.

Deferred Profit Liability

For life-contingent immediate annuity policies (which includes life-contingent PRT annuities), gross premiums received in ~~this update do not change the principles~~excess of ~~fair value measurement, rather, they clarify~~net premiums are deferred at initial recognition as a DPL. Gross premiums are measured using assumptions consistent with those principles when measuring the fair value of an equity security subject to a contractual sale restriction and improve current GAAP by reducing diversity in practice, reducing the cost and complexity in measuring fair value, and increasing comparability of financial information across reporting entities that hold those investments. The amendments in this update are effective for public business entities for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years, though early adoption is permitted. We do not currently expect to early adopt this standard and areused in the ~~process~~measurement of ~~assessing~~the related liability for FPB, including discount rate, mortality, and expenses.

The DPL is amortized and recognized as premium revenue with the amount of expected future benefit payments, discounted using the same discount rate determined and locked-in at contract issuance that is used in the measurement of the related FPB. Interest is accreted on the balance of the DPL using this ~~standard~~same discount rate. We periodically review and ~~its impact on~~update our ~~accounting~~estimates of using the actual historical experience and ~~disclosures.~~updated cash flows for the DPL at the same time as the estimates of cash flows for the FPB. When cash flows are updated,

Table of Contents

the updated estimates are used to recalculate the initial DPL at contract issuance. The recalculated DPL as of the beginning of the current reporting period is compared to the carrying amount of the DPL as of the beginning of the current reporting period, with any differences recognized as a remeasurement gain or loss, presented parenthetically within Benefits and other changes in policy reserves in the accompanying unaudited Condensed Consolidated Statements of Operations. The DPL is recorded as a component of the Future policy benefits in the accompanying Condensed Consolidated Balance Sheets.

Market Risk Benefits

MRBs are contracts or contract features that both provide protection to the contract holder from other-than-nominal capital market risk (equity, interest rate and foreign exchange risk) and expose the Company to other-than-nominal capital market risk. MRBs include certain contract features primarily on FIA products that provide minimum guarantees to policyholders, such as guaranteed minimum death benefit (“GMDB”) and guaranteed minimum withdrawal benefit (“GMWB”) riders.

MRBs are measured at fair value using an attributed fee measurement approach where attributed fees are explicit rider charges collectible from the policyholder used to cover the excess benefits, which represent expected benefits in excess of the policyholder’s account value. At contract inception, an attributed fee ratio is calculated equal to rider charges over benefits paid in excess of the account value attributable to the MRB.The attributed fee ratio remains static over the life of the MRB and is capped at 100%. Each period subsequent to contract inception, the attributed fee ratio is used to calculate the fair value of the MRB using a risk neutral valuation method and is based on current net amounts at risk, market data, internal and industry experience, and other factors. The balances are computed using assumptions including mortality, full and partial surrender, GMWB utilization, risk-free rates including non-performance spread and risk margin, market value of options and economic scenarios. Policyholder behavior assumptions are reviewed at least annually, typically in the third quarter, for any revisions. MRBs can either be in an asset or liability position and are presented separately on the Condensed Consolidated Balance Sheets as the right of setoff criteria are not met. Changes in fair value are recognized in Market risk benefits gain (losses) in the unaudited Condensed Consolidated Statements of Operations, except for the change in fair value due to a change in the instrument-specific credit risk, which is recognized in the Condensed Consolidated Statements of Comprehensive Earnings. See a description of the fair value methodology used in Note C Fair Value of Financial Instruments and Note P Market Risk Benefits.

Benefits and Other Changes in Policy Reserves

Benefit expenses for deferred annuities (FIAs and fixed rate annuities), IUL policies and funding agreements include interest credited, fixed interest and/or indexed (specific to FIA and IUL policies), to contractholder accountbalances. Benefit claims in excess of contract account balances, net of reinsurance recoveries, are charged to expense in the period that they are earned by the policyholder based on their selected strategy or strategies. Other changes in policy reserves include the change in the fair value of the FIA embedded derivative.

Other changes in policy reserves also include the change in reserves for life insurance products. For traditional life and life-contingent immediate annuities (which includes PRT annuities with life contingencies), policy benefit claims are charged to expense in the period that the claims are incurred, net of reinsurance recoveries. Remeasurement gains or losses on the related FPB and DPL balances are presented parenthetically within Benefits and other changes in policy reserves in the accompanying unaudited Condensed Consolidated Statements of Operations.

Table of Contents

Impacts of adoption of ASU 2018-12 on Financial Statements

The following tables summarize the impacts of the adoption of ASU 2018-12 on our accompanying unaudited Condensed Consolidated Balance Sheet and unaudited Condensed Consolidated Statement of Operations.

Condensed Consolidated Balance Sheet


	December 31, 2022
	As Previously Reported		Adjustments		As adjusted
			(Unaudited)		(Unaudited)
	(In millions)
ASSETS
Reinsurance recoverable, net of allowance for credit losses	$	5,588	$	(170)	$	5,418
Goodwill	4,642		(7)		4,635
Prepaid expenses and other assets	2,231		(163)		2,068
Market risk benefits asset	—		117		117
Other intangible assets, net	4,034		(223)		3,811
Total assets	$	16,495	$	(446)	$	16,049
LIABILITIES AND EQUITY
Liabilities:
Contractholder funds	$	41,233	$	(390)	$	40,843
Future policy benefits	5,923		(902)		5,021
Accounts payable and accrued liabilities	2,352		(26)		2,326
Market risk benefits liability	—		282		282
Total liabilities	$	49,508	$	(1,036)	$	48,472
Equity:
Additional paid-in capital	$	5,876	$	(6)	$	5,870
Retained earnings	4,714		511		5,225
Accumulated other comprehensive (loss) earnings	(2,862)		(8)		(2,870)
Non-controlling interests	360		93		453
Total equity	$	8,088	$	590	$	8,678

Condensed Consolidated Statement of Operations


	Three months ended March 31, 2022
	As Previously Reported		Adjustments		As adjusted
	(Unaudited)
Revenues:	(In millions)
Escrow, title-related and other fees	$	1,290	$	2	$	1,292
Expenses:
Benefits and other changes in policy reserves	$	208	$	(5)	$	203
Market risk benefit losses	—		70		70
Depreciation and amortization	182		(67)		115
Income tax expense	155		1		156
Net earnings attributable to Fidelity National Financial, Inc. common shareholders	$	397	$	3	$	400
Earnings per share
Basic
Net earnings per share attributable to common shareholders, basic	$	1.41	$	0.01	$	1.42
Diluted
Net earnings per share attributable to common shareholders, diluted	$	1.40	$	0.01	$	1.41

Table of Contents

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,
		2022			2021				2023			2022
		(Dollars in millions)							(In millions)
Beginning balance	Beginning balance	$	1,883		$	1,623		Beginning balance	$	1,810		$	1,883

Change in insurance recoverable	Change in insurance recoverable	(107)			(10)			Change in insurance recoverable	—			(1)
Claim loss provision related to:	Claim loss provision related to:							Claim loss provision related to:
Current year	Current year	251			278			Current year	43			84

Total title claim loss provision	Total title claim loss provision	251			278			Total title claim loss provision	43			84
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	(11)			(6)			Current year	(1)			(1)
Prior years	Prior years	(163)			(151)			Prior years	(61)			(53)
Total title claims paid, net of recoupments	Total title claims paid, net of recoupments	(174)			(157)			Total title claims paid, net of recoupments	(62)			(54)
Ending balance of claim loss reserve for title insurance	Ending balance of claim loss reserve for title insurance	$	1,853		$	1,734		Ending balance of claim loss reserve for title insurance	$	1,791		$	1,912
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 principal (collectively, the “Named Companies”). 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 some of the plaintiffs’ funds were deposited.

In connection with the alcoholic beverage license scheme, a lawsuit styled, Securities and Exchange Commission v. Gina Champion-Cain and ANI Development, LLC, was filed in the United States District Court for the Southern District of California asserting claims for securities fraud against Ms. Champion-Cain and certain of her affiliated entities. A receiver was appointed by the court to preserve the assets of the defendant affiliated entities (the “receivership entities”), pay their debts, operate the businesses and pursue any claims they may have against third-parties. Pursuant to the authority granted to her by the federal court, 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. In turn, the Named Companies petitioned the Federal Court to sue ANI, via the receiver, to pursue indemnity and other claims against the receivership entities as joint tortfeasors, which was granted.

On April 26, 2022, the Named Companies reached a ~~conditional~~global settlement with the receiver and several other investor ~~claimants, which if approved by~~claimants. As a condition of the ~~federal~~settlement, the Named Companies and the receiver jointly sought court ~~will bar~~approval of the global settlement and entry of an order barring any ~~future~~ claims against the Named Companies related to the alcoholic beverage license scheme. ~~Following an August 31,~~On November 23, 2022, ~~hearing on the motion to approve the settlement,~~ the federal court ~~ordered supplemental briefing on whether certain indemnity~~overruled any objections by non-joining investors and entered an order approving the global settlement and barring further claims ~~are permitted~~ against the ~~receivership estate.~~Named Companies (“Settlement and Bar Order”). The ~~supplemental briefs were submitted, and a decision on the motion to approve~~receiver is in receipt of the settlement payment from Chicago Title Company and will distribute the amount designated for each non-joining investor at the conclusion of any such investor’s appeal of the Settlement and Bar Order (or back to Chicago Title Company if an appeal is ~~pending~~successful). Some of the investor claimants who objected to entry of the Settlement and Bar Order appealed the decision to the United States Court of Appeals for the Ninth Circuit by (Cases 22-56206, 22-56208, and 23-55083). Appellate briefing is expected to take place over the next several months. After filing its appeal, one of the appellants, CalPrivate Bank (Case 23-55083), entered into a settlement with the receiver that was approved by the federal court. ~~As part~~ This settlement resolves CalPrivate Bank’s objections to the Settlement and Bar Order, and its appeal has been dismissed.

Table of ~~the proposed settlement, the Named Companies and the receiver have agreed to stay the federal action pending a decision on the motion.~~Contents

The following lawsuits remain pending in the Superior Court of San Diego County for the State of California, ~~most~~all of which involve investor claimants who have claims against the Named Companies, objected to the ~~Named Companies’~~ settlement with the ~~receiver.~~receiver, and have appealed the Settlement and Bar Order. Since any pending and future claims against the Named Companies ~~will be~~are barred, if the ~~federal court approves the settlement, these remaining~~ state court cases ~~were~~where plaintiffs have served a notice of appeal have been stayed ~~until October 31, 2022, and an unopposed motion has been filed seeking a further extension~~pending the outcome of the ~~stay until~~appeals, and the ~~federal court rules on~~claims against the ~~motion to approve the settlement. The state court cases were initially set for jury trial on December 2, 2022, but the trial date has~~Named Companies by non-appealing plaintiffs have been

~~Table of Contents~~

~~continued until May 12, 2023.~~ dismissed with prejudice. 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, as well as the recovery of attorneys' fees. The Named Companies have filed a cross-complaint against Ms. Champion-Cain, and others. The Named Companies have reached a conditional settlement with the members of 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 seek statutory, treble, and punitive damages. The Named Companies have filed a cross-complaint against Ms. Champion-Cain, and others.

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 and others, and the Named Companies ~~have been~~were substituted in as the Plaintiff following a settlement with the bank.

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 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 seeks punitive damages and the recovery of attorneys’ fees. The Named Companies have filed a cross-complaint against Ms. Champion-Cain, and others. Given CalPrivate Bank's settlement with the receiver, this action against the Named Companies will be dismissed.

Chicago Title Company has also resolved a number of other pre-suit claims and previously-disclosed lawsuits from both individual and groups of alleged investors under confidential terms. Based on the facts and circumstances of the remaining claims, including the settlements already reached, we have recorded reserves included in our reserve for title claim losses, which we believe are adequate to cover losses related to this matter, and 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

~~Table of Contents~~

required in future periods in order to maintain our recorded reserve within a reasonable range of our actuary's central estimate.

1415

Table of Contents

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, along with net asset value. The 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.

Net asset value ("NAV") - Certain equity investments are measured using NAV as a practical expedient in determining fair value. In addition, our unconsolidated affiliates (primarily limited partnerships) are primarily accounted for using the equity method of accounting with fair value determined using NAV as a practical expedient. Our carrying value reflects our pro rata ownership percentage as indicated by NAV in the limited partnership financial statements, which we may adjust if we determine NAV is not calculated consistent with investment company fair value principles. The underlying investments of the limited partnerships may have significant unobservable inputs, which may include, but are not limited to, comparable multiples and weighted average cost of capital rates applied in valuation models or a discounted cash flow model. Additionally, management meets quarterly with the general partner to determine whether any credit or other market events have occurred since prior quarter financial statements to ensure any material events are properly included in current quarter valuation and investment income.

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.

1516

Table of Contents

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):~~follows:


		September 30, 2022										March 31, 2023
		Level 1		Level 2		Level 3		NAV		Fair Value				Level 1		Level 2		Level 3		NAV		Fair Value
Assets	Assets												Assets	(In millions)
Cash and cash equivalents	Cash and cash equivalents	$	2,474	$	—	$	—	$	—	$	2,474		Cash and cash equivalents	$	2,821	$	—	$	—	$	—	$	2,821
Fixed maturity securities, available-for-sale:	Fixed maturity securities, available-for-sale:												Fixed maturity securities, available-for-sale:
Asset-backed securities	Asset-backed securities	—		4,892		5,952		—		10,844			Asset-backed securities	—		5,592		6,300		—		11,892
Commercial mortgage-backed securities	Commercial mortgage-backed securities	—		3,000		37		—		3,037			Commercial mortgage-backed securities	—		3,686		29		—		3,715
Corporates	Corporates	39		12,320		1,300		—		13,659			Corporates	25		14,262		1,544		—		15,831
Hybrids	Hybrids	102		632		—		—		734			Hybrids	97		683		—		—		780
Municipals	Municipals	—		1,290		30		—		1,320			Municipals	—		1,597		32		—		1,629
Residential mortgage-backed securities	Residential mortgage-backed securities	—		1,007		5		—		1,012			Residential mortgage-backed securities	—		1,657		12		—		1,669
U.S. Government	U.S. Government	490		—		—		—		490			U.S. Government	318		11		—		—		329
Foreign Governments	Foreign Governments	—		209		16		—		225			Foreign Governments	—		249		16		—		265
Short term investments	Short term investments	1,386		—		—		—		1,386			Short term investments	1,315		8		23		—		1,346
Preferred securities	Preferred securities	382		751		1		—		1,134			Preferred securities	285		565		1		—		851
Equity securities	Equity securities	654		—		10		40		704			Equity securities	681		—		11		42		734
Derivative investments	Derivative investments	—		108		—		—		108			Derivative investments	—		432		—		—		432
Investment in unconsolidated affiliates													Investment in unconsolidated affiliates	—		—		107		—		107
Reinsurance related embedded derivative, included in other assets	Reinsurance related embedded derivative, included in other assets	—		285		—		—		285			Reinsurance related embedded derivative, included in other assets	—		260		—		—		260
Market risk benefits asset													Market risk benefits asset	—		—		106		—		106
Other long-term investments	Other long-term investments	—		—		67		—		67			Other long-term investments	—		—		48		—		48

Total financial assets at fair value	Total financial assets at fair value	$	5,527	$	24,494	$	7,418	$	40	$	37,479		Total financial assets at fair value	$	5,542	$	29,002	$	8,229	$	42	$	42,815
Liabilities	Liabilities												Liabilities

Derivatives:	Derivatives:												Derivatives:
FIA/ IUL embedded derivatives, included in contractholder funds	FIA/ IUL embedded derivatives, included in contractholder funds	—		—		2,775		—		2,775			FIA/ IUL embedded derivatives, included in contractholder funds	—		—		3,569		—		3,569

Market risk benefits liability													Market risk benefits liability	$	—	$	—	$	324	$	—	$	324
Total financial liabilities at fair value	Total financial liabilities at fair value	$	—	$	—	$	2,775	$	—	$	2,775		Total financial liabilities at fair value	$	—	$	—	$	3,893	$	—	$	3,893

1617

Table of Contents


		December 31, 2021										December 31, 2022
		Level 1		Level 2		Level 3		NAV		Fair Value				Level 1		Level 2		Level 3		NAV		Fair Value
Assets	Assets												Assets	(In millions)
Cash and cash equivalents	Cash and cash equivalents	$	4,360	$	—	$	—	$	—	$	4,360		Cash and cash equivalents	$	2,286	$	—	$	—	$	—	$	2,286
Fixed maturity securities, available-for-sale:	Fixed maturity securities, available-for-sale:												Fixed maturity securities, available-for-sale:
Asset-backed securities	Asset-backed securities	—		4,736		3,959		—		8,695			Asset-backed securities	—		5,204		6,263		—		11,467
Commercial mortgage-backed securities	Commercial mortgage-backed securities	—		2,944		35		—		2,979			Commercial mortgage-backed securities	—		3,026		37		—		3,063
Corporates	Corporates	37		15,322		1,135		—		16,494			Corporates	40		12,857		1,440		—		14,337
Hybrids	Hybrids	132		780		—		—		912			Hybrids	93		638		—		—		731
Municipals	Municipals	—		1,458		43		—		1,501			Municipals	—		1,431		29		—		1,460
Residential mortgage-backed securities	Residential mortgage-backed securities	—		731		—		—		731			Residential mortgage-backed securities	—		1,225		302		—		1,527
U.S. Government	U.S. Government	394		—		—		—		394			U.S. Government	260		11		—		—		271
Foreign Governments	Foreign Governments	—		266		18		—		284			Foreign Governments	—		223		16		—		239
Short term investments	Short term investments	168		2		321		—		491			Short term investments	2,590		—		—		—		2,590
Preferred securities	Preferred securities	506		893		2		—		1,401			Preferred securities	320		582		1		—		903
Equity securities	Equity securities	1,206		—		9		48		1,263			Equity securities	621		—		10		47		678

Derivative investments	Derivative investments	—		816		—		—		816			Derivative investments	—		244		—		—		244
Investment in unconsolidated affiliates													Investment in unconsolidated affiliates	—		—		23		—		23
Reinsurance related embedded derivative, included in other assets													Reinsurance related embedded derivative, included in other assets	—		279		—		—		279
Market risk benefits asset													Market risk benefits asset	—		—		117		—		117
Other long-term investments	Other long-term investments	—		—		78		—		78			Other long-term investments	—		—		48		—		48

Total financial assets at fair value	Total financial assets at fair value	$	6,803	$	27,948	$	5,600	$	48	$	40,399		Total financial assets at fair value	$	6,210	$	25,720	$	8,286	$	47	$	40,263
Liabilities	Liabilities												Liabilities

Derivatives:	Derivatives:												Derivatives:
FIA/ IUL embedded derivatives, included in contractholder funds	FIA/ IUL embedded derivatives, included in contractholder funds	—		—		3,883		—		3,883			FIA/ IUL embedded derivatives, included in contractholder funds	—		—		3,115		—		3,115
Reinsurance related embedded derivatives, included in accounts payable and accrued liabilities		—		73		—		—		73

Market risk benefits liability													Market risk benefits liability	—		—		282		—		282
Total financial liabilities at fair value	Total financial liabilities at fair value	$	—	$	73	$	3,883	$	—	$	3,956		Total financial liabilities at fair value	$	—	$	—	$	3,397	$	—	$	3,397

Valuation Methodologies

Cash and Cash Equivalents

The carrying amounts reported in the unaudited Condensed Consolidated Balance Sheets for these instruments approximate fair value.

Fixed Maturity 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, preferred 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.

Table of Contents

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, 2022~~March 31, 2023 or December 31, ~~2021.~~

~~Table of Contents~~

2022.

Certain equity investments are measured using NAV as a practical expedient in determining fair value.

Derivative Financial Instruments

The fair value of call options 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.

The fair value of futures contracts (specifically for ~~fixed indexed annuity ("FIA")~~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/~~indexed universal life ("IUL")~~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, 2022~~March 31, 2023 was applied to the 2012 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.

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~~third-party reinsurer) and ASPIDA Life Re Ltd ("Aspida Re") 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&G Reinsurance for further discussion on F&G reinsurance agreements.

Investments in Unconsolidated affiliates

The fair value of our investments in unconsolidated affiliates is determined using a multiple of the affiliates’ EBITDA, which is derived from market analysis of transactions involving comparable companies. The EBITDA used in this calculation is based on the affiliates’ financial information.

Short-term investments

The carrying amounts reported in the unaudited Condensed Consolidated Balance Sheets for these instruments

approximate fair value.

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 embedded derivative is based on an unobservable input, the NAV of the fund at the balance sheet date. The embedded derivative is similar to a call option on the NAV 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 NAV of the fund on the maturity date. A Black-Scholes model determines the NAV 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 NAV 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. The discounted cash flow approach is based on the expected portfolio cash flows and amortization schedule reflecting

Table of Contents

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.

Market Risk Benefits

MRBs are measured at fair value using an attributed fee measurement approach where attributed fees are explicit rider charges collectible from the policyholder used to cover the excess benefits. The fair value is calculated using a risk neutral valuation method and is based on current net amounts at risk, market data, internal and industry experience, and other factors. The balances are computed using assumptions including mortality, full and partial surrender, rider benefit utilization, risk-free rates including non-performance spread and risk margin, market value of options and economic scenarios. Policyholder behavior assumptions are reviewed at least annually, typically in the third quarter, for any revisions. See further discussion on MRBs in Note P - Market Risk Benefits.

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, 2022~~March 31, 2023 and December 31, ~~2021~~2022 are as follows:

~~Table of Contents~~

Fair Value at Valuation Technique Unobservable Input(s) Range (Weighted average)
September 30, 2022
(in millions) September 30, 2022
Assets
Asset-backed securities $ 5,635 Broker-quoted Offered quotes 72.1% - 100.00% (94.87%)
Asset-backed securities 317 Third-Party Valuation Offered quotes 41.02% - 238.40% (66.85%)
Commercial mortgage-backed securities 20 Broker-quoted Offered quotes 107.00% - 107.00% (107.00%)
Commercial mortgage-backed securities 17 Third-Party Valuation Offered quotes
77.36% - 89.53%
(84.47%)
Corporates 524 Broker-quoted Offered quotes 76.94% - 101.50% (93.58%)
Corporates 12 Discounted Cash Flow Discount Rate 30.90% - 100.00% (76.78%)
Corporates 764 Third-Party Valuation Offered quotes 0.00% - 106.00% (88.44%)
Municipals 30 Third-Party Valuation Offered quotes 94.80% - 94.80% (94.80%)
Residential mortgage-backed securities 5 Broker-quoted Offered quotes 90.97% - 90.97% (90.97%)
Foreign Governments 16 Third-Party Valuation Offered quotes 96.23% - 98.45% (97.76%)
Preferred securities 1 Discounted Cash Flow Discount rate 100.00% - 100.00% (100.00%)
Equity securities 6 Broker Quoted Offered quotes $65.00 - $65.00 ($65.00)
Equity securities 4 Discounted Cash Flow Discount rate 10.90% - 10.90% (10.90%)
Market Comparable Company Analysis EBITDA multiple 5.6x - 5.6x (5.6x)
Other long-term investments:
Available-for-sale embedded derivative 22 Black Scholes model Market value of fund 100.00%
Secured borrowing receivable 10 Broker-quoted Offered quotes
100.00% - 100.00%
(100.00%)
Credit Linked Note 14 Broker-quoted Offered quotes 97.25%
Investment in affiliate 21 Market Comparable Company Analysis EBITDA multiple 8x-8x
Total financial assets at fair value $ 7,418
Liabilities
Derivative investments:
FIA/ IUL embedded derivatives, included in contractholder funds $ 2,775 Discounted cash flow Market value of option 0.00% - 23.28% (0.48%)
Swap rates 1.28% - 3.38% (2.33%)
Mortality multiplier 100.00% - 100.00% (100.00%)
Surrender rates 0.25% - 70.00% (6.38%)
Partial withdrawals 2.00% - 29.41% (2.74%)
Non-performance spread 0.76% - 1.64% (1.50%)
Option cost 0.07% - 4.97% (1.86%)
Total financial liabilities at fair value $ 2,775

~~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, 2021

March 31, 2023

(in millions)

December 31, 2021

(In millions)

March 31, 2023

Assets

Asset-backed securities

3,844

Broker-quoted

Offered quotes

52.56% - 260.70%

(97.06%)

Asset-backed securities

6,019

Broker-quoted

Offered quotes

54.2% - 187.27% (93.86%)

Asset-backed securities

115

Third-Party Valuation

Offered quotes

93.02% - 108.45%

(104.95%)

Asset-backed securities

281

Third-Party Valuation

Offered quotes

39.43% - 102.60% (62.83%)

Commercial mortgage-backed securities

Broker-quoted

Offered quotes

126.70% - 126.70%

(126.70%)

Commercial mortgage-backed securities

Broker-quoted

Offered quotes

95.34% - 101.25% (99.34%)

Commercial mortgage-backed securities

Third Party Valuation

Offered quotes

97.91% - 97.91%

(97.91%)

Commercial mortgage-backed securities

Third-Party Valuation

Offered quotes

73.36% - 88.60%

(82.26%)

Corporates

380

Broker-quoted

Offered quotes

0.00% - 109.69%

(100.91%)

Corporates

682

Broker-quoted

Offered quotes

80.24% - 104.74% (95.90%)

Corporates

741

Third-Party Valuation

Offered quotes

85.71% - 119.57%

(107.72%)

Corporates

Discounted Cash Flow

Discount Rate

44.00% - 100.00% (75.18%)

Corporates

Discounted Cash Flow

Discount Rate

44.00% - 100.00% (62.00%)

Corporates

851

Third-Party Valuation

Offered quotes

0.00% - 105.32% (90.85%)

Municipals

Third-Party Valuation

Offered quotes

135.09% - 135.09%

(135.09%)

Municipals

Third-Party Valuation

Offered quotes

104.38% - 104.38% (104.38%)

Residential mortgage-backed securities

Broker-quoted

Offered quotes

0.00% - 98.38% (98.18%)

Residential mortgage-backed securities

Third-Party Valuation

Offered quotes

94.93%

Foreign Governments

Third-Party Valuation

Offered quotes

107.23% - 116.44%

(110.11%)

Foreign Governments

Third-Party Valuation

Offered quotes

99.20% - 99.44% (99.28%)

Investment in unconsolidated affiliates

107

Market Comparable Company Analysis

EBITDA multiple

5x-14x

(12.1x)

Short term investments

321

Broker-quoted

Offered quotes

100.00% - 100.00%

(100.00%)

Short term investments

Broker-quoted

Offered quotes

100.00% - 100.00%

(100.00%)

Preferred securities

Discounted Cash Flow

Discount rate

100.00% - 100.00% (100.00%)

Preferred securities

Income-Approach

Yield

2.43%

Equity securities

Broker Quoted

Offered quotes

$6.23 - $6.23 ($6.23)

Equity securities

Black Scholes model

Risk Free Rate

1.00% -1.00% (1.00%)

Strike Price

$1.50 - $1.50 ($1.50)

Volatility

81.00% - 81.00%

(81.00%)

Dividend Yield

0.00% - 0.00% (0.00%)

Equity securities

Discounted Cash Flow

Discount rate

12.70% - 12.70%

(12.70%)

Equity securities

Broker Quoted

Offered quotes

$68.50 - $68.50 ($68.50)

Equity securities

Discounted Cash Flow

Discount rate

11.16% - 11.16% (11.16%)

Market Comparable Company Analysis

EBITDA multiple

5.9x - 5.9x (5.9x)

Market Comparable Company Analysis

EBITDA multiple

7.8x - 7.8x (7.8x)

Other long-term investments:

Available-for-sale embedded derivative

Black Scholes model

Market value of fund

100.00%

Available-for-sale embedded derivative

Black Scholes model

Market value of fund

100.00%

Secured borrowing receivable

Broker-quoted

Offered quotes

100.00% - 100.00%

(100.00%)

Credit Linked Note

Broker-quoted

Offered quotes

100.00%

Credit Linked Note

Broker-quoted

Offered quotes

96.23%

Investment in affiliate

Market Comparable Company Analysis

EBITDA multiple

8x-8x

Total financial assets at fair value

5,600

Liabilities

Market risk benefits asset

106

Discounted Cash Flow

Mortality

100.00% - 100.00% (100.00%)

Surrender rates

0.25% - 10.00%

(5.03%)

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%)

Option cost

0.07% - 4.97%

(1.83%)

Total financial liabilities at fair value

3,883

Table of Contents


				Partial withdrawal rates	2.00% - 21.74% (2.49%)
				Non-performance spread	0.48% - 1.42% (1.31%)
				GMWB utilization	50.00% - 60.00% (50.89%)
Total financial assets at fair value	$	8,229
Liabilities








Derivative investments:
FIA/ IUL embedded derivatives, included in contractholder funds	$	3,569	Discounted cash flow	Market value of option	0.00% - 28.31% (1.54%)
				Swap rates	3.48% - 4.97% (4.23%)
				Mortality multiplier	100.00% - 100.00% (100.00%)
				Surrender rates	0.25% - 70.00% (6.57%)
				Partial withdrawals	2.00% - 32.26% (2.74%)
				Non-performance spread	0.48% - 1.42% (1.31%)
				Option cost	0.07% - 5.67% (2.11%)


Market risk benefits liability	324		Discounted cash flow	Mortality	100.00% - 100.00% (100.00%)
				Surrender rates	0.25% - 10.00% (5.03%)
				Partial withdrawal rates	2.00% - 21.74% (2.49%)
				Non-performance spread	0.48% - 1.42% (1.31%)
				GMWB utilization	0.48% - 1.42% (50.89%)
Total financial liabilities at fair value	$	3,893

Fair Value at

Valuation Technique

Unobservable Input(s)

Range (Weighted average)

December 31, 2022

(In millions)

December 31, 2022

Assets

Asset-backed securities

5,916

Broker-quoted

Offered quotes

52.85% - 117.17%

(94.18%)

Asset-backed securities

347

Third-Party Valuation

Offered quotes

41.43% - 210.50%

(67.99%)

Commercial mortgage-backed securities

Broker-quoted

Offered quotes

109.02% - 109.02%

(109.02%)

Commercial mortgage-backed securities

Third-Party Valuation

Offered quotes

74.66% - 88.48%

(82.74%)

Corporates

602

Broker-quoted

Offered quotes

79.16% - 102.53%

(94.16%)

Corporates

826

Third-Party Evaluation

Offered quotes

—% - 104.96%

(89.69%)

Corporates

Discounted Cash Flow

Discount Rate

44.00% - 100.00% (77.02%)

Municipals

Third-Party Evaluation

Offered quotes

93.95% - 93.95%

(93.95%)

Foreign governments

Third-Party Evaluation

Offered quotes

99.78% - 102.29%

(100.56%)

Investment in unconsolidated affiliates

Market Comparable Company Analysis

EBITDA multiple

5x-5.50x

Table of Contents


Residential mortgage-backed securities	302		Broker-quoted	Offered quotes	—% - 91.04% (86.38%)


Preferred Securities	1		Discounted Cash Flow	Discount rate	100.00%
Equity securities	6		Broker-quoted	Offered Quotes	$64.25 - $64.25 ($64.25)




Equity securities	4		Discounted Cash Flow	Discount Rate	11.10% - 11.10% (11.10%)
			Market Comparable Company Analysis	EBITDA multiple	5.6x - 5.6x (5.6x)
Other long-term investments:
Available-for-sale embedded derivative	23		Black Scholes model	Market value of fund	100.00%
Secured borrowing receivable	10		Broker-quoted	Offered quotes	100.00% - 100.00% (100.00%)
Credit Linked Note	15		Broker-quoted	Offered quotes	96.23%

Market risk benefits asset	117		Discounted Cash Flow	Mortality	100.00% - 100.00% (100.00%)
				Surrender rates	0.25% - 10.00% (4.69%)
				Partial withdrawal rates	2.00% - 21.74% (2.49%)
				Non-performance spread	0.48% - 1.44% (1.30%)
				GMWB utilization	50.00% - 60.00% (50.94%)
Total financial assets at fair value	$	8,286
Liabilities


Derivative investments:
FIA/ IUL embedded derivatives, included in contractholder funds	3,115		Discounted cash flow	Market value of option	—% - 23.90% (87.00%)
				Swap rates	3.88% - 4.73% (4.31%)
				Mortality multiplier	100.00% - 100.00% (100.00%)
				Surrender rates	0.25% - 70.00% (6.57%)
				Partial withdrawals	2.00% - 29.41% (2.73%)
				Non-performance spread	0.48% - 1.44% (1.30%)
				Option cost	0.07% - 4.97% (1.89%)
Market risk benefits liability	282		Discounted Cash Flow	Mortality	100.00% - 100.00% (100.00%)
				Surrender rates	0.25% - 10.00% (4.69%)
				Partial withdrawal rates	2.00% - 21.74% (2.49%)
				Non-performance spread	0.48% - 1.44% (1.30%)
				GMWB utilization	50.00% - 60.00% (50.94%)


Total financial liabilities at fair value	$	3,397

Table of Contents

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, 2022~~March 31, 2023 and ~~2021. This summary excludes any impact of amortization of value of business acquired (“VOBA”), deferred acquisition cost (“DAC”), and deferred sales inducements (“DSI”).~~2022. 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, 2022
		(in millions)																						Three months ended March 31, 2023
		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																																(In millions)
Fixed maturity securities available-for-sale:	Fixed maturity securities available-for-sale:																											Fixed maturity securities available-for-sale:
Asset-backed securities	Asset-backed securities	$	4,677		$	—		$	(71)	$	1,530	$	—	$	(123)		$	(61)				$	5,952				$	(80)	Asset-backed securities		$	6,263										$	(8)						$	18				$	416				$	(83)				$	(235)				$	(71)	$	6,300	$	18
Commercial mortgage-backed securities	Commercial mortgage-backed securities	37			—			—		—		—		—			—			37					—			Commercial mortgage-backed securities	37							—				1				12				—					—					(21)					29					1
Corporates	Corporates	1,374			—			(53)		135		—		(147)			(9)			1,300					(57)			Corporates	1,440					(1)				(23)				133				—					(5)					—					1,544					(23)

Municipals	Municipals	33			—			(3)		—		—		—			—			30					(4)			Municipals	29					—				3				—				—					—					—					32					3
Residential mortgage-backed securities	Residential mortgage-backed securities	9			—			—		5		—		—			(9)			5					—			Residential mortgage-backed securities	302					1				8				8				—					(8)					(299)					12					8
Foreign Governments	Foreign Governments	16			—			—		—		—		—			—			16					—			Foreign Governments	16					—				—				—				—					—					—					16					—
Investment in unconsolidated affiliates																												Investment in unconsolidated affiliates	23					—				—				84				—					—					—					107					—
Short term investments	Short term investments	—			—			—		—		—		—			—			—					—			Short term investments	—					—				—				23				—					—					—					23					—

Preferred securities	Preferred securities	1			—			—		—		—		—			—			1					—			Preferred securities	1					—				—				—				—					—					—					1					—
Equity securities	Equity securities	10			—			—		1		(1)		—			—			10					—			Equity securities	10					—				—				1				—					—					—					11					—
Other long-term investments:	Other long-term investments:																											Other long-term investments:

Available-for-sale embedded derivative	Available-for-sale embedded derivative	24			(2)			—		—		—		—			—			22					—			Available-for-sale embedded derivative	23					—				2				—				—					—					—					25					2

Investment in affiliate		21			—			—		—		—		—			—			21					—
Credit linked note	Credit linked note	17			(1)			—		—		(2)		—			—			14					—			Credit linked note	15					—				—				—				—					(2)					—					13					—
Secured borrowing receivable	Secured borrowing receivable	10			—			—		—		—		—			—			10					—			Secured borrowing receivable	10					—				—				—				—					—					—					10					—

Subtotal Level 3 assets at fair value																												Subtotal Level 3 assets at fair value	$	8,169				$	(8)			$	9			$	677			$	(83)				$	(250)				$	(391)				$	8,123		$	8,123	$	9
Market risk benefits asset																												Market risk benefits asset	117																																106
Total Level 3 assets at fair value	Total Level 3 assets at fair value	$	6,229		$	(3)		$	(127)	$	1,671	$	(3)	$	(270)		$	(79)		$	7,418				$	(141)		Total Level 3 assets at fair value	$	8,286																															$	8,229
Liabilities	Liabilities																											Liabilities

FIA/ IUL embedded derivatives, included in contractholder funds	FIA/ IUL embedded derivatives, included in contractholder funds	2,941			(166)			—		—		—		—			—			2,775					—			FIA/ IUL embedded derivatives, included in contractholder funds	3,115					385				—				96				—					(27)					—					3,569					—

Subtotal Level 3 liabilities at fair value																												Subtotal Level 3 liabilities at fair value	$	3,115				$	385			$	—			$	96			$	—				$	(27)				$	—				$	3,569				$	—
Market risk benefits liability																												Market risk benefits liability	282																																324
Total Level 3 liabilities at fair value	Total Level 3 liabilities at fair value	$	2,941		$	(166)		$	—	$	—	$	—	$	—		$	—		$	2,775				$	—		Total Level 3 liabilities at fair value	$	3,397																															$	3,893

(a) The net transfers out of Level 3 during the three months ended ~~September 30, 2022~~March 31, 2023 were exclusively to Level 2.

~~Table of Contents~~

Three 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 Gains (Losses) Incl in OCI
Included in
Earnings Included in
AOCI
Assets
Fixed maturity securities available-for-sale:
Asset-backed securities $ 2,309 $ (1) $ 14 $ 1,188 $ (97) $ (125) $ (44) $ 3,244 $ 11
Commercial mortgage-backed securities 25 — (1) 12 — — — 36 —
Corporates 1,201 (1) (3) 19 (14) (89) — 1,113 (2)
Municipals 43 — — — — — — 43 —
Residential mortgage-backed securities 443 — (3) 4 — (50) — 394 1
Foreign Governments 17 — 1 — — — — 18 —
Short-Term 303 — 1 192 — (304) — 192 1
Equity and preferred securities 10 (1) 1 2 — — — 12 —
Other long-term investments:
Available-for-sale embedded derivative 30 1 — — — — — 31 —
Credit linked note 19 — 1 — — — — 20 —
Total assets at Level 3 fair value $ 4,400 $ (2) $ 11 $ 1,417 $ (111) $ (568) $ (44) $ 5,103 $ 11
Liabilities
FIA embedded derivatives, included in contractholder funds 3,759 (320) — — — — — 3,439 —
Total liabilities at Level 3 fair value $ 3,759 $ (320) $ — $ — $ — $ — $ — $ 3,439 $ —

~~Table of Contents~~

Nine months ended September 30, 2022
(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 Included in OCI
Included in
Earnings Included in
AOCI
Assets
Fixed maturity securities available-for-sale:
Asset-backed securities $ 3,959 $ 1 $ (343) $ 2,757 $ (39) $ (401) $ 18 $ 5,952 $ (371)
Commercial mortgage-backed securities 35 — (5) — — — 7 37 (4)
Corporates 1,135 — (190) 521 — (178) 12 1,300 (191)
Hybrids — — — — — — — — —
Municipals 43 — (13) — — — — 30 (13)
Residential mortgage-backed securities — — — 14 — — (9) 5 —
Foreign Governments 18 — (2) — — — — 16 (1)
Short-Term 321 — (1) 20 — — (340) — (1)
Preferred securities 2 — (1) — — — — 1 (1)
Equity securities 9 — — 2 (1) — — 10 —
Other long-term investments:
Available-for-sale embedded derivative 34 (12) — — — — — 22 —
Investment in affiliate 21 — — — — — — 21 —
Credit linked note 23 (1) (3) — (2) (3) — 14 —
Secured borrowing receivable — — — — — — 10 10 —
Total assets at Level 3 fair value $ 5,600 $ (12) $ (558) $ 3,314 $ (42) $ (582) $ (302) $ 7,418 $ (582)
Liabilities
FIA embedded derivatives, included in contractholder funds 3,883 (1,108) — — — — — 2,775 —
Total liabilities at Level 3 fair value $ 3,883 $ (1,108) $ — $ — $ — $ — $ — $ 2,775 $ —

(~~a) The net transfers out of Level 3 during the nine months endedSeptember 30, 2022 were to Level 2, except for the net transfers out related to our other long-term investment, which was to Level 1.~~

Table of Contents


		Nine months ended September 30, 2021																						Three months ended March 31, 2022
		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 Included 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											Included in Earnings					Included in AOCI
Assets	Assets																											Assets	(In millions)
Fixed maturity securities available-for-sale:	Fixed maturity securities available-for-sale:																						Fixed maturity securities available-for-sale:
Asset-backed securities	Asset-backed securities	$	1,350		$	(1)		$	11	$	2,359	$	(97)	$	(307)	$	(71)		$	3,244	$	25	Asset-backed securities	$	3,959	$	—		$	(130)			$	400			$	—			$	(152)			$	84			$	4,161			$	(138)
Commercial mortgage-backed securities	Commercial mortgage-backed securities	26			—			(2)		12		—		—		—			36		1		Commercial mortgage-backed securities	35		—			(2)		—				—				—				7				40				(2)
Corporates	Corporates	1,289			8			(29)		76		(22)		(196)		(13)			1,113		35		Corporates	1,135		—			(74)		80				—				(26)				26				1,141				(73)
Hybrids		4			—			—		—		—		(4)		—			—		—

Municipals	Municipals	43			—			—		—		—		—		—			43		7		Municipals	43		—			(6)		—				—				—				—				37				(5)
Residential mortgage-backed securities		483			—			(1)		14		—		(102)		—			394		22

Foreign Governments	Foreign Governments	17			—			1		—		—		—		—			18		2		Foreign Governments	18		—			(1)		—				—				—				—				17				(1)
Short-Term		—			—			2		494		—		(304)		—			192		1
Equity and preferred securities		5			1			2		4		—		—		—			12		—
Investment in unconsolidated affiliates																							Investment in unconsolidated affiliates	21		—			—		—				—				—				—				21				—
Short term investments																							Short term investments	321		—			(1)		20				—				—				(321)				19				(1)
Preferred securities																							Preferred securities	2		—			(1)		—				—				—				—				1				(1)
Equity securities																							Equity securities	9		—			—		1				—				—				—				10				—
Other long-term investments:	Other long-term investments:																						Other long-term investments:

Available-for-sale embedded derivative	Available-for-sale embedded derivative	27			4			—		—		—		—		—			31		—		Available-for-sale embedded derivative	34		(4)			—		—				—				—				—				30				—

Credit linked note	Credit linked note	23			—			(3)		—		—		—		—			20		—		Credit linked note	23		—			(3)		—				—				(1)				—				19				—

Total assets at Level 3 fair value		$	3,267		$	12		$	(19)	$	2,959	$	(119)	$	(913)	$	(84)		$	5,103	$	93
Subtotal Level 3 assets at fair value																							Subtotal Level 3 assets at fair value	$	5,600	$	(4)		$	(218)	$	501			$	—			$	(179)			$	(204)			$	5,496			$	(221)
Market risk benefits asset																							Market risk benefits asset	41																							29
Total Level 3 assets at fair value																							Total Level 3 assets at fair value	$	5,641																						$	5,525
Liabilities	Liabilities																						Liabilities
Future policy benefits (FSRC)		$	5		$	—		$	—	$	—	$	(4)	$	(1)	$	—		$	—	$	—

FIA embedded derivatives, included in contractholder funds	FIA embedded derivatives, included in contractholder funds	3,404			35			—		—		—		—		—			3,439		—		FIA embedded derivatives, included in contractholder funds	3,883		(584)			—		126				—				(30)				—				3,395				—

Total liabilities at Level 3 fair value		$	3,409		$	35		$	—	$	—	$	(4)	$	(1)	$	—		$	3,439	$	—
Subtotal Level 3 liabilities at fair value																							Subtotal Level 3 liabilities at fair value	$	3,883	$	(584)		$	—	$	126			$	—			$	(30)			$	—			$	3,395			$	—
Market risk benefits liability																							Market risk benefits liability	469																							486
Total Level 3 liabilities at fair value																							Total Level 3 liabilities at fair value	$	4,352																						$	3,881

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.

~~Investments in Unconsolidated affiliates~~

In our F&G segment, the fair value of Investments in unconsolidated affiliates is determined using NAV as a practical expedient and are included in the NAV column in the table below. In our title segment, Investments in unconsolidated affiliates are accounted for under the equity method of accounting. In our title segment, Investments in unconsolidated affiliates were $197 million and $136 million as of September 30, 2022 and December 31, 2021, respectively.

~~Table of Contents~~

~~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.

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

The fair value of bank loans 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 and fixed rate annuities), indexed IULs, funding agreements and pension risk transfer solutions ("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 annuity 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. The inputs used to measure the fair value of our outstanding debt are classified as Level 2 within the fair value hierarchy.~~

~~Table of Contents~~

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, 2022
(in millions)
Level 1 Level 2 Level 3 NAV Total Estimated Fair Value Carrying Amount
Assets
FHLB common stock $ — $ 89 $ — $ — $ 89 $ 89
Commercial mortgage loans — — 2,017 — 2,017 2,333
Residential mortgage loans — — 1,952 — 1,952 2,200
Investments in unconsolidated affiliates — — — 2,789 2,789 2,789
Policy loans — — 47 — 47 47
Other invested assets — — 87 — 87 87
Company-owned life insurance — — 358 — 358 358
Trade and notes receivables, net of allowance — — 530 — 530 530
Total $ — $ 89 $ 4,991 $ 2,789 $ 7,869 $ 8,433
Liabilities
Investment contracts, included in contractholder funds $ — $ — $ 33,207 $ — $ 33,207 $ 36,669
Debt — 2,173 — — 2,173 2,693
Total $ — $ 2,173 $ 33,207 $ — $ 35,380 $ 39,362

December 31, 2021
(in millions)
Level 1 Level 2 Level 3 NAV 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
Investments in unconsolidated affiliates — — — 2,350 2,350 2,350
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 $ 2,350 $ 7,222 $ 7,157
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

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 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.

~~Table of Contents~~

~~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 VOBA, DAC, 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 September 30, 2022 and December 31, 2021 are summarized as follows (in millions):

September 30, 2022
Amortized Cost Allowance for Expected Credit Losses Gross Unrealized Gains Gross Unrealized Losses Fair Value
Available-for-sale securities
Asset-backed securities $ 11,604 $ (8) $ 29 $ (781) $ 10,844
Commercial mortgage-backed securities 3,223 (1) 38 (223) 3,037
Corporates 17,116 (6) 11 (3,462) 13,659
Hybrids 809 — 7 (82) 734
Municipals 1,606 — — (286) 1,320
Residential mortgage-backed securities 1,122 (7) 1 (104) 1,012
U.S. Government 518 — — (28) 490
Foreign Governments 279 — — (54) 225
Total available-for-sale securities $ 36,277 $ (22) $ 86 $ (5,020) $ 31,321

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

~~Securities held on deposit with various state regulatory authorities had a fair value of $16,517 million and $22,343 million at September 30, 2022 and December 31, 2021, respectively.~~

~~As of September 30, 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 September 30, 2022 and December 31, 2021, the Company's accrued interest receivable balance was $330 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 $3,125 million and $2,469 million as of September 30, 2022 and December 31, 2021, respectively.

~~Table of Contents~~

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.

September 30, 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 $ 496 $ 491 $ 426 $ 431
Due after one year through five years 3,394 3,159 2,998 3,051
Due after five years through ten years 2,209 1,934 2,389 2,458
Due after ten years 14,203 10,820 12,930 13,608
Subtotal 20,302 16,404 18,743 19,548
Other securities, which provide for periodic payments:
Asset-backed securities 11,604 10,844 8,516 8,695
Commercial mortgage-backed securities 3,223 3,037 2,684 2,979
Structured hybrids 26 24 31 37
Residential mortgage-backed securities 1,122 1,012 731 731
Subtotal 15,975 14,917 11,962 12,442
Total fixed maturity available-for-sale securities $ 36,277 $ 31,321 $ 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);~~

•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);

•~~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 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;~~

~~Table of Contents~~

• ~~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. As of September 30, 2022 and December 31, 2021, our allowance for expected credit losses for AFS securities was $22 million and $8 million, respectively.

Purchased credit deteriorated ("PCD") financial assets 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 and nine months ended September 30, 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 September 30, 2022 and December 31, 2021 were as follows (dollars in millions):

September 30, 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 $ 8,253 $ (643) $ 1,114 $ (138) $ 9,367 $ (781)
Commercial mortgage-backed securities 1,978 (176) 193 (48) 2,171 (224)
Corporates 11,211 (2,552) 2,075 (910) 13,286 (3,462)
Hybrids 640 (82) 2 — 642 (82)
Municipals 1,180 (248) 133 (38) 1,313 (286)
Residential mortgage-backed securities 833 (57) 34 (8) 867 (65)
U.S. Government 379 (21) 110 (6) 489 (27)
Foreign Government 137 (42) 19 (12) 156 (54)
Total available-for-sale securities $ 24,611 $ (3,821) $ 3,680 $ (1,160) $ 28,291 $ (4,981)
Total number of available-for-sale securities in an unrealized loss position less than twelve months 3,567
Total number of available-for-sale securities in an unrealized loss position twelve months or longer 522
Total number of available-for-sale securities in an unrealized loss position 4,089

~~Table of Contents~~

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 September 30, 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 three quarters 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 September 30, 2022, our allowance for expected credit loss was $22 million. We believe that unrealized loss position for which we have not recorded an allowance for expected credit loss as of September 30, 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.

~~Table of Contents~~

Mortgage Loans

~~Our~~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 ~~collateralized by commercial and residential properties.~~

~~Commercial Mortgage Loans~~

~~Commercial mortgage loans ("CMLs") represented approximately 5% of our total investments~~classified as of September 30, 2022. We primarily invest in mortgage loans on income producing properties including 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 secureLevel 3 within 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, 2022 December 31, 2021
Gross Carrying Value % of Total Gross Carrying Value % of Total
Property Type:
Hotel $ 18 1 % $ 19 1 %
Industrial 486 20 % 497 23 %
Mixed Use 12 1 % 13 1 %
Multifamily 1,014 42 % 894 41 %
Office 331 14 % 343 16 %
Retail 106 5 % 121 6 %
Student Housing 83 4 % 83 4 %
Other 291 13 % 204 8 %
Total commercial mortgage loans, gross of valuation allowance $ 2,341 100 % $ 2,174 100 %
Allowance for expected credit loss (8) (6)
Total commercial mortgage loans $ 2,333 $ 2,168
U.S. Region:
East North Central $ 133 6 % $ 137 6 %
East South Central 76 3 % 79 4 %
Middle Atlantic 292 12 % 293 13 %
Mountain 355 15 % 236 11 %
New England 157 7 % 149 7 %
Pacific 707 30 % 649 30 %
South Atlantic 499 21 % 459 21 %
West North Central 4 1 % 12 1 %
West South Central 118 5 % 160 7 %
Total commercial mortgage loans, gross of valuation allowance $ 2,341 100 % $ 2,174 100 %
Allowance for expected credit loss (8) (6)
Total commercial mortgage loans $ 2,333 $ 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 thefair 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.hierarchy.

3124

Table of Contents

Investments in Unconsolidated affiliates

In our F&G segment, the fair value of Investments in unconsolidated affiliates is primarily determined using NAV as a practical expedient and are included in the NAV column in the table below. In our title segment, Investments in unconsolidated affiliates are accounted for under the equity method of accounting. In our title segment, Investments in unconsolidated affiliates were $220 million and $187 million as of March 31, 2023 and December 31, 2022, respectively.

Policy Loans (included within Other long-term investments)

Company Owned Life Insurance

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

The fair value of bank loans 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. Bank loans are classified as Level 3 within the fair value hierarchy. For cost method investments, our carrying value approximates fair value. Cost method investments are classified as Level 1 within the fair value hierarchy.

Investment Contracts

Investment contracts include deferred annuities (FIAs and fixed rate annuities), indexed IULs, funding agreements, PRTs 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., 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, PRTs and immediate annuity 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, with the exception of the F&G Credit Agreement, as defined in Note O Notes Payable, is based on quoted market prices. The carrying value of the F&G Credit Agreement approximates fair value as the rates are comparable to those at which we could currently borrow under similar terms.The inputs used to measure the fair value of our outstanding debt are classified as Level 2 within the fair value hierarchy.

Table of Contents

The following tables ~~present~~provide the ~~recorded investment in CMLs by LTV and DSC ratio categories~~carrying value and estimated fair value byof our financial instruments that are carried on the ~~indicated loan-to-value ratios~~unaudited Condensed Consolidated Balance Sheets at ~~September 30, 2022 and December 31, 2021 presented at gross carrying~~amounts other than fair value, ~~(dollars~~summarized according to the fair value hierarchy previously described.


	March 31, 2023
	Level 1		Level 2		Level 3		NAV		Total Estimated Fair Value		Carrying Amount
Assets	(In millions)
FHLB common stock	$	—	$	106	$	—	$	—	$	106	$	106
Commercial mortgage loans	—		—		2,178		—		2,178		2,458
Residential mortgage loans	—		—		2,323		—		2,323		2,526
Investments in unconsolidated affiliates	—		—		4		2,558		2,562		2,562
Policy loans	—		—		55		—		55		55
Other invested assets	91		—		11		—		102		102
Company-owned life insurance	—		—		381		—		381		381

Trade and notes receivables, net of allowance	—		—		428		—		428		428
Total	$	91	$	106	$	5,380	$	2,558	$	8,135	$	8,618

Liabilities
Investment contracts, included in contractholder funds	$	—	$	—	$	36,117	$	—	$	36,117	$	39,809
Debt	—		3,308		—		—		3,308		3,696

Total	$	—	$	3,308	$	36,117	$	—	$	39,425	$	43,505


	December 31, 2022
	Level 1		Level 2		Level 3		NAV		Total Estimated Fair Value		Carrying Amount
Assets	(In millions)
FHLB common stock	$	—	$	99	$	—	$	—	$	99	$	99
Commercial mortgage loans	—		—		2,083		—		2,083		2,406
Residential mortgage loans	—		—		1,892		—		1,892		2,148
Investments in unconsolidated affiliates	—		—		5		2,427		2,432		2,432
Policy loans	—		—		52		—		52		52
Other invested assets	93		—		16		—		109		109
Company-owned life insurance	—		—		363		—		363		363
Trade and notes receivables, net of allowance	—		—		467		—		467		467
Total	$	93	$	99	$	4,878	$	2,427	$	7,497	$	8,076

Liabilities
Investment contracts, included in contractholder funds	$	—	$	—	$	34,464	$	—	$	34,464	$	38,412
Debt	—		2,776		—		—		2,776		3,238
Total	$	—	$	2,776	$	34,464	$	—	$	37,240	$	41,650

For investments for which NAV is used as a practical expedient for fair value, we do not have any significant restrictions in ~~millions)~~:

Debt-Service Coverage Ratios Total Amount % of Total Estimated Fair Value % of Total
>1.25 1.00 - 1.25 <1.00
September 30, 2022
LTV Ratios:
Less than 50% $ 492 $ 5 $ 11 $ 508 22 % $ 475 24 %
50% to 60% 669 — — 669 29 % 582 29 %
60% to 75% 1,155 — — 1,155 48 % 954 46 %
75% to 85% $ — $ — $ 9 $ 9 1 % 6 1 %
Commercial mortgage loans $ 2,316 $ 5 $ 20 $ 2,341 100 % $ 2,017 100 %
December 31, 2021
LTV Ratios:
Less than 50% $ 626 $ 33 $ 9 $ 668 31 % $ 745 33 %
50% to 60% 470 — — 470 22 % 481 21 %
60% to 75% 1,036 — — 1,036 47 % 1,039 46 %
Commercial mortgage loans $ 2,132 $ 33 $ 9 $ 2,174 100 % $ 2,265 100 %
our ability to liquidate our positions in these investments, other than obtaining general partner approval, nor do we believe it is probable that a price less than NAV would be received in the event of a liquidation.

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

~~Residential Mortgage Loans~~

~~Residential mortgage loans ("RMLs") represented approximately 5% of our total investments as of September 30, 2022. Our residential mortgage loans are closed end, amortizing loans and 100%~~observability of the ~~properties~~valuation attributes may result in a reclassification of certain financial assets or liabilities. Such reclassifications are ~~located~~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 ~~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~~primary pricing source and changes in the ~~following tables (dollars~~observability of external information used in ~~millions):~~

September 30, 2022
U.S. State: Amortized Cost % of Total
Florida $ 331 15 %
Texas 232 10 %
New Jersey 175 8 %
Pennsylvania 155 7 %
California 145 7 %
New York 140 6 %
Georgia 126 6 %
All Other States (1) 926 41 %
Total residential mortgage loans $ 2,230 100 %

~~(1) The individual concentration of each state is equal to or less than 5% as of September 30, 2022.~~determining the fair value.

3226

Table of Contents

Note D — Investments

Our fixed maturity securities investments have been designated as AFS, and are carried at fair value, net of allowance for expected credit losses, with unrealized gains and losses included in AOCI, net of 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, 2023 and December 31, 2022 are summarized as follows:


	March 31, 2023
	Amortized Cost		Allowance for Expected Credit Losses		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available-for-sale securities	(In millions)
Asset-backed securities	$	12,620	$	(10)	$	43	$	(761)	$	11,892
Commercial mortgage-backed securities	4,048		—		3		(336)		3,715
Corporates	18,426		(3)		64		(2,656)		15,831
Hybrids	853		—		9		(82)		780
Municipals	1,850		—		13		(234)		1,629
Residential mortgage-backed securities	1,770		(7)		13		(107)		1,669
U.S. Government	341		—		—		(12)		329
Foreign Governments	311		—		1		(47)		265
Total available-for-sale securities	$	40,219	$	(20)	$	146	$	(4,235)	$	36,110


	December 31, 2022
	Amortized Cost		Allowance for Expected Credit Losses		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available-for-sale securities	(In millions)
Asset-backed securities	$	12,209	$	(8)	$	36	$	(770)	$	11,467
Commercial mortgage-backed/asset-backed securities	3,337		(1)		11		(284)		3,063
Corporates	17,396		(22)		32		(3,069)		14,337
Hybrids	806		—		9		(84)		731
Municipals	1,749		—		4		(293)		1,460
Residential mortgage-backed securities	1,638		(8)		6		(109)		1,527
U.S. Government	287		—		—		(16)		271
Foreign Governments	286		—		—		(47)		239
Total available-for-sale securities	$	37,708	$	(39)	$	98	$	(4,672)	$	33,095

Securities held on deposit with various state regulatory authorities had a fair value of $18,876 million and $17,870 million at March 31, 2023 and December 31, 2022, respectively.

As of March 31, 2023 and December 31, 2022, the Company held no material investments that were non-income producing for a period greater than twelve months.

As of March 31, 2023 and December 31, 2022, the Company's accrued interest receivable balance was $413 million and $365 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 $3,830 million and $3,387 million as of March 31, 2023 and December 31, 2022, respectively.

Table of Contents

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 as issuers may have the right to call or prepay obligations.

December 31, 2021
U.S. State: Amortized Cost % of Total
Florida $ 231 15 %
Texas 167 10 %
New Jersey 150 10 %
All other states (1) 1,027 65 %
Total residential mortgage loans $ 1,575 100 %

~~(1) The individual concentration of each state is less than 9% as of December 31, 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 nonaccrual status, which is assessed monthly. The credit quality of RML's as of September 30, 2022 and December 31, 2021, was as follows (dollars in millions):

September 30, 2022 December 31, 2021
Performance indicators: Carrying Value % of Total Carrying Value % of Total
Performing $ 2,165 97 % $ 1,533 95 %
Non-performing 65 3 % 73 5 %
Total residential mortgage loans, gross of valuation allowance $ 2,230 100 % $ 1,606 100 %
Allowance for expected loan loss (30) — % (25) — %
Total residential mortgage loans $ 2,200 100 % $ 1,581 100 %

~~Loans segregated by risk rating exposure as of September 30, 2022 and December 31, 2021, were as follows (in millions):~~

September 30, 2022
Amortized Cost by Origination Year
2022 2021 2020 2019 2018 Prior Total
Residential mortgages
Current (less than 30 days past due) $ 762 $ 898 $ 229 $ 199 $ 25 $ 35 $ 2,148
30-89 days past due 3 8 2 4 — — 17
90 days or over past due — 7 16 41 1 — 65
Total residential mortgages $ 765 $ 913 $ 247 $ 244 $ 26 $ 35 $ 2,230
Commercial mortgages
Current (less than 30 days past due) $ 250 $ 1,301 $ 510 $ — $ — $ 271 $ 2,332
30-89 days past due — — — — — — —
90 days or over past due — — — — — 9 9
Total commercial mortgages $ 250 $ 1,301 $ 510 $ — $ — $ 280 $ 2,341


	March 31, 2023				December 31, 2022
	(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	$	586	$	574	$	536	$	527
Due after one year through five years	3,921		3,745		3,288		3,089
Due after five years through ten years	2,265		2,079		2,171		1,939
Due after ten years	14,983		12,410		14,503		11,457
Subtotal	21,755		18,808		20,498		17,012
Other securities, which provide for periodic payments:
Asset-backed securities	12,620		11,892		12,209		11,467
Commercial mortgage-backed securities	4,048		3,715		3,337		3,063
Structured hybrids	26		26		26		26
Residential mortgage-backed securities	1,770		1,669		1,638		1,527
Subtotal	18,464		17,302		17,210		16,083
Total fixed maturity available-for-sale securities	$	40,219	$	36,110	$	37,708	$	33,095

~~Table of Contents~~

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
90 days or over 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 — — — — — — —
90 days or over past due — — — — — — —
Total commercial mortgage $ 1,301 $ 543 $ — $ 6 $ — $ 324 $ 2,174

September 30, 2022
Amortized Cost by Origination Year
2022 2021 2020 2019 2018 Prior Total
Commercial mortgages
LTV
Less than 50% $ 35 $ 120 $ 230 $ — $ — $ 123 $ 508
50% to 60% 105 267 158 — — 139 669
60% to 75% 110 914 122 — — 9 1,155
75% to 85% — — — — — 9 9
Total commercial mortgages $ 250 $ 1,301 $ 510 $ — $ — $ 280 $ 2,341
Commercial mortgages
DSCR
Greater than 1.25x $ 250 $ 1,301 $ 510 $ — $ — $ 255 $ 2,316
1.00x - 1.25x — — — — — 5 5
Less than 1.00x — — — — — 20 20
Total commercial mortgages $ 250 $ 1,301 $ 510 $ — $ — $ 280 $ 2,341

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, 2022 and December 31, 2021, were as follows (in millions):~~

Amortized cost of loans on non-accrual September 30, 2022 December 31, 2021
Residential mortgage: $ 64 $ 72
Commercial mortgage: 9 —
Total non-accrual loans $ 73 $ 72

~~Table of Contents~~

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

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, 2022 and December 31, 2021, we had $64 million and $72 million, respectively, of residential mortgage loans that were over 90 days past due, of which $33 million and $39 million were in the process of foreclosure as of September 30, 2022 and December 31, 2021, respectively.

Allowance for Expected 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 unaudited Condensed Consolidated Statements of Operations, 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 as we write-off accrued interest through 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;

Table of Contents

• 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 unaudited Condensed Consolidated Statements of Operations. 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 unaudited Condensed Consolidated Statements of Operations. The remainder of unrealized loss is held in AOCI. As of March 31, 2023 and December 31, 2022, our allowance for expected credit losses for AFS securities was $20 million and $39 million, respectively.

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, 2023 and December 31, 2022 were as follows:


	March 31, 2023
	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	(In millions)
Asset-backed securities	$	5,347	$	(307)	$	4,520	$	(448)	$	9,867	$	(755)
Commercial mortgage-backed securities	2,249		(122)		1,236		(214)		3,485		(336)
Corporates	5,501		(392)		8,553		(2,263)		14,054		(2,655)
Hybrids	346		(29)		321		(53)		667		(82)
Municipals	483		(37)		907		(196)		1,390		(233)
Residential mortgage-backed securities	708		(22)		540		(81)		1,248		(103)
U.S. Government	29		—		206		(11)		235		(11)
Foreign Government	23		(2)		183		(44)		206		(46)
Total available-for-sale securities	$	14,686	$	(911)	$	16,466	$	(3,310)	$	31,152	$	(4,221)
Total number of available-for-sale securities in an unrealized loss position less than twelve months											2,402
Total number of available-for-sale securities in an unrealized loss position twelve months or longer											2,270
Total number of available-for-sale securities in an unrealized loss position											4,672

Table of Contents


	December 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	(In millions)
Asset-backed securities	$	7,001	$	(410)	$	3,727	$	(360)	$	10,728	$	(770)
Commercial mortgage-backed securities	2,079		(169)		475		(116)		2,554		(285)
Corporates	9,913		(1,735)		3,523		(1,330)		13,436		(3,065)
Hybrids	628		(83)		3		(1)		631		(84)
Municipals	998		(180)		352		(113)		1,350		(293)
Residential mortgage-backed securities	992		(51)		184		(22)		1,176		(73)
U.S. Government	130		(7)		140		(8)		270		(15)
Foreign Government	119		(32)		59		(14)		178		(46)
Total available-for-sale securities	$	21,860	$	(2,667)	$	8,463	$	(1,964)	$	30,323	$	(4,631)
Total number of available-for-sale securities in an unrealized loss position less than twelve months											3,114
Total number of available-for-sale securities in an unrealized loss position twelve months or longer											1,296
Total number of available-for-sale securities in an unrealized loss position											4,410

We determined the decrease in unrealized losses as of March 31, 2023, compared to December 31, 2022, was caused by lower treasury rates as well as spread compression. For securities in an unrealized loss position as of March 31, 2023, our allowance for expected credit loss was $20 million. We believe the unrealized loss position for which we have not recorded an allowance for expected credit loss as of March 31, 2023 was primarily attributable to interest rate increases, near-term illiquidity, and other macroeconomic uncertainties as opposed to issuer specific credit concerns.

Table of Contents

Mortgage Loans

Our mortgage loans are collateralized by commercial and residential properties.

Commercial Mortgage Loans

Commercial mortgage loans (“CMLs”) represented approximately 6% of our total investments March 31, 2023 and December 31, 2022. The mortgage loans in our investment portfolio, are generally comprised of high quality commercial first lien and mezzanine real estate loans. Mortgage loans are primarily on income producing properties including 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:


	March 31, 2023				December 31, 2022
	Gross Carrying Value		% of Total		Gross Carrying Value		% of Total
Property Type:	(Dollars in millions)				(Dollars in millions)


Hotel	$	18	1	%	$	18	1	%
Industrial	538		22	%	520		22	%
Mixed Use	12		1	%	12		1	%
Multifamily	1,013		41	%	1,013		42	%
Office	329		13	%	330		14	%
Retail	104		4	%	105		4	%
Student Housing	83		3	%	83		3	%
Other	373		15	%	335		13	%
Total commercial mortgage loans, gross of valuation allowance	$	2,470	100	%	$	2,416	100	%
Allowance for expected credit loss	(12)				(10)
Total commercial mortgage loans, net of valuation allowance	$	2,458			$	2,406

U.S. Region:
East North Central	$	177	7	%	$	151	6	%
East South Central	76		3	%	76		3	%
Middle Atlantic	325		13	%	326		13	%
Mountain	354		14	%	355		15	%
New England	164		7	%	158		7	%
Pacific	700		28	%	708		28	%
South Atlantic	553		22	%	521		22	%
West North Central	4		1	%	4		1	%
West South Central	117		5	%	117		5	%

Total commercial mortgage loans, gross of valuation allowance	$	2,470	100	%	$	2,416	100	%
Allowance for expected credit loss	(12)				(10)
Total commercial mortgage loans, net of valuation allowance	$	2,458			$	2,406

Table of Contents

Commercial mortgage loans segregated by risk rating exposure as of March 31, 2023 and December 31, 2022, were as follows, gross of valuation allowances:


	March 31, 2023

	Amortized Cost by Origination Year
	2023		2022		2021		2020		2019		Prior		Total
Commercial mortgages	(In millions)
Current (less than 30 days past due)	$	53	$	354	$	1,301	$	486	$	—	$	267	$	2,461
30-89 days past due	—		—		—		—		—		—		—
90 days or more past due	—		—		—		—		—		9		9
Total commercial mortgages	$	53	$	354	$	1301	$	486	$	—	$	276	$	2,470


	December 31, 2022

	Amortized Cost by Origination Year
	2022		2021		2020		2019		2018		Prior		Total
Commercial mortgages	(In millions)
Current (less than 30 days past due)	$	350	$	1,300	$	488	$	—	$	—	$	269	$	2,407
30-89 days past due	—		—		—		—		—		—		—
90 days or more past due	—		—		—		—		—		9		9
Total commercial mortgages	$	350	$	1,300	$	488	$	—	$	—	$	278	$	2,416

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.

The following tables present the recorded investment in CMLs by LTV and DSC ratio categories and estimated fair value by the indicated loan-to-value ratios, gross of valuation allowances at March 31, 2023 and December 31, 2022:


	Debt-Service Coverage Ratios						Total Amount	% of Total		Estimated Fair Value		% of Total
	>1.25		1.00 - 1.25		<1.00
March 31, 2023	(In millions)
LTV Ratios:
Less than 50.00%	$	511	$	4	$	11		$	526	21	%	$	493	23	%
50.00% to 59.99%	732		—		—			732		30	%	653		30	%
60.00% to 74.99%	1,170		8		—			1,178		48	%	1,002		46	%
75.00% to 84.99%	—		2		18			20		1	%	17		1	%
Commercial mortgage loans (a)	$	2,413	$	14	$	29		$	2,456	100	%	$	2,165	100	%

December 31, 2022
LTV Ratios:
Less than 50.00%	$	511	$	4	$	11		$	526	22	%	$	490	24	%
50.00% to 59.99%	706		—		—			706		29	%	615		30	%
60.00% to 74.99%	1,154		3		—			1,157		48	%	955		45	%
75.00% to 84.99%	—		—		18			18		1	%	14		1	%
Commercial mortgage loans (a)	$	2,371	$	7	$	29		$	2,407	100	%	$	2,074	100	%

(a) Excludes loans under development with an amortized cost and estimated fair value of $9 million for March 31, 2023 and an amortized cost and estimated fair value of $9 million for December 31, 2022.

Table of Contents


	March 31, 2023

	Amortized Cost by Origination Year
	2023		2022		2021		2020		2019		Prior		Total
Commercial mortgages	(In millions)
LTV
Less than 50.00%	$	4	$	69	$	120	$	206			$	127	$	526
50.00% to 59.99%	27		149		268		158				130		732
60.00% to 74.99%	20		113		913		122				10		1,178
75.00% to 84.99%	3		9		—		—				8		20
Total commercial mortgages (a)	$	54	$	340	$	1301	$	486	$	—	$	275	$	2,456
Commercial mortgages
DSCR
Greater than 1.25x	$	47	$	328	$	1,301	$	486			$	251	$	2,413
1.00x - 1.25x	7		3		—		—				4		14
Less than 1.00x	—		9		—		—				20		29
Total commercial mortgages (a)	$	54	$	340	$	1301	$	486	$	—	$	275	$	2,456


	December 31, 2022

	Amortized Cost by Origination Year
	2022		2021		2020		2019		2017		Prior		Total
Commercial mortgages	(In millions)
LTV
Less than 50.00%	$	70	$	120	$	207	$	—	$	—	$	129	$	526
50.00% to 59.99%	149		268		158		—		—		131		706
60.00% to 74.99%	113		912		123		—		—		9		1,157
75.00% to 84.99%	9		—		—		—		—		9		18
Total commercial mortgages (a)	$	341	$	1,300	$	488	$	—	$	—	$	278	$	2,407
Commercial mortgages
DSCR
Greater than 1.25x	$	329	$	1,300	$	488	$	—	$	—	$	254	$	2,371
1.00x - 1.25x	3		—		—		—		—		4		7
Less than 1.00x	9		—		—		—		—		20		29
Total commercial mortgages (a)	$	341	$	1,300	$	488	$	—	$	—	$	278	$	2,407

We recognize a mortgage loan as delinquent when payments on the loan are greater than 30 days past due. At March 31, 2023 and December 31, 2022, we had one CML that was delinquent in principal or interest payments as shown in the risk rating exposure table above.

Table of Contents

Residential Mortgage Loans

Residential mortgage loans (“RMLs”) represented approximately 6% and 5% of our total investments as of March 31, 2023 and December 31, 2022, respectively. Our RMLs 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, gross of valuation allowances:


	March 31, 2023
	(Dollars in millions)
U.S. State:	Amortized Cost		% of Total
Florida	$	236	9	%
Texas	181		7	%
New Jersey	167		6	%
California	157		6	%
New York	155		6	%
All other states (a)	1,678		66	%
Total residential mortgage loans	$	2,574	100	%

(a)The individual concentration of each state is equal to or less than 5% as of March 31, 2023.


	December 31, 2022
	(Dollars in millions)
U.S. State:	Amortized Cost		% of Total
Florida	$	324	15	%
Texas	215		10	%
New Jersey	172		8	%
Pennsylvania	153		7	%
California	139		6	%
New York	138		6	%
Georgia	125		6	%
All other states (a)	914		42	%
Total residential mortgage loans	$	2,180	100	%

(a)The individual concentration of each state is equal to or less than 5% as of December 31, 2022.

RMLs have a primary credit quality indicator of either a performing or nonperforming loan. We define non-performing RMLs as those that are 90 or more days past due or in non-accrual status, which is assessed monthly. The credit quality of RMLs as of March 31, 2023 and December 31, 2022, was as follows :


	March 31, 2023				December 31, 2022
	(Dollars in millions)				(Dollars in millions)
Performance indicators:	Amortized Cost		% of Total		Amortized Cost		% of Total
Performing	$	2,511	98	%	$	2,118	97	%
Non-performing	63		2	%	62		3	%
Total residential mortgage loans, gross of valuation allowance	$	2,574	100	%	$	2,180	100	%
Allowance for expected loan loss	(48)		—	%	(32)		—	%
Total residential mortgage loans, net of valuation allowance	$	2,526	100	%	$	2,148	100	%

Table of Contents

RMLs segregated by risk rating exposure as of March 31, 2023 and December 31, 2022, were as follows, gross of valuation allowances:


	March 31, 2023

	Amortized Cost by Origination Year
	2023		2022		2021		2020		2019		Prior		Total
Residential mortgages	(In millions)
Current (less than 30 days past due)	$	35	$	950	$	889	$	209	$	199	$	209	$	2,491
30-89 days past due	—		3		8		3		4		2		20
90 days or more past due	—		3		18		13		28		1		63
Total residential mortgages	$	35	$	956	$	915	$	225	$	231	$	212	$	2,574


	December 31, 2022

	Amortized Cost by Origination Year
	(In millions)
	2022		2021		2020		2019		2018		Prior		Total
Residential mortgages	(In millions)
Current (less than 30 days past due)	$	766	$	884	$	214	$	185	$	23	$	33	$	2,105
30-89 days past due	2		7		—		4		—		—		13
90 days or more past due	3		9		15		34		1		—		62
Total residential mortgages	$	771	$	900	$	229	$	223	$	24	$	33	$	2,180

Non-accrual loans by amortized cost as of March 31, 2023 and December 31, 2022, were as follows:


	March 31, 2023		December 31, 2022
Amortized cost of loans on non-accrual	(In millions)
Residential mortgage:	$	63	$	62
Commercial mortgage:	9		9
Total non-accrual mortgages	$	72	$	71

Immaterial interest income was recognized on non-accrual financing receivables for the three months ended March 31, 2023 and March 31, 2022.

It is our policy to cease to accrue interest on loans that are delinquent for 90 days or more. 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 90 days or more delinquent, it is our general policy to initiate foreclosure proceedings unless a workout arrangement to bring the loan current is in place. As of March 31, 2023 and December 31, 2022, we had $72 million and $71 million, respectively, of RMLs that were over 90 days past due, of which $32 million and $38 million were in the process of foreclosure as of March 31, 2023 and December 31, 2022, respectively.

Allowance for Expected Credit Loss

We estimate expected credit losses for our commercial and residential mortgage loan portfolios using a probability of default/loss given default model. Significant inputs to this model include, where applicable, the loans' current performance, underlying collateral type, location, contractual life, LTV, DSC 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.

Table of Contents

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


															Three months ended March 31, 2023
		Three months ended September 30, 2022						Nine months ended September 30, 2022								(In millions)

		Residential Mortgage		Commercial Mortgage		Total		Residential Mortgage		Commercial Mortgage		Total				Residential Mortgage		Commercial Mortgage		Total
Beginning Balance	Beginning Balance	$	29	$	6	$	35	$	25	$	6	$	31	Beginning Balance		$	32	$	10	$	42
Provision for loan losses	Provision for loan losses	1		2		3		5		2		7		Provision for loan losses		16		2		18

Ending Balance	Ending Balance	$	30	$	8	$	38	$	30	$	8	$	38	Ending Balance		$	48	$	12	$	60


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

		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

An allowance for expected credit loss is not measured on accrued interest income for ~~commercial mortgage loans~~CMLs as we have a process to write-off interest on loans that enter into non-accrual status ~~(over 90~~(90 days or more past due). Allowances for expected credit losses are measured on accrued interest income for ~~residential mortgage loans~~RMLs and were immaterial as of ~~September 30, 2022~~March 31, 2023 and ~~December~~March 31, ~~2021.~~

~~Table of Contents~~

2022.

Interest and Investment Income

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


											Three months ended
		Three months ended				Nine months ended					March 31, 2023		March 31, 2022
		September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021			(In millions)
Fixed maturity securities, available-for-sale	Fixed maturity securities, available-for-sale	$	379	$	313	$	1,062	$	944	Fixed maturity securities, available-for-sale	$	447	$	332
Equity securities	Equity securities	7		6		23		16		Equity securities	8		8
Preferred securities	Preferred securities	15		13		48		45		Preferred securities	13		15
Mortgage loans	Mortgage loans	48		34		136		90		Mortgage loans	51		39

Invested cash and short-term investments	Invested cash and short-term investments	19		4		36		5		Invested cash and short-term investments	33		5

Limited partnerships	Limited partnerships	(55)		168		116		412		Limited partnerships	57		113
Tax deferred property exchange income	Tax deferred property exchange income	35		4		49		13		Tax deferred property exchange income	45		3
Other investments	Other investments	13		9		27		24		Other investments	19		9
Gross investment income	Gross investment income	461		551		1,497		1,549		Gross investment income	673		524
Investment expense	Investment expense	(50)		(43)		(145)		(125)		Investment expense	(62)		(46)
Interest and investment income	Interest and investment income	$	411	$	508	$	1,352	$	1,424	Interest and investment income	$	611	$	478

Table of Contents

Recognized Gains and Losses, net

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


		Three months ended				Nine months ended					Three months ended
		September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021			March 31, 2023		March 31, 2022
Net realized (losses) gains on fixed maturity available-for-sale securities		$	(57)	$	22	$	(153)	$	75
Net realized/unrealized losses on equity securities (1)		(51)		(193)		(423)		(281)
Net realized/unrealized (losses) gains on preferred securities (2)		(8)		(4)		(216)		2
Realized (losses) gains on other invested assets		(54)		—		(64)		8
											(In millions)
Net realized losses on fixed maturity available-for-sale securities										Net realized losses on fixed maturity available-for-sale securities	$	(50)	$	(36)
Net realized/unrealized gains (losses) on equity securities (1)										Net realized/unrealized gains (losses) on equity securities (1)	33		(148)
Net realized/unrealized losses on preferred securities (2)										Net realized/unrealized losses on preferred securities (2)	(10)		(91)
Realized losses on other invested assets										Realized losses on other invested assets	(5)		(1)
Change in allowance for expected credit losses	Change in allowance for expected credit losses	(8)		1		(20)		7		Change in allowance for expected credit losses	(4)		(4)
Derivatives and embedded derivatives:	Derivatives and embedded derivatives:									Derivatives and embedded derivatives:
Realized (losses) gains on certain derivative instruments	Realized (losses) gains on certain derivative instruments	(74)		138		(59)		318		Realized (losses) gains on certain derivative instruments	(89)		50
Unrealized losses on certain derivative instruments		(70)		(141)		(787)		(34)
Unrealized gains (losses) on certain derivative instruments										Unrealized gains (losses) on certain derivative instruments	147		(358)
Change in fair value of reinsurance related embedded derivatives (3)	Change in fair value of reinsurance related embedded derivatives (3)	94		23		357		23		Change in fair value of reinsurance related embedded derivatives (3)	(19)		122
Change in fair value of other derivatives and embedded derivatives	Change in fair value of other derivatives and embedded derivatives	(2)		—		(10)		3		Change in fair value of other derivatives and embedded derivatives	2		(3)
Realized (losses) gains on derivatives and embedded derivatives		(52)		20		(499)		310
Realized gains (losses) on derivatives and embedded derivatives										Realized gains (losses) on derivatives and embedded derivatives	41		(189)
Recognized gains and losses, net	Recognized gains and losses, net	$	(230)	$	(154)	$	(1,375)	$	121	Recognized gains and losses, net	$	5	$	(469)

(1) Includes net valuation losses of ~~$52~~$46 million and ~~$194~~$166 million for the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021, respectively, and net valuation losses of $440 million and $285 million for the nine months ended September 30, 2022 and 2021,~~ respectively.

(2) Includes net valuation losses of $6$35 million and $1$90 million for the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021, respectively, and net valuation (losses) gains of $(213) million and $4 million for the nine months ended September 30, 2022 and 2021,~~ respectively.

(3) Change in fair value of reinsurance related embedded derivatives is due to activity related to the reinsurance treaties with Kubera (novated from Kubera to ~~Sommerset~~Somerset effective October 31, 2021) and Aspida Re.

~~Table~~Recognized gains and losses, net is shown net of ~~Contents~~

amounts attributable to certain funds withheld reinsurance agreements which is passed along to the reinsurer in accordance with the terms of these agreements. Recognized (losses) gains attributable to these agreements, and thus excluded from the totals in the table above, was $(22) million and $128 million for the three months ended March 31, 2023 and March 31, 2022, respectively.

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

Three months ended Nine months ended
September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021
Proceeds $ 731 $ 1,816 $ 2,566 $ 2,685
Gross gains 3 30 8 98
Gross losses (58) (8) (157) (24)


	Three months ended
	March 31, 2023		March 31, 2022
	(In millions)
Proceeds	$	489	$	1,052
Gross gains	1		3
Gross losses	(51)		(39)

Unconsolidated Variable Interest Entities

We own investments in ~~VIEs~~variable interest entities ("VIEs") that are not consolidated within our financial statements. A VIE is an entity that does not have sufficient equity to finance its own activities without additional financial support, where investors lack certain characteristics of a controlling financial 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, 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 we are not considered the primary beneficiary for the VIE investments that are not consolidated.

We invest in various limited partnerships 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

Table of Contents

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~~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).

The following table summarizes the carrying value and the maximum loss exposure of our unconsolidated VIEs as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021 (in millions).~~2022:

September 30, 2022 December 31, 2021
Carrying Value Maximum Loss Exposure Carrying Value Maximum Loss Exposure
Investment in limited partnerships $ 2,789 $ 4,403 $ 2,350 $ 3,496
Fixed maturity securities 14,524 16,177 12,382 12,802
Total unconsolidated VIE investments $ 17,313 $ 20,580 $ 14,732 $ 16,298

~~Table of Contents~~


	March 31, 2023				December 31, 2022
	(In millions)				(In millions)
	Carrying Value		Maximum Loss Exposure		Carrying Value		Maximum Loss Exposure
Investment in limited partnerships	$	2,558	$	4,268	$	2,427	$	4,030
Fixed maturity securities	16,890		18,590		15,680		17,404
Total unconsolidated VIE investments	$	19,448	$	22,858	$	18,107	$	21,434

Concentrations

Our underlying investment concentrations that exceed 10% of shareholders equity are as ~~follows (in millions):~~follows:


	~~September 30, 2022~~March 31, 2023
	(In millions)
Blackstone Wave Asset Holdco (1)	$	~~902~~760

(1) Represents a special purpose vehicle that holds investments in numerous limited partnership investments whose underlying investments are further diversified by holding interest in multiple individual investments and industries.

~~Investment in Cannae Holdings, Inc. ("Cannae")~~

Included in equity securities as of December 31, 2021 were 5,775,598 shares of Cannae common stock (NYSE: CNNE). The fair value of this investment based on quoted market prices as of December 31, 2021 was $203 million. During the nine months ended September 30, 2022, we sold all 5,775,598 shares of CNNE common stock back to Cannae for approximately $109 million in the aggregate. As of September 30, 2022, we held no shares of CNNE common stock.

Table of Contents

Note E — Derivative Financial Instruments

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


		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
Assets:	Assets:					Assets:	(In millions)
Derivative investments:	Derivative investments:					Derivative investments:
Call options	Call options	$	108	$	816	Call options	$	432	$	244

Other long-term investments:	Other long-term investments:					Other long-term investments:
Other embedded derivatives	Other embedded derivatives	22		33		Other embedded derivatives	25		23
Prepaid expenses and other assets:	Prepaid expenses and other assets:					Prepaid expenses and other assets:
Reinsurance related embedded derivatives	Reinsurance related embedded derivatives	285		—		Reinsurance related embedded derivatives	260		279
		$	415	$	849		$	717	$	546


Liabilities:	Liabilities:					Liabilities:
Contractholder funds:	Contractholder funds:					Contractholder funds:
FIA/ IUL embedded derivatives	FIA/ IUL embedded derivatives	$	2,775	$	3,883	FIA/ IUL embedded derivatives	$	3,569	$	3,115

Accounts payable and accrued liabilities:

Reinsurance related embedded derivatives		—		73

		$	2,775	$	3,956

							$	3,569	$	3,115

The change in fair value of derivative instruments ~~included within Recognized gains and losses, net,~~ in the accompanying unaudited Condensed Consolidated Statements of ~~Earnings~~Operations is as ~~follows (in millions):~~follows:


		Three months ended				Nine months ended					Three months ended
		September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021				March 31, 2023		March 31, 2022
Recognized gains and losses, net										Recognized gains and losses, net		(In millions)
Net investment gains (losses):	Net investment gains (losses):									Net investment gains (losses):
Call options	Call options	$	(149)	$	(6)	$	(858)	$	273	Call options		$	55	$	(314)
Futures contracts	Futures contracts	(5)		—		(10)		4		Futures contracts		5		3
Foreign currency forwards	Foreign currency forwards	10		3		22		7		Foreign currency forwards		(1)		3
Other derivatives and embedded derivatives	Other derivatives and embedded derivatives	(2)		(1)		(10)		2		Other derivatives and embedded derivatives		1		(3)
Reinsurance related embedded derivatives	Reinsurance related embedded derivatives	94		23		357		23		Reinsurance related embedded derivatives		(19)		122
Total net investment gains (losses)	Total net investment gains (losses)	$	(52)	$	19	$	(499)	$	309	Total net investment gains (losses)		$	41	$	(189)

Benefits and other changes in policy reserves:	Benefits and other changes in policy reserves:									Benefits and other changes in policy reserves:
FIA/ IUL embedded derivatives		$	(166)	$	(320)	$	(1,108)	$	35
FIA/ IUL embedded derivatives (decrease) increase										FIA/ IUL embedded derivatives (decrease) increase		$	454	$	(488)

Additional Disclosures

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

We have FIA 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/IUL embedded derivatives are valued at fair value and included in the liability for ~~contractholder~~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.~~Operations. See a description of the fair value methodology used in Note C Fair Value of Financial Instruments.

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/IUL contractholders. The

~~Table of Contents~~

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 indexed 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/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

Table of Contents

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/IUL embedded 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, in the accompanying unaudited Condensed Consolidated Statements of ~~Earnings.~~Operations. 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/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.

Reinsurance Related Embedded Derivatives

F&G entered into a reinsurance agreement with Kubera effective December 31, 2018, to cede certain fixed rate and deferred annuity business, including MYGA, on a coinsurance funds withheld basis, net of applicable existing reinsurance. Effective October 31, 2021, this agreement was novated from Kubera to Somerset, a certified third-party reinsurer. Additionally, F&G entered into a reinsurance agreement with Aspida Re effective January 1, 2021, and amended in August 2021 and September 2022, to cede a quota share of MYGA business on a coinsurance funds withheld basis. Fair value movements in the funds withheld balances associated with these arrangements creates an obligation for F&G to pay Somerset and Aspida Re at a later date, which results in embedded derivatives. These embedded derivatives are considered total return swaps with contractual returns that are attributable to the assets and liabilities associated with the reinsurance arrangements. The fair value of the total return swap is based on the change in fair value of the underlying assets held in the funds withheld portfolio. Investment results for the assets that support the coinsurance with funds withheld reinsurance 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 Operations.

Table of Contents

~~Credit Risk~~Reinsurance Related Embedded Derivatives

~~We are exposed~~F&G entered into a reinsurance agreement with Kubera effective December 31, 2018, to ~~credit loss~~cede certain fixed rate and deferred annuity business, including MYGA, on a coinsurance funds withheld basis, net of applicable existing reinsurance. Effective October 31, 2021, this agreement was novated from Kubera to Somerset, a certified third-party reinsurer. Additionally, F&G entered into a reinsurance agreement with Aspida Re effective January 1, 2021, and amended in August 2021 and September 2022, to cede a quota share of MYGA business on a coinsurance funds withheld basis. Fair value movements in the ~~event of non-performance by our counterparties on~~funds withheld balances associated with these arrangements creates an obligation for F&G to pay Somerset and Aspida Re at a later date, which results in embedded derivatives. These embedded derivatives are considered total return swaps with contractual returns that are attributable to the ~~call options~~assets and ~~reflect assumptions regarding this non-performance risk in~~liabilities associated with the reinsurance arrangements. The fair value of the ~~call options. The non-performance risk~~total return swap is ~~the net counterparty exposure~~ based on the change in fair value of the ~~open contracts less collateral held. We maintain~~underlying assets held in the funds withheld portfolio. Investment results for the assets that support the 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 ~~policy of requiring all derivative contracts to be governed by an International Swaps~~net gain position, or Accounts payable and ~~Derivatives Association (“ISDA”) Master Agreement.~~

~~Information regarding our exposure to credit~~accrued liabilities, if in a net loss position, on the ~~call options we hold is presented~~unaudited Condensed Consolidated Balance Sheets and the related gains or losses are reported in Recognized gains and losses, net on the ~~following table (in millions):~~unaudited Condensed Consolidated Statements of Operations.

September 30, 2022
Counterparty Credit Rating
(Fitch/Moody's/S&P) (1) Notional
Amount Fair Value Collateral Net Credit Risk
Merrill Lynch AA/*/A+ $ 3,937 $ 14 $ — $ 14
Morgan Stanley */Aa3/A+ 1,420 5 7 —
Barclay's Bank A+/A1/A 5,514 26 35 —
Canadian Imperial Bank of Commerce AA/Aa2/A+ 4,189 22 28 —
Wells Fargo A+/A1/BBB+ 1,783 12 13 —
Goldman Sachs A/A2/BBB+ 969 5 5 —
Credit Suisse BBB+/A2/A 959 3 3 —
Truist A+/A2/A 2,706 19 22 —
Citibank A+/Aa3/A+ 370 2 3 —
Total $ 21,847 $ 108 $ 116 $ 14

Table of Contents

December 31, 2021
Counterparty Credit Rating
(Fitch/Moody's/S&P) (1) Notional
Amount Fair Value Collateral Net Credit Risk
Merrill Lynch AA/*/A+ $ 3,307 $ 128 $ 86 $ 42
Morgan Stanley */Aa3/A+ 2,184 86 92 —
Barclay's Bank A+/A1/A 5,197 231 233 —
Canadian Imperial Bank of Commerce AA/Aa2/A+ 2,936 147 151 —
Wells Fargo A+/A1/BBB+ 2,445 89 90 —
Goldman Sachs A/A2/BBB+ 307 10 10 —
Credit Suisse A/A1/A+ 1,485 74 75 —
Truist A+/A2/A 1,543 51 53 —
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, 2022 and December 31, 2021 counterparties posted $116 million and $790 million, respectively, of collateral of which $91 million and $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 Sheets. 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 $14 million at September 30, 2022 and $42 million at December 31, 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 224 and 329 futures contracts at September 30, 2022 and December 31, 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 $2 million and $3 million~~at September 30, 2022 and December 31, 2021, respectively.~~

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”)~~fixed rate and deferred annuity business, including MYGA, on a coinsurance funds withheld basis, net of applicable existing reinsurance. Effective October 31, 2021, this agreement was novated from Kubera to Somerset, a certified third-party reinsurer. Additionally, F&G entered into a reinsurance agreement with Aspida Re effective January 1, 2021, and amended in August 2021 and September 2022, to cede a quota share of ~~certain deferred annuity~~MYGA business on a coinsurance funds withheld basis. Fair value movements in the funds withheld balances associated with these arrangements creates an obligation for F&G to pay Somerset and Aspida Re at a later date, which results in embedded derivatives. These embedded derivatives are considered total return swaps with contractual returns that are attributable to the assets and liabilities associated with the reinsurance arrangements. The fair value of the total return swap is based on the change in fair value of the underlying

~~Table of Contents~~

assets held in the funds withheld portfolio. Investment results for the assets that support the 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~~Prepaid expenses and other assets if in a net gain position, or ~~accounts~~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.~~Operations.

Table of Contents

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 is presented in the following tables.


		March 31, 2023
		(In millions)
Counterparty	Credit Rating (Fitch/Moody's/S&P) (1)	Notional Amount		Fair Value		Collateral		Net Credit Risk
Merrill Lynch	AA/*/A+	$	3,834	$	44	$	—	$	44

Morgan Stanley	*/Aa3/A+	2,038		22		24		—
Barclay's Bank	A+/A1/A	5,939		106		95		11
Canadian Imperial Bank of Commerce	AA/Aa2/A+	6,006		129		113		16
Wells Fargo	A+/A1/BBB+	1,270		31		29		2
Goldman Sachs	A/A2/BBB+	1,178		16		14		2
Credit Suisse	BBB+/A3/A-	672		7		7		—
Truist	A+/A2/A	2,204		60		54		6
Citibank	A+/Aa3/A+	1,207		17		15		2
Total		$	24,348	$	432	$	351	$	83


		December 31, 2022
		(In millions)
Counterparty	Credit Rating (Fitch/Moody's/S&P) (1)	Notional Amount		Fair Value		Collateral		Net Credit Risk
Merrill Lynch	AA/*/A+	$	3,563	$	23	$	—	$	23

Morgan Stanley	*/Aa3/A+	1,699		14		19		—
Barclay's Bank	A+/A1/A	6,049		65		59		6
Canadian Imperial Bank of Commerce	AA/Aa2/A+	5,169		68		64		4
Wells Fargo	A+/A1/BBB+	1,361		17		17		—
Goldman Sachs	A/A2/BBB+	1,133		9		10		—
Credit Suisse	BBB+/A3/A-	1,039		5		5		—
Truist	A+/A2/A	2,489		35		36		—
Citibank	A+/Aa3/A+	795		8		9		—
Total		$	23,297	$	244	$	219	$	33

(a)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 March 31, 2023 and December 31, 2022, counterparties posted $351 million and $219 million, respectively, of collateral of which $290 million and $178 million, respectively, is included in Cash and cash equivalents with an associated payable for this collateral included in Accounts

Table of Contents

payable and accrued liabilities on the unaudited Condensed Consolidated Balance Sheets. 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 $83 million at March 31, 2023 and $33 million at December 31, 2022.

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 404 and 409 futures contracts at March 31, 2023 and December 31, 2022, 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 $4 million and $3 millionat March 31, 2023 and December 31, 2022, respectively.

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 that represents our best estimate has been recorded. Our accrual for legal and regulatory matters was ~~$16~~$8 million and $12 million as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, 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.

~~Two lawsuits have been filed related to FNF’s acquisition of F&G. On~~In 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. The Company’s Board of Directors (“Board”) designated a Special Litigation Committee (the “SLC”) consisting of three of the Board’s Directors, and authorized the SLC, among other things, to investigate and evaluate the claims and allegations asserted in the lawsuit. The Board 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 its shareholders, and what action the Company should take with respect to the lawsuit. On January 24, 2022, the SLC, acting on behalf of FNF, and the other parties to the lawsuit reached an agreement to settle the action subject to various terms and conditions. On June 21, 2022, an order was entered approving the settlement and dismissing the case with prejudice.

~~On August 17,~~ 2020, a lawsuit styled, In the Matter of FGL Holdings, was filed in the Grand Court of the Cayman Islands related to FNF's acquisition of F&G where dissenting shareholders, Kingfishers LP, Kingstown 1740 Fund LP, Kingstown Partners II LP, Kingstown Partners Master Ltd., and Ktown LP, asserted statutory appraisal rights relative to their ownership of 12,000,000 shares of F&G stock. They sought a judicial determination of the fair value of their shares of F&G stock as of the date of valuation under the law of the Cayman Islands, together with interest. On September 5, 2022 the Grand Court of the Cayman Islands decided in favor of F&G. ~~The dissenters~~Kingstown Capital Management LP failed to appeal, and ~~their~~its appeal period expired on October 20, 2022. On April 19, 2023 the Grand Court of the Cayman Islands determined that the dissenting shareholders should pay F&G's Cayman Islands legal expenses relating to the lawsuit, by way of interim payment of $4 million with the balance to be determined after assessment. We are attempting to collect reimbursement of these expenses.

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 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,

Table of Contents

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 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, 2022~~March 31, 2023 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, 2022~~March 31, 2023 is included ~~below (in millions):~~below:


	~~September 30, 2022~~March 31, 2023
Asset Type	(In millions)
Unconsolidated VIEs:
Limited partnerships	$	~~1,615~~1,710
Whole loans	~~459~~743
Fixed maturity securities, ABS	~~150~~212
Direct Lending	1,000
Other fixed maturity securities, AFS	~~104~~28
Commercial mortgage loans	1229

Other assets	~~126~~142
Residential mortgage loans	41
Committed amounts included in liabilities	31
Total	$	~~2,473~~3,866

Note G — Dividends

On ~~November~~May 3, ~~2022,~~2023, our Board of Directors declared cash dividends of $0.45 per share, payable on ~~December~~June 30, ~~2022,~~2023, to FNF common shareholders of record as of ~~December~~June 16, ~~2022.~~2023.

Note H — Segment Information

Summarized financial information concerning our reportable segments is shown in the following tables.

As of and for the three months ended ~~September 30, 2022:~~March 31, 2023:

Title F&G Corporate and Other Total
(In millions)
Title premiums $ 1,654 $ — $ — $ 1,654
Other revenues 623 702 47 1,372
Revenues from external customers 2,277 702 47 3,026
Interest and investment income, including recognized gains and losses, net 14 200 (33) 181
Total revenues 2,291 902 14 3,207
Depreciation and amortization 38 87 6 131
Interest expense — 6 22 28
Earnings (loss) from continuing operations before income taxes and equity in earnings (loss) of unconsolidated affiliates 335 143 (69) 409
Income tax expense (benefit) 93 28 (6) 115
Earnings (loss) from continuing operations before equity in earnings (loss) of unconsolidated affiliates 242 115 (63) 294
Net earnings (loss) from continuing operations $ 242 $ 115 $ (63) $ 294
Assets $ 8,906 $ 51,291 $ 1,967 $ 62,164
Goodwill 2,587 1,756 266 4,609


	Title		F&G		Corporate and Other		Total
	(In millions)
Title premiums	$	978	$	—	$	—	$	978
Other revenues	471		365		44		880
Revenues from external customers	1,449		365		44		1,858
Interest and investment income, including recognized gains and losses, net	103		504		9		616
Total revenues	1,552		869		53		2,474
Depreciation and amortization	37		90		7		134
Interest expense	—		22		20		42
Earnings (loss) from continuing operations before income taxes and equity in earnings (loss) of unconsolidated affiliates	157		(203)		(28)		(74)
Income tax expense (benefit)	27		(8)		(5)		14
Earnings (loss) from continuing operations before equity in earnings (loss) of unconsolidated affiliates	130		(195)		(23)		(88)
Equity in loss of unconsolidated affiliates	—		—		—		—
Net earnings (loss) from continuing operations	$	130	$	(195)	$	(23)	$	(88)
Assets	$	8,017	$	59,395	$	2,242	$	69,654
Goodwill	2,766		1,749		276		4,791

Table of Contents

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

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 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 (loss) 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

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


		Title		F&G		Corporate and Other		Total			Title		F&G		Corporate and Other		Total
		(In millions)									(In millions)
Title premiums	Title premiums	$	5,582	$	—	$	—	$	5,582	Title premiums	$	1,866	$	—	$	—	$	1,866
Other revenues	Other revenues	1,994		1,364		86		3,444		Other revenues	665		596		31		1,292
Revenues from external customers	Revenues from external customers	7,576		1,364		86		9,026		Revenues from external customers	2,531		596		31		3,158
Interest and investment income, including recognized gains and losses, net	Interest and investment income, including recognized gains and losses, net	(348)		353		(28)		(23)		Interest and investment income, including recognized gains and losses, net	(148)		154		3		9
Total revenues	Total revenues	7,228		1,717		58		9,003		Total revenues	2,383		750		34		3,167
Depreciation and amortization	Depreciation and amortization	105		351		18		474		Depreciation and amortization	33		76		6		115
Interest expense	Interest expense	—		23		66		89		Interest expense	—		8		22		30
Earnings (loss) from continuing operations before income taxes and equity in earnings (loss) of unconsolidated affiliates		851		774		(126)		1,499
Earnings (loss) from continuing operations before income taxes and equity in earnings of unconsolidated affiliates										Earnings (loss) from continuing operations before income taxes and equity in earnings of unconsolidated affiliates	249		345		(38)		556
Income tax expense (benefit)	Income tax expense (benefit)	261		193		(20)		434		Income tax expense (benefit)	57		106		(7)		156
Earnings (loss) from continuing operations before equity in earnings (loss) of unconsolidated affiliates	Earnings (loss) from continuing operations before equity in earnings (loss) of unconsolidated affiliates	590		581		(106)		1,065		Earnings (loss) from continuing operations before equity in earnings (loss) of unconsolidated affiliates	192		239		(31)		400
Equity in earnings of unconsolidated affiliates	Equity in earnings of unconsolidated affiliates	16		—		—		16		Equity in earnings of unconsolidated affiliates	2		—		—		2
Net earnings (loss) from continuing operations	Net earnings (loss) from continuing operations	$	606	$	581	$	(106)	$	1,081	Net earnings (loss) from continuing operations	$	194	$	239	$	(31)	$	402
Assets	Assets	$	8,906	$	51,291	$	1,967	$	62,164	Assets	$	9,478	$	49,277	$	2,271	$	61,026
Goodwill	Goodwill	2,587		1,756		266		4,609		Goodwill	2,517		1,749		266		4,532

~~Table of Contents~~

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

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 loan sub-servicing, valuations, default services, and home warranty products.

•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 indexed~~(FIA and fixed rate annuities), immediate annuities and ~~indexed universal life insurance.~~IUL. This segment also provides funding agreements and PRT solutions.

•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.

Table of Contents

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 (in millions).~~activities:


		Nine months ended September 30,					Three months ended March 31,
		2022		2021			2023		2022
Cash paid for:	Cash paid for:					Cash paid for:	(In millions)
Interest	Interest	$	99	$	85	Interest	$	34	$	36
Income taxes	Income taxes	293		488		Income taxes	6		9
Deferred sales inducements	Deferred sales inducements	60		65		Deferred sales inducements	29		16
Non-cash investing and financing activities:	Non-cash investing and financing activities:					Non-cash investing and financing activities:

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	150		(215)		Change in proceeds of sales of investments available for sale receivable in period	41		81
Change in purchases of investments available for sale payable in period	Change in purchases of investments available for sale payable in period	157		465		Change in purchases of investments available for sale payable in period	78		277

Lease liabilities recognized in exchange for lease right-of-use assets	Lease liabilities recognized in exchange for lease right-of-use assets	59		32		Lease liabilities recognized in exchange for lease right-of-use assets	9		15
Remeasurement of lease liabilities	Remeasurement of lease liabilities	52		65		Remeasurement of lease liabilities	19		15
Liabilities assumed in connection with acquisitions						Liabilities assumed in connection with acquisitions
Fair value of assets acquired						Fair value of assets acquired	276		27
Less: Total Purchase price						Less: Total Purchase price	273		20
Liabilities and noncontrolling interests assumed						Liabilities and noncontrolling interests assumed	$	3	$	7

Table of Contents

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,
				2022		2021		2022		2021					2023		2022
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	$	688	$	896	$	2,314	$	2,546	Direct title insurance premiums	Direct title insurance premiums	Title	$	428	$	767
Agency title insurance premiums	Agency title insurance premiums	Agency title insurance premiums	Title	966		1,318		3,268		3,632		Agency title insurance premiums	Agency title insurance premiums	Title	550		1,099
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	702		431		1,364		557		Life insurance premiums, insurance and investment product fees, and other	Escrow, title-related and other fees	F&G	365		596
Home warranty	Home warranty	Escrow, title-related and other fees	Title	52		57		129		144		Home warranty	Escrow, title-related and other fees	Title	30		34
Total revenue from insurance contracts	Total revenue from insurance contracts			2,408		2,702		7,075		6,879		Total revenue from insurance contracts			1,373		2,496
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	239		359		798		1,057		Escrow fees	Escrow, title-related and other fees	Title	160		265
Other title-related fees and income	Other title-related fees and income	Escrow, title-related and other fees	Title	187		226		593		663		Other title-related fees and income	Escrow, title-related and other fees	Title	146		196
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	84		108		270		295		ServiceLink, excluding title premiums, escrow fees, and subservicing fees	Escrow, title-related and other fees	Title	75		94

Real estate technology	Real estate technology	Escrow, title-related and other fees	Corporate and other	41		37		120		105		Real estate technology	Escrow, title-related and other fees	Corporate and other	37		38

Other		Escrow, title-related and other fees	Corporate and other	6		7		(34)		28

Total revenue from contracts with customers	Total revenue from contracts with customers			557		737		1,747		2,148		Total revenue from contracts with customers			418		593
Other revenue:	Other revenue:											Other revenue:
Loan subservicing revenue	Loan subservicing revenue	Escrow, title-related and other fees	Title	61		99		204		274		Loan subservicing revenue	Escrow, title-related and other fees	Title	60		76
Other												Other	Escrow, title-related and other fees	Corporate and other	7		(7)
Interest and investment income	Interest and investment income	Interest and investment income	Various	411		508		1,352		1,424		Interest and investment income	Interest and investment income	Various	611		478
Recognized gains and losses, net	Recognized gains and losses, net	Recognized gains and losses, net	Various	(230)		(154)		(1,375)		121		Recognized gains and losses, net	Recognized gains and losses, net	Various	5		(469)
Total revenues	Total revenues	Total revenues		$	3,207	$	3,892	$	9,003	$	10,846	Total revenues	Total revenues		$	2,474	$	3,167

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 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~~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

~~Table of Contents~~

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.

Table of Contents

Life insurance premiums in our F&G segment reflect premiums for life-contingent PRT, traditional life insurance products and life-contingent immediate annuity 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 on IUL policies, ~~unearned revenue ("UREV")~~URL 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 VOBA, DAC, and DSI, 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.

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 payments received on fixed maturity security holdings and dividends received on equity and preferred security holdings along with the investment income of 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, 2022		December 31, 2021			March 31, 2023		December 31, 2022
		(In millions)					(In millions)
Trade receivables	Trade receivables	$	412	$	524	Trade receivables	$	309	$	349
Deferred revenue (contract liabilities)	Deferred revenue (contract liabilities)	271		144		Deferred revenue (contract liabilities)	285		271

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~~Accounts payable and other accrued liabilities in the unaudited Condensed Consolidated Balance Sheets. During the three months ended March 31, 2023 and ~~nine months ended September 30,~~March 31, 2022, we recognized ~~$53~~$32 million and ~~$92~~$38 million of revenue, respectively, which was included in deferred revenue at the beginning of the respective period.

Table of Contents

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

~~A summary~~The following table reconciles to Other intangible assets, net, on the unaudited Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022.


	March 31, 2023		December 31, 2022

	(In millions)
VOBA	$	1,572	$	1,615
DAC	1,676		1,411
DSI	225		200
Value of distribution asset	97		100
Computer software	65		61
Definite lived trademarks, tradenames, and other	21		22
Indefinite lived tradenames and other	21		20
Total Other intangible assets, net	$	3,677	$	3,429

The following tables roll forward VOBA by product for the ~~changes~~three months ended March 31, 2023 and March 31, 2022.


	FIA		Fixed Rate Annuities		Immediate Annuities		Universal Life		Traditional Life		Total

	(In millions)
Balance at January 1, 2023	$	1,166	$	32	$	201	$	143	$	73	$	1,615

Amortization	(36)		(1)		(3)		(2)		(1)		(43)

Balance at March 31, 2023	$	1,130	$	31	$	198	$	141	$	72	$	1,572

	FIA		Fixed Rate Annuities		Immediate Annuities		Universal Life		Traditional Life		Total

	(In millions)
Balance at January 1, 2022	$	1,314	$	39	$	212	$	153	$	25	$	1,743

Amortization	(38)		(2)		(3)		(3)		(1)		(47)
Shadow Premium Deficiency Testing (“PDT”)	—		—		—		—		53		53
Balance at March 31, 2022	$	1,276	$	37	$	209	$	150	$	77	$	1,749

The following table presents a reconciliation of VOBA to the table above, which is included in Other intangible assets, net in the ~~carrying~~unaudited Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022:


	March 31, 2023		December 31, 2022

	(In millions)
FIA	$	1,130	$	1,166
Fixed Rate Annuities	31		32
Immediate Annuities	198		201
Universal Life	141		143
Traditional Life	72		73

Total	$	1,572	$	1,615

Table of Contents

The following tables roll forward DAC for the three months ended March 31, 2023 and March 31, 2022.


	FIA		Fixed Rate Annuities		Universal Life		Total (a)

	(In millions)
Balance at January 1, 2023	$	971	$	83	$	348	$	1,402
Capitalization	113		52		56		221
Amortization	(22)		(5)		(8)		(35)
Reinsurance related adjustments	—		79		—		79
Balance at March 31, 2023	$	1,062	$	209	$	396	$	1,667

	FIA		Fixed Rate Annuities		Universal Life		Total (a)

	(In millions)
Balance at January 1, 2022	$	564	$	38	$	173	$	775
Capitalization	98		8		47		153
Amortization	(13)		(2)		(4)		(19)
Balance at March 31, 2022	$	649	$	44	$	216	$	909

(a) Excludes insignificant amounts of ~~our~~DAC related to Funding Agreement Backed Note (“FABN”)

The following table presents a reconciliation of DAC to the table above, which is included in Other intangible assets, net in the unaudited Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022 :


	March 31, 2023		December 31, 2022

	(In millions)
FIA	$	1,062	$	971
Fixed Rate Annuities	209		83

Universal Life	396		348

Funding Agreements	9		9
Total	$	1,676	$	1,411

The following tables roll forward DSI for the three months ended March 31, 2023 and March 31, 2022:


	FIA		Total

	(In millions)
Balance at January 1, 2023	$	200	$	200
Capitalization	29		29
Amortization	(4)		(4)
Balance at March 31, 2023	$	225	$	225

	FIA		Total

	(In millions)
Balance at January 1, 2022	$	127	$	127
Capitalization	16		16
Amortization	(3)		(3)
Balance at March 31, 2022	$	140	$	140

The following table presents a reconciliation of DSI to the table above, which is included in Other intangible assets, net in the unaudited Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022:


	March 31, 2023		December 31, 2022

	(In millions)
FIA	$	225	$	200





Total	$	225	$	200

Table of Contents

The cash flow assumptions used to amortize VOBA and DAC were consistent with the assumptions used to estimate the FPB for life contingent immediate annuity and PRT contracts, and will be reviewed and unlocked, if applicable, in the same period as those balances. For nonparticipating traditional life contracts, the VOBA amortization is straight-line, without the use of cash flow assumptions. For FIA contracts, the cash flow assumptions used to amortize VOBA, DAC, and DSI ~~intangible assets is~~were consistent with the assumptions used to estimate the value of the embedded derivative and MRBs, and will be reviewed and unlocked, if applicable, in the same period as ~~follows (in millions):~~

VOBA DAC DSI Total
Balance at January 1, 2022 $ 1,185 $ 761 $ 88 $ 2,034
Deferrals — 513 60 573
Amortization (210) (121) (37) (368)
Interest 19 20 1 40
Unlocking (5) (3) 5 (3)
Adjustment for net unrealized investment (gains) losses 707 198 65 970
Balance at September 30, 2022 $ 1,696 $ 1,368 $ 182 $ 3,246
VOBA DAC DSI Total
Balance at January 1, 2021 $ 1,466 $ 222 $ 36 $ 1,724
Deferrals — 427 65 492
Amortization (376) (34) (26) (436)
Interest 23 8 1 32
Unlocking (1) 1 (1) (1)
Adjustment for net unrealized investment (gains) losses 38 (18) (1) 19
Purchase price allocation adjustments 61 — — 61
Balance at September 30, 2021 $ 1,211 $ 606 $ 74 $ 1,891

~~Amortization of VOBA, DAC,~~those balances. For fixed rate annuities and ~~DSI is based on~~IUL the ~~current and future expected gross margins or profits recognized, including investment gains and losses. The interest accrual rate utilized~~cash flow assumptions used 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~~amortize VOBA, DAC and DSI ~~that would have been amortized if such unrealized gains~~reflect the company’s best estimates for policyholder behavior, consistent with the development of assumptions for FIA, immediate annuity, and ~~losses had been recognized. This is referred~~PRT.

We review cash flow assumptions annually, generally in the third quarter. In 2022, F&G undertook a review of all significant assumptions and revised GMWB utilization for our deferred annuity contracts (FIA and fixed rate annuities) to asreflect internal and industry experience in the “shadow adjustments” as the additional amortization is reflected in AOCI rather than the unaudited Condensed Consolidated Statements of Earnings. As of September 30, 2022 and September 30, 2021, the VOBA balances included cumulative adjustments for net unrealized investment gains (losses) of $(474) million and $245 million, respectively, the DAC balances included cumulative adjustments for net unrealized investment gains (losses) of $(159) million and $44 million, respectively, and the DSI balance included net unrealized investment gains (losses) of $(57) million and $6 million, respectively.first several contract years.

For the in-force liabilities as of ~~September 30, 2022,~~March 31, 2023, the estimated amortization expense for VOBA in future fiscal periods is as ~~follows (in millions):~~follows:

Estimated Amortization Expense
Fiscal Year
2022 $ (23)
2023 (9)
2024 170
2025 151
2026 134
Thereafter 798


	Estimated Amortization Expense
Fiscal Year	(In millions)
2023	$	122
2024	151
2025	139
2026	128
2027	117

Thereafter	915

4850

Table of Contents

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~~the Company's retention limit is reinsured. ~~F&G~~The Company 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~~The Company 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 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, 2023 and March 31, 2022 ~~and September 30, 2021~~ were as ~~follows (in millions):~~follows:


																			Three months ended
		Three months ended								Nine months ended									March 31, 2023				March 31, 2022
		September 30, 2022				September 30, 2021				September 30, 2022				September 30, 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			(In millions)
Direct	Direct	$	642	$	1,319	$	412	$	461	$	1,248	$	2,016	$	500	$	1,646	Direct	$	301	$	872	$	567	$	505

Ceded	Ceded	(31)		(727)		(32)		(276)		(98)		(1,634)		(103)		(912)		Ceded	(26)		(60)		(32)		(302)
Net	Net	$	611	$	592	$	380	$	185	$	1,150	$	382	$	397	$	734	Net	$	275	$	812	$	535	$	203

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, 2022~~March 31, 2023 and ~~September 30, 2021.~~March 31, 2022. F&G did not commute any ceded reinsurance treaties during the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 and ~~September 30, 2021.~~March 31, 2022.

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 reinsurer's credit risk, expected timing of recovery, industry-wide historical default experience, senior unsecured bond recovery rates, and credit enhancement features. ~~As of September 30, 2022 and September 30, 2021, the~~The expected credit loss ~~reserve was $19 million and $19 million, respectively. There~~reserves were ~~no significant changes in the expected credit loss reserve for the three and nine months ended September 30, 2022 and September 30, 2021.~~as follows:


	Three months ended
		March 31, 2023		March 31, 2022
		(In millions)
Balance at Beginning of Period		$	(10)	$	(20)
Changes in the expected credit loss reserve		1		—
Balance at End of Period		$	(9)	$	(20)

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.

Aspida Reinsurance Transaction.F&G ~~has entered into~~executed a Funds Withheld Coinsurance Agreement with Aspida Re, a Bermuda reinsurer. In accordance with the terms of this agreement, F&G ~~ceded~~cedes to the reinsurer, on a fifty percent (50%) funds withheld coinsurance basis, certain multiyear guaranteed annuity business written effective January 1, 2021.The agreement was originally executed January 15, 2021 and amended in August 2021 and September 2022. For reinsured policies issued prior to September 1, 2022, the policies are ceded on a ~~50%~~fifty percent (50%) quota share basis. For reinsured policies issued on or after September 1, 2022, the policies are ceded on a ~~75%~~seventy-five percent (75%) quota share basis, capped at $350 million cession per month. ~~The~~For the month of March 2023 only, the premiums cap increased to $450 million. As the policies ceded to Aspida are investment contracts, there is no significant insurance risk present and; therefore, the effects of this agreement are accounted for as a separate investment contract.

~~Effective May 1, 2020, F&G entered into an indemnity~~There have been no other significant changes to reinsurance ~~agreement with Canada Life Assurance Company United States Branch, a third party reinsurer, to reinsure FIA policies with guaranteed minimum withdrawal benefit (“GMWB”). In accordance with~~contracts for 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 Decemberthree months ended March 31, 2023. ~~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.~~

4951

Table of Contents

Concentration of Reinsurance Risk

~~F&G~~The Company has a significant concentration of reinsurance risk with third party reinsurers, Aspida Re, Wilton Reassurance Company (“Wilton Re”), and Somerset that could have a material impact on our financial position in the event that any of these reinsurers fails to perform its obligations under the various reinsurance treaties. Aspida Re has an A- issuer credit rating from AM Best as of ~~September 30, 2022,~~March 31, 2023, and the risk of non-performance is further mitigated through the funds withheld arrangement. Wilton Re has an A+ issuer credit rating from AM Best and an A issuer credit rating from Fitch as of ~~September 30, 2022.~~March 31, 2023. Somerset has an A- issuer credit rating from AM Best and a BBB+ issuer credit rating from S&P as of ~~September 30, 2022,~~March 31, 2023, and the risk of non-performance is further mitigated through the funds withheld arrangement. On ~~September 30, 2022,~~March 31, 2023, the net amounts recoverable from Aspida Re, Wilton Re, and Somerset were ~~$2,304~~$4,073 million, ~~$1,241~~$1,184 million, and ~~$591~~$553 million, respectively. 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. We believe that all amounts due from Aspida Re, Wilton Re, and Somerset for periodic treaty settlements are collectible as of ~~September 30, 2022.~~March 31, 2023.

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, ~~2021.~~2022.

Table of Contents

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

Our U.S. insurance subsidiaries, Fidelity & Guaranty Life Insurance Company ("FGL Insurance"), Fidelity & Guaranty Life Insurance Company of New York ("FGL NY ~~Insurance,~~Insurance"), and Raven ~~Re,~~Reinsurance Company ("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 VOBA, DAC, and DSI, 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 and F&G Life Re Ltd (Bermuda) file financial statements with their respective regulators that are based on U.S. GAAP.

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 ~~$145~~$3 million and ~~$106~~$152 million decrease to statutory capital and surplus at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively.

FGL Insurance’s statutory carrying value of Raven ~~Reinsurance Company ("Raven Re")~~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 ~~$35~~$200 million and ~~$85~~$200 million at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively.

Raven Re is also permitted to follow Iowa prescribed statutory accounting practice for its reserves on reinsurance assumed from FGL Insurance. Without such permitted statutory accounting practices, Raven Re’s statutory capital and surplus (deficit) 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 ~~$66~~$93 million and ~~$115~~$121 million at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively.

As of ~~September 30, 2022,~~March 31, 2023, 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.

5053

Table of Contents

Note N — Acquisitions

~~AllFirst~~TitlePoint

subject to a customary working capital adjustment.

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 ~~AllFirst's~~TitlePoint's assets acquired ~~and liabilities assumed~~ based on their fair values as of ~~August 9, 2022.~~the acquisition date. 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 expected to be deductible for tax purposes. In connection with the acquisition, we recorded preliminary fair value estimates for goodwill, other intangible assets and other assets of $146 million, $73 million and $5 million, respectively, as of March 31, 2023.

The gross carrying value and weighted average estimated useful lives of Other intangible assets acquired in the TitlePoint acquisition consist of the following:


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

Other intangible assets:	(In millions)

Customer relationships	$	9	10
Trade name	4		10

Software	60		7
Total Other intangible assets	$	73

AllFirst

On August 9, 2022, we acquired approximately 74% of the outstanding equity of AllFirst Title Insurance Agency ("AllFirst") for approximately $130 million in cash consideration. On December 19, 2022, we purchased an additional 6% of the outstanding equity of AllFirst for approximately $10 million in cash consideration.

The acquisition was accounted for as a business combination under Topic 805. The purchase price has been allocated to AllFirst's assets acquired and liabilities assumed based on their fair values as of acquisition date. 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 expected to be deductible for tax purposes. We completed our assessment of the fair value of assets acquired and liabilities assumed within the one-year period from the date of the acquisition. We recorded fair value amounts as of the acquisition date for goodwill, other intangibles, other assets, other liabilities and non-controlling interest of ~~$71~~$104 million, ~~$83~~$55 million, ~~$43~~$40 million, ~~$20~~$18 million and ~~$45~~$46 million, respectively.

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


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

Other intangible assets:	Other intangible assets:				Other intangible assets:	(In millions)

Customer relationships	Customer relationships	$	72	10	Customer relationships	$	46	10
Trade name	Trade name	9		10	Trade name	7		10
Non-compete agreements	Non-compete agreements	1		5	Non-compete agreements	1		5
Software	Software	1		2	Software	1		2
Total Other intangible assets	Total Other intangible assets	$	83		Total Other intangible assets	$	55

5154

Table of Contents

Note O — Notes Payable

Notes payable consists of the following:


	March 31, 2023		December 31, 2022
	(In millions)
4.50% Notes, net of discount	$	445	$	445
3.40% Notes, net of discount	644		644





2.45% Notes, net of discount	594		594
3.20% Notes, net of discount	444		444
Revolving Credit Facility	(3)		(3)
F&G Credit Agreement	511		547
7.40% F&G Notes	494		—
5.50% F&G Notes	567		567










	$	3,696	$	3,238

On January 13, 2023, F&G completed its issuance and sale of $500 million aggregate amount of its 7.40% F&G Notes, pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended. The 7.40% F&G Notes are the senior unsecured, unsubordinated obligations of F&G and are guaranteed on an unsecured, unsubordinated basis by each of F&G's subsidiaries that are guarantors of its obligations under the F&G Credit Agreement (the “Guarantors”). The interest rate payable on the 7.40% F&G Notes will be subject to adjustment from time to time if either S&P or Fitch (or a substitute rating agency therefor) downgrades (or downgrades and subsequently upgrades) the credit ratings assigned to the 7.40% F&G Notes. F&G intends to use the net proceeds from the offering for general corporate purposes, including to support the growth of assets under management and for F&G's future liquidity requirements.

On November 22, 2022, F&G entered into a Credit Agreement (the "F&G Credit Agreement") with certain lenders (the "Lenders") and Bank of America, N.A. as administrative agent (the "Administrative Agent"), swing line lender and issuing bank, pursuant to which the Lenders have made available to F&G an unsecured revolving credit facility (the "F&G Credit Facility") in an aggregate principal amount of $550 million to be used for working capital and general corporate purposes.

The F&G Credit Agreement matures the earlier to occur of November 22, 2025 or 91 days prior to May 1, 2025, the stated maturity date of the 5.50% F&G Notes, unless the principal amount of the 5.50% F&G Notes is $150 million or less at such time, the 5.50% F&G Notes have been redeemed or defeased in full, and any refinancing Indebtedness incurred in connection therewith matures at least 91 days after the date that is 3 years from the Effective Date, as defined in the F&G Credit Agreement, or certain other conditions are met. Revolving loans under the F&G Credit Agreement generally bear interest at a variable rate based on either (i) the base rate (which is the highest of (a) one-half of one percent in excess of the federal funds rate, (b) the Administrative Agent’s “prime rate”, or (c) the sum of one percent plus Term The Secured Overnight Financing Rate (“SOFR”) plus a margin of between 30.0 and 80.0 basis points depending on the non-credit-enhanced, senior unsecured long-term debt ratings of F&G or (ii) Term SOFR plus a margin of between 130.0 and 180.0 basis points depending on the non-credit-enhanced, senior unsecured long-term debt ratings of F&G. On February 21, 2023, F&G amended F&G Credit Agreement with the Lenders and the Administrative Agent, swing line lender and issuing bank. The amendment of the F&G Credit Agreement increased the aggregate principal amount of commitments under the F&G Credit Facility by $115 million to $665 million.

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 on Form 10-K for the year ended December 31, 2019. As of

Table of Contents

March 31, 2023, there was no principal outstanding, $3 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.

Gross principal maturities of notes payable at March 31, 2023 are as follows:


	(In millions)
2023 (remaining)	$	515
2024	—
2025	550
2026	—
2027	—
Thereafter	2,650
	$	3,715

Table of Contents

Note P — Market Risk Benefits

The following table presents the balances of and changes in MRBs associated with FIAs and fixed rate annuities for the three months ended March 31, 2023 and the years ended December 31, 2022 and December 31, 2021:


	March 31, 2023				December 31, 2022				December 31, 2021
	FIA		Fixed rate annuities		FIA		Fixed rate annuities		FIA		Fixed rate annuities
	(Dollars in millions)
Balance, beginning of period	$	164	$	1	$	426	$	2	$	478	$	1

Balance, beginning of period, before effect of changes in the instrument-specific credit risk	$	104	$	1	$	280	$	1	$	320	$	1
Issuances and benefit payments	(4)		—		(21)		—		(9)		—
Attributed fees collected and interest accrual	30		—		107		1		99		1
Actual policyholder behavior different from expected	7		—		43		—		(22)		—
Changes in assumptions and other	1		—		(76)		—		—		—


Effects of market related movements	26		—		(231)		(1)		(108)		—
Balance, end of period, before effect of changes in the instrument-specific credit risk	$	164	$	1	$	102	$	1	$	280	$	2
Effect of changes in the instrument-specific credit risk	53		—		62		—		146		—
Balance, end of period	$	217	$	1	$	164	$	1	$	426	$	2



Weighted-average attained age of policyholders weighted by total AV (years)	68.49		72.64		68.59		72.88		68.95		73.10
Weighted-average attained age of policyholders weighted by Unlocked MRB (years)	78.33		77.73		80.84		77.56		68.77		73.72
Net amount at risk	$	1,031	$	3	$	952	$	3	$	1,304	$	4

Table of Contents

The following table reconciles MRBs by amounts in an asset position and amounts in a liability position to the MRB amounts in the accompanying unaudited Condensed Consolidated Balance Sheets:


	March 31, 2023						December 31, 2022						December 31, 2021
	Asset		Liability		Net		Asset		Liability		Net		Asset		Liability		Net
	(In millions)
FIA	$	106	$	323	$	217	$	117	$	281	$	164	$	41	$	467	$	426
Fixed rate annuities	—		1		1		—		1		1		—		2		2
Total	$	106	$	324	$	218	$	117	$	282	$	165	$	41	$	469	$	428

In the first quarter of 2023, the following notable changes were made to the inputs to the fair value estimates of MRB calculations:

•Risk-free rates decreased slightly, leading to an increase in the MRB associated with FIA and fixed rate annuities.

•Decreases in the equity market related projections resulted in an increase in the net amount of risk associated with FIAs, leading to an increase in the value of the associated MRBs.

•F&G’s credit spread increased, leading to a corresponding decrease in the MRBs associated with both FIA and fixed rate annuities.

In 2022, the following notable changes were made to the inputs to the fair value estimates of MRB calculations:

•Risk-free rates increased moderately, leading to a decrease in the MRBs associated with both FIA and fixed rate annuities.

•Increases in the equity markets resulted in a decrease in the net amount at risk associated with FIA and fixed rate annuities, leading to a decrease in the value of the associated MRBs.

•Volatility indices decreased, leading to a decrease in the MRBs associated with both FIA and fixed rate annuities.

•Cash flow assumptions for mortality and full and partial surrenders were unchanged during the annual third quarter review. The GMWB utilization assumption was revised in the second quarter of 2022 to reflect additional internal and industry experience for the first several contract years. This assumption update led to a decrease in the MRBs.

•F&G’s credit spread increased during the year, leading to a corresponding decrease in the MRBs value. Credit spreads on the block of business remain lower than the at-issue or at-purchase credit spreads, but the level has decreased since the beginning of 2022.

In 2021, the following notable changes were made to the inputs to the fair value estimates of MRB calculations:

• Risk-free rates increased moderately, leading to a decrease in the MRBs associated with both FIA and fixed rate annuities.

•Increases in the equity markets resulted in a decrease in the net amount at risk associated with FIA and fixed rate annuities, leading to a decrease in the value of the associated MRBs.

Table of Contents

Note Q — Contractholder Funds

The following tables summarize balances of and changes in contractholder funds’ account balances:


	March 31, 2023
	FIA			Fixed rate annuities			Universal Life			FABN (b)		FHLB (b)
	(Dollars in millions)
Balance, beginning of year	$	24,766		$	9,358		$	2,112		$	2,613	$	1,982
Issuances	1,186			1,522			49			—		256
Premiums received	25			1			87			—		—
Policy charges (a)	(42)			—			(60)			—		—
Surrenders and withdrawals	(403)			(257)			(21)			—		—
Benefit payments	(121)			(59)			(10)			(15)		(110)

Interest credited	21			81			5			13		11
Other	23			(1)			—			—		—
Balance, end of year	$	25,455		$	10,645		$	2,162		$	2,611	$	2,139
Embedded derivative adjustment (c)	(12)			—			45			—		—
Gross Liability, end of period	$	25,443		$	10,645		$	2,207		$	2,611	$	2,139
Less: Reinsurance	(17)			(4,691)			(933)			—		—
Net Liability, after Reinsurance	$	25,426		$	5,954		$	1,274		$	2,611	$	2,139

Weighted-average crediting rate	0.33		%	—		%	1.00		%	N/A		N/A
Net amount at risk (d)	N/A			N/A			49,426			N/A		N/A
Cash surrender value	23,726			9,929			1,724			N/A		N/A

(a) Contracts included in the contractholder funds are generally charged a premium and/or monthly assessments on the basis of the account balance.

(b) FABN and FHLB are considered funding agreements that are investment contracts which follow the interest method of accounting, and therefore are not subject to ASU 2018-12 disclosure requirements. However, the Company has elected to present the liability for these agreements within the disaggregated roll forward as we believe it will provide meaningful information for users of the financials.

(c) The embedded derivative adjustment reconciles the account balance to the gross GAAP liability and represents the combination of the host contract and the fair value of the embedded derivatives.

(d) For those guarantees of benefits that are payable in the event of death, the net amount at risk is generally defined as the current guaranteed minimum death benefit in excess of the current account balance at the balance sheet date.


	December 31, 2022
	FIA			Fixed rate annuities		Universal Life			FABN (b)		FHLB (b)
	(Dollars in millions)
Balance, beginning of year	21,997			6,367		1,907			1,904		1,543
Issuances	4,462			3,758		167			700		1,192
Premiums received	106			3		295			—		—
Policy charges (a)	(166)			(1)		(209)			—		—
Surrenders and withdrawals	(1,322)			(797)		(74)			—		—
Benefit payments	(485)			(192)		(22)			(35)		(789)

Interest credited	198			220		48			45		36
Other	(24)			—		—			(1)		—
Balance, end of year	$	24,766		$	9,358	$	2,112		$	2,613	$	1,982
Embedded derivative adjustment (c)	(343)			—		15			—		—
Gross Liability, end of period	$	24,423		$	9,358	$	2,127		$	2,613	$	1,982
Less: Reinsurance	(17)			(3,723)		(947)			—		—
Net Liability, after Reinsurance	$	24,406		$	5,635	$	1,180		$	2,613	$	1,982

Weighted-average crediting rate	0.85		%	—		2.39		%	N/A		N/A
Net amount at risk (d)	N/A			N/A		53,348			N/A		N/A
Cash surrender value	188			5,992		1,698			N/A		N/A

(a) Contracts included in the contractholder funds are generally charged a premium and/or monthly assessments on the basis of the account balance.

Table of Contents

(c) The embedded derivative adjustment reconciles the account balance to the gross GAAP liability and represents the combination of the host contract and the fair value of the embedded derivatives.


	December 31, 2021
	FIA			Fixed rate annuities		Universal Life			FABN (b)		FHLB (b)
	(In millions)
Balance, beginning of year	$	18,703		$	5,142	$	1,696		$	—	$	1,203
Issuances	4,400			1,743		114			1,899		759
Premiums received	103			3		233			—		—
Policy charges (a)	(148)			(1)		(167)			—		—
Surrenders and withdrawals	(1,303)			(543)		(68)			—		—
Benefit payments	(440)			(145)		(19)			(7)		(447)

Interest credited	686			167		118			12		30
Other	(4)			1		—			—		(2)
Balance, end of year	$	21,997		$	6,367	$	1,907		$	1,904	$	1,543
Embedded derivative adjustment (c)	603			—		74			—		—
Gross Liability, end of period	$	22,600		$	6,367	$	1,981		$	1,904	$	1,543
Less: Reinsurance	(17)			(1,692)		(984)			—		—
Net Liability, after Reinsurance	$	22,583		$	4,675	$	997		$	1,904	$	1,543

Weighted-average crediting rate	3.43		%	—		6.77		%	N/A		N/A
Net amount at risk (d)	N/A			N/A		41,326			N/A		N/A
Cash surrender value	20,455			5,992		1,572			N/A		N/A

(a) Contracts included in the contractholder funds are generally charged a premium and/or monthly assessments on the basis of the account balance.

(c) The embedded derivative adjustment reconciles the account balance to the gross GAAP liability and represents the combination of the host contract and the fair value of the embedded derivatives.

The following table reconciles contractholder funds’ account balances to the contractholder funds liability in the accompanying unaudited Condensed Consolidated Balance Sheets:


	March 31, 2023		December 31, 2022		December 31, 2021
	(In millions)
FIA	$	25,443	$	24,423	$	22,600
Fixed rate annuities	10,645		9,358		6,367
Immediate annuities	326		332		352
Universal life	2,207		2,127		1,981
Traditional life	5		5		5
Funding Agreement-FABN	2,611		2,613		1,904
FHLB	2,139		1,982		1,543
PRT	3		3		1
Total	$	43,379	$	40,843	$	34,753

Table of Contents

The following tables present the account values by range of guaranteed minimum crediting rates and the related range of difference, in basis points, between rates being credited to policyholders and the respective guaranteed minimums:


	March 31, 2023
	At Guaranteed Minimum		1 Basis Point-50 Basis Points Above		51 Basis Points-150 Basis Points Above		Greater Than 150 Basis Points Above		Total
FIA	(In millions)
0.00%-1.50%	$	23,348	$	806	$	406	$	370	$	24,930
1.51%-2.50%	149		—		1		—		150
Greater than 2.50%	373		—		2		—		375
Total	$	23,870	$	806	$	409	$	370	$	25,455

Fixed Rate Annuities
0.00%-1.50%	$	12	$	31	$	1,867	$	7,522	$	9,432
1.51%-2.50%	8		13		28		187		236
Greater than 2.50%	962		3		4		8		977
Total	$	982	$	47	$	1,899	$	7,717	$	10,645

Universal Life
0.00%-1.50%	$	1,752	$	4	$	—	$	18	$	1,774
1.51%-2.50%	—		—		—		—		—
Greater than 2.50%	344		43		1		—		388
Total	$	2,096	$	47	$	1	$	18	$	2,162


	December 31, 2022
	At Guaranteed Minimum		1 Basis Point-50 Basis Points Above		51 Basis Points-150 Basis Points Above		Greater Than 150 Basis Points Above		Total
FIA	(In millions)
0.00%-1.50%	$	22,848	$	801	$	410	$	151	$	24,210
1.51%-2.50%	162		—		1		—		163
Greater than 2.50%	390		—		3		—		393
Total	$	23,400	$	801	$	414	$	151	$	24,766

Fixed Rate Annuities
0.00%-1.50%	$	10	$	32	$	1,871	$	6,379	$	8,292
1.51%-2.50%	9		14		30		1		54
Greater than 2.50%	997		4		4		7		1,012
Total	$	1,016	$	50	$	1,905	$	6,387	$	9,358

Universal Life
0.00%-1.50%	$	1,701	$	3	$	—	$	17	$	1,721
1.51%-2.50%	—		—		—		—		—
Greater than 2.50%	346		44		1		—		391
Total	$	2,047	$	47	$	1	$	17	$	2,112

Table of Contents


	December 31, 2021
	At Guaranteed Minimum		1 Basis Point-50 Basis Points Above		51 Basis Points-150 Basis Points Above		Greater Than 150 Basis Points Above		Total
FIA	(In millions)
0.00%-1.50%	$	20,162	$	803	$	388	$	—	$	21,353
1.51%-2.50%	171		11		25		—		207
Greater than 2.50%	431		3		3		—		437
Total	$	20,764	$	817	$	416	$	—	$	21,997

Fixed Rate Annuities
0.00%-1.50%	$	2	$	28	$	1,928	$	3,219	$	5,177
1.51%-2.50%	9		15		37		1		62
Greater than 2.50%	954		142		25		7		1,128
Total	$	965	$	185	$	1,990	$	3,227	$	6,367

Universal Life
0.00%-1.50%	$	1,486	$	2	$	—	$	13	$	1,501
1.51%-2.50%	—		—		—		—		—
Greater than 2.50%	359		46		1		—		406
Total	$	1,845	$	48	$	1	$	13	$	1,907

Table of Contents

Note R — Future Policy Benefits

The following table summarizes balances and changes in the present value of expected net premiums and the present value of the expected FPB for nonparticipating traditional contracts:


	March 31, 2023		December 31, 2022		December 31, 2021
Expected net premiums	(Dollars in millions)
Balance, beginning of year	$	797	$	1,020	$	1,152
Beginning balance of original discount rate	974		1,045		1,131

Effect of actual variances from expected experience	3		33		25
Balance adjusted for variances from expectation	977		1,078		1,156

Interest accrual	5		20		22
Net premiums collected	(30)		(124)		(133)

Ending Balance at original discount rate	952		974		1,045
Effect of changes in discount rate assumptions	(158)		(177)		(25)
Balance, end of year	$	794	$	797	$	1,020

Expected FPB
Balance, beginning of year	$	2,151	$	2,772	$	3,105
Beginning balance of original discount rate	2,665		2,806		2,995

Effect of actual variances from expected experience	(7)		13		(14)
Balance adjusted for variances from expectation	2,658		$	2,819	$	2,981

Interest accrual	14		59		62
Benefits payments	(48)		(213)		(237)

Ending Balance at original discount rate	2,624		$	2,665	$	2,806
Effect of changes in discount rate assumptions	(448)		(514)		(34)
Balance, end of year	$	2,176	$	2,151	$	2,772

Net liability for future policy benefits	$	1,382	$	1,354	$	1,752
Less: Reinsurance recoverable	510		515		670
Net liability for future policy benefits, after reinsurance recoverable	$	872	$	839	$	1,082

Weighted-average duration of liability for future policyholder benefits (years)	7.53		7.58		8.54

Table of Contents

The following tables summarize balances and changes in the present value of the expected FPB for limited-payment contracts:


	March 31, 2023
	Immediate annuities		PRT
	(Dollars in millions)
Balance, beginning of year	$	1,429	$	2,165
Beginning balance of original discount rate	1,858		2,475
Effect of changes in cash flow assumptions	—		(1)
Effect of actual variances from expected experience	(7)		(3)
Balance adjusted for variances from expectation	1,851		2,471
Issuances	5		268
Interest accrual	16		23
Benefits payments	(31)		(55)

Ending Balance at original discount rate	1,841		2,707
Effect of changes in discount rate assumptions	(389)		(251)
Balance, end of year	$	1,452	$	2,456

Net liability for future policy benefits	$	1,452	$	2,456
Less: Reinsurance recoverable	204		—
Net liability for future policy benefits, after reinsurance recoverable	$	1,248	$	2,456

Weighted-average duration of liability for future policyholder benefits (years)	12.18		8.07


	December 31, 2022
	Immediate annuities		PRT
	(Dollars in millions)
Balance, beginning of year	$	1,954	$	1,148
Beginning balance of original discount rate	1,935		1,151
Effect of changes in cash flow assumptions	—		(20)
Effect of actual variances from expected experience	(26)		2
Balance adjusted for variances from expectation	$	1,909	$	1,133
Issuances	26		1,418
Interest accrual	60		50
Benefits payments	(137)		(126)

Ending Balance at original discount rate	$	1,858	$	2,475
Effect of changes in discount rate assumptions	(429)		(310)
Balance, end of year	$	1,429	$	2,165

Net liability for future policy benefits	$	1,429	$	2,165
Less: Reinsurance recoverable	218		—
Net liability for future policy benefits, after reinsurance recoverable	$	1,211	$	2,165

Weighted-average duration of liability for future policyholder benefits (years)	11.76		8.09

Table of Contents


	December 31, 2021
	Immediate annuities		PRT
	(Dollars in millions)
Balance, beginning of year	$	2,153	$	—
Beginning balance of original discount rate	2,040		—

Effect of actual variances from expected experience	(47)		—
Balance adjusted for variances from expectation	$	1,993	$	—
Issuances	18		1,155
Interest accrual	60		2
Benefits payments	(136)		(6)

Ending Balance at original discount rate	$	1,935	$	1,151
Effect of changes in discount rate assumptions	19		(3)
Balance, end of year	$	1,954	$	1,148

Net liability for future policy benefits	$	1,954	$	1,148
Less: Reinsurance recoverable	293		—
Net liability for future policy benefits, after reinsurance recoverable	$	1,661	$	1,148

Weighted-average duration of liability for future policyholder benefits (years)	13.61		8.75

The following tables summarize balances and changes in the liability for DPL for limited-payment contracts:


	March 31, 2023				December 31, 2022				December 31, 2021
	Immediate annuities		PRT		Immediate annuities		PRT		Immediate annuities		PRT
					(In millions)
Balance, beginning of year	$	69	$	4	$	57	$	7	$	22	$	—
Effect of modeling changes	4		—		—		—		—		—
Effect of changes in cash flow assumptions	—		—		—		(2)		—		—
Effect of actual variances from expected experience	4		—		16		—		39		—
Balance adjusted for variances from expectation	77		4		73		5		61		—
Issuances	1		—		1		—		$	—	$	7
Interest accrual	1		—		2		—		2		—
Amortization	(2)		—		(7)		(1)		(6)		—
Balance, end of year	$	77	$	4	$	69	$	4	$	57	$	7

The following table reconciles the net FPB to the FPB in the unaudited Condensed Consolidated Balance Sheets. The DPL for Immediate Annuities and PRT is presented together with the FPB in the unaudited Condensed Consolidated Balance Sheets and has been included as a reconciling item in the table below:


	March 31, 2023		December 31, 2022		December 31, 2021
	(In millions)
Traditional Life	$	1,382	$	1,354	$	1,752
Immediate annuities	1,452		1,429		1,954
PRT	2,456		2,165		1,148
Immediate annuities DPL	77		69		57
PRT DPL	4		4		7
Total	$	5,371	$	5,021	$	4,918

Table of Contents

The following table provides the amount of undiscounted and discounted expected gross premiums and expected future benefits and expenses for nonparticipating traditional and limited-payment contracts:


	Undiscounted				Discounted
	March 31, 2023		March 31, 2022		March 31, 2023		March 31, 2022
Traditional Life	(In millions)
Expected future benefit payments	$	3,073	$	3,265	$	2,155	$	2,734
Expected future gross premiums	1,142		1,289		839		1,129
Immediate annuities
Expected future benefit payments	$	3,402	$	3,545	$	1,452	$	1,923
Expected future gross premiums	—		—		—		—
PRT
Expected future benefit payments	$	3,916	$	2,289	$	2,708	$	1,665
Expected future gross premiums	—		—		—		—

The following table summarizes the amount of revenue and interest related to nonparticipating traditional and limited-payment contracts recognized in the unaudited Condensed Consolidated Statements of Operations:


	Gross Premiums (a)				Interest Expense (b)
	March 31, 2023		March 31, 2022		March 31, 2023		March 31, 2022
	(In millions)
Traditional Life	$	32	$	36	$	9	$	10
Immediate annuities	6		7		16		15
PRT	263		525		23		7
Total	$	301	$	568	$	48	$	32

(a) Included in Life insurance premiums and other fees on the Condensed Consolidated Statements of Operations.

(b Included in Benefits and other changes in policy reserves (Remeasurement gains (losses) (a)) on the Condensed Consolidated Statements of Operations.

The following table presents the weighted-average interest rate:


	March 31, 2023		December 31, 2022		December 31, 2021
Traditional Life
Interest accretion rate	2.33	%	2.32	%	2.29	%
Current discount rate	4.96	%	5.37	%	2.41	%
Immediate annuities
Interest accretion rate	3.11	%	3.07	%	3.04	%
Current discount rate	5.02	%	5.21	%	3.07	%
PRT
Interest accretion rate	3.82	%	3.20	%	1.20	%
Current discount rate	5.08	%	5.40	%	2.79	%

The following tables summarize the actual experience and expected experience for mortality and lapses of the FPB:


	March 31, 2023
	Traditional Life		Immediate annuities		PRT
Mortality
Actual experience	1.4	%	3.2	%	2.7	%
Expected experience	1.4	%	1.7	%	2.1	%
Lapses
Actual experience	0.1	%	—	%	—	%
Expected experience	0.2	%	—	%	—	%

Table of Contents


	December 31, 2022
	Traditional Life		Immediate annuities		PRT
Mortality
Actual experience	1.5	%	3.0	%	1.9	%
Expected experience	1.3	%	1.9	%	2.5	%
Lapses
Actual experience	—	%	—	%	—	%
Expected experience	0.3	%	—	%	—	%


	December 31, 2021
	Traditional Life		Immediate annuities		PRT
Mortality
Actual experience	1.7	%	4.2	%	—	%
Expected experience	1.3	%	2.0	%	—	%
Lapses
Actual experience	0.1	%	—	%	—	%
Expected experience	0.3	%	—	%	—	%

The following table provides additional information for periods in which a cohort has an NPR > 100% (and; therefore, capped at 100%) (dollars in millions):


	March 31, 2023				December 31, 2022
	Cohort X			Description	Cohort X			Description
Net Premium Ratio before capping	101		%	Term with ROP Non-NY Cohort	100		%	Term with ROP Non-NY Cohort
Reserves before NP Ratio capping	$	1,208		Term with ROP Non-NY Cohort	$	1,172		Term with ROP Non-NY Cohort
Reserves after NP Ratio capping	$	1,211		Term with ROP Non-NY Cohort	$	1,173		Term with ROP Non-NY Cohort
Loss Expense	$	2		Term with ROP Non-NY Cohort	$	—		Term with ROP Non-NY Cohort

F&G realized actual-to-expected experience variances and made changes to assumptions during the three months ended March 31, 2023 and the year ended December 31, 2022 as follows:

Traditional life

Significant assumption inputs to the calculation of the FPB for traditional life include mortality, lapses (including lapses due to nonpayment of premium and surrenders for cash surrender value), and discount rates (both accretion and current). We review the cash flow assumptions annually, typically in the third quarter. Market data that underlies current discount rates was updated in the first quarter of 2023 from that utilized in 2022 resulting in decreased discount rates that drove a material increase to the FPB.

In 2022, F&G similarly undertook a review in the third quarter of the significant cash flow assumptions and did not make any changes to mortality or lapses.

Market data that underlies current discount rates was updated from 2021 and increased significantly year-over-year, resulting in a material decrease to the FPB. Impacts to expected net premiums and expected future policy benefits due to discount rate changes in 2022 can be observed in the FPB roll forward tables at December 31, 2022.

Immediate annuities (life contingent)

Significant assumption inputs to the calculation of the FPB for immediate annuities (life contingent) include mortality and discount rates (both accretion and current). We review the cash flow assumptions annually, typically in the third quarter. Market data that underlies current discount rates was updated in the first quarter of 2023 from that utilized in 2022, resulting in decreased discount rates that drove a material increase to the FPB.

In 2022, F&G similarly undertook a review of the significant cash flow assumptions and did not make any changes to mortality. Market data that underlies current discount rates was updated from 2021 and increased significantly year-over-year, resulting in a material decrease to the FPB. Impacts to expected future policy

Table of Contents

benefits due to assumption changes in 2022 can be observed in the FPB roll forward tables at December 31, 2022.

PRT (life contingent)

Significant assumption inputs to the calculation of the FPB for PRT (life contingent) include mortality and discount rates (both accretion and current). We review the cash flow assumptions annually, typically in the third quarter. Market data that underlies current discount rates was updated in the first quarter of 2023 from 2022 resulting in decreased discount rates that drove a material increase to the FPB.

In 2022, F&G similarly undertook a review of the significant cash flow assumption and did not make any changes to mortality. Market data that underlies current discount rates was updated from 2021 and increased significantly year-over-year, resulting in a material decrease to the FPB. Impacts to expected future policy benefits due to assumption changes in 2022 can be observed in the FPB roll forward tables at December 31, 2022.

Premium deficiency testing

F&G conducts annual premium deficiency testing for its long-duration contracts except for the FPB for nonparticipating traditional and limited-payment contracts. F&G also conducts annual premium deficiency testing for the VOBA of all long-duration contracts. Premium deficiency testing is performed by reviewing assumptions used to calculate the insurance liabilities and determining whether the sum of the existing contract liabilities and the present value of future gross premiums is sufficient to cover the present value of future benefits to be paid to or on behalf of policyholders and settlement costs and recover unamortized present value of future profits. Anticipated investment income, based on F&G’s experience, is considered when performing premium deficiency testing for long-duration contracts. During 2023 and 2022, F&G was not required to establish any additional liabilities as a result of premium deficiency testing.

Note S — ASU 2018-12 Transition

We adopted ASU 2018-12 on January 1, 2023 with a transition date of January 1, 2021, or the beginning of the earliest period that will be presented in the annual December 31, 2023 Consolidated Financial Statements. We elected to adopt ASU 2018-12 using the full retrospective transition method and balances for FPB, DAC and balances amortized on a basis consistent with DAC (VOBA, DSI, and URL), and MRBs were adjusted to conform to ASU 2018-12 starting as of the F&G acquisition date, June 1, 2020. No hindsight was used for the full retrospective adoption of MRBs. As a result of adoption, the Company recorded a cumulative-effect adjustment, which increased opening 2021 retained earnings by $73 million, net of tax.

The following table summarizes the balance of and changes in the FPB on January 1, 2021 due to adoption of ASU 2018-12:


	Immediate annuities		Traditional Life		Total (3)
	(In millions)
Balance, December 31, 2020	$	1,861	$	2,144	$	4,005


Cumulative effect of retrospective adoption (1)	201		(279)		(78)
Effect of remeasurement of liability at current discount rate (2)	113		88		201
Balance, January 1, 2021	$	2,175	$	1,953	$	4,128
Less: Reinsurance Recoverable	322		793		1,115
Balance, January 1, 2021, net of reinsurance	$	1,853	$	1,160	$	3,013

(1) Adjustments for the cumulative effect of adoption of the new measurement guidance under the full retrospective method for contract issue years from the FNF Acquisition Date through December 31, 2020, net of the effects of any change in the DPL.
(2) The remeasurement of the liability at the current discount rate is reflected as an adjustment to opening AOCI upon the adoption of ASU 2018-12.
(3) PRT was not written as of the transition date, January 1, 2021, and as a result is not presented in the transition adjustment roll forward.

Table of Contents

The following table summarizes the balance of and changes in VOBA on January 1, 2021 due to adoption of ASU 2018-12:


	FIA		Fixed rate annuities		Immediate annuities		Universal Life		Traditional Life		Total
	(In millions)
Balance, December 31, 2020	$	1,208	$	15	$	86	$	139	$	18	$	1,466
Adjustment for reversal of AOCI adjustments (1)	208		24		—		29		22		283
Cumulative effect of retrospective adoption (2)	(14)		7		(5)		(9)		(1)		(22)
Transition opening balance adjustment	69		2		144		5		43		263
Balance, January 1, 2021	$	1,471	$	48	$	225	$	164	$	82	$	1,990

(1) Prior period "shadow" adjustments in AOCI have been reversed upon the adoption of ASU 2018-12 from opening AOCI.
(2) Adjustments for the cumulative effect of adoption of the simplified amortization methodology under the full retrospective method for contract issue years from the FNF acquisition date through December 31, 2020
(3) Adjustments for the change in VOBA due to the full retrospective adjustment of carrying amounts of acquired contracts as of the FNF Acquisition Date due to the adoption of ASU 2018-12.

The following table summarizes the balance of and changes in DAC on January 1, 2021 due to adoption of ASU 2018-12:


	FIA		Fixed rate annuities		Universal Life		Total
	(In millions)
Balance, December 31, 2020	$	167	$	14	$	41	$	222
Adjustment for reversal of AOCI adjustments (1)	15		2		8		25
Cumulative effect of retrospective adoption (2)	(1)		—		(1)		(2)
Balance, January 1, 2021	$	181	$	16	$	48	$	245

(1) Prior period "shadow" adjustments in AOCI have been reversed upon the adoption of ASU 2018-12 from opening AOCI.
(2) Adjustments for the cumulative effect of adoption of the simplified amortization methodology under the full retrospective method for contract issue years from the FNF acquisition date through December 31, 2020.

The following table summarizes the balance of and changes in DSI on January 1, 2021 due to adoption of ASU 2018-12:


	FIA		Total
	(In millions)
Balance, December 31, 2020	$	36	$	36
Adjustment for reversal of AOCI adjustments (1)	5		5
Cumulative effect of retrospective adoption (2)	4		4
Balance, January 1, 2021	$	45	$	45

(1) Prior period "shadow" adjustments in AOCI have been reversed upon the adoption of ASU 2018-12 from opening AOCI.
(2) Adjustments for the cumulative effect of adoption of the simplified amortization methodology under the full retrospective method for contract issue years from the FNF acquisition date through December 31, 2020.

The following table summarizes the balance of and changes in URL on January 1, 2021 due to adoption of ASU 2018-12:


	Universal Life		Total
	(In millions)
Balance, December 31, 2020	$	2	$	2
Adjustment for reversal of AOCI adjustments (1)	25		25
Cumulative effect of retrospective adoption (2)	2		2
Balance, January 1, 2021	$	29	$	29

(1) Prior period "shadow" adjustments in AOCI have been reversed upon the adoption of ASU 2018-12 from opening AOCI.
(2) Adjustments for the cumulative effect of adoption of the simplified amortization methodology under the full retrospective method for contract issue years from the FNF acquisition date through December 31, 2020.

Table of Contents

The following table summarizes the balance of and changes in the asset and liability position of MRBs on January 1, 2021 due to adoption of ASU 2018-12:


	FIA		Fixed rate annuities		Total
	(In millions)
Balance, December 31, 2020 - Carrying amount of MRBs under prior guidance (1)	$	531	$	—	$	531
Adjustment for reversal of AOCI adjustments (2)	(116)		—		(116)
Cumulative effect of the changes in the instrument-specific credit risk between the original contract issuance date and the transition date (3)	159		—		159
Remaining cumulative difference (exclusive of the instrument specific credit risk change) between June 1, 2020 carrying amount and fair value measurement for the MRBs (4)	(96)		1		(95)
Balance, January 1, 2021 - Market risk benefits at fair value	$	478	$	1	$	479
Less: Reinsurance Recoverable	—		—		—
Balance, January 1, 2021, net of reinsurance	$	478	$	1	$	479

(1) The pre-adoption balance as of December 31, 2020 balance for MRBs represents the contract features that meet the definition of an MRB under ASU 2018-12 and the related carrying amount of those features prior to the ASU. Those contract features were previously accounted for at fair value as a derivative or embedded derivative under ASC 815 or as an additional liability for annuitization benefits or death or other insurance benefits under ASC 944.
(2) Prior period "shadow" adjustments in AOCI have been reversed upon the adoption of ASU 2018-12 from opening AOCI.
(3) The cumulative effective of the change in instrument-specific credit risk between the FNF Acquisition Date or, if later, the original contract issuance date and the transition date to ASU 2018-12, which is recorded as an adjustment to opening AOCI.
(4) The cumulative difference (exclusive of instrument-specific credit risk change) between the pre-adoption carrying amount and the fair value measurement for MRBs is recorded as an adjustment to opening retained earnings.

The following table presents the effect of transition adjustments on Equity on January 1, 2021 due to the adoption of ASU 2018-12:


	January 1, 2021
	Retained Earnings		AOCI
	(In millions)
Contractholder funds	$	100	$	115
MRB	29		(159)
FPB	(15)		(159)
VOBA	(21)		233
DAC	(1)		5
Increase to Equity, gross of tax	$	92	$	35
Tax impact	19		9
Increase to Equity, net of tax	$	73	$	26

For MRBs, the transition adjustment reflected within the unaudited Condensed Consolidated Statements of Comprehensive Earnings relates to the cumulative effect of changes in the instrument-specific credit risk between contract issue date and transition date. The remaining difference between the fair value and carrying amount of the MRBs at transition, excluding the amounts recorded in the unaudited Condensed Consolidated Statements of Comprehensive Earnings, was recorded as an adjustment to Retained Earnings as of the transition date.

For the FPB, the net transition adjustment is primarily related to the difference in the discount rate used pre-transition and the discount rate at January 1, 2021, partially offset by the removal of provisions for adverse deviation from the cash flow assumptions used in the FPB calculation. At transition, we did not identify any instances, at the cohort level, where net premiums exceeded gross premiums.

Before the adoption of ASU 2018-12, VOBA was amortized consistent with DAC, which was amortized over the lives of the policies in relation to the expected emergence of estimated gross profits (“EGPs”). Based on our historical practice of using consistent amortization methods for VOBA and DAC, we elected to change the amortization method for VOBA associated with fixed rate annuities, FIAs, and IUL/Universal Life products to maintain consistency with the amortization method for DAC. At transition, VOBA associated with these product types is amortized on a constant level basis for the grouped contracts over the expected term of the related contracts to approximate straight-line amortization. Additionally, at transition, shadow adjustments previously recorded in the unaudited Condensed Consolidated Statements of Comprehensive Earnings, consistent with the historic amortization of DAC, have been removed.

Table of Contents

For DAC, DSI and URL, we removed shadow adjustments previously recorded in the unaudited Condensed Consolidated Statements of Comprehensive Earnings for the impact of unrealized gains and losses that were included in the pre-transition expected gross profits amortization calculation as of the transition date.

Table of Contents

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 potential impact of the ~~consummation of the proposed~~ F&G ~~spin-off transaction~~Distribution on relationships, including employees, suppliers, customers and competitors; our ability to successfully realize the anticipated benefits of the proposed spin-off transaction; the ability to satisfy any necessary conditions (including any applicable regulatory approvals) to consummate the spin-off transaction within the estimated timeframe or at all; changes in general economic, business and political conditions, including changes in the financial markets; weakness or adverse changes in the level of real estate activity, which may be caused by, among other things, high or increasing interest rates, a limited supply of mortgage funding, or a weak U.S. economy; our potential inability to find suitable acquisition candidates, 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, ~~2021~~2022 and other filings with the SEC.

The following discussion should be read in conjunction with our Annual ~~Report.~~Report on Form 10-K for the year ended December 31, 2022.

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 that includes sales, mortgage financing and mortgage refinancing. Declines in the level of real estate activity or the average price of real estate sales will adversely affect our title insurance revenues.

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

•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.

The most recent forecast of the Mortgage Bankers Association ("MBA"), as of ~~October 23, 2022,~~April 17, 2023, estimates (actual for fiscal year ~~2021)~~2022) the size of the U.S. residential mortgage originations market as shown in the following table for ~~2021~~2022 - ~~2024~~2025 in its "Mortgage Finance Forecast" (in trillions):

2024 2023 2022 2021
Purchase transactions $ 1.7 $ 1.5 $ 1.6 $ 1.9
Refinance transactions $ 0.6 $ 0.5 $ 0.7 $ 2.5
Total U.S. mortgage originations forecast $ 2.3 $ 2.0 $ 2.3 $ 4.4


	2025		2024		2023		2022
Purchase transactions	$	1.8	$	1.6	$	1.4	$	1.6
Refinance transactions	$	0.7	$	0.6	$	0.4	$	0.6
Total U.S. mortgage originations forecast	$	2.5	$	2.2	$	1.8	$	2.2

As of ~~October 23, 2022,~~April 17, 2023, the MBA expects residential purchase transactions to decrease in ~~2022 and~~ 2023 before increasing in ~~2024.~~2024 and 2025. Additionally, the MBA expects residential refinance transactions and overall mortgage originations to decrease in ~~2022 and~~ 2023 before increasing in ~~2024.~~

~~Table of Contents~~

2024 and 2025.

The Federal Reserve raised the benchmark interest rate from near zero as of March 2022 to a range between 3%4.75% and ~~3.25%~~5.0% as of ~~September 2022, moving most recently in 75 basis point increments in an effort to combat inflation.~~March 2023. Average interest rates for a 30-year fixed rate mortgage increased to ~~5.6% and 4.8%~~ 6.4%

Table of Contents

for the three ~~and nine~~ months ended ~~September 30, 2022, respectively,~~March 31, 2023, as compared to ~~2.9% and 2.9%~~3.9% for the corresponding ~~periods~~period of ~~2021.~~2022. On ~~November~~May 3, ~~2022,~~2023, the Federal Reserve raised the benchmark interest rate by an additional 7525 basis points.

A shortage in the supply of homes for sale, increasing home prices, rising mortgage interest rates, ~~inflation and~~ disrupted labor markets and geopolitical uncertainties associated with the war in Ukraine created some volatility in the residential real estate market in ~~2021,~~2022, which has continued into ~~2022. Additionally, geopolitical uncertainties associated with the war in Ukraine have created additional volatility in the global economy in 2022.~~2023. Existing-home sales decreased ~~24%~~22% in ~~September 2022~~March 2023 as compared to the corresponding period in ~~2021~~2022 while median existing-home sales prices ~~rose~~decreased from $379,500 to ~~$384,800~~$375,700 in ~~September 2022, an 8% increase over~~March 2023, a 1% decrease compared with the corresponding period in ~~2021.~~2022.

Other economic indicators used to measure the health of the U.S. economy, including the unemployment rate, have remained strong. The unemployment rate was 3.5% in ~~September 2022,~~March 2023, which equals the record low set in February 2020, as compared to ~~4.7%~~3.6% in ~~September 2021.~~March 2022.

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 ~~2021 and~~ the ~~first nine~~three months ofended March 31, 2022, we experienced strong demand in commercial real estate markets and, therefore, experienced relatively high volumes and fee-per-file in our commercial business when compared to historical results. In the three months ended March 31, 2023, order volumes and fee per file decreased when compared with the prior year period.

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 actions in 2020 in response to the pandemic, seasonality deviated from historical patterns in 2021.~~ In 2022, the rapid rise in mortgage rates and resulting decline in housing affordability ~~are adding pressure to the normal second half seasonal decline~~has resulted in ~~purchase transactions.~~deviations in seasonality from historical patterns.

F&G

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

~~COVID-19~~ ~~Pandemic~~

While still evolving, the COVID-19 pandemic has caused significant economic and financial turmoil in the U.S. and around the world. At this time, it is still not possible to estimate the longer term-effects the COVID-19 pandemic could have on our F&G segment or our consolidated financial statements. Increased economic uncertainty and increased unemployment that could potentially result from the spread of COVID-19 and its variants may result in F&G policyholders seeking sources of liquidity and withdrawing at rates greater than was previously expected. Additionally, adverse events or conditions resulting from COVID-19 could also have a negative effect on its sales of new policies and could result in more volatility from the impact of mortality experience. As of September 30, 2022, F&G has not seen a sustained elevated level of adverse policyholder experience from the impact of COVID-19 on the overall business. The full extent to which the COVID-19

~~Table of Contents~~

~~pandemic impacts our F&G segment's financial condition, results of operations, liquidity or prospects will depend on future developments, which cannot be predicted at this time.~~

Market Conditions

Market volatility has affected, and may continue to affect, our business and financial performance in varying ways. Volatility can pressure sales and reduce demand as consumers hesitate to make financial decisions. To enhance the attractiveness and profitability of our products and services, we continually monitor the behavior of our customers, as evidenced by annuitization rates and lapse rates in our F&G segment, 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, ~~2021~~2022 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, 2022,~~March 31, 2023, our reserves, net of reinsurance, and average crediting rate on our fixed rate annuities were ~~$6.0~~$11.0 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

Table of Contents

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, ~~2021~~2022 for a more detailed discussion of interest rate risk.

Aging of the U.S. Population

We believe that the aging of the U.S. population will increase the demand for our ~~FIA~~fixed indexed annuity ("FIA") and ~~IUL~~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. 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%~~18% in ~~2021~~2022 to 21% in 2035. The impact of this growth may be offset to some extent by asset outflows as an increasing percentage of the population begins withdrawing assets to convert their savings into income.

Industry Factors and Trends Affecting Our Results of Operations

We operate in the sector of the insurance industry that focuses on the needs of middle-income Americans. The underserved middle-income market represents a major growth opportunity for us. As a tool for addressing the unmet need for retirement planning, we believe that many middle-income Americans have grown to appreciate the financial certainty that we believe annuities such as our FIA products afford. Accordingly, the FIA market grew from nearly $12 billion of sales in 2002 to ~~$66~~$79 billion of sales in ~~2021.~~2022. Additionally, this market demand has positively impacted the IUL market as it has expanded from $100 million of annual premiums in 2002 to $2$3 billion of annual premiums in ~~2021.~~2022.

See Item 7 of Part II of our Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 for a more detailed discussion of industry factors and trends affecting our Results of Operations.

Table of Contents

Critical Accounting Policies and Estimates

As a result of the adoption of ASU 2018-12, we have applied the following additional critical accounting policies and estimates in preparing our Condensed Consolidated Financial Statements included in Item 1 of Part I of this Report. Other than the following additional critical accounting policies and estimates, which are further described in the Notes to our Condensed Consolidated Financial Statements included in Item 1 of Part 1 of this Quarterly Report on Form 10-Q, which is incorporated by reference into this Item 2 of Part I, there have been no material changes to our critical accounting policies described in Item 7 of Part II of our Annual Report on Form 10-K for the year ended December 31, 2022. See Note A Basis of Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional description of certain significant accounting policies that have been followed in preparing our Condensed Consolidated Financial Statements.

Reserves for Future Policy Benefits and Certain Information on Contractholder Funds

The determination of future policy benefit ("FPB") reserves is dependent on actuarial assumptions. The principal assumptions used to establish liabilities for FPBs are established at issue of the contract and include discount rates, mortality, and cash surrender or policy lapse for our traditional life insurance products. The assumptions used require considerable judgment. We review policyholder behavior experience at least annually and update these assumptions when deemed necessary based on additional information that becomes available. Discount rate assumptions are updated at each reporting period and also incorporate changes in risk free rates and option market values. Changes in, or deviations from, the assumptions previously used can significantly affect our reserve levels and related results of operations in a positive or negative direction.

Mortality refers to the incidence of death on covered lives, which triggers contractual death benefit provisions. On our deferred annuities and life insurance products, these provisions may allow for lump sum payments, payments over a period of time, or spousal continuation of the contract. On our life-contingent immediate annuities, the death of a named annuitant or pension risk transfer (“PRT”) certificate holder may trigger the cessation or reduction of future life-contingent payments due, depending on the presence of a joint annuitant/certificate holder and any remaining guaranteed non-life contingent payment periods. We utilize a combination of internal and industry experience when setting our mortality assumptions.

A surrender rate is the percentage of account value surrendered by the policyholder in exchange for receipt of a cash surrender value. A lapse rate is the percentage of account value canceled by us due to nonpayment of premiums required to maintain coverage on our life insurance products. We make estimates of expected full and partial surrenders of our deferred annuity products, based on a combination of internal and industry experience. Management’s best estimate of surrender behavior generally represents a medium-to-long term perspective, as we expect to experience a range of policyholder behavior and market conditions period to period. If actual surrender rates are significantly different from those estimated, such differences could have a significant effect on our reserve levels and related results of operations.

Discount rates refers to the interest rates used to discount future cash flows to the current period to determine a present value. For liability for FPB reserves the discount rate used is based on the yield curve for A-rated corporate bonds as of the valuation date. Changes in the discount rates from the at-issue or at-purchase discount rates flow through other comprehensive income (“OCI”).

Our aggregate reserves for contractholder funds, FPBs and market risk benefits ("MRBs") on a direct and net basis as of March 31, 2023 and December 31, 2022 are summarized as follows:


	As of March 31, 2023
	Direct		Deposit Asset/ Reinsurance Recoverable		Net
	(In millions)
Fixed indexed annuities (“FIA”)	$	25,765	$	(16)	$	25,749
Fixed rate annuities	10,646		(4,691)		5,955
Single premium immediate annuities (“SPIA”) and other	1,854		(86)		1,768
IUL and other life	3,595		(1,568)		2,027
Funding agreement backed notes ("FABN")	4,751		—		4,751
PRT	2,463		—		2,463
Total	$	49,074	$	(6,361)	$	42,713

5475

Table of Contents


	As of December 31, 2022
	Direct		Deposit Asset/ Reinsurance Recoverable		Net
	(In millions)
FIA	$	24,704	$	(16)	$	24,688
Fixed rate annuities	9,360		(3,723)		5,637
SPIA and other	1,829		(118)		1,711
IUL and other life	3,486		(1,560)		1,926
FABN	4,595		—		4,595
PRT	2,172		—		2,172
Total	$	46,146	$	(5,417)	$	40,729

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

For life-contingent immediate annuity policies (which includes life-contingent PRT annuities), gross premiums received in excess of net premiums are deferred at initial recognition as a deferred profit liability (“DPL”). Gross premiums are measured using assumptions consistent with those used in the measurement of the related liability for future policy benefits.

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

Our investments in fixed maturity securities 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 within accumulated other comprehensive income (loss) ("AOCI"), net of deferred income taxes. Our equity securities are carried at fair value with unrealized gains and losses included in net income (loss). Realized gains and losses on the sale of investments are determined on the basis of the cost of the specific investments sold and are credited or charged to income on a trade date basis.

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

We validate external valuations at least quarterly through a combination of procedures that include the evaluation of methodologies used by the pricing services, comparisons to valuations from other independent pricing services, analytical reviews and performance analysis of the prices against trends, and maintenance of a securities watch list. See Note C Fair Value of Financial Instruments and Note D Investments to our Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.

The fair value of derivative assets and liabilities is based upon valuation pricing models and represents what we would expect to receive or pay at the balance sheet date if we canceled the options, entered into offsetting positions, or exercised the options. Fair values for these instruments are determined internally using a conventional model and market observable inputs, including interest rates, yield curve volatilities and other factors. Credit risk related to the counterparty is considered when estimating the fair values of these derivatives. However, we are largely protected by collateral arrangements with counterparties when individual counterparty exposures exceed certain thresholds. The fair value of futures contracts (specifically for FIA contracts) at the balance sheet date represents the cumulative unsettled variation margin (open trade equity net of cash settlements). The fair values of the embedded derivatives in our FIA and IUL contracts are derived using market

Table of Contents

value of options, use of current and budgeted option cost, swap rates, mortality rates, surrender rates, partial withdrawals, and non-performance spread and are classified as Level 3. The discount rate used to determine the fair value of our FIA/IUL embedded derivative liabilities includes an adjustment to reflect the risk that these obligations will not be fulfilled (“non-performance risk”). For the quarter ended March 31, 2023 and the year ended December 31, 2022, our non-performance risk adjustment was based on the expected loss due to default in debt obligations for similarly rated financial companies. See Note C Fair Value of Financial Instruments and Note E Derivative Financial Instruments to our Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.

As discussed in Note L Reinsurance of our Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q, FGL Insurance entered into a reinsurance agreement with Kubera effective December 31, 2018, to cede certain MYGAs and other fixed rate annuity GAAP and statutory reserves on a coinsurance funds withheld basis, net of applicable existing reinsurance. Effective October 31, 2021, this agreement was novated from Kubera to Somerset. Additionally, FGL Insurance entered into a reinsurance agreement with Aspida Re effective January 1, 2021, and amended in August 2021 and September 2022, to cede a quota share of MYGA business on a funds withheld basis. Fair value movements in the funds withheld balances associated with these arrangements create an obligation for FGL Insurance to pay Somerset and Aspida Re at a later date, which results in embedded derivatives. These embedded derivatives are considered total return swaps with contractual returns that are attributable to the assets and liabilities associated with the reinsurance arrangements. The fair value of the total return swaps are based on the change in fair value of the underlying assets held in the funds withheld portfolio. Investment results for the assets that support the coinsurance with funds withheld reinsurance arrangement, including gains and losses from sales, are passed directly to the reinsurer pursuant to contractual terms of the reinsurance arrangement. The reinsurance related embedded derivatives are reported in 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 accompanying unaudited Condensed Consolidated Balance Sheets. The related gains or losses are reported in Recognized gains and losses, net on the accompanying unaudited Condensed Consolidated Statements of Operations.

Market Risk Benefits

MRBs are contracts or contract features that both provide protection to the contract holder from other-than-nominal capital market risk (equity, interest and foreign exchange risk) and expose the Company to other-than-nominal capital market risk. MRBs include certain contract features primarily on FIA contracts that provide minimum guarantees to policyholders, such as Guaranteed Minimum Death Benefit (“GMDBs”) and Guaranteed Minimum Withdrawal Benefits (“GMWBs”) riders. MRBs are measured at fair value using a risk neutral valuation method, which is based on current net amounts at risk, market data, internal and industry experience, and other factors.

The principal policyholder behavior assumptions used to calculate MRBs are established at issue of the contract and include mortality, contract full and partial surrenders, and utilization of the GMWB rider benefits. The assumptions used reflect a combination of internal experience, industry experience, and judgment. We review overall policyholder behavior experience at least annually and update these assumptions when deemed necessary based on additional information that becomes available. Changes in, or deviations from, the assumptions previously used can significantly affect our MRBs and related results of operations in a positive or negative direction.

Mortality refers to the incidence of death amongst policyholders on covered lives, which triggers contractual death benefit provisions. These provisions may allow for lump sum payments, payments over a period of time, or spousal continuation of the contract. We utilize a combination of actual internal and industry experience when setting our mortality assumptions.

A surrender rate is the percentage of account value surrendered by the policyholder in exchange for receipt of a cash surrender value. We make estimates of expected full and partial surrenders of our deferred annuity products based on a combination of internal and industry experience. Management’s best estimate of surrender generally represents a medium-to-long term perspective, as we expect to experience a range of policyholder behavior and market conditions period to period. If actual surrender rates are significantly different from those estimated, such differences could have a significant effect on our MRBs and related results of operations.

We have been issuing GMWB products since 2008. We make assumptions for policyholder behavior as it relates to GMWB utilization using a higher degree of industry experience and judgment than our other behavioral assumptions because internal experience, which we review annually, is still emerging. If emerging experience deviates from our assumptions on GMWB utilization, it could have a significant effect on MRBs and related results of operations.

Table of Contents

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,
		2022		2021		2022		2021			2023		2022
		(In millions)									(In millions)
Revenues:	Revenues:									Revenues:
Direct title insurance premiums	Direct title insurance premiums	$	688	$	896	$	2,314	$	2,546	Direct title insurance premiums	$	428	$	767
Agency title insurance premiums	Agency title insurance premiums	966		1,318		3,268		3,632		Agency title insurance premiums	550		1,099
Escrow, title-related and other fees	Escrow, title-related and other fees	1,372		1,324		3,444		3,123		Escrow, title-related and other fees	880		1,292

Interest and investment income	Interest and investment income	411		508		1,352		1,424		Interest and investment income	611		478
Recognized gains and losses, net	Recognized gains and losses, net	(230)		(154)		(1,375)		121		Recognized gains and losses, net	5		(469)
Total revenues	Total revenues	3,207		3,892		9,003		10,846		Total revenues	2,474		3,167
Expenses:	Expenses:									Expenses:
Benefits and other changes in policy reserves	Benefits and other changes in policy reserves	592		185		382		734		Benefits and other changes in policy reserves	812		203
Personnel costs	Personnel costs	796		894		2,458		2,596		Personnel costs	677		823
Agent commissions	Agent commissions	747		1,010		2,521		2,787		Agent commissions	420		844

Other operating expenses	Other operating expenses	430		498		1,329		1,432		Other operating expenses	360		442

Market risk benefit losses										Market risk benefit losses	59		70
Depreciation and amortization	Depreciation and amortization	131		252		474		540		Depreciation and amortization	134		115
Provision for title claim losses	Provision for title claim losses	74		100		251		278		Provision for title claim losses	44		84
Interest expense	Interest expense	28		27		89		83		Interest expense	42		30
Total expenses	Total expenses	2,798		2,966		7,504		8,450		Total expenses	2,548		2,611
Earnings before income taxes and equity in earnings of unconsolidated affiliates		409		926		1,499		2,396
(Loss) Earnings before income taxes and equity in (losses) earnings of unconsolidated affiliates										(Loss) Earnings before income taxes and equity in (losses) earnings of unconsolidated affiliates	(74)		556
Income tax expense	Income tax expense	115		213		434		555		Income tax expense	14		156
Equity in earnings of unconsolidated affiliates	Equity in earnings of unconsolidated affiliates	—		27		16		54		Equity in earnings of unconsolidated affiliates	—		2
Net earnings from continuing operations		$	294	$	740	$	1,081	$	1,895
Net (loss) earnings from continuing operations										Net (loss) earnings from continuing operations	$	(88)	$	402

Revenues.

Total revenues decreased by ~~$685~~$693 million in the three months ended ~~September 30, 2022 and decreased by $1,843 million in the nine months ended September 30, 2022~~March 31, 2023 compared to the corresponding ~~periods~~period in ~~2021.~~2022.

Net earnings from continuing operations decreased by ~~$446~~$490 million in the three months ended ~~September 30, 2022 and decreased by $814 million in the nine months ended September 30, 2022~~March 31, 2023 compared to the corresponding ~~periods~~period in ~~2021.~~2022.

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 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

Table of Contents

implemented programs and have taken necessary actions to maintain expense levels consistent with revenue

~~Table of Contents~~

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~~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 ~~$115~~$14 million and ~~$213~~$156 million in the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021, respectively, and $434 million and $555 million in the nine months ended September 30, 2022 and 2021,~~ respectively. Income tax expense as a percentage of earnings before income taxes was ~~28%~~(19)% and ~~23%~~28% in the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021, respectively and 29% and 23% in the nine months ended September 30, 2022 and 2021,~~ respectively. The ~~increase~~change in income tax expense as a percentage of (loss) earnings before taxes in the three months ended ~~September 30, 2022~~March 31, 2023 as compared to the corresponding period in ~~2021~~2022 is primarily attributable to the recording of a valuation allowance in the 2022 ~~period for~~period. The valuation allowance is associated with tax benefits ~~associated with~~from deferred tax assets related to recognized valuation losses on equity securities ~~for which it is~~that we will more likely than ~~not that we will~~ not be able to realize for tax purposes. ~~The increase in income~~Additionally, the tax expense as a percentage of earnings before taxes in the nine months ended September 30, 2022 as compared to the corresponding period in 2021 is primarily attributable to the recording of a valuation allowance in the 2022 period for tax benefitsbenefit associated with ~~deferred tax assets related to realized losses on~~ the ~~past sales of discontinued operations and the aforementioned recognized~~ valuation losses on equity securities ~~for which it is more likely than not that we will not be able to realize for tax purposes.~~in the three months ended March 31, 2023 was further reduced by an increase in the valuation allowance in 2023.

The Inflation Reduction Act of 2022 (the "IRA") was signed into law on August 16, 2022. Among other changes, the IRA introduced a 15% corporate alternative minimum tax ~~("CAMT")~~ on adjusted financial statement income and a 1% excise tax on treasury stock repurchases. The effective date of these provisions ~~will be~~was January 1, 2023. We do not anticipate that the IRA will have a material effect on our current or future financial condition or results from operations.

5679

Table of Contents

Title

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


		Three months ended September 30,				Nine months ended September 30,
		2022		2021		2022		2021			Three months ended March 31,
		(In millions)									2023		2022
Revenues:	Revenues:									Revenues:	(In millions)
Direct title insurance premiums	Direct title insurance premiums	$	688	$	896	$	2,314	$	2,546	Direct title insurance premiums	$	428	$	767
Agency title insurance premiums	Agency title insurance premiums	966		1,318		3,268		3,632		Agency title insurance premiums	550		1,099
Escrow, title-related and other fees	Escrow, title-related and other fees	623		849		1,994		2,433		Escrow, title-related and other fees	471		665
Interest and investment income	Interest and investment income	62		27		124		83		Interest and investment income	81		27
Recognized gains and losses, net	Recognized gains and losses, net	(48)		(169)		(472)		(258)		Recognized gains and losses, net	22		(175)
Total revenues	Total revenues	2,291		2,921		7,228		8,436		Total revenues	1,552		2,383
Expenses:	Expenses:									Expenses:
Personnel costs	Personnel costs	725		838		2,322		2,418		Personnel costs	598		776
Agent commissions	Agent commissions	747		1,010		2,521		2,787		Agent commissions	420		844
Other operating expenses	Other operating expenses	372		451		1,178		1,281		Other operating expenses	296		397
Depreciation and amortization	Depreciation and amortization	38		36		105		103		Depreciation and amortization	37		33
Provision for title claim losses	Provision for title claim losses	74		100		251		278		Provision for title claim losses	44		84

Total expenses	Total expenses	1,956		2,435		6,377		6,867		Total expenses	1,395		2,134
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	$	335	$	486	$	851	$	1,569	Earnings from continuing operations, before income taxes and equity in earnings of unconsolidated affiliates	$	157	$	249
Orders opened by direct title operations (in thousands)	Orders opened by direct title operations (in thousands)	363		688		1,328		2,153		Orders opened by direct title operations (in thousands)	308		522
Orders closed by direct title operations (in thousands)	Orders closed by direct title operations (in thousands)	278		527		1,006		1,692		Orders closed by direct title operations (in thousands)	188		380
Fee per file (in dollars)	Fee per file (in dollars)	$	3,621	$	2,581	$	3,323	$	2,310	Fee per file (in dollars)	$	3,446	$	2,891

Total revenues for the Title segment decreased by ~~$630~~$831 million, or ~~22%~~35%, in the three months ended ~~September 30, 2022 and decreased by $1,208 million, or 14% in the nine months ended September 30, 2022~~March 31, 2023 from the corresponding ~~periods~~period in ~~2021.~~

2022.

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,
% of % of % of % of
2022 Total 2021 Total 2022 Total 2021 Total
(Dollars in millions)
Title premiums from direct operations $ 688 42 % $ 896 40 % $ 2,314 41 % $ 2,546 41 %
Title premiums from agency operations 966 58 1,318 60 3,268 59 3,632 59
Total title premiums $ 1,654 100 % $ 2,214 100 % $ 5,582 100 % $ 6,178 100 %


	Three months ended March 31,
			% of				% of
	2023		Total		2022		Total
	(Dollars in millions)
Title premiums from direct operations	$	428	44	%	$	767	41	%
Title premiums from agency operations	550		56		1,099		59
Total title premiums	$	978	100	%	$	1,866	100	%

Title premiums decreased by ~~$560~~$888 million, or ~~25%~~48% in the three months ended ~~September 30, 2022~~March 31, 2023 from the corresponding period in ~~2021.~~2022. The decrease was comprised of a decrease in Title premiums from direct operations of ~~$208~~$339 million, or ~~23%~~44%, and a decrease in Title premiums from agency operations of ~~$352~~$549 million, or ~~27%~~50%.

5780

Table of Contents

Title premiums decreased by 9.6% in the nine months ended September 30, 2022 as compared to the corresponding period in 2021. The decrease is comprised of a decrease in Title premiums from direct operations of $232 million, or 9%, and a decrease in Title premiums from agency operations of $364 million or 10%.

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,
		2022		2021		2022		2021			2023		2022
Opened title insurance orders from purchase transactions (1)	Opened title insurance orders from purchase transactions (1)	76	%	50	%	70	%	48	%	Opened title insurance orders from purchase transactions (1)	78	%	62	%
Opened title insurance orders from refinance transactions (1)	Opened title insurance orders from refinance transactions (1)	24		50		30		52		Opened title insurance orders from refinance transactions (1)	22		38
		100	%	100	%	100	%	100	%		100	%	100	%

Closed title insurance orders from purchase transactions (1)	Closed title insurance orders from purchase transactions (1)	76	%	50	%	66	%	43	%	Closed title insurance orders from purchase transactions (1)	78	%	55	%
Closed title insurance orders from refinance transactions (1)	Closed title insurance orders from refinance transactions (1)	24		50		34		57		Closed title insurance orders from refinance transactions (1)	22		45
		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 decreased in the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 from the corresponding ~~periods~~period in ~~2021.~~2022. The ~~decreases were~~decrease was primarily attributable to decreased closed order volume, partially offset by increases in the average fee per file, which were driven by increases in the proportion of purchase transactions versus refinance transactions.

We experienced a significant decrease in closed title insurance order volume from both purchase and refinance transactions in the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 from the corresponding ~~periods~~period in ~~2021. Closed title insurance order volume from purchase transactions also decreased in the three and nine months ended September 30, 2022 when compared to the corresponding periods in 2021.~~2022. Total closed order volume was ~~278,000~~188,000 in the three months ended ~~September 30, 2022~~March 31, 2023 compared to ~~527,000~~380,000 in the three months ended ~~September 30, 2021 and 1,006,000 in the nine months ended September 30, 2022 compared to 1,692,000 in the nine months ended September 30, 2021.~~March 31, 2022. This represented an overall decrease of ~~47% and 41%~~51% in the three ~~and nine~~ months ended ~~September 30, 2022, respectively,~~March 31, 2023 from the corresponding ~~periods~~period in ~~2021.~~2022. The ~~decreases were~~decrease 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~~ in the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 when compared to the corresponding ~~periods~~period in ~~2021.~~2022.

Total opened title insurance order volume decreased in the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 from the corresponding ~~periods~~period in ~~2021.~~2022. The decrease was attributable to decreased opened title orders from ~~refinance~~both purchase and ~~purchase~~refinance transactions.

The average fee per file in our direct operations was ~~$3,621 and $3,323~~$3,446 in the three ~~and nine~~ months ended ~~September 30, 2022,~~March 31, 2023, respectively, compared to ~~$2,581 and $2,310~~$2,891 in the three ~~and nine~~ months ended ~~September 30, 2021, respectively.~~March 31, 2022. The ~~increases~~increase in average fee per file in the three ~~and nine-month periods reflect~~months ended March 31, 2023 reflects an increased proportion of purchase transactions relative to total closed orders ~~and an increased commercial market~~ compared to the corresponding ~~periods~~period in ~~2021.~~2022. 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.

Title premiums from agency operations decreased ~~$352~~$549 million, or ~~27%~~50%, in the three months ended ~~September 30, 2022 and decreased $364 million, or 10%, in the nine months ended September 30, 2022~~March 31, 2023 from the corresponding ~~periods~~period in ~~2021.~~2022. The current trends in the agency business reflect a softening residential purchase environment in many markets throughout the country and a dramatic decline in residential refinance transactions, consistent with recent trends in our direct business.

Escrow, title-related and other fees decreased by ~~$226~~$194 million, or ~~27%~~29%, in the three months ended ~~September 30, 2022 and decreased $439 million or 18%~~March 31, 2023 from the corresponding period in ~~the nine months ended September 30, 2022 from the~~

~~Table of Contents~~

~~corresponding periods in 2021.~~2022. Escrow fees decreased by ~~$120~~$105 million, or ~~33%~~39%, in the three months ended ~~September 30, 2022 and $259 million, or 24% in the nine months ended September 30, 2022~~March 31, 2023 from the corresponding ~~periods~~period in ~~2021.~~2022. The decreases in the three ~~and nine-month~~month periods were primarily attributable to the ~~significant~~ decrease in residential refinance transactions, which have relatively higher escrow fees per transaction than residential purchase and commercial transactions. Other fees, excluding escrow fees, decreased by ~~$106~~$89 million, or 22%, in the three months ended ~~September 30, 2022 and decreased by $181 million, or 13% in the nine months ended September 30, 2022~~March 31, 2023 from the corresponding ~~periods~~period in ~~2021.~~2022. The decreases in Other fees ~~in the three and nine-month periods~~ were attributable to various 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 increased ~~$35~~$54 million, or ~~130%~~200%, in the three months ended ~~September 30, 2022 and increased $41 million, or 49% in the nine months ended September 30, 2022~~March 31, 2023 from the corresponding period in ~~2021.~~2022. The ~~increases in the three and nine-month periods were~~increase was primarily attributable to increased income from our tax-deferred property exchange business and higher yields on our short-term investments when compared to the corresponding ~~periods~~period in ~~2021.~~2022.

Table of Contents

Net recognized ~~losses~~gains were ~~$48 million and $169~~$22 million in the three months ended ~~September 30, 2022 and 2021, respectively.~~March 31, 2023. Net recognized losses were ~~$472 million and $258~~$175 million in the ~~nine~~three months ended ~~September 30, 2022 and 2021, respectively.~~March 31, 2022. The variations in ~~net~~ recognized gains and losses, net in the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 compared to the corresponding periods in ~~2021~~2022 are primarily attributable to fluctuations in non-cash valuation changes on our equity and preferred security holdings in addition to various other 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 decreased ~~$113~~$178 million, or ~~13%~~23%, in the three months ended ~~September 30, 2022 and decreased $96 million, or 4% in the nine months ended September 30, 2022~~March 31, 2023 compared to the corresponding ~~periods~~period in ~~2021.~~2022. The ~~decreases in the three and nine-month periods are~~decrease is due to lower average head count in the ~~2022 periods~~2023 period in response to the ~~significant~~ decline in ~~refinance orders and the recent declines in purchase and commercial orders, partially offset by an increase in the 401(k) match in the 2022 periods.~~title orders. Personnel costs as a percentage of total revenues from direct title premiums and escrow, title-related and other fees were ~~55%~~67% and ~~48%~~54% for the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021, respectively and 54% and 49% for the nine-month periods ended September 30, 2022 and 2021,~~ respectively. Average employee count in the Title segment was ~~24,485~~21,516 and ~~27,799~~26,974 in the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021, respectively, and 25,914 and 27,164 in the nine months ended September 30, 2022 and 2021,~~ respectively.

Other operating expenses decreased by ~~$79~~$101 million, or ~~18%~~25%, in the three months ended ~~September 30, 2022, and decreased by $103 million, or 8% in the nine months ended September 30, 2022~~March 31, 2023, from the corresponding ~~periods~~period in ~~2021.~~2022. Other operating expenses as a percentage of total revenue excluding agency premiums, interest and investment income, and recognized gains and losses were ~~28%~~33% and ~~26%~~28% in the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021, respectively, and 27% and 26% in the nine months ended September 30, 2022 and 2021,~~ respectively.

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

The following table illustrates the relationship of agent premiums and agent commissions, which has remained relatively consistent since ~~2021:~~2022:

Three months ended September 30, Nine months ended September 30,
2022 % 2021 % 2022 % 2021 %
(Dollars in millions)
Agent premiums $ 966 100 % $ 1,318 100 % $ 3,268 100 % $ 3,632 100 %
Agent commissions 747 77 % 1,010 77 % 2,521 77 % 2,787 77 %
Net retained agent premiums $ 219 23 % $ 308 23 % $ 747 23 % $ 845 23 %

~~Table of Contents~~


	Three months ended March 31,
	2023		%		2022		%
	(Dollars in millions)
Agent premiums	$	550	100	%	$	1,099	100	%
Agent commissions	420		76	%	844		77	%
Net retained agent premiums	$	130	24	%	$	255	23	%

The claim loss provision for title insurance was ~~$74~~$44 million and ~~$100~~$84 million for the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021, respectively, and $251 million and $278 million for the nine months ended September 30, 2022 and 2021,~~ 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~~majority-owned F&G subsidiary, we have five distribution channels across retail and institutional markets. Our three retail channels include agent-based ~~IMOs,~~Independent Marketing Organizations ("IMOs"), banks and broker dealers. We have deep, long-tenured relationships with our network of leading IMOs and their agents to serve the needs of the middle-income market and develop competitive annuity and life products to align with their evolving needs. Upon FNF’s ownership and F&G’s subsequent rating upgrades in mid-2020, we launched into banks and broker dealers. Further, in 2021, we launched two institutional channels to originate Funding Agreement Backed Note ("FABN") and PRT transactions. The FABN Program offers funding agreements to institutional clients by means of capital markets transactions through investment banks. The funding agreements issued under the FABN Program are in addition to those issued to the Federal Home Loan Bank of Atlanta ("FHLB"). The PRT solutions business was launched by building an experienced team and then working with brokers and institutional consultants for distribution. These markets leverage our existing team's spread-based capabilities as well as our strategic partnership with Blackstone.

In setting the features and pricing of our flagship FIA products relative to our targeted net margin, we take into account our expectations regarding (1) 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

Table of Contents

number of related expenses, including benefits and changes in reserves, acquisition costs, and general and administrative expenses.

Key Components of Our Historical Results of Operations

Through our insurance subsidiaries, we issue a broad portfolio of deferred annuities (FIA and fixed rate annuities), ~~indexed universal life insurance (IUL),~~IUL, immediate annuities, funding agreements and 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. IUL 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 deferred annuities, FIAs, fixed rate annuities, immediate annuities and PRT without life contingency, and deposits received for funding agreements are reported in the financial statements as deposit liabilities (i.e., contractholder funds) instead of as sales or revenues. Similarly, cash payments to customers are reported as decreases in the liability for contractholder funds and not as expenses. Sources of revenues for products accounted for as deposit liabilities are net investment income, surrender, cost of insurance and other charges deducted from contractholder funds, and net realized gains (losses) on investments. Components of expenses for products accounted for as deposit liabilities are interest-sensitive and index product

~~Table of Contents~~

benefits (primarily interest credited to account balances or the hedging cost of providing index credits to the policyholder), amortization of ~~VOBA, DAC~~value of insurance and ~~DSI,~~reinsurance contracts acquired ("VOBA"), deferred acquisition costs ("DAC"), deferred sales inducements ("DSI") and unearned revenue liability ("URL"), other operating costs and expenses, and income taxes.

~~F&G hedges~~We hedge certain portions of ~~its~~our 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 reserve impact of the index credits due to policyholders under the FIA and IUL contracts. The majority of all such call options are one-year options purchased to match the funding requirements underlying the FIA/IUL contracts. We attempt to manage the cost of these purchases through the terms of our FIA/IUL contracts, which permit us to change caps, spread, or participation rates on each policy's annual anniversary, subject to certain guaranteed minimums that must be maintained. The call options and futures contracts are marked to fair value with the change in fair value included as a component of net investment gains (losses). The change in fair value of the call options and futures contracts includes the gains and losses recognized at the expiration of the instruments’ terms or upon early termination and the changes in fair value of open positions.

As noted above, MRBs are contracts or contract features that both provide protection to the contract holder from other-than-nominal capital market risk (equity, interest and foreign exchange risk) and expose the Company to other-than-nominal capital market risk. MRBs are measured at fair value using a risk neutral valuation method, which is based on current net amounts at risk, market data, internal and industry experience, and other factors. The change in fair value of MRBs generally reflects impacts from actual policyholder behavior (including surrenders of the benefit), changes in interest rates, and changes in equity market returns. Generally higher interest rates and equity returns result in gains whereas lower interest rates and equity returns result in losses.

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

~~Our profitability depends in large part upon the amount of assets under management (“AUM” — see “Non-GAAP Financial Measures~~” section), the excess of net investment income earned over the sum of interest credited to policyholders and the cost of hedging our risk on indexed product policies earned on our average assets under management ("AAUM" — see “~~Non-GAAP Financial Measures~~”), 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 the excess of net investment income earned over the sum of interest credited to policyholders and the cost of hedging our risk on indexed product policies involves the ability to maximize returns on our AUM and minimize risks such as interest rate changes and defaults or impairment of investments. It also includes our ability to manage interest rates credited to policyholders and costs of the options and futures purchased to fund the annual index credits on the FIA/IULs. We analyze returns on AAUM, VOBA, pre- and post-DAC and DSI as well as pre- and post-tax to measure our profitability in terms of growth and improved earnings.

In June 2021, we established a 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 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 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

6183

Table ~~of Contents~~

~~GAAP as measures of operating performance or liquidity. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are provided within.~~

~~Adjusted Net Earnings Attributable to Common Shareholders~~

Adjusted net earnings 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; and the effect of changes in fair value of the reinsurance related embedded derivative;

(ii) Indexed product related derivatives: the impacts related to changes in the fair value, including both realized and unrealized gains and losses, of index product related derivatives and embedded derivatives, net of hedging cost;

(iii) Purchase price amortization: the impacts related to the amortization of certain intangibles (internally developed software, trademarks and value of distribution asset (“VODA”)) recognized as a result of acquisition activities;

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

(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.

~~(vi) Amortization of actuarial intangibles and SOP 03-1 reserve offset: The intangibles amortization and SOP 03-1 change offsets related to the above mentioned adjustments; and~~

~~(vii) Income taxes: the income tax impact related to the above mentioned adjustments is measured using an effective tax rate, as appropriate by tax jurisdiction.~~

While these adjustments are an integral part of the overall performance of F&G, market conditions and/or the non-operating nature of these items can overshadow the underlying performance of the core business. Accordingly, management considers this to be a useful measure internally and to investors and analysts in analyzing the trends of our operations. Adjusted net earnings should not be used as a substitute for net earnings (loss). However, we believe the adjustments made to net earnings (loss) in order to derive adjusted net earnings provide an understanding of our overall results of operations.

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

Amounts attributable to the fair value accounting for derivatives hedging the FIA and IUL index credits and the related embedded derivative liability fluctuate from period to period based upon changes in the fair values of call options purchased to fund the annual index credits, changes in the interest rates and non-performance credit spreads used to discount the embedded derivative liability, and the fair value assumptions reflected in the

~~Table of Contents~~

embedded derivative liability. The accounting standards for fair value measurement require the discount rates used in the calculation of the embedded derivative liability to be based on risk-free interest rates adjusted for our non-performance as of the reporting date. The impact of the change in fair values of FIA-related derivatives, embedded derivatives and hedging costs has been removed from net earnings (loss) in calculating adjusted net earnings.

We have updated our non-GAAP measure definition for Adjusted net earnings as of September 30, 2022 to remove the alternative investments adjustment that was previously made for the difference between actual net investment income earned on our alternative investments compared to management's long-term expectation of net investment income for these types of investments. All prior periods have been restated to remove this adjustment.

~~Assets Under Management (“AUM”)~~

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

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

~~Average Assets Under Management (“AAUM”)~~

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 the rate of return on assets available for reinvestment.

~~Yield on AAUM~~

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.

~~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 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.

~~Table~~ of Contents

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, 2023 and 2022 ~~and September 30, 2021~~ were as ~~follows (in millions):~~follows:

Three months ended Nine months ended
September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021
Revenues:
Life insurance premiums and other fees (a) $ 702 $ 431 $ 1,364 $ 557
Interest and investment income 340 481 1,216 1,341
Recognized gains and losses, net (140) 15 (863) 370
Total revenues 902 927 1,717 2,268
Expenses:
Benefits and other changes in policy reserves 592 185 382 734
Personnel costs 46 32 110 93
Other operating expenses 28 22 77 76
Depreciation and amortization 87 210 351 419
Interest expense 6 6 23 21
Total expenses 759 455 943 1,343
Earnings before income taxes 143 472 774 925
Income tax (expense) benefit (28) (96) (193) (189)
Net earnings from continuing operations $ 115 $ 376 $ 581 $ 736
Earnings (loss) from discontinued operations, net of tax — (3) — 8
Net earnings $ 115 $ 373 $ 581 $ 744
(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) (see~~ ~~"Non-GAAP Financial Measures"~~):

Three months ended Nine months ended
September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021
Fixed indexed annuities (FIA) $ 1,109 $ 1,073 $ 3,185 $ 3,255
Fixed rate annuities (MYGA) 1,108 458 2,668 1,437
Total annuity 2,217 1,531 5,853 4,692
Indexed universal life (IUL) 36 24 92 59
Funding agreements (FABN/FHLB) — 1,150 1,443 2,275
Pension risk transfer (PRT) 620 371 1,147 371
Total Gross Sales $ 2,873 $ 3,076 $ 8,535 $ 7,397
Sales attributable to flow reinsurance to third parties (660) (229) (1,440) (718)
Total Net Sales $ 2,213 $ 2,847 $ 7,095 $ 6,679

•Total annuity sales increased during the three and nine months ended September 30, 2022 compared to the three and nine months ended September 30, 2021, and reflect pricing actions taken to align to the macro environment.

•Funding agreements, reflecting new FABN and FHLB agreements during the three and nine months ended September 30, 2022, were lower compared to the three and nine months ended September 30, 2021, reflect F&G's expansion into institutional markets during 2021 and are subject to fluctuation period to period.

•PRT sales increased during the three and nine months ended September 30, 2022 compared to the three and nine months ended September 30, 2021, reflect entrance into the PRT market in the second half of 2021, and are also subject to fluctuation period to period.

~~Table of Contents~~


	Three months ended
	March 31, 2023		March 31, 2022
	(In millions)
Revenues:
Life insurance premiums and other fees (a)	$	365	$	596
Interest and investment income	519		451
Recognized gains and (losses), net	(15)		(297)
Total revenues	869		750
Benefits and expenses:
Benefits and other changes in policy reserves	812		203
Market risk benefit losses	59		70
Depreciation and amortization	90		76
Personnel costs	53		30
Other operating expenses	36		18
Interest expense	22		8
Total benefits and expenses	1,072		405

Earnings (loss) before income taxes	(203)		345
Income tax expense (benefit)	$	(8)	$	106
Earnings (loss) from continuing operations	$	(195)	$	345


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

Revenues

Life insurance premiums and other fees

Life insurance premiums and other fees primarily reflect premiums on life-contingent PRTs and traditional life insurance products, which are recognized as revenue when due from the policyholder, as well as policy rider fees primarily on FIA policies, the cost of insurance on IUL 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 accompanying unaudited Condensed Consolidated Statements of ~~Earnings (in millions),~~Operations, for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~September 30, 2021:~~2022:

Three months ended Nine months ended
September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021
Life-contingent pension risk transfer premiums $ 605 $ 371 $ 1,125 $ 371
Traditional life insurance premiums 4 6 11 14
Life-contingent immediate annuity premiums 3 4 15 12
Surrender charges 14 7 37 25
Policyholder fees and other income 76 43 176 135
Life insurance premiums and other fees $ 702 $ 431 $ 1,364 $ 557


	Three months ended
	March 31, 2023		March 31, 2022
	(In millions)
Life-contingent pension risk transfer premiums	$	263	$	525
Traditional life insurance premiums	6		5
Life-contingent immediate annuity premiums	6		5
Surrender charges	23		10
Policyholder fees and other income	67		51
Life insurance premiums and other fees	$	365	$	596

•Life insurance premiums and other fees for the three ~~and nine~~ months ended ~~September 30, 2022 increased~~March 31, 2023 decreased compared to the three ~~and nine~~ months ended ~~September 30, 2021, primarily~~March 31, 2022, reflecting ~~our entrance into the~~lower PRT ~~market in the second half of 2021.~~premiums. As noted above, PRT premiums are subject to fluctuation period to period. ~~In addition, surrender~~

•Surrender charges increased for the three ~~and nine~~ months ended ~~September 30, 2022,~~March 31, 2023 compared to ~~the three and nine months ended September 30, 2021,~~March 31, 2022, primarily reflecting ~~the~~an increase in market value ~~adjustment feature~~adjustments (“MVA”) assessed on certain surrendered FIA policies. An MVA will apply in most states to any withdrawal that ~~results~~incurs a surrender charge, subject to certain exceptions. The MVA is based on a formula that takes into account changes in ~~relatively higher surrender charges when market~~ interest rates ~~are higher and relatively lower surrender charges when market~~since contract issuance. Generally, if interest rates ~~are lower.~~have risen, the MVA will decrease

6584

Table of Contents

surrender value, whereas if rates have fallen, it will increase surrender value. In addition, surrender charges increases as a result of increased amounts assessed against policy withdrawals in excess of the policyholder's allowable penalty-free amounts primarily on our FIA policies.

•Policyholder fees and other income increased for the three months ended March 31, 2023 compared to March 31, 2022, primarily due to increased GMWB rider fees, cost of insurance charges on IUL policies and IUL premium loads. GMWB rider fees are based on the policyholder's benefit base and are collected at the end of the policy year.

Interest and investment income

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

Three months ended Nine months ended
September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021
Fixed maturity securities, available-for-sale $ 364 $ 300 $ 1,019 $ 903
Equity securities 14 12 48 40
Mortgage loans 48 34 136 90
Limited partnerships (55) 173 116 417
Other investments 18 4 38 12
Gross investment income 389 523 1,357 1,462
Investment expense (49) (42) (141) (121)
Interest and investment income $ 340 $ 481 $ 1,216 $ 1,341

~~Our AAUM and yield on AAUM are summarized as follows (annualized) (dollars in millions) (see~~ ~~"Non-GAAP Financial Measures"~~):

Three months ended Nine months ended
September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021
AAUM $ 41,081 $ 32,692 $ 39,246 $ 30,706
Yield on AAUM (at amortized cost) 3.31 % 5.89 % 4.13 % 5.82 %

•AAUM was higher for the three and nine months ended September 30, 2022 compared to the three and nine months ended September 30, 2021, reflecting net new business asset flows, offset by net reinsurance and other activity.

•~~Interest and investment income was lower~~ for the three months ended ~~September 30, 2022 compared~~March 31, 2023 and March 31, 2022:


	Three months ended
	March 31, 2023		March 31, 2022
	(In millions)
Fixed maturity securities, available-for-sale	$	432	$	319
Equity securities	5		4
Preferred securities	10		11
Mortgage loans	51		39
Invested cash and short-term investments	16		4
Limited partnerships	57		113
Other investments	9		6
Gross investment income	580		496
Investment expense	(61)		(45)
Interest and investment income	$	519	$	451

Interest and investment income is shown net of amounts attributable to certain funds withheld reinsurance agreements which is passed along to the reinsurer in accordance with the terms of these agreements. Interest and investment income attributable to these agreements, and thus excluded from the totals in the table above, was $(58) million and $(18) million for the three months ended ~~September 30, 2021, primarily due to $255 million lower returns on limited partnerships~~March 31, 2023 and ~~$10 million of all other rate impacts, partially offset by $124 million from invested asset growth.~~

•~~Interest and investment income was lower for the nine months ended September 30,~~March 31, 2022, compared to the nine months ended September 30, 2021 primarily due to $436 million from lower returns on limited partnerships and $62 million of all other rate impacts, partially offset by $373 million from invested asset growth.respectively.

Recognized gains and ~~losses,~~(losses), net

Below is a summary of the major components included in recognized gains and losses, net ~~(in millions):~~for the three months ended March 31, 2023 and March 31, 2022:


		Three months ended				Nine months ended						Three months ended
		September 30, 2022		September 30, 2021			September 30, 2022		September 30, 2021					March 31, 2023		March 31, 2022
											(In millions)
Net realized and unrealized (losses) gains on fixed maturity available-for-sale securities, equity securities and other invested assets		$	(81)	$	(6)		$	(350)	$	58
Net realized and unrealized losses on fixed maturity available-for-sale securities, equity securities and other invested assets													Net realized and unrealized losses on fixed maturity available-for-sale securities, equity securities and other invested assets	$	(48)	$	(107)
Change in allowance for expected credit losses	Change in allowance for expected credit losses	(7)		1			(14)		3				Change in allowance for expected credit losses	(8)		(1)
Net realized and unrealized (losses) gains on certain derivatives instruments		(144)		(3)			(846)		284
Net realized and unrealized gains (losses) on certain derivatives instruments													Net realized and unrealized gains (losses) on certain derivatives instruments	58		(308)
Change in fair value of reinsurance related embedded derivatives	Change in fair value of reinsurance related embedded derivatives	94		23			357		23				Change in fair value of reinsurance related embedded derivatives	(19)		122
Change in fair value of other derivatives and embedded derivatives	Change in fair value of other derivatives and embedded derivatives	(2)		—			(10)		2				Change in fair value of other derivatives and embedded derivatives	2		(3)
Recognized gains and losses, net	Recognized gains and losses, net	$	(140)	$	15		$	(863)	$	370			Recognized gains and losses, net	$	(15)	$	(297)

Recognized gains and losses, net is shown net of amounts attributable to certain funds withheld reinsurance agreements which is passed along to the reinsurer in accordance with the terms of these agreements. Recognized gains and losses, net attributable to these agreements, and thus excluded from the totals in the table above, was $(22) million and $128 million for the three months ended March 31, 2023 and March 31, 2022, respectively.

•For the three months ended March 31, 2023, net realized and unrealized gains (losses) on fixed maturity AFS securities, equity securities and other invested assets is primarily the result of realized losses on fixed maturity AFS securities and mark-to-market losses on our equity securities.

6685

Table of Contents

•For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022, net realized and unrealized gains (losses) on fixed maturity ~~available-for-sale~~AFS securities, equity securities and other invested assets is primarily the result of mark-to-market losses on our equity securities and realized losses on fixed maturity ~~available-for-sale securities.~~

•For the three and nine months ended September 30, 2021, net realized and unrealized gains (losses) on fixed maturity available-for-sale securities, equity securities and other invested assets is primarily the result of realized gains and losses on fixed maturity available-for-saleAFS securities.

•For all periods, net realized and unrealized gains (losses) on certain derivative instruments primarily relate to the net realized and unrealized gains (losses) on options and futures used to hedge FIA and IUL products, including gains on option and futures expiration. See the table below for primary drivers of gains (losses) on certain derivatives.

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

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

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):~~for the three months ended March 31, 2023 and March 31, 2022:


		Three months ended						Nine months ended							Three months ended
		September 30, 2022			September 30, 2021				September 30, 2022			September 30, 2021					March 31, 2023			March 31, 2022
														(In millions)
Call options:	Call options:															Call options:
(Losses) gains on option expiration		$	(79)		$	134			$	(75)		$	303
Change in unrealized (losses) gains		(70)			(140)				(783)			(30)
Realized (losses) gains																Realized (losses) gains	$	(91)		$	45
Change in unrealized gains (losses)																Change in unrealized gains (losses)	146			(359)
Futures contracts:	Futures contracts:															Futures contracts:
(Losses) gains on futures contracts expiration		(4)			—				(6)			8
Change in unrealized gains (losses)		(1)			—				(4)			(4)
Gains on futures contracts expiration																Gains on futures contracts expiration	3			2
Change in unrealized gains																Change in unrealized gains	1			1
Foreign currency forward:	Foreign currency forward:															Foreign currency forward:
Gains on foreign currency forward		10			3				22			7
(Losses) gains on foreign currency forward																(Losses) gains on foreign currency forward	(1)			3
Total net change in fair value	Total net change in fair value	$	(144)		$	(3)			$	(846)		$	284			Total net change in fair value	$	58		$	(308)

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	(5)		%	1		%		(25)		%	16		%		Annual Point-to-Point Change in S&P 500 Index during the periods	(9)		%	14		%

•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 (losses) on option expiration reflect the movement during each period on options settled during the respective period.

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

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

6786

Table of Contents

The average index credits to policyholders are as follows:


		Three months ended				Nine months ended					Three months ended
		September 30, 2022		September 30, 2021			September 30, 2022		September 30, 2021				March 31, 2023		March 31, 2022
Average Crediting Rate	Average Crediting Rate	—	%	6	%		1	%	5	%		Average Crediting Rate	—	%	3	%
S&P 500 Index:	S&P 500 Index:											S&P 500 Index:
Point-to-point strategy	Point-to-point strategy	—	%	4	%		1	%	5	%		Point-to-point strategy	—	%	3	%
Monthly average strategy	Monthly average strategy	—	%	4	%		2	%	3	%		Monthly average strategy	—	%	3	%
Monthly point-to-point strategy	Monthly point-to-point strategy	—	%	11	%		1	%	7	%		Monthly point-to-point strategy	—	%	2	%
3 year high water mark	3 year high water mark	13	%	19	%		12	%	14	%		3 year high water mark	13	%	15	%

•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.

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):~~reserves:


		Three months ended				Nine months ended
		September 30, 2022		September 30, 2021			September 30, 2022		September 30, 2021			Three months ended
												March 31, 2023		March 31, 2022
												(In millions)
PRT agreements	PRT agreements	$	603	$	371		$	1,124	$	371	PRT agreements	$	266	$	532
FIA/IUL market related liability movements	FIA/IUL market related liability movements	(209)		(547)			(1,323)		(611)		FIA/IUL market related liability movements	369		(559)
Index credits, interest credited & bonuses	Index credits, interest credited & bonuses	122		289			483		725		Index credits, interest credited & bonuses	134		206

Annuity payments and other	Annuity payments and other	76		72			98		249		Annuity payments and other	43		24
Total benefits and other changes in policy reserves	Total benefits and other changes in policy reserves	$	592	$	185		$	382	$	734	Total benefits and other changes in policy reserves	$	812	$	203

•PRT agreements ~~increased~~decreased for the three ~~and nine~~ months ended ~~September 30, 2022,~~March 31, 2023 compared to the three ~~and nine~~ months ended ~~September 30, 2021,~~March 31, 2022 reflecting lower PRT transactions during the periods and ~~reflects F&G's entrance into the PRT market in the second half of 2021. PRT agreements~~ are subject to fluctuation period to period.

•The FIA/IUL market related liability movements during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and March 31, 2022, ~~and September 30, 2021,~~ respectively, are mainly driven by changes in the equity markets, non-performance spreads, and risk free rates during the periods. ~~Additionally, the three and nine months ended September 2021 include the system implementation and assumption review process impacts discussed below.~~ The change in risk free rates and non-performance spreads (decreased) increased the FIA market related liability by ~~($189)~~$65 million and ~~($29)~~$306 million during the three months ended ~~September 30,~~March 31, 2023 and March 31, 2022, and September 30, 2021, respectively. The change in risk free rates and non-performance spreads (decreased) the FIA market related liability by ($747) million and ($160) million during the nine months ended September 30, 2022 and September 30, 2021, respectively. The remaining changes in market value of the market related liability movements for all periods was driven by equity market impacts. See table in the net investment gains/losses discussion above for summary and discussion of net unrealized gains (losses) on certain derivative instruments.

~~Table of Contents~~

•Annually, typically in the third quarter, we review assumptions associated with reserves for policy benefits and product guarantees. ~~There were no significant impacts during~~During the ~~third~~first quarter of ~~2022. During the third quarter of 2021,~~2023, based on increases in interest rates and pricing changes, we implemented a new actuarial valuation system, and as a result, our third quarter 2021 assumption updates include model refinements and assumption updates resulting from the implementation. The system implementation and assumption review process included refinements in the calculation ofupdated certain FIA assumptions used to calculate the fair value of the embedded derivative component ~~of our fixed indexed annuities.~~within contractholder funds. These changes ~~taken together,~~ resulted in ~~a decrease~~an increase in contractholder funds ~~and future policy reserves~~ of ~~$397 million for the three and nine months ended September 30, 2021.~~$102 million.

•Index credits, interest credited & bonuses for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 were lower compared to the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 and primarily reflected lower index credits on FIA policies as a result of market movement during the respective periods. Refer to average policyholder index discussion above for details on drivers.

~~Amortization~~

Table of ~~intangibles~~Contents

Market Risk Benefit Losses

Below is a summary of market risk benefit losses:


	Three months ended
	March 31, 2023		March 31, 2022
	(In millions)
Market risk benefits (gains) losses	$	59	$	70

•Market risk benefit losses are primarily driven by attributed fees collected, effects of market related movements (including changes in equity markets and risk free rates), actual policyholder behavior as compared with expected and changes in assumptions during the periods. Market risk benefit losses for the three months ended March 31, 2023 and March 31, 2022 were impacted by attributed fees collected and unfavorable market related movements in both periods. In addition, actual policyholder behavior for the three months ended March 31, 2023 was more in line with expected, as compared to March 31, 2022, resulting in a decrease to the market risk benefit losses. There were no significant changes in assumptions during either period.

Depreciation and Amortization

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

Three months ended Nine months ended
September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021
Amortization of DAC, VOBA, and DSI $ 86 $ 204 $ 368 $ 436
Interest (14) (12) (40) (32)
Unlocking 9 18 3 1
Amortization of other intangible assets and other depreciation 6 — 20 14
Total depreciation and amortization $ 87 $ 210 $ 351 $ 419


	Three months ended
	March 31, 2023		March 31, 2022
	(In millions)
Amortization of VOBA, DAC and DSI	$	82	$	69


Amortization of other intangible assets and other depreciation	8		7
Total depreciation and amortization	$	90	$	76

•~~Amortization of~~ VOBA, DAC and DSI ~~is based~~are amortized on ~~current and future expected gross margins (pre-tax operating income before amortization). The amortization~~a constant level basis for the ~~periods presented is~~grouped contracts over the ~~result~~expected term of ~~actual gross profits ("AGPs") in~~ the ~~period.~~related contracts to approximate straight-line amortization.

•~~Annually, typically in~~Depreciation and amortization increased for the ~~third quarter, we review assumptions~~three months ended March 31, 2023 compared to the three months ended March 31, 2022 and primarily reflected increased DAC and DSI associated with the ~~amortization~~growth in business.

Personnel Costs and Other Operating Expenses

Below is a summary of ~~intangibles. There were no significant impacts during the third quarter of 2022. During the third quarter of 2021, we implemented a new actuarial valuations system~~personnel costs and ~~as a result, our third quarter 2021 assumption updates include model refinements~~other operating expenses:


	Three months ended
	March 31, 2023		March 31, 2022
	(In millions)
Personnel costs	53		30
Other operating expenses	36		18
Total personnel costs and other operating costs	$	89	$	48

•Personnel costs and ~~assumption updates resulting from the implementation. The changes, taken together, increased amortization of intangibles by $136 million~~other operating expenses for the three ~~and nine~~ months ended ~~September 30, 2021.~~March 31, 2023 were higher compared to the three months ended March 31, 2022, and primarily reflect headcount growth to support higher volumes and strategic growth capabilities.

Table of Contents

Other ~~items affecting net earnings~~Items Affecting Net Earnings

Income ~~tax expense (benefit)~~Tax (Benefit) Expense

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

Three months ended Nine months ended
September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021
Income before taxes $ 143 $ 472 $ 774 $ 925
Income tax expense before valuation allowance 28 96 155 203
Change in valuation allowance — — 38 (14)
Federal income tax expense (benefit) $ 28 $ 96 $ 193 $ 189
Effective rate 20 % 20 % 25 % 20 %


	Three months ended
	March 31, 2023			March 31, 2022
	(Dollars in millions)
(Loss) income before taxes	$	(203)		$	345

Income tax (benefit) expense before valuation allowance	(45)			68
Change in valuation allowance	37			38
Federal income tax (benefit) expense	$	(8)		$	106
Effective rate	4		%	31		%

•Income tax ~~expense~~benefit for the three months ended ~~September 30, 2022 of $28 million,~~March 31, 2023 was ~~lower compared to income tax expense of $96 million for the three months ended September 30, 2021,~~

~~Table of Contents~~

reflecting lower income before taxes. The effective tax rate for the three months ended September 30, 2022, was 20%, in line with the effective tax rate for the three months ended September 30, 2021.

•~~Income tax expense for the nine months ended September 30, 2022 was $193 million, inclusive of a change in the valuation allowance of $38~~$8 million, compared to income tax expense of $189 million, inclusive of a change in the valuation allowance of $(14) million for the nine months ended September 30, 2021. The effective tax rate was 25% and 20% for the nine months ended September 30, 2022 and September 30, 2021, respectively. The increase in the effective tax rate for the nine months ended September 30, 2022 is primarily related to the valuation allowance recorded on realized capital losses on the sale 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)~~

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

Three months ended Nine months ended
September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021
Net earnings (loss) from continuing operations attributable to common shareholders $ 115 $ 376 $ 581 $ 736
Non-GAAP adjustments:
Recognized (gains) and losses, net:
Net realized and unrealized gains (losses) on fixed maturity available-for-sale securities, equity securities and other invested assets 70 5 336 (58)
Change in allowance for expected credit losses 6 (2) 13 (5)
Change in fair value of reinsurance related embedded derivatives (94) (23) (357) (23)
Change in fair value of other derivatives and embedded derivatives (7) (3) (11) (9)
Recognized (gains) and losses, net (25) (23) (19) (95)
Indexed product related derivatives (148) 14 (566) (167)
Purchase price amortization 5 7 16 20
Transaction costs and other non-recurring items (a) 4 (283) 8 (279)
Amortization of actuarial intangibles and SOP-03-1 reserve offset on non-GAAP adjustments 33 12 87 110
Income taxes on non-GAAP adjustments 28 57 100 84
Adjusted net earnings $ 12 $ 160 $ 207 $ 409
(a)For the three and nine months ended September 30, 2021, reflects a one-time favorable adjustment to benefits and other changes in policy reserves and depreciation and amortization resulting from an actuarial system conversion which reflects modeling enhancement and other refinements of $284..

The commentary below is intended to provide additional information on the significant income and expense items that are reflected in ANE results for each time period. Those significant income and expense items are reported after actuarial intangibles and SOP 03-1 reserve offsets and taxes.

•~~Adjusted net earnings of $12~~$106 million for the three months ended September 30, 2022 is comprised of alternative investments net investment loss of $(10) million. Alternative investments net investment income based on management’s long-term expected return of approximately 10%March 31, 2022. The effective tax rate was ~~$83 million. Actual net investment income was lower due to declines in fair value of these investments. Additionally, we recognized $(5) million expense from other net unfavorable items.~~

•~~Adjusted net earnings of $160 million~~4% and 31% for the three months ended ~~September 30, 2021~~March 31, 2023 and 2022, respectively. The decrease in income tax expense quarter over quarter is comprised of alternative investments net investment income of $108 million. Alternative investments net investment income based on management’s long-term expected return of approximately 9% was $49 million. Actual net investment income was higher dueprimarily related to ~~increases~~the decrease in ~~fair value of these investments.Additionally, we recognized $7 million income from net favorable mortality experience and other~~pre-tax income.

7089

Table of Contents

~~reserve changes and $20 million of net favorable items, primarily income from CLO redemption and other income.~~

•Adjusted net earnings of $207 million for the nine months ended September 30, 2022 is comprised of alternative investments net investment income of $66 million. Alternative investments net investment income based on management’s long-term expected return of approximately 10% was $174 million. Actual net investment income was lower due to declines in fair value of these investments. Additionally, we recognized $9 million income from net favorable mortality experience and other reserve changes, $33 million income from actuarial assumption updates and $20 million income from CLO redemption and other income; offset by $(47) million from other net unfavorable items, primarily income tax expense due to a valuation allowance recorded against deferred tax assets related to the past sale of discontinued operations.

•Adjusted net earnings of $409 million for the nine months ended September 30, 2021 is comprised of alternative investments net investment income of $241 million. Alternative investments net investment income based on management’s long-term expected return of approximately 10% was $103 million. Actual net investment income was higher due to increases in fair value of these investments.Additionally, we recognized $17 million income from net favorable mortality experience and other reserve changes, $8 million income from actuarial intangibles unlocking and $36 million income of other net favorable items, primarily net investment income related to CLO gains.

~~Table of Contents~~

Investment Portfolio

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

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

As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, the fair value of our investment portfolio was approximately ~~$38~~$44 billion and ~~$39~~$41 billion, respectively, and was divided among the following asset classes and ~~sectors (dollars in millions):~~sectors:


		September 30, 2022				December 31, 2021				March 31, 2023				December 31, 2022
		Fair Value		Percent		Fair Value		Percent				Fair Value		Percent		Fair Value		Percent

Fixed maturity securities, available for sale:	Fixed maturity securities, available for sale:										Fixed maturity securities, available for sale:	(Dollars in millions)
United States Government full faith and credit	United States Government full faith and credit	$	179	—	%	$	50	—	%		United States Government full faith and credit	$	71	—	%	$	32	—	%
United States Government sponsored entities	United States Government sponsored entities	45		—	%	74		—	%		United States Government sponsored entities	40		—	%	42		—	%
United States municipalities, states and territories	United States municipalities, states and territories	1,268		3	%	1,441		4	%		United States municipalities, states and territories	1,581		3	%	1,410		3	%
Foreign Governments	Foreign Governments	143		—	%	205		1	%		Foreign Governments	172		—	%	148		—	%
Corporate securities:	Corporate securities:										Corporate securities:
Finance, insurance and real estate	Finance, insurance and real estate	4,753		13	%	5,109		13	%		Finance, insurance and real estate	5,960		14	%	5,085		12	%
Manufacturing, construction and mining	Manufacturing, construction and mining	705		2	%	932		2	%		Manufacturing, construction and mining	931		2	%	737		2	%
Utilities, energy and related sectors	Utilities, energy and related sectors	2,174		6	%	2,987		8	%		Utilities, energy and related sectors	2,185		5	%	2,275		6	%
Wholesale/retail trade	Wholesale/retail trade	1,986		5	%	2,627		7	%		Wholesale/retail trade	2,064		5	%	2,008		5	%
Services, media and other	Services, media and other	2,563		7	%	3,349		8	%		Services, media and other	3,251		7	%	2,794		7	%
Hybrid securities	Hybrid securities	710		2	%	881		2	%		Hybrid securities	754		2	%	705		2	%
Non-agency residential mortgage-backed securities	Non-agency residential mortgage-backed securities	961		3	%	648		2	%		Non-agency residential mortgage-backed securities	1,624		4	%	1,479		4	%
Commercial mortgage-backed securities	Commercial mortgage-backed securities	3,028		8	%	2,964		7	%		Commercial mortgage-backed securities	3,672		8	%	3,036		7	%
Asset-backed securities	Asset-backed securities	6,747		18	%	4,550		12	%		Asset-backed securities	7,631		17	%	7,245		18	%
Collateral loan obligations (“CLO”)		4,097		11	%	4,145		11	%
Collateral loan obligations ("CLO")											Collateral loan obligations ("CLO")	4,261		10	%	4,222		10	%
Total fixed maturity available for sale securities	Total fixed maturity available for sale securities	29,359		78	%	29,962		77	%		Total fixed maturity available for sale securities	34,197		77	%	31,218		76	%
Equity securities (a)	Equity securities (a)	922		3	%	1,171		3	%		Equity securities (a)	797		2	%	823		2	%
Alternative investments:
Limited partnerships:											Limited partnerships:
Private equity	Private equity	1,300		3	%	1,181		3	%		Private equity	1,161		3	%	1,129		3	%
Real assets	Real assets	420		1	%	340		1	%		Real assets	433		1	%	431		1	%
Credit	Credit	1,069		3	%	829		2	%		Credit	964		2	%	867		2	%
Commercial mortgage loans	Commercial mortgage loans	2,017		5	%	2,265		6	%		Commercial mortgage loans	2,178		5	%	2,083		5	%
Residential mortgage loans	Residential mortgage loans	1,952		5	%	1,549		4	%		Residential mortgage loans	2,323		5	%	1,892		5	%
Other (primarily derivatives and company owned life insurance)	Other (primarily derivatives and company owned life insurance)	645		2	%	1,305		3	%		Other (primarily derivatives and company owned life insurance)	1,108		3	%	809		2	%
Short term investments	Short term investments	42		—	%	373		1	%		Short term investments	776		2	%	1,556		4	%
Total investments	Total investments	$	37,726	100	%	$	38,975	100	%		Total investments	$	43,937	100	%	$	40,808	100	%
(a) Includes investment grade non-redeemable preferred stocks ($724 million and $928 million as of September 30, 2022 and December 31, 2021, respectively).
(a) Includes investment grade non-redeemable preferred stocks ($650 million and $672 million as of March 31, 2023 and December 31, 2022, respectively).											(a) Includes investment grade non-redeemable preferred stocks ($650 million and $672 million as of March 31, 2023 and December 31, 2022, respectively).

Insurance statutes regulate the type of investments that our life insurance subsidiaries are permitted to make and limit the amount of funds that may be used for any one type of investment. In light of these statutes and regulations, and our business and investment strategy, we generally seek to invest in (i) corporate securities rated investment grade by established nationally recognized statistical rating organizations (each, an “NRSRO”), (ii) U.S. Government and government-sponsored agency securities, or (iii) securities of comparable investment quality, if not rated.

~~Table of Contents~~

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

September 30, 2022 December 31, 2021
Rating Fair Value Percent Fair Value Percent
AAA $ 1,040 3 % $ 660 2 %
AA 2,026 7 % 2,181 7 %
A 7,320 25 % 7,667 26 %
BBB 7,986 27 % 10,462 35 %
Not rated (b)
8,969 31 % 6,642 22 %
Total investment grade 27,341 93 % 27,612 92 %
BB 1,043 4 % 1,372 5 %
B and below (a)
305 1 % 432 1 %
Not rated (b)
670 2 % 546 2 %
Total below investment grade 2,018 7 % 2,350 8 %
Total $ 29,359 100 % $ 29,962 100 %

~~(a) Includes $52 million and $68 million at September 30, 2022 and December 31, 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"~~(“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.

Table of Contents

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~~

NAIC published comparison of NRSRO ratings to NAIC designations.

The NAIC ~~uses designation methodologies~~determines ratings for non-agency ~~RMBS, including RMBS backed by subprime mortgage loans~~Residential Mortgage Backed Securities (“RMBS”) and ~~for commercial mortgage-backed securities ("CMBS"). The NAIC’s objective with the designation methodologies for these structured securities is to increase accuracy in assessing~~CMBS using modeling that estimates security level expected losses ~~and~~under a variety of economic scenarios. For such assets issued prior to use the improved assessment to determine a more appropriate capital requirement for such structured securities. Prior to 2021, the NAIC designations for structured securities, including subprime and Alternative A-paper ("Alt-A") RMBS, were based upon a comparison of the bond’sJanuary 1, 2013, an insurer’s amortized cost tobasis in applicable assets can impact the NAIC’s loss expectation for each security. Securities where modeling does not generate an expected loss in all scenarios are given the highest designation of NAIC 1. In 2021, the NAIC eliminated the comparison of non-legacy (issued after 2012) bond's amortized cost to the NAIC's loss expectation and instead assigned a NAIC designation based on the loss expectation alone. Several of our RMBS securities carry a NAIC 1 designation while the NRSRO rating indicates below investment grade. The revised methodologies reduce regulatory reliance on rating agencies and allow for greater regulatory input into the assumptions used to estimate expected losses from such structured securities.rating. In the tables below, we present the rating of structured securities based on ratings from the NAIC rating methodologies described above (which in some cases do not correspond to rating agency designations). All NAIC designations (e.g., NAIC 1-6) are based on the NAIC methodologies.

The following table summarizes the credit quality by NRSRO rating, or NAIC designation equivalent, of our fixed income portfolio at March 31, 2023 and December 31, 2022:


		March 31, 2023						December 31, 2022
NRSRO Rating	NAIC Designation	Amortized Cost		Fair Value		Fair Value Percent		Amortized Cost		Fair Value		Fair Value Percent
		(Dollars in millions)
AAA/AA/A	1	$	23,436	$	21,164	62	%	$	21,294	$	18,681	60	%
BBB	2	12,713		11,204		33	%	12,422		10,737		34	%
BB	3	1,647		1,477		4	%	1,588		1,425		5	%
B	4	226		184		1	%	259		236		1	%
CCC	5	114		88		—	%	87		67		—	%
In or near default	6	90		80		—	%	73		72		—	%
Total		$	38,226	$	34,197	100	%	$	35,723	$	31,218	100	%

Table ~~of Contents~~

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

September 30, 2022
NAIC Designation Amortized Cost Fair Value Percent of Total Fair Value
1 $ 20,253 $ 17,464 60 %
2 11,554 9,691 33 %
3 1,685 1,539 5 %
4 552 532 2 %
5 88 72 — %
6 51 61 — %
Total $ 34,183 $ 29,359 100 %
December 31, 2021
NAIC Designation Amortized Cost Fair Value Percent of Total Fair Value
1 $ 15,636 $ 15,848 54 %
2 10,779 11,441 38 %
3 1,603 1,850 6 %
4 567 669 2 %
5 80 93 — %
6 59 61 — %
Total $ 28,724 $ 29,962 100 %

~~Table~~ of Contents

Investment Industry Concentration

The tables below present the top ten industry categories of our fixed maturity and equity securities ~~and FHLB common stock,~~ including the fair value and percent of total fixed maturity and equity securities ~~and FHLB common stock~~ fair value as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021 (dollars~~2022. Effective January 1, 2023, we updated our industry classifications as a result of a change in ~~millions):~~our investment accounting software and related service providers. Our investment strategy has remained consistent and our portfolio mix has not materially changed. The December 31, 2022 table was updated to reflect a consistent presentation with the March 31, 2023 classifications:


		September 30, 2022					March 31, 2023
Top 10 Industry Concentration	Top 10 Industry Concentration	Fair Value		Percent of Total Fair Value		Top 10 Industry Concentration	Fair Value (In millions)		Percent of Total Fair Value
ABS Other	ABS Other	$	6,747	22	%	ABS Other	$	7,631	22	%
CLO securities	CLO securities	4,097		14	%	CLO securities	4,261		12	%
Whole loan collateralized mortgage obligation ("CMO")		3,128		10	%
Banking		2,749		9	%
Life insurance		1,376		5	%
Commercial mortgage backed securities						Commercial mortgage backed securities	3,672		11	%
Diversified financial services						Diversified financial services	2,919		8	%
Banks						Banks	2,224		6	%
Municipal						Municipal	1,598		5	%
Insurance						Insurance	1,567		4	%
Whole loan collateralized mortgage obligations ("CMO")						Whole loan collateralized mortgage obligations ("CMO")	1,375		4	%
Electric	Electric	1,326		4	%	Electric	1,058		3	%
Municipal		1,268		4	%
Technology		757		3	%
Healthcare		630		2	%
Commercial MBS		584		2	%
Telecommunications						Telecommunications	600		2	%
Total	Total	$	22,662	75	%	Total	$	26,905	77	%

		December 31, 2021					December 31, 2022
Top 10 Industry Concentration	Top 10 Industry Concentration	Fair Value		Percent of Total Fair Value		Top 10 Industry Concentration	Fair Value (In millions)		Percent of Total Fair Value
ABS Other	ABS Other	$	4,550	15	%	ABS Other	$	7,359	23	%
CLO securities	CLO securities	4,145		13	%	CLO securities	3,856		12	%
Banking		2,919		9	%
Whole loan collateralized mortgage obligation ("CMO")		2,622		8	%
Life insurance		1,795		6	%
Commercial mortgage-backed securities						Commercial mortgage-backed securities	3,399		11	%
Diversified financial services						Diversified financial services	2,620		8	%
Banks						Banks	1,850		6	%
Insurance						Insurance	1,545		5	%
Municipal						Municipal	1,428		4	%
Whole loan collateralized mortgage obligations						Whole loan collateralized mortgage obligations	1,278		4	%
Electric	Electric	1,701		6	%	Electric	1,014		3	%
Municipal		1,441		5	%
Healthcare		947		3	%
Technology		932		3	%
Other Financial Institutions		760		2	%
Telecommunications						Telecommunications	547		2	%
Total	Total	$	21,812	70	%	Total	$	24,896	78	%

7592

Table of Contents

The amortized cost and fair value of fixed maturity AFS securities by contractual maturities as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021 (in millions),~~2022, are shown below. Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations.


		September 30, 2022				December 31, 2021				March 31, 2023				December 31, 2022
		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:	(In millions)
Due in one year or less	Due in one year or less	$	165	$	165	$	105	$	106		Due in one year or less	$	170	$	166	$	124	$	123
Due after one year through five years	Due after one year through five years	2,122		1,969		1,724		1,754			Due after one year through five years	2,853		2,724		2,193		2,059
Due after five years through ten years	Due after five years through ten years	1,848		1,607		2,141		2,201			Due after five years through ten years	1,922		1,750		1,840		1,633
Due after ten years	Due after ten years	14,116		10,740		12,842		13,515			Due after ten years	14,893		12,329		14,417		11,379
Subtotal	Subtotal	$	18,251	$	14,481	$	16,812	$	17,576		Subtotal	$	19,838	$	16,969	$	18,574	$	15,194
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	$	11,604	$	10,844	$	8,516	$	8,695		Asset-backed securities	$	12,620	$	11,892	$	12,209	$	11,467

Commercial-mortgage-backed securities	Commercial-mortgage-backed securities	3,213		3,028		2,669		2,964			Commercial-mortgage-backed securities	4,004		3,672		3,309		3,036
Structured hybrids	Structured hybrids	—		—		5		5			Structured hybrids	—		—		—		—
Residential mortgage-backed securities	Residential mortgage-backed securities	1,115		1,006		722		722			Residential mortgage-backed securities	1,764		1,664		1,631		1,521
Subtotal	Subtotal	$	15,932	$	14,878	$	11,912	$	12,386		Subtotal	$	18,388	$	17,228	$	17,149	$	16,024
Total fixed maturity available-for-sale securities	Total fixed maturity available-for-sale securities	$	34,183	$	29,359	$	28,724	$	29,962		Total fixed maturity available-for-sale securities	$	38,226	$	34,197	$	35,723	$	31,218

Non-Agency RMBS Exposure

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

The fair value of our investments in subprime and Alt-A RMBS securities was ~~$42~~$38 million and ~~$58~~$52 million as of ~~September 30, 2022,~~March 31, 2023, respectively, and ~~$52~~$40 million and ~~$75~~$54 million as of December 31, ~~2021,~~2022, respectively. As of March 31, 2023 and December 31, 2022 approximately 94% and 91%, respectively, of the subprime and Alt-A RMBS exposures were rated NAIC 2 or higher.

7693

Table of Contents

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, 2022~~March 31, 2023 and December 31, ~~2021 (dollars in millions):~~2022:


		September 30, 2022				December 31, 2021				March 31, 2023				December 31, 2022
NAIC Designation:	NAIC Designation:	Fair Value		Percent of Total		Fair Value		Percent of Total			NAIC Designation:	Fair Value (In millions)		Percent of Total		Fair Value (In millions)		Percent of Total
1	1	$	92	92	%	$	116	91	%		1	$	82	91	%	$	83	88	%
2	2	3		3	%	4		3	%		2	3		3	%	3		3	%
3	3	3		3	%	2		2	%		3	4		5	%	7		8	%
4	4	—		—	%	1		1	%		4	1		1	%	1		1	%
5	5	2		2	%	4		3	%		5	—		—	%	—		—	%
6	6	—		—	%	—		—	%		6	—		—	%	—		—	%
Total	Total	$	100	100	%	$	127	100	%		Total	$	90	100	%	$	94	100	%

NRSRO:	NRSRO:										NRSRO:
AAA	AAA	$	—	—	%	$	—	—	%		AAA	$	—	—	%	$	—	—	%
AA	AA	—		—	%	15		12	%		AA	12		13	%	12		13	%
A	A	17		17	%	5		4	%		A	4		4	%	4		4	%
BBB	BBB	9		9	%	12		9	%		BBB	7		8	%	8		9	%
Not rated - Above investment grade (a)		19		19	%	24		19	%
Not rated - above investment grade (a)											Not rated - above investment grade (a)	18		20	%	20		21	%
BB and below	BB and below	55		55	%	71		56	%		BB and below	49		55	%	50		53	%
Total	Total	$	100	100	%	$	127	100	%		Total	$	90	100	%	$	94	100	%

Vintage:	Vintage:										Vintage:

2007		$	25	25	%	$	31	24	%
2006		27		27	%	34		27	%
2005 and prior	2005 and prior	48		48	%	62		49	%		2005 and prior	$	43	48	%	$	46	24	%
Total											Total	90		100	%	94		27	%

Total		$	100	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, 2023, the CLO and ABS positions were trading at a net unrealized loss position of $190 million and $529 million, respectively. As of December 31, 2022, the CLO and ABS positions were trading at a net unrealized loss position of ~~$(307)~~$236 million and ~~$(445)~~$499 million, respectively. ~~As of December 31, 2021, the CLO and ABS positions were trading at a net unrealized gain position of $145 million and $37 million, respectively.~~

Municipal Bond Exposure

Our municipal bond exposure is a combination of general obligation bonds (fair value of ~~$187~~$212 million and ~~$258~~$188 million and an amortized cost of ~~$232~~$246 million and ~~$247~~$231 million as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively) and special revenue bonds (fair value of ~~$1,003~~$1,196 million and ~~$1,183~~$1,017 million and an amortized cost of ~~$1,232~~$1,375 million and ~~$1,138~~$1,248 million as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively).

Across all municipal bonds, the largest issuer represented 5% and 6% of the category as of March 31, 2023 and December 31, 2022, respectively, less than 1% of the entire portfolio and is rated NAIC 1. Our focus within municipal bonds is on NAIC 1 rated instruments, and ~~96%~~97% of our municipal bond exposure is rated NAIC 1.

1 as of March 31, 2023.

7794

Table of Contents

Mortgage Loans

Commercial Mortgage Loans

We diversify our commercial mortgage loans ("CMLs") 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 level to secure the related debt. LTV and DSC ratios are utilized to assess the risk and quality of CMLs. As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, our mortgage loans on real estate portfolio had a weighted average DSC ratio of ~~2.5~~2.3 times and 2.4 times, respectively, and a weighted average LTV ratio of ~~57%~~55% and ~~56%~~57%, respectively. See Note DInvestments to the unaudited Condensed Consolidated Financial Statements included in this ~~report~~Quarterly Report on Form 10-Q for additional information on our CMLs, including our distribution by property type, geographic region and LTV and DSC ratios.

We consider a CML delinquent when a loan payment is greater than 30 days past due. For 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. At ~~September 30, 2022,~~March 31, 2023, we had one CML that was delinquent in principal or interest payments and none in the process of foreclosure. As of December 31, ~~2021,~~2022, we had no CMLs that were delinquent in principal or interest payments or in process of foreclosure.

Residential Mortgage Loans

F&G's ~~residential mortgage loans ("RMLs")~~RMLs are closed end, amortizing loans and 100% of the properties are 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.

Loans are placed on nonaccrual status when they are over 90 days delinquent. 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 can be put in place. See Note D Investmentsto the unaudited Condensed Consolidated Financial Statements included in this ~~report~~Quarterly Report on Form 10-Q for additional information on our RMLs.

7895

Table of Contents

Unrealized Losses

The amortized cost and fair value of the fixed maturity securities and the equity securities that were in an unrealized loss position as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, were as ~~follows (in millions):~~follows:


		September 30, 2022										March 31, 2023
		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:	(In millions)
United States Government full faith and credit	United States Government full faith and credit	15	$	189	$	—	$	(10)	$	179	United States Government full faith and credit	4	$	27	$	—	$	(1)	$	26
United States Government sponsored agencies	United States Government sponsored agencies	58	42		—		(4)		38		United States Government sponsored agencies	57	36		—		(3)		33
United States municipalities, states and territories	United States municipalities, states and territories	164	1,543		—		(282)		1,261		United States municipalities, states and territories	192	1,576		—		(229)		1,347
Foreign Governments	Foreign Governments	46	186		—		(43)		143		Foreign Governments	64	200		—		(40)		160
Corporate securities:	Corporate securities:										Corporate securities:
Finance, insurance and real estate	Finance, insurance and real estate	552	5,461		—		(947)		4,514		Finance, insurance and real estate	714	6,058		—		(788)		5,270
Manufacturing, construction and mining	Manufacturing, construction and mining	129	899		—		(196)		703		Manufacturing, construction and mining	136	1,038		—		(164)		874
Utilities, energy and related sectors	Utilities, energy and related sectors	351	2,838		—		(723)		2,115		Utilities, energy and related sectors	341	2,495		—		(503)		1,991
Wholesale/retail trade	Wholesale/retail trade	368	2,588		—		(627)		1,961		Wholesale/retail trade	444	2,222		—		(416)		1,806
Services, media and other	Services, media and other	415	3,418		—		(877)		2,541		Services, media and other	348	3,505		—		(728)		2,777
Hybrid securities	Hybrid securities	41	699		—		(81)		618		Hybrid securities	47	745		—		(83)		662
Non-agency residential mortgage backed securities		227	1,028		(5)		(100)		923
Commercial mortgage backed securities		314	2,400		—		(223)		2,177
Asset backed securities		1,035	10,164		(3)		(781)		9,380
Non-agency residential mortgage-backed securities											Non-agency residential mortgage-backed securities	252	1,351		(5)		(104)		1,242
Commercial mortgage-backed securities											Commercial mortgage-backed securities	532	3,802		—		(336)		3,466
Asset-backed securities											Asset-backed securities	1,182	10,651		(9)		(762)		9,880
Total fixed maturity available for sale securities	Total fixed maturity available for sale securities	3,715	31,455		(8)		(4,894)		26,553		Total fixed maturity available for sale securities	4,313	33,706		(14)		(4,157)		29,534
Equity securities	Equity securities	64	923		—		(166)		757		Equity securities	58	844		—		(144)		700
Total investments	Total investments	3,779	$	32,378	$	(8)	$	(5,060)	$	27,310	Total investments	4,371	$	34,550	$	(14)	$	(4,301)	$	30,234

		December 31, 2021										December 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:	(In millions)
United States Government full faith and credit	United States Government full faith and credit	9	$	36	$	—	$	—	$	36	United States Government full faith and credit	6	$	34	$	—	$	(2)	$	32
United States Government sponsored agencies	United States Government sponsored agencies	41	42		—		(1)		41		United States Government sponsored agencies	58	39		—		(4)		35
United States municipalities, states and territories	United States municipalities, states and territories	50	503		—		(11)		492		United States municipalities, states and territories	167	1,590		—		(289)		1,301
Foreign Governments	Foreign Governments	28	27		—		—		27		Foreign Governments	44	169		—		(37)		132
Corporate securities:	Corporate securities:										Corporate securities:
Finance, insurance and real estate	Finance, insurance and real estate	366	1,365		—		(31)		1,334		Finance, insurance and real estate	526	5,586		(15)		(876)		4,695
Manufacturing, construction and mining	Manufacturing, construction and mining	97	281		—		(3)		278		Manufacturing, construction and mining	120	850		—		(160)		690
Utilities, energy and related sectors	Utilities, energy and related sectors	280	1,243		—		(46)		1,197		Utilities, energy and related sectors	333	2,825		—		(644)		2,181
Wholesale/retail trade	Wholesale/retail trade	313	1,188		—		(33)		1,155		Wholesale/retail trade	316	2,418		—		(532)		1,886
Services, media and other	Services, media and other	339	1,486		—		(39)		1,447		Services, media and other	360	3,354		—		(783)		2,571
Hybrid securities	Hybrid securities	3	3		—		—		3		Hybrid securities	43	706		—		(84)		622
Non-agency residential mortgage backed securities		46	316		(2)		(3)		311
Commercial mortgage backed securities		89	616		(1)		(11)		604
Asset backed securities		375	4,603		(2)		(38)		4,563
Non-agency residential mortgage-backed securities											Non-agency residential mortgage-backed securities	241	1,353		(5)		(105)		1,243
Commercial mortgage-backed securities											Commercial mortgage-backed securities	365	2,850		—		(284)		2,566
Asset-backed securities											Asset-backed securities	1,147	11,511		(1)		(770)		10,740
Total fixed maturity available for sale securities	Total fixed maturity available for sale securities	2,036	11,709		(5)		(216)		11,488		Total fixed maturity available for sale securities	3,726	33,285		(21)		(4,570)		28,694
Equity securities	Equity securities	20	259		—		(33)		226		Equity securities	59	879		—		(174)		705
Total investments	Total investments	2,056	$	11,968	$	(5)	$	(249)	$	11,714	Total investments	3,785	$	34,164	$	(21)	$	(4,744)	$	29,399

7996

Table of Contents

The gross unrealized loss position on the fixed maturity ~~available-for-sale~~AFS fixed and equity portfolio was ~~$5,060~~$4,301 million and ~~$249~~$4,744 million as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively. Most components of the portfolio exhibited price depreciation caused by ~~higher~~lower treasury rates and ~~wider spreads as of September 30, 2022.~~spread compression. The total amortized cost of all securities in an unrealized loss position was ~~$32,378~~$34,550 million and ~~$11,968~~$34,164 million as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively. The average market value/book value of the investment category with the largest unrealized loss position was ~~83%~~87% for Finance, insurance and real estate as of ~~September 30, 2022.~~March 31, 2023. In the aggregate, Finance, insurance and real estate represented ~~19%~~18% of the total unrealized loss position as of ~~September 30, 2022.~~March 31, 2023. The average market value/book value of the investment category with the largest unrealized loss position was ~~96%~~84% for ~~Utilities, energy~~finance, insurance and ~~related sectors~~real estate as of December 31, ~~2021.~~2022. In aggregate, ~~Utilities, energy~~finance, insurance and ~~related sectors~~real estate represented 18% of the total unrealized loss position as of December 31, ~~2021.~~2022.

The amortized cost and fair value of fixed maturity ~~available for sale~~AFS 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, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, were as ~~follows (dollars in millions):~~follows:


		September 30, 2022										March 31, 2023
		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:	(Dollars in millions)
Less than six months	Less than six months	3	$	46	$	40	$	—	$	(6)	Less than six months	6	$	13	$	10	$	—	$	—	$	(2)
Six months or more and less than twelve months	Six months or more and less than twelve months	137	1,176		773		—		(403)		Six months or more and less than twelve months	—	—		—		—		—		—
Twelve months or greater	Twelve months or greater	44	624		402		—		(222)		Twelve months or greater	69	691		465		—		—		(226)
Total investment grade	Total investment grade	184	1,846		1,215		—		(631)		Total investment grade	75	703		475		—		—		(228)

Below investment grade:	Below investment grade:										Below investment grade:
Less than six months	Less than six months	4	50		44		—		(6)		Less than six months	3	20		18		—				(2)
Six months or more and less than twelve months	Six months or more and less than twelve months	16	149		105		—		(44)		Six months or more and less than twelve months	5	52		42		—				(10)
Twelve months or greater	Twelve months or greater	1	6		4		—		(2)		Twelve months or greater	7	45		38		—				(7)
Total below investment grade	Total below investment grade	21	205		153		—		(52)		Total below investment grade	15	117		98		—				(19)
Total	Total	205	$	2,051	$	1,368	$	—	$	(683)	Total	90	$	820	$	573	$	—			$	(247)

		December 31, 2021										December 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:	(Dollars in Millions)
Less than six months	Less than six months	4	$	82	$	79	$	—	$	(3)	Less than six months	6	$	5	$	3	$	—			$	(2)
Six months or more and less than twelve months	Six months or more and less than twelve months	2	34		32		—		(2)		Six months or more and less than twelve months	49	299		200		—				(99)
Twelve months or greater	Twelve months or greater	—	—		—		—		—		Twelve months or greater	76	969		634		—				(335)
Total investment grade	Total investment grade	6	116		111		—		(5)		Total investment grade	131	1,273		837		—				(436)

Below investment grade:	Below investment grade:										Below investment grade:
Less than six months	Less than six months	—	—		—		—		—		Less than six months	1	32		13		15				(4)
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	12	124		94		—				(30)
Twelve months or greater	Twelve months or greater	2	16		14		—		(2)		Twelve months or greater	2	6		4		—				(2)
Total below investment grade	Total below investment grade	2	16		14		—		(2)		Total below investment grade	15	162		111		15				(36)
Total	Total	8	$	132	$	125	$	—	$	(7)	Total	146	$	1,435	$	948	$	15			$	(472)

8097

Table of Contents

Expected Credit Losses and Watch List

F&G prepares a watch list to identify securities to evaluate for expected credit losses. Factors used in preparing the watch list include fair values relative to amortized cost, ratings and negative ratings actions and other factors. Detailed analysis is performed for each security on the watch list to further assess the presence of credit impairment loss indicators and, where present, calculate an allowance for expected credit loss or direct write-down of a security’s amortized cost.

At ~~September 30, 2022,~~March 31, 2023, our watch list included ~~one hundred eighty-five~~90 securities in an unrealized loss position with an amortized cost of ~~$2,051~~$820 million, no allowance for ~~expected~~ credit ~~losses of $0 million,~~loss, unrealized losses of ~~$683~~$247 million and a fair value of ~~$1,368~~$573 million.

At December 31, ~~2021,~~2022, our watch list included ~~seven~~146 securities in an unrealized loss position with an amortized cost of ~~$132~~$1,435 million, allowance for expected credit losses of $0$15 million, unrealized losses of $7$472 million and a fair value of ~~$125~~$948 million.

The watch list excludes structured securities as we have separate processes to evaluate the credit quality on the structured securities.

There were 6039 and 3664 structured securities with a fair value of ~~$150~~$70 million and ~~$45~~$162 million to which we had potential credit exposure as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively. Our analysis of these structured securities, which included cash flow testing, resulted in allowances for expected credit losses of ~~$15 million and $8~~$16 million as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021, respectively.~~2022.

Exposure to Sovereign Debt

There have been no material changes in the exposure to sovereign debt described in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

Interest and Investment Income

For discussion regarding our net investment income and net investment gains (losses) refer to Note D Investmentsto the unaudited Condensed Consolidated Financial Statements included in Item 1 of Part I of this ~~Report.~~Quarterly Report on Form 10-Q.

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, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, refer to Note DInvestments to the unaudited Condensed Consolidated Financial Statements included in Item 1 of Part I of this ~~Report.~~Quarterly Report on Form 10-Q.

Concentrations of Financial Instruments

For certain information regarding our concentrations of financial instruments, refer to Note D Investments to the unaudited Condensed Consolidated Financial Statements included in Item 1 of Part I of this ~~Report.~~Quarterly Report on Form 10-Q.

There have been no other material changes in the concentrations of financial instruments described in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

Derivatives

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

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

We are required to pay counterparties the effective federal funds rate each day for cash collateral posted to F&G for daily mark to market margin changes. We reduce the negative interest cost associated with cash collateral posted from counterparties under various ISDA agreements by reinvesting derivative cash collateral. This program permits collateral cash received to be invested in short term Treasury securities, bank deposits and

8198

Table of Contents

commercial paper rated A1/P1, which are included in Cash and cash equivalents in the accompanying unaudited Condensed Consolidated Balance Sheets.

See Note EDerivative Financial Instruments to the unaudited Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q for additional information regarding our derivatives and our exposure to credit loss on call options.

Corporate and Other

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

The following table presents the results of operations of our Corporate and Other ~~segment (in millions):~~segment:

Three months ended September 30, Nine months ended September 30,
2022 2021 2022 2021
Revenues:
Escrow, title-related and other fees $ 47 $ 44 $ 86 $ 133
Interest and investment income 9 — 12 —
Recognized gains and losses, net (42) — (40) 9
Total revenues 14 44 58 142
Expenses:
Personnel costs 25 24 26 85
Other operating expenses 30 25 74 75
Depreciation and amortization 6 6 18 18
Interest expense 22 21 66 62
Total expenses 83 76 184 240
Loss from continuing operations, before income taxes and equity in earnings of unconsolidated affiliates $ (69) $ (32) $ (126) $ (98)


	Three months ended March 31,
	2023		2022

Revenues:	(In millions)


Escrow, title-related and other fees	$	44	$	31
Interest and investment income	11		—
Recognized gains and losses, net	(2)		3
Total revenues	53		34
Expenses:
Personnel costs	26		17

Other operating expenses	28		27
Depreciation and amortization	7		6

Interest expense	20		22
Total expenses	81		72
Loss from continuing operations, before income taxes and equity in earnings of unconsolidated affiliates	$	(28)	$	(38)

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

Total revenues in the Corporate and Other segment ~~decreased $30~~increased $19 million, or ~~68%~~56%, in the three months ended ~~September 30, 2022 and decreased $84 million, or 59% in the nine months ended September 30, 2022~~March 31, 2023 from the corresponding ~~periods~~period in ~~2021.~~2022. The ~~decrease in the three-month period~~increase is primarily attributable to ~~a $41~~an increase in valuations associated with our deferred compensation plan assets of approximately $13 million ~~dollar impairment of cost method investments~~ in the ~~2022~~2023 period ~~when compared to~~and various other immaterial items.

Personnel costs in the Corporate and Other segment increased $9 million, or 53%, in the three months ended March 31, 2023 from the corresponding period in ~~2021, partially offset by other immaterial items.~~2022. The ~~decrease~~increase in the ~~nine-month~~2023 period iswas primarily attributable to ~~a $60~~the aforementioned $13 million ~~decrease~~increase in valuations associated with our deferred compensation plan assets, which ~~decreased~~increased both revenue and personnel costs, ~~and the aforementioned $41 million dollar impairment of cost method investments in the 2022 period when compared to the corresponding period in 2021,~~ partially offset by ~~other~~various immaterial items.

~~Personnel costs~~Other operating expenses in the Corporate and Other segment increased $1 million, or 4%, in the three months ended ~~September 30, 2022, and decreased $59 million, or 69% in the nine months ended September 30, 2022~~March 31, 2023 from the corresponding ~~periods~~period in 2021. The decreases in the three and nine-month periods were primarily attributable to the aforementioned $60 million decrease in valuations associated with our deferred compensation plan assets, which decreased both revenue and personnel costs.

Other operating expenses in the Corporate and Other segment increased $5 million, or 20%, in the three months ended September 30, 2022 and decreased $1 million, or 1% in the nine months ended September 30, 2022 from the corresponding periods in 2021.2022. The increase ~~in the three-month period and the decrease in the nine-month period were~~is attributable to various immaterial items.

~~Table of Contents~~

Interest expense in the Corporate and Other segment ~~increased~~decreased $1$2 million, or 5%9%, in the three months ended ~~September 30, 2022 and increased $4 million or 6%, in the nine months ended September 30, 2022~~March 31, 2023 from the corresponding ~~periods~~period in ~~2021.~~2022. The ~~increases were~~decrease was primarily attributable to ~~increased~~lower average debt outstanding in the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 from the corresponding ~~periods~~period in ~~2021.~~2022.

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 ~~$0.44~~$0.45 per share in the ~~third~~first quarter of ~~2022,~~2023, or approximately ~~$120~~$122 million to our common shareholders. On ~~November~~May 3, ~~2022,~~2023, our Board of Directors declared cash dividends of $0.45 per share, payable on ~~December~~June 30, ~~2022~~2023, to FNF common shareholders of record as of ~~December~~June 16, ~~2022~~2023. 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, 2022,~~March 31, 2023, we had cash and cash equivalents of ~~$2,474~~$2,821 million, short term investments of ~~$1,386~~$1,346 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 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, ~~2021, $2,375~~2022, $1,442 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 ~~2022~~2023 of approximately ~~$215~~$457 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, 2023 and 2022 ~~and 2021~~ totaled ~~$2,977~~$1,418 million and ~~$2,600~~$667 million, respectively. The increase in cash provided by operating activities in ~~the period in 2022~~2023 of ~~$377~~$751 million is primarily attributable to ~~the increase in future policy benefits of $799 million, which was primarily related to~~increased net cash ~~received for PRT transactions,~~inflows associated with the change in funds

~~Table of Contents~~

withheld from reinsurers of ~~$566 million, the change in trade receivables of $195 million and the change in income taxes of $261 million, partially offset by the decrease in net earnings of $822~~approximately $943 million and the timing of receipts and payments of prepaid assets and payables, and other individually immaterial ~~items.~~items, partially offset by the decrease in net earnings of $490 million in 2023, increased net cash outflows associated with the change in reinsurance recoverable of $126 million, increased net cash outflows associated with the change in income taxes of approximately $171million and reduced net cash inflows associated with the change in future policy benefits of approximately $204 million,

100

Table of Contents

Investing Cash Flows. Our cash flows used in investing activities for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ were ~~$7,890~~$2,285 million and ~~$4,863~~$3,414 million, respectively. The ~~increase~~decrease in cash used in investing activities in ~~the period in 2022~~2023 of ~~$3,027~~$1,129 million is primarily attributable to decreased net proceeds from sales and maturities of short-term investments of approximately $2,504 million, partially offset by decreased proceeds from sales, calls and maturities of investment securities of ~~$1,465~~approximately $893 million, increased purchases of investment securities of approximately $267 million and ~~net purchases~~increased cash outflows associated with acquisitions of short-term investments of $1,367 million in the period in 2022 as compared to net proceeds from sales and maturities of short-term investments of $92 million in the corresponding period in 2021, partially offset by other individually immaterial items.approximately $253 million.

Capital Expenditures. Total capital expenditures for property and equipment and capitalized software were ~~$107~~$34 million and ~~$93~~$43 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively.

Financing Cash Flows. Our cash flows provided by financing activities for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ were ~~$3,027~~$1,402 million and ~~$4,692~~$1,180 million, respectively. The ~~decrease~~increase in cash provided by financing activities in ~~the period in 2022~~2023 of ~~$1,665~~$222 million is primarily attributable to the ~~repayment~~issuance of ~~our 5.50% Senior~~the 7.40% F&G Notes of ~~$400~~$500 million ~~as compared to~~in 2023, and reduced cash ~~received~~outflows associated with ~~our 3.20% Notes offering~~the purchase of treasury stock of approximately $123 million, partially offset by increased cash outflows associated with the change in ~~the corresponding period in 2021~~contractholder withdrawals of ~~$449~~approximately $227 million and increased cash outflows associated with the ~~net~~ change in secured trust deposits of $328 million, decreased cash inflows from contractholder account deposits of $251 million, and increased purchases of treasury stock of $143 million, partially offset by other individually immaterial items.approximately $97 million.

Financing Arrangements. For a description of our financing arrangements see Note G Notes Payable included in Item 8 of Part II of our Annual Report on Form 10-K for the year ended December 31, 2021.

Capital Stock Transactions. 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 ~~12,369,565~~100,000 shares of FNF common stock during the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 for approximately ~~$511~~$4 million, at an average price of ~~$41.31~~$38.45 per share. Subsequent to ~~September 30, 2022~~March 31, 2023 and through market close on ~~November 7, 2022,~~May 5, 2023 we have not repurchased ~~a total of 475,000~~additional shares ~~for approximately $18 million, at an average price of $38.39~~ under this program. Since the original commencement of the Repurchase Program, we repurchased a total of ~~15,824,565~~16,449,565 FNF common shares for approximately ~~$678~~$701 million, at an average price of ~~$42.80~~$42.60 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, ~~2021.~~2022.

We have unfunded investment commitments as of ~~September 30, 2022~~March 31, 2023 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 on Form 10-Q 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, 2021.~~

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, ~~2021.~~2022.

~~Table of Contents~~

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

101

Table of Contents

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.

There were no changes in our internal control over financial reporting that occurred during the quarter ended ~~September 30, 2022~~March 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

85102

Table of Contents

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 on Form 10-Q, which is incorporated by reference into this Item 1 of Part II.

Item 1A. Risk Factors

~~The risk factors~~In addition to the information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the "Risk Factors" disclosed inunder "Item 1A. Risk Factors" ~~included~~ in our Annual Report on Form 10-K, which was filed with the SEC on February 27, 2023. You should be aware that these risk factors and other information may not describe every risk facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

We adopted Accounting Standards Update (“ASU”) 2018-12, Financial Services-Insurance (Topic 944), Targeted Improvements to the Accounting for Long-Duration Contracts (“ASU 2018-12”) using the ~~year ended December 31,~~full retrospective transition method effective January 1, 2023, with changes applied as of January 1, 2021, ~~are~~also referred to as the transition date. The following updates to Risk Factors relate to the adoption of ASU 2018-12. There have been no other material changes from the Risk Factors previously disclosed in "Item 1A. Risk Factors" in our Annual Report filed with the SEC on February 27, 2023 and hereby incorporated by reference. ~~In addition, we identified the following additional risk factors during the nine months ended September 30, 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,~~ASU 2018-12 requires that VOBA, DAC and DSI be amortized on a ~~pro rata~~constant level basis ~~15%~~for the grouped contracts over the expected term of the ~~common stock~~related contracts to approximate straight-line amortization. Based on this change, we have removed the risk factor previously titled “The pattern of amortizing our ~~wholly-owned subsidiary, F&G, targeted to be completed~~VOBA, DAC and DSI balances relies on assumptions and estimates made by management. Changes in ~~the fourth quarter~~these assumptions and estimates could impact our results of ~~2022. The F&G Distribution is subject to inherent risks~~operations 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.financial condition.”

~~The F&G Distribution~~Interest rate fluctuations could adversely affect our ~~earnings~~business, financial condition, liquidity and results of operations.

~~F&G contributes to~~Interest rate risk is a significant market risk for us, as our F&G business involves issuing interest rate sensitive obligations backed primarily by investments in fixed income assets. F&G also maintains a portion of the assets in its investment portfolio in floating rate instruments and had executed a variable interest rate Credit Agreement, which are both subject to an element of market risk from changes in interest rates.

Prior to 2022, interest rates had been at or near historical low levels over the preceding several years. A prolonged period of low rates exposes us to the risk of not achieving returns sufficient to meet our ~~earnings.~~earnings targets and/or our contractual obligations. Furthermore, low or declining interest rates may reduce the rate of policyholder surrenders and withdrawals on our life insurance and annuity products, thus increasing the duration of the liabilities, creating asset and liability duration mismatches and increasing the risk of having to reinvest assets at yields below the amounts required to support our obligations. Lower interest rates may also result in decreased sales of certain insurance products, negatively impacting our profitability from new business.

During periods of increasing interest rates, we may offer higher crediting rates on interest-sensitive products, such as universal life insurance and fixed rate annuities, and we may increase crediting rates on in-force products to keep these products competitive. We may be required to accept lower spread income (the difference between the returns we earn on our investments and the amounts we credit to contract holders), thus reducing our profitability, as returns on our portfolio of invested assets may not increase as quickly as current interest rates. Rapidly rising interest rates may also expose us to the risk of financial disintermediation, which is an increase in policy surrenders, withdrawals and requests for policy loans as customers seek to achieve higher returns elsewhere, requiring us to liquidate assets in an unrealized loss position. If we experience unexpected withdrawal activity, we could exhaust our liquid assets and be forced to liquidate other less liquid assets such as limited partnership investments. We may have difficulty selling these investments in a timely manner and/or be forced to sell them for less than we otherwise would have been able to realize, which could have a material adverse effect on our business, financial condition or operating results. We have ~~begun~~developed and maintain asset liability management programs and procedures that are, we believe, designed to ~~pursue~~mitigate interest rate risk by matching asset cash flows to expected liability cash flows. In addition, we assess surrender charges on

103

Table of Contents

withdrawals in excess of allowable penalty-free amounts that occur during the ~~F&G Distribution. Although there~~surrender charge period. There can be no assurance that ~~this process~~actual withdrawals, contract benefits, and maturities will match our estimates. Despite our efforts to reduce the impact of rising interest rates, we may be required to sell assets to raise the cash necessary to respond to an increase in surrenders, withdrawals and loans, thereby realizing capital losses on the assets sold.

Liabilities that are held on our balance sheet at fair value, including embedded derivatives on our FIA and IUL business and MRBs on our FIA and fixed rate annuity business, are sensitive to fluctuations in interest rates. Decreases in interest rates generally would have the impact of increasing the value of these liabilities, which will result in a ~~consummated transaction,~~reduction in our net income. Liabilities for future policyholder benefits are valued using locked-in discount rates, and any ~~separation~~changes in interest rates since the inception of those contracts are reflected in OCI. Decreases in interest rates would result in a ~~portion~~reduction in our OCI. In addition, certain statutory capital and reserve requirements are based on formulas or models that consider interest rates and a prolonged period of ~~F&G's~~low interest rates may increase the statutory capital we are required to hold as well as the amount of assets we must maintain to support statutory reserves.

Economic conditions, including higher interest rates, could materially adversely affected our business, results of operations and financial condition. However, we cannot predict if it will impact our business, results of operations or financial condition in the future for the forgoing reasons.

Equity market volatility could ~~adversely affect~~negatively impact our ~~earnings.~~business.

The estimated cost of providing GMWB riders associated with our annuity products incorporates various assumptions about the overall performance of equity markets over certain time periods. Periods of significant and sustained downturns in equity markets or increased equity volatility could result in an increase in the valuation of the MRB or policyholder account balance liabilities associated with such products, resulting in a reduction in our revenues and net income.

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, 2022:~~March 31, 2023:

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)
07/1/2022 - 07/31/2022 631,945 $ 37.24 631,945 14,313,055
08/01/2022 - 08/31/2022 2,000,000 $ 39.93 2,000,000 12,313,055
09/01/2022 - 09/30/2022 2,662,620 $ 38.21 2,662,620 9,650,435
Total 5,294,565 $ 38.74 5,294,565


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)
12/31/2022					8,650,435
1/1/2023 - 1/31/2023	100,000	$	38.45	100,000	8,550,435
2/1/2023 - 2/28/2023	—	—		—	8,550,435
3/1/2023 - 3/31/2023	—	—		—	8,550,435









Total	100,000	$	38.45	100,000	8,550,435

(1) On August 3, 2021, our Board of Directors approved the Repurchase Program under which we may purchase up to 25 million shares of our FNF common stock through July 31, 2024.

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

Item 3. Defaults Upon Senior Securities

None.

Item 5. Other Information

None.

104

Table of Contents

Item 6. Exhibits

(a) Exhibits:

~~Table of Contents~~






10.1						Investment Management Agreement, dated as of December 16, 2020, by and between F&G Cayman Re Ltd. and Blackstone ISGI Advisors L.L.C.

10.2						Investment Management Agreement, dated as of January 4, 2021, by and between F&G Annuities & Life, Inc. and Blackstone ISG-I Advisors L.L.C.

10.3						Investment Management Agreement, dated as of July 29, 2021, by and between Fidelity & Guaranty Life Insurance Company and Blackstone ISG-I Advisors L.L.C.

10.4						Amended and Restated Amendment to Investment Management Agreements; IMA Omnibus Termination Side Letter; SMA Fee Agreement and Participation Fee Agreement, dated September 24, 2021, by and among F&G Life & Annuities, Inc., Fidelity National Financial, Inc. and Blackstone ISG-I Advisors L.L.C.

10.5						Amended and Restated Fidelity National Financial, Inc. 2013 Employee Stock Purchase Plan (1)

10.6						Indenture relating to the 7.400% Senior Notes due 2028, dated as of January 13, 2023, among F&G Annuities & Life, Inc., the guarantors named therein and Citibank, N.A., as trustee, filed as Exhibit 4.1 to our Current Report on Form 8-K filed January 13, 2023

10.7						First Supplement Indenture relating to the 7.400% Senior Notes due 2028, dated as of January 13, 2023, among F&G Annuities & Life, Inc., the guarantors named therein and Citibank, N.A., as trustee, filed as Exhibit 4.2 to our Current Report on Form 8-K filed January 13, 2023

10.8						Form of 7.400% Senior Notes due 2028, filed as Exhibit 4.3 to our Current Report on Form 8-K filed January 13, 2023

10.9						Registration Rights Agreement relating to the 7.400% Senior Notes due 2028, dated as of January 13, 2023, among F&G Annuities & Life, Inc., the guarantors named therein and BofA Securities, Inc., J.P. Morgan Securities LC and RBC Capital Markets, LLC, as representatives of the initial purchasers, filed as Exhibit 10.1 to our Current Report on Form 8-K filed January 13, 2023

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(b)(10)(ii) 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.

** Furnished herewith in accordance with Item 601(b)(32) of Regulation S-K.

105

Table of Contents

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~~May 9, ~~2022~~2023

FIDELITY NATIONAL FINANCIAL, INC.

(registrant)

By:

/s/ Anthony J. Park

Anthony J. Park

Chief Financial Officer
(Principal Financial and Accounting Officer)

87106


	September 30, 2022		December 31, 2021
	(Unaudited)
ASSETS
Investments:
Fixed maturity securities available for sale, at fair value, at September 30, 2022 and December 31, 2021, at an amortized cost of $36,277 and $30,705, respectively, net of allowance for credit losses of $22 and $8, respectively, and includes pledged fixed maturity securities of $459 and $460, respectively, related to secured trust deposits	$	31,321	$	31,990
Preferred securities, at fair value	1,134		1,401
Equity securities, at fair value	704		1,263
Derivative investments	108		816
Mortgage loans, net of allowance for credit losses of $38 and $31 at September 30, 2022 and December 31, 2021, respectively	4,533		3,749
Investments in unconsolidated affiliates	2,986		2,486
Other long-term investments	648		579
Short-term investments, at September 30, 2022 and December 31, 2021 includes pledged short-term investments of $2 and $1, respectively, related to secured trust deposits	1,386		491
Total investments	42,820		42,775
Cash and cash equivalents, at September 30, 2022 and December 31, 2021 includes $423 and $480, respectively, of pledged cash related to secured trust deposits	2,474		4,360
Trade and notes receivables, net of allowance for credit losses of $34 and $32 at September 30, 2022 and December 31, 2021, respectively	530		557


Reinsurance recoverable, net of allowance for credit losses of $19 and $20 at September 30, 2022 and December 31, 2021, respectively	4,827		3,738
Goodwill	4,609		4,539
Prepaid expenses and other assets	2,069		1,203
Lease assets	397		376
Other intangible assets, net	3,838		2,557
Title plants	418		400
Property and equipment, net	182		185


Total assets	$	62,164	$	60,690
LIABILITIES AND EQUITY
Liabilities:
Contractholder funds	$	39,127	$	35,525
Future policy benefits	5,734		4,732
Accounts payable and accrued liabilities	2,438		2,696
Notes payable	2,693		3,096
Reserve for title claim losses	1,853		1,883
Funds withheld for reinsurance liabilities	2,900		1,676
Secured trust deposits	1,043		934
Lease liabilities	435		414
Income taxes payable	63		72
Deferred tax liability	79		205

Total liabilities	56,365		51,233


Equity:

FNF common stock, $0.0001 par value; authorized 600,000,000 shares as of September 30, 2022 and December 31, 2021; outstanding of 272,626,430 and 283,778,574 as of September 30, 2022 and December 31, 2021, respectively, and issued of 326,711,963 and 325,486,429 as of September 30, 2022 and December 31, 2021, respectively	—		—

Preferred stock, $0.0001 par value; authorized 50,000,000 shares; issued and outstanding, none	—		—
Additional paid-in capital	5,885		5,811
Retained earnings	5,069		4,369
Accumulated other comprehensive (loss) earnings	(3,186)		779
Less: Treasury stock, 54,085,533 shares and 41,707,855 shares as of September 30, 2022 and December 31, 2021, respectively, at cost	(2,056)		(1,545)
Total Fidelity National Financial, Inc. shareholders’ equity	5,712		9,414
Non-controlling interests	87		43
Total equity	5,799		9,457
Total liabilities and equity	$	62,164	$	60,690


	September 30, 2022				December 31, 2021
Rating	Fair Value		Percent		Fair Value		Percent
AAA	$	1,040	3	%	$	660	2	%
AA	2,026		7	%	2,181		7	%
A	7,320		25	%	7,667		26	%
BBB	7,986		27	%	10,462		35	%
Not rated (b)	8,969		31	%	6,642		22	%
Total investment grade	27,341		93	%	27,612		92	%
BB	1,043		4	%	1,372		5	%
B and below (a)	305		1	%	432		1	%
Not rated (b)	670		2	%	546		2	%
Total below investment grade	2,018		7	%	2,350		8	%
Total	$	29,359	100	%	$	29,962	100	%