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Item 8. Financial Statements and Supplementary Data

2022-02-25 compared with 2021-03-01 · 745 added, 625 removed, 1752 unchanged (44% of the section changed)

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INDEX TO FINANCIAL INFORMATION

Report of Independent Registered Public Accounting Firm on Effectiveness of Internal Control over Financial Reporting

Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm on Effectiveness of Internal Control over Financial Reporting (Ernst & Young, LLP, Jacksonville, FL, Auditor Firm ID :

Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements (Ernst & Young, LLP, Jacksonville, FL, Auditor Firm ID :

Consolidated Balance Sheets as of December 31, 202 1 and 20 20

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and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on the COSO criteria.

As indicated in the accompanying Management’s Report on Internal Control over Financial Reporting, management's assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of F&G Annuities & Life, Inc.

which is included in the 2020 consolidated financial statements of the Company and constituted 78.7% and 48.5% of total and net assets, respectively, as of December 31, 2020 and 11.4% and 9.6% of revenue and net income respectively, for the year then ended.

Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of F&G Annuities & Life, Inc.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2020 and 2019, and the related consolidated statements of earnings, comprehensive earnings, equity and cash flows for each of the three years in the period ended December 31, 2020, and the related notes and financial statement schedules listed in the Index at Item 15(a)(2) and our report dated March 1, 2021 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2021 and 2020, the related consolidated statements of earnings, comprehensive earnings, equity and cash flows for each of the three years in the period ended December 31, 2021, and the related notes and financial statement schedules listed in the Index at Item 15(a)(2) and our report dated February 25, 2022 expressed an unqualified opinion thereon.

Basis for Opinion

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Jacksonville, Florida

March 1, 2021

February 25, 2022

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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We have audited the accompanying consolidated balance sheets of Fidelity National Financial, Inc.

and subsidiaries (the Company) as of December 31, 2020 and 2019, and the related consolidated statements of earnings, comprehensive earnings, equity and cash flows for each of the three years in the period ended December 31, 2020, and the related notes and financial statement schedules listed in the Index at Item 15(a)(2) (collectively referred to as the “consolidated financial statements”).

and subsidiaries (the Company) as of December 31, 2021 and 2020, the related consolidated statements of earnings, comprehensive earnings, equity and cash flows for each of the three years in the period ended December 31, 2021, and the related notes and financial statement schedules listed in the Index at Item 15(a)(2) (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 1, 2021 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 25, 2022 expressed an unqualified opinion thereon.

Basis for Opinion

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

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We also independently calculated a range of reasonable reserve estimates which we compared to management’s recorded reserve for title claim losses.

Assumptions related to initial valuation of intangible asset Value of Business Acquired (VOBA)

Value of Business Acquired (VOBA), Deferred Acquisition Costs (DAC), Deferred Sales Inducements (DSI) and secondary guarantee liabilities

Description of the Matter

The Company’s intangible asset VOBA totaled $1.47 billion as of December 31, 2020.

The intangible asset relates to the acquisition of FGL Holding at June 1, 2020 and was established at $1.85 billion.

As discussed in Note A to the consolidated financial statements, VOBA represents the portion of the purchase price allocated to the value of the rights to receive future cash flows from the business in force at the acquisition date and is calculated as the differences between the amount recorded as insurance contract liabilities and the estimated fair value of in-force contracts.

Auditing the valuation of the Company’s VOBA establishment was complex because of the highly judgmental nature of the determination of the assumptions required to determine the fair value of the in force contracts.

In particular, the fair value estimate of the in force contracts was sensitive to significant assumptions including the discount rate, surrender rates, partial withdrawals, utilization rates, projected investment spreads, mortality, and expenses.

There is significant uncertainty inherent in determining these assumptions.

At December 31, 2021 VOBA, DAC, and DSI reported within other intangible assets, net totaled $2.0 billion and contractholder funds totaled $35.5 billion, a portion of which related to indexed universal life (IUL)-type and Investment-type contracts with secondary guarantees.

As discussed in Note A to the consolidated financial statements, VOBA, DAC, and DSI are generally amortized over the lives of the policies in relation to the emergence of actual gross profits (AGPs) and estimated gross profits (EGPs).

Secondary guarantee liabilities on IUL-type products or Investment-type contracts are calculated by multiplying the benefit ratio by the cumulative assessments recorded from contract inception through the balance sheet date less the cumulative secondary guarantee benefit payments plus interest.

The benefit ratio is the ratio of the present value of secondary guarantees to the present value of the assessments used to provide the secondary guarantees.

The assessments are calculated using the same assumptions used in VOBA, DAC, and DSI EGPs.

There is significant uncertainty inherent in calculating EGPs and assessments as the calculation is sensitive to management’s best estimate of assumptions such as earned rate, budgeted option costs, surrender rates, mortality, and guaranteed minimum withdrawal benefit (GMWB) utilization.

Changes in assumptions, including the Company’s earned rate, budgeted option costs, surrender rates, mortality, and GMWB utilization can have a significant impact on the pattern of EGPs of the underlying business and as a result the amortization of VOBA, DAC and DSI balances.

Management’s assumptions are adjusted, also known as unlocking, based on actual policyholder behavior and market experience and projecting for expected trends.

The unlocking results in amortization being recalculated using the new assumptions for estimated gross profits, resulting either in additional or less cumulative amortization expense.

Additionally, if experience or assumption changes result in a new benefit ratio, the secondary guarantee liabilities are adjusted to reflect the changes in a manner similar to the unlocking of VOBA, DAC, and DSI.

Auditing the valuation of the Company’s VOBA, DAC, and DSI that are amortized in relation to the emergence of AGPs/EGPs and valuation of secondary guarantee liabilities on IUL-type products or Investment-type contracts was complex because of the highly judgmental nature of the methods used and determination of the assumptions applied to determine the EGPs and assessments.

The high degree of judgment was primarily due to the sensitivity of the EGPs and assessments to the methods used and assumptions applied which have a significant effect on the valuation of VOBA, DAC, DSI and secondary guarantee liabilities on IUL-type products or Investment-type contracts.

How we Addressed the

Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s controls over Management’s process for the establishment of VOBA.

Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s controls over the VOBA, DAC, DSI, and contractholder funds estimation processes.

These controls included, among others, the review and approval process management has in place for the development of the significant assumptions described above.

To evaluate the judgment used by management in determining the assumptions used in measuring the fair value of the VOBA, among other procedures, we involved actuarial specialists and evaluated the methodology applied by management in determining the fair value with those used in the industry.

To assess the significant assumptions used by management, we compared the significant assumptions noted above to historical experience, observable market data or management’s estimates of prospective changes in these assumptions.

To evaluate the judgment used by management in determining the EGPs and assessments, among other procedures, we involved actuarial specialists and evaluated the methodology applied by management in determining the EGPs and assessments with those used in prior periods.

To evaluate the significant assumptions used by management, we compared policyholder behavior assumptions that we identified as being higher risk to prior actual experience, observable market data or management’s estimates of prospective changes in these assumptions.

We performed an independent recalculation of EGPs and secondary guarantee liabilities for a sample of product cohorts, which we compared to the actuarial model used by management.

Valuation of Investments in Securities

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Auditing the valuation of the Company’s fixed indexed annuity embedded derivative was complex because of the highly judgmental nature of the determination of the assumptions required to determine the fair value of the embedded derivative.

In particular, the fair value was sensitive to the significant assumptions used to determine future policy growth including the mortality, surrender rates, partial withdrawals, non-performance spread, and option cost.

There is significant uncertainty inherent in determining the mortality, surrender rates, partial withdrawals, non-performance spread and option cost assumptions.

There is significant uncertainty inherent in determining the mortality, surrender rates, partial withdrawals, GMWB utilization, non-performance spread and option cost assumptions.

How we Addressed the

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These controls included, among others, the review and approval process management has in place for the development of the significant assumptions.

To evaluate the judgment used by management in determining the assumptions used in measuring the fair value of the fixed indexed annuity embedded derivative, among other procedures, we involved actuarial specialists and evaluated the methodology applied by management in determining the fair value with those used in the industry.

To evaluate the significant assumptions used by management in the methodology applied, we compared policyholder behavior assumptions to prior actual experience and management’s estimate of prospective changes in the assumptions.

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Jacksonville, Florida

March 1, 2021

February 25, 2022

FIDELITY NATIONAL FINANCIAL, INC.

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2021 December 31,

Fixed maturity securities available for sale, at fair value, at December 31, 2020 and December 31, 2019, net of allowance for credit losses of $ 19 and $ 0 , respectively, and includes pledged fixed maturity securities of $ 455 and $ 410 , respectively, related to secured trust deposits

Fixed maturity securities available for sale, at fair value, at December 31, 2021 and December 31, 2020, at an amortized cost of $ 30,705 and $ 25,577 , respectively, net of allowance for credit losses of $ 8 and $ 19 , respectively, and includes pledged fixed maturity securities of $ 460 and $ 455 , respectively, related to secured trust deposits

$ 31,990 $ 27,587

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Derivative investments 816 548

Mortgage loans, net of allowance for credit losses of $ 39 at December 31, 2020

Mortgage loans, net of allowance for credit losses of $ 31 and $ 39 at December 31, 2021 and 2020, respectively.

Investments in unconsolidated affiliates 2,486 1,294

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Total investments 42,775 35,047

Cash and cash equivalents, at December 31, 2020 and December 31, 2019 includes $ 270 and $ 384 , respectively, of pledged cash related to secured trust deposits

Trade and notes receivables, net of allowance of $ 28 and $ 20 at December 31, 2020 and December 31, 2019, respectively

Reinsurance recoverable, net of allowance for credit losses of $ 21 at December 31, 2020

Cash and cash equivalents, at December 31, 2021 and 2020 includes $ 480 and $ 270 , respectively, of pledged cash related to secured trust deposits

Trade and notes receivables, net of allowance of $ 32 and $ 28 at December 31, 2021 and 2020, respectively

Reinsurance recoverable, net of allowance for credit losses of $ 20 and $ 21 at December 31, 2021 and 2020, respectively

Goodwill 4,539 4,495

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Total liabilities 51,233 42,063

Commitments and Contingencies:

Redeemable non-controlling interest by 21 % minority holder of ServiceLink Holdings, LLC (see Note R)

FNF common stock, $ 0.0001 par value;

authorized 600,000,000 shares as of December 31, 2020 and December 31, 2019;

outstanding of 291,448,627 and 275,563,436 as of December 31, 2020 and December 31, 2019, respectively, and issued of 322,622,948 and 292,236,476 as of December 31, 2020 and December 31, 2019, respectively

authorized 600,000,000 shares as of December 31, 2021 and 2020, respectively;

outstanding of 283,778,574 and 291,448,627 as of December 31, 2021 and 2020, respectively, and issued of 325,486,429 and 322,622,948 as of December 31, 2021 and 2020, respectively

Preferred stock, $ 0.0001 par value;

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Accumulated other comprehensive earnings 779 1,304

Treasury stock, 31,174,321 shares and 16,673,040 shares as of December 31, 2020 and December 31, 2019, respectively, at cost

Treasury stock, 41,707,855 shares and 31,174,321 shares as of December 31, 2021 and 2020, respectively, at cost

( 1,545 ) ( 1,067 )

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Total equity 9,457 8,392

Total liabilities, redeemable non-controlling interest and equity $ 50,455 $ 10,677

Total liabilities and equity $ 60,690 $ 50,455

See Notes to Consolidated Financial Statements

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Net earnings from continuing operations 2,434 1,477 1,076

Net loss from discontinued operations, net of tax ( 25 ) — —

Net earnings (loss) from discontinued operations, net of tax 8 ( 25 ) —

Net earnings 2,442 1,452 1,076

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Net earnings from continuing operations attributable to FNF common shareholders $ 8.47 $ 5.11 $ 3.89

Net loss from discontinued operations attributable to FNF common shareholders ( 0.09 ) — —

Net earnings (loss) from discontinued operations attributable to FNF common shareholders 0.03 ( 0.09 ) —

Net earnings per share attributable to FNF common shareholders, basic $ 8.50 $ 5.02 $ 3.89

Net earnings from continuing operations attributable to FNF common shareholders $ 8.41 $ 5.08 $ 3.83

Net loss from discontinued operations attributable to FNF common shareholders ( 0.09 ) — —

Net earnings (loss) from discontinued operations attributable to FNF common shareholders 0.03 ( 0.09 ) —

Net earnings per share attributable to FNF common shareholders, diluted $ 8.44 $ 4.99 $ 3.83

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Other comprehensive earnings:

Unrealized gain (loss) on investments and other financial instruments, net of adjustments to intangible assets and unearned revenue (excluding investments in unconsolidated affiliates) (1) 1,310 56 ( 11 )

Unrealized (loss) gain on investments and other financial instruments, net of adjustments to intangible assets and unearned revenue (excluding investments in unconsolidated affiliates) (1) ( 413 ) 1,310 56

Unrealized gain on investments in unconsolidated affiliates (2) 22 3 5

Unrealized gain (loss) on foreign currency translation (3) 10 4 ( 8 )

Unrealized (loss) gain on foreign currency translation (3) ( 7 ) 10 4

Reclassification adjustments for change in unrealized gains and losses included in net earnings (4) ( 123 ) ( 73 ) ( 9 )

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Minimum pension liability adjustment (6) ( 7 ) 14 —

Other comprehensive earnings 1,261 56 ( 15 )

Other comprehensive (loss) earnings ( 525 ) 1,261 56

Comprehensive earnings 1,917 2,713 1,132

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common shareholders $ 1,897 $ 2,688 $ 1,118

_______________________________________

(1) Net of income tax expense (benefit) of $ 350 million, $ 17 million, and $( 4 ) million for the years ended December 31, 2020, 2019, and 2018, respectively.

(1) Net of income tax (benefit) expense of $( 113 ) million, $ 350 million, and $ 17 million for the years ended December 31, 2021, 2020, and 2019, respectively.

(2) Net of income tax expense of $ 7 million, $ 1 million, and $ 2 million for the years ended December 31, 2021, 2020, and 2019, respectively.

(3) Net of income tax expense (benefit) of $ 1 million, $ 1 million, and $( 2 ) million for the years ended December 31, 2020, 2019, and 2018, respectively.

(4) Net of income tax expense $ 18 million and $ 3 million for the years ended December 31, 2020 and 2019, respectively.

(5) Net of income tax benefit of $ 1 million for the year ended December 31, 2020.

(6) Net of income tax expense of $ 4 million and less than $ 1 million for the years ended December 31, 2020 and December 31, 2018, respectively.

(3) Net of income tax (benefit) expense of less than $(1) million, $ 1 million, and $ 1 million for the years ended December 31, 2021, 2020, and 2019, respectively.

(4) Net of income tax expense of $ 33 million, $ 18 million and $ 3 million for the years ended December 31, 2021, 2020 and 2019, respectively.

(5) Net of income tax expense (benefit) of $ 1 million and $( 1 ) million for the years ended December 31, 2021 and 2020, respectively.

(6) Net of income tax (benefit) expense of $( 2 ) million and $ 4 million for the years ended December 31, 2021 and December 31, 2020, respectively.

See Notes to Consolidated Financial Statements

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Shares $ Capital Earnings (Loss) Shares $ Interests Equity Interests

Balance, December 31, 2017 288 $ — $ 4,587 $ 217 $ 111 13 $ ( 468 ) $ 20 4,467 $ 344

Adjustment for cumulative effect for adoption of ASU 2016-01 — — — 128 ( 109 ) — — — 19 —

Balance, January 1, 2019 290 $ — $ 4,500 $ 641 $ ( 13 ) 14 $ ( 498 ) $ ( 2 ) 4,628 $ 344

Exercise of stock options 2 — 39 — — — — — 39 —

Issuance of restricted stock 1 — — — — — — — — —

Purchase of additional share in consolidated subsidiaries — — 4 — — — — ( 18 ) ( 14 ) —

Treasury stock repurchased — — — — — 2 ( 85 ) — ( 85 ) —

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Other comprehensive earnings - unrealized gain on investments in unconsolidated affiliates — — — — 5 — — — 5 —

Other comprehensive earnings - unrealized loss on foreign currency translation — — — — ( 8 ) — — — ( 8 ) —

Other comprehensive earnings - minimum pension liability adjustment — — — — 1 — — — 1 —

Other comprehensive earnings - unrealized gain on foreign currency translation — — — — 4 — — — 4 —

Reclassification adjustments for change in unrealized gains and losses included in net earnings — — — — ( 9 ) — — — ( 9 ) —

Stock-based compensation — — 38 — — — — — 38 —

Shares withheld for taxes and in treasury — — — — — 1 ( 15 ) — ( 15 ) —

Debt conversions settled in cash — — ( 134 ) — — — — — ( 134 ) —

Dilution resulting from subsidiary equity issuance — — ( 3 ) — — — — 5 2 —

Dividends declared — — — ( 347 ) — — — — ( 347 ) —

Subsidiary dividends declared to non-controlling interests — — — — — — — ( 11 ) ( 11 ) —

Pacific Union Sale — — — — — — — ( 25 ) ( 25 ) —

Other equity activity — — — ( 2 ) — — — 1 ( 1 ) —

Net earnings — — — 1,062 — — — 14 1,076 —

Balance, December 31, 2019 292 $ — $ 4,581 $ 1,356 $ 43 17 $ ( 598 ) $ ( 17 ) $ 5,365 $ 344

Balance, December 31, 2018 290 $ — $ 4,500 $ 641 $ ( 13 ) 14 $ ( 498 ) $ ( 2 ) $ 4,628 $ 344

Exercise of stock options 3 — 62 — — — — — 62 —

Other comprehensive gain — unrealized gain on investments and other financial instruments — — — — 56 — — — 56 —

Other comprehensive earnings — unrealized loss on investments in unconsolidated affiliates — — — — 5 — — — 5 —

Other comprehensive gain — unrealized gain on foreign currency translation — — — — 4 — — — 4 —

F&G Acquisition 25 — 827 — — 7 ( 217 ) — 610 —

Purchase of ServiceLink noncontrolling interest — — 211 — — — — 47 258 ( 344 )

Treasury stock repurchased — — — — — 7 ( 244 ) — ( 244 ) —

Issuance of restricted stock 2 — — — — — — — — —

Other comprehensive earnings — unrealized gain on investments and other financial instruments — — — — 1,310 — — — 1,310 —

Other comprehensive earnings — unrealized gain on investments in unconsolidated affiliates — — — — 3 — — — 3 —

Other comprehensive earnings — unrealized gain on foreign currency translation — — — — 10 — — — 10 —

Other comprehensive earnings - minimum pension liability adjustment — — — — 14 — — — 14 —

Reclassification adjustments for change in unrealized gains and losses included in net earnings — — — — ( 73 ) — — — ( 73 ) —

Stock-based compensation — — 39 — — — — — 39 —

Purchase of additional interest in consolidated subsidiaries — — 4 — — — — ( 18 ) ( 14 ) —

Shares withheld for taxes and in treasury — — — — — 1 ( 15 ) — ( 15 ) —

Dividends declared — — — ( 389 ) — — — — ( 389 ) —

Purchases of treasury stock — — — — — 2 ( 85 ) ( 85 ) —

Shares withheld for taxes and in treasury — — — — — — ( 8 ) — ( 8 ) —

Change in reinsurance liabilities held at fair value resulting from change in instrument-specific credit risk — — — — ( 3 ) — — — ( 3 ) —

Subsidiary dividends declared to non-controlling interests — — — — — — — ( 14 ) ( 14 ) —

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Common Shareholders

FNF Other Redeemable

Common Additional Comprehensive Treasury Non- Non-

Stock Paid-in Retained Earnings Stock controlling Total controlling

Shares $ Capital Earnings (Loss) Shares $ Interests Equity Interests

Balance, December 31, 2019 292 $ — $ 4,581 $ 1,356 $ 43 17 $ ( 598 ) $ ( 17 ) $ 5,365 $ 344

Common Additional Comprehensive Treasury Non-

Stock Paid-in Retained Earnings Stock controlling Total

Shares $ Capital Earnings (Loss) Shares $ Interests Equity

Balance, January 1, 2021 322 $ — $ 5,720 $ 2,394 $ 1,304 31 $ ( 1,067 ) $ 41 $ 8,392

Exercise of stock options 2 — 50 — — — — — 50

F&G Acquisition 25 — 827 — — 7 ( 217 ) — 610

Purchase of ServiceLink noncontrolling interest — — 211 — — — — 47 258 ( 344 )

Treasury stock repurchased — — — — — 10 ( 461 ) — ( 461 )

Issuance of restricted stock 1 — — — — — — — —

Other comprehensive earnings - unrealized gain on investments and other financial instruments — — — — 1,310 — — — 1,310 —

Purchase of incremental share in consolidated subsidiaries — — — — — — — 1 1

Other comprehensive earnings - unrealized loss on investments and other financial instruments — — — — ( 413 ) — — — ( 413 )

Other comprehensive earnings - unrealized gain on investments in unconsolidated affiliates — — — — 22 — — — 22

Other comprehensive earnings - unrealized gain on foreign currency translation — — — — 10 — — — 10 —

Other comprehensive earnings - unrealized loss on foreign currency translation — — — — ( 7 ) — — — ( 7 )

Other comprehensive earnings - minimum pension liability adjustment — — — — ( 7 ) — — — ( 7 )

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Equity in earnings of unconsolidated affiliates ( 64 ) ( 15 ) ( 15 )

Loss on sales of investments and other assets and asset impairments, net 80 10 18

Loss (gain) on sale of businesses 9 — ( 4 )

(Gain) loss on sales of investments and other assets and asset impairments, net ( 588 ) 80 10

Loss on sale of businesses 14 9 —

Interest credited/index credits to contractholder account balances 805 750 —

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Stock-based compensation cost 43 39 38

Change in NAV of limited partnerships, net ( 589 ) — —

Change in valuation of derivatives, equity and preferred securities, net 253 ( 568 ) ( 328 )

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Change in funds withheld from reinsurers 850 ( 15 ) —

Net (increase) decrease in trade receivables ( 83 ) ( 36 ) 15

Net increase (decrease) in reserve for title claim losses 114 21 ( 2 )

Net increase in trade receivables ( 120 ) ( 83 ) ( 36 )

Net increase in reserve for title claim losses 260 114 21

Net change in income taxes ( 18 ) 24 53

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(In millions)

For the Year Ended December 31,

Cash Flows From Financing Activities:

2021 2020 2019

Borrowings — 1,000 —

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Debt service payments — ( 1,000 ) —

Equity portion of debt conversions paid in cash — — ( 142 )

Dividends paid ( 446 ) ( 389 ) ( 344 )

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- which collectively issue more title insurance policies than any other title company in the United States.

Through our wholly-owned 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 provider of annuity and life insurance products, providing deferred annuities, including fixed indexed annuities ("FIA"), fixed rate annuities, and immediate annuities and indexed universal life ("IUL") insurance through our wholly-owned subsidiary, FGL Holdings ("F&G").

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 subsidiary, F&G Annuities & Life ("F&G").

For information about our reportable segments refe r to Note J Seg ment Information .

Recent Developments

Subscription Agreements with Acrobat Holdings, Inc., now known as Alight, Inc.

("Alight") and Foley Trasimene Acquisition Corp.

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

The proceeds from the FTAC Subscription Agreements will be used to partially fund the cash consideration to be paid by FTAC to Tempo Holding Company, LLC ("Tempo") upon the closing of the transactions contemplated by the Business Combination Agreement, dated January 25, 2021, by and among Alight, FTAC, and other parties thereto.

The closing of the transactions is expected to occur in the second quarter of 2021.

Upon the closing of the transactions, the FTAC Subscribers are expected to hold approximately 2.8 % of Alight's outstanding Class A Common Stock.

Additionally, Alight has agreed to pay the FTAC Subscribers a fee of 2.5 % of the Alight Purchase price upon closing of the transactions.

The FTAC Subscription Agreements are with a related party as we share certain members of our Board of Directors with FTAC .

Subscription Agreements with Paysafe Limited ("Paysafe") and Foley Trasimene Acquisition Corp.

II ("FTAC II")

On December 7, 2020, each of our wholly-owned subsidiaries, FNTIC, Commonwealth Title, Chicago Title and F&G (collectively, the "FTAC II Subscribers") entered into common stock subscription agreements (the "FTAC II Subscription Agreements") with Paysafe and FTAC II to purchase in the aggregate $ 500 million (the "Purchase Price") of common shares, par value $ .001 per share, of Paysafe at a purchase price of $ 10.00 per share.

The proceeds from the FTAC II Subscription Agreements will be used to partially fund the cash consideration to be paid by FTAC II to Paysafe Group Holdings Limited ("PGHL"), which is contingent upon the closing of the transactions contemplated by the Agreement and Plan of Merger, dated December 7, 2020, by and among Paysafe, FTAC II, PGHL and other parties thereto.

The closing of the transactions are expected to occur in the first half of 2021.

Upon the closing of the transactions, the FTAC II Subscribers are expected to hold approximately 7 % of Paysafe's outstanding common shares.

Additionally, Paysafe has agreed to pay the FTAC II Subscribers a fee of 1.6 % of the Purchase Price upon the closing of the transactions.

As of December 31, 2020, the fair value of the subscription agreements was $ 199 million, which is included in Equity securities in the accompanying Consolidated Balance Sheets.

The corresponding unrealized gain of $ 199 million is included in Recognized gains and losses, net in the accompanying Consolidated Statements of Earnings for the year ended December 31, 2020.

The FTAC II subscription agreements are with a related party as we share a common director with FTAC II.

For further information related to our subscription agreements, refer to Note D Fair Value of Financial Instruments , Note E Investments and Note H Commitments and Contingencies .

Termination of F&G Credit Agreement

On October 29, 2020, we terminated our $ 250 million senior unsecured revolving credit facility with Royal Bank of Canada, as administrative agent, and a maturity date of November 30, 2020 (the "F&G Credit Agreement"), which we assumed in connection with our acquisition of F&G on June 1, 2020.

Amendment to our Revolving Credit Facility

On October 29, 2020, we entered into a Fifth Amended and Restated Credit Agreement for our $ 800 million revolving credit facility (the "Amended Revolving Credit Facility") with Bank of America, N.A., as administrative agent and other agents party thereto (the "Fifth Restated Credit Agreement").

For further information related to the Amended Revolving Credit Facility and the Fifth Restated Credit Agreement refer to Note G Notes Payable .

3.20 % Senior Notes

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 our registration statement on Form S-3 (File No.

333-239002) and the related prospectus supplement.

The net proceeds from the registered offering of the 2.45 % Notes were approximately $ 593 million, after deducting underwriting discounts, commissions and offering expenses.

We used the net proceeds from the offering (i) to repay all outstanding of our $ 260 million indebtedness under our term loan credit agreement, dated April 22, 2020, among us, as borrower, each lender from time to time party thereto, as lenders, and Bank of America, N.A., as administrative agent (the "Term Loan"), which we entered into to fund a portion of the acquisition of F&G, and (ii) for general corporate purposes.

For further information related to the Term Loan and the 2.45 % Notes refer to Note G Notes Payable.

3.40 % Senior Notes

On June 12, 2020, we completed our underwritten public offering of $ 650 million aggregate principal amount of our 3.40 % Notes due June 15, 2030 (the “ 3.40 % Notes”), pursuant to our registration statement on Form S-3 (File No.

On September 17, 2021, we completed our underwritten public offering of $ 450 million aggregate principal amount of our 3.20 % Notes due 2051 (the " 3.20 % Notes"), pursuant to our registration statement on Form S-3 (File No.

333-239002) and the related prospectus supplement.

The net proceeds from the registered offering of the 3.20 % Notes were approximately $ 443 million, after deducting underwriting discounts, commissions and offering expenses.

We used the net proceeds from the offering to repay $ 640 million of the outstanding principal amount under the Term Loan Agreement.

For further information related to the Term Loan and the 3.40 % Notes refer to Note G Notes Payable.

Acquisition of F&G

On June 1, 2020, we completed the acquisition of F&G for approximately $ 2.7 billion pursuant to the Agreement and Plan of Merger, dated February 7, 2020, as amended (the "Merger Agreement").

For additional information on our acquisition of F&G refer to Note B Acquisitions .

In connection with the acquisition of F&G, on April 22, 2020, we entered into the Term Loan, which provides for an aggregate principal borrowing of $ 1.0 billion (the "Term Loan Agreement") with Bank of America, N.A., as administrative agent (in such capacity, the "Administrative Agent"), JPMorgan Chase Bank, N.A., as syndication agent, and the other lenders party thereto from time to time (the “Term Lenders”), pursuant to which the Term Lenders provided the $ 1.0 billion delayed draw Term Loan.

On June 1, 2020, we drew down the full $ 1.0 billion in aggregate borrowing under the Term Loan to fund a portion of the acquisition of F&G.

On June 12, 2020 we repaid $ 640 million of principal on the Term Loan.

On July 31, 2020, we repaid an additional $ 100 million of principal.

On September 15, 2020, we repaid the remaining $ 260 million of principal under the Term Loan.

As of December 31, 2020, we had no principal outstanding under the Term Loan.

For further information related to the Term Loan refer to Note G Notes Payable.

We plan to use the net proceeds from the offering for general corporate purposes.

For further information related to the 3.20 % Notes, refer to Note G Notes Payable .

Approval of the 2021 Repurchase Program

On August 3, 2021, our Board of Directors approved a new three -year stock repurchase program effective August 3, 2021 (the "2021 Repurchase Program") under which we may purchase up to 25 million shares of our FNF common stock through July 31, 2024.

We may make repurchases from time to time in the open market, in block purchases or in privately negotiated transactions, depending on market conditions and other factors.

Merger of Alight, Inc.

("Alight") and Foley Trasimene Acquisition Corp.

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

On June 29, 2021, we funded the Alight Purchase Price.

Additionally, Alight paid the FTAC Subscribers a fee of 2.5 % of the Alight Purchase Price upon closing of the transactions in accordance with the Business Combination Agreement dated January 25, 2021, as amended and restated April 29, 2021, by and among FTAC, Alight and other parties thereto .

On July 2, 2021, FTAC merged with Alight.

The combined company operates as Alight, Inc.

and is traded on the New York Stock Exchange ("NYSE") under the symbol "ALIT." As of December 31, 2021 our shares of Alight are fully registered and are included in equity securities within the accompanying Consolidated Balance Sheets.

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

In June 2021, we established a funding agreement-backed notes program (the “FABN Program”), pursuant to which Fidelity & Guaranty Life Insurance Company (“FGL Insurance”) may issue funding agreements to a special purpose statutory trust (the “Trust”) for spread lending purposes.

The maximum aggregate principal amount permitted to be outstanding at any one time under the FABN Program is currently $ 5.0 billion.

As of December 31, 2021, we had approximately $ 1.9 billion outstanding under the FABN program.

In January 2022, we issued an additional $ 400 million funding agreement.

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

In July 2021, we entered the PRT market, pursuant to which FGL Insurance and Fidelity & Guaranty Life Insurance Company of New York ("FGL NY Insurance") may issue group annuity contracts to discharge pension plan liabilities from a pension plan sponsor.

As of December 31, 2021, we closed PRT transactions which represent pension obligations of $ 1.1 billion.

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

II ("FTAC II")

On December 7, 2020, each of our wholly-owned subsidiaries, FNTIC, Commonwealth Title, Chicago Title and F&G (collectively, the "FTAC II Subscribers"), entered into common stock subscription agreements with Paysafe and FTAC II to purchase in the aggregate $ 500 million (the "Paysafe Purchase Price") of common shares, par value $ 0.001 per share, of Paysafe at a purchase price of $ 10.00 per share ("the PIPE Investment").

On March 30, 2021, FTAC II merged with Paysafe, an exempted limited company incorporated under the laws of Bermuda and a leading integrated payments platform (the "FTAC II Paysafe Merger"), in accordance with the agreement and plan of merger dated December 7, 2020.

The newly combined company operates as Paysafe and is traded on the NYSE under the symbol PSFE.

The FTAC II Paysafe Merger was funded with the cash held in trust at FTAC II, forward purchase commitments, private investment in public equity ("PIPE") commitments and equity of Paysafe.

On March 30, 2021, the FTAC II Subscribers funded the Paysafe Purchase Price and received 50 million common shares of Paysafe.

As of December 31, 2021, we hold approximately 7 % of the outstanding common shares of Paysafe, which are included in equity securities in the accompanying Consolidated Balance Sheets.

In connection with the PIPE Investment, we received a fee of 1.6 % of the Paysafe Purchase Price as described in the agreement and plan of merger dated December 7, 2020.

Principles of Consolidation and Basis of Presentation

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All intercompany profits, transactions and balances have been eliminated.

Our investments in non-majority-owned partnerships and affiliates are accounted for using the equity method until such time that they become wholly or majority-owned.

In our title segment, our investments in unconsolidated subsidiaries and affiliates are accounted for using the equity method until such time that they become wholly or majority-owned.

Earnings attributable to noncontrolling interests are recorded on the Consolidated Statements of Earnings relating to majority-owned subsidiaries with the appropriate noncontrolling interest that represents the portion of equity not related to our ownership interest recorded on the Consolidated Balance Sheets in each period.

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Our involvement with VIEs is primarily to invest in assets that allow us to gain exposure to a broadly diversified portfolio of asset classes.

A VIE is an entity that does not have sufficient equity to finance its own activities without additional financial support

or where investors lack certain characteristics of a controlling financial interest.

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.

We assess our relationships to determine if we have the ability to direct the activities, or otherwise exert control, to evaluate if we are the primary beneficiary of the VIE.

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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 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 associated adjustments for deferred acquisition costs ("DAC"), value of business acquired ("VOBA"), deferred sales inducements ("DSI"), unearned revenue ("UREV"), SOP 03-1 reserves, and deferred income taxes.

Fair values for fixed maturity securities are principally a function of current market conditions and are valued based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly.

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 associated adjustments for deferred acquisition costs ("DAC"), value of business acquired ("VOBA"), deferred sales inducements ("DSI"), unearned revenue ("UREV"), Statement of Position 03-1, “ Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts ,” ("SOP 03-1") reserves, and deferred income taxes.

We recognize investment income on fixed maturities based on the 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.

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Our F&G segment uses FIFO cost basis and generally records 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 Consolidated Statements of Earnings.

Realized gains and losses on sales of fixed maturity securities are reported within Recognized gains and losses, net in the accompanying Consolidated Statements of

For details on our policy around allowance for expected credit losses on available-for-sale securities, refer to Note E Investments.

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Equity and prefer red securities held are carried at fair value as of the balance sheet dates.

The fair values of our equity and preferred securities are based on quoted prices in active markets, or are valued based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly.

Changes in fair value and realized gains and losses on sales of our preferred and equity securities are reported within Recognized gains and losses, net in the accompanying Consolidated Statements of Earnings.

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Reinsurance Related Embedded Derivatives

As discussed in Note P Reinsurance , F&G has a reinsurance agreement with Kubera, to cede certain MYGA and deferred annuity statutory reserves on a coinsurance funds withheld basis, net of applicable existing reinsurance.

As discussed in Note O Reinsurance , F&G entered into reinsurance agreements with Kubera Insurance (SAC) Ltd.

("Kubera"), effective December 31, 2018, and ASPIDA Life Re Ltd ("Aspida Re"), effective January 1, 2021, to cede certain multi-year guaranteed annuities ("MYGA") and deferred annuity GAAP and statutory reserves on a coinsurance funds withheld basis, net of applicable existing reinsurance.

Effective October 31, 2021, the Kubera agreement was novated from Kubera to Somerset Reinsurance Ltd.

("Somerset"), a certified third-party reinsurer.

Funds withheld arrangements allow the Company to retain legal ownership of assets backing reinsurance arrangements until they are earned by the reinsurer while passing credit risk associated with the assets in the funds withheld account to the reinsurer.

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These total return swaps are not clearly and closely related to the underlying reinsurance contract and thus require bifurcation.

The reinsurance related embedded derivative is

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 Consolidated Balance Sheets and the related gains or losses are reported in Recognized gains (losses) on the Consolidated Statements of Earnings.

The reinsurance related embedded derivative is 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 Consolidated Balance Sheets and the related gains or losses are reported in Recognized gains (losses) on the Consolidated Statements of Earnings.

Mortgage Loans

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Generally, nonperforming residential mortgage loans have a higher risk of experiencing a credit loss.

We consider residential mortgage loans that are 90 or more days past due and have an LTV greater than 90% to be foreclosure probable.

consider residential mortgage loans that are 90 or more days past due and have an LTV greater than 90% to be foreclosure probable.

Interest on loans is recognized on an accrual basis at the applicable interest rate on the principal amount outstanding.

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Short-term investments

Short-term inve stments consist primarily of money market instruments, which are carried at fair value, and commercial paper, which have an original maturity of one year or less and are carried at amortized cost, which approximates fair value.

Short-term inve stments consist primarily of money market instruments, which are carried at fair value, and commercial paper and loans, which have an original maturity of one year or less and are carried at amortized cost, which approximates fair value.

Investments in Unconsolidated Affiliates

In our F&G segment, we account for our investments in unconsolidated affiliates (primarily limited partnership interests) using the equity method and use net asset value ("NAV") as a practical expedient to determine the carrying value.

In our F&G segment, we account for our investments in unconsolidated affiliates (primarily limited partnerships) using the equity method and use net asset value ("NAV") as a practical expedient to determine the carrying value.

Income from investments in unconsolidated affiliates is included within Interest and investment income in the accompanying Consolidated Statements of Earnings.

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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 our title business we account for our Investments in unconsolidated affiliates using the equity method of accounting, earnings on our investments in unconsolidated affiliates are recorded within Equity in earnings of unconsolidated affiliates within the Consolidated Statements of Earnings.

In our title business we account for our Investments in unconsolidated affiliates using the equity method of accounting and earnings on our investments in unconsolidated affiliates are recorded within Equity in earnings of unconsolidated affiliates within the Consolidated Statements of Earnings.

Interest and investment income

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For mortgage-backed and asset-backed securities, included in the fixed maturity securities portfolios, we recognize income using a constant effective yield based on anticipated cash flows and the estimated economic life of the securities.

When actual prepayments differ significantly from originally anticipated prepayments, the effective yield is generally recalculated prospectively to reflect actual payments to date plus anticipated future payments.

When actual prepayments differ significantly from originally anticipated prepayments, the effective yield is recalculated prospectively to reflect actual payments to date plus anticipated future payments.

Any adjustments resulting from changes in effective yield are reflected in Interest and investment income.

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Highly liquid instruments purchased as part of cash management with original maturities of three months or less are considered cash equivalents.

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

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

Trade and Notes Receivables

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For the years ended December 31, 2021, 2020 and 2019, we determined there were no events or circumstances which indicated that the carrying value of a reporting unit exceeded the fair value.

We recorded $ 3 million of goodwill impairment related to a real estate brokerage reporting unit in our Corporate and other segment in the year ended December 31, 2018.

VOBA, VODA, DAC and DSI

Our intangible assets include an intangible asset reflecting the value of insurance and reinsurance contracts acquired (hereafter referred to as the value of business acquired (“VOBA”), deferred acquisition costs (“DAC”), deferred sales inducements (“DSI”), internally developed software, trademarks and state licenses.

VOBA, DAC and DSI

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

VOBA is an intangible asset that reflects the amount recorded as insurance contract liabilities less the estimated fair value of in-force contracts (“VIF”) in a life insurance company acquisition.

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Indirect or unsuccessful acquisition costs, maintenance, product development and overhead expenses are charged to expense as incurred.

DSI represents up front bonus credits and vesting bonuses to policyholder account values, which may be deferred to the extent recoverable.

DSI represents up front bonus credits and vesting and persistency bonuses to policyholder account values, which may be deferred to the extent recoverable.

The methodology for determining the amortization of DAC, DSI and VOBA varies by product type.

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At each evaluation date, actual historical gross profits are reflected with the impact on the intangibles reported as “unlocking” as a component of amortization expense, and estimated future gross profits and related assumptions are evaluated for continued reasonableness.

Any adjustment in estimated future gross profits requires that the amortization rate be revised (“unlocking”) retroactively to the date of the policy or contract issuance.

Any adjustment in estimated future gross profits requires that the amortization rate be revised (“unlocking”) retroactively to the date of the contract issuance or acquisition date with respect to VOBA.

The cumulative unlocking adjustment is recognized as a component of current period amortization.

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When actual credit-related investment losses are realized, we perform a retrospective unlocking of amortization for those intangibles as actual margins vary from expected margins.

This unlocking is reflected in the accompanying Consolidated Statements of Earnings.

For investment-type products, the VOBA, DAC and DSI assets are adjusted for the impact of unrealized gains (losses) on AFS investments as if these gains (losses) had been realized, with corresponding credits or charges included in AOCI ("shadow adjustments").

This unlocking is reflected within Depreciation and amortization in the accompanying Consolidated Statements of Earnings.

For investment-type products, the VOBA, DAC and DSI assets are adjusted for the impact of unrealized gains (losses) on available-for-sale ("AFS") investments as if these gains (losses) had been realized, with corresponding credits or charges included in AOCI ("shadow adjustments").

Other Intangible Assets

We have other intangible assets, not including goodwill, VOBA, DAC or DSI, which consist primarily of customer relationships and contracts, the value of distribution network acquired ("VODA"), trademarks and tradenames, and computer software, which are generally recorded in connection with acquisitions at their fair value.

We have other intangible assets, not including goodwill, VOBA, DAC or DSI, which consist primarily of customer relationships and contracts, the value of distribution network acquired ("VODA"), trademarks and tradenames and state licenses, and computer software, which are generally recorded in connection with acquisitions at their fair value .

Intangible assets with estimable lives are amortized over their respective estimated useful lives to their estimated residual values and reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

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Trademarks and tradenames are generally amortized over ten years .

Capitalized software includes the fair value of software acquired in business combinations, purchased software and capitalized software development costs.

Capitalized computer software includes the fair value of software acquired in business combinations, purchased software and capitalized software development costs.

Purchased software is recorded at cost and amortized using the straight-line method over its estimated useful life.

Software acquired in business combinations is recorded at its fair value and amortized using straight-line or accelerated methods over its estimated useful life, ranging from five to ten years .

For internal-use computer software products, internal and external costs

incurred during the preliminary project stage are expensed as they are incurred.

For internal-use computer software products, internal and external costs incurred during the preliminary project stage are expensed as they are incurred.

Internal and external costs incurred during the application development stage are capitalized and amortized on a product by product basis commencing on the date the software is ready for its intended use.

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We recorded no impairment expense to other intangible assets during the years ended December 31, 2021, 2020, or 2019.

We recorded $ 3 million in impairment expense to other intangible assets during the year ended December 31, 2018, which primarily related to an acquired customer relationship asset in our Title segment.

Title plants are recorded at the cost incurred to construct or obtain and organize historical title information to the point it can be used to perform title searches.

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Contractholder Funds

The liabilities for contractholder funds for deferred annuities and IUL policies consist of contract account balances that accrue to the benefit of the contractholders.

The liabilities for FIA policies consist of the value of the host contract plus the fair value of the indexed crediting feature of the policy, which is accounted for as an embedded derivative.

Contractholder Funds include FIAs, fixed rate annuities, IULs, funding agreements and PRT and immediate annuities contracts without life contingencies.

The liabilities for contractholder funds for fixed rate annuities, funding agreements and PRT and immediate annuities contracts without life contingencies consist of contract account balances that accrue to the benefit of the contractholders.

The liabilities for FIA and IUL policies consist of the value of the host contract plus the fair value of the indexed crediting feature of the policy, which is accounted for as an embedded derivative.

The embedded derivative is carried at fair value in Contractholder funds in the accompanying Consolidated Balance Sheets with changes in fair value reported in Benefits and other changes in policy reserves in the accompanying Consolidated Statements of Earnings.

See a description of the fair value methodology used in Note D Fair Value of Financial Instruments .

Liabilities for the secondary guarantees on IUL-type products or Investment-type contracts are calculated by multiplying the benefit ratio by the cumulative assessments recorded from contract inception through the balance sheet date less the cumulative secondary guarantee benefit payments plus interest.

The benefit ratio is the ratio of the present value of future secondary guarantees to the present value of the assessments used to provide the secondary guarantees using the same assumptions as we use for our intangible assets.

Liabilities for the Guaranteed Minimum Withdrawal Benefits ("GMWB") and Guaranteed Minimum Death Benefit ("GMDB") riders on FIA and DA products are calculated by multiplying the benefit ratio by the cumulative assessments recorded from contract inception through the balance sheet date less the cumulative guaranteed minimum withdrawal and death benefit payments plus interest.

The benefit ratio is the ratio of the present value of future guaranteed minimum withdrawal and death benefit payments to the present value of the assessments used to provide the guaranteed minimum withdrawal and death benefit payments using the same assumptions as we use for our intangible assets.

If experience or assumption changes result in a new benefit ratio, the reserves are adjusted to reflect the changes in a manner similar to the unlocking of DAC, DSI and VOBA.

The accounting for secondary guarantee benefits impact EGPs used to calculate amortization of DAC, DSI and VOBA.

The accounting for these GMWB and GMDB benefit liabilities (also referred to as SOP 03-1 liabilities) impact EGPs used to calculate amortization of DAC, DSI and VOBA.

The related reserve is adjusted for the impact of unrealized gains (losses) on AFS investments as if these gains (losses) had been realized, with corresponding credits or charges included in AOCI ("shadow adjustments").

Contractholder funds include funds related to funding agreements that have been issued by F&G to the Federal Home Loan Bank of Atlanta (“FHLB”) as a funding medium for single premium funding agreements.

The funding agreements (i.e., immediate annuity contracts without life contingencies) provide a guaranteed stream of payments or provide for a bullet payment with renewal provisions.

Single premiums were received at the initiation of the funding agreements and were in the form of advances from the FHLB.

Payments under the funding agreements extend through 2022.

The reserves for the funding agreements totaled $ 1,203 million at December 31, 2020, and are included in Contractholder funds in the accompanying Consolidated Balance Sheets.

In accordance with the agreements, the investments supporting the funding agreement liabilities are pledged as collateral to secure the FHLB funding agreement liabilities and are not available to settle our general obligations.

The collateral investments had a fair value of $ 1,471 million at December 31, 2020.

Contractholder funds include funds related to funding agreements that have been issued pursuant to the FABN Program as well as to the Federal Home Loan Bank of Atlanta (" FHLB"), the latter being in the form of advances.

Single premiums were received at the initiation of the funding agreements.

As of December 31, 2021, we had approximately $ 1,900 million outstanding under the FABN program, which provides for semi-annual interest payments with principal maturities.

Reserves for the FHLB funding agreements totaled $ 1,543 million and $ 1,203 million as of December 31, 2021 and 2020, respectively.

Additionally, on February 18, 2022, F&G executed a $ 200 million short term borrowing with the FHLB that matures on March 4, 2022.

The FHLB agreements provide a guaranteed stream of payments or provide for a bullet payment at maturity with renewal provisions.

In accordance with the 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 settle our general obligations.

The collateral investments had a fair value of $ 2,420 million and $ 1,471 million as of December 31, 2021 and 2020, respectively.

Payments pursuant to FABN and FHLB funding agreements extend through 2028.

Future Policy Benefits

The liabilities for future policy benefits and claim reserves for traditional life policies and life contingent pay-out annuity policies are computed using assumptions for investment yields, mortality and withdrawals based on generally accepted actuarial methods and assumptions at the time of acquisition or contract issue.

Investment yield assumption for traditional direct life reserves for all contracts is 4.3 %.

The investment yield assumption for life contingent pay-out annuities ranges from 4.0 % to 4.1 %.

Policies are terminated through surrenders and maturities, where surrenders represent the voluntary terminations of

policies by policyholders and maturities are determined by policy contract terms.

The liabilities for future policy benefits and claim reserves for traditional life policies, life contingent pay-out annuity policies (which includes PRT annuities with life contingencies) are computed using assumptions for investment yields, mortality and withdrawals, with a provision for adverse deviation, based on generally accepted actuarial methods and assumptions at the time of acquisition or contract issue.

The investment yield assumption is 4.3 % for traditional direct life reserves for all contracts, 4.1 % for life contingent pay-out annuities, and ranges from 3.6 % to 3.9 % for PRT annuities with life contingencies.

Policies are terminated through surrenders and maturities, where surrenders represent the voluntary terminations of policies by policyholders and maturities are determined by policy contract terms.

Surrender assumptions are based upon policyholder experience adjusted for expected future conditions.

For long-duration contracts the assumptions are locked in at contract inception and only modified if we deem the reserves to be inadequate.

We periodically review actual and anticipated experience compared to the assumptions used to establish policy benefits.

If the net GAAP liability (gross reserves less DAC, DSI and VOBA) is less than the gross premium liability, impairment is deemed to have occurred, and the DAC, DSI and VOBA asset balances are reduced until the net GAAP liability is equal to the gross premium liability.

If the DAC, DSI and VOBA asset balances are completely written off and the net GAAP liability is still less than the gross premium liability, then an additional liability is recorded to arrive at the gross premium liability.

Reserve for Title Claim Losses

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In our F&G segment, our insurance subsidiaries enter into reinsurance agreements with other companies in the normal course of business.

Reinsurance agreements are mostly reported on a gross basis in our Consolidated Balance Sheets as an asset for amounts recoverable from reinsurers or as a component of other liabilities for amounts, such as premiums, owed to the reinsurers.

Premiums and benefits are reported net of insurance ceded.

The effects of certain reinsurance agreements are not accounted for as reinsurance as they either do not satisfy the risk transfer requirements for GAAP or are categorized and accounted for as investment contracts.

The assets and liabilities of certain reinsurance contracts are presented on a net basis in the accompanying Consolidated Balance Sheets and Consolidated Statements of Earnings, respectively, when there is a right of offset explicit in the reinsurance agreement and deposit accounting is being applied.

See Note P Reinsurance for details.

For arrangements in which F&G follows reinsurance accounting and for most arrangements that are accounted for as separate investment contracts, we present the amounts consistently and on a gross basis in our Consolidated Balance Sheet with the ceded reserves balance presented as a Reinsurance recoverable.

Where applicable, deferred gains associated with the reinsurance of insurance and investment contracts will be included within Accounts payable and accrued expenses with the related accretion reflected within Escrow, title-related and other fees on the Consolidated Balance Sheet and Statement of Earnings, respectively.

Where applicable, deferred costs associated with the reinsurance of insurance and investment contracts will be included within the Prepaid expense and other assets with the related amortization reflected within Other operating expenses in the Consolidated Balance Sheet and Statement of Earnings, respectively.

Premium and expense are recorded net of reinsurance ceded for both insurance and investment contracts.

For some arrangements in which deposit accounting is applied or the arrangement is accounted for as a separate investment contract, the assets and liabilities of certain reinsurance contracts are presented on a net basis in the accompanying Consolidated Balance Sheet.

F&G intends to apply the offset where there is a right of offset explicit in the reinsurance agreement.

See Note O Reinsurance for more details over F&G's reinsurance agreements.

Revenue Recognition

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Benefits and Other Changes in Policy Reserves

Benefit expenses for FIA, fixed rate annuities 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, are charged to expense in the period that they are earned by the policyholder based on their selected strategy.

Interest crediting rates associated with funds invested in the general account of our insurance subsidiaries range from 0.5 % to 6.0 % for deferred annuities and FIAs combined, and 3.0 % to 4.8 % for IULs.

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.

Benefit expenses for FIAs, fixed rate annuities, IUL policies and funding agreements include interest credited and, for FIA and IUL policies, index credits, to contractholder account balances.

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.

Interest crediting rates associated with funds invested in the general account of our insurance subsidiaries range from 0.5 % to 6.0 % for fixed rate annuities and FIAs combined, 3.0 % to 4.8 % for IULs, and 0.9 % to 2.0 % for funding agreements.

Other changes in policy reserves include the change in the fair value of the FIA embedded derivative and the change in the SOP 03-1 reserve for GMWB and GMDB benefits.

Other changes in policy reserves also include the change in reserves for life insurance products.

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.

For traditional life and 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.

Stock-Based Compensation Plans

We accou nt for stock-based compensation plans using the fair value method.

Using the fair value method of accounting, compensation cost is measured based on the fair value of the award at the grant date, using the Black-Scholes Model, and recognized over the service period.

Using the fair value method of accounting, compensation cost is measured based on the fair value of the award at the grant date using quoted market prices, and recognized over the service period.

Earnings Per Share

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Restricted stock, options or other instruments, which provide the ability to acquire shares of our common stock that are antidilutive are excluded from the computation of diluted earnings per share.

There were 1 million antidilutive instruments outstanding during the year ended December 31, 2020.

T here were no antidilutive instruments outstanding during the years ended December 31, 2019 and 2018.

There were 1 million antidilutive instruments outstanding for the years ended December 31, 2021 and 2020.

There were no antidilutive instruments outstanding for the year ended December 31, 2019.

Comprehensive Earnings (Loss)

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(In millions)

Balance December 31, 2018 $ ( 5 ) $ 17 $ ( 15 ) $ ( 10 ) $ ( 13 )

Balance January 1, 2020 $ 46 $ 18 $ ( 11 ) $ ( 10 ) $ 43

Reclassification adjustments ( 73 ) — — — ( 73 )

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THL had an option to put its ownership interests of ServiceLink to us if no public offering of the corresponding business was consummated after four years from the date of FNF's purchase of LPS.

The Class A units owned by THL (the "redeemable noncontrolling interests") could have been settled in cash or common stock of FNF or a combination of both at our election.

The Class A units owned by THL (the "redeemable noncontrolling

interests") could have been settled in cash or common stock of FNF or a combination of both at our election.

As of January 2018, no public offering was made and the redeemable noncontrolling interests were no longer subject to a holding requirement.

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As these redeemable noncontrolling interests provided for redemption features not solely within our control, we classified the redeemable noncontrolling interests outside of permanent equity.

Redeemable noncontrolling interests held by third parties in subsidiaries owned or controlled by FNF was reported on the Consolidated Balance Sheets outside of permanent equity as of December 31, 2019;

and the Consolidated Statement of Earnings reflected the respective redeemable noncontrolling interests in Net earnings attributable to non-controlling interests for the years ended December 31, 2019 and 2018, the effect of which was removed from the net earnings attributable to FNF common shareholders.

On July 29, 2020, we purchased for $ 90 million the outstanding Class A units of ServiceLink held by THL.

As of the purchase date, ServiceLink is a wholly-owned subsidiary of FNF.

Note Receivable from Cannae

In November 2017, in conjunction with the split-off of our former portfolio company investments into a separate company, C annae Holdings, Inc.

("Cannae"), we issued to Cannae a revolver note (the "Cannae Revolver") in the aggregate principal amount of up to $ 100 million.

Cannae is considered a related party to FNF.

The Cannae Revolver accrues interest quarterly at LIBOR plus 450 basis points and matures on the five -year anniversary from the date of issuance.

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.

On February 7, 2019, Cannae borrowed $ 100 million from FNF under the Cannae Revolver.

On June 12, 2019, Cannae repaid to FNF the entire $ 100 million outstanding amount under the Cannae Revolver.

On July 5, 2019, Cannae borrowed $ 100 million from FNF under the Cannae Revolver.

On September 11, 2019, Cannae repaid to FNF the entire $ 100 million outstanding amount under the Cannae Revolver.

As of December 31, 2020 and 2019, there was no outstanding balance 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.

Management Estimates

1 unchanged sentence

Actual results could differ from those estimates.

Periodically, and at least annually, typically in the third quarter, we review the assumptions associated with reserves for policy benefits, product guarantees, and amortization of intangibles.

Additionally, during the third quarter of 2021, we implemented a new actuarial valuation system.

As a result, our third quarter 2021 assumption updates include model refinements and assumption updates resulting from the implementation.

The system implementation and assumption review process that occurred in the third quarter of 2021, included refinements in the calculation of the fair value of the embedded derivative component of our fixed indexed annuities within contractholder funds and updates to the surrender rates, GMWB utilization, IUL premium persistency, maintenance expenses, and earned rate assumptions to reflect our current and expected future experience.

These changes, taken together, resulted in a decrease in contractholder funds and future policy reserves of $ 425 million and a decrease to intangible assets of $ 136 million.

These model refinements and assumptions are also used in the SOP 03-1 liability for GMWB and GMDB benefits and resulted in an increase in the liability of $ 28 million.

There was no material change to underlying policyholder behavior.

The majority of the changes represent one-time adjustments in the third quarter of 2021 related to the cumulative impact of the system implementation and are not expected to re-occur in the future.

Note B — Acquisitions

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

On June 1, 2020, we acquired 100 % of the outstanding equity of F&G for approximately $ 2.7 billion pursuant to the Agreement and Plan of Merger, dated February 7, 2020, as amended (the "Merger Agreement").

In connection with the Merger, we issued approximately 24 million shares of FNF common stock and paid approximately $ 1.8 billion in cash to former holders of F&G ordinary and preferred shares.

4 unchanged sentences

At closing, all outstanding shares of F&G common stock, excluding shares associated with the liability to former owners, were converted into the right to receive the Merger Consideration (as defined in the Merger Agreement).

Additionally, each outstanding F&G Option and F&G Phantom unit was cancelled and converted into options to purchase FNF common stock and phantom units denominated in FNF common stock, and each outstanding warrant to purchase F&G common stock was converted into the right to purchase and receive upon exercise $ 8.18 in cash and .0833 shares of FNF common stock.

Additionally, each outstanding F&G Option and F&G Phantom unit was canceled and converted into options to purchase FNF common stock and phantom units denominated in FNF common stock, and each outstanding warrant to purchase F&G common stock was converted into the right to purchase and receive upon exercise $ 8.18 in cash and .0833 shares of FNF common stock.

At closing, our subsidiaries' ownership of F&G common and preferred shares was converted into approximately 7 million shares of FNF common stock, which are reflected as treasury shares in the accompanying Consolidated Financial Statements.

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Total net consideration paid $ 1,910

The acquisition was accounted for as a business combination under FASB Accounting Standards Codification Topic 805, Business Combinations ("Topic 805").The purchase price has been allocated to F&G's assets acquired and liabilities assumed based on our best estimates of their fair values as of the acquisition date.

The fair value of assets acquired and liabilities assumed represents a preliminary allocation as our evaluation of facts and circumstances available as of June 1, 2020 is ongoing.

As of December 31, 2020, the preliminary allocation of purchase price primarily relates to the valuation of identifiable intangible assets.

Goodwill has been recorded based on the amount that the purchase price exceeds the fair value of the net assets acquired.

The acquisition was accounted for as a business combination under FASB Accounting Standards Codification Topic 805, Business Combinations ("Topic 805").The purchase price was allocated to F&G's assets acquired and liabilities assumed based on their fair values as of 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 not expected to be deductible for tax purposes, except for $ 16 million related to a prior F&G transaction.

Pursuant to Topic 805, the financial statements will not be retrospectively adjusted for any provisional amount changes that occur in subsequent periods.

Rather, we will recognize any provisional adjustments as we obtain information not available as of the completion of this preliminary fair value calculation as determined within the measurement period.

We will also be required to record, in the same period as the financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of any change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date.

We expect to finalize the purchase price allocation as soon as practicable, but no later than one year from the acquisition date.

The following table summarizes the preliminary fair value amounts recognized for the assets acquired and liabilities assumed as of the acquisition date (dollars in millions):

Pursuant to Topic 805, the financial statements were not retrospectively adjusted for any provisional amount changes that occurred during the measurement period.

Rather, we recognized provisional adjustments as we obtained information not available as of the completion of the preliminary fair value calculation.

We also recorded, in the same period as the financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, as a result of any changes to the provisional amounts, calculated as if the accounting had been completed at the acquisition date.

The following table summarizes the fair value amounts recognized for the assets acquired and liabilities assumed as of the acquisition date (dollars in millions):

Fixed maturity securities $ 22,389

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Other intangible assets 2,107

Income taxes receivable 27

Deferred tax asset 269

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Total Other intangible assets $ 2,107

During the period from June 1, 2020 to December 31, 2020, we adjusted the provisional amounts as of June 1, 2020 that were recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition dates that, if known, would have affected the measurement of the amounts recognized as of the acquisition date.

Such adjustments resulted in an increase in Investments in unconsolidated affiliates of approximately $ 31 million, an increase in Reinsurance recoverable of approximately $ 46 million, an increase in Goodwill of approximately $ 26 million, a decrease in Other intangible assets of approximately $ 93 million, an increase in Deferred tax assets of approximately $ 13 million, an increase in Accounts payable and other accrued liabilities of $ 35 million and various other, individually immaterial items.

We completed our assessment of the fair value of assets acquired and liabilities assumed within the one-year period from the date of acquisition.

During the year ended December 31, 2021, we recorded measurement period adjustments as of the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of the acquisition date.

Such adjustments resulted in a decrease in Reinsurance recoverable of approximately $ 289 million, an increase in Other intangible assets of approximately $ 61 million, a decrease in Future policy benefits of $ 227 million and various other, individually immaterial items.

There was no material impact on Consolidated Statements of Earnings as a result of the measurement period adjustments recorded.

Unaudited Supplemental Pro-forma Financial Results

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Provision for title insurance claim losses as a percentage of title insurance premiums 4.5 % 4.5 % 4.5 %

Several lawsuits have been filed by various parties against Chicago Title Company and Chicago Title Insurance Company as its alter ego (collectively, the “Named Companies”), among others.

Generally, plaintiffs claim they are investors who were solicited by Gina Champion-Cain 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 that under California state law, alcoholic beverage license applicants are required to escrow an amount equal to the license purchase price while their applications remain pending with the State.

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, or other affiliates to provide funds that purportedly were to be used for high-interest, short-term loans to parties seeking to acquire California alcoholic beverage licenses.

Plaintiffs contend they were told that under California state law, alcoholic beverage license applicants are required to deposit into escrow an amount equal to the license purchase price while their applications remain pending with the State.

Plaintiffs further alleged that employees of Chicago Title Company participated with Ms.

Champion-Cain and her entities in a fraud scheme involving an escrow account maintained by Chicago Title Company into which the plaintiffs’ funds were deposited.

The Named Companies have settled or are planning mediations and/or settlement discussions with a majority of both the individual and group investors in the alleged scheme in the coming months.

The following lawsuits were filed in the Superior Court of San Diego County for the State of California.

The following lawsuits are pending in the Superior Court of San Diego County for the State of California and have been set for jury trial on December 2, 2022.

While they have not been consolidated into one action, they have been deemed by the court to be related and are assigned to the same judge for purposes of judicial economy.

The Named Companies filed an omnibus motion to dismiss the complaints in the related cases on several grounds.

On January 13, 2021, the court entered an order dismissing several of the counts with leave to amend, another without leave to amend, and denied the motion as to the remaining counts.

Unless otherwise noted as resolved, plaintiffs have recently filed or are expected to file amended complaints in these cases, and the Named Companies will file responses on or before the respective due dates.

On Decem ber 13, 2019, a lawsuit styled, Kim Funding, LLC, Kim H.

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Plaintiffs claim losses of more than $ 250 million as a result of the alleged fraud scheme, and also seek statutory, treble, and punitive damages.

The Named Companies have filed a cross-complaint against Ms.

Champion-Cain, 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.

3 unchanged sentences

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 March 16, 2020, a lawsuit styled, Randolph L.

Levin, et al., v.

Chicago Title Co., Chicago Title Ins.

Co., Thomas Schwiebert, Adelle Ducharme, Betty Elixman, et al.

, was filed in San Diego County Superior Court.

Plaintiffs claim losses in excess of $ 38 million as a result of the alleged fraud scheme, and also seek punitive damages and the recovery of attorneys’ fees.

This matter recently settled under confidential terms following mediation.

On May 29, 2020, a lawsuit styled, Mark Atherton, et al., v.

Chicago Title Co.

and Chicago Title Ins.

, was filed in was filed in San Diego County Superior Court.

Plaintiffs claim losses of more than $ 30 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.

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.

1 unchanged sentence

Co., Thomas Schwiebert, Adelle Ducharme, and Betty Elixman , was filed in San Diego County Superior Court.

Plaintiffs claim losses in excess of $ 6 million as a result of the alleged fraud scheme, and also seek statutory, treble, and punitive damages.

On June 29, 2020, a lawsuit styled, Yuan Yu and Polly Yu v.

Chicago Title Co., Chicago Title Ins.

Co., Thomas Schwiebert, Adelle Ducharme, and Betty Elixman , was filed in San Diego County Superior Court.

Plaintiffs claim losses in excess of $ 1 million as a result of the alleged fraud scheme, and also seek statutory, treble, and punitive damages.

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.

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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.

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.

On Septemb er 3, 2020, a cross-claim styled, Kim H.

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, was filed in San Diego County Superior Court.

Plaintiffs claim losses of more than

$ 100 million, as well as consequential and punitive damages.

The Named Companies are defending and filed a motion to dismiss the complaint on several grounds

Plaintiffs claim losses of more than $ 75 million, as well as consequential and punitive damages.

The Named Companies have filed a cross-complaint against Ms.

Champion-Cain, and others.

The Named Companies have reached a conditional settlement with the Ovation plaintiffs under confidential terms.

On November 2, 2020, a lawsuit styled, C alPrivate Bank v.

2 unchanged sentences

, was also filed in the Superior Court of San Diego County for the State of California.

Plaintiff claims losses in excess of $ 12 million based upon business loan advances made in the alcoholic beverage license scheme, and also seeks punitive damages and the recovery of attorneys’ fees.

This case was only recently deemed by the court to be related to the above San Diego County Superior Court lawsuits, and it has now been transferred to the same judge.

On November 5, 2019, a putative class action lawsuit styled, Blake E.

Allred and Melissa M.

Chicago Title Co., Chicago Title Ins.

Co., Adelle E.

Ducharme, Betty Elixman, Gina Champion-Cain, Joelle Hanson, Cris Torres, and Rachel Bond , was filed in the United States District Court for the Southern District of California.

The Named Companies filed a motion to dismiss the complaint on several grounds, or alternatively, to stay the case.

The court entered an order dismissing the federal law counts against the Named Companies without leave to amend, dismissing other counts with leave to amend, and denied the motion as to the remaining counts.

Following the court’s dismissal of certain counts, Plaintiffs voluntarily dismissed the entire federal action and refiled a similar action in the Superior Court of San Diego County for the State of California.

The new state court putative class action lawsuit, filed February 24, 2021, is styled, Blake E.

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.

The following matters pending in the Superior Court of San Diego County for the State of California have conditionally settled under confidential terms:

Yuan Yu and Polly Yu v.

Chicago Title Co., et al., and Blake E.

Allred and Melissa M.

Chicago Title Co., Chicago Title Ins.

, and plaintiffs are seeking compensatory, statutory, treble, and punitive damages.

The court has been notified that this matter is related to the other lawsuits filed in San Diego County Superior Court.

On October 23, 2020, a lawsuit styled, DH Claims LLC v.

Chicago Title Co., Chicago Title Ins.

Co., and Della Ducharme , was filed in the Superior Court of Orange County for the State of California.

Plaintiff claims losses in excess of $ 2 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 parties have asked the court to transfer this case to San Diego County Superior Court, where the Named Companies have already informed the court of this additional related matter.

In addition, Chicago Title Company resolved claims from both individual investors and a group of alleged investors under confidential terms during pre-suit mediations.

As of December 31, 2020, the Company has recorded an incurred claim loss reserve for legal fees and any remaining unpaid amounts relating to losses on the matters resolved confidentially mentioned above which is included in its consolidated reserve for title claim losses.

The Company has also recorded an insurance recoverable for amounts that will be recovered from its insurance carriers relating to these matters

At this time, the Company is unable to ascertain its liability, if any, and is unable to make an estimate of a reasonably possible claim loss for any of the unresolved claims due to the complex nature of the claims and litigation, the early procedural status of each claim (involving unresolved questions of fact without any rulings on the merits or determinations of liability), the extent of discovery not yet conducted, potential insurance coverage, and an incomplete evaluation of possible defenses, counterclaims, crossclaims or third-party claims that may exist.

Moreover, it is likely that in some instances, the claims listed above are duplicative.

As further information becomes available, the Company will continue to evaluate the adequacy of its consolidated reserve for title claim losses.

As of December 31, 2020, the Company believes that its reserves are adequate to cover losses related to this matter and other claims.

Chicago Title Co., et al.

Additionally, in connection with the alcoholic beverage license scheme, the Securities and Exchange Commission (“SEC”) filed a lawsuit in the United States District Court for the Southern District of California against Ms.

Champion-Cain and certain of her affiliated entities asserting claims for securities fraud.

A receiver was appointed by the court to preserve the assets of 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 the SEC action, on January 7, 2022, a lawsuit styled, Krista Freitag v.

Chicago Title Co.

and Chicago Title Ins.

, 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 have filed a motion in the SEC action seeking permission to sue ANI, via the receiver, to pursue indemnity and other claims against the receivership entities as joint tortfeasors.

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 applicable insurance coverage and the settlements already reached, the Company has recorded reserves included in its reserve for title claim losses which it believes are adequate to cover losses related to this matter, and believes that its 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.

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Preferred securities 506 893 2 1,401 1,401

Subscription agreements (1) — 199 — 199 199

Derivative investments — 816 — 816 816

2 unchanged sentences

Total financial assets at fair value $ 6,803 $ 27,948 $ 5,600 $ 40,351 $ 40,351

Fair value of future policy benefits — — 5 5 5

FIA embedded derivatives, included in contractholder funds — — 3,404 3,404 3,404

FIA/ IUL embedded derivatives, included in contractholder funds — — 3,883 3,883 3,883

Reinsurance related embedded derivatives, included in accounts payable and accrued liabilities — 73 — 73 73

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

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

December 31, 2020

2 unchanged sentences

Fixed maturity securities, available-for-sale:

Asset-backed securities — 4,916 1,350 6,266 6,266

Commercial mortgage-backed securities — 2,803 26 2,829 2,829

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Foreign Governments — 176 17 193 193

Preferred securities 65 258 — 323 323

Equity securities 791 — 5 796 796

Preferred securities 490 851 — 1,341 1,341

Subscription agreements (1) — 199 — 199 199

Derivative investments — 548 — 548 548

Short term investments 769 — — 769 769

1 unchanged sentence

Total financial assets at fair value $ 5,311 $ 25,431 $ 3,267 $ 34,009 $ 34,009

Fair value of future policy benefits — — 5 5 5

FIA/ IUL embedded derivatives, included in contractholder funds — — 3,404 3,404 3,404

Reinsurance related embedded derivatives, included in other liabilities — 101 — 101 101

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

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

Valuation Methodologies

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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 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.

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

These contracts are classified as Level 1.

The fair value measurement of the FIA 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 fair value measurement of the FIA/ IUL embedded derivatives included in contractholder funds is determined through a combination of market observable information and significant unobservable inputs using the option budget method.

The market observable inputs are the market value of option and treasury rates.

The significant unobservable inputs are the budgeted option cost (i.e., the expected cost to purchase call options in future periods to fund the equity indexed linked feature), surrender rates, mortality multiplier and non-performance spread.

The mortality multiplier at December 31, 2020 was applied to the Annuity 2000 mortality tables.

The mortality multiplier at December 31, 2021 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.

1 unchanged sentence

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 derivative in the funds withheld reinsurance agreement with Kubera Insurance (SAC) Ltd.

("Kubera") is estimated based upon the fair value of the assets supporting the funds withheld from reinsurance liabilities.

Also refer to Management's Estimates in Note A Business and Summary of Significant Accounting Policies regarding the implementation of a new actuarial valuation system and assumption updates during the three-months ended September 30, 2021.

The system implementation and assumption review process included refinements in the calculation of the fair value of the embedded derivative component of our fixed indexed annuities.

The fair value of the reinsurance-related embedded derivatives in the funds withheld reinsurance agreements with Kubera (effective October 31, 2021, this agreement was novated from Kubera to Somerset) and 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.

Please see Note P Reinsurance for further discussion on F&G reinsurance agreements.

Please see Note O Reinsurance for further discussion on F&G reinsurance agreements.

Other long-term investments

1 unchanged sentence

Fair value of the available-for-sale embedded derivative is based on an unobservable input, the net asset value of the fund at the balance sheet date.

The embedded derivative is similar to a call option on the net asset value of the fund with a strike price of zero since Fidelity & Guaranty Life Insurance Company ("FGL Insurance") will not be required to make any additional payments at maturity of the fund-linked note in order to receive the net asset value of the fund on the maturity date.

The embedded derivative is similar to a call option on the net asset value of the fund with a strike price of zero since FGL Insurance will not be required to make any additional payments at maturity of the fund-linked note in order to receive the net asset value of the fund on the maturity date.

A Black-Scholes model determines the net asset value of the fund as the fair value of the call option regardless of the values used for the other inputs to the option pricing model.

The net asset value of the fund is provided by the fund manager at the end of each calendar month and represents the value an investor would receive if it

withdrew its investment on the balance sheet date.

The net asset value of the fund is provided by the fund manager at the end of each calendar month and represents the value an investor would receive if it withdrew its investment on the balance sheet date.

Therefore, the key unobservable input used in the Black-Scholes model is the value of the fund.

4 unchanged sentences

The fair value of the note is provided by the fund manager at the end of each quarter.

Subscription Agreements for Forward Purchases of Equity of Special Purpose Acquisition Companies

Our FTAC II Subscription Agreements are accounted for at fair value pursuant to ASC Topic 321, Investments - Equity Securities and considered to be a Level 2 fair value measurement.

Fair value is determined using observable inputs including stock prices, volatility assumptions and a discount for the lack of marketability determined using the Finnerty Model at 7.5 %.

Quantitative information regarding significant unobservable inputs used for recurring Level 3 fair value measurements of financial instruments carried at fair value as of December 31, 2020 are as follows:

Fair Value at Valuation Technique Unobservable Input(s) Range (Weighted average)

4 unchanged sentences

Commercial mortgage-backed securities 24 Broker-quoted Offered quotes 126.70 % - 126.70 % ( 126.70 %)

Commercial mortgage-backed securities 11 Third Party Valuation Offered quotes 97.91 % - 97.91 % ( 97.91 %)

Corporates 380 Broker-quoted Offered quotes 0.00 % - 109.69 % ( 100.91 %)

Corporates 741 Third-Party Valuation Offered quotes 85.71 % - 119.57 % ( 107.72 %)

Corporates 14 Discounted Cash Flow Discount Rate 44.00 % - 100.00 %

Municipals 43 Third-Party Valuation Offered quotes 135.09 % - 135.09 % ( 135.09 %)

Foreign governments 18 Third-Party Valuation Offered quotes 107.23 % - 116.44 % ( 110.11 %)

Short-term 321 Broker-quoted Offered quotes 100.00 % - 100.00 % ( 100.00 %)

Preferred securities 2 Income-Approach Yield 2.43 %

Equity securities 3 Broker Quoted Offered quotes $ 6.23 - $ 6.23

Equity securities 2 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 4 Discounted Cash Flow Discount rate 12.70 % - 12.70 % ( 12.70 %)

Market Comparable Company Analysis EBITDA multiple 5.9 x - 5.9 x ( 5.9 x)

Other long-term investments:

Available-for-sale embedded derivative 34 Black Scholes model Market value of fund 100.00 %

Credit Linked Note 23 Broker-quoted Offered quotes 100.00 %

Investment in affiliate 21 Market Comparable Company Analysis EBITDA multiple 8 x - 8 x

Total financial assets at fair value $ 5,600

Future policy benefits — Discounted cash flow Non-performance spread 0.50 %

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

Fair Value at Valuation Technique Unobservable Input(s) Range (Weighted average)

December 31, 2020

(in millions) December 31, 2020

Asset-backed securities $ 1,175 Broker-quoted Offered quotes 85 % - 126.15 % ( 103.96 %)

Asset-backed securities 175 Third-Party Valuation Offered quotes 0.00 % - 107.25 % ( 79.87 %)

Commercial mortgage-backed securities 26 Broker-quoted Offered quotes 131.59 % - 131.59 % ( 131.59 %)

Corporates 388 Broker-quoted Offered quotes 75.20 % - 114.68 % ( 103.36 %)

Corporates 901 Third-Party Valuation Offered quotes 88.42 % - 125.83 % ( 109.47 %)

Hybrids 4 Third-Party Valuation Offered quotes 112.06 % - 112.06 % ( 112.06 %)

2 unchanged sentences

Foreign governments 17 Third-Party Valuation Offered quotes 107.87 % - 113.80 % ( 109.72 %)

Equity securities 1 Income-Approach Yield — %

Preferred securities 1 Income-Approach Yield 2.61 %

Equity securities 1 Black Scholes model Risk Free Rate 0.29 % - 0.29 % ( 0.29 %)

5 unchanged sentences

Other long-term assets:

Available-for-sale embedded derivative 27 Third-Party Valuation Market value of fund 100.00 %

Available-for-sale embedded derivative 27 Black Scholes model Market value of fund 100.00 %

Credit Linked Note 23 Broker-quoted Offered quotes 100.00 %

2 unchanged sentences

Risk margin to reflect uncertainty 0.50 %

FIA embedded derivatives, included in contractholder funds 3,404 Discounted cash flow Market value of option 0.00 % - 67.65 % 2.25 %

FIA/ IUL embedded derivatives, included in contractholder funds 3,404 Discounted cash flow Market value of option 0.00 % - 67.65 % ( 2.25 %)

Treasury rates 0.08 % - 1.65 % ( 0.87 %)

12 unchanged sentences

Balance at Beginning

of Period F&G Acquisition Total Gains (Losses) Purchases Sales Settlements Net transfer In (Out) of

of Period Total Gains (Losses) Purchases Sales Settlements Net transfer In (Out) of

Level 3 (a) Balance at End of

9 unchanged sentences

Foreign Governments 17 — 1 — — — — 18 2

Short-term — — 2 820 — ( 501 ) — 321 —

Preferred securities 1 ( 1 ) 1 1 — — — 2 —

Equity securities 4 2 — 3 — — — 9 —

2 unchanged sentences

Credit linked note 23 — — — — — — 23 —

Other long-term investment 120 — ( 61 ) — — — — ( 59 ) — —

Investment in affiliate — — — 21 — — — 21 —

Total assets at Level 3 fair value $ 3,267 $ 15 $ ( 48 ) $ 4,449 $ ( 120 ) $ ( 1,449 ) $ ( 514 ) $ 5,600 $ 59

Future policy benefits $ 5 $ — $ — $ — $ ( 4 ) $ ( 1 ) $ — $ — $ —

FIA embedded derivatives, included in contractholder funds — 2,852 552 — — — — — 3,404 —

FIA/ IUL embedded derivatives, included in contractholder funds 3,404 479 — — — — — 3,883 —

Total liabilities at Level 3 fair value $ 3,409 $ 479 $ — $ — $ ( 4 ) $ ( 1 ) $ — $ 3,883 $ —

( a) The net transfers out of Level 3 during the twelve months ended December 31, 2020 were to Level 2, except for the net transfers out related to our other long-term investment, which was to Level 1.

( a) The net transfers out of Level 3 during the year ended December 31, 2021 were to Level 2.

Year ended December 31, 2020

(in millions)

Balance at Beginning

of Period Total Gains (Losses) Purchases Sales Settlements Net transfer In (Out) of

of Period F&G Acquisition Total Gains (Losses) Purchases Sales Settlements Net transfer In (Out) of

Level 3 (a) Balance at End of

Period Change in Unrealized Incl in OCI

Earnings Included in

Fixed maturity securities available-for-sale:

Asset-backed securities $ — $ 854 $ ( 1 ) $ 21 $ 633 $ ( 1 ) $ ( 133 ) $ ( 23 ) $ 1,350 $ 10

Commercial mortgage-backed securities — 26 — — — — — — 26 —

Corporates 17 1,238 ( 3 ) 59 110 — ( 87 ) ( 45 ) 1,289 43

Hybrids — 4 — — — — — — 4 —

Municipals — 38 — 5 — — — — 43 5

Residential mortgage-backed securities — 534 — 7 11 — ( 62 ) ( 7 ) 483 —

Foreign Governments — 16 — 1 — — — — 17 1

Preferred securities — 1 — — — — — — 1 —

Equity securities 1 — 1 — 2 — — — 4 —

Other invested assets:

Other long-term assets:

Available-for-sale embedded derivative — 20 7 — — — — — 27 —

Credit linked note — 23 — — — — — — 23 —

Other long-term investment 120 — ( 61 ) — — — — ( 59 ) — —

Total assets at Level 3 fair value $ 138 $ 2,754 $ ( 57 ) $ 93 $ 756 $ ( 1 ) $ ( 282 ) $ ( 134 ) $ 3,267 $ 59

( a) The net transfers out of Level 3 during the twelve months ended December 31, 2019 were to Level 2.

Future policy benefits $ — $ 5 $ — $ — $ — $ — $ — $ — $ 5 $ —

FIA/ IUL embedded derivatives, included in contractholder funds — 2,852 552 — — — — — 3,404 —

Total liabilities at Level 3 fair value $ — $ 2,857 $ 552 $ — $ — $ — $ — $ — $ 3,409 $ —

( a) The net transfers out of Level 3 during the year ended December 31, 2020 were to Level 2, except for the net transfers out related to our other long-term investment, which was to Level 1.

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

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Policy Loans (included within Other long-term investments)

Fair values for policy loans represent their cash value.

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

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Investment Contracts

Investment contracts include deferred annuities, FIAs, indexed universal life policies ("IULs") and immediate annuities.

The fair value of deferred annuity, FIA, and IUL contracts is based on their cash surrender value (i.e.

Investment contracts include deferred annuities (FIAs and fixed rate annuities), indexed universal life policies ("IULs"), funding agreements and PRT and immediate annuity contracts without life contingencies.

The FIA/ IUL embedded derivatives, included in contractholder funds, are excluded as they are carried at fair value.

The fair value of the FIA, fixed rate annuity and IUL contracts is based on their cash surrender value (i.e.

the cost the Company would incur to extinguish the liability) as these contracts are generally issued without an annuitization date.

The fair value of immediate annuities contracts 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 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.

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Total $ — $ 3,218 $ 27,448 $ 30,666 $ 34,625

December 31, 2020

(in millions)

Level 1 Level 2 Level 3 Total Estimated Fair Value Carrying Amount

FHLB common stock $ — $ 66 $ — $ 66 $ 66

Commercial mortgage loans — — 926 926 903

Residential mortgage loans — — 1,123 1,123 1,128

Policy loans — — 33 33 33

Other invested assets — — 28 28 28

Company-owned life insurance — — 305 305 305

Trade and notes receivables, net of allowance — — 437 437 437

Total $ — $ 66 $ 2,852 $ 2,918 $ 2,900

Investment contracts, included in contractholder funds $ — $ — $ 21,719 $ 21,719 $ 25,199

Debt — 2,896 — 2,896 2,662

Total $ — $ 2,896 $ 21,719 $ 24,615 $ 27,861

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

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Investments in unconsolidated affiliates (equity method of accounting) $ 136 $ 146

Equity securities (NAV) 48 —

Investments in unconsolidated affiliates (NAV) 2,350 1,148

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Our preferred and equity securities investments are carried at fair value with unrealized gains and losses included in net income (loss).

The Company’s consolidated investments at December 31, 2020 and December 31, 2019 are summarized as follows (in millions):

The Company’s consolidated investments are summarized as follows (in millions):

December 31, 2021

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December 31, 2020

Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Carrying Value

Amortized Cost Allowance for Expected Credit Losses Gross Unrealized Gains Gross Unrealized Losses Fair Value Carrying Value

Available-for-sale securities

Asset-backed securities $ 5,941 $ — $ 343 $ ( 18 ) $ 6,266 $ 6,266

Commercial mortgage-backed/asset-backed securities 2,490 — 342 ( 3 ) 2,829 2,829

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Total available-for-sale securities $ 25,577 $ ( 19 ) $ 2,068 $ ( 39 ) $ 27,587 $ 27,587

Securities held on deposit with various state regulatory authorities had a fair value of $ 16,714 million and $ 94 million at December 31, 2020 and December 31, 2019, respectively.

At December 31, 2020 and December 31, 2019, the Company held no material investments that were non-income producing for a period greater than twelve months.

At December 31, 2020 and December 31, 2019, the Company's accrued interest receivable balance was $ 235 million and $ 16 million, respectively.

Securities held on deposit with various state regulatory authorities had a fair value of $ 22,343 million and $ 16,714 million at December 31, 2021 and 2020, respectively.

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

At December 31, 2021 and 2020, the Company's accrued interest receivable balance was $ 253 million and $ 235 million, respectively.

Accrued interest receivable is classified within Prepaid expenses and other assets within the Consolidated Balance Sheets.

In accordance with our FHLB agreements, the investments supporting the funding agreement liabilities are pledged as collateral to secure the FHLB funding agreement liabilities and are not available to the Company for general purposes.

The collateral investments had a fair value of $ 1,622 million at December 31, 2020.

The collateral investments had a fair value of $ 2,469 million and $ 1,622 million at December 31, 2021 and 2020, respectively.

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.

December 31, 2020

(in millions)

Amortized Cost Fair Value

December 31, 2021 December 31, 2020

(in millions) (in millions)

Amortized Cost Fair Value Amortized Cost Fair Value

Corporates, Non-structured Hybrids, Municipal and Government securities:

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Residential mortgage-backed securities 731 731 806 825

11,962 12,442 9,264 9,950

Total fixed maturity available-for-sale securities $ 30,705 $ 31,990 $ 25,577 $ 27,587

Allowance for Current Expected Credit Loss

Following the adoption of ASU 2016-13 and the related targeted improvements and transition relief amendments (see Note Y Recent Accounting Pronouncements for further details) effective January 1, 2020, we regularly review AFS securities for declines in fair value that we determine to be credit related.

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:

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The remainder of unrealized loss is held in AOCI.

The activity in the allowance for expected credit losses of available-for-sale securities aggregated by investment category were as follows for the twelve months ended December 31, 2020 (in millions):

Twelve Months Ended December 31, 2020

The activity in the allowance for expected credit losses of available-for-sale securities aggregated by investment category was as follows (in millions):

Year Ended December 31, 2021

Additions Reductions

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

Available-for-sale securities

Asset-backed securities $ — $ — $ ( 1 ) $ ( 2 ) $ — $ — $ — — $ ( 3 )

Commercial mortgage-backed securities — ( 2 ) — — — — — — — ( 2 )

Corporates ( 16 ) — — 4 — — 8 4 —

Hybrids — — — — — — — — —

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

Total available-for-sale securities $ ( 19 ) $ ( 2 ) $ ( 1 ) $ 2 $ — $ — $ 8 $ 4 $ ( 8 )

Year ended December 31, 2020

Additions Reductions

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The following table summarizes year to date PCD AFS security purchases (in millions).

Purchased credit-deteriorated available-for-sale debt securities December 31, 2020

Purchased credit-deteriorated available-for-sale debt securities December 31, 2021 December 31, 2020

Purchase price $ 4 $ 265

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AFS purchased credit-deteriorated par value $ 5 $ 384

The fair value and gross unrealized losses of available-for-sale 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 December 31, 2020, and December 31, 2019 were as follows (dollars in millions):

December 31, 2021

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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 )

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Available-for-sale securities

Asset-backed securities $ 477 $ ( 18 ) $ — $ — $ 477 $ ( 18 )

Commercial mortgage-backed securities 51 ( 3 ) — — 51 ( 3 )

Corporates $ 865 $ ( 15 ) $ 36 $ — $ 901 $ ( 15 )

Hybrids 1 — — — 1 —

Municipals 115 ( 2 ) — — 115 ( 2 )

Residential mortgage-backed securities 30 ( 1 ) — — 30 ( 1 )

Government 11 — — — 11 —

Foreign Government — — 33 ( 2 ) 33 ( 2 )

Total available-for-sale securities $ 1,550 $ ( 39 ) $ 36 $ — $ 1,586 $ ( 39 )

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Total number of available-for-sale securities in an unrealized loss position 233

We determined the increase in unrealized losses was caused by widening spreads, which in most cases was driven by market illiquidity and perceived increases in credit risk.

For securities in an unrealized loss position as of December 31, 2020 and an expected credit loss was not determined, we believe that the unrealized loss is being driven by near-term illiquidity and uncertainty of the impact of COVID-19 on the economy as opposed to issuer specific credit concerns.

We determined the increase in unrealized losses was caused by the increasing treasury rates, offset by narrower credit spreads.

Specific to asset-backed and mortgage-backed securities for which an expected credit loss was not determined, the effect of any increased expectations of underlying collateral defaults have not risen to the level of impacting the tranches of those securities.

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Our mortgage loans are collateralized by commercial and residential properties.

All mortgages were acquired in the F&G acquisition, which is why no 2019 data is presented.

Commercial Mortgage Loans

Commercial mortgage loans ("CMLs") represented approximately 3 % of our total investments as of December 31, 2020.

Commercial mortgage loans ("CMLs") represented approximately 7 % of our total investments at December 31, 2021.

We primarily invest in mortgage loans on income producing properties including hotels, industrial properties, retail buildings, multifamily properties and office buildings.

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The distribution of CMLs, gross of valuation allowances, by property type and geographic region is reflected in the following tables (dollars in millions):

December 31, 2020

Gross Carrying Value % of Total

December 31, 2021 December 31, 2020

Gross Carrying Value % of Total Gross Carrying Value % of Total

Property Type:

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Industrial - General 497 23 % 302 33 %

Industrial - Warehouse 12 1 %

Mixed Use 13 1 % 12 1 %

Multifamily 894 41 % 165 18 %

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Other 204 8 % 125 14 %

Student Housing 83 4 % — — %

Total commercial mortgage loans, gross of valuation allowance $ 2,174 100 % $ 905 100 %

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All of our investments in CMLs had a loan-to-value ("LTV") ratio of less than 75 % at December 31, 2021, as measured at inception of the loans unless otherwise updated.

The following table presents the recorded investment in CMLs by LTV and DSC ratio categories and estimated fair value by the indicated loan-to-value ratios at December 31, 2020 (dollars in millions) :

The following tables presents the recorded investment in CMLs by LTV and DSC ratio categories and estimated fair value by the indicated loan-to-value ratios (dollars in millions) :

Debt-Service Coverage Ratios Total Amount % of Total Estimated Fair Value % of Total

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Commercial mortgage loans $ 2,132 $ 33 $ 9 $ 2,174 100 % $ 2,265 100 %

December 31, 2020

Less than 50% $ 519 $ 18 $ — $ 537 60 % $ 557 60 %

50% to 60% 237 9 — 246 27 251 27

60% to 75% 122 — — 122 13 119 13

Commercial mortgage loans $ 878 $ 27 $ — $ 905 100 % $ 927 100 %

We recognize a mortgage loan as delinquent when payments on the loan are greater than 30 days past due.

At December 31, 2020, we had no CMLs that were delinquent in principal or interest payments.

As of December 31, 2021 and 2020, we had no CMLs that were delinquent in principal or interest payments.

Allowance for Expected Credit Loss

We estimate expected credit losses for our commercial loan portfolio using a probability of default/loss given default model.

We estimate expected credit losses for our commercial mortgage loan portfolio using a probability of default/loss given default model.

Significant inputs to this model include the loans current performance, underlying collateral type, location, contractual life, LTV, and DSC.

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Residential Mortgage Loans

Residential mortgage loans ("RMLs") represented approximately 3 % of our total investments as of December 31, 2020.

Residential mortgage loans ("RMLs") represented approximately 4 % of our total investments at December 31, 2021.

Our residential mortgage loans are closed end, amortizing loans and 100 % of the properties are located in the United States.

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Unpaid Principal Balance % of Total

California $ 164 15 %

Florida $ 231 15 %

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Total mortgage loans $ 1,575 100 %

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

(1) The individual concentration of each state is less than or equal to 9%.

December 31, 2020

Unpaid Principal Balance % of Total

California $ 164 15 %

Florida 188 16 %

New Jersey 96 8 %

All Other States (1) 704 61 %

Total residential mortgage loans $ 1,152 100 %

(1) The individual concentration of each state is less than 8%.

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 RMLs as at December 31, 2020, was as follows (dollars in millions):

December 31, 2020

The credit quality of RMLs was as follows (dollars in millions):

December 31, 2021 December 31, 2020

Performance indicators:

Carrying Value % of Total

Carrying Value % of Total Carrying Value % of Total

Performing $ 1,533 95 % $ 1,059 91 %

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Total residential mortgage loans $ 1,581 100 % $ 1128 100 %

Loans segregated by risk rating exposure as of December 31, 2020, were as follows (in millions):

Loans segregated by risk rating exposure were as follows (in millions):

December 31, 2021

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Over 90 days past due — — — — — — —

Total commercial mortgages $ 1,301 $ 543 $ — $ 6 $ — $ 324 $ 2,174

December 31, 2020

Amortized Cost by Origination Year

2020 2019 2018 2017 2016 Prior Total

Residential mortgages

Current (less than 30 days past due) $ 311 $ 545 $ 68 $ 42 $ 62 $ 2 $ 1,030

30-89 days past due 2 22 2 — — — 26

Over 90 days past due 26 74 3 — — — 103

Total residential mortgages $ 339 $ 641 $ 73 $ 42 $ 62 $ 2 $ 1,159

Commercial mortgages

Current (less than 30 days past due) $ 542 $ — $ 6 $ — $ 11 $ 346 $ 905

30-89 days past due — — — — — — —

Over 90 days past due — — — — — — —

Total commercial mortgage $ 542 $ — $ 6 $ — $ 11 $ 346 $ 905

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Total commercial mortgages $ 1301 $ 543 $ — $ 6 $ — $ 324 $ 2174

Non-accrual loans by amortized cost as of December 31, 2020, was as follows (in millions):

Amortized cost of loans on non-accrual December 31, 2020

December 31, 2020

Amortized Cost by Origination Year

2020 2019 2018 2017 2016 Prior Total

Commercial mortgages

Less than 50% $ 228 $ — $ 6 $ — $ — $ 303 $ 537

50% to 60% 192 — — — 11 43 246

60% to 75% 122 — — — — — 122

Total commercial mortgages $ 542 $ — $ 6 $ — $ 11 $ 346 $ 905

Commercial mortgages

Greater than 1.25x $ 542 $ — $ 6 $ — $ 11 $ 319 $ 878

1.00x - 1.25x — — — — — 27 27

Less than 1.00x — — — — — — —

Total commercial mortgages $ 542 $ — $ 6 $ — $ 11 $ 346 $ 905

Non-accrual loans by amortized cost were as follows (in millions):

Amortized cost of loans on non-accrual December 31, 2021 December 31, 2020

Residential mortgage:

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Total non-accrual loans $ 72 $ 99

Immaterial interest income was recognized on non-accrual financing receivables for the years ended December 31, 2021 and 2020.

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.

At December 31, 2021 and 2020, we had $ 72 million and $ 99 million, respectively, of mortgage loans that were over 90 days past due, of which $ 39 million and $ 24 million, respectively, were in the process of foreclosure.

We will continue to evaluate these policies with regard to the economic challenges for mortgage debtors related to COVID-19.

Our ability to initiate foreclosure proceedings may be limited by legislation passed and executive orders issued in response to COVID-19.

Allowance for Expected Credit Loss

We estimate expected credit losses for our mortgage loan portfolio using a probability of default/loss given default model.

We estimate expected credit losses for our residential mortgage loan portfolio using a probability of default/loss given default model.

Significant inputs to this model include the loans' current performance, underlying collateral type, location, contractual life, LTV, and Debt to Income or FICO.

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Changes in our allowance for expected credit losses on mortgage loans are recognized in Recognized gains and losses, net in the accompanying Consolidated Statements of Earnings.

Credit losses on purchase credit deteriorated (“PCD”) financial assets were recognized on the opening balance sheet and PCD amounts as of December 31, 2020 are shown in the table below (in millions):

December 31, 2020

Credit Losses on PCD Financial Assets

Residential Mortgage Commercial Mortgage Total

The allowances for our mortgage loan portfolio is summarized as follows:

Year ended December 31, 2021 Seven months ended December 31, 2020

Residential Mortgage Commercial Mortgage Total Residential Mortgage Commercial Mortgage Total

Beginning Balance $ 37 $ 2 $ 39 — — —

Provision for loan losses ( 12 ) 4 ( 8 ) $ 30 $ 2 $ 32

For initial credit losses on purchased loans accounted for as PCD financial assets — — — 7 — 7

$ 37 $ 2 $ 39

Ending Balance $ 25 $ 6 $ 31 $ 37 $ 2 $ 39

An allowance for expected credit loss is not measured on accrued interest income for commercial mortgage loans as we have a process to write-off interest on loans that enter into non-accrual status (over 90 days past due).

Allowances for expected credit losses are measured on accrued interest income for residential mortgage loans as seen in the tables below (in millions).

December 31, 2020

Residential Mortgage $ 1

Commercial Mortgage —

Total interest income recognized during the period on nonaccrual loans $ 1

December 31, 2020

Residential Mortgage $ 3

Commercial Mortgage —

Total loans that are 90 days past due and still accruing $ 3

Allowances for expected credit losses are measured on accrued interest income for residential mortgage loans and were immaterial as of December 31, 2021 and 2020.

Interest and Investment Income

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Recognized gains and losses, net $ 334 $ 488 $ 318

(1) Change in fair value of reinsurance related embedded derivatives is due to held for sale unaffiliated third party business under the fair value option election, and activity related to the FGL Insurance and Kubera reinsurance treaty.

(2) Includes unrealized gain on Forward Purchase Agreements of $ 199 million as of December 31, 2020.

(3) Includes valuation gains (losses) of $ 248 million, $ 299 million and $( 71 ) million for the year ended December 31, 2020, 2019 and 2018.

(4) Includes valuation gains (losses) of $( 40 ) million, $ 17 million and $( 24 ) million for the year ended December 31, 2020, 2019 and 2018, respectively.

The impact of ASU 2016-13 adoption on the P&L was as follows (in millions):

(Dollars in millions) December 31, 2020

Total ASU 2016-13 adoption impact on P&L $ ( 19 )

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

(2) Includes net valuation (losses) gains of $( 436 ) million, $ 248 million and $ 299 million for the years ended December 31, 2021 2020, and 2019 respectively.

(3) Includes net valuation (losses) gains of $( 14 )million, $( 40 ) million, and $ 17 million for the years ended December 31, 2021, 2020 and 2019, 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):

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Unconsolidated Variable Interest Entities

The Company owns investments in VIEs that are not consolidated within our financial statements, and one investment in a VIE that is consolidated within our financial statements.

VIEs do not have sufficient equity to finance their own activities without additional financial support and certain of its investors lack certain characteristics of a controlling financial interest.

The Company owns investments in VIEs that are not consolidated within our financial statements.

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.

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It is for this reason that the Company is not considered the primary beneficiary for the VIE investments that are not consolidated.

We previously executed a commitment of $ 83 million to purchase common shares in an unaffiliated private business development company ("BDC").

The BDC invests in secured and unsecured fixed maturity and equity securities of middle market companies in the United States.

Due to the voting structure of the transaction, the Company does not have voting power.

As of December 31, 2020, the BDC was listed on the NASDAQ.

We invest in various limited partnerships as a passive investor.

These investments are in credit funds with a bias towards current income, real assets, or private equity.

Limited partnership interests are accounted for under the equity method and are included in Investments in unconsolidated affiliates on our Consolidated Balance Sheets.

Our maximum exposure to loss with respect to these investments is limited to the investment carrying amounts reported in our Consolidated Balance Sheets in addition to any required unfunded commitments.

As of December 31, 2020, our maximum exposure to loss was $ 1,107 million in recorded carrying value and $ 394 million in unfunded commitments.

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 Consolidated Balance Sheets.

In addition, we invest in structured investments which may be VIEs, but for which we are not the primary beneficiary.

These structured investments typically invest in fixed income investments and are managed by third parties and include asset-backed securities, commercial mortgage-backed securities and residential mortgage-backed securities included in fixed maturity securities available for sale on our Consolidated Balance Sheets.

Our maximum exposure to loss with respect to these VIEs is limited to the investment carrying amounts reported in our 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 H - Commitments and Contingencies).

The following table summarizes the carrying value and the maximum loss exposure of our unconsolidated VIEs:

December 31, 2021 December 31, 2020

Carrying Value Maximum Loss Exposure Carrying Value Maximum Loss Exposure

Investments in unconsolidated affiliates $ 2,350 $ 3,496 $ 1,156 $ 1,550

Fixed maturity securities 12,382 12,802 9,873 9,513

Total unconsolidated VIE investments $ 14,732 $ 16,298 $ 11,029 $ 11,063

Investment with Related Party

Included in equity securities as of December 31, 2020 and December 31, 2019 are 5,706,134 shares of Cannae common stock (NYSE:

CNNE), which were purchased during the fourth quarter of 2017 in connection with the split-off of our former portfolio company investments to Cannae.

The fair value of our related party investment based on quoted market prices is $ 253 million and $ 212 million as of December 31, 2020 and December 31, 2019, respectively.

Included in equity securities as of December 31, 2021 and 2020 are 5,775,598 and 5,706,134 shares, respectively, of Cannae common stock (NYSE:

The fair value of our related party investment based on quoted market prices was $ 203 million and $ 253 million as of December 31, 2021 and December 31, 2020, respectively.

In order to maintain the tax-free treatment of the November 17, 2017 split-off of Cannae Holdings, Inc.

we are required to dispose of these shares by November 17, 2022.

Note F — Derivative Financial Instruments

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

December 31, 2020

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

December 31, 2021 December 31, 2020

Derivative investments:

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Contractholder funds:

FIA embedded derivative $ 3,404

Other liabilities:

Reinsurance related embedded derivative 101

FIA/ IUL embedded derivatives $ 3,883 $ 3,404

Accounts payable and accrued liabilities:

Reinsurance related embedded derivatives 73 101

$ 3,956 $ 3,505

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

Period from June 1 to December 31, 2020

Year Ended Seven Months Ended

December 31, 2021

December 31, 2020

Net investment gains (losses):

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Futures contracts 8 15

Foreign currency forward ( 7 )

Foreign currency forwards 9 ( 7 )

Other derivatives and embedded derivatives 5 8

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Benefits and other changes in policy reserves:

FIA embedded derivatives $ 552

FIA/ IUL embedded derivatives $ 479 $ 552

Additional Disclosures

FIA Embedded Derivative and Call Options and Futures

We have FIA 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.

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 embedded derivative is valued at fair value and included in the liability for contractholder funds in the accompanying Consolidated Balance Sheets with changes in fair value included as a component of Benefits and other changes in policy reserves in the Consolidated Statements of Earnings.

See a description of the fair value methodology used in Note E Fair Value of Financial Instruments .

We purchase derivatives consisting of a combination of call options and futures contracts on the applicable market indices to fund the index credits due to FIA contractholders.

The FIA/IUL embedded derivatives are valued at fair value and included in the liability for contractholder funds in the accompanying Consolidated Balance Sheets with changes in fair value included as a component of Benefits and other changes in policy reserves in the Consolidated Statements of Earnings.

See a description of the fair value methodology used in Note D 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 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 one , two , three , or five year call options to fund the next

index credit.

We manage the cost of these purchases through the terms of our FIA contracts, which permit us to change caps, spreads or participation rates, subject to guaranteed minimums, on each contract’s anniversary date.

The change in the fair value of the call options and futures contracts is generally designed to offset the portion of the change in the fair value of the FIA embedded derivative related to index performance through the current credit period.

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 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.

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Other market exposures are hedged periodically depending on market conditions and our risk tolerance.

Our FIA 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.

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.

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We maintain a policy of requiring all derivative contracts to be governed by an International Swaps and Derivatives Association (“ISDA”) Master Agreement.

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

Information regarding our exposure to credit loss on the call options we hold is presented in the following table (in millions):

December 31, 2021

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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

December 31, 2020

Counterparty Credit Rating

(Fitch/Moody's/S&P) (1) Notional

Amount Fair Value Collateral Net Credit Risk

Merrill Lynch AA-/*/A+ $ 1,932 $ 75 $ 32 $ 43

Morgan Stanley A/A2/BBB+ 1,503 40 41 —

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Collateral Agreements

The Company is required to maintain minimum ratings as a matter of routine practice as part of its over-the-counter derivative agreements on ISDA forms.

Under some ISDA agreements, the Company has 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 the Company or the counterparty would be dependent on the market value of the underlying option contracts.

The Company's current rating doesn't allow any counterparty the right to terminate ISDA agreements.

In certain transactions, the Company and the counterparty have entered into a collateral support agreement requiring either party to post collateral when the net exposures exceed pre-determined thresholds.

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 we 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 December 31, 2020, counterparties posted $ 491 million of collateral of which $ 415 million is included in cash and cash equivalents with an associated payable for this collateral included in accounts payable and accrued liabilities on the Consolidated Balance Sheet.

Accordingly, the maximum amount of loss due to credit risk that the Company would incur if parties to the call options failed completely to perform according to the terms of the contracts was $ 58 million at December 31, 2020.

The Company is required to pay counterparties the effective federal funds rate each day for cash collateral posted to F&G for daily mark to market margin changes.

The Company reinvests derivative cash collateral to reduce the interest cost.

As of December 31, 2021 and 2020, counterparties posted $ 790 million and $ 491 million, respectively, of collateral, of which $ 576 million and $ 415 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 Consolidated Balance Sheet.

Accordingly, the maximum amount of loss due to credit risk that we would incur if parties to the call options failed completely to perform according to the terms of the contracts was $ 42 million at December 31, 2021 and $ 58 million at December 31, 2020.

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 Consolidated Balance Sheets.

The Company held 384 futures contracts at December 31, 2020.

We held 329 and 384 futures contracts at December 31, 2021 and 2020, respectively.

The fair value of the futures contracts represents the cumulative unsettled variation margin (open trade equity, net of cash settlements).

The Company provides 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 Consolidated Balance Sheets.

The amount of cash collateral held by the counterparties for such contracts was $ 4 million at December 31, 2020.

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 Consolidated Balance Sheets.

The amount of cash collateral held by the counterparties for such contracts was $ 3 million and $ 4 million at December 31, 2021 and 2020, respectively.

Reinsurance Related Embedded Derivatives

FGL Insurance entered into a reinsurance agreement with Kubera effective December 31, 2018, to cede certain MYGA and deferred annuity statutory reserve on a coinsurance funds withheld basis, net of applicable existing reinsurance.

Fair value movements in the funds withheld balances associated with this arrangement creates an obligation for FGL Insurance to pay Kubera at a later date, which results in an embedded derivative.

This embedded derivative is considered a total return swap with contractual returns that are attributable to the assets and liabilities associated with this reinsurance arrangement.

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 arrangement, including gains and losses from sales, were passed directly to the reinsurer pursuant to contractual terms of the reinsurance arrangement.

The reinsurance related embedded derivative is 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 Consolidated Balance Sheets and the related gains or losses are reported in Recognized gains and losses, net on the Consolidated Statements of Earnings.

As discussed in Note O Reinsurance , F&G entered into a reinsurance agreement with Kubera, effective December 31, 2018, to cede certain MYGA and deferred annuity business on a coinsurance funds withheld basis, net of applicable existing reinsurance.

Effective October 31, 2021, this agreement was novated from Kubera to Somerset, a certified third party reinsurer.

Additionally, F&G entered into a reinsurance agreement with Aspida Re effective January 1, 2021, to cede a quota share of certain deferred annuity business on a funds withheld basis.

Fair value movements in the funds withheld balances associated with these arrangements creates an obligation for FGL Insurance 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.

Note G — Notes Payable

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2.45 % Notes, net of discount

3.20 % Notes, net of discount

Revolving Credit Facility ( 4 ) ( 4 )

5.50 % F&G Notes, net of discount

5.50 % F&G Notes

$ 3,096 $ 2,662

On September 17, 2021, we completed our underwritten public offering of $ 450 million aggregate principal amount of our 3.20 % Notes due 2051, pursuant to our registration statement on Form S-3 ASR (File No.

333-239002) and the related prospectus supplement.

The net proceeds from the registered offering of the 3.20 % Notes were approximately $ 443 million, after deducting underwriting discounts, commissions and offering expenses.

We plan to use the net proceeds from the offering for general corporate purposes.

On October 29, 2020, we entered into the Fifth Restated Credit Agreement for our Amended Revolving Credit Facility with Bank of America, N.A., as administrative agent and the other agents party thereto.

Among other changes, the Fifth Restated Credit Agreement amends the Fourth Restated Credit Agreement to extend the maturity date from April 27, 2022 to October 29, 2025.The material terms of the Fourth Restated Credit Agreement are set forth in our Annual Report for the year ended December 31, 2019.

Among other changes, the Fifth Restated Credit Agreement amends the Fourth Restated Credit Agreement to extend the maturity date from April 27, 2022 to October 29, 2025.

The material terms of the Fourth Restated Credit Agreement are set forth in our Annual Report for the year ended December 31, 2019.

As of December 31, 2021, there was no principal outstanding, $ 4 million of unamortized debt issuance costs, and $ 800 million of available borrowing capacity under the Revolving Credit Facility.

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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 the remaining $ 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.

We used the net proceeds from the offering (i) to repay the remaining $ 260 million outstanding indebtedness under our prior term loan credit agreement dated April 22, 2020, among us, as borrower, various lenders, and Bank of American N.A., as administrative agent (the "Term Loan"), which provided for an aggregate principal borrowing of $ 1.0 billion and which we entered into to fund a portion of the acquisition of F&G 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 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.

We used the net proceeds from the offering (i) to repay $ 640 million of the then 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.

In connection with the acquisition of F&G, on April 22, 2020, we entered into the Term Loan, which provided for an aggregate principal borrowing of $ 1.0 billion with Bank of America, N.A, as the Administrative Agent, JPMorgan Chase Bank, N.A., as syndication agent, and the other lenders party thereto from time to time (the “Term Lenders”), pursuant to which the Term Lenders provided the $ 1.0 billion Term Loan.

The Term Loan matures on April 21, 2021 and generally accrues interest based on a fluctuating rate per annum based on either (i) the base rate (which is equal to the highest of (a) the federal funds rate plus 0.5% of 1%, (b) the Administrative Agent’s "prime rate," and (c) LIBOR plus 1 % (with a floor of 1.75 %)), plus a margin of between 1 % and 2 % depending on the FNF Debt Rating or (ii) LIBOR (with a floor of 0.75 %) plus a margin of between 2 % and 0.03 depending on the FNF Debt Rating.

On June 1, 2020, we drew down the full $ 1.0 billion in aggregate principal to fund a portion of the acquisition of F&G.

On June 12, 2020, we repaid $ 640 million of principal on the Term Loan and an additional $ 100 million of principal on July 31, 2020.

On September 15, 2020, we repaid the remaining $ 260 million in principal on the Term Loan.

As of December 31, 2020, we had no principal outstanding under the Term Loan.

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.

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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 represents our best estimate has been recorded.

Our accrual for legal and regulatory matters was $ 13 million and $ 22 million a s of December 31, 2020 and December 31, 2019, respectively.

Our accrual for legal and regulatory matters was $ 12 million and $ 13 million a s of December 31, 2021 and 2020, 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.

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.

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, 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”) has designated a Special Litigation Committee (the “SLC”) consisting of two of the Board’s Directors, and has authorized the SLC, among other things, to investigate and evaluate the claims and allegations asserted in the lawsuit.

The Board has also given 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.

The parties have agreed to stay the action until June 2021, to allow sufficient time for the SLC to investigate the allegations and provide its evaluation.

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 in principle to settle the action subject to various terms and conditions.

The settlement will be presented to the court for approval, and if approved, is expected to be finalized during the second quarter of 2022.

On August 17, 2020, a lawsuit styled, In the Matter of FGL Holdings , was filed in the Grand Court of the Cayman Islands where dissenting shareholders, Kingfishers LP, Kingstown 1740 Fund LP, Kingstown Partners II LP, Kingstown Partners Master Ltd., and Ktown LP, have asserted statutory appraisal rights relative to their ownership of 12,000,000 shares of F&G stock in connection with the acquisition.

They seek a judicial determination of the fair value of their shares of F&G stock under the law of the Cayman Islands, together with interest.

The Company is defending and is appealing a recent discovery ruling related to the scope of dissenting shareholder disclosures.

Expert discovery is in process.

The parties have exchanged expert reports, and the matter is scheduled for trial during the second quarter of 2022.

We do not believe the result in either case will have a material adverse effect on our financial condition.

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Certain of these amounts are maintained in segregated bank accounts and have not been included in the accompanying Consolidated Balance Sheets, consistent with GAAP and industry practice.

These balances amounted t o $ 26.5 billion a t December 31, 2020.

These balances amounted to $ 30.5 billion and $ 26.5 billion at December 31, 2021 and 2020, respectively.

As a result of holding these customers’ assets in escrow, we have ongoing programs for realizing economic benefits during the year through favorable borrowing and vendor arrangements with various banks.

There were no investments or loans outstanding as of December 31, 2021 and 2020 related to these arrangements.

Subscription Agreements for Forward Purchases of Equity

On December 7, 2020, certain of our wholly-owned subsidiaries entered into the FTAC II Subscription Agreements to purchase in the aggregate $ 500 million of common shares of Paysafe upon the closing of the transactions contemplated by the Agreement and Plan of Merger, dated December 7, 2020, by and among Paysafe, FTAC II, PGHL and other parties thereto.

The closing of the transactions are expected to occur in the first half of 2021.

For further information related to the FTAC II Subscription Agreements, refer to Note A Basis of Presentation , Note D Fair Value of Financial Instruments and Note E Investments .

F&G Commitments

The Company has unfunded investment commitments as of December 31, 2020 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 December 31, 2020 is included below (in millions):

December 31, 2020

Other invested assets $ 394

Equity securities 50

Fixed maturity securities, available-for-sale 432

The Company has unfunded investment commitments as of December 31, 2021 and 2020 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 is included below (in millions):

December 31, 2021 December 31, 2020

Unconsolidated VIEs:

Limited partnerships $ 1,146 $ 394

Whole loans 589 —

Fixed maturity securities, ABS 306 384

Other fixed maturity securities, AFS 119 48

Other assets 156 135

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Residential mortgage loans — 6

Total $ 2,360 $ 967

See Note A - Business and Summary of Significant Accounting Policies , for discussion of funding agreements that have been issued pursuant to the FABN Program as well as to the FHLB that are included in Contractholder funds.

As discussed in Note O - F&G Reinsurance , to enhance Kubera's ability to pay its obligations under the amended reinsurance agreement, effective October 31, 2021, F&G entered into a Variable Note Purchase Agreement (the “NPA”), whereby F&G agreed to fund a note to Kubera to be used to ultimately settle with F&G, with principal increases up to a maximum amount of $ 300 million, to the extent a potential funding shortfall (treaty assets are less than then the total funding requirement) is projected relative to the business ceded to Kubera from F&G as part of the amended reinsurance agreement.

The potential funding shortfall will be determined quarterly and, among other items, is impacted by the market value of the assets in the funds withheld account related to the reinsurance agreement and Kubera's capital as calculated on a Bermuda regulatory basis.

The NPA matures on November 30, 2071.

Based on the current level of the treaty assets and projections that these policies will be profitable over the lifetime of the agreement, we do not expect significant fundings to occur under the NPA.

At December 31, 2021, the amount funded under the NPA was insignificant.

Note I — Dividends

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On June 1, 2020, we completed our acquisition of F&G.

As a result we have a new segment as of and for the year ended December 31, 2020, F&G, which contains our fixed annuity and life insurance businesses.

As a result, the year ended December 31, 2021 and the seven months ended December 31, 2020 include our F&G segment.

As of and for the year ended December 31, 2021:

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Interest expense — 29 85 114

Earnings (loss) from continuing operations before income taxes and equity in earnings (loss) of unconsolidated affiliates 1,878 86 ( 180 ) 1,784

Earnings (loss) from continuing operations before income taxes and equity in earnings of unconsolidated affiliates 2,136 1,077 ( 130 ) 3,083

Income tax expense (benefit) 511 220 ( 18 ) 713

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As of and for the year ended December 31, 2020:

Title Corporate and Other Total

Title F&G Corporate and Other Total

(In millions)

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This segment also includes our transaction services business, which includes other title-related services used in the production and management of mortgage loans, including mortgage loans that experience default.

This segment consists of operations of our annuities and life insurance related businesses.

This segment issues a broad portfolio of deferred annuities (fixed indexed and fixed rate annuities), immediate annuities and indexed universal life insurance.

Premiums and annuity deposits (net of reinsurance), which are not included as revenues (except for traditional premiums) in the accompany Consolidated Statements of Operations, collected by product type were as follows:

December 31, 2020

Fixed indexed annuities $ 1,966

Fixed rate annuities 631

Single premium immediate annuities 10

Life insurance (a) 146

Total $ 2,753

(a) Life insurance includes Universal Life (“UL”) and traditional life insurance products for FGL Insurance and FGL NY Insurance.

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 and fixed rate annuities), immediate annuities and indexed universal life insurance.

This segment also provides funding agreements and pension risk transfer solutions.

• Corporate and Other.

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This segment also includes certain other unallocated corporate overhead expenses and eliminations of revenues and expenses between it and our Title segment.

Refer to Note L Revenue Recognition for a description of our accounting for our various revenue streams.

Note K — Supplemental Cash Flow Information

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Equity financing associated with the acquisition of F&G $ — $ 609 $ —

Investments received from pension risk transfer premiums 316 — —

Change in proceeds of sales of investments available for sale receivable in period ( 160 ) ( 4 ) 1

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Total revenues Total revenues $ 15,643 $ 10,778 $ 8,469

(1) Includes $1,146 of life-contingent pension risk transfer premiums in 2021

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.

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Revenues from foreclosure processing and facilitation services are primarily recognized upon completion of the services and when billing to the client is complete.

Life insurance premiums in our F&G segment reflect premiums for 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.

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.

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") 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.

Insurance and investment product fees and other consist primarily of the cost of insurance on IUL policies, unearned revenue ("UREV") on IUL policies, policy rider fees primarily on FIA policies and surrender charges assessed against policy withdrawals in excess of the policyholder's allowable penalty-free amounts.

Premium and annuity deposit collections for FIA, fixed rate annuities, immediate annuities and PRT without life contingency, and amounts received for funding agreements are reported in the financial statements as deposit liabilities (i.e., contractholder funds) instead of as sales or revenues.

Similarly, cash payments to customers are reported as decreases in the liability for contractholder funds and not as expenses.

Sources of revenues for products accounted for as deposit liabilities include net investment income, surrender, cost of insurance and other charges deducted from contractholder funds, and net realized gains (losses) on investments.

Components of expenses for products accounted for as deposit liabilities are interest-sensitive and index product benefits (primarily interest credited to account balances or the hedging cost of providing index credits to the policyholder), amortization of DAC, DSI, and VOBA, other operating costs and expenses, and income taxes.

Premiums, annuity deposits (net of reinsurance) and funding agreements, which are not included as revenues in the accompanying Consolidated Statements of Earnings, collected by product type were as follows:

Year ended Seven months ended

December 31, 2021 December 31, 2020

Fixed indexed annuities 4,420 1,966

Fixed rate annuities 878 631

Funding agreements (FABN/FHLB) 2,658 100

Life insurance and other (a) 329 152

Total $ 8,285 $ 2,849

(a) Life insurance and other primarily includes indexed universal l ife insurance.

Real estate technology revenues are primarily comprised of subscription fees for use of software provided to real estate professionals.

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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.

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.

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The unrecognized portion is recorded as deferred revenue in accounts payable and other accrued liabilities in the Consolidated Balance Sheets.

During the years ended December 31, 2020 and 2019, we recognized $ 103 million and $ 103 million of revenue, respectively, which was included in deferred revenue at the beginning of the period.

During the years ended December 31, 2021 and 2020, we recognized $ 106 million and $ 103 million of revenue, respectively, which was included in deferred revenue at the beginning of the respective period.

Note M — Intangibles

A summary of the changes in the carrying amounts of the Company's VOBA, DAC and DSI intangible assets are as follows (in millions):

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

VOBA DAC DSI Total

Balance at Balance at December 31, 2019 $ — $ — $ — $ —

Balance at January 1, 2021 $ 1,466 $ 222 $ 36 $ 1,724

Purchase price allocation adjustments 61 — — 61

Deferrals — 585 90 675

Amortization ( 436 ) ( 46 ) ( 35 ) ( 517 )

Interest 30 13 1 44

Unlocking 13 1 ( 2 ) 12

Adjustment for net unrealized investment losses (gains) 51 ( 14 ) ( 2 ) 35

Balance at December 31, 2021 $ 1,185 $ 761 $ 88 $ 2,034

VOBA DAC DSI Total

Balance at January 1, 2020 $ — $ — $ — $ —

F&G acquisition 1,847 — — 1,847

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Unlocking 2 — — 2

Adjustment for net unrealized investment (gains) losses ( 283 ) ( 25 ) ( 5 ) ( 313 )

Adjustment for net unrealized investment gains ( 283 ) ( 25 ) ( 5 ) ( 313 )

Balance at December 31, 2020 $ 1,466 $ 222 $ 36 $ 1,724

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This is referred to as the “shadow adjustments” as the additional amortization is reflected in AOCI rather than the Consolidated Statements of Earnings.

As of December 31, 2020, the VOBA balances included cumulative adjustments for net unrealized investment gains of $ 283 million, the DAC balances included cumulative adjustments for net unrealized investment gains of $ 25 million, and the DSI balance included net unrealized investment gains of $ 5 million.

As of December 31, 2021 and 2020, the VOBA balances included cumulative adjustments for net unrealized investment gains of $ 232 million and $ 283 million respectively, the DAC balances included cumulative adjustments for net unrealized investment gains of $ 39 million and $ 25 million, respectively, and the DSI balance included net unrealized investment gains of $ 7 million and $ 5 million, respectively.

For the in-force liabilities as of December 31, 2021, the estimated amortization expense for VOBA in future fiscal periods is as follows (in millions):

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Thereafter 806

Our F&G segment had an unearned revenue liability balance of $ 2 million as of December 31, 2020, including deferrals of $ 31 million, amortization of $ 4 million, interest of $ 0 million, unlocking of $ 0 million and adjustment for net unrealized investment gains (losses) of $ 25 million.

Definite and Indefinite Lived Other Intangible Assets

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Indefinite lived tradenames and other 59 N/A 59 Indefinite

Other intangible assets as of December 31, 2020 consist of the following (in millions):

Cost Accumulated amortization Net carrying amount Weighted average useful life (years)

Customer relationships and contracts $ 783 $ ( 596 ) $ 187 10

Computer software 416 ( 262 ) 154 2 to 10

Value of distribution Asset (VODA) 140 ( 10 ) 130 15

Definite lived trademarks, tradenames, and other 73 ( 39 ) 34 10

Indefinite lived tradenames and other 35 N/A 35 Indefinite

Amortization expense for amortizable intangible assets, which consist primarily of VODA, customer relationships and computer software, was $ 135 million, $ 138 million, and $ 131 million for the years ended December 31, 2021, 2020 and 2019, respectively.

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Note N — Goodwill

Goo dwill consists of the following:

A summary of the changes in Goo dwill consists of the following:

Title F&G Corporate and Other Total

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Balance, December 31, 2019 $ 2,462 $ — $ 265 $ 2,727

Adjustments to prior year acquisitions — — 1 1

Goodwill associated with acquisitions 16 1,751 1 1,768

Balance, December 31, 2020 $ 2,478 $ 1,751 $ 266 $ 4,495

Goodwill associated with acquisitions 38 — — 38

Adjustments to prior year acquisitions 1 5 — 6

Balance, December 31, 2021 $ 2,517 $ 1,756 $ 266 $ 4,539

Note O — Discontinued Operations

In connection with the F&G acquisition, certain third party offshore reinsurance businesses acquired were deemed discontinued operations and are presented as such within our Consolidated Statements of Earnings for the period from June 1, 2020 through December 31, 2020.

As of December 31, 2020, we have sold F&G Reinsurance Ltd (“F&G Re”) to Aspida Holdings Ltd (“Aspida”).

The closing of the transaction occurred on December 18, 2020.

The transaction did not have a material impact to our GAAP financial results.

F&G and Aspida entered into a funds withheld reinsurance agreement, as of January 1, 2021, wherein F&G agreed to cede a quota share of MYGA sales occurring after the closing date of the sale.

Note P — F&G Reinsurance

Note O — F&G Reinsurance

F&G reinsures portions of its policy risks with other insurance companies.

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F&G primarily seeks reinsurance coverage in order to limit its exposure to mortality losses and enhance capital management.

F&G follows reinsurance accounting when there is adequate risk transfer.

If the underlying policy being reinsured is an investment contract or there is inadequate risk transfer, deposit accounting is followed.

F&G also assumes policy risks from other insurance companies.

The effect of reinsurance on net premiums earned and net benefits incurred (benefits paid and reserve changes) for the seven months ended December 31, 2020 were as follows (in millions):

Seven months ended

December 31, 2020

Net Premiums Earned Net Benefits Incurred

If the underlying policy being reinsured is an insurance contract, F&G follows reinsurance accounting when there is adequate risk transfer or deposit accounting if there is inadequate risk transfer.

If the underlying policy being reinsured is an investment contract, the effects of the agreement are accounted for as a separate investment contract.

Refer to Note A - Business and Summary of Significant Accounting Policies for more information over our accounting policy for reinsurance agreements.

The effect of reinsurance on net premiums earned and net benefits incurred (benefits paid and reserve changes) for the twelve and seven months ended December 31, 2021 and December 31, 2020 were as follows (in millions):

Twelve months ended Seven months ended

December 31, 2021 December 31, 2020

Net Premiums Earned Net Benefits Incurred Net Premiums Earned Net Benefits Incurred

Direct $ 1,314 $ 3,282 108 976

Assumed — — — 1

Ceded ( 137 ) ( 1,144 ) ( 85 ) ( 111 )

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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 seven months ended December 31, 2020.

F&G did not commute any ceded reinsurance treaties during the seven months ended December 31, 2020.

F&G did not write off any significant reinsurance balances during the year ended December 31, 2021 or the seven months ended December 31, 2020.

F&G did not commute any ceded reinsurance treaties during the year ended December 31, 2021 or the seven months ended December 31, 2020.

Following the adoption of ASC 326, F&G estimates expected credit losses on reinsurance recoverables using a probability of default/loss given default model.

Significant inputs to the model include the reinsurers credit risk, expected timing of recovery, industry-wide historical default experience, senior unsecured bond recovery rates, and credit enhancement features.

As of the acquisition of F&G, due to purchase accounting adjustments, our expected credit loss reserve was valued at $ 0 .

During the seven months ended December 31, 2020, the expected credit loss reserve was increased to $ 21 million.

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 the June 1, 2020 acquisition of F&G, due to purchase accounting adjustments, our expected credit loss reserve was valued at $ 0 .

For the seven months ended December 31, 2020, the expected credit loss reserve increased from $ 0 to $ 21 million.

During the year ended December 31, 2021, the expected credit loss reserve decreased by $ 1 million to $ 20 million.

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.

FGL Insurance has an indemnity reinsurance agreement with Hannover Re, a third party reinsurer, to cede a quota share percentage of the net retention of guarantee payments in excess of account value for guaranteed minimum withdrawal benefits ("GMWB") and Guaranteed Minimum Death Benefit (“GMDB”) guarantees associated with an in-force block of its FIA and fixed deferred annuity contracts.

The effects of this agreement are not accounted for as reinsurance as it does not satisfy the risk transfer requirements for GAAP, since it is not “reasonably possible” that the reinsurer may realize significant loss from assuming the insurance risk.

FGL Insurance incurred risk charge fees of $ 12 million during the seven months ended December 31, 2020, respectively, in relation to this reinsurance agreement.

FGL Insurance has a reinsurance agreement with Kubera Insurance (SAC) Ltd.

("Kubera"), a third party reinsurer, to initially cede approximately $ 943 million of certain MYGA and deferred annuity GAAP reserves on a coinsurance funds withheld basis, net of applicable existing reinsurance.

In accordance with the terms of this agreement, FGL Insurance cedes a quota share percentage of MYGA and deferred annuity policies for certain issue years to Kubera.

As the policies ceded to Kubera are investment contracts, there is no significant insurance risk present and therefore deposit accounting is applied.

The application of deposit accounting for this agreement, however, results in accounting for and presentation similar to other reinsurance agreements that apply reinsurance accounting.

FGL Insurance has a reinsurance agreement with Kubera to initially cede approximately $ 5.0 billion of certain FIA statutory reserves on a coinsurance funds withheld basis, net of applicable existing reinsurance.

In accordance with the terms of this agreement, FGL Insurance cedes a quota share percentage of FIA policies for certain issue years to Kubera.

As the policies ceded to Kubera are investment contracts, there is no significant insurance risk present and therefore deposit accounting is applied.

For financial statement presentation, we net the deposit asset with the funds withheld liability.

FGL Insurance incurred risk charge fees of $ 4 million during the seven months ended December 31, 2020, respectively, in relation to this reinsurance agreement.

Effective May 1, 2020, FGL Insurance entered into an indemnity reinsurance agreement with Canada Life Assurance Company United States Branch, a third party reinsurer, to reinsure FIA policies with guaranteed minimum withdrawal benefits ("GMWB").

In accordance with the terms of this agreement, FGL Insurance cedes a quota share percentage of the net retention of guarantee payments in excess of account value for GMWB.

The effects of this agreement are not accounted for as

reinsurance as it does not satisfy the risk transfer requirements for GAAP, since it is not “reasonably possible” that the reinsurer may realize significant loss from assuming the insurance risk.

FGL Insurance incurred risk charge fees of $ 1 million during the seven months ended December 31, 2020, respectively, in relation to this reinsurance agreement.

On January 15, 2021, F&G executed a Funds Withheld Coinsurance Agreement with Aspida Re, a Bermuda reinsurer.

In accordance with the terms of this agreement, F&G cedes to the reinsurer, on a fifty percent ( 50 %) funds withheld coinsurance basis, certain multiyear guaranteed annuity business written effective January 1, 2021.

The effects of this agreement are accounted for as a separate investment contract.

F&G has an indemnity reinsurance agreement with Hannover Re, a third party reinsurer, to cede a quota share percentage of the net retention of guarantee payments in excess of account value for GMWB and GMDB guarantees associated with an in-force block of its FIA and fixed deferred annuity contracts.

The effects of this agreement are not accounted for as reinsurance as it does not satisfy the risk transfer requirements for GAAP;

therefore, deposit accounting is applied.

F&G incurred risk charge fees of $ 21 million and $ 12 million during the year ended December 31, 2021 and the seven months ended December 31, 2020, respectively in relation to this reinsurance agreement.

F&G entered into a reinsurance agreement with Kubera, a third party reinsurer, effective December 31, 2018, to cede certain MYGA and deferred annuity GAAP and statutory reserves on a coinsurance funds withheld basis, net of applicable existing reinsurance.

In accordance with the terms of this agreement, F&G cedes a quota share percentage of MYGA and deferred annuity policies for certain issue years to Kubera.

Effective October 31, 2021, this agreement was novated from Kubera to Somerset, a certified third party reinsurer.

This agreement cedes GAAP and statutory reserves of approximately $ 1 billion.

As the policies ceded to Somerset are investment contracts, there is no significant insurance risk present and therefore the reinsurance agreement is accounted for as a separate investment contract.

The presentation of this agreement is similar to other reinsurance agreements that apply reinsurance accounting as discussed in further detail within Note A - Business and Summary of Significant Accounting Policies .

F&G has a reinsurance agreement with Kubera to cede certain FIA statutory reserves on a coinsurance funds withheld basis, net of applicable existing reinsurance.

In accordance with the terms of this agreement, F&G cedes a quota share percentage of FIA policies for certain issue years to Kubera.

Effective October 31, 2021, this agreement was amended to increase the ceded reserves from approximately $ 4 billion to approximately $ 10 billion.

As the policies ceded to Kubera are investment contracts, there is no significant insurance risk present and therefore the reinsurance agreement is accounted for as a separate investment contract.

F&G incurred risk charge fees of $ 5 million and $ 4 million during the year ended December 31, 2021 and the seven months ended December 31, 2020, respectively, in relation to this reinsurance agreement.

To enhance Kubera's ability to pay its obligations under the amended reinsurance agreement, F&G entered into a Variable Note Purchase Agreement (the “NPA”), whereby F&G agreed to fund a note to Kubera to be used to ultimately settle with F&G, with principal increases up to a maximum amount of $ 300 million, to the extent a potential funding shortfall (treaty assets

are less than the total funding requirement) is projected relative to the business ceded to Kubera from F&G as part of the amended reinsurance agreement.

The NPA matures on November 30, 2071.

At December 31, 2021, the amount funded under the NPA was insignificant.

Effective May 1, 2020, F&G entered into an indemnity reinsurance agreement with Canada Life Assurance Company United States Branch, a third party reinsurer, to reinsure FIA policies with GMWB.

In accordance with the terms of this agreement, F&G cedes a quota share percentage of the net retention of guarantee payments in excess of account value for GMWB.

The effects of this agreement are not accounted for as reinsurance as it does not satisfy the risk transfer requirements for GAAP;

therefore, deposit accounting is applied.

F&G incurred risk charge fees of $ 2 million and $ 1 million during the year ended December 31, 2021 and the seven months ended December 31, 2020, respectively, in relation to this reinsurance agreement.

Concentration of Reinsurance Risk

F&G has a significant concentration of reinsurance risk with third party reinsurers, Wilton Reassurance Company (“Wilton Re”) and Kubera that could have a material impact on the Company’s financial position in the event that either Wilton Re or Kubera fail to perform their obligations under the various reinsurance treaties.

F&G has a significant concentration of reinsurance risk with third party reinsurers, Wilton Reassurance Company (“Wilton Re”), Aspida Re, and Somerset that could have a material impact on our financial position in the event that Wilton Re, Aspida Re, or Somerset fail to perform their obligations under the various reinsurance treaties.

Wilton Re is a wholly-owned subsidiary of Canada Pension Plan Investment Board ("CPPIB").

CPPIB has an AAA issuer credit rating from Standard & Poor's Ratings Services ("S&P") as of December 31, 2021.

Kubera is not rated;

however, management has attempted to mitigate the risk of non-performance through the funds withheld arrangement.

As of December 31, 2020, the net amount recoverable from Wilton Re was $ 1,481 million and the net amount recoverable from Kubera was $ 810 million.

The Company monitors both the financial condition of individual reinsurers and risk concentration arising from similar activities and economic characteristics of reinsurers to attempt to reduce the risk of default by such reinsurers.

The Company believes that all amounts due from Wilton Re and Kubera for periodic treaty settlements are collectible as of December 31, 2020.

On March 6, 2019, Scottish Re (U.S.), Inc.

(“SRUS”), a Delaware domestic life and health reinsurer of FGL Insurance, was ordered into receivership for purposes of rehabilitation.

As of December 31, 2020, the net amount recoverable from SRUS was $ 50 million.

The financial exposure related to these ceded reserves are substantially mitigated via a reinsurance agreement whereby Wilton Re assumes treaty non-performance including credit risk for this business.

On July 9, 2019, Pavonia Life Insurance Company of Michigan ("Pavonia"), a Michigan domiciled life, accident, and health insurance company, was placed into rehabilitation.

While the court order indicated that Pavonia had a stable financial condition and lack of non-insurance affiliated investments, the Director of the Michigan Department of Insurance and Financial Services ("MDIFS") has concerns relating to Pavonia's parent company.

To insulate Pavonia from its parent until a pending acquisition transaction could be consummated, MDIFS placed Pavonia under supervision and rehabilitation.

As of December 31, 2020, the net amount recoverable from Pavonia was $ 94 million.

Aspida Re has an A- issuer credit rating from AM Best and a BBB issuer credit rating from Fitch as of December 31, 2021, and the risk of non-performance is further mitigated through the funds withheld arrangement.

Somerset has an A- issuer credit rating from AM Best and a BBB+ issuer credit rating from S&P as of December 31, 2021, and the risk of non-performance is further mitigated through the funds withheld arrangement.

At December 31, 2021, the net amount recoverable from Wilton Re, Aspida Re, and Somerset were $ 1,269 million, $ 873 million, and $ 780 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 Wilton Re, Aspida Re, and Somerset for periodic treaty settlements are collectible as of December 31, 2021.

Intercompany Reinsurance Agreements

F&G entered has a reinsurance treaty with Raven Reinsurance Company ("Raven Re"), its wholly-owned captive reinsurance company, to cede the Commissioners Annuity Reserve Valuation Method (CARVM) liability for annuity benefits where surrender charges are waived.

F&G has a reinsurance treaty with Raven Reinsurance Company ("Raven Re"), its wholly-owned captive reinsurance company, to cede the Commissioners Annuity Reserve Valuation Method ("CARVM") liability for annuity benefits where surrender charges are waived.

In connection with the CARVM reinsurance agreement, FGL Insurance and Raven Re entered into an agreement with Nomura Bank International plc (“NBI”) to establish a reserve financing facility in the form of a letter of credit issued by NBI.

The financing facility has $ 85 million available to draw on as of December 31, 2021.

The facility may terminate earlier, in accordance with the terms of the Reimbursement Agreement.

Under the terms of the reimbursement agreement, in the event the letter of credit is drawn upon, Raven Re is required to repay the amounts utilized, and FGLH is obligated to repay the amounts utilized if Raven Re fails to make the required reimbursement.

The facility may terminate earlier than the current termination date of October 1, 2022, in accordance with the terms of the Reimbursement Agreement.

Under the terms of the reimbursement agreement, in the event the letter of credit is drawn upon, Raven Re is required to repay the amounts utilized, and Fidelity & Guaranty Life Holdings, Inc.

("FGLH") is obligated to repay the amounts utilized if Raven Re fails to make the required reimbursement.

FGLH also is required to make capital contributions to Raven Re in the event that Raven Re’s statutory capital and surplus falls below certain defined levels.

As of December 31, 2020 and 2019, Raven Re’s statutory capital and surplus was $ 29 million and $ 33 million, respectively, in excess of the minimum level required under the Reimbursement Agreement.

As of December 31, 2021 and December 31, 2020, Raven Re’s statutory capital and surplus was $ 62 million and $ 29 million, respectively, in excess of the minimum level required under the Reimbursement Agreement.

As this letter of credit is provided by an unaffiliated financial institution, Raven Re is permitted to carry the letter of credit as an admitted asset on the Raven Re statutory balance sheet.

FGL Insurance entered into a reinsurance treaty with FSRC, an affiliated reinsurer, whereby FGL Insurance ceded 10 % of its June 30, 2012 in-force annuity block of business not already reinsured on a funds withheld basis.

FGL Insurance later entered into a second reinsurance treaty with FSRC whereby FGL Insurance ceded 30 % of any new business of its MYGA issued on a funds withheld basis.

The second treaty was subsequently terminated as to new business, but will remain in effect for policies ceded to FSRC with an effective date between September 17, 2014 and April 30, 2015.

Accordingly, MYGA policies issued with an effective date of May 1, 2015 and later will not be ceded to FSRC.

Effective December 31, 2020, FGL Insurance executed a Coinsurance Agreement with F&G Life Re Ltd.

("Reinsurer"), an affiliated Bermuda reinsurer, to reinsure a quota share of FIA policies to the Reinsurer.

Concurrently, the Reinsurer and F&G Cayman Re Ltd., an affiliated reinsurer of both FGL Insurance and the Reinsurer, entered into a Retrocession Agreement.

The cession from FGL Insurance to the Reinsurer is on a 100 % quota share basis, net of applicable existing reinsurance and the retrocession to F&G Cayman Re Ltd.

from the Reinsurer is on a 45 % quota share basis.

Additionally, both treaties are maintained on a funds withheld basis.

FGL Insurance ceded and the Reinsurer retroceded approximately $ 5.0 billion and $ 2.2 billion, respectively, in certain FIA Statutory Reserves and Interest Maintenance Reserve.

Note Q — Regulation and Equity

Note P — Regulation and Equity

Our insurance subsidiaries, including title insurers, underwritten title companies and insurance agencies, are subject to extensive regulation under applicable state laws.

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The laws of most states in which we transact business establish supervisory agencies with broad administrative powers relating to issuing and revoking licenses to transact business, regulating trade practices, licensing agents, approving policy forms, accounting practices, financial practices, establishing reserve and capital and surplus as regards policyholders (“capital and surplus”) requirements, defining suitable investments for reserves and capital and surplus and approving rate schedules.

The process of state regulation of changes in rates ranges from states that set rates, to states where individual companies or associations of companies prepare rate filings that are submitted for approval, to a few states in which rate changes do not need to be filed for approval.

The process of state regulation of changes in rates ranges from states that set rates, to states where individual companies or

associations of companies prepare rate filings that are submitted for approval, to a few states in which rate changes do not need to be filed for approval.

Since we are regulated by both state and federal governments and the applicable insurance laws and regulations are constantly subject to change, it is not possible to predict the potential effects on our insurance operations, particularly the Title segment, of any laws or regulations that may become more restrictive in the future or if new restrictive laws will be enacted.

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Our underwritten title companies, primarily those domiciled in California, are also subject to certain regulation by insurance regulatory or banking authorities relating to their net worth and working capital.

Minimum net worth and working

capital requirements for each underwritten title company is less than $ 1 million.

Minimum net worth and working capital requirements for each underwritten title company is less than $ 1 million.

These companies were in compliance with their respective minimum net worth and working capital requirements at December 31, 2021.

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Through our wholly owned F&G subsidiary, our U.S.

insurance subsidiaries, FGL Insurance, Fidelity & Guaranty Life Insurance Company of New York ("FGL NY Insurance"), and Raven Re, file financial statements with state insurance regulatory authorities and the National Association of Insurance Commissioners (“NAIC”) that are prepared in accordance with Statutory Accounting Principles (“SAP”) prescribed or permitted by such authorities, which may vary materially from GAAP.

insurance subsidiaries, FGL NY Insurance, and Raven Re, file financial statements with state insurance regulatory authorities and the NAIC that are prepared in accordance with SAP prescribed or permitted by such authorities, which may vary materially from GAAP.

Prescribed SAP includes the Accounting Practices and Procedures Manual of the NAIC as well as state laws, regulations and administrative rules.

Permitted SAP encompasses all accounting practices not so prescribed.

The principal differences between SAP financial statements and financial statements prepared in accordance with GAAP are that SAP financial statements do not reflect DAC, DSI and VOBA, some bond portfolios may be carried at amortized cost, assets and liabilities are presented net of reinsurance, contract holder liabilities are generally valued using more conservative assumptions and certain assets are non-admitted.

The principal differences between SAP financial statements and financial statements prepared in accordance with GAAP are that SAP financial statements do not reflect DAC, DSI and VOBA,

some bond portfolios may be carried at amortized cost, assets and liabilities are presented net of reinsurance, contract holder 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.

Our principal insurance subsidiaries' statutory (SAP and GAAP) financial statements are based on a December 31 year end.

Statutory net income and statutory capital and surplus of the Company's wholly owned insurance subsidiaries were as follows (in millions):

Statutory net income and statutory capital and surplus of our wholly owned insurance subsidiaries were as follows (in millions):

Subsidiary (state/country of domicile) (a)

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December 31, 2021 $ 1,522 $ 99 $ 115

Subsidiary (state/country of domicile) (a)

FGL Insurance (IA) FGL NY Insurance (NY) Raven Re (VT)

Statutory Net (Loss) income:

Seven months ended December 31, 2020 $ ( 46 ) $ ( 2 ) $ 12

Statutory Capital and Surplus:

December 31, 2020 $ 1,249 $ 93 $ 84

(a) FGL NY Insurance and Raven Re are subsidiaries of FGL Insurance, and the columns should not be added together.

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Any dividends in excess of limits are deemed “extraordinary” and require regulatory approval.

In addition, and pursuant to an order issued by the Iowa Commissioner on November 28, 2017, FGL Insurance shall not pay any dividend or other distribution to shareholders prior to November 28, 2020 without the prior approval of the Iowa Commissioner.

As of December 31, 2020, upon approval by the Iowa Commissioner, FGL Insurance declared and paid extraordinary dividends of $ 151 to its parent.

In addition, and pursuant to an order issued by the Iowa Commissioner on November 28, 2017, FGL Insurance may not pay any dividend or other distribution to shareholders prior to November 28, 2020 without the prior approval of the Iowa Commissioner.

As of December 31, 2021 and 2020, upon approval by the Iowa Commissioner, FGL Insurance declared and paid extraordinary dividends of $ 38 million and $ 151 million to its parent, respectively.

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 $ 204 million decrease to statutory capital and surplus at December 31, 2020.

FGL Insurance’s statutory carrying value of Raven Re reflects the effect of permitted practices Raven Re received to treat the available amount of a letter of credit as an admitted asset, which increased Raven Re’s statutory capital and surplus by $ 85 million at December 31, 2020.

Raven Re is also permitted to follow Iowa prescribed statutory accounting practice for its reserves on reinsurance assumed from FGL Insurance, which increased Raven Re’s statutory capital and surplus by $ 5 million at December 31, 2020.

Without such permitted statutory accounting practices Raven Re’s statutory capital and surplus (deficit) would be $( 6 ) million as of December 31, 2020, and its risk-based capital would fall below the minimum regulatory requirements.

This resulted in a $ 106 million and $ 144 million decrease to statutory capital and surplus at December 31, 2021 and 2020, respectively.

FGL Insurance’s statutory carrying value of Raven Re reflects the effect of permitted practices Raven Re received to treat the available amount of a letter of credit as an admitted asset which increased Raven Re’s statutory capital and surplus by $ 85 million at December 31, 2021 and 2020.

Raven Re is also permitted to follow Iowa prescribed statutory accounting practice for its reserves on reinsurance assumed from FGL Insurance which increased Raven Re’s statutory capital and surplus by $ 0 million at December 31, 2021 and by $ 5 million at December 31, 2020.

Without such permitted statutory accounting practices, Raven Re’s statutory capital and surplus (deficit) would be $ 30 million as of December 31, 2021 and would be $( 6 ) million as of December 31, 2020, and its risk-based

capital would 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 as discussed in Note P F&G Reinsurance .

FGL Insurance’s statutory carrying value of Raven Re at December 31, 2020 was $ 84 million.

If the permitted practice was revoked, the letter of credit could be replaced by the collateral assets with Nomura’s consent as discussed in Note O F&G Reinsurance.

FGL Insurance’s statutory carrying value of Raven Re was $ 115 million and $ 84 million at December 31, 2021 and 2020, respectively.

As of December 31, 2021, 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 Consolidated Financial Statements, which are prepared in accordance with GAAP.

On July 17, 2018, our Board of Directors approved a new three -year stock repurchase program effective August 1, 2018 (the "2018 Repurchase Program") under which we can purchase up to 25 million shares of our FNF common stock through July 31, 2021.

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

On August 3, 2021, our Board of Directors approved the 2021 Repurchase Program under which we may purchase up to 25 million shares of our FNF common stock through July 31, 2024, replacing the prior stock repurchase program that expired on July 31, 2021.

We may make repurchases from time to time in the open market, in block purchases or in privately negotiated transactions, depending on market conditions and other factors.

On October 28, 2020, we announced that we intend to purchase approximately $ 500 million of FNF common shares over the following 12 months, based on market conditions.

During the year ended December 31, 2021, we repurchased a total of 10,180,000 FNF common shares for an aggregate of $ 461 million or an average of $ 45.22 per share.

Subsequent to December 31, 2021 and through market close on February 23, 2022, we repurchased a total of 250,000 shares for $ 13 million, or an average of $ 52.60 under this program.

Since the original commencement of the 2018 Repurchase Program, we repurchased a total of 10,630,000 FNF common shares for an aggregate of $ 366 million, or an average of $ 34.43 per share.

Note R — Net Income Attributable to FNF Common Shareholders and Change in Total Equity

On July 29, 2020, we purchased for $ 90 million the outstanding Class A units of ServiceLink held by its minority owners.

As of the purchase date, ServiceLink is a wholly owned subsidiary of FNF.

The following table presents the effect of the change in our ownership percentage in ServiceLink on equity attributable to FNF (in millions):

Year ended December 31,

2020 2019 2018

Net earnings attributable to FNF common shareholders $ 1,427 $ 1,062 $ 628

Increase in additional paid-in capital for increase in ownership percentage in ServiceLink 211 — —

Decrease in noncontrolling interests resulting from increased ownership percentage 47 — —

Net increase in total equity 258 — —

Net income attributable to FNF common shareholders and change in total equity $ 1,685 $ 1,062 $ 628

The following table presents the changes in our redeemable non-controlling interest during the years ended December 31, 2020 and 2019.

Year ended December 31,

2020 2019 2018

Beginning balance $ 344 $ 344 $ 344

Redemption of ServiceLink non-controlling interest ( 344 ) — —

Ending balance $ — $ 344 $ 344

Note S - Leases

We adopted ASC Topic 842 on January 1, 2019 using a modified retrospective approach.

Prior year periods continue to be reported under ASC Topic 840.

Right-of-use assets and lease liabilities related to operating leases under ASC Topic 842 are recorded when we are party to a contract, which conveys the right for the Company to control an asset for a specified period of time.

Note Q - Leases

Right-of-use assets and lease liabilities related to operating leases under ASC Topic 842 are recorded when we are party to a contract, which conveys the right for us to control an asset for a specified period of time.

Substantially all of our operating lease arrangements relate to rented office space and real estate for our title operations.

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We do not include options to renew in our measurement of lease assets and lease liabilities as they are not considered reasonably assured of exercise.

Our operating lease liability is determined by discounting future lease payments using a discount rate based on the Company's incremental borrowing rate for similar collateralized borrowing.

Our operating lease liability is determined by discounting future lease payments using a discount rate based on our incremental borrowing rate for similar collateralized borrowing.

The discount rate is calculated as an average of the current yield on our unsecured notes payable and 140 basis points in excess of the current five year LIBOR swap rate.

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We do not separate lease components from non-lease components for any of our right-of-use assets.

Our lease costs are included in Other operating expenses on the Consolidated Statements of Income and was $ 150 million and $ 146 million for the years ended December 31, 2020 and 2019, respectively.

Our lease costs are included in Other operating expenses on the Consolidated Statements of Earnings and was $ 139 million, $ 150 million and $ 146 million for the years ended December 31, 2021, 2020 and 2019, respectively.

We do not have any material short term lease costs, variable lease costs, or sublease income.

Rent expense incurred for operating leases under ASC Topic 840 during the year ended December 31, 2018 was $ 150 million.

Future payments under operating lease arrangements accounted for under ASC Topic 842 as of December 31, 2021 are as follows (in millions):

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Supplementary Cash Flow Information for certain information on noncash investing and financing activities related to our operating lease arrangements.

Note T - Property and Equipment

Property and equipment consists of the following:

Note R - Property and Equipment

Property and equipment consist of the following:

(In millions)

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Depreciation expense on property and equipment was $ 45 million, $ 48 million, and $ 42 million for the years ended December 31, 2021, 2020 , and 2019 , respectively.

Note U - Accounts Payable and Other Accrued Liabilities

Note S - Accounts Payable and Other Accrued Liabilities

Accounts payable and other accrued liabilities consist of the following:

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$ 2,696 $ 2,402

Note T — Income Taxes

Income tax expense (benefit) on continuing operations consists of the following:

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Net earnings from continuing operations $ 713 $ 322 $ 308

Tax expense attributable to net earnings from discontinued operations — — —

Other comprehensive earnings (loss):

Unrealized gain (loss) on investments and other financial instruments 332 16 ( 3 )

Unrealized gain (loss) on foreign currency translation and cash flow hedging 1 1 ( 2 )

Other comprehensive (loss) earnings:

Unrealized (loss) gain on investments and other financial instruments ( 141 ) 332 16

Unrealized gain on foreign currency translation and cash flow hedging — 1 1

Minimum pension liability adjustment ( 2 ) 4 —

Total income tax expense (benefit) allocated to other comprehensive earnings 337 17 ( 5 )

Total income tax (benefit) expense allocated to other comprehensive earnings ( 143 ) 337 17

Total income taxes $ 570 $ 659 $ 325

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Consolidated partnerships ( 0.1 ) ( 0.3 ) ( 0.2 )

Tax reform — — ( 7.1 )

Tax gain on parent shares held 0.5 — —

Valuation allowance for deferred tax assets ( 0.3 ) ( 3.0 ) —

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Effective tax rate 23.1 % 18.0 % 22.5 %

The significant components of deferred tax assets and liabilities at December 31, 2020 and 2019 consist of the following:

The significant components of deferred tax assets and liabilities consist of the following:

(In millions)

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The significant changes in the deferred taxes are as follows:

the deferred tax liability for investment securities increased by $ 526 million primarily due to unrealized gains recorded for investment securities and the acquisition of F&G ($ 68 million was related to unrealized gains in our title business, $ 383 million was related to unrealized gains of F&G and $ 75 million was related to F&G mortgage loans and other investment related deferreds).

The deferred tax liability relating to partnerships and amortization increased by $ 29 million and $ 35 million, respectively, primarily related to the acquisition of F&G related deferred tax items.

The increase in the deferred tax asset relating to employee benefits of $ 23 million is also primarily related to the acquisition of F&G.

Other notable deferred assets solely related to the F&G acquisition are the deferred tax assets for:

life insurance and claim related adjustments of $ 861 million, capital loss carryover of $ 35 million, funds held under reinsurance agreements of $ 85 million and basis differences in held for sale assets of $ 19 million.

Other notable deferred tax liabilities solely related to the F&G acquisition are the deferred tax liabilities for:

value of business acquired of $ 308 million, derivatives of $ 38 million, funds withheld under reinsurance agreements of $ 58 million and transition reserve on new reserve method of $ 43 million.

As of December 31, 2020, we have net operating losses ("NOL") on a pretax basis of $ 82 million available to carryforward and offset future federal taxable income.

The net operating losses are US federal net operating losses arising from acquisitions made since 2012, including Buyers Protection Group, Inc., Digital Insurance Holdings, Inc., ServiceLink, THL Corporations and F&G.

the deferred tax liability for investment securities decreased by $ 200 million primarily due to unrealized losses recorded on investment securities, of which $ 97 million was related to unrealized losses in our Title segment and $ 103 million was related to unrealized losses in our F&G segment's life insurance business.

The deferred tax liability relating to partnerships increased by $ 99 million, primarily due to increased investments in higher yield partnerships by F&G and the related unrealized gains.

The F&G segment's life insurance business’ deferred tax liability relating to VOBA decreased by $ 59 million due to GAAP amortization.

The deferred tax liability related to deferred acquisition costs increased by $ 96 million, which is consistent with the growth in sales in our F&G segment.

The deferred tax liability relating to derivatives in our F&G segment increased by $ 30 million due to unrealized gains on call options.

The deferred tax asset related to credit carryovers increased by $ 18 million, of which $ 11 million related to our F&G segment's life insurance business and $ 7 million related to Title segment.

The deferred tax asset for basis differences held-for-sale was reduced by $ 19 million due to the sale of an F&G entity.

The reinsurance receivable deferred tax asset decreased by $ 33 million

and the reinsurance receivable deferred tax liability increased by $ 16 million, both due to unrealized gains in the funds withheld portfolios within our F&G segment.

As of December 31, 2021, we have net operating losses ("NOLs") on a pretax basis of $ 129 million, of which $ 53 million related to our Title segment and $ 76 million related to our F&G segment's life insurance business, which are available to carryforward and offset future federal taxable income.

The NOLs are U.S.

federal NOLs arising from acquisitions made since 2012, including Buyers Protection Group, Inc., Digital Insurance Holdings, Inc., ServiceLink/THL Corporations and F&G.

Most of the NOLs are subject to an annual Internal Revenue Code Section 382 limitation.

These losses will begin to expire in year 2023 and we fully anticipate utilizing these losses prior to expiration with the exception of $ 42 million of gross net operating losses that are offset by a $ 42 million valuation allowance.

These losses will begin to expire in year 2023 and we fully anticipate utilizing these losses prior to expiration with the exception of $ 24 million of gross net operating losses that are offset by a $ 24 million valuation allowance in the title segment.

As of December 31, 2021 and 2020, we had $ 77 million and $ 59 million of tax credits, respectively, which expire between 2025 and 2041.

The credits primarily consist of general business credits from historical acquisitions, including $ 20 million associated with the acquisition of F&G.

We anticipate that these credits will be utilized prior to expiration after a valuation allowance of $ 24 million on the general business credits.

The credits primarily consist of general business credits from historical acquisitions, including $ 32 million associated with our F&G segment's life insurance business.

We anticipate that these credits will be utilized prior to expiration after a valuation allowance of $ 28 million on the general business credits in our title segment.

As of December 31, 2021 and 2020, the balance of unrecognized tax benefits which would, if recognized, favorably affect our effective tax rate was $ 24 million and $ 28 million, respectively.

Interest and penalties accrued on income tax uncertainties are recorded as a component of income tax expense and were $ 1 million and $ 2 million as of December 31, 2020, and 2019, respectively.

Interest and penalties accrued on income tax uncertainties are recorded as a component of income tax expense and were $ 1 million as of December 31, 2021 and 2020.

It is reasonably possible that as a result of the carryback request and approval of the Joint Committee of Taxation, unrecognized tax benefits could decrease as much as $ 58 million within the next 12 months.

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Additions based on positions taken in current year — 58

Reductions related to statute of limitation lapses ( 1 )

Reductions related to statute of limitation lapses and audit payments ( 4 ) ( 1 )

Ending balance $ 60 $ 64

F&G's life insurance subsidiaries, as well as certain F&G non-life subsidiaries file separate tax returns from the FNF consolidated group.

Prepaid expenses and other assets in the accompanying Consolidated Balance Sheets as of December 31, 2020 includes $ 20 million of tax receivables and $ 8 million of deferred tax assets related to F&G subsidiaries who file separate tax returns.

Prepaid expenses and other assets in the accompanying Consolidated Balance Sheets as of December 31, 2021 includes $ 52 million of tax receivables related to F&G subsidiaries that file separate tax returns.

Prepaid expenses and other assets in the accompanying Consolidated Balance Sheets as of December 31, 2020 includes $20 million of tax receivables and $8 million in deferred tax assets related to F&G subsidiaries who file separate tax returns.

The Internal Revenue Service (“IRS”) has selected us to participate in the Compliance Assurance Program that is a real-time audit.

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F&G is not currently under examination by the IRS.

Employee Benefit Plans

Note U - Employee Benefit Plans

Stock Purchase Plan

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We contribute varying amounts as specified in the ESPP.

We contributed $ 30 million, $ 28 million, and $ 25 million to the ESPP in the years ended December 31, 2020 , 2019, and 2018, respectively, in accordance with our matching contribution.

401(k) Profit Sharing Plan

We contribu ted $ 24 million, $ 30 million, and $ 28 million to the ESPP in the years ended December 31, 2021 , 2020, and 2019, respectively, in accordance with our matching contribution.

FNF 401(k) Profit Sharing Plan

During the three-year period ended December 31, 2021 , we have offered our employees the opportunity to participate in our 401(k) profit sharing plan (the “401(k) Plan”), a qualified voluntary contributory savings plan that is available to substantially all of our employees.

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F&G Omnibus Incentive Plan

On June 1, 2020, in connection with the acquisition of F&G, we assumed the shares that remained available for future awards under the FGL Holdings 2017 Omnibus Incentive Plan, as amended and restated (the “F&G Omnibus Plan”) and converted such shares into 2,096,429 shares of common stock that may be issued pursuant to future awards granted under the F&G Omnibus Plan and 2,411,585 shares of common stock that may be issued pursuant to outstanding stock options under the F&G Omnibus Plan.

On June 1, 2020, in connection with the acquisition of F&G, we assumed the shares that remained available for future awards under the FGL Holdings 2017 Omnibus Incentive Plan, as amended and restated (the “F&G Omnibus Plan”) and converted such shares into 2,096,429 shares of FNF common stock that may be issued pursuant to future awards granted under the F&G Omnibus Plan and 2,411,585 sh ares of FNF common stock that may be issued pursuant to outstanding stock options under the F&G Omnibus Plan.

Each unvested stock option assumed under the F&G Omnibus Plan was converted into an FNF stock option and vests solely on the passage of time without any ongoing performance-vesting conditions.

The options vest over a 3 year period, based on the option's initial grant date, and have a contractual life of 7 years.

As of December 31, 2020, there were 449,870 shares of restricted stock and 2,002,690 stock options outstanding under the Omnibus Plan.

As of December 31, 2021, there were 718,641 shares of restricted stock and 1,527,936 stock options outstanding under the F&G Omnibus Plan.

FNF stock option transactions under the Omnibus Plan for 2021 , 2020, and 2019 are as follows:

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Exercise Price Exercisable

Balance, December 31, 2017 8,529,427 $ 20.38 7,648,837

Balance, January 1, 2019 7,543,787 $ 20.55 7,530,137

Exercised ( 2,009,112 ) 19.61

Canceled ( 4,550 ) 25.34

Balance, December 31, 2019 5,530,125 $ 20.88 5,530,125

Exercised ( 3,208,712 ) 18.45

Canceled ( 4,550 ) 25.34

Balance, December 31, 2020 2,321,413 $ 24.24 2,321,413

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Balance, December 31, 2021 996,113 $ 25.53 996,113

FNF stock options transactions under the F&G Omnibus Incentive Plan for 2020 are as follows:

FNF stock option transactions under the F&G Omnibus Plan for 2021 and 2020 are as follows:

Options Weighted Average

Exercise Price Exercisable

Balance, December 31, 2019 — $ — —

Balance, January 1, 2020 — $ — —

Options assumed in connection with the F&G acquisition 2,411,585 36.04

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Balance, December 31, 2020 2,002,690 $ 36.14 1,021,671

Exercised ( 474,754 ) 36.68

Balance, December 31, 2021 1,527,936 $ 35.97 1,072,584

FNF restricted stock transactions under the Omnibus Plan in 2021 , 2020, and 2019 are as follows:

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Balance, December 31, 2021 1,639,226 $ 41.97

FNF restricted stock transactions under the F&G Omnibus Plan in 2020 are as follows:

FNF restricted stock transactions under the F&G Omnibus Plan in 2021 and 2020 are as follows:

Shares Weighted Average Grant Date Fair Value

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Balance, December 31, 2020 449,870 $ 34.11

Granted 311,081 48.28

Canceled ( 12,437 ) 33.40

Vested ( 29,873 ) 34.59

Balance, December 31, 2021 718,641 $ 40.24

The following table summarizes information related to stock options outstanding and exercisable as of December 31, 2021 :

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2,524,049 $ 52 2,068,697 $ 45

1,463,591 4.75 39.10 — 774,246 4.29 39.10 —

4,324,103 $ 41 3,343,084 $ 38

We account for stock-based compensation plans in accordance with GAAP on share-based payments, which requires that compensation cost relating to share-based payments be recognized in the consolidated financial statements based on the fair value of each award.

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The total fair value of restricted stock awards granted in the years ended December 31, 2021 , 2020 and 2019 was $ 52 million, $ 50 million, and $ 29 million, respectively.

total fair value of restricted stock awards, which vested in the years ended December 31, 2020 , 2019 and 2018 was $ 25 million, $ 42 million, and $ 29 million, respectively.

The total fair value of restricted stock awards, which vested in the years ended December 31, 2021 , 2020 and 2019 was $ 43 million, $ 25 million, and $ 42 million, respectively.

Option awards are measured at fair value on the grant date using the Black Scholes Option Pricing Model.

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Pursuant to GAAP on employers’ accounting for defined benefit pension and other post retirement plans, the measurement date is December 31.

The discount rate used to determine the benefit obligation as of the years ended December 31, 2020 and 2019 wa s 1.85 % and 2.79 %, respectively.

As of the years ended December 31, 2020 and 2019, the projected benefit obligation was $ 153 million and $ 160 million, respectively, and the fair value of plan assets was $ 157 million and $ 150 million, respectively.

The discount rate used to determine the benefit obligation as of December 31, 2021 and 2020 wa s 2.35 % and 1.85 %, respectively.

As of December 31, 2021 and 2020, the projected benefit obligation was $ 154 million and $ 153 million, respectively, and the fair value of plan assets was $ 145 million and $ 157 million, respectively.

The net pension liability and net periodic expense included in our financial position and results of operations relating to the Pension Plan is not considered material for any period presented.

Financial Instruments with Off-Balance Sheet Risk and Concentration of Risk

Note V - Financial Instruments with Off-Balance Sheet Risk and Concentration of Risk

In the normal course of business, we and certain of our subsidiaries enter into off-balance sheet credit arrangements associated with certain aspects of the title insurance business and other activities.

We generate a significant amount of title insurance premiums in Texas, California, Florida and New York.

Title insurance premiums as a percentage of the total title insurance premiums written from those four states are detailed as follows:

We generate a significant amount of title insurance premiums in Texas, California, Florida, Pennsylvania and Illinois.

Title insurance premiums as a percentage of the total title insurance premiums written from those five states are detailed as follows:

2021 2020 2019

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Florida 9.3 % 8.6 % 9.2 %

New York 4.2 % 5.8 % 6.3 %

Pennsylvania 5.1 % 4.8 % 4.7 %

Illinois 5.1 % 5.0 % 5.1 %

Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash equivalents, short-term investments, and trade receivables.

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We control credit risk through monitoring procedures.

Recent Accounting Pronouncements

Note W - Recent Accounting Pronouncements

Adopted Pronouncements

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The method used to measure estimated credit losses for fixed maturity available-for-sale securities will be unchanged from current GAAP;

however, the amendments require credit losses to be recognized through an allowance

rather than as a reduction to the amortized cost of those securities.

however, the amendments require credit losses to be recognized through an allowance rather than as a reduction to the amortized cost of those securities.

We adopted ASC 326 using the modified retrospective method for all financial assets measured at amortized cost.

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however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit.

We have adopted this standard as of January 1, 2020 and are applying this guidance on a prospective basis.

We adopted this standard as of January 1, 2020 and are applying this guidance on a prospective basis.

The overall effect of Topic 350 had no impact to the Consolidated Financial Statements upon adoption.

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We adopted this standard on June 1, 2020 as a result of our acquisition of F&G, and it did not have an impact on our Consolidated Financial Statements.

Pronouncements Not Yet Adopted

In December 2019, the FASB issued ASU 2019-12 Income Taxes - Simplifying the Accounting for Income Taxes (Topic 740), which simplifies various aspects of the income tax accounting guidance and will be applied using different approaches depending on what the specific amendment relates to and, for public entities, are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020.

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 adopted this standard as of January 1, 2021, and it had no impact on our Consolidated Financial Statements upon adoption.

In October 2020, the FASB issued ASU 2020-08, Codification Improvements to Subtopic 310-20, Receivables - Nonrefundable Fees and Other Costs.

The amendments in this update clarify that callable debt securities should be re-evaluated each reporting period to determine if the amortized cost exceeds the amount repayable by the issuer at the next earliest call date,

and, if so, the excess should be amortized to the next call date.

We adopted this standard as of January 1, 2021 and are applying this guidance on a prospective basis.

This standard had no impact on our Consolidated Financial Statements upon adoption.

Pronouncements Not Yet Adopted

In August 2018, the FASB issued ASU 2018-12, Financial Services-Insurance (Topic 944), Targeted Improvements to the Accounting for Long-Duration Contracts, effective for fiscal years beginning after December 15, 2022 including interim periods within those fiscal years.

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market risk benefits associated with deposit contracts must be measured at fair value, with the effect of the change in the fair value attributable to a change in the instrument-specific credit risk being recognized in other comprehensive income;

deferred acquisition costs are required to be amortized in

proportion to premiums, gross profits, or gross margins and those balances must be amortized on a constant level basis over the expected term of the related contracts;

deferred acquisition costs are required to be amortized in proportion to premiums, gross profits, or gross margins and 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;

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We have identified specific areas that will be impacted by the new guidance and are in the process of assessing the accounting, reporting and/or process changes that will be required to comply as well as the impact of the new guidance on our consolidated financial statements.

In December 2021, the FASB issued ASU 2021-10, Financial Services-Insurance (Topic 944), Government Assistance Requires Disclosures, effective for fiscal years beginning after December 15, 2022 including interim periods within those fiscal years.

The amendments in this ASU may be early adopted as of the beginning of an annual reporting period for which financial statements have not yet been issued, including interim financial statements.

We do not currently expect to early adopt this standard.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data