Fidelity National Financial, Inc. 10-K

Item 8. Financial Statements and Supplementary Data FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES INDEX TO FINANCIAL INFORMATION Page Number Report of Independent Registered Public Accounting Firm on Effectiveness of Internal Control over Financial Reporting (Ernst & Young, LLP, Jacksonville, FL, Auditor Firm ID : 42 ) 91 Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements (Ernst & Young, LLP, Jacksonville, FL, Auditor Firm ID : 42 ) 92 Consolidated Balance Sheets as of December 31, 202 1 and 20 20 96 Consolidated Statements of Earnings for the years ended December 31, 202 1 , 20 20 , and 201 9 97 Consolidated Statements of Comprehensive Earnings for the years ended December 31, 202 1 , 20 20 , and 201 9 98 Consolidated Statements of Equity for the years ended December 31, 202 1 , 20 20 , and 201 9 99 Consolidated Statements of Cash Flows for the years ended December 31, 202 1 , 20 20 , and 201 9 101 Notes to Consolidated Financial Statements 103 90 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and the Board of Directors of Fidelity National Financial, Inc. Opinion on Internal Control over Financial Reporting We have audited Fidelity National Financial, Inc. and subsidiaries’ 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) (the COSO criteria). In our opinion, Fidelity National Financial, Inc. 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. 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 The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP Jacksonville, Florida February 25, 2022 91 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and the Board of Directors of Fidelity National Financial, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Fidelity National Financial, Inc. 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, 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 These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. 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: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Loss Provision Rate Assumption related to the Reserve for Title Claim Losses Description of the Matter The Company’s reserve for title claim losses totaled $1.9 billion as of December 31, 2021. As discussed in Note A to the consolidated financial statements, the reserve for title claim losses includes known claims as well as losses that have been incurred but not yet reported, net of recoupments. The Company establishes reserves for claims which are incurred but not reported at the time premium revenue is recognized based on estimated loss provision rates. There is significant uncertainty inherent in determining the loss provision rates. Auditing the Company’s reserve for title claim losses was complex because of the highly judgmental nature of the determination of the loss provision rates used in the valuation of the reserve for title claim losses. The significant judgment was primarily due to the sensitivity of management’s estimate to claim loss history, industry trends, current legal environment, and geographic considerations. 92 Table of Contents 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 development of the loss provision rates and the recorded reserve for title claim losses. These controls included, among others, the review and approval process management has in place for the development of the loss provision rates and the estimation of the reserve for title claim losses. To evaluate the judgment used by management in determining the loss provision rates, among other procedures, we considered claim loss history, industry trends, current legal environment and geographic considerations, and how management assessed these factors in the current period as compared to prior periods. We involved actuarial professionals with specialized skills and industry knowledge, who assisted in performing an evaluation of the Company’s current year loss provision rates compared with those used in prior periods, as well as a review of loss development experience for prior years. We also independently calculated a range of reasonable reserve estimates which we compared to management’s recorded reserve for title claim losses. Value of Business Acquired (VOBA), Deferred Acquisition Costs (DAC), Deferred Sales Inducements (DSI) and secondary guarantee liabilities Description of the Matter 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 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 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. 93 Table of Contents Valuation of Investments in Securities Description of the Matter The Company’s fair value of fixed maturity securities totaled $32.0 billion as of December 31, 2021. The fair value of a subset of these securities, including asset backed securities and bonds, is based on non-binding broker quotes as described in Note D to the consolidated financial statements. The lack of visibility into assumptions used in non-binding broker quotes is a significant unobservable input, which creates greater subjectivity when determining the fair values. Auditing the fair value of the securities valued by brokers was especially challenging because determining the fair value is complex and highly judgmental and involves using inputs and assumptions that are not directly observable in the market. How we Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of management’s valuation process for broker-quoted securities. These controls included management’s evaluation of the broker-quoted values compared to an independently calculated range of values. To test the fair value of the securities, we utilized the support of our valuation specialists which included, among other procedures, independently calculating a reasonable range of fair values for a sample of securities based on independently obtained information or available transaction data for similar securities. We compared these ranges to management’s estimates of fair value for the selected securities. Assumptions related to Fixed Indexed Annuity Embedded Derivative Liability Description of the Matter As of December 31, 2021, the fair value of the Company’s fixed indexed annuity embedded derivative liability totaled $3.9 billion. Certain of the Company’s fixed indexed annuity contracts allow the policyholder to elect an equity index linked feature, where amounts credited to the contract’s account value are linked to the performance of designated equity indices selected by the policyholder. The equity index crediting feature is accounted for as an embedded derivative liability and reported at fair value as discussed in Note D to the consolidated financial statements. 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, GMWB utilization, non-performance spread, and option cost. 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 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 development of the significant assumptions used in measuring the fair value of the embedded derivative for fixed indexed annuities. 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 prior period and 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. In addition, we compared the nonperformance spread and option costs assumptions to observable market data. We performed an independent recalculation of the embedded derivative for a sample of products for comparison with the actuarial model used by management. 94 Table of Contents /s/ Ernst & Young LLP We have served as the Company's auditor since 2017. Jacksonville, Florida February 25, 2022 95 Table of Contents FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in millions, except share data) December 31, 2021 December 31, 2020 ASSETS Investments: 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 Preferred securities, at fair value 1,401 1,341 Equity securities, at fair value 1,263 995 Derivative investments 816 548 Mortgage loans, net of allowance for credit losses of $ 31 and $ 39 at December 31, 2021 and 2020, respectively. 3,749 2,031 Investments in unconsolidated affiliates 2,486 1,294 Other long-term investments 579 482 Short-term investments, at December 31, 2021 and December 31, 2020 includes pledged short-term investments of $ 1 and $ 1 , respectively, related to secured trust deposits 491 769 Total investments 42,775 35,047 Cash and cash equivalents, at December 31, 2021 and 2020 includes $ 480 and $ 270 , respectively, of pledged cash related to secured trust deposits 4,360 2,719 Trade and notes receivables, net of allowance of $ 32 and $ 28 at December 31, 2021 and 2020, respectively 557 437 Reinsurance recoverable, net of allowance for credit losses of $ 20 and $ 21 at December 31, 2021 and 2020, respectively 3,738 3,211 Goodwill 4,539 4,495 Prepaid expenses and other assets 1,203 997 Lease assets 376 374 Other intangible assets, net 2,557 2,264 Title plants 400 404 Property and equipment, net 185 180 Assets of discontinued operations — 327 Total assets $ 60,690 $ 50,455 LIABILITIES AND EQUITY Liabilities: Contractholder funds $ 35,525 $ 28,718 Future policy benefits 4,732 4,010 Accounts payable and accrued liabilities 2,696 2,402 Notes payable 3,096 2,662 Reserve for title claim losses 1,883 1,623 Funds withheld for reinsurance liabilities 1,676 806 Secured trust deposits 934 711 Lease liabilities 414 414 Income taxes payable 72 56 Deferred tax liability 205 300 Liabilities of discontinued operations — 361 Total liabilities 51,233 42,063 Equity: FNF common stock, $ 0.0001 par value; 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; authorized 50,000,000 shares; issued and outstanding, none — — Additional paid-in capital 5,811 5,720 Retained earnings 4,369 2,394 Accumulated other comprehensive earnings 779 1,304 Less: 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 ) Total Fidelity National Financial, Inc. shareholders’ equity 9,414 8,351 Non-controlling interests 43 41 Total equity 9,457 8,392 Total liabilities and equity $ 60,690 $ 50,455 See Notes to Consolidated Financial Statements 96 Table of Contents FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (Dollars in millions, except per share data) Year Ended December 31, 2021 2020 2019 Revenues: Direct title insurance premiums $ 3,571 $ 2,699 $ 2,381 Agency title insurance premiums 4,982 3,599 2,961 Escrow, title-related and other fees 4,795 3,092 2,584 Interest and investment income 1,961 900 225 Recognized gains and losses, net 334 488 318 Total revenues 15,643 10,778 8,469 Expenses: Personnel costs 3,528 2,951 2,696 Agent commissions 3,821 2,749 2,258 Other operating expenses 1,929 1,759 1,681 Benefits and other changes in policy reserves 2,138 866 — Depreciation and amortization 645 296 178 Provision for title claim losses 385 283 240 Interest expense 114 90 47 Total expenses 12,560 8,994 7,100 Earnings from continuing operations before income taxes and equity in earnings of unconsolidated affiliates 3,083 1,784 1,369 Income tax expense 713 322 308 Earnings before equity in earnings of unconsolidated affiliates 2,370 1,462 1,061 Equity in earnings of unconsolidated affiliates 64 15 15 Net earnings from continuing operations 2,434 1,477 1,076 Net earnings (loss) from discontinued operations, net of tax 8 ( 25 ) — Net earnings 2,442 1,452 1,076 Less: Net earnings attributable to non-controlling interests 20 25 14 Net earnings attributable to Fidelity National Financial, Inc. common shareholders $ 2,422 $ 1,427 $ 1,062 Earnings per share Basic Net earnings from continuing operations attributable to FNF common shareholders $ 8.47 $ 5.11 $ 3.89 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 Diluted Net earnings from continuing operations attributable to FNF common shareholders $ 8.41 $ 5.08 $ 3.83 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 Weighted average shares outstanding FNF common stock, basic basis 285 284 273 Weighted average shares outstanding FNF common stock, diluted basis 287 286 277 See Notes to Consolidated Financial Statements 97 Table of Contents FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS (In millions) Year Ended December 31, 2021 2020 2019 Net earnings $ 2,442 $ 1,452 1,076 Other comprehensive earnings: 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 (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 ) Change in reinsurance liabilities held at fair value resulting from a change in the instrument-specific credit risk (5) 3 ( 3 ) — Minimum pension liability adjustment (6) ( 7 ) 14 — Other comprehensive (loss) earnings ( 525 ) 1,261 56 Comprehensive earnings 1,917 2,713 1,132 Less: Comprehensive earnings attributable to non-controlling interests 20 25 14 Comprehensive earnings attributable to Fidelity National Financial, Inc. common shareholders $ 1,897 $ 2,688 $ 1,118 (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 (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 98 Table of Contents FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EQUITY (In millions, except per share data) Fidelity National Financial, Inc. Common Shareholders Accumulated FNF Other Redeemable Common Additional Comprehensive Treasury Non- Non- Stock Paid-in Retained Earnings Stock controlling Total controlling Shares $ Capital Earnings (Loss) Shares $ Interests Equity Interests Balance, January 1, 2019 290 $ — $ 4,500 $ 641 $ ( 13 ) 14 $ ( 498 ) $ ( 2 ) 4,628 $ 344 Exercise of stock options 2 — 39 — — — — — 39 — Purchase of additional share in consolidated subsidiaries — — 4 — — — — ( 18 ) ( 14 ) — Treasury stock repurchased — — — — — 2 ( 85 ) — ( 85 ) — Other comprehensive earnings - unrealized gain on investments and other financial instruments — — — — 56 — — — 56 — Other comprehensive earnings - unrealized gain on investments in unconsolidated affiliates — — — — 5 — — — 5 — 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 ) — Dividends declared — — — ( 347 ) — — — — ( 347 ) — Subsidiary dividends declared to non-controlling interests — — — — — — — ( 11 ) ( 11 ) — Net earnings — — — 1,062 — — — 14 1,076 — Balance, December 31, 2019 292 $ — $ 4,581 $ 1,356 $ 43 17 $ ( 598 ) $ ( 17 ) $ 5,365 $ 344 Exercise of stock options 3 — 62 — — — — — 62 — 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 — Dividends declared — — — ( 389 ) — — — — ( 389 ) — 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 ) — Net earnings — — — 1,427 — — — 25 1,452 — Balance, December 31, 2020 322 $ — $ 5,720 $ 2,394 $ 1,304 31 $ ( 1,067 ) $ 41 $ 8,392 $ — See Notes to Consolidated Financial Statements 99 Table of Contents FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EQUITY (CONTINUED) (In millions, except per share data) Fidelity National Financial, Inc. Common Shareholders Accumulated FNF Other Common Additional Comprehensive Treasury Non- Stock Paid-in Retained Earnings Stock controlling Total Shares $ Capital Earnings (Loss) Shares $ Interests Equity Balance, January 1, 2021 322 $ — $ 5,720 $ 2,394 $ 1,304 31 $ ( 1,067 ) $ 41 $ 8,392 Exercise of stock options 2 — 50 — — — — — 50 Treasury stock repurchased — — — — — 10 ( 461 ) — ( 461 ) Issuance of restricted stock 1 — — — — — — — — 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 loss on foreign currency translation — — — — ( 7 ) — — — ( 7 ) Other comprehensive earnings - minimum pension liability adjustment — — — — ( 7 ) — — — ( 7 ) Reclassification adjustments for change in unrealized gains and losses included in net earnings — — — — ( 123 ) — — — ( 123 ) Stock-based compensation — — 41 — — — — — 41 Dividends declared — — — ( 447 ) — — — — ( 447 ) Shares withheld for taxes and in treasury — — — — — 1 ( 17 ) — ( 17 ) 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 — — — — — — — ( 19 ) ( 19 ) Net earnings — — — 2,422 — — — 20 2,442 Balance, December 31, 2021 325 $ — $ 5,811 $ 4,369 $ 779 42 $ ( 1,545 ) $ 43 $ 9,457 See Notes to Consolidated Financial Statements 100 Table of Contents FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) For the Year Ended December 31, 2021 2020 2019 Cash Flows From Operating Activities: Net earnings $ 2,442 $ 1,452 $ 1,076 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 645 296 178 Equity in earnings of unconsolidated affiliates ( 64 ) ( 15 ) ( 15 ) (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 — Deferred policy acquisition costs and deferred sales inducements ( 675 ) ( 266 ) — Charges assessed to contractholders for mortality and administration ( 180 ) ( 100 ) — Non-cash lease costs 139 150 147 Operating lease payments ( 150 ) ( 152 ) ( 149 ) Distributions from unconsolidated affiliates, return on investment 106 — 5 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 ) Changes in assets and liabilities, net of effects from acquisitions: Change in reinsurance recoverable 4 40 — Change in future policy benefits 634 ( 92 ) — Change in funds withheld from reinsurers 850 ( 15 ) — 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 Net change in other assets and other liabilities 279 ( 85 ) 121 Net cash provided by operating activities 4,090 1,578 1,121 Cash Flows From Investing Activities: Proceeds from sales, calls and maturities of investment securities 9,796 3,592 831 Proceeds from sales of property and equipment — 9 4 Fundings of Cannae Holdings Inc. note receivable — — ( 200 ) Proceeds from repayments of Cannae Holdings Inc. note receivable — — 200 Additions to property and equipment and capitalized software ( 131 ) ( 110 ) ( 96 ) Purchases of investment securities ( 16,014 ) ( 4,959 ) ( 867 ) Net proceeds from (purchases of) sales and maturities of short-term investment securities 266 145 ( 395 ) F&G acquisition — ( 1,076 ) — Other acquisitions/disposals, net of cash acquired ( 100 ) 158 ( 1 ) Additional investments in unconsolidated affiliates ( 1,746 ) ( 327 ) ( 34 ) Distributions from unconsolidated affiliates, return of investment 491 241 46 Net other investing activities ( 11 ) ( 4 ) ( 8 ) Net cash used in investing activities ( 7,449 ) ( 2,331 ) ( 520 ) 101 Table of Contents FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) (In millions) For the Year Ended December 31, Cash Flows From Financing Activities: 2021 2020 2019 Borrowings — 1,000 — Debt offering 449 1,246 — Debt costs/equity issuance additions ( 6 ) ( 22 ) — Debt service payments — ( 1,000 ) — Dividends paid ( 446 ) ( 389 ) ( 344 ) Subsidiary dividends paid to non-controlling interest shareholders ( 19 ) ( 14 ) ( 11 ) Exercise of stock options 48 62 39 Net change in secured trust deposits 224 ( 80 ) ( 31 ) Purchase of additional share in consolidated subsidiaries — ( 90 ) ( 3 ) Payment of contingent consideration for prior period acquisitions ( 5 ) ( 13 ) ( 21 ) Payment for shares withheld for taxes and in treasury ( 17 ) ( 8 ) ( 15 ) Contractholder account deposits 8,166 2,967 — Contractholder account withdrawals ( 2,931 ) ( 1,327 ) — Purchases of treasury stock ( 463 ) ( 236 ) ( 86 ) Other financing activity — — ( 10 ) Net cash provided by (used in) financing activities 5,000 2,096 ( 482 ) Net increase in cash and cash equivalents 1,641 1,343 119 Cash and cash equivalents at beginning of period 2,719 1,376 1,257 Cash and cash equivalents at end of period $ 4,360 $ 2,719 $ 1,376 See Notes to Consolidated Financial Statements 102 Table of Contents FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note A. Business and Summary of Significant Accounting Policies The following describes the business and significant accounting policies of Fidelity National Financial, Inc. and its subsidiaries (collectively, “we,” “us,” “our,” the "Company" or “FNF”), which have been followed in preparing the accompanying Consolidated Financial Statement s. Description of the Business We are a leading provider of (i) title insurance, escrow and other title-related services, including trust activities, trustee sales guarantees, recordings and reconveyances and home warranty products, (ii) technology and transaction services to the real estate and mortgage industries and (iii) annuity and life insurance products. FNF is one of the nation’s largest title insurance companies operating through its title insurance underwriters - Fidelity National Title Insurance Company ("FNTIC"), Chicago Title Insurance Company ("Chicago Title"), Commonwealth Land Title Insurance Company ("Commonwealth Title"), Alamo Title Insurance and National Title Insurance of New York Inc. - which collectively issue more title insurance policies than any other title company in the United States. Through our subsidiary, ServiceLink Holdings, LLC ("ServiceLink"), we provide mortgage transaction services, including title-related services and facilitation of production and management of mortgage loans. We are also a leading provider of insurance solutions serving retail annuity and life 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 3.20 % Senior Notes 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 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. ("FTAC") On January 25, 2021, each of our wholly-owned subsidiaries, FNTIC, Commonwealth Title and Chicago Title (collectively, the "FTAC Subscribers") entered into common stock subscription agreements (the "FTAC Subscription Agreements") with Alight (f/k/a Acrobat Holdings, Inc.) and FTAC to purchase in the aggregate $ 150 million (the "Alight Purchase Price") of Class A Common Stock, par value $ .001 per share, of Alight at a purchase price of $ 10.00 per share. On June 29, 2021, we funded the Alight Purchase Price. Additionally, Alight paid the FTAC Subscribers a fee of 2.5 % 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. 103 Table of Contents 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 The accompanying Consolidated Financial Statements are prepared in accordance with generally accepted accounting principles in the United States ("GAAP") and include our accounts as well as our wholly-owned and majority-owned subsidiaries. All intercompany profits, transactions and balances have been eliminated. 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. We are also involved in certain entities that are considered variable interest entities ("VIEs") as defined under GAAP. 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, 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. If we determine we are the primary beneficiary of a VIE, we consolidate the assets and liabilities of the VIE in our Consolidated Financial Statements. See Note E Investments for additional information on our investments in VIEs. I nvestments Fixed Maturity Securities Available-for-Sale Fixed maturity securities are purchased to support our investment strategies, which are developed based on factors including rate of return, maturity, credit risk, duration, tax considerations and regulatory requirements. Our investments in fixed maturity securities have been designated as available-for-sale ("AFS") and are carried at fair value, net of allowance for expected credit losses, with unrealized gains and losses included within 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. 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 or unobservable. 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. Changes in prepayment ass umptions are accounted for prospectively. In our title segment, realized gains and losses on sales of our fixed maturity securitie s are determined on the basis of the cost of the specific investments sold and are credited or charged to income on a trade date basis. 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 104 Table of Contents Earnings. For details on our policy around allowance for expected credit losses on available-for-sale securities, refer to Note E Investments. Preferred and Equity Securities 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 or unobservable. 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. Recognized gains and losses on sales of our preferred and equity securities are credited or charged to income on a trade date basis, unless the security is a private placement in which case settlement date basis is used. Derivative Financial Instruments In our F&G segment, we hedge certain portions of our exposure to product related equity market risk by entering into derivative transactions (primarily call options). All such derivative instruments are recognized as either assets or liabilities in the accompanying Consolidated Balance Sheets at fair value. The changes in fair value are reported within Recognized gains and losses, net in the accompanying Consolidated Statements of Earnings. We purchase financial instruments and issue products that may contain embedded derivative instruments. If it is determined that the embedded derivative possesses economic characteristics that are not clearly and closely related to the economic characteristics of the host contract, and a separate instrument with the same terms would qualify as a derivative instrument, the embedded derivative is bifurcated from the host contract for measurement purposes. The embedded derivative is carried at fair value, which is determined through a combination of market observable inputs such as market value of option and interest swap rates and unobservable inputs such as the mortality multiplier, surrender and withdrawal rates and non-performance spread. The changes in fair value are reported within 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 . Reinsurance Related Embedded Derivatives 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. These arrangements create embedded derivatives considered to be total return swaps with contractual returns that are attributable to the assets and liabilities associated with the 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, are passed directly to the reinsurer pursuant to contractual terms of the reinsurance arrangement. 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. Mortgage Loans Our investment in mortgage loans consists of commercial and residential mortgage loans on real estate, which are reported at amortized cost, less allowance for expected credit losses. For details on our policy around allowance for expected credit losses on mortgage loans, refer to Note E Investments . Commercial mortgage loans are continuously monitored by reviewing appraisals, operating statements, rent revenues, annual inspection reports, loan specific credit quality, property characteristics, market trends and other factors. Commercial mortgage loans are rated for the purpose of quantifying the level of risk. Loans are placed on a watch list when the debt service coverage ("DSC") ratio falls below and the loan-to-value ("LTV") ratios exceeds certain thresholds. Loans on the watchlist are closely monitored for collateral deficiency or other credit events that may lead to a potential loss of principal or interest. We define delinquent mortgage loans as 30 days past due, consistent with industry practice. Residential mortgage loans have a primary credit quality indicator of either a performing or nonperforming loan. We define nonperforming residential mortgage loans as those that are 90 or more days past due and/or in nonaccrual status, which is assessed monthly. Generally, nonperforming residential mortgage loans have a higher risk of experiencing a credit loss. We 105 Table of Contents 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. Loan origination fees and direct costs, as well as premiums and discounts, are amortized as level yield adjustments over the respective loan terms. Unamortized net fees or costs are recognized upon early repayment of the loans. Loan commitment fees are deferred and amortized on an effective yield basis over the term of the loan. Short-term investments 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 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. Recognition of income is delayed due to the availability of the related financial statements, which are obtained from the general partner generally on a one to three-month delay. 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 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 Dividends and interest income are recorded in Interest and investment income and recognized when earned. Income or losses upon call or prepayment of fixed maturity securities are recognized in Interest and investment income. Amortization of premiums and accretion of discounts on investments in fixed maturity securities are reflected in Interest and investment income over the contractual terms of the investments, and for callable investments at a premium, based on the earliest call date of the investments, in a manner that produces a constant effective yield. 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 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. Interest and investment income is presented net of earned investment management fees. Cash and Cash Equivalents 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 fair value. Trade and Notes Receivables The carrying values reported in the Consolidated Balance Sheets for trade and notes receivables approximate their fair value. Premium revenues from agency title operations are recognized when the underlying title order and transaction closing, if applicable, are complete and reported to us. Premium revenues from agency operations and related commissions include an accrual based on estimated historical transaction volume data for policies that have closed in a particular period in which premiums have not yet been reported to us. Historically, the time lag between the closing of these transactions by our agents and the reporting of these policies, or premiums, to us has been up to 15 months, with 69 % - 84 % reported within three months following closing, an additional 14 % - 26 % reported within the next three months and the remainder within seven to fifteen months. In addition to accruing these earned but unreported agency premiums, we also accrue agent commission expense, which was 76.7 % of agent premiums earned in 2021, 76.4 % of agent premiums earned in 2020, and 76.3 % of agent premiums earned in 2019. The amount due from our agents relating to this accrual, i.e., the agent premium less their contractual retained commission, was approximately $ 113 million and $ 65 million at December 31, 2021 and 2020, respectively. Due to the offsetting effects of reversing prior period accruals, the impact of this accrual to our recorded Agency title insurance premiums, Agent commissions and net earnings in any given period is not considered material. 106 Table of Contents Fair Value of Financial Instruments The fair values of financial instruments presented in the Consolidated Financial Statements are estimates of the fair values at a specific point in time using available market information and appropriate valuation methodologies. These estimates are subjective in nature and involve uncertainties and significant judgment in the interpretation of current market data. See a description of the fair value methodology used in Note D Fair Value of Financial Instruments . Fair Value of Assets Acquired and Liabilities Assumed in Business Combinations FASB Accounting Standards Codification ("ASC") Topic 805, Business Combinations, requires an acquirer to recognize, separately from goodwill, the identifiable assets acquired, liabilities assumed, and any noncontrolling interest in the acquiree, and to measure these items generally at their acquisition date fair values. Goodwill is recorded as the residual amount by which the purchase price exceeds the fair value of the net assets acquired. If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, we are required to report provisional amounts in the financial statements for the items for which the accounting is incomplete. Adjustments to provisional amounts initially recorded that are identified during the measurement period are recognized in the reporting period in which the adjustment amounts are determined. This includes any effect on earnings of changes in depreciation, amortization, or other income effects as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. During the measurement period, we are also required to recognize additional assets or liabilities if new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have resulted in the recognition of those assets and liabilities as of that date. The measurement period ends the sooner of one year from the acquisition date or when we receive the information we were seeking about facts and circumstances that existed as of the acquisition date or learn that more information is not obtainable. Contingent consideration liabilities or receivables recorded in connection with business acquisitions must also be adjusted for changes in fair value until settled. Goodwill Goodwill represents the excess of cost over fair value of identifiable net assets acquired and assumed in a business combination. Goodwill and other intangible assets with indefinite useful lives are reviewed for impairment at the reporting unit level on an annual basis or more frequently if circumstances indicate potential impairment, through a comparison of fair value to the carrying amount. In evaluating the recoverability of goodwill, we perform an annual goodwill impairment analysis based on a review of qualitative factors to determine if events and circumstances exist, which will lead to a determination that the fair value of a reporting unit is greater than its carrying amount, prior to performing a full fair-value assessment. We completed annual goodwill impairment analyses in the fourth quarter of each period presented using a September 30 measurement date. For the years ended December 31, 2021, 2020 and 2019, we determined there were no events or circumstances which indicated that the carrying value of a reporting unit exceeded the fair value. 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. It represents the portion of the purchase price that is allocated to the value of the rights to receive future cash flows from the business in force at the acquisition date. VOBA is a function of the VIF, current GAAP reserves, GAAP assets, and deferred tax liability. The VIF is determined by the present value of statutory distributable earnings less opening required capital, and is sensitive to assumptions including the discount rate, surrender rates, partial withdrawals, utilization rates, projected investment spreads, mortality, and expenses. DAC consists principally of commissions that are related directly to the successful sale of new or renewal insurance contracts, which may be deferred to the extent recoverable. 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 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. For all insurance contracts accounted for under long-duration contract deposit accounting, amortization is based on assumptions consistent with those used in the development of the underlying contract liabilities, adjusted for emerging experience and expected trends. For all of the insurance intangibles (DAC, DSI and VOBA), the balances are generally amortized over the lives of the policies in relation to the expected emergence of estimated gross profits (“EGPs”) from investment income, surrender charges and other product fees, less policy benefits, maintenance expenses, mortality, and expense margins. Recognized gains (losses) on investments and changes in fair value of the embedded derivative on our FIA and IUL products are included in actual gross profits in the period realized as described further below. Amortization is reported within Depreciation and amortization in the accompanying Consolidated Statements of Earnings. 107 Table of Contents Changes in assumptions, including our earned rate (i.e., long term assumptions of the Company’s expected earnings on related investments), budgeted option costs (i.e., the expected cost to purchase call options in future periods to fund the equity indexed linked feature) and surrender rates can have a significant impact on VOBA, DAC and DSI balances and amortization rates. Due to the relative size and sensitivity to minor changes in underlying assumptions of those intangible balances, we perform quarterly and annual analyses of the VOBA, DAC and DSI balances for recoverability to ensure that the unamortized portion does not exceed the expected recoverable amounts. 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 contract issuance or acquisition date with respect to VOBA. The cumulative unlocking adjustment is recognized as a component of current period amortization. Amortization expense of VOBA, DAC and DSI reflects an assumption for an expected level of credit-related investment losses. 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 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 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. In general, customer relationships are amortized over their estimated useful lives, generally ten years , using an accelerated method, which takes into consideration expected customer attrition rates. VODA is an intangible asset that represents the value of an acquired distribution network and is amortized using the sum of years digits method. Contractual relationships are generally amortized over their contractual life. Trademarks and tradenames are generally amortized over ten years . 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. 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. We do not capitalize any costs once the software is ready for its intended use. We recorded no impairment expense to other intangible assets during the years ended December 31, 2021, 2020, or 2019. Title Plants 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. Costs incurred to maintain, update and operate title plants are expensed as incurred. Title plants are not amortized as they are considered to have an indefinite life, if maintained. Sales of title plants are reported at the amount received net of the adjusted costs of the title plant sold. Sales of title plant copies are reported at the amount received. No cost is allocated to the sale of copies of title plants unless the carrying value of the title plant is diminished or impaired. Title plants are reviewed for impairment whenever events or circumstances indicate that the carrying amounts may not be recoverable. We recorded $ 1 million in impairment expense to title plants during the year ended December 31, 2019, for two title plants, which are no longer in use. We reviewed title plants for impairment but recorded no impairment expense related to title plants in the years ended December 31, 2021 or 2020. Property and Equipment Property and equipment are recorded at cost, less accumulated depreciation. Depreciation is computed primarily using the straight-line method based on the estimated useful lives of the related assets: twenty to thirty years for buildings and three to twenty-five years for furniture, fixtures and equipment. Leasehold improvements are amortized on a straight-line basis over the lesser of the term of the applicable lease or the estimated useful lives of such assets. Property and equipment are reviewed for impairment whenever events or circumstances indicate that the carrying amounts may not be recoverable. 108 Table of Contents Contractholder Funds 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 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 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 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, 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 Our reserve for title claim losses includes known claims as well as losses we expect to incur, net of recoupments. Each known claim is reserved based on our review as to the estimated amount of the claim and the costs required to settle the claim. Reserves for claims, which are incurred but not reported are established at the time premium revenue is recognized based on historical loss experience and also take into consideration other factors, including industry trends, claim loss history, current leg al environment, geographic considerations and the type of policy written. 109 Table of Contents The reserve for title claim losses also includes reserves for losses arising from closing and disbursement functions due to frau d or operational error. If a loss is r elated to a policy issued by an independent agent, we may proceed against the independent agent pursuant to the terms of the agency agreement. In any event, we may proceed against third parties who are responsible for any loss under th e title insurance policy under rights of subrogation. Secured Trust Deposits In the state of Illinois, a trust company is permitted to commingle and invest customers’ assets with its own assets, pending completion of real estate transactions. Accordingly, our Consolidated Balance Sheets reflect a secured trust deposit liability of $ 934 million and $ 711 million at December 31, 2021 and 2020, respectively, representing customers’ assets held by us and corresponding assets including cash and investments pledged as security for those trust balances. Income Taxes We recognize deferred tax assets and liabilities for temporary differences between the financial reporting basis and the tax basis of our assets and liabilities and expected benefits of utilizing net operating loss and credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The impact on deferred taxes of changes in tax rates and laws, if any, is applied to the years during which temporary differences are expected to be settled and reflected in the financial statements in the period enacted. Reinsurance Title In our Title segment, in a limited number of situations, we limit our maximum loss exposure by reinsuring certain risks with other title insurers. We also earn a small amount of additional income, which is reflected in our direct premiums, by assuming reinsurance for certain risks of other title insurers. We cede a portion of certain policy and other liabilities under agent fidelity, excess of loss and case-by-case reinsurance agreements. Reinsurance agreements provide that in the event of a loss (including costs, attorneys’ fees and expenses) exceeding the retained amounts, the reinsurer is liable for the excess amount assumed. However, the ceding company remains primarily liable in the event the reinsurer does not meet its contractual obligations. F&G In our F&G segment, our insurance subsidiaries enter into reinsurance agreements with other companies in the normal course of business. 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 Refer to Note L Revenue Recognition for a description of our accounting for our various revenue streams. Benefits and Other Changes in Policy Reserves 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. 110 Table of Contents Other changes in policy reserves also include the change in reserves for life insurance products. 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 quoted market prices, and recognized over the service period. Earnings Per Share Basic earnings per share, as presented on the Consolidated Statement of Earnings, is computed by dividing net earnings available to common shareholders by the weighted average number of common shares outstanding during the period. In periods when earnings are positive, diluted earnings per share is calculated by dividing net earnings available to common shareholders by the weighted average number of common shares outstanding plus the impact of assumed conversions of potentially dilutive securities. For periods when we recognize a net loss, diluted earnings per share is equal to basic earnings per share as the impact of assumed conversions of potentially dilutive securities is considered to be antidilutive. We have granted certain stock options, shares of restricted stock, convertible debt instruments and certain other convertible share based payments, which have been treated as common share equivalents for purposes of calculating diluted earnings per share for periods in which positive earnings have been reported. 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 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) We report Comprehensive earnings (loss) in accordance with GAAP on the Consolidated Statements of Comprehensive Earnings. Total comprehensive earnings are defined as all changes in shareholders' equity during a period, other than those resulting from investments by and distributions to shareholders. While total comprehensive earnings is the activity in a period and is largely driven by net earnings in that period, accumulated other comprehensive earnings or loss represents the cumulative balance of other comprehensive earnings, net of tax, as of the balance sheet date. Amounts reclassified to net earnings relate to the realized gains (losses) on our investments and other financial instruments, excluding investments in unconsolidated affiliates, and are included in Recognized gains and losses, net on the Consolidated Statements of Earnings. Changes in the balance of Other comprehensive earnings (loss) by component are as follows: Unrealized gain (loss) on investments and other financial instruments, net (excluding investments in unconsolidated affiliates) Unrealized gain (loss) relating to investments in unconsolidated affiliates Unrealized (loss) gain on foreign currency translation and cash flow hedging Minimum pension liability adjustment Total Accumulated Other Comprehensive Earnings (Loss) (In millions) Balance January 1, 2020 $ 46 $ 18 $ ( 11 ) $ ( 10 ) $ 43 Reclassification adjustments ( 73 ) — — — ( 73 ) Other comprehensive earnings 1,307 3 10 14 1,334 Balance December 31, 2020 1,280 21 ( 1 ) 4 1,304 Reclassification adjustments ( 123 ) — — — ( 123 ) Other comprehensive earnings ( 410 ) 22 ( 7 ) ( 7 ) ( 402 ) Balance December 31, 2021 $ 747 $ 43 $ ( 8 ) $ ( 3 ) $ 779 Redeemable Non-controlling Interest Subsequent to our acquisition of Lender Processing Services, Inc. ("LPS") in January 2014, we issued a 35 % ownership interest in ServiceLink to funds affiliated with Thomas H. Lee Partners ("THL" or "the minority interest holder"). 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 111 Table of Contents 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. The redeemable noncontrolling interests were settled at the current fair value at the time we received notice of THL's put election as determined by the parties or by a third party appraisal under the terms of the Unit Purchase Agreement. As a result of a recapitalization of ServiceLink in 2015, the ownership interest by the minority interest holder was reduced from 35 % to 21 %. The redeemable noncontrolling interests were recorded at their initial value of $ 344 million in our Consolidated Balance Sheets and would have been adjusted to fair value were such value to rise above the initial value. As these redeemable noncontrolling interests provided for redemption features not solely within our control, we classified the redeemable noncontrolling interests outside of permanent equity. 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. Management Estimates The preparation of these Consolidated Financial Statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Periodically, and at least annually, typically in the third quarter, we review the assumptions associated with reserves for policy benefits, product guarantees, and amortization of intangibles. Additionally, during the 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 F&G 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. On August 26, 2020, we issued an additional 1 million shares of FNF common stock and paid approximately $ 100 million in cash to Kingfishers, LP., Kingstown Partners Master, LTD., Kingstown Partners II, LP., Kingstown 1740 Fund, LP. and Ktown, LP. (collectively the "Kingstown Dissenters"), who are former owners of F&G common stock. For more information related to the Kingstown Dissenters, refer to Note H Commitments and Contingencies . 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 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. The initial purchase price is as follows (in millions): Cash paid for outstanding F&G shares $ 1,903 Less: Cash Acquired 827 Net cash paid for F&G 1,076 Value of FNF share consideration 806 Value of outstanding converted equity awards attributed to services already rendered 28 Total net consideration paid $ 1,910 The acquisition was accounted for as a business combination under FASB Accounting Standards Codification Topic 805, Business Combinations ("Topic 805").The purchase price 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 112 Table of Contents 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 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): Fair Value Fixed maturity securities $ 22,389 Preferred securities 876 Equity securities 52 Derivative instruments 313 Mortgage loans 1,755 Investments in unconsolidated affiliates 1,049 Other long-term investments 430 Short-term investments 37 Trade and notes receivable 1 Reinsurance recoverable 2,998 Goodwill 1,756 Prepaid expenses and other assets 379 Lease assets 8 Other intangible assets 2,107 Deferred tax asset 269 Assets of discontinued operations 2,392 Total assets acquired 36,811 Contractholder funds 26,451 Future policy benefits 3,871 Accounts payable and accrued liabilities 897 Notes payable 589 Funds withheld for reinsurance liabilities 816 Lease liabilities 9 Liabilities of discontinued operations 2,268 Total liabilities assumed 34,901 Net assets acquired $ 1,910 The gross carrying value and weighted average estimated useful lives of Other intangible assets acquired in the F&G acquisition consist of the following (dollars in millions): Gross Carrying Value Estimated Useful Life (in years) Other intangible assets: Value of business acquired $ 1,908 Various Value of distribution network acquired 140 15 Trademarks and licenses 38 10 Software 21 2 Total Other intangible assets $ 2,107 113 Table of Contents 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 F&G's financial results since the acquisition date are reflected in our Consolidated Financial Statements. F&G's revenues and net earnings for the period from June 1, 2020 through December 31, 2020 of $ 1,233 million and $ 136 million, respectively, are included in the Consolidated Statements of Earnings for the year ended December 31, 2020. For comparative purposes, selected unaudited pro-forma consolidated results of operations of FNF for the years ended December 31, 2020 and 2019 are presented below. Unaudited pro-forma results presented assume the consolidation of F&G occurred as of January 1, 2019. Year Ended December 31, 2020 2019 (In millions) Total revenues $ 10,897 $ 10,386 Net earnings attributable to FNF common shareholders 1,233 1,419 Amounts reflect certain pro forma adjustments to revenue and net earnings that were directly attributable to the acquisition, and for the elimination of historical activity between FNF and F&G prior to the acquisition. These adjustments include the following: • elimination of valuation changes on FNF's investment in F&G common and preferred shares prior to the acquisition; • elimination of dividends received by FNF related to its holdings of F&G's common and preferred shares prior to the acquisition; • elimination of advisory fees F&G paid to FNF; • elimination of transaction costs paid by F&G; • adjustment to record interest expense related to financing associated with the acquisition; • adjustment to reflect the elimination of historical amortization of F&G intangibles and the additional amortization of F&G intangibles measured at fair value as of the acquisition date; and • adjustment to reflect the prospective reclassification from accumulated other comprehensive earnings of the unrealized gains on available-for-sale securities to a premium, which will be amortized into income based on the expected life of the investment securities. 114 Table of Contents Note C — Summary of Reserve for Title Claim Losses A summary of the reserve for title claim losses follows: Year Ended December 31, 2021 2020 2019 (Dollars in millions) Beginning balance $ 1,623 $ 1,509 $ 1,488 Change in insurance recoverable 94 34 1 Claim loss provision related to: Current year 385 283 240 Prior years — — — Total title claim loss provision 385 283 240 Claims paid, net of recoupments related to: Current year ( 14 ) ( 11 ) ( 11 ) Prior years ( 205 ) ( 192 ) ( 209 ) Total title claims paid, net of recoupments ( 219 ) ( 203 ) ( 220 ) Ending balance of claim loss reserve for title insurance $ 1,883 $ 1,623 $ 1,509 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 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 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. On Decem ber 13, 2019, a lawsuit styled, Kim Funding, LLC, Kim H. Peterson, Joseph J. Cohen, and ABC Funding Strategies, LLC v. Chicago Title Co., Chicago Title Ins. Co., Thomas Schwiebert, Adelle Ducharme, and Betty Elixman , was filed in San Diego County Superior Court. Plaintiffs claim losses 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. Chicago Title Co. and Chicago Title Ins. Co. , was filed in San Diego County Superior Court. Plaintiffs claim losses in excess of $ 7 million as a result of the alleged fraud scheme, and also seek punitive damages, recovery of attorneys’ fees, and disgorgement. On June 29, 2020, a lawsuit styled, Susan Heller Fenley Separate Property Trust, DTD 03/04/2010, Susan Heller Fenley Inherited Roth IRA, Shelley Lynn Tarditi Trust and ROJ, LLC v. Chicago Title Co., Chicago Title Ins. Co., Thomas Schwiebert, Adelle Ducharme, and Betty Elixman , was filed in San Diego County Superior Court. Plaintiffs claim losses in excess of $ 6 million as a result of the alleged fraud scheme, and seek statutory, treble, and punitive damages. The Named Companies have filed a cross-complaint against Ms. Champion-Cain, and others. On July 7, 2020, a cross-claim styled, Laurie Peterson v. Chicago Title Co., Chicago Title Ins. Co., Thomas Schwiebert, Adelle Ducharme, and Betty Elixman , was filed in an existing lawsuit styled, Banc of California, National Association v. Laurie Peterson , which is pending in San Diego County Superior Court. Cross-complaint plaintiff was sued by a bank to recover in excess of $ 35 million that she allegedly guaranteed to repay for certain investments made by the Banc of California in the alcoholic beverage license scheme. Cross-complaint plaintiff has, in turn, sued the Named 115 Table of Contents 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. Peterson Trustee of the Peterson Family Trust dated April 14 1992 v. Chicago Title Co., Chicago Title Ins. Co., Thomas Schwiebert, Adelle Ducharme, and Betty Elixman , was filed in an existing lawsuit styled, CalPrivate Bank v. Kim H. Peterson Trustee of the Peterson Family Trust dated April 14 1992 , which is pending in Superior Court of San Diego County for the State of California. Cross-complaint plaintiff was sued by a bank to recover in excess of $ 12 million that the trustee allegedly guaranteed to repay for certain investments made by CalPrivate Bank in the alcoholic beverage license scheme. Cross-complaint plaintiff has, in turn, sued the Named Companies in that action seeking in excess of $ 250 million in monetary losses as well as exemplary damages and attorneys’ fees. On Octo ber 1, 2020, a lawsuit styled, Ovation Fin. Holdings 2 LLC, Ovation Fund Mgmt. II, LLC, Banc of California, N.A. v. Chicago Title Ins. Co. , was filed in San Diego County Superior Court. Plaintiffs claim losses of more than $ 75 million, as well as consequential and punitive damages. The Named Companies have filed a cross-complaint against Ms. Champion-Cain, 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. Chicago Title Co. and Chicago Title Ins. Co. , was also filed in the Superior Court of San Diego County for the State of California. Plaintiff claims losses in excess of $ 12 million based upon business loan advances made in the alcoholic beverage license scheme, and seeks punitive damages and the recovery of attorneys’ fees. The Named Companies have filed a cross-complaint against Ms. Champion-Cain, and others. 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. Allred v. 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. Co. , was filed in San Diego County Superior Court by the receiver on behalf of the receivership entities against the Named Companies. The receiver seeks compensatory, incidental, consequential, and punitive damages, and seeks the recovery of attorneys’ fees. In turn, the Named Companies 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. Estimating future title loss payments is difficult because of the complex nature of title claims, the long periods of time over which claims are paid, significantly varying dollar amounts of individual claims and other factors. Due to the uncertainty inherent in the process and to the judgment used by management, the ultimate liability may be greater or less than our current reserves. If actual claims loss development varies from what is currently expected and is not offset by other factors, it is possible that additional reserve adjustments may be required in future periods in order to maintain our recorded reserve within a reasonable range of our actuary's central estimate. 116 Table of Contents Note D — Fair Value of Financial Instruments Our measurement of fair value is based on assumptions used by market participants in pricing the asset or liability, which may include inherent risk, restrictions on the sale or use of an asset, or non-performance risk, which may include our own credit risk. We estimate an exchange price is the price in an orderly transaction between market participants to sell the asset or transfer the liability (“exit price”) in the principal market, or the most advantageous market for that asset or liability in the absence of a principal market as opposed to the price that would be paid to acquire the asset or assume a liability (“entry price”). We categorize financial instruments carried at fair value into a three-level fair value hierarchy, based on the priority of inputs to the respective valuation technique. The three-level hierarchy for fair value measurement is defined as follows: Level 1 - Values are unadjusted quoted prices for identical assets and liabilities in active markets accessible at the measurement date. Level 2 - Inputs include quoted prices for similar assets or liabilities in active markets, quoted prices from those willing to trade in markets that are not active, or other inputs that are observable or can be corroborated by market data for the term of the instrument. Such inputs include market interest rates and volatilities, spreads, and yield curves. Level 3 - Certain inputs are unobservable (supported by little or no market activity) and significant to the fair value measurement. Unobservable inputs reflect the Company’s best estimate of what hypothetical market participants would use to determine a transaction price for the asset or liability at the reporting date based on the best information available in the circumstances. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the investment. When a determination is made to classify an asset or liability within Level 3 of the fair value hierarchy, the determination is based upon the significance of the unobservable inputs to the overall fair value measurement. Because certain securities trade in less liquid or illiquid markets with limited or no pricing information, the determination of fair value for these securities is inherently more difficult. In addition to the unobservable inputs, Level 3 fair value investments may include observable components, which are components that are actively quoted or can be validated to market-based sources. 117 Table of Contents The carrying amounts and estimated fair values of our financial instruments for which the disclosure of fair values is required, including financial assets and liabilities measured and carried at fair value on a recurring basis, with the exception of investment contracts, portions of other long-term investments and debt, which are disclosed later within this footnote, was summarized according to the hierarchy previously described, as follows (in millions): December 31, 2021 Level 1 Level 2 Level 3 Fair Value Carrying Amount Assets Cash and cash equivalents $ 4,360 $ — $ — $ 4,360 $ 4,360 Fixed maturity securities, available-for-sale: Asset-backed securities — 4,736 3,959 8,695 8,695 Commercial mortgage-backed securities — 2,944 35 2,979 2,979 Corporates 37 15,322 1,135 16,494 16,494 Hybrids 132 780 — 912 912 Municipals — 1,458 43 1,501 1,501 Residential mortgage-backed securities — 731 — 731 731 U.S. Government 394 — — 394 394 Foreign Governments — 266 18 284 284 Equity securities 1,206 — 9 1,215 1,215 Preferred securities 506 893 2 1,401 1,401 Derivative investments — 816 — 816 816 Short term investments 168 2 321 491 491 Other long-term investments — — 78 78 78 Total financial assets at fair value $ 6,803 $ 27,948 $ 5,600 $ 40,351 $ 40,351 Liabilities Derivatives: 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 $ 3,956 118 Table of Contents December 31, 2020 Level 1 Level 2 Level 3 Fair Value Carrying Amount Assets Cash and cash equivalents $ 2,719 $ — $ — $ 2,719 $ 2,719 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 Corporates 25 13,421 1,289 14,735 14,735 Hybrids 175 815 4 994 994 Municipals — 1,360 43 1,403 1,403 Residential mortgage-backed securities — 342 483 825 825 U.S. Government 342 — — 342 342 Foreign Governments — 176 17 193 193 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 Other long-term investments — — 50 50 50 Total financial assets at fair value $ 5,311 $ 25,431 $ 3,267 $ 34,009 $ 34,009 Liabilities Fair value of future policy benefits — — 5 5 5 Derivatives: 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 Fixed Maturity, Preferred and Equity Securities We measure the fair value of our securities based on assumptions used by market participants in pricing the security. The most appropriate valuation methodology is selected based on the specific characteristics of the fixed maturity or equity security, and we will then consistently apply the valuation methodology to measure the security’s fair value. Our fair value measurement is based on a market approach, which utilizes prices and other relevant information generated by market transactions involving identical or comparable securities. Sources of inputs to the market approach include third-party pricing services, independent broker quotations, or pricing matrices. We use observable and unobservable inputs in our valuation methodologies. Observable inputs include benchmark yields, reported trades, broker-dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data including market research publications. In addition, market indicators and industry and economic events are monitored and further market data will be acquired when certain thresholds are met. For certain security types, additional inputs may be used, or some of the inputs described above may not be applicable. The significant input used in the fair value measurement of equity securities for which the market approach valuation technique is employed is yield for comparable securities. Increases or decreases in the yields would result in lower or higher, respectively, fair value measurements. For broker-quoted only securities, quotes from market makers or broker-dealers are obtained from sources recognized to be market participants. We believe the broker quotes are prices at which trades could be executed based on historical trades executed at broker-quoted or slightly higher prices. We analyze the third-party valuation methodologies and related inputs to perform assessments to determine the appropriate level within the fair value hierarchy. However, we did not adjust prices received from third parties as of December 31, 2021 or December 31, 2020. 119 Table of Contents Derivative Financial Instruments The fair value of call options is based upon valuation pricing models, which represents what we would expect to receive or pay at the balance sheet date if we canceled the options, entered into offsetting positions, or exercised the options. Fair values for these instruments are determined internally, based on industry accepted valuation pricing models, which use market-observable inputs, including interest rates, yield curve volatilities, and other factors. The fair value of futures contracts (specifically for 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/ 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, 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. Increases or decreases in treasury rates, mortality multiplier, surrender rates, or non-performance spread in isolation would result in a lower or higher fair value measurement, respectively. Generally, a change in any one unobservable input would not directly result in a change in any other unobservable input. Also refer to 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 O Reinsurance for further discussion on F&G reinsurance agreements. Other long-term investments We hold a fund-linked note which provides for an additional payment at maturity based on the value of an embedded derivative based on the actual return of a dedicated return fund. Fair value of the available-for-sale embedded derivative is based on an unobservable input, the net asset value of the fund at the balance sheet date. 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. Therefore, the key unobservable input used in the Black-Scholes model is the value of the fund. As the value of the fund increases or decreases, the fair value of the embedded derivative will increase or decrease. See further discussion on the available-for-sale embedded derivative in Note F Derivative Financial Instruments . The fair value of the credit-linked note is based on a weighted average of a broker quote and a discounted cash flow analysis. The discounted cash flow approach is based on the expected portfolio cash flows and amortization schedule reflecting investment expectations, adjusted for assumptions on the portfolio's default and recovery rates, and the note's discount rate. The fair value of the note is provided by the fund manager at the end of each quarter. Quantitative information regarding significant unobservable inputs used for recurring Level 3 fair value measurements of financial instruments carried at fair value as of December 31, 2021 and December 31, 2020 are as follows: 120 Table of Contents Fair Value at Valuation Technique Unobservable Input(s) Range (Weighted average) December 31, 2021 (in millions) December 31, 2021 Assets Asset-backed securities $ 3,844 Broker-quoted Offered quotes 52.56 % - 260.7 % ( 97.06 %) Asset-backed securities 115 Third-Party Valuation Offered quotes 93.02 % - 108.45 % ( 104.95 %) 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 % ( 62.00 %) 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 ($ 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 Liabilities Future policy benefits — Discounted cash flow Non-performance spread 0.50 % Derivatives: 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 $ 3,883 121 Table of Contents Fair Value at Valuation Technique Unobservable Input(s) Range (Weighted average) December 31, 2020 (in millions) December 31, 2020 Assets 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 %) Municipals 43 Third-Party Valuation Offered quotes 133.53 % - 133.53 % ( 133.53 %) Residential mortgage-backed securities 483 Broker-quoted Offered quotes 112.58 % - 112.58 % ( 112.58 %) Foreign governments 17 Third-Party Valuation Offered quotes 107.87 % - 113.80 % ( 109.72 %) Preferred securities 1 Income-Approach Yield 2.61 % Equity securities 1 Black Scholes model Risk Free Rate 0.29 % - 0.29 % ( 0.29 %) Strike Price $ 1.50 - $ 1.50 ($ 1.50 ) Volatility 1.00 % - 1.00 % ( 1.00 %) Dividend Yield 0.00 % - 0.00 % ( 0.00 %) Equity securities 3 Discounted Cash Flow Discount rate 10.60 % - 10.60 % ( 10.60 %) Market Comparable Company Analysis EBITDA multiple 6.6 x - 6.6 x ( 6.6 x) Other long-term assets: 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 % Total financial assets at fair value $ 3,267 Liabilities Future policy benefits $ 5 Discounted cash flow Non-performance spread 0.00 % Risk margin to reflect uncertainty 0.50 % Derivatives: 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 %) Mortality multiplier 100.00 % - 100.00 % ( 100.00 %) Surrender rates 0.25 % - 55.00 % ( 5.24 %) Partial withdrawals 2.00 % - 3.50 % ( 2.58 %) Non-performance spread 0.74 % - 0.74 % ( 0.74 %) Option cost 0.05 % - 16.61 % ( 2.25 %) Total financial liabilities at fair value $ 3,409 122 Table of Contents The following tables summarize changes to the Company’s financial instruments carried at fair value and classified within Level 3 of the fair value hierarchy for the years ended December 31, 2021 and 2020, respectively. F&G related activit y for the year ended December 31, 2020 in the table below is comprised of the period from June 1, 2020 through December 31, 2020 only. This summary excludes any impact of amortization of VOBA, DAC and DSI. The gains and losses below may include changes in fair value due in part to observable inputs that are a component of the valuation methodology. Year ended December 31, 2021 (in millions) Balance at Beginning of Period Total Gains (Losses) Purchases Sales Settlements Net transfer In (Out) of Level 3 (a) Balance at End of Period Change in Unrealized Incl in OCI Included in Earnings Included in AOCI Assets Fixed maturity securities available-for-sale: Asset-backed securities $ 1,350 $ ( 1 ) $ ( 8 ) $ 3,417 $ ( 97 ) $ ( 595 ) $ ( 107 ) $ 3,959 $ 4 Commercial mortgage-backed securities 26 — ( 3 ) 12 — — — 35 1 Corporates 1,289 8 ( 40 ) 161 ( 23 ) ( 247 ) ( 13 ) 1,135 23 Hybrids 4 — — — — ( 4 ) — — — Municipals 43 — — — — — — 43 7 Residential mortgage-backed securities 483 — ( 1 ) 14 — ( 102 ) ( 394 ) — 22 Foreign Governments 17 — 1 — — — — 18 2 Short-term — — 2 820 — ( 501 ) — 321 — Preferred securities 1 ( 1 ) 1 1 — — — 2 — Equity securities 4 2 — 3 — — — 9 — Other long-term assets: Available-for-sale embedded derivative 27 7 — — — — — 34 — Credit linked note 23 — — — — — — 23 — 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 Liabilities Future policy benefits $ 5 $ — $ — $ — $ ( 4 ) $ ( 1 ) $ — $ — $ — 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 year ended December 31, 2021 were to Level 2. 123 Table of Contents Year ended December 31, 2020 (in millions) Balance at Beginning 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 Included in Earnings Included in AOCI Assets 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 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 Liabilities 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 The following discussion outlines the methodologies and assumptions used to determine the fair value of our financial instruments not carried at fair value. Considerable judgment is required to develop these assumptions used to measure fair value. Accordingly, the estimates shown are not necessarily indicative of the amounts that would be realized in a one-time, current market exchange of all of our financial instruments. Mortgage Loans The fair value of mortgage loans is established using a discounted cash flow method based on internal credit rating, maturity and future income. This yield-based approach is sourced from our third-party vendor. The internal ratings for mortgages in good standing are based on property type, location, market conditions, occupancy, debt service coverage, loan-to-value, quality of tenancy, borrower, and payment record. The inputs used to measure the fair value of our mortgage loans are classified as Level 3 within the fair value hierarchy. Policy Loans (included within Other long-term investments) Fair values for policy loans are estimated from a discounted cash flow analysis, using interest rates currently being offered for loans with similar credit risk. Loans with similar characteristics are aggregated for purposes of the calculations. 124 Table of Contents Company Owned Life Insurance Company owned life insurance (COLI) is a life insurance program used to finance certain employee benefit expenses. The fair value of COLI is based on net realizable value, which is generally cash surrender value. COLI is classified as Level 3 within the fair value hierarchy. Other Invested Assets (included within Other long-term investments) The fair value of the bank loan is estimated using a discounted cash flow method with the discount rate based on weighted average cost of capital ("WACC"). This yield-based approach is sourced from a third-party vendor and the WACC establishes a market participant discount rate by determining the hypothetical capital structure for the asset should it be underwritten as of each period end. Other invested assets are classified as Level 3 within the fair value hierarchy. Investment Contracts Investment contracts include deferred annuities (FIAs and fixed rate annuities), indexed universal life policies ("IULs"), funding agreements and PRT and immediate annuity contracts without life contingencies. The FIA/ IUL embedded derivatives, included in contractholder funds, are excluded as they are carried at fair value. The fair value of the FIA, fixed rate annuity and IUL contracts is based on their cash surrender value (i.e. the cost the Company would incur to extinguish the liability) as these contracts are generally issued without an annuitization date. The fair value of funding agreements and PRT and immediate annuity contracts without life contingencies is derived by calculating a new fair value interest rate using the updated yield curve and treasury spreads as of the respective reporting date. The Company is not required to, and has not, estimated the fair value of the liabilities under contracts that involve significant mortality or morbidity risks, as these liabilities fall within the definition of insurance contracts that are exceptions from financial instruments that require disclosures of fair value. Other FHLB common stock, Accounts receivable and Notes receivable are carried at cost, which approximates fair value. FHLB common stock is classified as Level 2 within the fair value hierarchy. Accounts receivable and Notes receivable are classified as Level 3 within the fair value hierarchy. Debt The fair value of debt is based on quoted market prices. The inputs used to measure the fair value of our outstanding debt are classified as Level 2 within the fair value hierarchy. 125 Table of Contents The following tables provide the carrying value and estimated fair value of our financial instruments that are carried on the accompanying Consolidated Balance Sheets at amounts other than fair value, summarized according to the fair value hierarchy previously described. December 31, 2021 (in millions) Level 1 Level 2 Level 3 Total Estimated Fair Value Carrying Amount Assets FHLB common stock $ — $ 72 $ — $ 72 $ 72 Commercial mortgage loans — — 2,265 2,265 2,168 Residential mortgage loans — — 1,549 1,549 1,581 Policy loans — — 39 39 39 Other invested assets — — 57 57 57 Company-owned life insurance — — 333 333 333 Trade and notes receivables, net of allowance — — 557 557 557 Total $ — $ 72 $ 4,800 $ 4,872 $ 4,807 Liabilities Investment contracts, included in contractholder funds $ — $ — $ 27,448 $ 27,448 $ 31,529 Debt — 3,218 — 3,218 3,096 Total $ — $ 3,218 $ 27,448 $ 30,666 $ 34,625 December 31, 2020 (in millions) Level 1 Level 2 Level 3 Total Estimated Fair Value Carrying Amount Assets FHLB common stock $ — $ 66 $ — $ 66 $ 66 Commercial mortgage loans — — 926 926 903 Residential mortgage loans — — 1,123 1,123 1,128 Policy loans — — 33 33 33 Other invested assets — — 28 28 28 Company-owned life insurance — — 305 305 305 Trade and notes receivables, net of allowance — — 437 437 437 Total $ — $ 66 $ 2,852 $ 2,918 $ 2,900 Liabilities Investment contracts, included in contractholder funds $ — $ — $ 21,719 $ 21,719 $ 25,199 Debt — 2,896 — 2,896 2,662 Total $ — $ 2,896 $ 21,719 $ 24,615 $ 27,861 The following table includes assets that have not been classified in the fair value hierarchy as the value of these investments are measured using the equity method of accounting or the net asset value ("NAV") per share practical expedient (in millions): December 31, 2021 December 31, 2020 Investments in unconsolidated affiliates (equity method of accounting) $ 136 $ 146 Equity securities (NAV) 48 — Investments in unconsolidated affiliates (NAV) 2,350 1,148 $ 2,534 $ 1,294 126 Table of Contents For investments for which NAV is used as a practical expedient for fair value, we do not have any significant restrictions in our ability to liquidate our positions in these investments, other than obtaining general partner approval, nor do we believe it is probable a price less than NAV would be received in the event of a liquidation. Equity method investments are reported on a lag of up to three months for investee information not received timely. We review the fair value hierarchy classifications each reporting period. Changes in the observability of the valuation attributes may result in a reclassification of certain financial assets or liabilities. Such reclassifications are reported as transfers in and out of Level 3, or between other levels, at the beginning fair value for the reporting period in which the changes occur. The transfers into and out of Level 3 were related to changes in the primary pricing source and changes in the observability of external information used in determining the fair value. 127 Table of Contents Note E — Investments Our fixed maturity securities investments have been designated as available-for-sale and are carried at fair value, net of allowance for expected credit losses, with unrealized gains and losses included in AOCI, net of associated adjustments for DAC, VOBA, DSI, UREV, SOP 03-1 reserves, and deferred income taxes. Our preferred and equity securities investments are carried at fair value with unrealized gains and losses included in net income (loss). The Company’s consolidated investments are summarized as follows (in millions): December 31, 2021 Amortized Cost Allowance for Expected Credit Losses Gross Unrealized Gains Gross Unrealized Losses Fair Value Carrying Value Available-for-sale securities Asset-backed securities $ 8,516 $ ( 3 ) $ 220 $ ( 38 ) $ 8,695 $ 8,695 Commercial mortgage-backed securities 2,684 ( 2 ) 308 ( 11 ) 2,979 2,979 Corporates 15,822 — 830 ( 158 ) 16,494 16,494 Hybrids 838 — 74 — 912 912 Municipals 1,445 — 67 ( 11 ) 1,501 1,501 Residential mortgage-backed securities 731 ( 3 ) 7 ( 4 ) 731 731 U.S. Government 393 — 3 ( 2 ) 394 394 Foreign Governments 276 — 9 ( 1 ) 284 284 Total available-for-sale securities $ 30,705 $ ( 8 ) $ 1,518 $ ( 225 ) $ 31,990 $ 31,990 December 31, 2020 Amortized Cost Allowance for Expected Credit Losses Gross Unrealized Gains Gross Unrealized Losses Fair Value Carrying Value Available-for-sale securities Asset-backed securities $ 5,941 $ — $ 343 $ ( 18 ) $ 6,266 $ 6,266 Commercial mortgage-backed/asset-backed securities 2,490 — 342 ( 3 ) 2,829 2,829 Corporates 13,582 ( 16 ) 1,184 ( 15 ) 14,735 14,735 Hybrids 914 — 80 — 994 994 Municipals 1,333 — 72 ( 2 ) 1,403 1,403 Residential mortgage-backed securities 806 ( 3 ) 23 ( 1 ) 825 825 U.S. Government 332 — 10 — 342 342 Foreign Governments 179 — 14 — 193 193 Total available-for-sale securities $ 25,577 $ ( 19 ) $ 2,068 $ ( 39 ) $ 27,587 $ 27,587 Securities held on deposit with various state regulatory authorities had a fair value of $ 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 $ 2,469 million and $ 1,622 million at December 31, 2021 and 2020, respectively. 128 Table of Contents The amortized cost and fair value of fixed maturity securities by contractual maturities, as applicable, are shown below. Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. 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: Due in one year or less $ 426 $ 431 $ 466 $ 463 Due after one year through five years 2,998 3,051 2,171 2,295 Due after five years through ten years 2,389 2,458 2,116 2,255 Due after ten years 12,930 13,608 11,560 12,624 18,743 19,548 16,313 17,637 Other securities, which provide for periodic payments: Asset-backed securities 8,516 8,695 5,941 6,266 Commercial mortgage-backed securities 2,684 2,979 2,490 2,829 Structured hybrids 31 37 27 30 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 We regularly review AFS securities for declines in fair value that we determine to be credit related. For our fixed maturity securities, we generally consider the following in determining whether our unrealized losses are credit related, and if so, the magnitude of the credit loss: • The extent to which the fair value is less than the amortized cost basis; • The reasons for the decline in value (credit event, currency or interest-rate related, including general credit spread widening); • The financial condition of and near-term prospects of the issuer (including issuer's current credit rating and the probability of full recovery of principal based upon the issuer's financial strength); • Current delinquencies and nonperforming assets of underlying collateral; • Expected future default rates; • Collateral value by vintage, geographic region, industry concentration or property type; • Subordination levels or other credit enhancements as of the balance sheet date as compared to origination; and • Contractual and regulatory cash obligations and the issuer's plans to meet such obligations. We recognize an allowance for current expected credit losses on fixed maturity securities in an unrealized loss position when it is determined, using the factors discussed above, a component of the unrealized loss is related to credit. We measure the credit loss using a discounted cash flow model that utilizes the single best estimate cash flow and the recognized credit loss is limited to the total unrealized loss on the security (i.e. the fair value floor). Cash flows are discounted using the implicit yield of bonds at their time of purchase and the current book yield for asset and mortgage backed securities as well as variable rate securities. We recognize the expected credit losses in Recognized gains and losses, net in the Consolidated Statements of Earnings, with an offset for the amount of non-credit impairments recognized in AOCI. We do not measure a credit loss allowance on accrued investment income because we write-off accrued interest through to Interest and investment income when collectability concerns arise. We consider the following in determining whether write-offs of a security’s amortized cost is necessary: • We believe amounts related to securities have become uncollectible; or • We intend to sell a security; or • It is more likely than not that we will be required to sell a security prior to recovery. 129 Table of Contents If we intend to sell a fixed maturity security or it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis and the fair value of the security is below amortized cost, we will write down the security to current fair value, with a corresponding charge, net of any amount previously recognized as an allowance for expected credit loss, to Recognized gains and losses, net in the accompanying Consolidated Statements of Earnings. If we do not intend to sell a fixed maturity security or it is more likely than not that we will not be required to sell a fixed maturity security before recovery of its amortized cost basis but believe amounts related to a security are uncollectible (generally based on proximity to expected credit loss), an impairment is deemed to have occurred and the amortized cost is written down to the estimated recovery value with a corresponding charge, net of any amount previously recognized as an allowance for expected credit loss, to Recognized gains and losses, net in the accompanying Consolidated Statements of Earnings. The remainder of unrealized loss is held in AOCI. The activity in the allowance for expected credit losses of available-for-sale securities aggregated by investment category 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 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 Balance at End of Period Available-for-sale securities Asset-backed securities $ — $ 7 $ ( 9 ) $ 2 $ — $ — $ — $ — Corporates — ( 16 ) ( 16 ) 7 3 4 2 ( 16 ) Hybrids — — ( 3 ) — 3 — — — Residential mortgage-backed securities — 2 ( 7 ) 1 1 — — ( 3 ) Total available-for-sale securities $ — $ ( 7 ) $ ( 35 ) $ 10 $ 7 $ 4 $ 2 $ ( 19 ) (1) Purchased credit deteriorated financial assets ("PCD") 130 Table of Contents Purchased credit-deteriorated available-for-sale debt securities ("PCD"s) are AFS securities purchased at a discount, where part of that discount is attributable to credit. Credit loss allowances are calculated for these securities as of the date of their acquisition, with the initial allowance serving to increase amortized cost. The following table summarizes year to date PCD AFS security purchases (in millions). Purchased credit-deteriorated available-for-sale debt securities December 31, 2021 December 31, 2020 Purchase price $ 4 $ 265 Allowance for credit losses at acquisition 1 35 Discount (or premiums) attributable to other factors — 84 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 were as follows (dollars in millions): December 31, 2021 Less than 12 months 12 months or longer Total Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Available-for-sale securities Asset-backed securities $ 4,410 $ ( 31 ) $ 146 $ ( 7 ) $ 4,556 $ ( 38 ) Commercial mortgage-backed securities 603 ( 11 ) 1 — 604 ( 11 ) Corporates 5,391 ( 132 ) 394 ( 26 ) 5,785 ( 158 ) Hybrids 3 — — — 3 — Municipals 410 ( 5 ) 85 ( 6 ) 495 ( 11 ) Residential mortgage-backed securities 325 ( 3 ) 11 ( 1 ) 336 ( 4 ) U.S. Government 219 ( 2 ) 4 — 223 ( 2 ) Foreign Government 82 ( 1 ) 5 — 87 ( 1 ) Total available-for-sale securities $ 11,443 $ ( 185 ) $ 646 $ ( 40 ) $ 12,089 $ ( 225 ) Total number of available-for-sale securities in an unrealized loss position less than twelve months 2,056 Total number of available-for-sale securities in an unrealized loss position twelve months or longer 68 Total number of available-for-sale securities in an unrealized loss position 2,124 131 Table of Contents December 31, 2020 Less than 12 months 12 months or longer Total Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Available-for-sale securities Asset-backed securities $ 477 $ ( 18 ) $ — $ — $ 477 $ ( 18 ) Commercial mortgage-backed securities 51 ( 3 ) — — 51 ( 3 ) Corporates $ 865 $ ( 15 ) $ 36 $ — $ 901 $ ( 15 ) Hybrids 1 — — — 1 — Municipals 115 ( 2 ) — — 115 ( 2 ) Residential mortgage-backed securities 30 ( 1 ) — — 30 ( 1 ) U.S. Government 11 — — — 11 — Total available-for-sale securities $ 1,550 $ ( 39 ) $ 36 $ — $ 1,586 $ ( 39 ) Total number of available-for-sale securities in an unrealized loss position less than twelve months 222 Total number of available-for-sale securities in an unrealized loss position twelve months or longer 11 Total number of available-for-sale securities in an unrealized loss position 233 We determined the increase in unrealized losses 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. 132 Table of Contents Mortgage Loans Our mortgage loans are collateralized by commercial and residential properties. Commercial Mortgage Loans 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. We diversify our CML portfolio by geographic region and property type to attempt to reduce concentration risk. We continuously evaluate CMLs based on relevant current information to ensure properties are performing at a consistent and acceptable level to secure the related debt. The distribution of CMLs, gross of valuation allowances, by property type and geographic region is reflected in the following tables (dollars in millions): December 31, 2021 December 31, 2020 Gross Carrying Value % of Total Gross Carrying Value % of Total Property Type: Hotel $ 19 1 % $ 19 2 % Industrial - General 497 23 % 302 33 % Mixed Use 13 1 % 12 1 % Multifamily 894 41 % 165 18 % Office 343 16 % 140 15 % Retail 121 6 % 142 17 % Other 204 8 % 125 14 % Student Housing 83 4 % — — % Total commercial mortgage loans, gross of valuation allowance $ 2,174 100 % $ 905 100 % Allowance for expected credit loss ( 6 ) ( 2 ) Total commercial mortgage loans $ 2,168 $ 903 U.S. Region: East North Central $ 137 6 % $ 61 7 % East South Central 79 4 % 80 9 % Middle Atlantic 293 13 % 100 11 % Mountain 236 11 % 48 5 % New England 149 7 % 79 9 % Pacific 649 30 % 333 37 % South Atlantic 459 21 % 133 15 % West North Central 12 1 % 13 1 % West South Central 160 7 % 58 6 % Total commercial mortgage loans, gross of valuation allowance $ 2,174 100 % $ 905 100 % Allowance for expected credit loss ( 6 ) ( 2 ) Total commercial mortgage loans $ 2,168 $ 903 LTV and debt service coverage ("DSC") ratios are measures commonly used to assess the risk and quality of mortgage loans. The LTV ratio is expressed as a percentage of the amount of the loan relative to the value of the underlying property. A LTV ratio in excess of 100% indicates the unpaid loan amount exceeds the underlying collateral. The DSC ratio, based upon the most recently received financial statements, is expressed as a percentage of the amount of a property’s net income to its debt service payments. A DSC ratio of less than 1.00 indicates that a property’s operations do not generate sufficient income to cover debt payments. We normalize our DSC ratios to a 25 -year amortization period for purposes of our general loan allowance evaluation. 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. 133 Table of Contents 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 >1.25 1.00 - 1.25 <1.00 December 31, 2021 LTV Ratios: Less than 50% $ 626 $ 33 $ 9 $ 668 31 % $ 745 33 % 50% to 60% 470 — — 470 22 481 21 60% to 75% 1,036 — — 1,036 47 1,039 46 Commercial mortgage loans $ 2,132 $ 33 $ 9 $ 2,174 100 % $ 2,265 100 % December 31, 2020 LTV Ratios: 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. 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 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. The model projects losses using a two year reasonable and supportable forecast and then reverts over a three year period to market-wide historical loss experience. Changes in our allowance for expected credit losses on commercial mortgage loans are recognized in Recognized gains and losses, net in the accompanying Consolidated Statements of Earnings. 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). Residential Mortgage Loans 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. We diversify our RML portfolio by state to attempt to reduce concentration risk. The distribution of RMLs by state with highest-to-lowest concentration are reflected in the following tables (dollars in millions): December 31, 2021 U.S. State: Unpaid Principal Balance % of Total Florida $ 231 15 % Texas 167 10 New Jersey 150 10 All Other States (1) 1,027 65 Total mortgage loans $ 1,575 100 % (1) The individual concentration of each state is less than or equal to 9%. 134 Table of Contents December 31, 2020 U.S. State: 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 was as follows (dollars in millions): December 31, 2021 December 31, 2020 Performance indicators: Carrying Value % of Total Carrying Value % of Total Performing $ 1,533 95 % $ 1,059 91 % Non-performing 73 5 106 9 % Total residential mortgage loans, gross of valuation allowance $ 1,606 100 % $ 1165 100 % Allowance for expected loan loss ( 25 ) — ( 37 ) — % Total residential mortgage loans $ 1,581 100 % $ 1128 100 % Loans segregated by risk rating exposure were as follows (in millions): December 31, 2021 Amortized Cost by Origination Year 2021 2020 2019 2018 2017 Prior Total Residential mortgages Current (less than 30 days past due) $ 795 $ 293 $ 323 $ 50 $ 36 $ 21 $ 1,518 30-89 days past due 5 4 6 1 — — 16 Over 90 days past due 1 23 46 2 — — 72 Total residential mortgages $ 801 $ 320 $ 375 $ 53 $ 36 $ 21 $ 1,606 Commercial mortgages Current (less than 30 days past due) $ 1,301 $ 543 $ — $ 6 $ — $ 324 $ 2,174 30-89 days past due — — — — — — — Over 90 days past due — — — — — — — Total commercial 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 $ 905 135 Table of Contents December 31, 2021 Amortized Cost by Origination Year 2021 2020 2019 2018 2017 Prior Total Commercial mortgages LTV Less than 50% $ 120 $ 229 $ — $ 6 $ — $ 313 $ 668 50% to 60% 267 192 — — — 11 470 60% to 75% 914 122 — — — — 1,036 Total commercial mortgages $ 1301 $ 543 $ — $ 6 $ — $ 324 $ 2174 Commercial mortgages DSCR Greater than 1.25x $ 1,301 $ 543 $ — $ 4 $ — $ 284 $ 2,132 1.00x - 1.25x — — — 2 — 31 33 Less than 1.00x — — — — — 9 9 Total commercial mortgages $ 1301 $ 543 $ — $ 6 $ — $ 324 $ 2174 December 31, 2020 Amortized Cost by Origination Year 2020 2019 2018 2017 2016 Prior Total Commercial mortgages LTV Less than 50% $ 228 $ — $ 6 $ — $ — $ 303 $ 537 50% to 60% 192 — — — 11 43 246 60% to 75% 122 — — — — — 122 Total commercial mortgages $ 542 $ — $ 6 $ — $ 11 $ 346 $ 905 Commercial mortgages DSCR Greater than 1.25x $ 542 $ — $ 6 $ — $ 11 $ 319 $ 878 1.00x - 1.25x — — — — — 27 27 Less than 1.00x — — — — — — — Total commercial mortgages $ 542 $ — $ 6 $ — $ 11 $ 346 $ 905 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: $ 72 $ 99 Commercial mortgage: — — 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. 136 Table of Contents Allowance for Expected Credit Loss We estimate expected credit losses for our residential mortgage loan portfolio using a probability of default/loss given default model. Significant inputs to this model include the loans' current performance, underlying collateral type, location, contractual life, LTV, and Debt to Income or FICO. The model projects losses using a two year reasonable and supportable forecast and then reverts over a three year period to market-wide historical loss experience. Changes in our allowance for expected credit losses on mortgage loans are recognized in Recognized gains and losses, net in the accompanying Consolidated Statements of Earnings. 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 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 and were immaterial as of December 31, 2021 and 2020. 137 Table of Contents Interest and Investment Income The major sources of Interest and investment income reported on the accompanying Consolidated Statements of Earnings were as follows (in millions): Year ended December 31, 2021 December 31, 2020 December 31, 2019 Fixed maturity securities, available-for-sale $ 1,267 $ 708 $ 70 Equity securities 23 19 10 Preferred securities 63 59 24 Mortgage loans 131 50 — Invested cash and short-term investments 7 8 34 Limited partnerships 589 76 — Tax deferred property exchange income 16 33 72 Other investments 32 25 19 Gross investment income 2,128 978 229 Investment expense ( 167 ) ( 78 ) ( 4 ) Interest and investment income $ 1,961 $ 900 $ 225 Recognized Gains and Losses, net Details underlying Recognized gains and losses, net reported on the accompanying Consolidated Statements of Earnings were as follows (in millions): Year ended December 31, 2021 December 31, 2020 December 31, 2019 Net realized gains (losses) on fixed maturity available-for-sale securities $ 111 $ 102 $ ( 6 ) Net realized/unrealized gains (losses) on equity securities (2) ( 434 ) 241 309 Net realized/unrealized gains (losses) on preferred securities (3) ( 14 ) 15 28 Realized gains (losses) on other invested assets 8 ( 25 ) ( 13 ) Change in allowance for expected credit losses 8 ( 37 ) — Derivatives and embedded derivatives: Realized gains on certain derivative instruments 456 76 — Unrealized gains on certain derivative instruments 159 161 — Change in fair value of reinsurance related embedded derivatives (1) 34 ( 53 ) — Change in fair value of other derivatives and embedded derivatives 6 8 — Realized gains on derivatives and embedded derivatives 655 192 — Recognized gains and losses, net $ 334 $ 488 $ 318 (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. 138 Table of Contents The proceeds from the sale of fixed-maturity securities and the gross gains and losses associated with those transactions were as follows (in millions): Year ended December 31, 2021 December 31, 2020 December 31, 2019 Proceeds $ 4,749 $ 1,946 $ 614 Gross gains 158 116 4 Gross losses ( 49 ) ( 12 ) ( 9 ) Unconsolidated Variable Interest Entities The Company owns investments in VIEs that are not consolidated within our financial statements. A VIE is an entity that does not have sufficient equity to finance its own activities without additional financial support, where investors lack certain characteristics of a controlling financial interest, or where the entity is structured with non-substantive voting rights. VIEs are consolidated by their ‘primary beneficiary’, a designation given to an entity that receives both the benefits from the VIE as well as the substantive power to make its key economic decisions. While the Company participates in the benefits from VIEs in which it invests, but does not consolidate, the substantive power to make the key economic decisions for each respective VIE resides with entities not under common control with the Company. It is for this reason that the Company is not considered the primary beneficiary for the VIE investments that are not consolidated. We invest in various limited partnerships and limited liability companies primarily as a passive investor. These investments are primarily in credit funds with a bias towards current income, real assets, or private equity. Limited partnership and limited liability company interests are accounted for under the equity method and are included in Investments in unconsolidated affiliates on our 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, 2021 and 2020 are 5,775,598 and 5,706,134 shares, respectively, of Cannae common stock (NYSE: CNNE). 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. 139 Table of Contents Note F — Derivative Financial Instruments 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 Assets: Derivative investments: Call options $ 816 $ 548 Other long-term investments: Other embedded derivatives 33 27 $ 849 $ 575 Liabilities: Contractholder funds: 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): Year Ended Seven Months Ended December 31, 2021 December 31, 2020 Net investment gains (losses): Call options $ 597 $ 229 Futures contracts 8 15 Foreign currency forwards 9 ( 7 ) Other derivatives and embedded derivatives 5 8 Reinsurance related embedded derivatives 34 ( 53 ) Total net investment gains $ 653 $ 192 Benefits and other changes in policy reserves: FIA/ IUL embedded derivatives $ 479 $ 552 Additional Disclosures FIA/ IUL Embedded Derivative and Call Options and Futures We have FIA and IUL contracts that permit the holder to elect an interest rate return or an equity index linked component, where interest credited to the contracts is linked to the performance of various equity indices, primarily the S&P 500 Index. This feature represents an embedded derivative under GAAP. The FIA/IUL embedded derivatives are valued at fair value and included in the liability for contractholder 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 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 140 Table of Contents 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. The change in fair value of the call options and futures contracts includes the gains and losses recognized at the expiration of the instrument term or upon early termination and the changes in fair value of open positions. Other market exposures are hedged periodically depending on market conditions and our risk tolerance. Our FIA/IUL hedging strategy economically hedges the equity returns and exposes us to the risk that unhedged market exposures result in divergence between changes in the fair value of the liabilities and the hedging assets. We use a variety of techniques, including direct estimation of market sensitivities, to monitor this risk daily. We intend to continue to adjust the hedging strategy as market conditions and our risk tolerance changes. Credit Risk We are exposed to credit loss in the event of non-performance by our counterparties on the call options and reflect assumptions regarding this non-performance risk in the fair value of the call options. The non-performance risk is the net counterparty exposure based on the fair value of the open contracts less collateral held. We maintain a policy of requiring all derivative contracts to be governed by an International Swaps and Derivatives Association (“ISDA”) Master Agreement. 141 Table of Contents Information regarding our exposure to credit loss on the call options we hold is presented in the following table (in millions): December 31, 2021 Counterparty Credit Rating (Fitch/Moody's/S&P) (1) Notional Amount Fair Value Collateral Net Credit Risk Merrill Lynch AA/*/A+ $ 3,307 $ 128 $ 86 $ 42 Morgan Stanley */Aa3/A+ 2,184 86 92 — Barclay's Bank A+/A1/A 5,197 231 233 — Canadian Imperial Bank of Commerce AA/Aa2/A+ 2,936 147 151 — Wells Fargo A+/A1/BBB+ 2,445 89 90 — Goldman Sachs A/A2/BBB+ 307 10 10 — Credit Suisse A/A1/A+ 1,485 74 75 — Truist A+/A2/A 1,543 51 53 — Total $ 19,404 $ 816 $ 790 $ 42 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 — Barclay's Bank A+/A1/A 4,639 180 169 11 Canadian Imperial Bank of Commerce AA/Aa2/A+ 2,276 86 85 1 Wells Fargo A+/A2/BBB+ 2,900 106 105 1 Goldman Sachs A/A3/BBB+ 634 15 15 — Credit Suisse A/Aa3/A+ 1,373 27 25 2 Truist A+/A2/A 652 19 19 — Total $ 15,909 $ 548 $ 491 $ 58 (1) An * represents credit ratings that were not available. Collateral Agreements We are required to maintain minimum ratings as a matter of routine practice as part of our over-the-counter derivative agreements on ISDA forms. Under some ISDA agreements, we have agreed to maintain certain financial strength ratings. A downgrade below these levels provides the counterparty under the agreement the right to terminate the open option contracts between the parties, at which time any amounts payable by us or the counterparty would be dependent on the market value of the underlying option contracts. Our current rating does not allow any counterparty the right to terminate ISDA agreements. In certain transactions, both 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, 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. 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). 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. 142 Table of Contents Reinsurance Related Embedded Derivatives 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 Notes payable consists of the following: December 31, 2021 December 31, 2020 (In millions) 4.50 % Notes, net of discount $ 444 $ 443 5.50 % Notes, net of discount 400 399 3.40 % Notes, net of discount 643 643 2.45 % Notes, net of discount 593 592 3.20 % Notes, net of discount 443 — Revolving Credit Facility ( 4 ) ( 4 ) 5.50 % F&G Notes 577 589 $ 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. 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. On September 15, 2020, we completed our underwritten public offering of $ 600 million aggregate principal amount of our 2.45 % Notes due March 15, 2031 (the " 2.45 % Notes") pursuant to an effective registration statement filed with the Securities and Exchange Commission ("SEC"). The net proceeds from the registered offering of the 2.45 % Notes were approximately $ 593 million, after deducting underwriting discounts and commissions and offering expenses. We used the net proceeds from the offering (i) to repay 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 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. 143 Table of Contents On August 13, 2018, we completed an offering of $ 450 million in aggregate principal amount of 4.50 % notes due August 2028 (the " 4.50 % Notes"), pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended. The 4.50 % Notes were priced at 99.252 % of par to yield 4.594 % annual interest. We pay interest on the 4.50 % Notes semi-annually on the 15th of February and August, beginning February 15, 2019. The 4.50 % Notes contain customary covenants and events of default for investment grade public debt, which primarily relate to failure to make principal or interest payments. On May 16, 2019, we completed an offering to exchange the 4.50 % Notes for substantially identical notes registered pursuant to Rule 424 under the Securities Act of 1933 (the " 4.50 % Notes Exchange"). There were no material changes to the terms of the 4.50 % Notes as a result of the 4.50 % Notes Exchange and all holders of the 4.50 % Notes accepted the offer to exchange. On August 28, 2012, we completed an offering of $ 400 million in aggregate principal amount of 5.50 % notes due September 2022 (the " 5.50 % Notes"), pursuant to an effective registration statement previously filed with the SEC. The notes were priced at 99.513 % of par to yield 5.564 % annual interest. We pay interest on the 5.50 % semi-annually on the 1st of March and September, beginning March 1, 2013. These notes contain customary covenants and events of default for investment grade public debt. These events of default include a cross default provision, with respect to any other debt of the Company in an aggregate amount exceeding $ 100 million for all such debt, arising from (i) failure to make a principal payment when due or (ii) the occurrence of an event, which results in such debt being due and payable prior to its scheduled maturity. Gross principal maturities of notes payable at December 31, 2021 are as follows (in millions): 2022 $ 400 2023 — 2024 — 2025 550 2026 — Thereafter 2,150 $ 3,100 Note H — Commitments and Contingencies Legal and Regulatory Contingencies In the ordinary course of business, we are involved in various pending and threatened litigation matters related to our operations, some of which include claims for punitive or exemplary damages. With respect to our title insurance operations, this customary litigation includes but is not limited to a wide variety of cases arising out of or related to title and escrow claims, for which we make provisions through our loss reserves. See Note C Summary of Reserve for Title Claim Losses. Additionally, like other companies, our ordinary course litigation includes a number of class action and purported class action lawsuits, which make allegations related to aspects of our operations. We believe that no actions, other than the matters discussed below, if any, depart from customary litigation incidental to our business. We review lawsuits and other legal and regulatory matters (collectively “legal proceedings”) on an ongoing basis when making accrual and disclosure decisions. When assessing reasonably possible and probable outcomes, management bases its decision on its assessment of the ultimate outcome assuming all appeals have been exhausted. For legal proceedings in which it has been determined that a loss is both probable and reasonably estimable, a liability based on known facts and represents our best estimate has been recorded. 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. Two lawsuits have been filed related to FNF’s acquisition of F&G. On August 4, 2020, a stockholder derivative lawsuit styled, City of Miami General Employees’ and Sanitation Employees’ Retirement Trust v. Fidelity National Financial, et al. , was filed in the Court of Chancery of the State of Delaware against the Company, its Board of Directors and others alleging breach of fiduciary duties as directors and officers relating to FNF’s acquisition of F&G. 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. 144 Table of Contents 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 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. From time to time we receive inquiries and requests for information from state insurance departments, attorneys general and other regulatory agencies about various matters relating to our business. Sometimes these take the form of civil investigative demands or subpoenas. We cooperate with all such inquiries and we have responded to or are currently responding to inquiries from multiple governmental agencies. Also, regulators and courts have been dealing with issues arising from foreclosures and related processes and documentation. Various governmental entities are studying the title insurance product, market, pricing, and business practices, and potential regulatory and legislative changes, which may materially affect our business and operations. From time to time, we are assessed fines for violations of regulations or other matters or enter into settlements with such authorities, which may require us to pay fines or claims or take other actions. We do not anticipate such fines and settlements, either individually or in the aggregate, will have a material adverse effect on our financial condition. Acquired Contingencies - F&G We have received inquiries from a number of state regulatory authorities regarding our use of the U.S. Social Security Administration’s Death Master File (“Death Master File”) and compliance with state claims practices regulations and unclaimed property or escheatment laws. We have established procedures to periodically compare our in-force life insurance and annuity policies against the Death Master File or similar databases; investigate any identified potential matches to confirm the death of the insured; and determine whether benefits are due and attempt to locate the beneficiaries of any benefits due or, if no beneficiary can be located, escheat the benefit to the state as unclaimed property. We believe we have established sufficient reserves with respect to these matters; however, it is possible that third parties could dispute these amounts and additional payments or additional unreported claims or liabilities could be identified, which could be significant and could have a material adverse effect on our results of operations. Escrow Balances In conducting our operations, we routinely hold customers’ assets in escrow, pending completion of real estate transactions, and are respon sible for the proper disposition of these balances for our customers. Certain of these amounts are maintained in segregated bank accounts and have not been included in the accompanying Consolidated Balance Sheets, consistent with GAAP and industry practice. These balances amounted to $ 30.5 billion and $ 26.5 billion at December 31, 2021 and 2020, respectively. As a result of holding these customers’ assets in escrow, we have ongoing programs for realizing economic benefits during the year through favorable borrowing and vendor arrangements with various banks. There were no investments or loans outstanding as of December 31, 2021 and 2020 related to these arrangements. 145 Table of Contents F&G Commitments 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 Asset Type 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 Commercial mortgage loans 44 — 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 On February 16, 2022, our Board of Directors declared cash dividends of $ 0.44 per share, payable on March 31, 2022, to FNF common shareholders of record as of March 17, 2022. 146 Table of Contents Note J — Segment Information Summarized financial information concerning our reportable segments is shown in the following tables. On June 1, 2020, we completed our acquisition of F&G. As a result, the 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: Title F&G Corporate and Other Total (In millions) Title premiums $ 8,553 $ — $ — $ 8,553 Other revenues 3,228 1,395 172 4,795 Revenues from external customers 11,781 1,395 172 13,348 Interest and investment income, including recognized gains and losses ( 284 ) 2,567 12 2,295 Total revenues 11,497 3,962 184 15,643 Depreciation and amortization 138 484 23 645 Interest expense — 29 85 114 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 Earnings (loss) before equity in earnings (loss) of unconsolidated affiliates 1,625 857 ( 112 ) 2,370 Equity in earnings of unconsolidated affiliates 58 — 6 64 Net earnings (loss) from continuing operations $ 1,683 $ 857 $ ( 106 ) $ 2,434 Assets $ 9,663 $ 48,730 $ 2,297 $ 60,690 Goodwill 2,517 1,756 266 4,539 As of and for the year ended December 31, 2020: Title F&G Corporate and Other Total (In millions) Title premiums $ 6,298 $ — $ — $ 6,298 Other revenues 2,782 138 172 3,092 Revenues from external customers 9,080 138 172 9,390 Interest and investment income, including recognized gains and losses 294 1,095 ( 1 ) 1,388 Total revenues 9,374 1,233 171 10,778 Depreciation and amortization 149 123 24 296 Interest expense 1 18 71 90 Earnings (loss) before income taxes and equity in earnings of unconsolidated affiliates 1,878 86 ( 180 ) 1,784 Income tax expense (benefit) 432 ( 75 ) ( 35 ) 322 Earnings (loss) before equity in earnings of unconsolidated affiliates 1,446 161 ( 145 ) 1,462 Equity in earnings of unconsolidated affiliates 14 — 1 15 Net earnings (loss) $ 1,460 $ 161 $ ( 144 ) $ 1,477 Assets $ 9,211 $ 39,714 $ 1,530 $ 50,455 Goodwill 2,478 1,751 266 4,495 147 Table of Contents As of and for the year ended December 31, 2019: Title Corporate and Other Total (In millions) Title premiums $ 5,342 $ — $ 5,342 Other revenues 2,389 195 2,584 Revenues from external customers 7,731 195 7,926 Interest and investment income, including recognized gains and losses 528 15 543 Total revenues 8,259 210 8,469 Depreciation and amortization 154 24 178 Interest expense — 47 47 Earnings (loss) before income taxes and equity in earnings of unconsolidated affiliates 1,536 ( 167 ) 1,369 Income tax expense (benefit) 363 ( 55 ) 308 Earnings (loss) before equity in earnings of unconsolidated affiliates 1,173 ( 112 ) 1,061 Equity in earnings of unconsolidated affiliates 13 2 15 Net earnings (loss) $ 1,186 $ ( 110 ) $ 1,076 Assets $ 9,071 $ 1,606 $ 10,677 Goodwill 2,462 265 2,727 The activities in our segments include the following: • Title. This segment consists of the operations of our title insurance underwriters and related businesses. This segment provides core title insurance and escrow and other title-related services including trust activities, trustee sales guarantees, and home warranty products. This segment also includes our transaction services business, which includes other title-related services used in the production and management of mortgage loans, including mortgage loans that experience default. • F&G . This segment primarily consists of the operations of our annuities and life insurance related businesses. This segment issues a broad portfolio of annuity and life products, including deferred annuities (fixed 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. This segment consists of the operations of the parent holding company, our real estate technology subsidiaries and our remaining real estate brokerage businesses. This segment also includes certain other unallocated corporate overhead expenses and eliminations of revenues and expenses between it and our Title segment. Refer to Note L Revenue Recognition for a description of our accounting for our various revenue streams. 148 Table of Contents Note K — Supplemental Cash Flow Information The following supplemental cash flow information is provided with respect to certain cash payment and non-cash investing and financing activities. Year Ended December 31, 2021 2020 2019 (In millions) Cash paid for: Interest $ 112 $ 73 $ 44 Income taxes 653 315 251 Deferred sales inducements 90 46 — Non-cash investing and financing activities: 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 Change in purchases of investments available for sale payable in period 18 14 ( 1 ) Change in treasury stock purchases payable in period ( 3 ) 8 ( 1 ) Change in accrued dividends payable in period 1 1 2 Lease liabilities recognized in exchange for lease right-of-use assets 47 44 36 Remeasurement of lease liabilities 87 48 101 Liabilities assumed in connection with acquisitions (excluding F&G)(1) Fair value of assets acquired 85 32 1 Less: Total Purchase price 59 24 1 Liabilities and noncontrolling interests assumed $ 26 $ 8 $ — (1) For further information related to the acquisition of F&G, refer to Note B Acquisitions 149 Table of Contents Note L — Revenue Recognition Disaggregation of Revenue Our revenue consists of: Year Ended December 31, 2021 2020 2019 Revenue Stream Income Statement Classification Segment Total Revenue Revenue from insurance contracts: (in millions) Direct title insurance premiums Direct title insurance premiums Title $ 3,571 $ 2,699 $ 2,381 Agency title insurance premiums Agency title insurance premiums Title 4,982 3,599 2,961 Life insurance premiums, insurance and investment product fees, and other (1) Escrow, title-related and other fees F&G 1,395 138 — Home warranty Escrow, title-related and other fees Title 185 181 177 Total revenue from insurance contracts 10,133 6,617 5,519 Revenue from contracts with customers: Escrow fees Escrow, title-related and other fees Title 1,395 1,170 899 Other title-related fees and income Escrow, title-related and other fees Title 888 724 639 ServiceLink, excluding title premiums, escrow fees, and subservicing fees Escrow, title-related and other fees Title 396 368 389 Real estate technology Escrow, title-related and other fees Corporate and other 142 112 110 Real estate brokerage Escrow, title-related and other fees Corporate and other — 25 39 Other Escrow, title-related and other fees Corporate and other 30 36 46 Total revenue from contracts with customers 2,851 2,435 2,122 Other revenue: Loan subservicing revenue Escrow, title-related and other fees Title 364 338 285 Interest and investment income Interest and investment income Various 1,961 900 225 Recognized gains and losses, net Recognized gains and losses, net Various 334 488 318 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. Regulation of title insurance rates varies by state. Premiums are charged to customers based on rates predetermined in coordination with each states' respective Department of Insurance. Cash associated with such revenue is typically collected at closing of the underlying real estate transaction. Premium revenues from agency title operations are recognized when the underlying title order and transaction closing, if applicable, are complete. Revenues from our home warranty business are generated from contracts with customers to provide warranty for major home appliances. Substantially all of our home warranty contracts are one year in length and revenue is recognized ratably over the term of the contract. Escrow fees and Other title-related fees and income in our Title segment are closely related to Direct title insurance premiums and are primarily associated with managing the closing of real estate transactions including the processing of funds on behalf of the transaction participants, gathering and recording the required closing documents, providing notary and home inspection services, and other real estate or title-related activities. Revenue is primarily recognized upon closing of the underlying real estate transaction or completion of services. Cash associated with such revenue is typically collected at closing. Revenues from ServiceLink, excluding its title premiums, escrow fees and loan subservicing fees primarily include revenues from real estate appraisal services and foreclosure processing and facilitation services. Revenues from real estate appraisal services are recognized when all appraisal work is complete, a final report is issued to the client and the client is billed. Revenues from foreclosure processing and facilitation services are primarily recognized upon completion of the services and when billing to the client is complete. Life insurance premiums in our F&G segment reflect premiums for life-contingent PRT, traditional life insurance products and life-contingent immediate annuity products which are recognized as revenue when due from the policyholder. We have 150 Table of Contents 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. 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 Product Type 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. Subscriptions are only offered on a month-by-month basis and fees are billed monthly. Revenue is recognized in the month services are provided. Real estate brokerage revenues are primarily comprised of commission revenues earned in association with the facilitation of real estate transactions and are recognized upon closing of the sale of the underlying real estate transaction. Loan subservicing revenues are generated by certain subsidiaries of ServiceLink and are associated with the servicing of mortgage loans on behalf of its customers. Revenue is recognized when the underlying work is performed and billed. Loan subservicing revenues are subject to the recognition requirements of ASC Topic 860. Interest and investment income consists primarily of interest payments received on fixed maturity security holdings and dividends received on equity and preferred security holdings along with the investment income of limited partnerships. We do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less, primarily related to revenue from our home warranty business, and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed. Contract Balances The following table provides information about trade receivables and deferred revenue: December 31, 2021 December 31, 2020 (In millions) Trade receivables $ 524 $ 404 Deferred revenue (contract liabilities) 144 117 151 Table of Contents Deferred revenue is recorded primarily for our home warranty contracts. Revenues from home warranty products are recognized over the life of the policy, which is primarily one year . The unrecognized portion is recorded as deferred revenue in accounts payable and other accrued liabilities in the Consolidated Balance Sheets. 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 our VOBA, DAC and DSI intangible assets are as follows (in millions): VOBA DAC DSI Total 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 Deferrals — 251 46 297 Amortization ( 120 ) ( 6 ) ( 5 ) ( 131 ) Interest 20 2 — 22 Unlocking 2 — — 2 Adjustment for net unrealized investment gains ( 283 ) ( 25 ) ( 5 ) ( 313 ) Balance at December 31, 2020 $ 1,466 $ 222 $ 36 $ 1,724 Amortization of VOBA, DAC, and DSI is based on the current and future expected gross margins or profits recognized, including investment gains and losses. The interest accrual rate utilized to calculate the accretion of interest on VOBA ranged from 0 % to 4.71 %. The adjustment for unrealized net investment losses (gains) represents the amount of VOBA, DAC, and DSI that would have been amortized if such unrealized gains and losses had been recognized. This is referred to as the “shadow adjustments” as the additional amortization is reflected in AOCI rather than the Consolidated Statements of Earnings. 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): Estimated Amortization Expense Fiscal Year 2022 $ 2 2023 159 2024 158 2025 152 2026 140 Thereafter 806 152 Table of Contents Definite and Indefinite Lived Other Intangible Assets Other intangible assets as of December 31, 2021 consist of the following (in millions): Cost Accumulated amortization Net carrying amount Weighted average useful life (years) Customer relationships and contracts $ 803 $ ( 651 ) $ 152 10 Computer software 488 ( 307 ) 181 2 to 10 Value of distribution asset (VODA) 140 ( 25 ) 115 15 Definite lived trademarks, tradenames, and other 49 ( 33 ) 16 10 Indefinite lived tradenames and other 59 N/A 59 Indefinite Total $ 523 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 Total $ 540 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. Estimated amortization expense for the next five years for assets owned at December 31, 2021, is $ 116 million in 2022, $ 93 million in 2023, $ 61 million in 2024, $ 44 million in 2025 and $ 34 million in 2026. Note N — Goodwill A summary of the changes in Goo dwill consists of the following: Title F&G Corporate and Other Total (In millions) Balance, December 31, 2019 $ 2,462 $ — $ 265 $ 2,727 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 — F&G Reinsurance F&G reinsures portions of its policy risks with other insurance companies. The use of indemnity reinsurance does not discharge an insurer from liability on the insurance ceded. The insurer is required to pay in full the amount of its insurance liability regardless of whether it is entitled to or able to receive payment from the reinsurer. The portion of risks exceeding F&G's retention limit is reinsured. F&G primarily seeks reinsurance coverage in order to limit its exposure to mortality losses and enhance capital management. If the underlying policy being reinsured is an insurance contract, F&G follows reinsurance accounting when there is adequate risk transfer or deposit accounting if there is inadequate risk transfer. If the underlying policy being reinsured is an investment contract, the effects of the agreement are accounted for as a separate investment contract. Refer to Note A - Business and Summary of Significant Accounting Policies for more information over our accounting policy for reinsurance agreements. 153 Table of Contents 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 ) Net $ 1,177 $ 2,138 23 866 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 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 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. 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 154 Table of Contents 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 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. 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”), 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. 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 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 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, 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. Note P — Regulation and Equity Regulation Title Our insurance subsidiaries, including title insurers, underwritten title companies and insurance agencies, are subject to extensive regulation under applicable state laws. Each of the insurance underwriters is subject to a holding company act in its state of domicile that regulates, among other matters, the ability to pay dividends and enter into transactions with affiliates. 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 155 Table of Contents 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. Statutory-basis financial statements are prepared in accordance with accounting practices prescribed or permitted by the various state insurance regulatory authorities. The National Association of Insurance Commissioners' (“NAIC” ) Accounting Practices and Procedures manual (“NAIC SAP”) has been adopted as a component of prescribed or permitted practices by each of the states that regulate us. Each of our states of domicile for our title insurance underwriter subsidiaries have adopted a material prescribed accounting practice that differs from that found in NAIC SAP. Specifically, in both years, the timing of amounts released from the statutory unearned premium reserve under NAIC SAP differs from the states' required practice. Statutory surplus at December 31, 2021 and 2020 was lower by approximately $ 29 million and $ 28 million than if we had reported such amounts in accordance with NAIC SAP. Pursuant to statutory accounting requirements of the various states in which our insurers are domiciled, these insurers must defer a portion of premiums earned as an unearned premium reserve for the protection of policyholders and must maintain qualified assets in an amount equal to the statutory requirements. The level of unearned premium reserve required to be maintained at any time is determined by statutory formula based upon either the age, number of policies and dollar amount of policy liabilities underwritten, or the age and dollar amount of statutory premiums written. As of December 31, 2021, the combined statutory unearned premium reserve required and reported for our title insurers was $ 1,742 million . In addition to statutory unearned premium reserves, each of our insurers maintains reserves for known claims and surplus funds for policyholder protection and business operations. Each of our insurance subsidiaries is regulated by the insurance regulatory authority in its respective state of domicile, as well as that of each state in which it is licensed. The insurance commissioners of their respective states of domicile are the primary regulators of our title insurance subsidiaries. Each of the insurers is subject to periodic regulatory financial examination by regulatory authorities. Our insurance subsidiaries are subject to regulations that restrict their ability to pay dividends or make other distributions of cash or property to their immediate parent company without prior approval from the Department of Insurance of their respective states of domicile. As of December 31, 2021 , $ 2,375 million of our net assets are restricted from dividend payments without prior approval from the Departments of Insurance. During 2022, our title insurers can pay or make distributions to us of approximately $ 831 million, without prior approval. The combined statutory capital and surplus of our title insurers was approximately $ 1,903 million and $ 1,699 million as of December 31, 2021 and 2020, respectively. The combined statutory net earnings of our title insurance subsidiaries were $ 936 million, $ 629 million, and $ 583 million for the years ended December 31, 2021 , 2020, and 2019, respectively. As a condition to continued authority to underwrite policies in the states in which our insurers conduct their business, the insurers are required to pay certain fees and file information regarding their officers, directors and financial condition. In addition, our escrow and trust business is subject to regulation by various state banking authorities. Pursuant to statutory requirements of the various states in which our insurers are domiciled, such insurers must maintain certain levels of minimum capital and surplus. Required levels of minimum capital and surplus are not significant to the insurers individually or in the aggregate. Each of our insurers has complied with the minimum statutory requirements as of December 31, 2021. 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. These companies were in compliance with their respective minimum net worth and working capital requirements at December 31, 2021. There are no restrictions on our retained earnings regarding our ability to pay dividends to shareholders although there are limits on the ability of certain subsidiaries to pay dividends to us, as described above. F&G Through our wholly owned F&G subsidiary, our U.S. 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, 156 Table of Contents 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 our wholly owned insurance subsidiaries were as follows (in millions): Subsidiary (state/country of domicile) (a) FGL Insurance (IA) FGL NY Insurance (NY) Raven Re (VT) Statutory Net Income (loss): Year ended December 31, 2021 $ 351 $ 4 $ 9 Statutory Capital and Surplus: 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. FGL Insurance, FGL NY Insurance and Raven Re's respective statutory capital and surplus satisfies the applicable minimum regulatory requirements. Life insurance companies domiciled in the U.S. are subject to certain Risk-Based Capital (“RBC”) requirements as specified by the NAIC. The RBC is used to evaluate the adequacy of capital and surplus maintained by an insurance company in relation to risks associated with: (i) asset risk, (ii) insurance risk, (iii) interest rate risk and (iv) business risk. We monitor the RBC of FGLH’s insurance subsidiaries. As of December 31, 2021, each of FGLH's insurance subsidiaries had exceeded the minimum RBC requirements. Our insurance subsidiaries domiciled in the U.S. are restricted by state laws and regulations as to the amount of dividends they may pay to their parent, our wholly owned F&G subsidiary, without regulatory approval in any year, the purpose of which is to protect affected insurance policyholders, depositors or investors. 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 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 $ 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 157 Table of Contents 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 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 Condensed Consolidated Financial Statements which are prepared in accordance with GAAP. Equity 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. 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. 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. We generally are not a party to any material contracts considered finance leases. Right-of-use assets and lease liabilities under ASC Topic 842 are recorded as Lease assets and Lease liabilities, respectively, on the Consolidated Balance Sheet as of December 31, 2021. Our operating leases range in term from one to ten years . As of December 31, 2021, the weighted-average remaining lease term of our operating leases was 4.0 years. Our lease agreements do not contain material variable lease payments, buyout options, residual value guarantees or restrictive covenants. Most of our leases include one or more options to renew, with renewal terms that can extend the lease term by varying amounts. The exercise of lease renewal options is at our sole discretion. 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 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. As of December 31, 2021 the weighted-average discount rate used to determine our operating lease liability was 3.4 %. 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 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. 158 Table of Contents Future payments under operating lease arrangements accounted for under ASC Topic 842 as of December 31, 2021 are as follows (in millions): 2022 $ 145 2023 116 2024 83 2025 44 2026 26 Thereafter 27 Total operating lease payments, undiscounted $ 441 Less: present value discount 27 Lease liability, at present value $ 414 See Note K. Supplementary Cash Flow Information for certain information on noncash investing and financing activities related to our operating lease arrangements. Note R - Property and Equipment Property and equipment consist of the following: December 31, 2021 2020 (In millions) Furniture, fixtures and equipment $ 239 $ 230 Data processing equipment 210 186 Leasehold improvements 121 115 Buildings 79 78 Land 14 14 Other 5 5 Total property and equipment, gross 668 628 Accumulated depreciation and amortization ( 483 ) ( 448 ) Total property and equipment, net $ 185 $ 180 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. 159 Table of Contents Note S - Accounts Payable and Other Accrued Liabilities Accounts payable and other accrued liabilities consist of the following: December 31, 2021 2020 (In millions) Salaries and incentives $ 537 $ 519 Accrued benefits 447 373 Deferred revenue 144 117 Contingent consideration - acquisitions 30 11 Trade accounts payable 129 115 Accrued recording fees and transfer taxes 14 21 Accrued premium taxes 59 36 Liability for policy and contract claims 109 88 Retained asset account 148 144 Remittances and items not allocated 39 158 Option collateral liabilities 576 415 Funds withheld embedded derivative 73 101 Other accrued liabilities 391 304 $ 2,696 $ 2,402 160 Table of Contents Note T — Income Taxes Income tax expense (benefit) on continuing operations consists of the following: Year Ended December 31, 2021 2020 2019 (In millions) Current $ 656 $ 379 $ 268 Deferred 57 ( 57 ) 40 $ 713 $ 322 $ 308 Total income tax expense was allocated as follows: Year Ended December 31, 2021 2020 2019 (In millions) Net earnings from continuing operations $ 713 $ 322 $ 308 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 (benefit) expense allocated to other comprehensive earnings ( 143 ) 337 17 Total income taxes $ 570 $ 659 $ 325 A reconciliation of the federal statutory rate to our effective tax rate is as follows: Year Ended December 31, 2021 2020 2019 Federal statutory rate 21.0 % 21.0 % 21.0 % State income taxes, net of federal benefit 1.6 2.5 1.7 Stock compensation ( 0.2 ) ( 0.3 ) ( 0.8 ) Tax credits ( 0.2 ) ( 0.4 ) ( 0.1 ) Consolidated partnerships ( 0.1 ) ( 0.3 ) ( 0.2 ) Tax gain on parent shares held 0.5 — — Valuation allowance for deferred tax assets ( 0.3 ) ( 3.0 ) — Change in tax status benefit — ( 2.0 ) — Non-deductible expenses and other, net 0.8 0.5 0.9 Effective tax rate 23.1 % 18.0 % 22.5 % 161 Table of Contents The significant components of deferred tax assets and liabilities consist of the following: December 31, 2021 2020 (In millions) Deferred Tax Assets: Employee benefit accruals $ 111 $ 94 Net operating loss carryforwards 27 17 Accrued liabilities 1 12 Allowance for uncollectible accounts receivable 5 5 Pension plan 2 — Tax credits 77 59 State income taxes 8 4 Capital loss carryover 41 35 Basis difference held-for-sale — 19 Life insurance and claim related adjustments 854 861 Funds held under reinsurance agreements 52 85 Other 33 13 Total gross deferred tax asset 1,211 1,204 Less: valuation allowance 33 45 Total deferred tax asset $ 1,178 $ 1,159 Deferred Tax Liabilities: Title plant $ ( 52 ) $ ( 56 ) Amortization of goodwill and intangible assets ( 140 ) ( 148 ) Other investments — ( 7 ) Other ( 2 ) ( 23 ) Investment securities ( 401 ) ( 601 ) Depreciation ( 29 ) ( 17 ) Partnerships ( 182 ) ( 83 ) Value of business acquired ( 249 ) ( 308 ) Derivatives ( 68 ) ( 38 ) Deferred acquisition costs ( 102 ) ( 6 ) Transition reserve on new reserve method ( 34 ) ( 43 ) Funds held under reinsurance agreements ( 74 ) ( 58 ) Title Insurance reserve discounting ( 50 ) ( 63 ) Total deferred tax liability $ ( 1,383 ) $ ( 1,451 ) Net deferred tax liability $ ( 205 ) $ ( 292 ) Our net deferred tax liability was $ 205 million and $ 292 million as of December 31, 2021 and 2020, respectively. The significant changes in the deferred taxes are as follows: 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 162 Table of Contents 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 $ 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 $ 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 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. This reserve relates to a timing difference. A reconciliation of the beginning and ending unrecognized tax benefits is as follows (in millions): Year ended December 31, 2021 2020 Beginning balance $ 64 $ 7 Additions based on positions taken in current year — 58 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, 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. We are currently under audit by the IRS for the 2021 through 2022 tax years. We file income tax returns in various foreign and US state jurisdictions. Our state income tax returns for the 2017 through 2021 tax years remain subject to examination by state jurisdictions. The F&G life insurance group files a separate consolidated return with the IRS. F&G is not currently under examination by the IRS. Note U - Employee Benefit Plans Stock Purchase Plan During the three-year period ended December 31, 2021, our eligible employees could voluntarily participate in our employee stock purchase plan (“ESPP”) sponsored by us. Pursuant to the ESPP, employees may contribute an amount between 3 % and 15 % of their base salary and certain commissions. We contribute varying amounts as specified in the ESPP. 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. Eligible employees may contribute up to 40 % of their pre-tax annual compensation, up to the amount allowed pursuant to the Internal Revenue Code. We make an employer match on the 401(k) Plan of $ 0.375 on each $1.00 contributed up to the first 6 % of eligible earnings contributed to the 401(k) Plan by employees. The employer match was $ 36 million, $ 31 million, and $ 29 million for the years ended December 31, 2021, 2020, and 2019, respectively, and was credited based on the participant's individual investment elections in the FNF 401(k) Plan. 163 Table of Contents Omnibus Incentive Plan In 2005, we established the FNT 2005 Omnibus Incentive Plan (as amended and restated, the “Omnibus Plan”) authorizing the issuance of up to 8 million shares of common stock, subject to the terms of the Omnibus Plan. On October 23, 2006; May 29, 2008; May 25, 2011; May 22, 2013; and June 15, 2016 the shareholders of FNF approved amendments to increase the number of shares for issuance under the Omnibus Plan by 16 million, 11 million, 6 million, 6 million and 10 million shares, respectively. The primary purpose of the increases were to assure that we had adequate means to provide equity incentive compensation to our employees on a going-forward basis. The Omnibus Plan provides for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units and performance shares, performance units, other cash and stock-based awards and dividend equivalents. As of December 31, 2021, there were 1,639,226 shares of restricted stock and 996,113 stock options outstanding under the Omnibus Plan. Awards granted are approved by the Compensation Committee of the Board of Directors. Options vest over a 3 year period and have a contractual life o f 7 years. The exercise price for options granted equals the market price of the underlying stock on the grant date. Stock option grants vest according to certain time based and operating performance criteria. Option exercises by participants are settled on the open market. 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 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, 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: Options Weighted Average Exercise Price Exercisable 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 Balance, December 31, 2020 2,321,413 $ 24.24 2,321,413 Exercised ( 1,325,300 ) 23.28 Balance, December 31, 2021 996,113 $ 25.53 996,113 FNF stock option transactions under the F&G Omnibus Plan for 2021 and 2020 are as follows: Options Weighted Average Exercise Price Exercisable Balance, January 1, 2020 — $ — — Options assumed in connection with the F&G acquisition 2,411,585 36.04 Exercised ( 109,159 ) 27.64 Canceled ( 299,736 ) 38.41 Balance, December 31, 2020 2,002,690 $ 36.14 1,021,671 Exercised ( 474,754 ) 36.68 Canceled — — Balance, December 31, 2021 1,527,936 $ 35.97 1,072,584 164 Table of Contents FNF restricted stock transactions under the Omnibus Plan in 2021 , 2020, and 2019 are as follows: Shares Weighted Average Grant Date Fair Value Balance, December 31, 2018 1,821,238 $ 32.35 Granted 640,698 45.84 Canceled ( 14,937 ) 31.94 Vested ( 929,823 ) 30.98 Balance, December 31, 2019 1,517,176 $ 38.90 Granted 1,006,058 33.40 Canceled ( 11,604 ) 38.93 Vested ( 795,075 ) 37.60 Balance, December 31, 2020 1,716,555 $ 36.26 Granted 772,189 48.27 Canceled ( 7,577 ) 37.20 Vested ( 841,941 ) 36.15 Balance, December 31, 2021 1,639,226 $ 41.97 FNF restricted stock transactions under the F&G Omnibus Plan in 2021 and 2020 are as follows: Shares Weighted Average Grant Date Fair Value Balance, December 31, 2019 — $ — Granted 474,025 34.13 Canceled ( 24,155 ) 34.47 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 : Options Outstanding Options Exercisable Weighted Weighted Average Weighted Average Weighted Remaining Average Remaining Average Range of Number of Contractual Exercise Intrinsic Number of Contractual Exercise Intrinsic Exercise Prices Options Life Price Value Options Life Price Value (In years) (In millions) (In years) (In millions) $ 0.00 - $ 25.53 996,113 0.83 $ 25.53 $ 27 996,113 0.83 $ 25.53 $ 27 $ 25.54 - $ 27.53 359,510 3.98 27.53 9 292,101 3.98 27.53 7 $ 27.54 - $ 28.00 45,734 4.60 28.00 1 24,854 4.60 28.00 1 $ 28.01 - $ 35.89 34,106 4.87 35.89 1 6,821 4.87 35.89 — $ 35.90 - $ 39.10 1,088,586 4.05 39.10 14 748,808 3.77 39.1 10 2,524,049 $ 52 2,068,697 $ 45 165 Table of Contents 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. Using the fair value method of accounting, compensation cost is measured based on the fair value of the award at the grant date and recognized over the service period. Fair value of restricted stock awards and units is based on the grant date value of the underlying stock derived from quoted market prices. 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. 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. The intrinsic value of options exercised in the years ended December 31, 2021 , 2020 and 2019 was $ 32 million, $ 50 million, and $ 48 million, respectively. Net earnings attributable to FNF Shareholders reflects stock-based compensation expense amounts of $ 43 million for the year ended December 31, 2021, $ 39 million for the year ended December 31, 2020 , and $ 38 million for the year ended December 31, 2019 , which are included in personnel costs in the reported financial results of each period. At December 31, 2021 , the total unrecognized compensation cost related to non-vested stock option grants and restricted stock grants is $ 71 million, which is expected to be recognized in pre-tax income over a weighted average period of 1.75 years. Pension Plan In 2000, FNF merged with Chicago Title Corporation ("CTC"). In connection with the merger, we assumed CTC’s noncontributory defined contribution plan and noncontributory defined benefit pension plan (the “Pension Plan”). The Pension Plan covers certain CTC employees. The benefits are based on years of service and the employee’s average monthly compensation in the highest 60 consecutive calendar months during the 120 months ending at retirement or termination. Effective December 31, 2000, the Pension Plan was frozen and there will be no future credit given for years of service or changes in salary. The accumulated benefit obligation is the same as the projected benefit obligation due to the pension plan being frozen as of December 31, 2000. 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 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. 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, 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 California 14.6 % 15.2 % 14.3 % Texas 13.0 % 12.3 % 13.8 % Florida 9.3 % 8.6 % 9.2 % 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. We place cash equivalents and short-term investments with high credit quality financial institutions and, by policy, limit the amount of credit exposure with any one financial institution. Investments in commercial paper of industrial firms and financial institutions are rated investment grade by nationally recognized rating agencies. Concentrations of credit risk with respect to trade receivables are limited because a large number of geographically diverse customers make up our customer base, thus spreading the trade receivables credit risk. We control credit risk through monitoring procedures. 166 Table of Contents Note W - Recent Accounting Pronouncements Adopted Pronouncements In June 2016, the FASB issued ASU No. 2016-13 Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments (Topic 326). The amendments in this ASU introduce broad changes to accounting for credit impairment of financial instruments. The primary updates include the introduction of a new current expected credit loss ("CECL") model that is based on expected rather than incurred losses and amendments to the accounting for impairment of fixed maturity securities available for sale. 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. We adopted ASC 326 using the modified retrospective method for all financial assets measured at amortized cost. Results for reporting period beginning after December 15, 2019 are presented under ASC 326 while prior period amounts continue to be reported in accordance with previously applicable Generally Accepted Accounting Principles. We adopted this standard using the prospective transition approach for debt securities for which other than temporary impairment had been recognized prior to January 1, 2020. As a result, the amortized cost basis remains the same before and after the effective date of ASC 326. The effective interest rate on these debt securities was not changed. Amounts previously recognized in accumulated other comprehensive income as of January 1, 2020 relating to improvements in cash flows expected to be collected will be accreted into income over the remaining life of the asset. Recoveries of amounts previously written off relating to improvements in cash flows after January 1, 2020 will be recorded in earnings when received. See Note E Investments for further discussion of the adoption as it relates to our fixed maturity securities available for sale. In January 2017, the FASB issued ASU 2017-04 Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The guidance simplifies the measurement of goodwill impairment by removing step 2 of the goodwill impairment test, which requires the determination of the fair value of individual assets and liabilities of a reporting unit. The new guidance requires goodwill impairment to be measured as the amount by which a reporting unit’s carrying value exceeds its fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. 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. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820), Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement, effective for fiscal years beginning after December 15, 2019 including interim periods within those fiscal years. The new guidance introduces the following requirements: for investments in certain entities that calculate net asset value, investors are required to disclose the timing of liquidation of an investee's assets and the date when restrictions from redemption might lapse if the investee has communicated timing to the entity or announced timing publicly; entities should use the measurement uncertainty disclosure to communicate information about the uncertainty in measurement as of the reporting date; entities must disclose changes in unrealized gains and losses included in other comprehensive income for recurring Level 3 fair value measurements, as well as the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, or other quantitative information in lieu of weighted average if the entity determines such information would be more reasonable and rational; and entities are no longer required to disclose the amounts and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for timing of transfers between levels, and the valuation processes for Level 3 fair value measurements. We adopted this standard on June 1, 2020 as a result of our acquisition of F&G, and the overall effect of Topic 820 on our Consolidated Financial Statements was not material upon adoption. In October 2018, the FASB issued ASU 2018-17, Consolidation (Topic 810), Targeted Improvements to Related Party Guidance for Variable Interest Entities, effective for fiscal years beginning after December 15, 2019 including interim periods within those fiscal years. Under this update, entities must consider indirect interests held through related parties under common control on a proportional basis to determine whether a decision-making fee is a variable interest. 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. In December 2019, the FASB issued ASU 2019-12 Income Taxes - Simplifying the Accounting for Income Taxes (Topic 740), which simplifies various aspects of the income tax accounting guidance and will be applied using different approaches depending on what the specific amendment relates to and, for public entities, are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. We adopted this standard as of January 1, 2021, and it had no impact on our 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, 167 Table of Contents 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. In June of 2020, the FASB deferred the effective date of ASU 2018-12 for one-year in response to implementation challenges resulting from COVID-19. This update introduced the following requirements: assumptions used to measure cash flows for traditional and limited-payment contracts must be reviewed at least annually with the effect of changes in those assumptions being recognized in the statement of operations; the discount rate applied to measure the liability for future policy benefits and limited-payment contracts must be updated at each reporting date with the effect of changes in the rate being recognized in other comprehensive income; market risk benefits associated with deposit contracts must be measured at fair value, with the effect of the change in the fair value attributable to a change in the instrument-specific credit risk being recognized in other comprehensive income; deferred acquisition costs are 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; and disaggregated rollforwards of beginning to ending balances of the liability for future policy benefits, policyholder account balances, market risk benefits, separate account liabilities and deferred acquisition costs, as well as information about significant inputs, judgments, assumptions, and methods used in measurement are required to be disclosed. The amendments in this ASU may be early adopted as of the beginning of an annual reporting period for which financial statements have not yet been issued, including interim financial statements. We do not currently expect to early adopt this standard. 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. 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. 168 Table of Contents Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.