What changed in this filing

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Item 7. Management’s Discussion and Analysis

2023-02-27 compared with 2022-02-25 · 285 added, 392 removed, 883 unchanged (43% of the section changed)

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• the strength of the United States economy, including employment levels.

While we cannot predict the severity and duration of the impacts related to COVID-19, the most recent forecast of the MBA, as of January 21, 2022, estimated (actual for fiscal year 2020) the size of the U.S.

The most recent forecast of the MBA, as of February 21, 2023, estimated (actual for fiscal year 2021) the size of the U.S.

residential mortgage originations market as shown in the following table for 2021 - 2025 in its "Mortgage Finance Forecast" (in trillions):

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mortgage originations forecast $ 2.5 $ 2.3 $ 1.9 $ 2.2 $ 4.4

As of January 21, 2022, the MBA expects residential purchase transactions to steadily increase through 2023 before leveling out in 2024.

Additionally, the MBA expects residential refinance transactions to steadily decrease in 2022 and 2023 before leveling out in 2024 as interest rates are expected to rise.

The MBA expects overall mortgage originations to decrease in 2022 and thereafter.

As of February 21, 2023, the MBA expects residential purchase transactions to decrease in 2022 and 2023 followed by increases in 2024 and 2025.

Additionally, the MBA expects residential refinance transactions to dramatically decrease in 2022, followed by a slight decrease in 2023 before slightly increasing in 2024 and 2025.

The MBA expects overall mortgage originations to decrease in 2022 and 2023 before increasing in 2024 and 2025.

In recent years, total originations have been reflective of a strong residential real estate market driven by increasing home prices and low mortgage interest rates.

Mortgage rates rose consistently between 2016 and the beginning of 2019.

Concerns over a slowing global economy and the impact of a prolonged trade war resulted in interest rate cuts in the second half of 2019, which significantly increased refinance transactions and slightly increased purchase transactions when compared to 2018.

Interest rate cuts in the second half of 2019 resulted in a significant increase in refinance transactions and a slight increase in purchase transactions.

In the beginning of 2020, refinance and purchase transactions remained strong until the outbreak of COVID-19.

On March 15, 2020, the Federal Reserve took emergency action and reduced its benchmark interest rate by a full percentage point to nearly zero.

Following this emergency action, average interest rates for a 30-year fixed rate mortgages fell throughout the remainder of 2020, bottoming out at 2.65% on January 7, 2021.

Following this emergency action, average interest rates for a 30-year fixed rate mortgages fell throughout the remainder of 2020.

The outbreak of COVID-19 resulted in significant uncertainty in the economic outlook in the second quarter of 2020, and as a result real estate activity decreased significantly as consumers moved to the sidelines to assess the ongoing impact of COVID-19.

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However, with the surge in residential refinance transactions in 2020, residential refinance transactions began to slow in 2021 as the population of eligible refinance candidates declined.

The Federal Reserve raised the benchmark interest rate from near zero as of March 2022 to a range between 4.25% and 4.50% as of December 2022 in an effort to combat inflation.

Interest rates on a 30-year, fixed rate mortgage averaged 5.2% in 2022, up from 3.2% in 2021.

Despite the recent increase in interest rates and fluctuation in existing-home sales, the market is still outperforming pre-pandemic levels.

On February 2, 2023, the Federal Reserve raised the benchmark interest rate an additional 25 basis points.

A shortage in the supply of homes for sale, increasing home prices, rising mortgage interest rates, inflation and disrupted labor markets created some volatility in the residential real estate market in 2021 and 2022, which has continued into 2023.

Additionally, geopolitical uncertainties associated with the war in Ukraine have created additional volatility in the global economy beginning in 2022.

Existing-home sales decreased 34% in December 2022 as compared to the corresponding month in

2021 while median existing-home sales prices rose to $366,900 in December 2022, a 2% increase over the corresponding month in 2021.

Other economic indicators used to measure the health of the U.S.

economy, including the unemployment rate and consumer confidence, indicated that the United States was on strong footing prior to the outbreak of COVID-19.

However, the impact of COVID-19 reduced the outlook related to these economic indicators in March 2020.

economy, including the unemployment rate, indicated that the United States was on strong footing prior to the outbreak of COVID-19.

According to the U.S.

Department of Labor's Bureau of Labor, the unemployment rate was at a historically low 3.5% in February 2020 but subsequently fluctuated dramatically before reaching 6.7% in December 2020.

In 2021, the unemployment rate fell to 3.9% in December of 2021.

Additionally, the Conference Board's monthly Consumer Confidence Index remained at high levels through

February 2020 before falling as a result of the COVID-19 outbreak.

Consumer confidence has since rebounded, reaching its peak in June 2021 before decreasing in the third quarter of 2021 due to concerns over inflation.

Consumer confidence remained flat in the fourth quarter of 2021.

In 2021, the unemployment rate fell dramatically and remained near record lows throughout 2022.

The unemployment rate was 3.5% and 3.9% in December of 2022 and 2021, respectively.

Because commercial real estate transactions tend to be generally driven by supply and demand for commercial space and occupancy rates in a particular area rather than by interest rate fluctuations, we believe that our commercial real estate title insurance business is less dependent on the industry cycles discussed above than our residential real estate title business.

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In 2020, we experienced decreases in commercial volumes and commercial fee-per-file as a result of the outbreak of COVID-19.

Commercial volumes and commercial fee-per-file recovered in the second half of 2020 and remained elevated throughout 2021.

Commercial volumes and commercial fee-per-file recovered in the second half of 2020 and remained stable throughout 2021 and the first three quarters of 2022.

Commercial volumes and commercial fee-per-file declined in the fourth quarter of 2022.

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

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The fourth quarter is typically strong due to the desire of commercial entities to complete transactions by year-end.

Seasonality in 2020 and 2021 deviated from historical patterns due to COVID-19.

Seasonality in 2020, 2021 and 2022 deviated from historical patterns due to COVID-19 and the subsequent rapid increase in interest rates.

We have noted short-term fluctuations through recent years in resale and refinance transactions as a result of changes in interest rates.

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(Dollars in millions)

California $ 1,251 14.6 % $ 958 15.2 % $ 764 14.3 %

Texas $ 1,027 15.0 % $ 1,112 13.0 % $ 778 12.3 %

California 819 12.0 1,251 14.6 958 15.2

Florida 722 10.6 799 9.3 540 8.6

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COVID-19 Pandemic

While still evolving, the COVID-19 pandemic has already caused significant economic and financial turmoil in the U.S.

and around the world.

At this time, it is still not possible to estimate the longer term-effects the COVID-19 pandemic could have on our F&G segment or our consolidated financial statements.

Increased economic uncertainty and increased unemployment that could potentially result from the spread of COVID-19 and its variants may result in F&G policyholders seeking sources of liquidity and withdrawing at rates greater than was previously expected.

Additionally, adverse events or conditions resulting from COVID-19 could also have a negative effect on its sales of new policies and could result in more volatility from the impact of mortality experience.

As of December 31, 2021, F&G's investment portfolio has recovered from earlier volatility and F&G has not seen a sustained elevated level of adverse policyholder experience from the impact of COVID-19 on the overall business.

The full extent to which the COVID-19 pandemic impacts our F&G segment's financial condition, results of operations, liquidity or prospects will depend on future developments which cannot be predicted at this time.

The health, economic and business conditions precipitated by the worldwide COVID-19 pandemic that emerged in 2020 increased our mortality experience in 2021 and 2020 in both our single premium immediate annuity (“SPIA”) and IUL business which largely offset each other.

As of December 31, 2022, we have not seen a sustained elevated level of adverse policyholder experience from the impact of COVID-19 on the overall business.

Market Conditions

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December 31, 2022 % December 31, 2021 %

(in millions) (in millions)

(Dollars in millions)

Known claims $ 195 10.8 % $ 337 17.9 %

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

We recorded our loss provision rate at 4.5% for the years ended December 31, 2021, 2020 and 2019.

Of such annual loss provision rates, 4.5%, for each of the years ended December 31, 2021, 2020 and 2019, respectively, related to losses on policies written in the current year, and the remainder, if any related to developments on prior year policies.

The provision rate in 2021, 2020, and 2019 is supported by stability in payments for prior policy years, and qualitative factors that would indicate consistency, including consistency in lender underwriting standards, extension of credit to quality borrowers, a high proportion of refinance activity, better claims expense management, better mechanic’s lien underwriting practices, and better fraud awareness by lenders, title insurers and settlement agents.

We recorded our loss provision rate at 4.5% for the years ended December 31, 2022, 2021 and 2020 related to policies written in those years.

The provision rate in 2022, 2021, and 2020 is supported by stability in payments for prior policy years, and qualitative factors that would indicate consistency, including consistency in lender underwriting standards, extension of credit to quality borrowers, a high proportion of refinance activity, claims expense management, mechanic’s lien underwriting practices, and fraud awareness by lenders, title insurers and settlement agents.

Due to the uncertainty inherent in the process and due to the judgment used by both management and our actuary, our ultimate liability may be greater or less than our carried reserves.

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Additionally, we continued to see positive development relating to the 2011 through 2022 policy years, which we believe is indicative of more stringent underwriting standards by us and the lending industry.

Further, we have seen significant positive development in residential owner's policies due to increased payments on residential lender's policies, which inherently limit the potential loss on the related owner's policy to the differential in coverage amount between the amount insured under the owner's policy and the amount paid under the residential lender's policy.

Also, any residential lender's policy claim paid relating to a property that is in foreclosure negates any potential loss under an owner's policy previously issued on the property as the owner has no equity in the property.

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We make estimates of expected full and partial surrenders of our fixed annuity products.

Our surrender rate experience in the twelve months ended December 31, 2021 and the seven month period ended December 31, 2020 on the fixed annuity products averaged 7% and 4%, respectively, which is within our assumed ranges.

Our surrender rate experience in the years ended December 31, 2022 and 2021 , and the seven month period ended December 31, 2020 on the fixed annuity products averaged 7%, 7% and 4%, respectively, which is within our assumed ranges.

Management’s best estimate of surrender behavior incorporates actual experience over the entire period, as we believe that, over the duration of the policies, we will experience the full range of policyholder behavior and market conditions.

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Changes in or deviations from the assumptions used can significantly affect our reserve levels and related results of operations.

At issue, and at each subsequent valuation, we determine the present value of the cost of the Guaranteed Minimum Withdrawaal Benefit ("GMWB") rider benefits and certain Guaranteed Minimum Death Benefit ("GMDB") riders in excess of benefits that are funded by the account value.

At issue, and at each subsequent valuation, we determine the present value of the cost of the Guaranteed Minimum Withdrawal Benefit ("GMWB") rider benefits and certain Guaranteed Minimum Death Benefit ("GMDB") riders in excess of benefits that are funded by the account value.

We also calculate the present value of total expected policy assessments, including investment margins, if applicable.

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We began issuing our GMWB products in 2008, and future experience could lead to significant changes in our assumptions.

If emerging experience deviates from our

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

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

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

Our aggregate reserves for contractholder funds, future policy benefits and product guarantees on a direct and net basis as of December 31, 2022 and December 31, 2021 are summarized as follows:

(Dollars in millions) Direct Reinsurance Recoverable Net

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Total $ 47,156 $ (5,587) $ 41,569

As of December 31, 2021

(Dollars in millions) Direct Reinsurance Recoverable Net

Fixed indexed annuities $ 23,370 $ — $ 23,370

Fixed rate annuities 6,369 (1,689) 4,680

Immediate annuities 3,657 (133) 3,524

Universal life 1,981 (983) 998

Traditional life 1,823 (805) 1,018

Funding agreement backed notes 1,904 — 1,904

Pension risk transfer 1,153 — 1,153

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

Fixed indexed annuities ("FIA") and indexed universal life ("IUL") products contain an embedded derivative;

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The discount rate used to determine the fair value of our FIA/ IUL embedded derivative liabilities includes an adjustment to reflect the risk that these obligations will not be fulfilled (“non-performance risk”).

For the period ended December 31, 2021, our non-performance risk adjustment was based on the expected loss due to default in debt obligations for

similarly rated financial companies.

For the years ended December 31, 2022 and December 31, 2021, our non-performance risk adjustment was based on the expected loss due to default in debt obligations for similarly rated financial companies.

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

As discussed in Note O Reinsurance of our Consolidated Financial Statements included in Item 8 of Part II of this Report, F&G entered into a reinsurance agreement with Kubera Insurance (SAC) Ltd.

As discussed in Note O F&G Reinsurance of our Consolidated Financial Statements included in Item 8 of Part II of this Report, F&G entered into a reinsurance agreement with Kubera Insurance (SAC) Ltd.

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

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If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value measurement of the instrument.

The following table presents the fair value of fixed maturity securities and equity securities by pricing source and hierarchy level as of December 31, 2021 and 2020.

The following table presents the fair value of fixed maturity securities and equity securities by pricing source, hierarchy level and net asset value ("NAV") as of December 31, 2022 and December 31, 2021.

As of December 31, 2022

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(Level 2) Significant

(Level 3) Total

(Level 3) NAV Total

Fixed maturity securities available-for-sale and equity securities:

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(Level 2) Significant

(Level 3) Total

(Level 3) NAV Total

Fixed maturity securities available-for-sale and equity securities:

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We have made acquisitions that have resulted in a significant amount of goodwill.

As of December 31, 2021 and 2020, goodwill was $4,539 million and $4,495 million, respectively.

The majority of our goodwill as of December 31, 2021 relates to goodwill recorded in connection with the Chicago Title merger in 2000, our acquisition of ServiceLink in 2014 and our acquisition of F&G in 2020.

As of December 31, 2022 and 2021, goodwill w as $4,642 million and $4,539 million, respectively.

The majority of our goodwill as of December 31, 2022 relates to goodwill recorded in connection with the Chicago Title merger in 2000, our initial acquisition of an ownership interest in ServiceLink in 2014 and our acquisition of F&G in 2020.

Refer to Note N Goodwill to our Consolidated Financial Statements included in Item 8 of Part II of this Annual Report for a summary of recent changes in our Goodwill balance.

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VOBA, DAC and DSI

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

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

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

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We perform sensitivity analyses to assess the impact that certain assumptions have on DAC, DSI, VOBA.

The following table presents the estimated instantaneous net impact to income before income taxes of various assumption changes on our

DAC, DSI, and VOBA.

The following table presents the estimated instantaneous net impact to income before income taxes of various assumption changes on our DAC, DSI, and VOBA.

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

(Dollars in millions) As of December 31, 2021

(Dollars in millions) As of December 31, 2022 As of December 31, 2021

A change to the long-term interest rate assumption of -50 basis points $ (113) $ (91)

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These differences result in deferred income tax assets and liabilities, which are included within the Consolidated Balance Sheets.

We must then assess the likelihood that deferred income tax assets will be recovered from future taxable income and, to the extent we believe that recovery is not likely, establish a valuation allowance.

To the extent we establish a valuation allowance or increase this allowance in a period, we must reflect this increase as expense within Income tax expense in the Consolidated Statement of Earnings.

We must then assess the likelihood that deferred income tax assets will be realized and, to the extent we believe that realizability is not likely, establish a valuation allowance.

Determination of income tax expense requires estimates and can involve complex issues that may require an extended period to resolve.

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The outcome of these final determinations could have a material effect on our income tax provision, net income or cash flows in the period that determination is made.

For the year ended December 31, 2022, changes in market conditions, including rising interest rates, resulted in deferred tax assets related to the net unrealized capital losses in the Company’s investment portfolio.

GAAP requires the evaluation of the recoverability of deferred tax assets and the establishment of a valuation allowance, if necessary, to reduce the deferred tax asset to an amount that is more likely than not to be realized.

When assessing the need for valuation allowance on the unrealized capital loss deferred tax assets, we assert a tax planning strategy to hold the vast majority of underlying securities to recovery or maturity.

Our ability to assert such a tax planning strategy is dependent upon factors such as the Company’s asset/liability matching process, overall investment strategy, projected future annuity product sales, and expected liquidity needs.

In the event these estimates differ from our prior estimates due to the receipt of new information, we may be required to significantly change the income tax expense recorded in the Consolidated Financial Statements.

This includes a further significant decline in value of assets incorporated into our tax planning strategies which could lead to an increase of our valuation allowance on deferred tax assets having an adverse effect on current and future results.

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

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Net earnings from continuing operations $ 1,152 $ 2,434 $ 1,477

Total revenues decreased by $4,087 million in 2022 compared to 2021, primarily attributable to decreases in both direct and agency premiums, decreases in escrow title-related and other fees, decreases in interest and investment income and net recognized losses on our investment holdings in 2022 as compared to net recognized gains on our investment holdings in 2021.

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

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

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

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

Total net earnings from continuing operations decreased by $1,282 million in 2022 compared to 2021, and increased by $957 million in 2021 compared to 2020.

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

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The increase in 2021 as compared to 2020 is primarily attributable to a full year of activity in our F&G segment.

The increase in 2020 as compared to 2019 is primarily attributable to the addition of our F&G segment, partially offset by decreased interest income from lower average balances and of cash and cash equivalents and short term investments, and lower investment yields as a result of declining interest rates year-over-year.

Recognized gains and losses, net totaled $(1,493) million, $334 million, and $488 million for the years ended December 31, 2022, 2021, and 2020, respectively.

Recognized gains and losses, net for the year ended December 31, 2022 are primarily

attributable to realized losses on derivatives of $515 million, losses on sales of fixed maturity securities of $282 million, losses on sales of mortgages and other assets of $80 million, losses on sales of equity and preferred securities of $31 million and non-cash valuation losses on equity and preferred security holdings of $584 million.

Recognized gains and losses, net for the year ended December 31, 2021 are primarily attributable to realized gains on derivatives of $655 million, gains on sales of fixed maturity securities of $114 million and gains on sales of mortgages and other assets of $13 million, partially offset by losses on sales of equity and preferred securities of $19 million and non-cash net valuation losses on equity and preferred securities of $429 million.

Recognized gains and losses, net for the year ended December 31, 2020 are primarily attributable to non-cash valuation gains on equity and preferred security holdings of $208 million, realized gains on derivatives of $192 million, gains on sales of fixed maturity, preferred and equity securities of $148 million, losses on other assets of $25 million and losses on mortgage loans of $32 million.

Recognized gains and losses, net for the year ended December 31, 2019 are primarily attributable to non-cash valuation gains on equity and preferred security holdings of $316 million, non-cash valuation gains on other long-term investments of $11 million, gains on sales of equity securities of $10 million, partially offset by impairments of lease assets of $8 million, net realized losses of $5 million on sales and maturities of fixed maturity investment securities, and $7 million of other net realized losses.

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

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Title insurance premiums, escrow and title-related fees are generally recognized as income at the time the underlying transaction closes or other service is provided.

Direct title operations revenue often lags approximately 45-60 days behind expenses and therefore gross margins may fluctuate.

Direct title operations revenue often lags approximately 45-60 days behind expenses, therefore;

gross margins may fluctuate.

The changes in the market environment, mix of business between direct and agency operations and the contributions from our various business units have historically impacted margins and net earnings.

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Income tax expense as a percentage of earnings before income taxes was 25.9%, 23.1%, and 18.0% in the years ended December 31, 2022, 2021, and 2020 respectively.

The increase in income tax expense as a percentage of earnings before taxes in 2021 when compared to 2020 and the decrease in income tax expense as a percentage of earnings before taxes in 2020 as compared to 2019 is primarily attributable to valuation allowance releases and the tax status change recorded by F&G in 2020.

The increase in income tax expense as a percentage of earnings before taxes in 2022 as compared to 2021 is primarily attributable to the recording of a valuation allowance in 2022 for tax benefits associated with deferred tax assets related to unrealized losses on equity securities for which it is not more likely than not that we will not be able to realize the benefit for tax purposes, partially offset by the tax benefit of realized capital losses carried back to 2017.

The increase in income tax expense as a percentage of earnings before taxes in 2021 when compared to 2020 is primarily attributable to valuation allowance releases and the tax status change recorded by F&G in 2020.

When assessing the need for valuation allowance for the F&G segment on the unrealized capital loss deferred tax assets, F&G asserts a tax planning strategy to hold the vast majority of underlying securities to recovery or maturity.

F&G’s ability to assert such a tax planning strategy is dependent upon factors such as F&G’s asset/liability matching process, overall investment strategy, projected future annuity product sales, and expected liquidity needs.

In the event these estimates differ from our prior estimates due to the receipt of new information, the Company may be required to significantly change the income tax expense recorded in the Consolidated Financial Statements.

The following table presents the results of operations of our Title segment for the years indicated:

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Fee per file by direct title operations (in dollars) $ 3,381 $ 2,467 $ 2,067

Total revenues for the Title segment decreased by $2,391 million, or 21%, in the year ended December 31, 2022 when compared to 2021.

Total revenues for the Title segment increased by $2,123 million, or 23%, in the year ended December 31, 2021 when compared to 2020.

Total revenues increased by $1,115 million or 14% in the year ended December 31, 2020 when compared to 2019.

The decrease in the year ended December 31, 2022 as compared to 2021 is primarily attributable to decreases in both our direct and agency premiums, decreases in escrow, title-related and other fees and an increase in non-cash valuation losses on our equity and preferred investment holdings, partially offset by an increase in interest and investment income.

The increase in the year ended December 31, 2021 as compared to 2020 is primarily attributable to increases in both our direct and agency premiums, and increases in escrow, title-related and other fees, partially offset by a decrease in interest and investment income, and an increase in non-cash valuation losses on our equity and preferred investment holdings.

The increase in the year ended December 31, 2020 as compared to 2019 is primarily attributable to increases in both our direct and agency premiums, and increases in escrow, title-related and other fees, partially offset by decreases in interest and investment income, and non-cash valuation gains on our equity and preferred investment holdings.

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

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Total title premiums $ 6,834 100.0 % $ 8,553 100.0 % $ 6,298 100.0 %

Title premiums decreased by 20% in the year ended December 31, 2022 as compared to 2021.

The decrease is primarily attributable to a decrease in Title premiums from direct operations of $713 million, or 20%, and a decrease in Title premiums from agency operations of $1,006 million, or 20%.

Title premiums increased by 36% in the year ended December 31, 2021 as compared to 2020.

The increase is primarily attributable to an increase in Title premiums from direct operations of $872 million, or 32%, and an increase in Title premiums from agency operations of $1,383 million, or 38%.

Title premiums increased 18% in the year ended December 31, 2020 as compared to 2019.

The increase was a result of an increase in Title premiums from direct operations of $318 million, or 13%, and an increase in Title premiums from agency operations of $638 million, or 22%.

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

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

Title premiums from direct operations increased in the year ended December 31, 2021 as compared to 2020.

The increase is primarily attributable to an increase in total closed order volume, driven by an increase in purchase order volume and an increase in fee per file, partially offset by a decline in refinance volume.

Ti tle premiums from direct operations increased in 2020 as compared to 2019, primarily due to an increase in total closed order volume, driven by an increase in refinance order volume, partially offset by a decline in total fee per file.

Title premiums from direct operations decreased in the year ended December 31, 2022 as compared to 2021.

The decrease is primarily attributable to a decrease in total closed order volume, partially offset by an increase in fee per file.

Ti tle premiums from direct operations increased in 2021 as compared to 2020, primarily due to an increase in total closed order volume, driven by an increase in purchase order volume and an increase in fee per file, partially offset by a decline in refinance volume.

The residential refinance market has considerably lower fees per closed order than commercial or residential purchase transactions.

We experienced an increase in closed title insurance order volumes from purchase transactions and a decrease in closed order volume from refinance transactions in the year ended December 31, 2021 as compared to 2020.

Total closed order volumes were 2,169,000 in the year ended December 31, 2021 compared to 2,052,000 in the year ended December 31, 2020, an overall increase of 5.7%.

The decrease in refinance transactions in 2021 is primarily attributable to the surge in residential refinance transactions in 2020 and the first half of 2021, resulting in a decline in the population of eligible refinance candidates in the second half of 2021.

Closed order volumes were 2,052,000 in the year ended December 31, 2020 compared with 1,448,000 in the year ended December 31, 2019, an overall increase of 41.7%.

The increase in refinance transactions in 2020 is primarily due to lower average interest rates when compared to 2019.

We experienced a decrease in closed title insurance order volumes from both purchase and refinance transactions in the year ended December 31, 2022 as compared to 2021.

Total closed order volumes were 1,222,000 in the year ended December 31, 2022 compared to 2,169,000 in the year ended December 31, 2021, an overall decrease of 43.7%.

Total closed order volumes from refinance transactions, which have a lower fee per file than purchase transactions, were 369,000 in the year ended December 31, 2022 compared to 1,172,000 in the year ended December 31, 2021, an overall decrease of 69%.

The decrease in 2022 is primarily attributable to higher average mortgage interest rates in 2022 as compared to 2021.

Total closed order volumes were 2,169,000 in the year ended December 31, 2021 compared to 2,052,000 in the year ended December 31, 2020, an overall increase of 5.7%.The decrease in refinance transactions in 2021 is primarily attributable to the surge in residential refinance transactions in 2020 and the first half of 2021, resulting in a decline in the population of eligible refinance candidates in the second half of 2021.

Total open ed title insurance order volume s decreased i n the year ended December 31, 2022, as compared to 2021.

The decrease in the year ended 2021 was attributable to decreased opened title orders from refinance transactions, partially offset by an increase in purchase transactions.

Total opened title insurance order volumes increased in the year ended December 31, 2020, as compared to 2019.

The increase in the year ended 2020 was attributable to increased opened title orders from purchase and refinance transactions.

The decrease in 2022 was attributable to decreases in both opened title orders from purchase transactions and refinance transactions.

Total opened title insurance order volumes decreased in the year ended December 31, 2021, as compared to 2020.

The decrease in 2021 was attributable to decreased opened title orders from refinance transactions, partially offset by an increase in purchase transactions.

The average fee per file in our direct operations was $3,381 in the year ended December 31, 2022, compared to $2,467 in the year ended December 31, 2021.

The increase in average fee per file in 2021 as compared to 2020 reflects an increased proportion of purchase transactions relative to total closed orders and a stronger commercial market compared to 2020.

The increase in average fee per file in 2022 as compared to 2021 reflects an increased proportion of purchase transactions relative to total closed orders and a stable commercial market.

The average fee per file in our direct operations was $2,467 in the year ended December 31, 2021, compared to $2,067 in the year ended December 31, 2020.

The increase in average fee per file in 2021 as compared to 2020 reflects an increased proportion of purchase transactions

relative to total closed orders and a stronger commercial market compared to 2020.

The fee per file tends to change as the mix of refinance and purchase transactions changes, because purchase transactions involve the issuance of both a lender’s policy and an owner’s policy, resulting in higher fees, whereas refinance transactions only require a lender’s policy, resulting in lower fees.

The average fee per file in our direct operations in the year ended December 31, 2019 was $2,511.

The decrease in average fee per file in 2020 as compared to 2019 refle cts an increased proportion of refinance transactions relative to total closed orders and a weaker commercial market compared to the corresponding prior year period.

Title premiums from agency operations increased $1,383 million, or 38%, in the year ended December 31, 2021 as compared to 2020, and increased $638 million, or 22%, in the year ended December 31, 2020 as compared to 2019.

The current trends in the agency business reflect an improving residential purchase environment in many markets throughout the country and a concerted effort by management to increase remittances with existing agents as well as cultivate new relationships with potential new agents.

In addition, lower mortgage rates have resulted in a surge in refinance business with agents, which is further impacted by changes in underlying real estate activity in the geographic regions in which the independent agents operate.

Escrow, title-related and other fees increased by $446 million, or 16%, in the year ended December 31, 2021 as compared to 2020, and increased by $393 million, or 16%, in the year ended December 31, 2020 as compared to 2019.

Escrow fees, which are more closely related to our direct operations, increased by $225 million, or 19%, in the year ended December 31, 2021, as compared to 2020, and increased $271 million, or 30%, in the year ended December 31, 2020 as compared to 2019.

The increases in the year ended December 31, 2021 as compared to 2020 are primarily due to the increase in closed order volume.

The increase in the year ended December 31, 2020 as compared to 2019 is primarily due to stronger residential refinance revenue, which has relatively higher escrow fees than residential purchase and commercial transactions.

Othe r fees in the Title segment, excluding escrow fees, increased b y $221 million, or 14%, in the year ended December 31, 2021 as compared to 2020, and increased $122 million, or 8%, in the year ended December 31, 2020 as compared to 2019.

The increase in Other fees in the year ended December 31, 2021 as compared to 2020, and the increase in Other fees in the year ended December 31, 2020 as compared to 2019 was primarily driven by an increase in revenues related to our ServiceLink business in addition to increases in various individually immaterial items.

Title premiums from agency operations decreased $1,006 million, or 20%, in the year ended December 31, 2022 as compared to 2021, and increased $1,383 million, or 38%, in the year ended December 31, 2021 as compared to 2020.

The current trends in the agency business reflect a softening residential purchase environment in many markets throughout the country and a dramatic decline in residential refinance transactions, consistent with trends in the direct business.

In addition in 2021 and 2020, lower mortgage rates during those years resulted in a surge in refinance business with agents, which was further impacted by changes in underlying real estate activity in the geographic regions in which the independent agents operate.

Escrow, title-related and other fees decreased by $726 million, or 22%, in the year ended December 31, 2022 as compared to 2021, and increased by $446 million, or 16%, in the year ended December 31, 2021 as compared to 2020.

Escrow fees, which are more closely related to our direct operations, decreased by $414 million, or 30%, in the year ended December 31, 2022, as compared to 2021, and increased $225 million, or 19%, in the year ended December 31, 2021 as compared to 2020.

The decrease in the year ended December 31, 2022 as compared to 2021 is primarily due to the decrease in closed order volume including the decline in residential refinance volume, which have relatively higher escrow fees than residential purchase and commercial transactions.

The increase in the year ended December 31, 2021 as compared to 2020 is primarily due to the increase in closed order volume.

Othe r fees in the Title segment, excluding escrow fees, decreased b y $311 million, or 17%, in the year ended December 31, 2022 as compared to 2021, and increased $221 million, or 14%, in the year ended December 31, 2021 as compared to 2020.

The decrease in Other fees in the year ended December 31, 2022 as compared to 2021 was primarily driven by a decrease in revenues related to our ServiceLink business in addition to decreases in various individually immaterial items.

The increase in Other fees in the year ended December 31, 2021 as compared to 2020 was primarily driven by an increase in revenues related to our ServiceLink business in addition to increases in various individually immaterial items.

T he change in both escrow fees and other fees is directionally consistent with the change in title premiums from direct operations in 2022 and 2021.

Interest and investment income levels are primarily a function of securities markets, interest rates and the amount of cash available for investment.

Interest and investment income decreased $42 million, or 28%, in the year ended December 31, 2021, as compared to 2020, and decreased $51 million in the year ended December 31, 2020 as compared to 2019.

Interest and investment income increased $104 million, or 95%, in the year ended December 31, 2022, as compared to 2021, and decreased $42 million, or 28%, in the year ended December 31, 2021 as compared to 2020.

The increase in the year ended December 31, 2022 as compared to 2021 was primarily attributable to increased income from our tax-deferred property exchange business and higher yields on our short-term investments when compared to 2021.

The decrease in the year ended December 31, 2021 as compared to 2020 was primarily attributable to decreased average fixed maturity portfolio balances, decreased dividends on preferred and common stocks and a decline in interest on cash and short-term investments.

The decrease in the year ended December 31, 2020 as compared to 2019 w as primarily driven by a decline in interest income related to the Company's tax-deferred property exchange business and a decline in interest on cash and short-term investments, due to a decline in short-term rates in 2020 as compared to 2019.

Recognized net losses were $393 million in the year ended December 31, 2021.

Recognized net gains were $143 million and $326 million in the years ended December 31, 2020 and 2019, respectively.

Recognized net losses were $443 million and $393 million in the years ended December 31, 2022 and 2021, respectively.

Recognized net gains were $143 million in the year ended December 31, 2020.

The variability in recognized gains and losses, net is primarily attributable to fluctuations in non-cash valuation changes on our equity and preferred security holdings in addition to various other individually immaterial items .

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

Personnel costs increased $514 million, or 19%, in the year ended December 31, 2021, as compared to 2020, and increased $216 million, or 8% in the year ended December 31, 2020 as compared to 2019.

T he increases in the year ended December 31, 2021 as compared to 2020, and the year ended December 31, 2020 as compared to 2019 are primarily attrib utable to increased commissions driven by the increases in year-over-year closed title order volumes.

Personnel costs decreased $305 million, or 9%, in the year ended December 31, 2022, as compared to 2021, and increased $514 million, or 19% in the year ended December 31, 2021 as compared to 2020.

The decrease in the year ended December 31, 2022 as compared to 2021 is primarily attributable to lower average head count in 2022 in response to the significant decline in refinance orders and the recent declines in purchase and commercial orders, partially offset by an increase in the 401(k) match in 2022.

T he increase in the year ended December 31, 2021 as compared to 2020 is primarily attrib utable to increased commissions driven by the increases in year-over-year closed title order volumes.

Personnel costs as a percentage of total revenues from direct title premiums and escrow, title-related and other fees were 56%, 48% and 51% for the years ended December 31, 2022, 2021 and 2020, respectively.

Average employee count in the Title segment was 25,157, 27,297, and 24,638 in the years ended December 31, 2022, 2021 and 2020, respectively.

Other operating expenses increased by $189 million, or 12%, in the year ended December 31, 2021 as compared to 2020, and increased $27 million, or 2%, in the year ended December 31, 2020 compared to 2019.

Other operating expenses decreased by $210 million, or 12%, in the year ended December 31, 2022 as compared to 2021, and increased $189 million, or 12%, in the year ended December 31, 2021 compared to 2020.

Other operating expenses as a percentage of total revenue excluding agency premiums, interest and investment income, and recognized gains and losses were 28%, 25% and 28% in the years ended December 31, 2022, 2021 and 2020, respectively.

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Segment Overview

Through our wholly owned F&G subsidiary, which we acquired on June 1, 2020, we provide our principal annuity and life insurance products through the insurance subsidiaries composing our F&G segment, FGL Insurance and FGL NY Insurance.

Through our majority owned F&G subsidiary, which we acquired on June 1, 2020, we provide our principal annuity and life insurance products through the insurance subsidiaries composing our F&G segment, FGL Insurance and FGL NY Insurance.

Our customers range across a variety of age groups and are concentrated in the middle-income market.

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Additionally, we provide funding agreements and pension risk transfer ("PRT") solutions to various institutions through consultants and brokers.

In setting the features and pricing of new FIA products relative to our targeted net margin, we take into account our expectations regarding (1) net investment spread (see Non-GAAP Financial Measures section), which is the difference between the net investment income we earn and the sum of the interest credited to policyholders and the cost of hedging our risk on the policies;

In setting the features and pricing of our flagship FIA products relative to our targeted net margin, we take into account our expectations regarding (1) the difference between the net investment income we earn and the sum of the interest credited to policyholders and the cost of hedging our risk on the policies;

(2) fees, including surrender charges and rider fees, partly offset by vesting bonuses that we pay our policyholders;

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Sources of revenues for products accounted for as deposit liabilities are net investment income, surrender, cost of insurance and other charges deducted from contractholder funds, and net realized gains (losses) on investments.

Components of expenses for products accounted for as deposit liabilities are interest-sensitive and index product benefits (primarily interest credited to account balances or the hedging cost of providing index credits to the policyholder), amortization of DAC, DSI, and VOBA, other operating costs and expenses, and income taxes.

F&G hedges certain portions of its exposure to product related equity market risk by entering into derivative transactions.

Components of expenses for products accounted for as deposit liabilities are interest-sensitive and index product benefits (primarily interest credited to account balances or the hedging cost of providing index credits to the policyholder), amortization of VOBA, DAC, and DSI, other operating costs and expenses, and income taxes.

We hedge certain portions of our exposure to product related equity market risk by entering into derivative transactions.

We purchase derivatives consisting predominantly of call options and, to a lesser degree, futures contracts (specifically for FIA contracts) on the equity indices underlying the applicable policy.

These derivatives are used to offset the statutory reserve impact of the index credits due to policyholders under the FIA and IUL contracts.

The majority of all such call options are one-year options purchased to match the funding requirements underlying the FIA/IUL contracts.

These derivatives are used to offset the reserve impact of the index credits due to policyholders under the FIA and IUL contracts.

The majority of all such call options are one-year options

purchased to match the funding requirements underlying the FIA/IUL contracts.

We attempt to manage the cost of these purchases through the terms of our FIA/IUL contracts, which permit us to change caps, spread, or participation rates on each policy's annual anniversary, subject to certain guaranteed minimums that must be maintained.

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The change in fair value of the call options and futures contracts includes the gains and losses recognized at the expiration of the instruments’ terms or upon early termination and the changes in fair value of open positions.

Earnings from products accounted for as deposit liabilities are primarily generated from the excess of net investment income earned over the sum of interest credited to policyholders and the cost of hedging our risk on FIA/IUL policies, known as the net investment spread.

With respect to FIAs/IULs, the cost of hedging our risk includes the expenses incurred to fund the index credits.

Proceeds received upon expiration or early termination of call options purchased to fund annual index credits are recorded as part of the change in fair value of derivatives, and are largely offset by an expense for index credits earned on annuity contractholder fund balances.

Our profitability depends in large part upon the amount of assets under management (“AUM” - see Non-GAAP Financial Measures section), the net investment spreads earned on our AUM, our ability to manage our operating expenses and the costs of acquiring new business (principally commissions to agents and bonuses credited to policyholders).

As we grow AUM, earnings generally increase.

AUM increases when cash inflows, which include sales, exceed cash outflows.

Managing net investment spreads involves the ability to maximize returns on our AUM and minimize risks such as interest rate changes and defaults or impairment of investments.

It also includes our ability to manage interest rates credited to policyholders and costs of the options and futures purchased to fund the annual index credits on the FIA/IULs.

We analyze returns on average assets under management ("AAUM" - see Non-GAAP Financial Measures section) pre- and post-DAC, DSI and VOBA as well as pre- and post-tax to measure our profitability in terms of growth and improved earnings.

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

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Life contingent pension risk transfer premiums are included in life insurance premiums and other fees below.

Non-GAAP Financial Measures

In addition to reporting financial results in accordance with GAAP, this document includes non-GAAP financial measures, which the Company believes are useful to help investors better understand its financial performance, competitive position and prospects for the future.

Management believes these non-GAAP financial measures may be useful in certain instances to provide additional meaningful comparisons between current results and results in prior operating periods.

Our non-GAAP measures may not be comparable to similarly titled measures of other organizations because other organizations may not calculate such non-GAAP measures in the same manner as we do.

The presentation of this financial information is not intended to be considered in isolation of or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

By disclosing these non-GAAP financial measures, the Company believes it offers investors a greater understanding of, and an enhanced level of transparency into, the means by which the Company’s management operates the Company.

Any non-GAAP measures should be considered in context with the GAAP financial presentation and should not be considered in isolation or as a substitute for GAAP net earnings, net earnings attributable to common shareholders, or any other measures derived in accordance with GAAP as measures of operating performance or liquidity.

Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are provided within.

Adjusted net earnings attributable to common shareholders ("adjusted net earnings") is a non-GAAP economic measure we use to evaluate financial performance each period.

Adjusted net earnings is calculated by adjusting net earnings (loss) from continuing operations attributable to common shareholders to eliminate:

(i) Recognized (gains) and losses, net:

the impact of net investment gains/losses, including changes in allowance for expected credit losses and other than temporary impairment ("OTTI") losses, recognized in operations;

the impact of market volatility on the alternative asset portfolio that differ from management's expectation of returns over the life of these assets;

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

(ii) Indexed product related derivatives:

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

(iii) Purchase price amortization:

the impacts related to the amortization of certain intangibles (internally developed software, trademarks and value of distribution asset ("VODA")) recognized as a result of acquisition activities;

(iv) Transaction costs:

the impacts related to acquisition, integration and merger related items;

(v) Other "non-recurring", "infrequent" or "unusual items":

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

Adjustments to adjusted net earnings are net of the corresponding impact on amortization of intangibles, as appropriate.

The income tax impact related to these adjustments is measured using an effective tax rate, as appropriate by tax jurisdiction.

While these adjustments are an integral part of the overall performance of F&G, market conditions and/or the non-operating nature of these items can overshadow the underlying performance of the core business.

Accordingly, management considers this to be a useful measure internally and to investors and analysts in analyzing the trends of our operations.

Adjusted net earnings should not be used as a substitute for net earnings (loss).

However, we believe the adjustments made to net earnings (loss) in order to derive adjusted net earnings provide an understanding of our overall results of operations.

For example, we could have strong operating results in a given period, yet report net income that is materially less, if during such period the fair value of our derivative assets hedging the FIA and IUL index credit obligations decreased due to general equity market conditions but the embedded derivative liability related to the index credit obligation did not decrease in the same proportion as the derivative assets because of non-equity market factors such as interest rate and non-performance credit spread movements.

Similarly, we could also have poor operating results in a given period yet show net earnings (loss) that is materially greater, if during such period the fair value of the derivative assets increases but the embedded derivative liability did not increase in the same proportion as the derivative assets.

We hedge our index credits with a combination of static and dynamic strategies, which can result in earnings volatility, the effects of which are generally likely to reverse over time.

Our management and board of directors review adjusted net earnings and net earnings (loss) as part of their examination of our overall financial results.

However, these examples illustrate the significant impact derivative and embedded derivative movements can have on our net earnings (loss).

Accordingly, our management performs a review and analysis of these items, as part of their review of our hedging results each period.

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

The accounting standards for fair value measurement require the discount rates used in the calculation of the embedded derivative liability to be based on risk-free interest rates adjusted for our non-performance as of the reporting date.

The impact of the change in fair values of FIA-related derivatives, embedded derivatives and hedging costs has been removed from net earnings (loss) in calculating adjusted net earnings.

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

AUM is calculated as the sum of:

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

(ii) related party loans and investments;

(iii) accrued investment income;

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

(v) cash and cash equivalents excluding derivative collateral at the beginning of the period and the end of each month in the period, divided by the total number of months in the period plus one.

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

AAUM is calculated as AUM at the beginning of the period and the end of each month in the period, divided by the total number of months in the period plus one.

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

Yield on AAUM is calculated by dividing annualized net investment income by AAUM.

Management considers this non-GAAP financial measure to be useful internally and to investors and analysts when assessing the level of return earned on AAUM.

Alternative investment yield adjustment is the current period yield impact of market volatility on the alternative investment portfolio that differ from management's expectation of returns over the life of these assets.

Management considers this non-GAAP financial measure to be useful internally and to investors and analysts when assessing the level of return earned on AAUM.

Adjusted Yield on AAUM is calculated by dividing annualized net investment income by AAUM, plus or minus the alternative investment yield adjustment.

Management considers this non-GAAP financial measure to be useful internally and to investors and analysts when assessing the level of return earned on AAUM.

Net investment spread is the excess of net investment income, adjusted for market volatility on the alternative asset investment portfolio, earned over the sum of interest credited to policyholders and the cost of hedging our risk on indexed

product policies.

Management considers this non-GAAP financial measure to be useful internally and to investors and analysts when assessing the performance of the Company’s invested assets against the level of investment return provided to policyholders, inclusive of hedging costs.

Annuity, IUL and funding agreement sales are not derived from any specific GAAP income statement accounts or line items and should not be viewed as a substitute for any financial measure determined in accordance with GAAP.

Sales from these products are recorded as deposit liabilities (i.e.

contractholder funds) within the Company's consolidated financial statements in accordance with GAAP.

PRT sales are recorded as premiums in revenues within the consolidated financial statements.

Management believes that presentation of sales, as measured for management purposes, enhances the understanding of our business and helps depict longer term trends that may not be apparent in the results of operations due to the timing of sales and revenue recognition.

F&G Results of Operations

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

Twelve months ended Seven months ended

December 31, 2021 December 31, 2020

The results of operations of our F&G segment for the years ended December 31, 2022 and December 31, 2021 and seven months ended December 31, 2020, were as follows:

Year ended Seven months ended

December 31, 2022 December 31, 2021 December 31, 2020

(In millions)

Life insurance premiums and other fees (a) $ 1,395 $ 138

Life insurance premiums and other fees $ 1,695 $ 1,395 $ 138

Interest and investment income 1,655 1,852 743

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Total revenues 2,340 3,962 1,233

Benefits and expenses:

Benefits and other changes in policy reserves 1,125 2,138 866

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Interest expense 29 29 18

Total expenses 2,885 1,147

Earnings before income taxes 1,077 86

Total benefits and expenses 1,742 2,885 1,147

Pre-tax earnings (loss) 598 1,077 86

Income tax expense (benefit) 117 220 75

Net earnings $ 857 $ 161

Earnings (loss) from discontinued operations, net of tax 8 (25)

Net earnings $ 865 $ 136

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

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

Year ended December 31,

(In millions)

Fixed indexed annuities (FIA) $ 4,310 $ 3,459

Fixed rate annuities (MYGA) 1,738 776

Total annuity 6,048 4,235

Indexed universal life (IUL) 87 50

Funding agreements (FABN/FHLB) 2,310 200

Pension risk transfer (PRT) 1,147 —

Flow reinsurance — 352

Total Sales $ 9,592 $ 4,837

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

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

Net earnings (loss) from continuing operations $ 481 $ 857 $ 161

Earnings from discontinued operations, net of tax — 8 (25)

Net earnings (loss) $ 481 $ 865 $ 136

Life insurance premiums and other fees

Life insurance premiums and other fees primarily reflect premiums on life-contingent pension risk transfers and traditional life insurance products, which are recognized as revenue when due from the policyholder, as well as the cost of insurance on IUL policies, policy rider fees primarily on FIA policies, and surrender charges assessed against policy withdrawals in excess of the policyholder's allowable penalty-free amounts (up to 10% of the prior year's value, subject to certain limitations).

The following table summarizes the Life insurance premiums and other fees, included within Escrow, title-related and other fees on the Consolidated Statements of Earnings (in millions), for the year ended December 31, 2021 and seven months ended December 31, 2020 (following our June 1 acquisition of F&G):

Life insurance premiums and other fees primarily reflect premiums on life-contingent pension risk transfers and traditional life insurance products, which are recognized as revenue when due from the policyholder, as well as policy rider fees primarily on FIA policies, the cost of insurance on IUL policies and surrender charges assessed against policy withdrawals in excess of the policyholder's allowable penalty-free amounts (up to 10% of the prior year's value, subject to certain limitations).

The following table summarizes the Life insurance premiums and other fees, on the Consolidated Statements of Earnings for the respective periods:

Year ended Seven months ended

December 31, 2021 December 31, 2020

December 31, 2022 December 31, 2021 December 31, 2020

(In millions)

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Surrender charges 58 33 13

Cost of insurance fees and other income 185 102

Policyholder fees and other income 243 184 102

Life insurance premiums and other fees $ 1,695 $ 1,395 $ 138

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

• Traditional life insurance premiums for the twelve months ended December 31, 2021, and seven months ended December 31, 2020 are related to the return of premium riders on traditional life contracts.

FGL Insurance has ceded the majority of its traditional life business to unaffiliated third party reinsurers.

While the base contract has been reinsured, we continue to retain the return of premium rider.

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

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

• Cost of insurance fees and other income for the twelve months ended December 31, 2021 and seven months ended December 31, 2020 primarily reflects GMWB rider fees of $137 million and $72 million, respectively, and cost of insurance charges on IUL policies, net of unearned revenue deferrals, of $31 million and $22 million, respectively.

• Life contingent pension risk transfer premiums for the year ended December 31, 2022 increased compared to the year ended December 31, 2021, due to increased PRT premiums, reflecting our first full year in the PRT market.

As noted above, PRT premiums are subject to fluctuation period to period.

• Surrender charges increased for the years ended December 31, 2022 and December 31, 2021, primarily reflecting an increase in market value adjustments (“MVA”) assessed on certain surrendered FIA policies.

A market value adjustment (“MVA”) will apply in most states to any withdrawal that incurs a surrender charge, subject to certain exceptions.

The MVA is based on a formula that takes into account changes in interest rates since contract issuance.

Generally, if interest rates have risen, the MVA will decrease surrender value, whereas if rates have fallen, it will increase surrender value.

In addition, surrender charges increases as a result of increased amounts assessed against policy withdrawals in excess of the policyholder's allowable penalty-free amounts primarily on our FIA policies.

• Policyholder fees and other income increased for the years ended December 31, 2022 and December 31, 2021, primarily due to increased GMWB rider fees, cost of insurance charges on IUL policies and IUL premium loads.

GMWB rider fees are based on the policyholder's benefit base and are collected at the end of the policy year.

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Year ended Seven months ended

December 31, 2021 December 31, 2020

December 31, 2022 December 31, 2021 December 31, 2020

(In millions)

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Equity securities 17 11 7

Preferred securities 49 47 35

Mortgage loans 186 131 50

Invested cash and short-term investments 33 7 —

Limited partnerships 110 589 75

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Investment expense (191) (163) (75)

Interest and investment income $ 1,852 $ 743

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

Year ended Seven months ended

December 31, 2021 December 31, 2020

(Dollars in millions)

Yield on AAUM (at amortized cost) 5.80 % 4.66 %

Alternative investment yield adjustment (1.04) % 0.07 %

Adjusted yield on AAUM 4.76 % 4.73 %

Interest credited and option cost (1.95) % (1.99) %

Net investment spread 2.81 % 2.74 %

AAUM $ 31,938 $ 27,322

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

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

The $743 million NII for the seven months ended December 31, 2020 was primarily driven by $643 million in fixed maturity securities, $76 million of interest and investment income related to our investments in limited partnerships, and $50 million in mortgage loans, partially offset by $76 million in investment expenses.

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

Net investment income $ 1,655 $ 1,852 $ 743

Interest and investment income is shown net of amounts attributable to certain funds withheld reinsurance agreements which is passed along to the reinsurer in accordance with the terms of these agreements.

Interest and investment income attributable to these agreements, and thus excluded from the totals in the table above, was $109 million, $53 million and $21 million, for the years ended December 31, 2022 and December 31, 2021, and the seven months ended December 31, 2020, respectively.

Recognized gains and losses, net

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Year ended Seven months ended

December 31, 2021 December 31, 2020

December 31, 2022 December 31, 2021 December 31, 2020

(In millions)

Net realized and unrealized gains (losses) on fixed maturity available-for-sale securities, equity securities and other invested assets $ 58 $ 179

Net realized and unrealized (losses) gains on fixed maturity available-for-sale securities, equity securities and other invested assets $ (461) $ 57 $ 179

Change in allowance for expected credit losses (34) 4 (19)

Net realized and unrealized gains (losses) on certain derivatives instruments 614 237

Net realized and unrealized (losses) gains on certain derivatives instruments (857) 615 237

Change in fair value of reinsurance related embedded derivatives 352 34 (53)

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Recognized gains and losses, net $ (1,010) $ 715 $ 352

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

• Allowance for expected credit losses during the year ended December 31, 2021 decreased primarily due to improved economic conditions for residential mortgage loans, partially offset by higher reserves for commercial mortgage loans.

As of the June 1, 2020 acquisition of F&G, due to purchase accounting adjustments, our expected credit loss reserve was valued at $0.

For the seven months ended December 31, 2020, the expected credit loss reserve increased primarily due to reserves established for residential mortgage loans.

• For the year ended December 31, 2021 and the seven months ended December 31, 2020, net realized and unrealized gains on certain derivative instruments primarily relates to the net realized and unrealized gains on options and futures used to hedge FIA and IUL products, including gains on option and futures expiration.

Recognized gains and (losses) are shown net of amounts attributable to certain funds withheld reinsurance agreements which is passed along to the reinsurer in accordance with the terms of these agreements.

Recognized gains and (losses) attributable to these agreements, and thus excluded from the totals in the table above, was $381 million, $15 million and $(58) million for the year ended December 31, 2022, the year ended December 31, 2021, the seven months ended December 31, 2020, respectively.

• For the year ended December 31, 2022, recognized gains and (losses), net include $241 million of realized losses on fixed maturity available-for-sale securities and $207 million of unrealized losses on equity securities (as a result of mark-to-market losses).

For the year ended December 31, 2021, recognized gains and (losses), net include $102 million of realized gains on fixed maturity available-for-sale securities and $51 million unrealized losses on equity securities (as a result of mark-to-market losses).

• For the period from June 1, 2020 to December 31, 2020, recognized gains and (losses), net include $95 million of realized gains on fixed maturity available-for-sale securities and $84 million of unrealized losses on equity securities (as a result of mark-to-market losses).

• For all periods, the change in allowance for expected credit losses primarily relates to available for sale securities.

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

See the table below for primary drivers of gains (losses) on certain derivatives.

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Year ended Seven months ended

December 31, 2021 December 31, 2020

December 31, 2022 December 31, 2021 December 31, 2020

(Dollars in millions)

Call options:

Gains on option expiration $ 437 $ 62

Realized (losses) gains $ (170) $ 437 $ 62

Change in unrealized (losses) gains (692) 160 167

Futures contracts:

Gains on futures contracts expiration 9 21

Change in unrealized losses (1) (6)

(Losses) gains on futures contracts expiration (6) 9 21

Change in unrealized gains (losses) (1) (1) (6)

Foreign currency forward:

Gains (losses) on foreign currency forward 9 (7)

Gains on foreign currency forward 11 10 (7)

Total net change in fair value $ (858) $ 615 $ 237

Point-to-Point Change in S&P 500 Index during twelve and seven month periods 27 % 23 %

Year-to-Date Point-to-Point Change in S&P 500 Index during the periods (19) % 27 % 23 %

• Realized gains and losses on certain derivative instruments are directly correlated to the performance of the indices upon which the call options and futures contracts are based and the value of the derivatives at the time of expiration compared to the value at the time of purchase.

Gains on option expiration reflect the movement during the twelve months ended December 31, 2021 and the seven months ended December 31, 2020, on options settled during the period.

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

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

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

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

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Year ended Seven months ended

December 31, 2021 December 31, 2020

December 31, 2022 December 31, 2021 December 31, 2020

Average Crediting Rate 1 % 5 % 3 %

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3 year high water mark 13 % 16 % 19 %

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

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

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

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Year ended Seven months ended

December 31, 2021 December 31, 2020

December 31, 2022 December 31, 2021 December 31, 2020

(In millions)

PRT agreements $ 1,365 $ 1,149 $ —

FIA/IUL market related liability movements (1,010) (378) 317

Index credits, interest credited & bonuses 610 1,024 319

Annuity payments 574 74

PRT agreements 1,157 —

Other (220) 156

Annuity payments and other 160 343 230

Total benefits and other changes in policy reserves $ 1,125 $ 2,138 $ 866

• The FIA/IUL market related liability movements during the twelve and seven months ended December 31, 2021 and December 31, 2020, respectively, are mainly driven by changes in the equity markets, non-performance spreads, and risk free rates during the periods.

• PRT agreements for the years ended December 31, 2022 and December 31, 2021 reflect our entrance into the PRT market in the second half of 2021.

PRT agreements are subject to fluctuation period to period.

• The FIA/IUL market related liability movements for all periods are mainly driven by changes in the equity markets, non-performance spreads, and risk-free rates during the respective periods.

Additionally, 2021 includes the system implementation and assumption review process impacts discussed below.

The change in risk free rates decreased the FIA market related liability by $145 million and $63 million during the twelve and seven months ended December 31, 2021 and 2020, respectively.

During the twelve and seven months ended December 31, 2021 and 2020, the change in non-performance spread decreased the FIA market related liability by $34 million and increased the FIA market related liability by $205 million, respectively.

The change in risk free rates and non-performance spreads (decreased)/ increased the FIA market related liability by $(656) million, $(74) million, $268 million and $141 million during the years ended December 31, 2022 and December 31, 2021, the period from June 1, 2020 to December 31, 2020 and the Predecessor period from January 1, 2020 to May 31, 2020, respectively.

The remaining change in market value of the market related liability movements was driven by equity market impacts.

See table in the net investment gains/losses discussion above for summary and discussion of net unrealized gains (losses) on certain derivative instruments.

See “Recognized gains and (losses)” above for summary and discussion of net unrealized gains (losses) on certain derivative instruments.

• Annually, typically in the third quarter, we review assumptions associated with reserves for policy benefits and product guarantees.

In addition, during the third quarter of 2021, we implemented a new actuarial valuation system, and as a result, our third quarter 2021 assumption updates include model refinements and assumption updates resulting from the implementation.

During the fourth quarter of 2022, based on increases in interest rates and pricing changes during 2022, we updated certain FIA assumptions used to calculate the fair value of the embedded derivative component within contractholder funds and certain assumptions used to calculate SOP 03-1 liabilities and intangible balances.

These changes, taken together, resulted in an increase in contractholder funds and future policy benefits of $97 million.

During the third quarter of 2021, we implemented a new actuarial valuation system, and as a result, our third quarter 2021 assumption updates include model refinements and assumption updates resulting from the implementation.

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

These changes, taken together, resulted in a decrease in contractholder funds and future policy reserves of $397 million.

• The index credits, interest credited and bonuses were primarily due to index credits on FIA policies.

• Index credits, interest credited & bonuses for the year ended December 31, 2022 were lower compared to the year ended December 31, 2021 and primarily reflected lower index credits on FIA policies as a result of market movement during the respective periods.

Index credits, interest credited & bonuses for the year ended December 31, 2021 were higher compared with the combined periods from June 1, 2020 to December 31, 2020 and the Predecessor period from January 1, 2020 to May 31, 2020, and primarily reflected higher index credits on FIA policies as a result of market movement during the respective periods.

Refer to average policyholder index discussion above for details on drivers.

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

Personnel Costs and Other Operating Expenses

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

Year ended Seven months ended

December 31, 2021 December 31, 2020

(In millions)

Personnel costs $ 129 $ 65

Other operating expenses 105 75

Total personnel costs and other operating expenses $ 234 $ 140

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

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

Depreciation and amortization

Amortization of intangibles

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

Year ended Seven months ended

December 31, 2021 December 31, 2020

December 31, 2022 December 31, 2021 December 31, 2020

(In millions)

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Total depreciation and amortization $ 329 $ 484 $ 123

• Amortization of DAC, VOBA, and DSI is based on current and future expected gross margins (pre-tax operating income before amortization) and includes the system implementation discussed below.

The amortization for the year ended December 31, 2021 and the seven months ended December 31, 2020 is the result of actual gross profits ("AGPs") in the periods.

• Amortization of VOBA, DAC and DSI is based on current and future expected gross margins (pre-tax operating income before amortization) and includes the impacts of the assumption changes and system implementation discussed below.

The amortization for the each period presented is the result of AGPs in the respective periods.

• Annually, typically in the third quarter, we review assumptions associated with the amortization of intangibles.

In addition, during the third quarter of 2021, we implemented a new actuarial valuations system and as a result, our third quarter 2021 assumption updates include model refinements and assumption updates resulting from the implementation.

These changes, taken together, resulted in an increase to intangible assets of $47 million.

During the third quarter of 2021, we implemented a new actuarial valuation system and as a result, our third quarter 2021 assumption updates include model refinements and assumption updates resulting from the implementation.

The changes, taken together, increased amortization of intangibles by $136 million.

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Year ended Seven months ended

December 31, 2021 December 31, 2020

December 31, 2022 December 31, 2021 December 31, 2020

(Dollars in millions)

Income before taxes $ 1,077 $ 86

Income tax expense before valuation allowance 234 (21)

Earnings from continuing operations before taxes $ 598 $ 1,077 $ 86

Income tax expense (benefit) before valuation allowance 90 234 (21)

Change in valuation allowance 27 (14) (54)

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Effective rate 20 % 20 % (87) %

• Income tax benefit for the period ended December 31, 2020 was $75 million.

The income tax benefit was primarily driven by various valuation allowance releases as a result of merger activity, partially offset by taxes on income.

• See "Note T - Income Taxes " for further information.

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

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

Year ended Seven months ended

December 31, 2021 December 31, 2020

(In millions)

Net earnings $ 857 $ 161

Non-GAAP adjustments:

Recognized (gains), net (319) (45)

Indexed product related derivatives (52) 111

Purchase price amortization 26 16

Transaction costs 5 21

Other non-recurring items (a) (284) —

Income taxes on non-GAAP adjustments 128 (29)

Adjusted net earnings $ 361 $ 235

(a) Reflects adjustments to benefits and other changes in policy reserves and depreciation and amortization resulting from the implementation of a new actuarial valuation system

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

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

• The income tax expense for the year ended December 31, 2022 was $117 million compared to the income tax expense of $220 million for the year ended December 31, 2021.

The effective tax rate was 20% for both years, which differs from the statutory rate of 21% primarily due to favorable permanent tax adjustments.

• Income tax benefit for the seven months ended December 31, 2020 was $75 million.

The income tax benefit was primarily driven by the change in tax status benefit recorded at December 31, 2020 and valuation allowance releases on the current period activity in Front Street Re Cayman Ltd.

(“FSRC”) included in continuing operations and the US non-life companies.

• See Note T Income Taxes to the Consolidated Financial Statements for further information.

Investment Portfolio

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(iii) preserve capital and (iv) provide liquidity to meet policyholder and other corporate obligations.

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

Our investment portfolio is designed to contribute stable earnings, excluding the effects of short-term mark-to-market effects, and balance risk across diverse asset classes and is primarily invested in high quality fixed income securities.

As of December 31, 2022 and December 31, 2021, the fair value of our investment portfolio was approximately $41 billion and $39 billion, respectively, and was divided among the following asset classes and sectors:

20 unchanged sentences

Equity securities (a) 823 2 % 1,171 3 %

Alternative investments:

Limited partnerships:

Private equity 1,129 3 % 1,181 3 %

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Credit 867 2 % 829 2 %

Limited partnerships $ 2,427 6 % $ 2,350 6 %

Commercial mortgage loans 2,083 5 % 2,265 6 %

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Total investments $ 40,808 100 % $ 38,975 100 %

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

(a) Includes investment grade non-redeemable preferred stocks ($672 million and $928 million at December 31, 2022 and December 31, 2021, respectively).

Insurance statutes regulate the type of investments that our life insurance subsidiaries are permitted to make and limit the amount of funds that may be used for any one type of investment.

10 unchanged sentences

BBB 8,158 26 % 10,462 35 %

Not rated (b) 6,642 22 % 4,336 17 %

Not rated (a) 9,529 31 % 6,642 22 %

Total investment grade 29,418 94 % 27,612 92 %

BB 986 3 % 1,372 5 %

B and below (a) 432 1 % 612 2 %

Not rated (b) 546 2 % 271 1 %

B and below (b) 236 1 % 432 1 %

Not rated (a) 578 2 % 546 2 %

Total below investment grade 1,800 6 % 2,350 8 %

Total $ 31,218 100 % $ 29,962 100 %

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

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

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

(b) Includes $46 million and $68 million at December 31, 2022 and December 31, 2021, respectively, of non-agency RMBS (as defined below) that carry a NAIC 1 designation.

The NAIC’s Securities Valuation Office ("SVO") is responsible for the day-to-day credit quality assessment and valuation of securities owned by state regulated insurance companies.

5 unchanged sentences

6 In or near default

The NAIC uses designation methodologies for non-agency RMBS, including RMBS backed by subprime mortgage loans and for commercial mortgage-backed securities ("CMBS").

The NAIC uses designation methodologies for non-agency RMBS, including RMBS backed by subprime mortgage loans and for CMBS.

The NAIC’s objective with the designation methodologies for these structured securities is to increase accuracy in assessing expected losses and to use the improved assessment to determine a more appropriate capital requirement for such structured securities.

Prior to 2021, the NAIC designations for structured securities, including subprime and Alternative A-paper ("Alt-A") RMBS, were based upon a comparison of the bond’s amortized cost to the NAIC’s loss expectation for each security.

Securities where modeling does not generate an expected loss in all scenarios are given the highest designation of NAIC 1.

In 2021, the NAIC eliminated the comparison of non-legacy (issued after 2012) bond's amortized cost to the NAIC's loss expectation and instead assigned a NAIC designation based on the loss expectation alone.

The NAIC assigns a NAIC designation based on the loss expectation for each security.

Several of our RMBS securities carry a NAIC 1 designation while the NRSRO rating indicates below investment grade.

2 unchanged sentences

All NAIC designations (e.g., NAIC 1-6) are based on the NAIC methodologies.

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

December 31, 2021

The tables below present our fixed maturity securities by NAIC designation as of December 31, 2022 and December 31, 2021:

(Dollars in millions) December 31, 2022

NAIC Designation Amortized Cost Fair Value Percent of Total Fair Value

4 unchanged sentences

Total $ 35,723 $ 31,218 100 %

December 31, 2020

(Dollars in millions) December 31, 2021

NAIC Designation Amortized Cost Fair Value Percent of Total Fair Value

3 unchanged sentences

4 567 669 2 %

5 162 174 — %

Total $ 28,724 $ 29,962 100 %

Investment Industry Concentration

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

December 31, 2022

2 unchanged sentences

CLO securities 4,222 13 %

Banking 2,919 9 %

Whole loan collateralized mortgage obligation (“CMO”)

Life insurance 1,795 6 %

Electric 1,701 6 %

Banking 2,855 9 %

Municipal 1,410 4 %

Healthcare 947 3 %

Electric 1,379 4 %

Life insurance 1,376 4 %

Technology 855 3 %

Other Financial Institution 760 2 %

Healthcare 659 2 %

Commercial MBS 571 2 %

Total $ 24,227 76 %

1 unchanged sentence

Top 10 Industry Concentration Fair Value Percent of Total Fair Value

ABS Other $ 4,550 15 %

CLO securities 4,145 13 %

1 unchanged sentence

Whole loan collateralized mortgage obligation (“CMO”) 2,622 8 %

ABS other 1,873 7 %

Life insurance 1,795 6 %

1 unchanged sentence

Municipal 1,441 5 %

Technology 784 3 %

Healthcare 947 3 %

Technology 932 3 %

Other Financial Institutions 760 2 %

Total $ 21,812 70 %

The amortized cost and fair value of fixed maturity AFS securities by contractual maturities as of December 31, 2021 and 2020, are shown below.

The amortized cost and fair value of fixed maturity AFS securities by contractual maturities as of December 31, 2022 and December 31, 2021, are shown below.

Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations.

2 unchanged sentences

(In millions)

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

Corporate, Non-structured Hybrids, Municipal and U.S.

Government securities:

Due in one year or less $ 124 $ 123 $ 105 $ 106

2 unchanged sentences

Due after ten years 14,417 11,379 12,842 13,515

$ 16,812 $ 17,576 $ 14,410 $ 15,626

Subtotal $ 18,574 $ 15,194 $ 16,812 $ 17,576

Other securities, which provide for periodic payments

Asset-backed securities $ 12,209 $ 11,467 $ 8,516 $ 8,695

CLO securities — — 4,021 4,268

Commercial mortgage-backed securities 3,309 3,036 2,669 2,964

6 unchanged sentences

The fair value of our investments in subprime and Alt-A RMBS securities was $40 million and $54 million as of December 31, 2022, respectively, and $52 million and $75 million as of December 31, 2021, respectively.

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

December 31, 2021 December 31, 2020

NAIC Designation:

Fair Value Percent of Total Fair Value Percent of Total

1 $ 116 91 % $ 153 94 %

2 4 3 % 1 1 %

3 2 2 % 2 1 %

4 1 1 % 3 2 %

5 4 3 % 3 2 %

6 — — % — — %

Total $ 127 100 % $ 162 100 %

AAA $ — — % $ 1 1 %

AA 15 12 % 4 2 %

A 5 4 % 17 10 %

BBB 12 9 % 17 10 %

Not rated - Above investment grade (a) 24 19 % 19 12 %

BB and below 71 56 % 104 65 %

Total $ 127 100 % $ 162 100 %

2007 31 24 % 37 23 %

2006 34 27 % 43 27 %

2005 and prior 62 49 % 82 50 %

Total $ 127 100 % $ 162 100 %

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

As of December 31, 2022 and December 31, 2021, approximately 91% and 94%, respectively, of the subprime and Alt-A RMBS exposures were rated NAIC 2 or higher.

ABS and CLO Exposures

1 unchanged sentence

Our CLO exposures are generally senior tranches of CLOs which have leveraged loans as their underlying collateral.

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

As of December 31, 2022, the CLO and ABS positions were trading at a net unrealized loss position of $236 million and $499 million, respectively.

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

Municipal Bond Exposure

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

Across all municipal bonds, the largest issuer represented 7% of the category, less than 1% of the entire portfolio and is rated NAIC 1.

Our focus within municipal bonds is on NAIC 1 rated instruments, and 91% of our municipal bond exposure is rated NAIC 1.

Our municipal bond exposure is a combination of general obligation bonds (fair value of $188 million and $258 million and an amortized cost of $231 million and $247 million as of December 31, 2022 and December 31, 2021, respectively) and special revenue bonds (fair value of $1,017 million and $1,183 and an amortized cost of $1,248 million and $1,138 as of December 31, 2022 and December 31, 2021, respectively).

Across all municipal bonds, the largest issuer represented 6% and 7% of the category as of December 31, 2022 and December 31, 2021, respectively, less than 1% of the entire portfolio and is rated NAIC 1.

Our focus within municipal bonds is on NAIC 1 rated instruments, and 96% of our municipal bond exposure is rated NAIC 1 as of December 31, 2022.

Mortgage Loans

We rate all CMLs to quantify the level of risk.

We place those loans with higher risk on a watch list and closely monitor them for collateral deficiency or other credit events that may lead to a potential loss of principal and/or interest.

If we determine the value of any CML to be impaired (i.e., when it is probable that we will be unable to collect on amounts due according to the contractual terms of the loan agreement), the carrying value of the CML is reduced to either the present value of expected cash flows from the loan, discounted at the loan’s effective interest rate, or fair value of the collateral.

For those mortgage loans that are determined to require foreclosure, the carrying value is reduced to the fair value of the underlying collateral, net of estimated costs to obtain and sell at the point of foreclosure.

The carrying value of the impaired loans is reduced by establishing a specific write-down recorded in Recognized gains and losses, net in the Consolidated Statements of Earnings included in Item 8 of Part II of this Annual Report.

LTV and DSC ratios are utilized as part of the review process described above.

As of December 31, 2021, our mortgage loans on real estate portfolio had a weighted average DSC ratio of 2.4 times, and a weighted average LTV ratio of 56%.

See Note E to the Consolidated Financial Statements included in Item 8 of Part II of this Annual Report for additional information regarding our LTV and DSC ratios.

F&G's RMLs are closed end, amortizing loans and 100% of the properties are located in the United States.

F&G diversifies its RML portfolio by state to attempt to reduce concentration risk.

Commercial Mortgage Loans

We diversify our commercial mortgage loans ("CMLs") portfolio by geographic region and property type to attempt to reduce concentration risk.

We continuously evaluate CMLs based on relevant current information to ensure properties are performing at a level to secure the related debt.

LTV and DSC ratios are utilized to assess the risk and quality of CMLs.

As of December 31, 2022 and December 31, 2021, our mortgage loans on real estate portfolio had a weighted average DSC ratio of 2.3 times and 2.4 times, respectively, and a weighted average LTV ratio of 57% and 56%, respectively.

We consider a CML delinquent when a loan payment is greater than 30 days past due.

For mortgage loans that are determined to require foreclosure, the carrying value is reduced to the fair value of the underlying collateral, net of estimated costs to obtain and sell at the point of foreclosure.

At December 31, 2022 we had one CML that was delinquent in principal or interest payments and none in the process of foreclosure.

At December 31, 2021 we had no CMLs that were delinquent in principal or interest payments or in process of foreclosure.

See Note E Investments to the Consolidated Financial Statements included in this report for additional information on our CMLs, including our distribution by property type, geographic region and LTV and DSC ratios.

Residential Mortgage Loans

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

We diversify our RML portfolio by state to attempt to reduce concentration risk.

RMLs have a primary credit quality indicator of either a performing or nonperforming loan.

F&G defines non-performing RMLs as those that are 90 or more days past due and/or in nonaccrual status, which is assessed monthly.

We define nonperforming RMLs as those that are 90 or more days past due and/or in nonaccrual status.

Loans are placed on nonaccrual status when they are over 90 days delinquent.

If a loan becomes over 90 days delinquent, it is our general policy to initiate foreclosure proceedings unless a workout arrangement to bring the loan current can be put in place.

See Note E Investments to the Consolidated Financial Statements included in this Annual Report for additional information on our RMLs.

Unrealized Losses

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

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

December 31, 2022

27 unchanged sentences

Finance, insurance and real estate 366 1,365 — (31) 1,334

Manufacturing, construction and mining 97 281 — (3) 278

Utilities, energy and related sectors 280 1,243 — (46) 1,197

8 unchanged sentences

Total investments 2,056 $ 11,968 $ (5) $ (249) $ 11,714

The gross unrealized loss position on the fixed maturity available-for-sale fixed and equity portfolio was $249 million and $38 million as of December 31, 2021 and 2020, respectively.

Most components of the portfolio exhibited price depreciation as treasury rates increased, offset by narrower credit spreads.

The total amortized cost of all securities in an unrealized loss position was $11,968 million and $1,601 million as of December 31, 2021 and 2020, respectively.

The gross unrealized loss position on the fixed maturity available-for-sale fixed and equity portfolio was $4,744 million and $249 million as of December 31, 2022 and December 31, 2021, respectively.

Most components of the portfolio exhibited price depreciation caused by higher treasury rates and wider spreads.

The total amortized cost of all securities in an unrealized loss position was $34,164 million and $11,968 million as of December 31, 2022 and December 31, 2021, respectively.

The average market value/book value of the investment category with the largest unrealized loss position was 84% for finance, insurance and real estate as of December 31, 2022.

In the aggregate, finance, insurance and real estate represented 18% of the total unrealized loss position as of December 31, 2022.

The average market value/book value of the investment category with the largest unrealized loss position was 96% for utilities, energy and related sectors as of December 31, 2021.

In the aggregate, utilities, energy and related sectors represented 18% of the total unrealized loss position as of December 31, 2021.

The average market value/book value of the investment category with the largest unrealized loss position was 97% for Asset backed securities as of December 31, 2020.

In the aggregate, Asset backed securities represented 47% of the total unrealized loss position as of December 31, 2020.

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

December 31, 2022

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Detailed analysis is performed for each security on the watch list to further assess the presence of credit impairment loss indicators and, where present, calculate an allowance for expected credit loss or direct write-down of a security’s amortized cost.

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

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

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

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

There were 36 structured securities to which we had a potential credit disclosure with a fair value of $45 million and $65 million as of December 31, 2021 and 2020, respectively.

Our analysis of these structured securities, which included cash flow testing, resulted in allowances for expected credit losses of $8 million and $3 million as of December 31, 2021 and 2020, respectively.

Exposure to Sovereign Debt

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

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

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

There were 64 and 36 structured securities with a fair value of $162 million and $45 million, respectively, to which we had potential credit exposure as of December 31, 2022 and December 31, 2021, respectively.

Our analysis of these structured securities, which included cash flow testing, resulted in allowances for expected credit losses of $16 million and $8 million as of December 31, 2022 and December 31, 2021, respectively.

Exposure to Sovereign Debt and Certain Other Exposures

Our investment portfolio had an immaterial amount of direct exposure to European sovereign debt as of December 31, 2022 and December 31, 2021, respectively.

We have no exposure to investments in Russia or Ukraine and de minimis investments in peripheral countries in the region.

Interest and Investment Income

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

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

AFS Securities

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

For additional information regarding our AFS securities, including the amortized cost, gross unrealized gains (losses), and fair value as well as the amortized cost and fair value of fixed maturity AFS securities by contractual maturities, as of December 31, 2022 and December 31, 2021, refer to Note E Investments to the Consolidated Financial Statements included in Item 8 of Part II of this Annual Report.

Concentrations of Financial Instruments

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

Total revenues in the Corporate and Other segment increased $13 million, or 8% in the year ended December 31, 2021 as compared to 2020, and decreased $39 million, or 19%, in the year ended December 31, 2020 as compared to 2019.

Total revenues in the Corporate and Other segment decreased $74 million, or 40% in the year ended December 31, 2022 as compared to 2021, and increased $13 million, or 8%, in the year ended December 31, 2021 as compared to 2020.

The decrease in the year ended December 31, 2022 as compared to 2021 is primarily attributable to a $59 million decrease in valuations associated with our deferred compensation plan assets, which decreased both revenue and personnel costs and a $41 million impairment of cost method investments in 2022, partially offset by other immaterial items.

The increase in the year ended December 31, 2021 as compared to 2020 is primarily attributable to increased Recognized gains and losses, net, of approximately $19 million, partially offset by decreased interest and investment income of $6 million associated with a year-over-year reduction in fixed-income investment holdings.

The decrease in the year ended December 31, 2020 as compared to 2019 is primarily attributable to valuation losses associated with our deferred compensation plan assets in 2020 and decreased interest and investment income of $17 million associated with a year-over-year reduction in cash holdings.

Personnel costs in the Corporate and Other segment decreased $1 million, or 1% in the year ended December 31, 2021 as compared to 2020, and decreased $26 million, or 19%, in the year ended December 31, 2020 compared to 2019.

The decrease in the year ended December 31, 2020 as compared to 2019 is attributable to the aforementioned decrease in the valuation of deferred compensation plan assets compared to the corresponding period in 2019.

Other operating expenses in the Corporate and Other segment decreased $49 million, or 33%, in the year ended December 31, 2021 as compared to 2020, and decreased $24 million, or 14% in the year ended December 31, 2020 as compared to 2019.

The decrease in 2021 as compared to 2020 is primarily attributable to a decrease in F&G transaction costs of approximately $38 million and reduced real estate brokerage expenses of $24 million in 2021 related to previous divestitures, partially offset by growth in our real estate technology businesses.

The decrease in the year ended December 31, 2020 as compared to 2019 is primarily attributable to the reverse termination fee paid in 2019 related to the abandoned Stewart Information Services Corporation acquisition, partially offset by F&G acquisition costs in 2020

Personnel costs in the Corporate and Other segment decreased $59 million, or 55% in the year ended December 31, 2022 as compared to 2021, and decreased $1 million, or 1%, in the year ended December 31, 2021 as compared to 2020.

The decrease in the year ended December 31, 2022 as compared to 2021 is primarily attributable to the aforementioned decrease in the valuation of deferred compensation plan assets in 2022.

Other operating expenses in the Corporate and Other segment increased $5 million, or 5%, in the year ended December 31, 2022 as compared to 2021, and decreased $49 million, or 33% in the year ended December 31, 2021 as compared to 2020.

The decrease in 2021 as compared to 2020 is primarily attributable to F&G transaction costs of approximately $38 million in 2020 that were not incurred in 2021 and reduced real estate brokerage expenses of $24 million in 2021 related to previous divestitures, partially offset by growth in our real estate technology businesses.

Interest expense increased $1 million, or 1%, in the year ended December 31, 2022 as compared to 2021, and increased $14 million, or 20%, in the year ended December 31, 2021 as compared to 2020.

The increase in the year ended December 31, 2021 as compared to 2020 is primarily attributable to increased average debt outstanding in 2021 associated with issuance of our 3.20% Notes in September 2021 as well as having a full year outstanding of our 3.40% Notes and our 2.45% Notes issued in 2020.

The increase in the year ended December 31, 2020 as compared to 2019 is primarily attributable to increased average debt outstanding in 2020 associated with the Term Loan Credit Agreement, our 3.40% Notes and our 2.45% Notes.

Liquidity and Capital Resources

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The declaration of any future dividends is at the discretion of our Board of Directors.

Additional uses of cash flow are expected to include acquisitions, stock repurchases and debt repayments, including the repayment of $400 million in outstanding principal amount associated with our 5.50% Notes due in September 2022.

As of December 31, 2022, we had cash and cash equivalents of $2,286 million, short term investments of $2,590 million and available capacity under our Revolving Credit Facility of $800 million.

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

333-239002) and the related prospectus supplement.

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

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

For further information related to the 3.20% Notes, refer to Note G Notes Payable to the Consolidated Financial Statements included in Item 8 of Part II of this Annual Report.

Subsequent to December 31, 2022, F&G completed the issuance and sale on January 13, 2023 of $500 million aggregate principal amount of 7.40% Senior Notes due 2028 (the “7.40% F&G Notes”) pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended.

F&G intends to use the net proceeds from the offering of the 7.40% F&G Notes for general corporate purposes, including to support the growth of assets under management and for our future liquidity requirements.

On November 22, 2022, F&G entered into a Credit Agreement (the "F&G Credit Agreement") with certain lenders (the "Lenders") and Bank of America, N.A.

as administrative agent (the "Administrative Agent"), swing line lender and an issuing bank, pursuant to which F&G has an available unsecured revolving credit facility (the "F&G Credit Facility") in an aggregate principal amount of $550 million to be used for working capital and general corporate purposes.

A net partial paydown of $35 million was made on January 6, 2023 and, on February 21, 2023, F&G entered into an amendment (the "First Amendment") to the F&G Credit Agreement (the "Amended F&G Credit Agreement").

The First Amendment increased the aggregate principal amount of commitments under the F&G Credit Facility by $115 million to $665 million.

For further information related to the 7.40% F&G Notes and F&G Credit Facility, refer to Note G Notes Payable to the Consolidated Financial Statements included in Item 8 of Part II of this Annual Report.

We continually assess our capital allocation strategy, including decisions relating to the amount of our dividend, reducing debt, repurchasing our stock, investing in growth of our subsidiaries, making acquisitions and/or conserving cash.

We believe that all anticipated cash requirements for current operations will be met from internally generated funds, through cash dividends from subsidiaries, cash generated by investment securities, potential sales of non-strategic assets, potential issuances of additional debt or equity securities, and borrowings on our Revolving Credit Facility.

Our short-term and long-term liquidity requirements are monitored regularly to ensure that we can meet our cash requirements.

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Our cash flows provided by operations for the years ended December 31, 2022, 2021, 2020 were $4,355 million, $4,090 million, and $1,578 million respectively.

The increase in cash provided by operating activities of $2,512 million in 2021 as compared to 2020 is primarily attributable to the increase in pre-tax earnings in 2021, non-cash valuation changes in equity, preferred and derivative securities of $821 million, increased cash inflows associated with the change in future policy benefits of $726 million, increased cash inflows associated with the change in funds withheld from reinsurers of $865 million, partially offset by gains on sales of investments and other assets of $668 million, increased cash outflows associated with increased deferred policy acquisition costs and deferred sales inducements of $409 million and the timing of

receipts and payments of prepaid assets, payables, receivables and income taxes.

The primary driver of the increased cash flows associated with the change in future policy benefits in 2021 as compared to 2020 was cash received for PRT transactions associated with our F&G business.

The increase in cash provided by operating activities of $457 million in 2020 as compared to 2019 is primarily attributable to the increase in pre-tax earnings in 2020 and the addition of interest credited to contractholder account balances of $750 million in 2020, partially offset by deferred policy acquisition costs and deferred sales inducements of $266 million in 2020, charges assessed to contractholders for mortality and administration of $100 million in 2020, and the timing of receipts and payments of prepaid assets, payables, receivables and income taxes.

The increase in cash provided by operating activities of $265

million in 2022 as compared to 2021 is primarily attributable to increased cash inflows associated with the change in funds withheld from reinsurers of $1,206 million, increased cash inflows associated with the change in future policy benefits of $557 million, increased cash inflows from the net decrease in trade receivables of $298 million, increased cash inflows associated with the change in reinsurance recoverable of $145 million and the increase in cash inflows associated with the change in income taxes of $43 million, partially offset by the decrease in pre-tax earnings in 2022 of $1,290 million, increased cash outflows associated with the decrease in the reserve for title claims losses of $333 million and the timing of receipts and payments of prepaid assets, payables, receivables and income taxes.

The primary driver of the increased cash flows associated with the change in future policy benefits in 2021 as compared to 2020 was cash received for PRT transactions associated with our F&G segment.

Investing Cash Flows.

Our cash used in investing activities for the years ended December 31, 2022, 2021, and 2020 were $10,524 million, $7,449 million, and $2,331 million, respectively.

The increase in cash used in investing activities in 2022 as compared to 2021 of $3,075 million is primarily associated with decreased cash inflows from proceeds from sales, calls and maturities of investment securities of $3,456 million, net purchases of short-term investment securities of $2,571 million in 2022 as compared to proceeds from sales and maturities of short-term investment securities of $266 million in 2021, partially offset by decreased cash outflows for additional investments in unconsolidated affiliates of $669 million and decreased cash outflows for purchases of investment securities of $2,866 million.

The increase in cash used in investing activities of $5,118 million in 2021 as compared to 2020 is primarily associated with increased purchases of investment securities of $11,055 million, increased investment in unconsolidated affiliates of $1,419 million, partially offset by increased proceeds from sales, calls and maturities of investment securities of $6,204 million, increased distributions from unconsolidated affiliates of $250 million and reduced cash outflows associated with acquisitions of $818 million.

The increase in cash used in investing activities of $1,811 million in 2020 as compared to 2019 is primarily attributable to the net cash outflow of $1,076 million associated with the F&G acquisition, increased purchases of investment securities of $4,092 million and additional investments in unconsolidated affiliates of $293 million, partially offset by increased sales, calls, and maturities of investment securities of $2,761 million, sales and maturities of short-term investments of $540 million and increased distributions from unconsolidated affiliates of $195 million.

The increased activity related to purchases, sales and calls of investment securities in the 2020 period is primarily associated with our F&G segment.

Capital Expenditures.

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Financing Cash Flows.

Our cash flows provided by (used in) financing activities for the year ended December 31, 2021, 2020, and 2019 were $5,000 million and $2,096 million, and $(482) million respectively.

Our cash flows provided by financing activities for the year ended December 31, 2022, 2021, and 2020 were $4,095 million, $5,000 million, and $2,096 million respectively.

The decrease in cash provided by financing activities of $905 million in 2022 as compared to 2021 is primarily associated with increased cash outflows for debt service payments, including the repayment of $400 million for our 5.50% Notes that were due in September 2022, increased cash outflows from contractholder withdrawals of $519 million, and net cash outflows associated with the change in secured trust deposits of $72 million in 2022 as compared to net cash inflows of $224 million in 2021, partially offset by increased cash inflows from contractholder deposits of $365 million.

The increase in cash provided by financing activities of $2,904 million in 2021 as compared to 2020 is primarily associated with increased cash inflows associated with the change in contractholder accounts of $3,595 million, increased cash inflows associated with the change in secured trust deposits of $304 million and reduced debt service payments of $1,000 million, partially offset by reduced debt offerings and borrowings of $1,797 million and increased purchases of treasury stock of $227 million.

The increase in cash provided by financing activities of $2,578 million in 2020 as compared to 2019 is primarily attributable to cash inflows from the offerings of our 3.40% Notes of $648 million and 2.45% Notes of $593 million, and increased cash inflows from contractholder account deposits of $2,967 million, partially offset by increased cash outflows from contractholder withdrawals of $1,327 million, increased purchases of treasury stock of $150 million and the purchase of the outstanding Class A units of ServiceLink held by minority owners of $90 million.

The increased activity in contractholder deposits and withdrawals in the 2020 period is associated with our F&G segment.

Financing Arrangements.

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Interest on fixed rate notes payable 147 147 147 147 147 605 1,340

Acquisitions 225 — — — — — 225

Total $ 6,549 $ 5,591 $ 7,048 $ 5,208 $ 5,292 $ 38,229 $ 67,917

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We sponsor certain frozen pension and other post-retirement benefit plans.

Employee Benefit Plans to our Consolidated Financial Statements included in Item 8 of Part II of this Annual Report for further information.

See Note U Employee Benefit Plans to our Consolidated Financial Statements included in Item 8 of Part II of this Annual Report for further information.

Capital Stock Tran s actions .

On July 17, 2018, our Board of Directors approved a three-year stock repurchase program effective August 1, 2018 (the "2018 Repurchase Program") under which we may purchase up to 25 million shares of our FNF common stock through July 31, 2021.

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

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

We 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.

We repurchased 13,369,565 shares of FNF common stock during the year ended December 31, 2022 for approximately $549 million, or an average of $41.05 per share.

Subsequent to December 31, 2021 and through market close on February 23, 2022, we repurchased a total of 250,000 shares for $13 million, or an average of $52.60 under the 2021 Repurchase Program.

Since the original commencement of the 2021 Repurchase Program, we repurchased a total of 3,230,000 FNF common shares for an aggregate amount of $161 million, or an average of $49.90 per share.

Subsequent to December 31, 2022 and through market close on February 23, 2023, we repurchased a total of 100,000 shares for approximately $4 million in the aggregate, or an average of $38.45 per share under the 2021 Repurchase Program.

Since the original commencement of the 2021 Repurchase Program, we have repurchased a total of 16,449,565 FNF common shares for an aggregate amount of $701 million, or an average of $42.60 per share.

Equity and Preferred Security Investments.

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These balances amounted to $18.9 billion and $30.5 billion at December 31, 2022 and 2021 , 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.

As a result of holding these customers’ assets in

escrow, we have ongoing programs for realizing economic benefits during the year through favorable borrowing and vendor arrangements with various banks.

We have unfunded investment commitments as of December 31, 2022 based upon the timing of when investments are executed compared to when the actual investments are funded, as some investments require that funding occur over a period of months or years.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis