UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

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

Commission File Number 1-32630

FIDELITY NATIONAL FINANCIAL, INC.

(Exact name of registrant as specified in its charter)

Delaware		16-1725106
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification Number)
601 Riverside Avenue, Jacksonville, Florida		32204
(Address of principal executive offices)		(Zip Code)

(904) 854-8100

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES þ      NO o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

YES o      NO o

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

Large accelerated filer þ		Accelerated filer o		Non-accelerated filer o		Smaller reporting company o
				(Do not check if a smaller reporting company)

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES o      NO þ

     As of July 31, 2009, there were 230,625,371 shares of the Registrant’s Common Stock outstanding.

 

 

FORM 10-Q
QUARTERLY REPORT
Quarter Ended June 30, 2009
INDEX

		Page
Part I: FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
A. Condensed Consolidated Balance Sheets as of June 30, 2009 and December 31, 2008			3
B. Condensed Consolidated Statements of Earnings for the three-month and six-month periods ended June 30, 2009 and 2008			4
C. Condensed Consolidated Statements of Comprehensive Earnings for the three-month and six-month periods ended June 30, 2009 and 2008			6
D. Condensed Consolidated Statement of Equity for the six-month period ended June 30, 2009			7
E. Condensed Consolidated Statements of Cash Flows for the six-month periods ended June 30, 2009 and 2008			8
F. Notes to Condensed Consolidated Financial Statements			9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			29
Item 3. Quantitative and Qualitative Disclosure About Market Risk			42
Item 4. Controls and Procedures			42
Part II: OTHER INFORMATION
Item 1. Legal Proceedings			43
Item 1A. Risk Factors			45
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			46
Item 4. Submission of Matters to a Vote of Security Holders			46
Item 6. Exhibits			47
EX-31.1
EX-31.2
EX-32.1
EX-32.2

Part I: FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)

		June 30,				December 31,
		2009				2008
		(Unaudited)
ASSETS
Investments:
Fixed maturity securities available for sale, at fair value, at June 30, 2009 includes $224,629 and $63,548, respectively, of pledged fixed maturity securities related to secured trust deposits and the securities lending program, at December 31, 2008 includes $267,353 and $103,586, respectively, of pledged fixed maturity securities related to secured trust deposits and the securities lending program		$	3,408,120			$	2,853,829
Equity securities available for sale, at fair value			18,290				71,516
Investments in unconsolidated affiliates			569,715				644,539
Other long-term investments			33,047				18,259
Short-term investments at June 30, 2009 and December 31, 2008, includes $41,252 and $115,184, respectively, of pledged short-term investments related to secured trust deposits			392,924				788,350
Total investments			4,422,096				4,376,493
Cash and cash equivalents, at June 30, 2009 includes $219,553 and $66,919, respectively, of pledged cash related to secured trust deposits and the securities lending program, and at December 31, 2008, includes $109,587 and $107,626, respectively, of pledged cash related to secured trust deposits and the securities lending program			443,876				315,297
Trade and notes receivables, net of allowance of $33,260 and $32,627, respectively, at June 30, 2009 and December 31, 2008			287,359				290,692
Goodwill			1,569,641				1,581,658
Prepaid expenses and other assets			628,706				632,527
Capitalized software			59,952				85,728
Other intangible assets			100,200				92,510
Title plants			430,510				431,591
Property and equipment, net			287,557				307,155
Income taxes receivable			14,123				115,371
Deferred tax assets			90,161				139,218
Total assets		$	8,334,181			$	8,368,240
LIABILITIES AND EQUITY
Liabilities:
Accounts payable and accrued liabilities, at June 30, 2009 and December 31, 2008, includes $66,919 and $107,626, respectively, of security loans related to the securities lending program		$	784,737			$	828,945
Accounts payable to related parties			8,463				9,953
Deferred revenue			109,432				109,023
Notes payable, at June 30, 2009 and December 31, 2008, includes $5,859 and $6,199, respectively, in notes payable to Fidelity National Information Services, Inc.			1,088,115				1,350,849
Reserve for claim losses			2,736,999				2,738,625
Secured trust deposits			473,245				474,073
Total liabilities			5,200,991				5,511,468
Equity:
Preferred stock, $0.0001 par value; authorized 50,000,000 shares; issued and outstanding, none			—				—
Common stock, Class A, $0.0001 par value; authorized 600,000,000 shares as of June 30, 2009 and December 31, 2008; issued 248,522,447 as of June 30, 2009 and 228,391,066 as of December 31, 2008			25				23
Additional paid-in capital			3,698,235				3,325,209
Accumulated deficit			(176,866	)			(188,954	)
Accumulated other comprehensive loss			(119,235	)			(91,757	)
Less treasury stock, 17,427,116 shares and 13,488,288 shares as of June 30, 2009 and December 31, 2008, respectively, at cost			(290,955	)			(238,948	)
Total Fidelity National Financial, Inc. shareholders’ equity			3,111,204				2,805,573
Noncontrolling interests			21,986				51,199
Total equity			3,133,190				2,856,772
Total liabilities and equity		$	8,334,181			$	8,368,240

See Notes to Condensed Consolidated Financial Statements

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share data)

		Three months ended								Six months ended
		June 30,								June 30,
		2009				2008				2009				2008
		(Unaudited)								(Unaudited)
REVENUE:
Direct title insurance premiums		$	409,069			$	321,040			$	742,657			$	625,819
Agency title insurance premiums			634,804				423,915				1,210,494				847,351
Escrow, title related and other fees			379,240				281,211				712,595				542,955
Specialty insurance			93,903				94,161				177,287				178,988
Interest and investment income			39,514				29,950				76,289				71,796
Realized gains and losses, net			13,182				17,791				7,873				26,268
Total revenue			1,569,712				1,168,068				2,927,195				2,293,177
EXPENSES:
Personnel costs			430,128				358,597				852,255				712,713
Other operating expenses			353,919				313,718				680,824				574,799
Agent commissions			504,155				328,800				965,673				656,809
Depreciation and amortization			36,606				33,844				73,021				67,514
Provision for claim losses			102,083				100,427				197,694				187,932
Interest expense			11,630				16,207				26,396				34,830
Total expenses			1,438,521				1,151,593				2,795,863				2,234,597
Earnings from continuing operations before income taxes and equity in loss of unconsolidated affiliates			131,191				16,475				131,332				58,580
Income tax expense			34,053				2,243				34,042				16,499
Earnings from continuing operations before equity in loss of unconsolidated affiliates			97,138				14,232				97,290				42,081
Equity in loss of unconsolidated affiliates			(4,602	)			(6,349	)			(16,732	)			(4,668	)
Net earnings from continuing operations			92,536				7,883				80,558				37,413
Net loss from discontinued operations, net of tax			—				(1,872	)			(440	)			(5,529	)
Net earnings			92,536				6,011				80,118				31,884
Less: Net earnings (loss) attributable to noncontrolling interests			593				(914	)			573				(2,286	)
Net earnings attributable to Fidelity National Financial, Inc. common shareholders		$	91,943			$	6,925			$	79,545			$	34,170
Earnings per share
Basic
Net earnings from continuing operations attributable to Fidelity National Financial, Inc. common shareholders		$	0.40			$	0.04			$	0.36			$	0.18
Net loss from discontinued operations attributable to Fidelity National Financial, Inc. common shareholders			—				(0.01	)			—				(0.02	)
Net earnings attributable to Fidelity National Financial, Inc. common shareholders		$	0.40			$	0.03			$	0.36			$	0.16
Diluted
Net earnings from continuing operations attributable to Fidelity National Financial, Inc. common shareholders		$	0.40			$	0.04			$	0.35			$	0.18
Net loss from discontinued operations attributable to Fidelity National Financial, Inc. common shareholders			—				(0.01	)			—				(0.02	)
Net earnings attributable to Fidelity National Financial, Inc. common shareholders		$	0.40			$	0.03			$	0.35			$	0.16
Weighted average shares outstanding, basic basis			228,056				210,814				220,661				210,962
Weighted average shares outstanding, diluted basis			232,078				213,107				225,006				213,318
Cash dividends paid per share		$	0.15			$	0.30			$	0.30			$	0.60

See Notes to Condensed Consolidated Financial Statements

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Continued)
(In thousands, except per share data)

		Three months ended								Six months ended
		June 30,								June 30,
		2009				2008				2009				2008
		(Unaudited)								(Unaudited)
Amounts attributable to Fidelity National Financial, Inc., common shareholders:
Net earnings from continuing operations, net of tax, attributable to Fidelity National Financial, Inc. common shareholders		$	91,943			$	8,067			$	79,872			$	37,543
Net loss from discontinued operations, net of tax, attributable to Fidelity National Financial, Inc. common shareholders			—				(1,142	)			(327	)			(3,373	)
Net earnings attributable to Fidelity National Financial, Inc. common shareholders		$	91,943			$	6,925			$	79,545			$	34,170

See Notes to Condensed Consolidated Financial Statements

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
(In thousands)

		Three months ended								Six months ended
		June 30,								June 30,
		2009				2008				2009				2008
		(Unaudited)								(Unaudited)
Net earnings		$	92,536			$	6,011			$	80,118			$	31,884
Other comprehensive earnings (loss):
Unrealized gain (loss) on investments and other financial instruments, net (excluding investments in unconsolidated affiliates) (1)			34,542				(34,651	)			42,955				(22,520	)
Unrealized gain (loss) on investments in unconsolidated affiliates			1,167				(15,530	)			(66,985	)			(14,238	)
Unrealized gain on foreign currency translation (2)			2,546				1,412				1,226				3,119
Reclassification adjustments for (gains) losses included in net earnings (3)			(8,368	)			4,445				(4,674	)			3,406
Other comprehensive earnings (loss)			29,887				(44,324	)			(27,478	)			(30,233	)
Comprehensive earnings (loss)			122,423				(38,313	)			52,640				1,651
Less: Comprehensive earnings (loss) attributable to noncontrolling interests			593				(914	)			573				(2,286	)
Comprehensive earnings (loss) attributable to Fidelity National Financial, Inc. common shareholders		$	121,830			$	(37,399	)		$	52,067			$	3,937

See Notes to Condensed Consolidated Financial Statements

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF EQUITY
(In thousands)
(Unaudited)

		Fidelity National Financial, Inc. Common Shareholders
																		Accumulated
										Additional								Other
		Common Stock								Paid-in				Accumulated				Comprehensive				Treasury Stock								Noncontrolling
		Shares				Amount				Capital				Deficit				Loss				Shares				Amount				Interests				Total
Balance, December 31, 2008			228,391			$	23			$	3,325,209			$	(188,954	)		$	(91,757	)			13,488			$	(238,948	)		$	51,199			$	2,856,772
Equity offering			18,170				2				331,419				—				—				—				—				—				331,421
Exercise of stock options			1,961				—				18,977				—				—				—				—				—				18,977
Tax benefit associated with the exercise of stock options			—				—				2,703				—				—				—				—				—				2,703
Unrealized gain on investments and other financial instruments (excluding investments in unconsolidated affiliates)			—				—				—				—				38,281				—				—				—				38,281
Unrealized loss on investments in unconsolidated affiliates			—				—				—				—				(66,985	)			—				—				—				(66,985	)
Unrealized gain on foreign currency			—				—				—				—				1,226				—				—				—				1,226
Stock based compensation, including issuance of restricted stock			—				—				19,927				—				—				—				—				—				19,927
De-consolidation of previous majority-owned subsidiary			—				—				—				—				—				—				—				(29,051	)			(29,051	)
Purchases of treasury stock			—				—				—				—				—				3,850				(50,841	)			—				(50,841	)
Shares withheld for taxes and in treasury			—				—				—				—				—				89				(1,166	)			—				(1,166	)
Cash dividends ($0.30 per share)			—				—				—				(67,457	)			—				—				—				—				(67,457	)
Subsidiary dividends paid to noncontrolling interests			—				—				—				—				—				—				—				(735	)			(735	)
Net earnings			—				—				—				79,545				—				—				—				573				80,118
Balance, June 30, 2009			248,522			$	25			$	3,698,235			$	(176,866	)		$	(119,235	)			17,427			$	(290,955	)		$	21,986			$	3,133,190

See Notes to Condensed Consolidated Financial Statements

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

		Six months ended
		June 30,
		2009				2008
		(Unaudited)
Cash flows from operating activities:
Net earnings		$	80,118			$	31,884
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:
Depreciation and amortization			73,374				71,611
Equity in loss of unconsolidated affiliates			16,732				4,668
Gain on sales of investments in other assets, net			(7,873	)			(26,268	)
Stock-based compensation cost			19,927				15,465
Tax benefit associated with the exercise of stock options			(2,703	)			(2,681	)
Changes in assets and liabilities, net of effects from acquisitions:
Net decrease in secured trust deposits			5,861				5,081
Net decrease (increase) in trade receivables			295				(3,462	)
Net decrease (increase) in prepaid expenses and other assets			5,249				(87,462	)
Net decrease in accounts payable, accrued liabilities, deferred revenue and other			(26,338	)			(61,108	)
Net decrease in reserve for claim losses			(1,626	)			(24,989	)
Net change in income taxes			120,139				15,223
Net cash provided by (used in) operating activities			283,155				(62,038	)
Cash flows from investing activities:
Proceeds from sales of investment securities available for sale			486,437				560,100
Proceeds from maturities of investment securities available for sale			135,042				164,410
Proceeds from sale of assets			2,788				927
Collections of notes receivable			367				3,536
Cash expended as collateral on loaned securities, net			(667	)			(1,855	)
Additions to title plants			(513	)			(2,981	)
Additions to property and equipment			(27,519	)			(31,176	)
Additions to capitalized software			(1,983	)			(13,803	)
Additions to notes receivable			(95	)			(435	)
Purchases of investment securities available for sale			(1,164,684	)			(482,031	)
Net purchases of (proceeds from) short-term investment securities			321,495				(165,775	)
Proceeds from sale of partial interest in Sedgwick CMS			—				53,872
Distributions from unconsolidated affiliates			2,117				—
Acquisitions of businesses, net of cash acquired			1,609				(1,082	)
Net cash (used in) provided by investing activities			(245,606	)			83,707
Cash flows from financing activities:
Equity offering			331,421				—
Borrowings			84,535				90,115
Debt service payments			(337,539	)			(61,089	)
Dividends paid			(67,457	)			(127,929	)
Subsidiary dividends paid to minority interest shareholders			(735	)			(2,209	)
Exercise of stock options			18,977				4,578
Tax benefit associated with the exercise of stock options			2,703				2,681
Purchases of treasury stock			(50,841	)			(33,159	)
Net cash used in financing activities			(18,936	)			(127,012	)
Net increase (decrease) in cash and cash equivalents, excluding pledged cash related to secured trust deposits			18,613				(105,343	)
Cash and cash equivalents, excluding pledged cash related to secured trust deposits at beginning of period			205,710				376,078
Cash and cash equivalents, excluding pledged cash related to secured trust deposits at end of period		$	224,323			$	270,735
Supplemental cash flow information:
Income taxes (refunded) paid		$	(65,172	)		$	3,879
Interest paid		$	31,837			$	34,829

See Notes to Condensed Consolidated Financial Statements

Fidelity National Financial, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Note A — Basis of Financial Statements

     The unaudited financial information in this report includes the accounts of Fidelity National Financial, Inc. and its subsidiaries (collectively, the “Company” or “FNF”) prepared in accordance with generally accepted accounting principles and the instructions to Form 10-Q and Article 10 of Regulation S-X. All adjustments considered necessary for a fair presentation have been included. This report should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2008.

     The preparation of these Condensed Consolidated Financial Statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Condensed Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Certain reclassifications have been made in the 2008 Condensed Consolidated Financial Statements to conform to classifications used in 2009.

Description of Business

     Fidelity National Financial, Inc. is a holding company that is a provider, through its subsidiaries, of title insurance, specialty insurance, claims management services, and information services. FNF is the nation’s largest title insurance company through its title insurance underwriters — Fidelity National Title, Chicago Title, Commonwealth Land Title, Lawyers Title, Ticor Title, Security Union Title, and Alamo Title — which collectively issued more title insurance policies in 2008 than any other title company in the United States. FNF also provides flood insurance, personal lines insurance, and home warranty insurance through its specialty insurance subsidiaries. FNF is also a leading provider of outsourced claims management services to large corporate and public sector entities through its minority-owned affiliate, Sedgwick CMS (“Sedgwick”). FNF is also a provider of information services in the human resources, retail, and transportation markets through another minority-owned affiliate, Ceridian Corporation (“Ceridian”).

Equity Offering

     On April 14, 2009, the Company offered 15,800,000 shares of its common stock at an offering price of $19.00 per share, pursuant to an effective registration statement previously filed with the Securities and Exchange Commission. The underwriters were granted and chose to exercise an option to purchase additional shares equal to 15% of the offering, or 2,370,000 shares, at the offering price. A total of 18,170,000 shares were issued on April 20, 2009, for net proceeds of approximately $331.4 million. The proceeds were used as follows: $135.0 million to repay borrowings under the Company’s $1.1 billion revolving credit facility, $71.5 million to repurchase the Company’s public bonds, $50.8 million to repurchase shares of the Company’s common stock, $25.0 million as part of a $49.1 million capital infusion into Lawyers Title Insurance Corporation, and the remainder for general corporate purposes.

Transactions with Related Parties

     The Company has historically conducted business with Fidelity National Information Services, Inc. and its subsidiaries (“FIS”). On July 2, 2008, FIS completed the spin-off of its lender processing services segment into a separate publicly traded company known as Lender Processing Services, Inc. (“LPS”). As part of the spin-off of LPS, a number of the agreements that were previously between FNF and FIS were amended and renegotiated to reflect the revised relationships between FNF and FIS and the new relationships between FNF and LPS. Effective March 15, 2009, William P. Foley, II, retired from his position as an officer and director of LPS. Prior to March 15, 2009, Mr. Foley was the Chairman of the Board of LPS. Also at that time, Daniel D. (Ron) Lane and Cary H. Thompson, retired from the LPS Board of Directors. As a result, as of March 15, 2009, LPS is no longer a related party and activity between FNF and LPS subsequent to that date is not included in the Company’s disclosures of transactions with related parties.

Fidelity National Financial, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (continued)

     A summary of the agreements that were in effect with FIS through June 30, 2009, is as follows:

•		Information Technology (“IT”), data processing services and software development services from FIS. These agreements govern IT support services and software development provided to the Company by FIS, primarily consisting of infrastructure support and data center management. Subject to certain early termination provisions (including the payment of minimum monthly service and termination fees), the agreement expires on or about June 30, 2013 with an option to renew for one or two additional years.
•		Administrative corporate support and cost-sharing services to and from FIS. The Company has provided certain administrative corporate support services such as general management, statutory accounting, claims administration, corporate aviation and other administrative support services to FIS. On a lesser scale, until recently, FIS has provided similar support services to the Company. The pricing of these administrative services is at cost. The administrative corporate services agreements expire in July 2010, subject to extension in certain circumstances or early termination if the services are no longer required by the party receiving the services or upon mutual agreement of the parties.
•		Real estate management, real estate lease and equipment lease agreements. Included in the Company’s revenues are amounts received related to leases of certain equipment to FIS and the sublease of certain office space, furniture and furnishings to FIS.

     A detail of related party items included in revenues and expenses is as follows:

		Three months ended				Three months ended				Six months ended				Six months ended
		June 30, 2009				June 30, 2008				June 30, 2009				June 30, 2008
						(in millions)
Rental revenue		$	5.3			$	6.3			$	10.4			$	12.3
Data processing costs		$	12.3			$	11.4			$	24.0			$	22.6
Corporate services and cost-sharing			(0.5	)			(0.7	)			(1.0	)			(1.1	)
Interest expense			—				0.1				0.1				0.1
Total expenses		$	11.8			$	10.8			$	23.1			$	21.6

     Management believes the amounts earned by the Company or charged to it under each of the foregoing arrangements are fair and reasonable. The information technology infrastructure support and data center management services provided to the Company are priced within the range of prices that FIS offers to its unaffiliated third party customers for the same types of services. However, the amounts FNF earned or was charged under these arrangements were not negotiated at arm’s-length, and may not represent the terms that the Company might have obtained from an unrelated third party.

     Amounts due to FIS as of the dates shown were as follows:

		June 30,				December 31,
		2009				2008
		(In millions)
Note payable to FIS		$	5.9			$	6.2
Other amounts due to FIS			8.5				6.9

     The Company’s consolidated balance sheet includes an unsecured note payable to FIS, with a balance of $5.9 million and $6.2 million at June 30, 2009, and December 31, 2008, respectively. The Company’s related interest expense was less than $0.1 million and $0.1 million for the three-month periods ended June 30, 2009 and 2008, respectively, and $0.1 million for each of the six-month periods ended June 30, 2009 and 2008. Also, as a result of related party transactions, as of June 30, 2009, and December 31, 2008, the Company owed $8.5 million and $6.9 million, respectively, to FIS.

     During the six months ended June 30, 2008, the Company paid FIS $0.8 million for capitalized software development costs, none of which was paid in the three months ended June 30, 2008. No software development costs paid to FIS were capitalized during the six months ended June 30, 2009.

Fidelity National Financial, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (continued)

Proposed Investment in Fidelity National Information Services, Inc.

     On March 31, 2009, the Company entered into an investment agreement (the “Investment Agreement”) with FIS pursuant to which the Company has agreed to invest a total of $50.0 million in FIS in connection with a proposed merger (the “Merger”) between FIS and Metavante Technologies, Inc. (“Metavante”). Under the terms of the Investment Agreement, the Company will purchase 3,215,434 shares of FIS’s common stock at a price of $15.55 per share. Additionally, FIS has agreed to pay the Company a transaction fee of $1.5 million. This investment is subject to certain customary conditions (including approval of FIS’s shareholders) and the consummation of the Merger.

Agreements with LPS

As noted above, prior to March 15, 2009, LPS was a related party of the Company. A summary of the agreements that were in effect with LPS that were considered related party activity through March 15, 2009, are as follows:

•		Title agency services by LPS. These agreements allow LPS to provide services to existing customers through loan facilitation transactions, primarily with large national lenders. The arrangement involves the provision of title agency services by LPS, which results in the issuance of title policies on behalf of title insurance underwriters owned by the Company. The Company recorded agency title premiums of $38.7 million and $75.5 million for the three-month and six-month periods ended June 30, 2008, and $84.2 million for the period from January 1 through March 15, 2009, while LPS was still a related party. The Company recorded Agency Title Commissions of $34.3 million and $66.8 million for the three-month and six-month periods ended June 30, 2008, and $73.8 million for the period from January 1 through March 15, 2009, while LPS was still a related party.
•		Software development services from LPS. These agreements govern software development provided to the Company by LPS. The Company recorded software development expense of $14.3 million and $27.2 million for the three-month and six-month periods ended June 30, 2008, and $13.5 million for the period from January 1 through March 15, 2009, while LPS was still a related party.
•		Other real estate, tax, and title support related services by LPS. Under these arrangements, the Company pays LPS for providing other real estate related services to the Company, which consist primarily of real estate, tax data and title related data services required by the Company’s title insurance operations and flood zone determination and reporting services used by the Company’s title insurers in connection with properties that may be located in special flood hazard areas. The Company recorded expenses of $3.6 million and $7.1 million for the three-month and six-month periods ended June 30, 2008, and $2.1 million for the period from January 1 through March 15, 2009, relating to these agreements while LPS was still a related party.
•		Title plant access and title production services by LPS. Under these agreements, the Company’s title insurers provide LPS with title plant access for real property located in various states, including online database access, physical access to title records, use of space, image system use, and use of special software, as well as other title production services. The Company recorded title plant revenue of $2.1 million and $4.7 million for the three-month and six-month periods ended June 30, 2008, and $3.0 million for the period from January 1 through March 15, 2009, relating to these agreements while LPS was still a related party.
•		Real estate management, real estate lease and equipment lease agreements. The Company recorded revenue of $2.0 million in the first quarter of 2009, and expense of less than $0.1 million and $(0.5) million for the three-month and six-month periods ended June 30, 2008, and $0.2 million for the period from January 1 through March 15, 2009, relating to these agreements while LPS was still a related party.
•		Licensing, cost sharing, business processing and other agreements. The Company recorded expense of $7.9 million and $10.1 million for the three-month and six-month periods ended June 30, 2008, and $3.4 million for the period from January 1 through March 15, 2009, relating to these agreements while LPS was still a related party.

     In February 2009, the Company transferred its ownership interest in FNRES Holdings, Inc. (“FNRES”) to LPS in exchange for all of the outstanding shares of Investment Property Exchange Services, Inc. (“IPEX”), a company that facilitates real estate exchanges under Section 1031 of the Internal Revenue Code. Under the provisions of

Fidelity National Financial, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (continued)

Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards (“SFAS”) No. 141(R), “Business Combinations,” and FASB Accounting Standards Codification Topic 805, “Business Combinations,” the purchase price was approximately $43 million, which was the fair value of FNF’s 61% holdings in FNRES. The results of operations of FNRES are reflected as discontinued operations in the Condensed Consolidated Statements of Earnings. Discontinued operations included revenues from FNRES operations of $11.7 million in the three months ended June 30, 2008, and $3.5 million and $23.8 million in the six months ended June 30, 2009 and 2008. Discontinued operations included pre-tax losses related to FNRES operations of $2.9 million in the three months ended June 30, 2008, and $0.5 million and $8.7 million in the six months ended June 30, 2009 and 2008, respectively.

Recent Accounting Pronouncements

     In June 2009, the FASB issued SFAS No. 168, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles — a Replacement of FAS No. 162” (“SFAS 168”). This statement changes the hierarchy of U.S. generally accepted accounting principles (“GAAP”) such that the newly released FASB Accounting Standards Codification (“ASC”) will replace other sources of authoritative GAAP with the exception of rules and interpretive releases of the Securities and Exchange Commission, which will continue to be authoritative. The issuance of this statement is not intended to significantly change GAAP, but it will require ASC citations in place of references to previous authoritative accounting literature. SFAS 168 is effective for financial statements issued for interim and annual periods ending after September 15, 2009. Although the ASC is not effective for periods ended June 30, 2009, the Company’s notes to condensed consolidated financial statements for such periods include dual citations with references to the ASC and to the accounting literature in effect for those periods. The Company does not expect SFAS 168 to have an impact on its financial condition or results of operations.

     In June 2009, the FASB issued SFAS No. 167,” Amendments to FASB Interpretation No. 46(R)” (“SFAS 167”) (not yet integrated into the ASC). This statement amends certain guidance for determining whether or not an entity is a variable interest entity. SFAS 167 also changes the methodology used to determine whether or not an entity is a primary beneficiary with respect to a variable interest entity and introduces a requirement to reassess on an ongoing basis whether an entity is the primary beneficiary of a variable interest entity. SFAS 167 is effective for annual reporting periods beginning after November 15, 2009, and for interim periods during the first annual reporting period. The Company does not expect SFAS 167 to have a material impact on its financial condition or results of operations.

     In June 2009, the FASB issued SFAS No. 166, “Accounting for Transfers of Financial Assets — an Amendment of FASB Statement No. 140,” (not yet integrated into the ASC) to clarify its intentions relative to SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities.” (SFAS No. 140 is incorporated in ASC Topic 860.) This statement also eliminates the concept of special purpose entities. It is effective for the first annual reporting period beginning after November 15, 2009. The Company does not expect this statement to have a material impact on its financial condition or results of operations.

     In May 2009, the FASB issued SFAS No. 165, “Subsequent Events” (“SFAS 165”) (incorporated in ASC Topic 855). SFAS 165 sets forth (1) the period after the balance sheet date during which management should evaluate events or transactions for potential recognition or disclosure in the financial statements, (2) the circumstances under which an entity should recognize in its financial statements events or transactions occurring after the balance sheet date, and (3) the related disclosures that an entity should make. SFAS 165 is effective for interim or annual periods ending after June 15, 2009. The Company has implemented this standard with no impact to its financial condition or results of operations in the periods presented. The Company has concluded that there were no material subsequent events through August 6, 2009, the date that the financial statements were issued.

     In April 2009, the FASB issued FASB Staff Position (“FSP”) No. FAS 115-2 and FAS 124-2, “Recognition and Presentation of Other-Than-Temporary Impairments” (“FAS 115-2 and 124-2”) (incorporated in ASC Topic 320). This FSP modifies the requirements for recognizing other-than-temporary impairment related to debt securities classified as available-for-sale and held-to-maturity and changes the impairment model for such securities. It also modifies the presentation of other-than-temporary impairment losses and expands and increases the frequency of related disclosures for debt and equity securities. This standard is effective for interim and annual periods ending

Fidelity National Financial, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (continued)

after June 15, 2009. The Company has implemented this FSP with no material impact on its financial position or results of operations. The additional disclosures required by this FSP are set forth in note E.

     In April 2009, the FASB issued FSP No. FAS 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (incorporated in ASC Topic 820). This FSP provides additional guidance for estimating fair value when the volume and level of activity for the asset or liability have significantly decreased. This FSP also includes guidance on identifying circumstances that indicate a transaction is not orderly. This FSP is effective for interim and annual reporting periods ending after June 15, 2009. The Company has implemented this standard with no material impact on its financial position or results of operations.

     In April 2009, the FASB issued FSP No. FAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments” (incorporated in ASC Topic 825) requiring summarized disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies. This standard is effective for interim reporting periods ending after June 15, 2009. The Company has adopted this FSP by including additional disclosures in note D.

     In December 2008, the FASB issued FSP FAS 132(R)-1, “Employer’s Disclosures about Postretirement Benefit Plan Assets” (“FSP FAS 132(R)-1”), which amends SFAS No. 132(R), “Employer’s Disclosures about Pensions and Other Postretirement Benefits — An Amendment of FASB Statements 87, 88 and 106” (incorporated in ASC Topic 715). FSP FAS 132(R)-1 requires additional disclosures about plan assets, including investment strategies, major categories of plan assets, concentrations of risks within plan assets, inputs and valuation techniques used to measure fair value of plan assets, and the effect of fair value measurements using significant unobservable inputs on changes in plan assets for the period. FSP FAS 132(R)-1 is effective for fiscal years ending after December 15, 2009. The Company does not expect this standard to have a material impact on its financial condition or results of operations.

     In November 2008, the FASB ratified the consensus reached by the Emerging Issues Task Force (“EITF”) in EITF Issue No. 08-6, “Equity Method Investment Accounting Considerations” (“EITF 08-6”) (incorporated in ASC Topic 323), which clarifies the accounting for certain transactions and impairment considerations involving equity method investments. EITF 08-6 is effective for fiscal years beginning after December 15, 2008. The Company has adopted EITF 08-6 with no material effects in the Company’s statements of financial condition or results of operations.

     In June 2008, the FASB issued FSP EITF 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities” (“FSP EITF 03-6-1”) (incorporated in ASC Topic 260). FSP EITF 03-6-1 requires unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents to be treated as participating securities, which means that they would be included in the earnings allocation in computing earnings per share under a two-class method described in Statement of Financial Accounting Standards (“SFAS”) No. 128, “Earnings Per Share.” This FSP is effective for interim and annual periods beginning after December 15, 2008. The Company has adopted this FSP with no material effects in the Company’s statements of financial condition or results of operations.

     In April 2008, the FASB issued FSP FAS 142-3, “Determination of the Useful Life of Intangible Assets” (“FSP SFAS 142-3”) (incorporated in ASC Topic 350), which amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS 142, “Goodwill and Other Intangible Assets.” FSP SFAS 142-3 applies to intangible assets that are acquired individually or with a group of other assets acquired in business combinations and asset acquisitions. FSP SFAS 142-3 also requires expanded disclosure related to the determination of intangible asset useful lives. FSP SFAS 142-3 is effective for fiscal years beginning after December 15, 2008. The Company has adopted this standard with no material effects in the Company’s statements of financial condition or results of operations.

     In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 51” (“SFAS 160”) (incorporated in ASC Topic 810), requiring noncontrolling interests (sometimes called minority interests) to be presented as a component of equity on the balance sheet. SFAS 160 also requires that the amount of net income attributable to the parent and to the noncontrolling interests be clearly identified and presented on the face of the consolidated statement of income. This

Fidelity National Financial, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (continued)

statement eliminates the need to apply purchase accounting when a parent company acquires a noncontrolling ownership interest in a subsidiary and requires that, upon deconsolidation of a subsidiary, a parent company recognize a gain or loss in net income after which any retained noncontrolling interest will be reported at fair value. SFAS 160 requires expanded disclosures in the consolidated financial statements that identify and distinguish between the interests of the parent’s owners and the interest of the noncontrolling owners of subsidiaries. SFAS 160 is effective for periods beginning on or after December 15, 2008 and will be applied prospectively except for the presentation and disclosure requirements, which will be applied retrospectively for all periods presented. The Company has implemented SFAS 160 effective January 1, 2009, with no material impact to the Company’s statements of financial position or results of operations except for the changes in presentation as noted above.

     In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations” (“SFAS 141(R)”) (incorporated in ASC Topic 805), requiring an acquirer in a business combination to recognize the assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree at their fair values at the acquisition date, with limited exceptions. The costs of the acquisition and any related restructuring costs will be recognized separately. Assets and liabilities arising from contingencies in a business combination are to be recognized at their fair value at the acquisition date and adjusted prospectively as new information becomes available. When the fair value of assets acquired exceeds the fair value of consideration transferred plus any noncontrolling interest in the acquiree, the excess will be recognized as a gain. Under SFAS 141(R), all business combinations will be accounted for by applying the acquisition method, including combinations among mutual entities and combinations by contract alone. SFAS 141(R) is effective for periods beginning on or after December 15, 2008. The Company has adopted SFAS 141(R) and is applying it to business combinations occurring subsequent to December 31, 2008.

Note B — Acquisitions

     The results of operations and financial position of the entities acquired during any year are included in the Condensed Consolidated Financial Statements from and after the date of acquisition. Based on the Company’s valuation, any differences between the fair value of the identifiable assets and liabilities and the purchase price paid are recorded as goodwill. There were no individually significant acquisitions during the six months ended June 30, 2009.

Significant Acquisition

Acquisition of Commonwealth Land Title Insurance Company, Lawyers Title Insurance Corporation, and United Capital Title Insurance Company

     On December 22, 2008, FNF completed the acquisition of LandAmerica Financial Group, Inc’s (“LFG”) two principal title insurance underwriters, Commonwealth Land Title Insurance Company (“Commonwealth”) and Lawyers Title Insurance Corporation (“Lawyers”), as well as United Capital Title Insurance Company (“United”) (collectively, the “LFG Underwriters”). The total purchase price for Commonwealth and Lawyers was $238.0 million, net of cash acquired of $8.8 million, and was comprised of $134.8 million paid in cash by two of FNF’s title insurance underwriters, Fidelity National Title Insurance Company and Chicago Title Insurance Company, a $50.0 million subordinated note due in 2013, and $50.0 million in FNF common stock (3,176,620 shares valued at $15.74 per share at the time of closing). In addition, Fidelity National Title Insurance Company purchased United from an indirect subsidiary of LFG for a purchase price of approximately $12 million, equal to an estimate of the statutory net worth of United at the time of closing.

     The total purchase price was as follows (in millions):

Cash paid by FNF’s title insurance underwriters, net of cash acquired		$	138.0
Subordinated note payable to LFG (see note F)			50.0
FNF common stock (3,176,620 shares valued at $15.74 per share)			50.0
Transaction costs			3.8
		$	241.8

     The purchase price has been initially allocated to the LFG Underwriters’ assets acquired and liabilities assumed based on our best estimates of their fair values as of December 22, 2008. Goodwill has been recorded based on the

Fidelity National Financial, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (continued)

amount that the purchase price exceeds the fair value of the net assets acquired. This estimate is preliminary and subject to adjustments as the Company completes its valuation process. The initial purchase price allocation is as follows (in millions):

Investments		$	919.2
Trade and notes receivable			77.6
Title plants			95.1
Property and equipment			41.5
Deferred tax assets			151.1
Other assets			126.3
Goodwill			224.2
Reserve for claim losses			(1,115.8	)
Other liabilities assumed			(277.4	)
Total purchase price		$	241.8

     The following table summarizes the other liabilities assumed in the acquisition of the LFG Underwriters (in millions):

Estimated facility closure costs		$	49.7
Estimated employee termination costs			14.7
Other merger related costs			4.8
Other operating liabilities			208.2
		$	277.4

     The Company is currently evaluating the various agreements, including leases, vendor and agency agreements, title plants, deferred tax assets, and customer contracts of the LFG Underwriters. This evaluation has resulted in the recognition of certain liabilities associated with exiting activities of the acquired companies. The Company expects to complete this evaluation during 2009 and will adjust the amounts recorded as of December 31, 2008, to reflect the Company’s revised evaluations.

Pro Forma Results

     Selected unaudited pro forma results of operations for three-month and six-month periods ended June 30, 2008, are presented for comparative purposes below, assuming the acquisition of the LFG Underwriters had occurred as of January 1, 2008, and using actual general and administrative expenses prior to the acquisition.

		Three months ended				Six months ended
		June 30, 2008				June 30, 2008
		(in millions)
Total revenues		$	1,767.3			$	3,464.6
Net loss attributable to FNF			(51.4	)			(42.1	)
Pro forma earnings per share attributable to FNF — basic			(0.24	)			(0.20	)
Pro forma earnings per share attributable to FNF — diluted			(0.24	)			(0.20	)

     In the three-month and six-month periods ended June 30, 2008, the operations of the LFG Underwriters resulted in total revenues of $599.2 million and $1,171.5 million and net losses of $72.4 million and $113.7 million.

Note C — Earnings Per Share

     Basic earnings per share is computed by dividing net earnings available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share is calculated by dividing net earnings available to common stockholders by the weighted average number of common shares outstanding plus the impact of assumed conversions of potentially dilutive securities. The Company has granted certain options and shares of restricted stock which have been treated as common share equivalents for purposes of calculating diluted earnings per share.

Fidelity National Financial, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (continued)

     The following table presents the computation of basic and diluted earnings per share:

		Three months ended								Six months ended
		June 30,								June 30,
		2009				2008				2009				2008
		(In thousands, except per share amounts)
Basic and diluted net earnings from continuing operations attributable to FNF common shareholders		$	91,943			$	8,067			$	79,872			$	37,543
Basic and diluted net loss from discontinued operations attributable to FNF common shareholders			—				(1,142	)			(327	)			(3,373	)
Basic and diluted net earnings attributable to FNF common shareholders		$	91,943			$	6,925			$	79,545			$	34,170
Weighted average shares outstanding during the period, basic basis			228,056				210,814				220,661				210,962
Plus: Common stock equivalent shares assumed from conversion of options			4,022				2,293				4,345				2,356
Weighted average shares outstanding during the period, diluted basis			232,078				213,107				225,006				213,318
Basic net earnings per share from continuing operations attributable to FNF common shareholders		$	0.40			$	0.04			$	0.36			$	0.18
Basic net loss from discontinued operations attributable to FNF common shareholders			—				(0.01	)			—				(0.02	)
Basic earnings per share attributable to FNF common shareholders		$	0.40			$	0.03			$	0.36			$	0.16
Diluted net earnings per share from continuing operations attributable to FNF common shareholders		$	0.40			$	0.04			$	0.35			$	0.18
Diluted net loss from discontinued operations attributable to FNF common shareholders			—				(0.01	)			—				(0.02	)
Diluted earnings per share attributable to FNF common shareholders		$	0.40			$	0.03			$	0.35			$	0.16

     Options to purchase shares of the Company’s common stock that are antidilutive are excluded from the computation of diluted earnings per share. Antidilutive options totaled 8,476,187 shares and 7,367,725 shares for the three months ended June 30, 2009 and 2008, respectively, and 6,976,827 shares and 7,481,464 shares for the six months ended June 30, 2009 and 2008, respectively.

Note D — Fair Value Measurements

     The following table presents the Company’s fair value hierarchy, pursuant to SFAS No. 157, “Fair Value Measurements” (“SFAS 157”) and FASB ASC Topic 820, for those assets and liabilities measured at fair value on a recurring basis as of June 30, 2009:

		Level 1				Level 2				Level 3				Total
						(In thousands)
U.S. government and agencies		$	—			$	414,880			$	—			$	414,880
State and political subdivisions			—				1,279,501				—				1,279,501
Corporate debt securities			—				1,296,590				—				1,296,590
Foreign government bonds			—				19,879				—				19,879
Mortgage-backed/asset-backed securities			—				354,945				—				354,945
Other fixed-maturity securities			—				1,558				40,767				42,325
Equity securities available for sale			18,290				—				—				18,290
Total		$	18,290			$	3,367,353			$	40,767			$	3,426,410

     The Company’s level 2 fair value measures for fixed-maturities available for sale are provided by third-party pricing services. The Company utilizes one firm for its taxable bond portfolio and another for its municipal bond

Fidelity National Financial, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (continued)

portfolio. These pricing services are leading global providers of financial market data, analytics and related services to financial institutions. The Company only relies on one price for each instrument to determine the carrying amount of the assets on our balance sheet. The inputs utilized in these pricing methodologies include observable measures such as benchmark yields, reported trades, broker dealer quotes, issuer spreads, two sided markets, benchmark securities, bids, offers and reference data including market research publications. The Company’s fixed maturities classified as level 3 consist of auction rate securities with a par value of $81.8 million and fair value at June 30, 2009, of $40.8 million, which were included in the assets of the LFG Underwriters that we acquired on December 22, 2008. There is no active market for these auction rate securities and they are valued using models with significant non-observable inputs. These securities represent less than one percent of our total portfolio. Beginning in the second quarter of 2009, fair values for these auction rate securities are determined by the Company.

     The following table presents the changes in the Company’s investments that are classified as Level 3 for the six months ended June 30, 2009 (in thousands).

Balance, January 1, 2009		$	32,055
Less: Proceeds received upon call			(7,000	)
Realized gain			4,824
Unrealized gains included in other comprehensive income			10,888
Balance, June 30, 2009		$	40,767

     At June 30, 2009, the fair value of the Company’s long-term debt was $1,067.4 million and the carrying amount was $1,088.1 million. The carrying amounts of accounts receivable and notes receivable approximate fair value.

     FASB Staff Position SFAS No. 157-2, “Effective Date of FASB Statement No. 157,” (“FSP SFAS 157-2”) (incorporated in ASC 820) delayed the effective date of SFAS No. 157 with respect to nonfinancial assets and nonfinancial liabilities that are not remeasured at fair value on a recurring basis until fiscal years beginning after November 15, 2008. The Company has adopted FSP SFAS 157-2 effective January 1, 2009 with no effect on the Company’s statements of financial condition or results of operations for the three-month and six-month periods ended June 30, 2009.

Note E — Investments

     The carrying amounts and fair values of the Company’s securities at June 30, 2009, and December 31, 2008, are as follows:

		June 30, 2009
		Carrying				Amortized				Unrealized				Unrealized				Fair
		Value				Cost				Gains				Losses				Value
		(In thousands)
Fixed-maturity securities:
U.S. government and agencies		$	414,880			$	400,687			$	16,348			$	(2,155	)		$	414,880
States and political subdivisions			1,279,501				1,253,278				29,761				(3,538	)			1,279,501
Corporate debt securities			1,296,590				1,279,631				37,835				(20,876	)			1,296,590
Foreign government bonds			19,879				18,737				1,142				—				19,879
Mortgage-backed/asset-backed securities			354,945				349,844				8,497				(3,396	)			354,945
Other fixed maturity securities			42,325				33,222				9,104				(1	)			42,325
Total fixed maturity securities			3,408,120				3,335,399				102,687				(29,966	)			3,408,120
Equity securities			18,290				18,466				4,267				(4,443	)			18,290
Total available for sale securities		$	3,426,410			$	3,353,865			$	106,954			$	(34,409	)		$	3,426,410

Fidelity National Financial, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (continued)

		December 31, 2008
		Carrying				Amortized				Unrealized				Unrealized				Fair
		Value				Cost				Gains				Losses				Value
		(In thousands)
Fixed-maturity securities:
U.S. government and agencies		$	558,651			$	526,425			$	32,469			$	(243	)		$	558,651
States and political subdivisions			1,049,125				1,029,505				24,550				(4,930	)			1,049,125
Corporate debt securities			875,005				910,533				8,413				(43,941	)			875,005
Foreign government bonds			43,510				41,582				1,943				(15	)			43,510
Mortgage-backed/asset-backed securities			293,188				292,452				1,227				(491	)			293,188
Other fixed maturity securities			34,350				33,712				677				(39	)			34,350
Total fixed maturity securities			2,853,829				2,834,209				69,279				(49,659	)			2,853,829
Equity securities			71,516				79,795				2,204				(10,483	)			71,516
Total available for sale securities		$	2,925,345			$	2,914,004			$	71,483			$	(60,142	)		$	2,925,345

     The following table presents certain information regarding contractual maturities of the Company’s fixed maturity securities at June 30, 2009:

		June 30, 2009
		Amortized				% of								% of
Maturity		Cost				Total				Fair Value				Total
						(In thousands)
One year or less		$	313,871				9.4	%		$	316,680				9.3	%
After one year through five years			1,570,337				47.1				1,602,349				47.0
After five years through ten years			841,442				25.2				855,315				25.1
After ten years			332,470				10.0				355,435				10.4
Mortgage-backed/asset-backed securities			277,279				8.3				278,341				8.2
		$	3,335,399				100.0	%		$	3,408,120				100.0	%
Subject to call		$	436,833				13.1	%		$	447,942				13.1	%

     Expected maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations with or without call or prepayment penalties and because of prepayments by issuers. Because of the potential for prepayment on mortgage-backed and asset-backed securities, they are not categorized by contractual maturity.

     The Company lends fixed maturity and equity securities to financial institutions in short-term security lending transactions. The Company’s security lending policy requires that the cash received as collateral be 102% or more of the fair value of the loaned securities. At June 30, 2009 and December 31, 2008, the fair values of pledged fixed-maturity securities related to securities loaned totaled $63.5 million and $103.6 million, respectively. Securities loaned under such transactions may be sold or repledged by the transferee. The Company was liable for cash collateral under its control of $66.9 million and $107.6 million at June 30, 2009 and December 31, 2008, respectively, which has been included in cash and cash equivalents and in accounts payable and accrued liabilities.

Fidelity National Financial, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (continued)

     During the three-month and six-month periods ended June 30, 2009, gross proceeds from sales of available for sale securities were $229.2 million and $621.5 million, respectively, gross gains were $13.3 million and $25.4 million, respectively, and gross losses, including impairment charges, were $0.1 million and $17.9 million, respectively. During the three-month and six-month periods ended June 30, 2009, unrealized gains on available for sale securities included in other comprehensive earnings totaled $55.6 million and $68.7 million, respectively, and realized gains reclassified out of other comprehensive earnings totaled $13.2 million and $7.5 million, respectively. Realized gains and losses on the sale of investments are determined on the basis of the cost of the specific investments sold and are credited or charged to income on a trade date basis.

     Net unrealized losses on investment securities and the fair value of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at June 30, 2009, and December 31, 2008, were as follows:

Fidelity National Financial, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (continued)

June 30, 2009:

		Less than 12 Months								12 Months or Longer								Total
						Unrealized								Unrealized								Unrealized
		Fair Value				Losses				Fair Value				Losses				Fair Value				Losses
										(In thousands)
Fixed-maturity securities:
U.S. government and agencies		$	49,708			$	(2,155	)		$	—			$	—			$	49,708			$	(2,155	)
States and political subdivisions			192,932				(1,599	)			23,748				(1,939	)			216,680				(3,538	)
Corporate securities			188,962				(7,068	)			177,138				(13,808	)			366,100				(20,876	)
Mortgage-backed/asset-backed securities			75,564				(3,396	)			—				—				75,564				(3,396	)
Other fixed maturity securities			80				(1	)			—				—				80				(1	)
Total fixed maturity securities			507,246				(14,219	)			200,886				(15,747	)			708,132				(29,966	)
Equity securities			6,745				(3,158	)			2,737				(1,285	)			9,482				(4,443	)
Total temporarily impaired securities		$	513,991			$	(17,377	)		$	203,623			$	(17,032	)		$	717,614			$	(34,409	)

December 31, 2008:

		Less than 12 Months								12 Months or Longer								Total
						Unrealized								Unrealized								Unrealized
		Fair Value				Losses				Fair Value				Losses				Fair Value				Losses
		(In thousands)
Fixed-maturity securities:
U.S. government and agencies		$	37,920			$	(243	)		$	—			$	—			$	37,920			$	(243	)
States and political subdivisions			116,364				(3,740	)			10,762				(1,190	)			127,126				(4,930	)
Corporate securities			451,615				(26,006	)			90,043				(17,935	)			541,658				(43,941	)
Foreign securities			2,022				(15	)			—				—				2,022				(15	)
Mortgage-backed/asset-backed securities			42,578				(491	)			—				—				42,578				(491	)
Other fixed maturity securities			2,137				(39	)			—				—				2,137				(39	)
Total fixed maturity securities			652,636				(30,534	)			100,805				(19,125	)			753,441				(49,659	)
Equity securities			22,346				(10,483	)			—				—				22,346				(10,483	)
Total temporarily impaired securities		$	674,982			$	(41,017	)		$	100,805			$	(19,125	)		$	775,787			$	(60,142	)

     A substantial portion of the Company’s unrealized losses relate to debt securities. These unrealized losses were primarily caused by widening credit spreads that the Company considers to be temporary. Because the Company expects to recover the entire amortized cost basis of these securities, the Company does not intend to sell these securities and it is not more likely than not that the Company will be required to sell the securities before recovery of the cost basis, the Company does not consider these investments to be other-than-temporarily impaired. The unrealized losses relating to equity securities were caused by market changes that the Company considers to be temporary and thus the Company does not consider these investments other-than-temporarily impaired.

     The Company recorded no impairment charges during the three months ended June 30, 2009. During the three months ended June 30, 2008, the Company recorded impairment charges totaling $7.6 million related to two of its fixed maturity securities and $2.0 million related to one of its equity securities that were deemed other than temporarily impaired. During the six months ended June 30, 2009, the Company recorded impairment charges totaling $5.7 million related to equity securities that were deemed other than temporarily impaired. During the six

Fidelity National Financial, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (continued)

months ended June 30, 2008, the Company recorded impairment charges totaling $7.6 million related to two of its fixed maturity securities and $3.5 million related to equity securities that were deemed other than temporarily impaired. The impairment charges relating to fixed maturity securities primarily resulted from the Company’s conclusion that the credit risk relating to the holdings was high and thus the assets are likely other-than-temporarily impaired. The impairment charges relating to the equity securities are based on the duration of the unrealized loss and inability to predict the time to recover if the investment continued to be held. It is at least reasonably possible that future events may lead us to recognize potential future impairment losses related to our investment portfolio. It is also at least reasonably possible that unanticipated future events may lead us to dispose of certain investment holdings and recognize the effects of any market movements in our consolidated financial statements.

     In accordance with FAS 115-2 and 124-2 (incorporated in ASC Topic 320), the Company determined that a total of $1.3 million in other-than-temporary impairments had previously been recognized in relation to investments held at April 1, 2009, all of which were related to credit losses. Therefore, no cumulative effect adjustment was necessary upon implementation of FAS 115-2 and 124-2. All of the securities for which an other-than-temporary impairment had previously been recognized were sold during the three months ended June 30, 2009. As of June 30, 2009, there were no investments held by the Company for which an other-than-temporary impairment had been previously recognized.

     Investments in unconsolidated affiliates are recorded using the equity method of accounting and, as of June 30, 2009 and December 31, 2008, consist of (in thousands):

		Ownership				June 30, 2009				December 31, 2008
Ceridian			33	%		$	369,543			$	453,129
Sedgwick			32	%			116,403				115,646
Remy			47	%			58,311				61,786
Other		Various					25,458				13,978
Total						$	569,715			$	644,539

     In addition, the Company records its share of the other comprehensive income (loss) of unconsolidated affiliates. As of June 30, 2009, included within the statement of equity, the Company had recorded accumulated other comprehensive losses of $90.3 million, $18.1 million, and $3.5 million related to its investments in Ceridian, Remy, and Sedgwick.

     On June 5, 2008, the Company sold 20% of its 40% interest in Sedgwick for proceeds of $53.9 million, resulting in a pre-tax gain of $24.8 million. Subsequent to this sale, the Company owns 32% of Sedgwick.

     The Company accounts for its equity in Ceridian’s earnings on a three-month lag. Accordingly, FNF’s net earnings for the three-month and six-month periods ended June 30, 2009, include the Company’s equity in Ceridian’s earnings for the three-month and six-month periods ended March 31, 2009, and FNF’s net earnings for the three-month and six-month periods ended June 30, 2008, include the Company’s equity in Ceridian’s earnings for the three month period ended March 31, 2008 and the period from November 10, 2007 through March 31, 2008, respectively. Additionally, our investment in Ceridian at June 30, 2009, and December 31, 2008, reflects Ceridian’s statements of financial condition as of March 31, 2009, and September 30, 2008, respectively. Summarized financial information for Ceridian for the relevant dates and time periods included in the Company’s statements of financial condition and operations, is presented below.

		March 31, 2009				September 30, 2008
		(In millions)
Total current assets		$	999.1			$	1,300.0
Goodwill and other intangible assets, net			4,661.7				4,755.5
Other assets			4,282.9				3,397.9
Total assets		$	9,943.7			$	9,453.4
Current liabilities		$	702.4			$	986.3
Long-term obligations, less current portion			3,495.2				3,516.5
Other long-term liabilities			4,608.7				3,557.7
Total liabilities			8,806.3				8,060.5
Equity			1,137.4				1,392.9
Total liabilities and equity		$	9,943.7			$	9,453.4

Fidelity National Financial, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (continued)

														Period from
		Three Months Ended				Three Months Ended				Six Months Ended				November 10, 2007,
		March 31, 2009				March 31, 2008				March 31, 2009				through March 31, 2008
		(in millions)
Total revenues		$	362.2			$	406.5			$	746.8			$	643.5
Loss before income taxes			(53.8	)			(29.2	)			(100.1	)			(48.4	)
Net loss			(34.8	)			(22.1	)			(66.6	)			(34.5	)

     The Company recorded aggregate losses of Ceridian, Sedgwick, and Remy, of $(5.8) million and $(6.8) million in the three-month periods ended June 30, 2009 and 2008, respectively, and $(19.8) million and $(6.0) million in the six-month periods ended June 30, 2009 and 2008, respectively. Equity in earnings of other unconsolidated affiliates was $1.2 million and $0.5 million for the three-month periods ended June 30, 2009 and 2008, respectively, and $3.1 million and $1.3 million for the six-month periods ended June 30, 2009 and 2008, respectively.

Note F — Notes payable

     Notes payable consist of the following:

		June 30,				December 31,
		2009				2008
		(In thousands)
Unsecured notes net of discount, interest payable semi-annually at 5.25%, due March 2013		$	245,121			$	249,217
Unsecured notes, net of discount, interest payable semi-annually at 7.30%, due August 2011			173,384				241,081
Syndicated credit agreement, unsecured, interest accrued monthly at LIBOR plus 0.475%, unused portion of $700 million at June 30, 2009, due October 2011			400,000				585,000
Bank promissory notes, nonrecourse, secured, interest payable monthly at various fixed rates (3.55%-12.00% at June 30, 2009), various maturities			204,097				197,536
Subordinated note payable to LandAmerica Financial Group, Inc., interest payable annually at 2.36%, due December 2013			50,000				50,000
Other			15,513				28,015
Total		$	1,088,115			$	1,350,849