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FNF Reports Fourth Quarter 2020 Diluted EPS from Continuing Operations of $2.74 and Adjusted Diluted EPS from Continuing Operations of $2.01, Pre-Tax Title Margin of 29.4% and Adjusted Pre-Tax Title Margin of 22.7%
Jacksonville, Fla. - (February 24, 2021) - Fidelity National Financial, Inc. (NYSE:FNF), a leading provider of title insurance and transaction services to the real estate and mortgage industries, today reported operating results for the period ended December 31, 2020.

Total revenue of approximately $3.8 billion in the fourth quarter versus $2.4 billion in the fourth quarter of 2019
Fourth quarter net earnings from continuing operations of $803 million and adjusted net earnings from continuing operations of $588 million versus net earnings of $340 million and adjusted net earnings of $263 million for the fourth quarter of 2019
Fourth quarter diluted EPS from continuing operations of $2.74 and adjusted diluted EPS from continuing operations of $2.01 versus diluted EPS of $1.22 and adjusted diluted EPS of $0.95 in the fourth quarter of 2019
Recognized gains were $573 million in the fourth quarter versus recognized gains of $131 million in the fourth quarter of 2019 primarily due to mark to market accounting treatment of equity and preferred stock securities whether the securities were disposed of in the quarter or continue to be held in our investment portfolio

Title
Total revenue of approximately $3.0 billion versus approximately $2.3 billion in total revenue in the fourth quarter of 2019
Total revenue, excluding recognized gains and losses, of approximately $2.8 billion versus approximately $2.2 billion in the fourth quarter of 2019, an increase of 26.6%
Pre-tax earnings of $896 million and adjusted pre-tax earnings of $624 million versus pre-tax earnings of $468 million and adjusted pre-tax earnings of $355 million in the fourth quarter of 2019
Pre-tax title margin of 29.4% and adjusted pre-tax title margin of 22.7% versus pre-tax title margin of 20.3% and adjusted pre-tax title margin of 16.3% in the fourth quarter of 2019
Fourth quarter refinance orders opened increased 90% on a daily basis and refinance orders closed increased 86% on a daily basis versus the fourth quarter of 2019; purchase orders opened increased 14% on a daily basis and purchase orders closed increased 18% on a daily basis versus the fourth quarter of 2019
Total commercial revenue of $322 million, a 0.3% increase versus total commercial revenue in the fourth quarter of 2019, driven by a 1% increase in closed orders; fourth quarter total commercial orders opened increased 3% compared to the prior year
Overall fourth quarter average fee per file of $2,116, an 11% decrease versus the fourth quarter of 2019

Title Orders
Direct Orders Opened *Direct Orders Closed *
Month  / (% Purchase)  / (% Purchase)
October 2020  259,00040%  210,00039%
November 2020  227,00038%  190,00037%
December 2020  242,00035%  217,00038%
      
Fourth Quarter 2020  728,00038%  617,00038%

Direct Orders Opened *Direct Orders Closed *
Month  / (% Purchase)  / (% Purchase)
October 2019  195,00050%  153,00048%
November 2019  157,00049%  127,00049%
December 2019  140,00051%  137,00050%
      
Fourth Quarter 2019  492,00050%  417,00049%
* Includes an immaterial number of non-purchase and non-refinance orders
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F&G

F&G, a leading provider of annuities and life insurance, reported operating results for the fourth quarter of 2020. As a result of acquisition accounting (purchase accounting or PGAAP), financial results for periods after June 1, 2020 are generally not comparable to the results of prior periods. Certain metrics, such as sales and policyholder account values, are not affected by PGAAP and are comparable to prior period data.
Total Retail Annuity Sales of $1,309 million in the fourth quarter, an increase of 42 percent to the prior year, and an increase of 23 percent from the sequential quarter
Fixed Indexed Annuities (FIA) Sales of $947 million in the fourth quarter, an increase of 19 percent to the prior year, and an increase of 16 percent from the sequential quarter
Average Assets Under Management (AAUM) of $27.9 billion for the fourth quarter, up from $27.0 billion in the sequential period driven by net new business asset flows
Net Investment Spread: FIA spread for the fourth quarter of 302 basis points; Total Spread, including all product lines, for the fourth quarter of 255 basis points
Net Earnings Attributable to Common Shareholders of $137 million for the fourth quarter, including a $2 million loss from discontinued operations and $11 million net favorable mark-to-market and other items which are excluded from Adjusted Net Earnings
Adjusted Net Earnings From Continuing Operations Attributable to Common Shareholders of $128 million for the quarter, including $68 million of net favorable notable items

William P. Foley, II, Chairman, commented, “I am very proud of our team as they navigated a challenging environment and delivered record results for both the fourth quarter and full-year 2020 in our Title business. We generated adjusted pre-tax title earnings of $624 million and an adjusted pre-tax title margin of 22.7% as refinance and purchase orders opened remained strong through the fourth quarter of 2020. We continued to see a rebound in commercial real estate activity as total commercial orders opened increased 3% in the quarter as compared to the year ago fourth quarter.

We also made significant headway on our technology investments in our Title business having recently announced both the inHere Experience Platform and, subsequently, Close inHere. The inHere platform transforms the overall experience of buying, selling, and refinancing a home by helping to enhance the safety and simplicity needed to start, track, notarize, and close the transaction. While we continue to drive innovation in the Title industry, we believe our significant national footprint will prove to be a real plus as further adoption of our client facing and title automation technology expands our competitive advantage.

Turning to F&G, the Company continues to execute on its growth strategy and generated retail sales growth of over 40% in the fourth quarter. The credit rating upgrade that F&G has enjoyed as a result of the acquisition by FNF has opened additional large market opportunities. F&G is gaining momentum in the newly entered bank and broker dealer channel, generating $500 million of channel sales since their launch on July 1st. Expansion into institutional products, including the pension risk transfer market, will also be an area of strategic focus for F&G in 2021. We expect F&G's next phase of growth to benefit from leveraging FNF's expertise in capital allocation, value creation and strategic oversight."

Mr. Foley concluded, "Finally, we will remain focused on maintaining a balanced capital allocation strategy centered on returning capital to shareholders while investing in the business to drive growth. In the fourth quarter, our Board approved a 9.0% increase in our quarterly cash dividend to $0.36 per share and announced a plan targeting $500 million of share repurchases, based on market conditions over the course of the following twelve months. During the quarter we repurchased 3.8 million shares at an average purchase price of $36.77 per share."
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Conference Call
We will host a call with investors and analysts to discuss fourth quarter 2020 FNF results on Thursday, February25, 2021, beginning at 12:00 p.m. Eastern Time. A live webcast of the conference call will be available on the Events and Multimedia page of the FNF Investor Relations website at fnf.com. The conference call replay will be available via webcast through the FNF Investor Relations website at fnf.com. The telephone replay will be available from 3:00 p.m. Eastern Time on February 25, 2021, through March 4, 2021, by dialing 1-844-512-2921 (USA) or 1-412-317-6671 (International). The access code will be 13715589. An expanded quarterly financial supplement providing segment results is available on the FNF Investor Relations website.

About Fidelity National Financial, Inc.
Fidelity National Financial, Inc. (NYSE: FNF) is a leading provider of title insurance and transaction services to the real estate and mortgage industries. FNF is the nation’s largest title insurance company through its title insurance underwriters - Fidelity National Title, Chicago Title, Commonwealth Land Title, Alamo Title and National Title of New York - that collectively issue more title insurance policies than any other title company in the United States. More information about FNF can be found at fnf.com.

About F&G
F&G is part of the FNF family of companies. F&G is committed to helping Americans turn their aspirations into reality. F&G is a leading provider of annuity and life insurance products and is headquartered in Des Moines, Iowa. For more information, please visit www.fglife.bm.

Use of Non-GAAP Financial Information
Generally Accepted Accounting Principles (GAAP) is the term used to refer to the standard framework of guidelines for financial accounting. GAAP includes the standards, conventions, and rules accountants follow in recording and summarizing transactions and in the preparation of financial statements. In addition to reporting financial results in accordance with GAAP, FNF has provided non-GAAP financial measures, which it believes are useful to help investors better understand its financial performance, competitive position and prospects for the future. These non-GAAP measures include adjusted net earnings, adjusted earnings per share, adjusted pre-tax title earnings, adjusted pre-tax title earnings as a percentage of adjusted title revenue (adjusted pre-tax title margin), F&G adjusted earnings, F&G adjusted earnings attributable to common shareholders, F&G adjusted operating return on common shareholders’ equity excluding AOCI, F&G net investment spread, F&G average assets under management and F&G sales.

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. Further, FNF's non-GAAP measures may be calculated differently from similarly titled measures of other companies. Reconciliations of these non-GAAP measures to related GAAP measures are provided below.

Forward-Looking Statements and Risk Factors
This press release contains forward-looking statements that involve a number of risks and uncertainties. Statements that are not historical facts, including statements regarding our expectations, hopes, intentions or strategies regarding the future are forward-looking statements. Forward-looking statements are based on management's beliefs, as well as assumptions made by, and information currently available to, management. Because such statements are based on expectations as to future financial and operating results and are not statements of fact, actual results may differ materially from those projected. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. The risks and uncertainties which forward-looking statements are subject to include, but are not limited to: the ability of FNF to successfully integrate F&G's operations and employees; the potential impact of the announcement or consummation of the proposed F&G transaction on relationships, including with employees, suppliers, customers and competitors; changes in general economic, business, political and COVID-19 conditions, including changes in the financial markets; weakness or adverse changes in the level of real estate activity, which may be caused by, among other things, high or increasing interest rates, a limited supply of mortgage funding or a weak U. S. economy; our potential inability to find suitable acquisition candidates; our dependence on distributions from our title insurance underwriters as a main source of cash flow; significant competition that F&G and our operating subsidiaries face; compliance with extensive government regulation of our operating subsidiaries; and other risks detailed in the “Statement Regarding Forward-Looking Information,” “Risk Factors” and other sections of FNF's Form 10-K and other filings with the Securities and Exchange Commission ("SEC").
FNF-E
SOURCE: Fidelity National Financial, Inc.
CONTACT: Jamie Lillis, Managing Director, Solebury Trout, 203-428-3223, jlillis@soleburytrout.com
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FIDELITY NATIONAL FINANCIAL, INC.
FOURTH QUARTER SEGMENT INFORMATION
(In millions, except order information in thousands)
(Unaudited)
ConsolidatedTitleF&GCorporate and Other
Three Months Ended
December 31, 2020
Direct title premiums$845 $845 $— $— 
Agency title premiums1,102 1,102 — — 
Escrow, title related and other fees 891 775 58 58 
Total title and escrow2,838 2,722 58 58 
Interest and investment income359 31 327 
Recognized gains and losses, net573 290 282 
Total revenue3,770 3,043 667 60 
Personnel costs863 786 33 44 
Agent commissions842 842 — — 
Other operating expenses 453 396 30 27 
Benefits & other policy reserve changes460 — 460 — 
Depreciation and amortization107 36 64 
Claim loss expense87 87 — — 
Interest expense28 — 20 
Total expenses2,840 2,147 595 98 
Pre-tax earnings (loss) from continuing operations$930 $896 $72 $(38)
  Income tax expense (benefit)128 192 (67)
  Earnings (loss) from equity investments6 — — 
  Loss from discontinued operations, net of tax (2)— (2)— 
  Non-controlling interests5 — — 
Net earnings (loss) attributable to common shareholders$801 $705 $137 $(41)
EPS from continuing operations attributable to common shareholders - basic$2.75 
EPS from discontinued operations attributable to common shareholders - basic(0.01)
EPS attributable to common shareholders - basic$2.74 
EPS from continuing operations attributable to common shareholders - diluted$2.74 
EPS from discontinued operations attributable to common shareholders - diluted(0.01)
EPS attributable to common shareholders - diluted$2.73 
Weighted average shares - basic292 
Weighted average shares - diluted293 






4


FIDELITY NATIONAL FINANCIAL, INC.
FOURTH QUARTER SEGMENT INFORMATION
(In millions, except order information in thousands)
(Unaudited)
ConsolidatedTitleF&GCorporate and Other
Three Months Ended
December 31, 2020
Net earnings (loss) attributable to common shareholders$801 $705 $137 $(41)
  Loss from discontinued operations, net of tax(2)— (2)— 
Net earnings (loss) from continuing operations attributable to common shareholders$803 $705 $139 $(41)
Pre-tax earnings (loss) from continuing operations$930 $896 $72 $(38)
 Non-GAAP Adjustments
  Recognized (gains) and losses, net(367)(290)(76)(1)
  Indexed product related derivatives54 — 54 — 
  Purchase price amortization29 18 
  Transaction costs5 — 
Adjusted pre-tax earnings (loss)$651 $624 $61 $(34)
Total non-GAAP, pre-tax adjustments$(279)$(272)$(11)$
  Income taxes on non-GAAP adjustments64 65 — (1)
Total non-GAAP adjustments$(215)$(207)$(11)$3 
Adjusted net earnings (loss) from continuing operations attributable to common shareholders$588 $498 $128 $(38)
Adjusted EPS from continuing operations attributable to common shareholders - diluted$2.01 






















5


FIDELITY NATIONAL FINANCIAL, INC.
FOURTH QUARTER SEGMENT INFORMATION
(In millions, except order information in thousands)
(Unaudited)
ConsolidatedTitleCorporate and Other
Three Months Ended
December 31, 2019
Direct title premiums$656 $656 $— 
Agency title premiums828 828 — 
Escrow, title related and other fees 692 642 50 
Total title and escrow2,176 2,126 50 
Interest and investment income55 49 
Recognized gains and losses, net 131 135 (4)
Total revenue2,362 2,310 52 
Personnel costs717 681 36 
Agent commissions628 628 — 
Other operating expenses455 428 27 
Depreciation and amortization46 39 
Claim loss expense66 66 — 
Interest expense11 — 11 
Total expenses1,923 1,842 81 
Pre-tax earnings (loss) $439 $468 $(29)
  Income tax expense (benefit)98 103 (5)
  Earnings from equity investments3 
  Non-controlling interests4 (1)
Net earnings (loss) attributable to common shareholders$340 $362 $(22)
EPS attributable to common shareholders - basic$1.24 
EPS attributable to common shareholders - diluted$1.22 
Weighted average shares - basic274 
Weighted average shares - diluted278 

6


FIDELITY NATIONAL FINANCIAL, INC.
FOURTH QUARTER SEGMENT INFORMATION
(In millions, except order information in thousands)
(Unaudited)
ConsolidatedTitleCorporate and Other
Three Months Ended
December 31, 2019
Net earnings (loss) attributable to common shareholders$340 $362 $(22)
Pre-tax earnings (loss)$439 $468 $(29)
Non-GAAP Adjustments
  Recognized (gains) and losses, net(131)(135)
  Purchase price amortization27 22 
  Transaction costs — — 
  Severance costs606
Adjusted pre-tax earnings (loss)$341 $355 $(14)
Total non-GAAP, pre-tax adjustments$(104)$(113)$
  Income taxes on non-GAAP adjustments24 28 (4)
  Non-controlling interest on non-GAAP adjustments(3)(3)— 
Total non-GAAP adjustments$(83)$(88)$5 
Adjusted net earnings attributable to common shareholders$263 $274 $(11)
Adjusted EPS attributable to common shareholders - diluted$0.95 

7


FIDELITY NATIONAL FINANCIAL, INC.
YTD SEGMENT INFORMATION
(In millions, except order information in thousands)
(Unaudited)
ConsolidatedTitleF&GCorporate and Other
Twelve Months Ended
December 31, 2020
Direct title premiums$2,699 $2,699 $— $— 
Agency title premiums3,599 3,599 — — 
Escrow, title related and other fees 3,092 2,782 138 172 
Total title and escrow9,390 9,080 138 172 
Interest and investment income 900 151 743 
Recognized gains and losses, net488 143 352 (7)
Total revenue10,778 9,374 1,233 171 
Personnel costs2,951 2,778 65 108 
Agent commissions2,749 2,749 — — 
Other operating expenses1,759 1,536 75 148 
Benefits & other policy reserve changes866 — 866 — 
Depreciation and amortization296 149 123 24 
Claim loss expense283 283 — — 
Interest expense90 18 71 
Total expenses8,994 7,496 1,147 351 
Pre-tax earnings (loss) from continuing operations$1,784 $1,878 $86 $(180)
  Income tax expense (benefit)322 432 (75)(35)
  Earnings (loss) from equity investments15 14 — 
  Loss from discontinued operations, net of tax(25)— (25)— 
  Non-controlling interests25 25 — — 
Net earnings (loss) attributable to common shareholders$1,427 $1,435 $136 $(144)
EPS from continuing operations attributable to common shareholders - basic$5.11 
EPS from discontinued operations attributable to common shareholders - basic(0.09)
EPS attributable to common shareholders - basic$5.02 
EPS from continuing operations attributable to common shareholders - diluted$5.08 
EPS from discontinued operations attributable to common shareholders - diluted(0.09)
EPS attributable to common shareholders - diluted$4.99 
Weighted average shares - basic284 
Weighted average shares - diluted286 

8


FIDELITY NATIONAL FINANCIAL, INC.
YTD SEGMENT INFORMATION
(In millions, except order information in thousands)
(Unaudited)
ConsolidatedTitleF&GCorporate and Other
Twelve Months Ended
December 31, 2020
Net earnings (loss) attributable to common shareholders$1,427 $1,435 $136 $(144)
Loss from discontinued operations, net of tax(25)— (25)— 
Net earnings (loss) from continuing operations attributable to common shareholders$1,452 $1,435 $161 $(144)
Pre-tax earnings (loss) from continuing operations$1,784 $1,878 $86 $(180)
Non-GAAP Adjustments
  Recognized (gains) and losses, net(181)(143)(45)
  Indexed product related derivatives111 — 111 — 
  Debt issuance costs5 — — 
  Purchase price amortization106 73 16 17 
  Transaction costs68 — 21 47 
  Other adjustments1 — — 
Adjusted pre-tax earnings (loss)$1,894 $1,809 $189 $(104)
Total non-GAAP, pre-tax adjustments$110 $(69)$103 $76 
  Income taxes on non-GAAP adjustments(29)18 (29)(18)
  Non-controlling interest on non-GAAP adjustments(7)(6)— (1)
Total non-GAAP adjustments$74 $(57)$74 $57 
Adjusted net earnings (loss) from continuing operations attributable to common shareholders$1,526 $1,378 $235 $(87)
Adjusted EPS from continuing operations attributable to common shareholders - diluted$5.34 

9


FIDELITY NATIONAL FINANCIAL, INC.
YTD SEGMENT INFORMATION
(In millions, except order information in thousands)
(Unaudited)
Twelve Months EndedConsolidatedTitleCorporate and Other
December 31, 2019
Direct title premiums$2,381 $2,381 $— 
Agency title premiums2,961 2,961 — 
Escrow, title related and other fees 2,584 2,389 195 
Total title and escrow7,926 7,731 195 
Interest and investment income225 202 23 
Recognized gains and losses, net 318 326 (8)
Total revenue8,469 8,259 210 
Personnel costs2,696 2,562 134 
Agent commissions2,258 2,258 — 
Other operating expenses1,681 1,509 172 
Depreciation and amortization178 154 24 
Claim loss expense240 240 — 
Interest expense47 — 47 
Total expenses7,100 6,723 377 
Pre-tax earnings (loss) $1,369 $1,536 $(167)
  Income tax expense (benefit)308 363 (55)
  Earnings from equity investments15 13 
  Non-controlling interests14 15 (1)
Net earnings (loss) attributable to common shareholders$1,062 $1,171 $(109)
EPS attributable to common shareholders - basic$3.89 
EPS attributable to common shareholders - diluted$3.83 
Weighted average shares - basic273 
Weighted average shares - diluted277 

10


FIDELITY NATIONAL FINANCIAL, INC.
YTD SEGMENT INFORMATION
(In millions, except order information in thousands)
(Unaudited)

ConsolidatedTitleCorporate and Other
Twelve Months Ended
December 31, 2019
Net earnings (loss) attributable to common shareholders$1,062 $1,171 $(109)
Pre-tax earnings (loss)$1,369 $1,536 $(167)
Non-GAAP Adjustments
  Recognized (gains) and losses, net(318)(326)
  FIA related derivative
  Reinsurance related derivative
  Purchase price amortization105 86 19 
  Transaction costs58 — 58 
  Severance costs$$— $
  Other adjustments1 — 
Adjusted pre-tax earnings (loss)$1,221 $1,297 $(76)
Total non-GAAP, pre-tax adjustments$(148)$(239)$91 
  Income taxes on non-GAAP adjustments38 60 (22)
  Non-controlling interest on non-GAAP adjustments(12)(11)(1)
Total non-GAAP adjustments$(122)$(190)$68 
Adjusted net earnings (loss) attributable to common shareholders$940 $981 $(41)
Adjusted EPS attributable to common shareholders - diluted$3.39 


FIDELITY NATIONAL FINANCIAL, INC.
SUMMARY BALANCE SHEET INFORMATION
(In millions)
  December 31,
2020
December 31,
2019
  (Unaudited)(Unaudited)
Cash and investment portfolio $37,766 $5,760 
Goodwill  4,495  2,727 
Title plant  404  404 
Total assets  50,455  10,677 
Notes payable  2,662  838 
Reserve for title claim losses  1,623  1,509 
Secured trust deposits  711  791 
Redeemable non-controlling interests 344 
Non-redeemable non-controlling interests41 (17)
Total equity and non-controlling interests  8,392  5,709 
Total equity attributable to common shareholders8,351 5,382 

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Non-GAAP Measures and Other Information

Title

The table below reconciles pre-tax title earnings to adjusted pre-tax title earnings.


Three Months Ended
Year Ended
(Dollars in millions)
December 31, 2020
December 31, 2019
December 31, 2020
December 31, 2019
Pre-tax earnings
$896 $468 $1,878 $1,536 
Non-GAAP adjustments before taxes
  Recognized (gains) and losses, net
(290)(135)(143)(326)
  Purchase price amortization
18 22 73 86 
  Other adjustments
— — 
Total non-GAAP adjustments
(272)(113)(69)(239)
Adjusted pre-tax earnings
$624 $355 $1,809 $1,297 
Adjusted pre-tax margin
22.7 %16.3 %19.6 %16.3 %



FIDELITY NATIONAL FINANCIAL, INC.
QUARTERLY OPERATING STATISTICS
(Unaudited)
Q4 2020Q3 2020Q2 2020Q1 2020Q4 2019Q3 2019Q2 2019Q1 2019
Quarterly Opened Orders ('000's except % data)
Total opened orders*728 847 693 682 492 592 544 438 
Total opened orders per day*11.6 13.2 10.8 11.0 7.8 9.3 8.5 7.2 
Purchase % of opened orders38 %40 %37 %41 %50 %52 %61 %65 %
Refinance % of opened orders62 %60 %63 %59 %50 %48 %39 %35 %
Total closed orders*617 571 487 377 417 409 359 263 
Total closed orders per day*9.8 8.9 7.6 6.1 6.6 6.4 5.6 4.3 
Purchase % of closed orders38 %42 %35 %46 %49 %55 %65 %66 %
Refinance % of closed orders62 %58 %65 %54 %51 %45 %35 %34 %
Commercial (millions, except orders in '000's)
Total commercial revenue$322 $216 $184 $245 $321 $301 $286 $231 
Total commercial opened orders57.0 58.1 43.9 56.3 55.1 56.0 58.6 49.8 
Total commercial closed orders39.5 30.6 25.7 31.0 39.1 36.4 34.0 30.0 
National commercial revenue$177 $113 $96 $132 $186 $172 $163 $122 
National commercial opened orders21.4 21.7 15.2 21.5 22.6 23.8 25.3 20.6 
National commercial closed orders13.4 9.8 8.8 10.7 16.2 14.1 12.7 10.5 
Total Fee Per File
Fee per file$2,116 $2,063 $1,889 $2,224 $2,384 $2,459 $2,677 $2,567 
Residential fee per file$1,661 $1,803 $1,614 $1,744 $1,792 $1,928 $2,075 $1,964 
Total commercial fee per file$8,200 $7,100 $7,200 $7,900 $8,200 $8,300 $8,400 $7,700 
National commercial fee per file$13,200 $11,500 $10,900 $12,300 $11,500 $12,200 $12,900 $11,600 
Total Staffing
Total field operations employees12,800 12,300 10,900 12,500 12,300 12,200 12,000 11,700 
Actual title claims paid ($ millions)$54 $50 $51 $48 $53 $52 $66 $49 
* Includes an immaterial number of non-purchase and non-refinance orders


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F&G

The table below reconciles the reported after-tax net loss from continuing operations to adjusted earnings from continuing operations attributable to common shareholders.

Three months endedSeven months ended
December 31, 2020December 31, 2020
(Dollars in millions)
Net earnings (loss) attributable to common shareholders $137 $136 
Less: Earnings (loss) from discontinued operations, net of tax(2)(25)
Net earnings (loss) from continuing operations attributable to common shareholders$139 $161 
Non-GAAP adjustments (1,2):
Recognized (gains) and losses, net (76)(45)
Indexed product related derivatives 54 111
Purchase price amortization16 
Transaction costs21 
Income taxes on non-GAAP adjustments — (29)
     Adjusted earnings (loss) from continuing operations attributable to common shareholders$128 $235 

Adjusted earnings from continuing operations include $68 million of favorable items in the current quarter and $86 million in the year-to-date period.

The table below provides summary financial highlights.

Three Months EndedSeven months ended
(Dollars in millions)December 31, 2020December 31, 2020
Average assets under management (AAUM)(1)
$27,864 $27,322 
Net investment spread - FIA(1)
3.02 %3.21 %
Net investment spread - All products(1)
2.55 %2.74 %
Net earnings (loss) from continuing operations attributable to common shareholders$139 $161 
Adjusted earnings from continuing operations attributable to common shareholders(1)
$128 $235 


The table below provides a summary of sales, which are not affected by PGAAP and are comparable to prior period data.

Three Months EndedTwelve Months Ended
(In millions)December 31, 2020December 31, 2019December 31, 2020December 31, 2019
Fixed indexed annuity (FIA) sales(1)
$947 $795 $3,459 $2,820 
Total retail annuity sales(1)
$1,309 $921 $4,235 $3,596 


Footnotes:
1.Non-GAAP financial measure. See the Non-GAAP Measures section below for additional information.
2.Amounts are net of offsets related to value of business acquired (VOBA), deferred acquisition cost (DAC), deferred sale inducement (DSI) amortization, and unearned revenue (UREV) amortization, as applicable.








13



DEFINITIONS
The following represents the definitions of non-GAAP measures used by F&G.

Adjusted Earnings

Adjusted Earnings is a non-GAAP economic measure we use to evaluate financial performance each period. Adjusted earnings is calculated by adjusting net earnings (loss) from continuing operations 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; 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, and the fair value accounting impact of assumed reinsurance,

(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, and

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

Adjustments to Adjusted 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 Earnings Attributable to Common Shareholders

Adjusted Earnings attributable to common shareholders is a non-GAAP economic measure we use to evaluate financial performance attributable to our common shareholders each period. Adjusted Earnings attributable to common shareholders is calculated by adjusting net earnings (loss) available to common shareholders to eliminate the same items as described in the Adjusted Earnings paragraph above. While these adjustments are an integral part of the overall performance of the Company, 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.

Net Investment Spread

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.

Average Assets Under Management (AAUM)

AAUM 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) funds withheld at fair value;

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

(iv) 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.



14



Sales (FIA Sales and Total Retail Annuity Sales)

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. Annuity and IUL sales are recorded as deposit liabilities (i.e. contractholder funds) within the Company's unaudited condensed consolidated financial statements in accordance with GAAP. 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.


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15

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