Full Description

Fidelity National Financial, Inc. (FNF) is a holding company that is a provider, through its subsidiaries, of title insurance, specialty insurance and claims management services. The Company also provides flood insurance, personal lines insurance and home warranty insurance through its specialty insurance subsidiaries. In addition, FNF is a provider of outsourced claims management services to corporate and public sector entities through its minority-owned subsidiary, Sedgwick CMS Holdings, Inc. (Sedgwick), and a provider of information services in the human resources, retail, and transportation markets through another minority-owned affiliate, Ceridian Corporation (Ceridian). FNF’s operating business segments include Fidelity National Title Group, which provides core title insurance and escrow and other title related services, including collection and trust activities, trustee’s sales guarantees, recordings and reconveyances, and Specialty Insurance, which consists of certain subsidiaries that issue flood, home warranty, homeowners, automobile and other personal lines insurance policies. In December 2008, FNF announced the closing of the acquisition of LandAmerica Financial Group, Inc.’s two principal title insurance underwriters, Commonwealth Land Title Insurance Company and Lawyers Title Insurance Corporation, as well as United Capital Title Insurance Company. In September 2009, the Company announced the sale of Fidelity National Capital, Inc. (FN Capital) to Winthrop Resources Corporation (WRC), a subsidiary of TCF Financial Corporation.

Fidelity National Title Group

FNF provides title insurance services through its direct operations and through independent title insurance agents who issue title policies on behalf of its title insurance companies. The Company’s title insurance companies determine the terms and conditions, upon which they will insure title to the real property according to their underwriting standards, policies and procedures. In FNF’s direct operations, the title insurer issues the title insurance policy and retains the entire premium paid in connection with the transaction. The Company has over 1,000 offices throughout the United States primarily providing residential real estate title insurance. During the year ended December 31, 2008, as title insurance activity has decreased, the Company has closed and consolidated a number of its offices. Its commercial real estate title insurance business is operated through its direct operations. FNF maintains direct operations for its commercial title insurance business in all the real estate markets, including New York, Los Angeles, Chicago, Atlanta, Dallas, Philadelphia, Phoenix, Seattle and Houston.

In the Company’s agency operations, the search and examination function is performed by an independent agent or the agent may purchase the search and examination from FNF. In either case, the agent is responsible to ensure that the search and examination is completed. The agent thus retains the majority of the title premium collected, with the balance remitted to the title underwriter for bearing the risk of loss in the event that a claim is made under the title insurance policy. FNF recognizes title insurance premium revenues from direct operations upon the closing of the transaction, whereas premium revenues from agency operations include an accrual based on estimates of the volume of transactions that have closed in a particular period, for which premiums have not yet been reported to the Company. Its direct operations are divided into approximately 170 profit centers. FNF also transacts title insurance business through a network of approximately 9,000 agents, primarily in those areas, in which agents are the prevalent title insurance provider.

FNF derives its revenues from escrow and other title-related services, including closing services. The escrow and other services provided by the Company include all of those required in connection with residential and commercial real estate purchase and refinance activities. Escrow and other title-related fees represented approximately 26.5% of its revenues during 2008. Escrow and other title-related fees are primarily generated by its direct title operations. In a limited number of situations, FNF limits its maximum loss exposure by reinsuring certain risks with other title insurers under agent fidelity, excess of loss and case-by-case reinsurance agreements. The Company also earns a small amount of additional income, which is reflected in its direct premiums, by assuming reinsurance for certain risks of other title insurers. It also uses coinsurance in its commercial title business. In coinsurance transactions, each individual underwriting company issues a separate policy and assumes a portion of the overall total risk.

In the Fidelity National Title Group segment, the Company competes with The First American Corporation, LandAmerica Financial Group, Inc., Old Republic International Corporation and Stewart Information Services Corporation.

Specialty Insurance

The Company issues various insurance policies and contracts, which include flood insurance, home warranty and personal lines insurance. FNF issues new and renewal flood insurance policies in conjunction with the United States National Flood Insurance Program (NFIP). The NFIP bears all insurance risk related to these policies. The Company issues one-year, renewable contracts that protect homeowners against defects in household systems and appliances. FNF offers and underwrites homeowners insurance in 49 states. In addition, the Company underwrites personal umbrella, inland marine (boat and recreational watercraft) and other personal lines niche products in selected markets.

In the Specialty Insurance segment, the Company competes with State Farm, Allstate, Farmers, Travelers, Hartford and Nationwide.