Fidelity National Financial, Inc. and its subsidiaries (FNF) operate as a title insurance company.
The company is a provider of title insurance, escrow and other title-related services, including trust activities, trustee sales guarantees, recordings and reconveyances and home warranty products; and transaction services to the real estate and mortgage industries.
FNF operates through its title insurance underwriters - Fidelity National Title Insurance Company (‘FNTIC’), Chicago Title Insurance...
Fidelity National Financial, Inc. and its subsidiaries (FNF) operate as a title insurance company.
The company is a provider of title insurance, escrow and other title-related services, including trust activities, trustee sales guarantees, recordings and reconveyances and home warranty products; and transaction services to the real estate and mortgage industries.
FNF operates through its title insurance underwriters - Fidelity National Title Insurance Company (‘FNTIC’), Chicago Title Insurance Company (‘Chicago Title’), Commonwealth Land Title Insurance Company (‘Commonwealth Land Title’), Alamo Title Insurance (Alamo Title) and National Title Insurance of New York Inc (National Title of New York). - which collectively issue more title insurance policies than any other title company in the United States. Through the company’s subsidiary ServiceLink Holdings, LLC (‘ServiceLink’), the company provides mortgage transaction services including title-related services and facilitation of production and management of mortgage loans. The company is also a leading provider of insurance solutions serving retail annuity and life customers and institutional clients through the company’s majority-owned subsidiary, F&G Annuities & Life, Inc. (‘F&G’).
F&G is a separate, publicly traded company and its businesses, assets and liabilities consist of those related to F&G’s business as a provider of insurance solutions serving retail annuity and life customers and institutional clients. Through F&G’s insurance subsidiaries, including Fidelity & Guaranty Life Insurance Company (‘FGL Insurance’) and Fidelity & Guaranty Life Insurance Company of New York (‘FGL NY Insurance’), F&G markets a broad portfolio of deferred annuities, including fixed indexed annuities (FIA), registered index-linked annuities (RILA), (together referred to as indexed annuities) and fixed rate annuities including multi-year guarantee annuities (MYGAs), immediate annuities, indexed universal life insurance (IUL), funding agreements (through funding agreement-backed notes issuances (FABNs) and the Federal Home Loan Bank of Atlanta ("FHLB")) and pension risk transfer solutions (PRTs). All of FNF’s core title insurance, real estate, technology and mortgage related businesses, assets and liabilities that are not held by F&G remain with FNF.
As of December 31, 2024, the company had the following reporting segments:
Title. This segment consists of the operations of the company’s title insurance underwriters and related businesses, which provide title insurance and escrow and other title-related services including trust activities, trustee sales guarantees, and home warranty products. This segment also includes the company’s transaction services business, which includes other title-related services used in the production and management of mortgage loans, including mortgage loans that experience default.
F&G. This segment primarily consists of operations of the company’s annuities and life insurance related businesses. This segment issues a broad portfolio of annuity and life insurance products, including deferred annuities (fixed indexed and fixed rate annuities), immediate annuities, and indexed universal life (‘IUL’) insurance, through its retail distribution channels. This segment also provides funding agreements and pension risk transfer (‘PRT’) solutions through its institutional channels.
Corporate and Other. This segment consists of the operations of the parent holding company, the company’s real estate technology subsidiaries, other smaller, non-title businesses and certain unallocated corporate overhead expenses and eliminations of revenues and expenses between it and the company’s Title segment.
Strategies
Title
The company’s strategy in the Title segment is to maximize operating profits by increasing the company’s market share and managing operating expenses throughout the real estate business cycle. The company’s strategies are to continue to operate multiple title brands independently; consistently deliver superior customer service; manage the company’s operations successfully through business cycles; continue to improve the company’s products and technology; maintain values supporting the company’s strategy; and effectively manage costs based on economic factors.
F&G
Through a diversified growth strategy, the company’s F&G segment seeks to deliver consistent and increasing earnings driven by asset growth. The company’s strategies include targeting large and growing markets; superior ecosystem; consistent track record of success; and driving margin expansion and improved returns.
Acquisitions, Dispositions, Minority Owned Operating Subsidiaries and Financings
Acquisitions have been an important part of the company’s growth strategy and dispositions have been an important aspect of the company’s strategy of returning value to shareholders. On an ongoing basis, with assistance from the company’s advisors, the company actively evaluates possible transactions, such as acquisitions and dispositions of business units and operating assets and business combination transactions.
Technology and Research and Development
As a national provider of real estate transaction products and services, the company participates in an industry that is subject to significant regulatory requirements, frequent new product and service introductions, and evolving industry standards. In connection with the company’s Title segment service offerings, the company is continuing to deploy new information system technologies to the company’s direct and agency operations. The company continues to improve the process of ordering title and escrow services and improve the delivery of the company’s products to its customers. In order to meet new regulatory requirements, the company also continues to expand its data collection and reporting abilities.
Title Insurance
Market for Title Insurance: The company’s Title segment revenue is closely related to the level of real estate activity that includes sales, mortgage financing and mortgage refinancing.
Title Insurance Policies. The products and services the company offers have a positive social impact on families and communities overall. For many families, their home is the single largest investment that they will make in their lifetimes. Generally, real estate buyers and mortgage lenders purchase title insurance to insure good and marketable title to real estate and priority of lien. An owner’s title insurance policy, like those the company issues in connection with the closing of a real estate transaction, is the best way for property owners to protect themselves from losing their property due to unforeseen or unexpected title claims.
Direct and Agency Operations. The company provides title insurance services through its direct operations and independent title insurance agents who issue title policies on behalf of the company’s 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 the company’s underwriting standards, policies and procedures.
Direct Operations. The company’s direct operations include both the operations of the company’s underwriters and those of affiliated agencies. In the company’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 approximately 1,300 offices throughout the U.S. primarily providing title insurance. The company continuously monitors the number of direct offices to ensure that it remains in line with the company’s strategy and the current economic environment. The company’s commercial real estate title insurance business is operated primarily through the company’s direct operations. The company maintains direct operations for its commercial title insurance business in all the major real estate markets, including Atlanta, Boston, Chicago, Dallas, Houston, Los Angeles, New York, Philadelphia, Phoenix, Seattle and Washington D.C.
Agency Operations. In the company’s agency operations, the search and examination function is performed by an independent agent or the agent may purchase the search product from the company. The company’s relationship with each agent is governed by an agency agreement defining how the agent issues a title insurance policy on the company’s behalf. The agency agreement also sets forth the agent’s liability to the company for policy losses attributable to the agent’s errors. The company also conducts periodic audits of its agents and strategically manage the number of agents with which the company transacts business in an effort to reduce future expenses and manage risks. As of December 31, 2024, the company transacted business with approximately 5,100 agents.
Escrow, Title-Related and Other Fees. In addition to fees for underwriting title insurance policies, the company derives a significant amount of its revenues from escrow and other title-related services, including closing and trust activities, trustee sales guarantees, recordings and reconveyances, and home warranty products. The escrow and other services provided by the company include all of those typically required in connection with residential and commercial real estate purchases and refinance activities.
Sales and Marketing. The company markets and distributes its title and escrow products and services to customers in the residential and commercial market sectors of the real estate industry through customer solicitation by sales personnel. Although in many instances the individual homeowner is the beneficiary of a title insurance policy, the company does not focus its marketing efforts on the homeowner. The company actively encourages its sales personnel to develop new business relationships with persons in the real estate community, such as real estate sales agents and brokers, financial institutions, independent escrow companies and title agents, real estate developers, mortgage brokers and attorneys who order title insurance policies for their clients. While the company’s smaller, local clients remain important, large customers, such as national residential mortgage lenders, real estate investment trusts and developers are an important part of the company’s business.
Claims. An important part of the company’s business is responsible claims management. The company employs a large staff of attorneys in its claims department to handle title and escrow claims. The company’s claims processing centers are located in Omaha, Nebraska and Jacksonville, Florida.
Reinsurance and Coinsurance. Within the company’s Title segment, the company limits its maximum loss exposure by reinsuring risks with other insurers under excess of loss and case-by-case (‘facultative’) reinsurance agreements.
In addition to reinsurance, the company carries errors and omissions insurance and fidelity bond coverage, each of which can provide protection to the company in the event of certain types of losses that can occur in the company’s businesses.
The company's policy is to be selective in choosing its reinsurers, seeking only those companies that it considers to be financially stable and adequately capitalized. In an effort to minimize exposure to the insolvency of a reinsurer, the company periodically reviews the financial condition of its reinsurers.
The company also uses coinsurance in its commercial title business to provide coverage in amounts greater than the company would be willing or able to provide individually. In coinsurance transactions, each individual underwriting company issues a separate policy and assumes a portion of the overall total risk. As a coinsurer the company is only liable for the portion of the risk the company assumes.
The company also earns a small amount of additional income, which is reflected in the company’s direct premiums, by assuming reinsurance for certain risks of other title insurers.
Competition. In the company’s principal markets, competitors include other major title underwriters such as First American Financial Corporation, Old Republic International Corporation, Stewart Information Services Corporation, Westcor Land Title Insurance Company, Title Resources Guaranty Company, and WFG National Title Insurance Company.
Regulation. The company’s insurance subsidiaries, including title insurers, underwritten title companies and insurance agencies, are subject to extensive regulation under applicable state laws. In addition to state-level regulation, the company’s title insurance and certain other real estate businesses are subject to regulation by federal agencies, including the Consumer Financial Protection Bureau (‘CFPB’). The CFPB was established under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (‘Dodd-Frank’), which also included regulation over financial services and other lending related businesses. The CFPB has broad authority to regulate, among other areas, the mortgage and real estate markets in matters pertaining to consumers. This authority includes the enforcement of the Truth-in-Lending Act and the Real Estate Settlement Procedures Act formerly placed with the Department of Housing and Urban Development.
The National Association of Insurance Commissioners (‘NAIC’) has adopted an instruction requiring an annual certification of reserve adequacy by a qualified actuary. Because all of the states in which the company’s title insurers are domiciled require adherence to NAIC filing procedures, each such insurer, unless it qualifies for an exemption, must file an actuarial opinion with respect to the adequacy of its reserves.
F&G
Through F&G, and its wholly-owned insurance subsidiaries, the company markets a broad portfolio of annuities, including fixed indexed annuities (FIAs), registered index-linked annuities (RILAs), which are together referred to as indexed annuities, multi-year guarantee annuities (MYGAs), as well as pension risk transfer (PRT) solutions, indexed universal life (IUL) insurance, and institutional funding agreements.
F&G has helped middle-income Americans prepare for retirement and for their loved ones' financial security. The company partners with leading IMOs and their agents to serve the needs of the middle-income market and develop competitive products to align with their evolving needs. During 2020, F&G entered the bank and broker-dealer distribution channels to connect with even more customers. As of December 31, 2024, F&G has approximately 731,000 policyholders who count on the safety and protection features its fixed annuity and life insurance products provide.
Through the efforts of F&G's approximately 1,300 employees, most of whom are located in Des Moines, Iowa, and through a network of approximately 300 IMOs and banks and independent broker dealers, representing approximately 138,000 independent agents and advisers, the company offers various types of fixed annuities and life insurance products. The company’s fixed annuities serve as a retirement and savings tool for which the company’s customers rely on principal protection and predictable income streams. In addition, the company’s IUL insurance products provide its customers with a complementary product that allows them to build on their savings and provide a payment to their designated beneficiaries upon the policyholder’s death. The company’s most popular products are FIAs that tie contractual returns to specific market indices, such as the S&P 500 Index. The company’s customers value its FIAs, which provide a portion of the gains of an underlying market index, while also providing principal protection.
The company invests the proceeds primarily in fixed income securities. The company also uses options and futures that hedge the index credit of its FIA and IUL liabilities by replicating the market index returns to the company’s policyholders. The company invests predominantly in options on the S&P 500 Index. The majority of the company’s products allow for active management to achieve targeted lifetime returns. In addition, the company’s annuity contracts generally either cannot be surrendered or include surrender charges that discourage early redemptions.
Annuities. Through F&G’s insurance subsidiaries, the company issues a broad portfolio of deferred annuities (indexed annuities and fixed rate annuities), immediate annuities, and PRT solutions. A deferred annuity is a type of contract that accumulates value on a tax deferred basis and typically begins making specified periodic or lump sum payments a certain number of years after the contract has been issued. An immediate annuity is a type of contract that begins making specified payments within one annuity period (e.g., one month or one year) and typically pays principal and earnings in equal payments over some period of time.
Deferred Annuities – FIAs. The company’s FIAs allow contract owners the possibility of earning returns linked to the performance of a specified market index, such as the S&P 500 Index, while providing principal protection. The contract owners typically make a single deposit into its deferred annuities. The contracts include a provision for a minimum guaranteed surrender value calculated in accordance with applicable law.
The company purchases derivatives predominantly consisting of over-the-counter options and, to a lesser degree, futures contracts (specifically for FIA contracts) on the equity indices underlying the applicable policy, such as the S&P 500. These derivatives are used to fund the index credits due to policyholders under the FIA and IUL contracts based upon policyholders’ contract elections.
Approximately 48% of the company’s FIA contracts were issued with a guaranteed minimum withdrawal benefit (‘GMWB’) rider for the year ended December 31, 2023. With this rider, a contract owner can elect to receive guaranteed payments for life from the FIA contract without requiring the owner to annuitize the FIA contract value. Some of the FIA contract riders that the company offers include an additional death benefit or an increase in benefit amounts under chronic health conditions.
Deferred Annuities – Fixed Rate Annuities. Fixed rate annuities are typically single deposit contracts and include annual reset and multi-year rate guaranteed policies. Fixed rate annual reset annuities issued by the company has an annual interest rate (the ‘crediting rate’) that is guaranteed for the first policy year. After the first policy year, the company has the discretionary ability to change the crediting rate once annually to any rate at or above a guaranteed minimum rate. MYGAs are similar to fixed rate annual reset annuities except that the initial crediting rate is guaranteed for a specified number of years before it may be changed at the company’s discretion.
Deferred Annuities - Registered Index-Linked Annuities (‘RILA’). – In early 2024, the company entered into the RILA markets. RILAs are similar to FIAs in offering the policyholder the opportunity for tax-deferred growth based in part on the performance of a market index.
Withdrawal Options for Deferred Annuities. After the first year following the issuance of a deferred annuity policy, holders of deferred annuities are typically permitted penalty-free withdrawals up to a contractually specified amount.
Single Premium Immediate Annuities. The company has previously sold single premium immediate annuities (‘SPIAs’), which provide a series of periodic payments for a fixed period of time or for the life of the contract, according to the policyholder’s choice at the time of issue. The amounts, frequency and length of time of the payments are fixed at the outset of the annuity contract. SPIAs are often purchased by persons at or near retirement age who desire a steady stream of payments over a future period of years. Existing policyholders may elect to surrender their contract and use the proceeds to purchase a supplementary contract, which functions as a SPIA.
Life Insurance. The company offers IUL insurance policies and have previously sold universal life, term and whole life insurance products. Holders of universal life insurance policies may make periodic payments over the life of the contract and earn returns on their policies, which are credited to the policyholder’s cash value account. The insurer periodically deducts its expenses and the cost of life insurance protection from the cash value account. The balance of the cash value account is credited interest at a fixed rate or returns based on the performance of a market index, or both, at the option of the policyholder, using a method similar to that described above for indexed annuities.
Funding Agreements. As defined by the Iowa Insurance Division (the ‘IID’), a funding agreement is an agreement for an insurer to accept and accumulate funds and to make one or more payments at future dates in amounts that are not based on mortality or morbidity contingencies of the person to whom the funding agreement is issued. In essence, funding agreement providers are agreeing to a defined stream of future payments in exchange for a single upfront premium. This type of business is sometimes referred to as spread lending, as funding agreement providers invest upfront premiums with the intent to earn an investment spread on the funds prior to making agreed upon maturity and interest payments. The structure of the payments can take several forms, but are commonly a fixed or variable interest payment with a single maturity principal re-payment.
F&G currently utilizes two forms of funding agreement offerings. The first is through the issuance of collateralized funding agreements with the FHLB. This enables spread-based income without longevity or mortality exposure given the certainty in liability profile. Funding agreements through the FHLB are flexible in their format and the ability to issue during broad windows, as long as sufficient eligible collateral has been deposited with the bank.
In June 2021, the company established a funding agreement backed note (‘FABN’) program, which is a medium term note program under which funding agreements are issued to a special-purpose trust that issues marketable notes. The notes are underwritten and marketed by major investment banks’ broker-dealer operations and are sold to institutional investors. These FABN offerings are more limited regarding timing of issuance, but do not require collateralization as with the FHLB.
Pension Risk Transfer. In July 2021, the company entered the pension risk transfer (‘PRT’) market. A PRT occurs when a defined-benefit pension provider seeks to remove some or all of its obligation to pay guaranteed retirement income or post-retirement benefits to plan participants. There are four major types of PRT strategies: longevity reinsurance, buy-in, buy-out, and paying in lump sums. The company is active in plan buy-outs, where the company has a direct, irrevocable commitment to each covered participant to make the specified annuity payments based upon the terms of the pension plan. Plan buy-out transactions fully and permanently transfer all investment, mortality, and administrative risk, associated with covered benefits, from the pension plan sponsor to the insurance provider.
The company’s PRT products are comparable to income annuities, as the company generally receives a single, upfront premium in exchange for paying a guaranteed stream of future income payments, which are typically fixed in nature, but may vary in duration based on participant mortality experience. These products primarily create earnings through spread income. In each transaction FGL Insurance and/or FGL NY Insurance issues a group annuity contract to discharge pension plan liabilities from a pension plan sponsor, either through a separate account or through a general account guarantee. Certificate holders covered under a group annuity contract have a guaranteed benefit from the insurance company.
The company entered the PRT solutions business by building a team of experienced professionals, then working with brokers and institutional consultants for distribution.
Distribution. The company distributes its annuity and life insurance products through three main channels of distribution: independent agents, banks, and broker dealers.
In the company’s independent agent channel, the sale of the company’s products typically occurs as part of a four-party, three stage sales process between FGL Insurance, an IMO, the agent and the customer. FGL Insurance designs, manufactures, issues, and services the product. The IMOs will typically sign contracts with multiple insurance carriers to provide their agents with a broad and competitive product portfolio. The IMO provides training and discusses product options with agents in preparation for meetings with clients. The IMO staff also provide assistance to the agent during the selling and application process. The agent may get customer leads from the IMOs. The agent conducts fact finding and presents suitable product choices to the customers. The company monitors the business issued by each distribution partner for pricing metrics, mortality, persistency, as well as market conduct and suitability.
The company offers its products through a network of approximately 300 IMOs, representing approximately 126,000 agents. The company identifies Power Partners as those who have demonstrated the ability to generate significant production for its business. The company currently has 41 Power Partners, comprises 19 annuity IMOs and 22 life insurance IMOs. The average tenure of the Power Partners is approximately 21 years.
The company took a similar approach in launching products as a new entrant into the bank and broker dealer channels by partnering with one of the largest broker dealers in the industry. In 2020, F&G launched a set of fixed rate annuity and indexed annuity products to banks and broker dealers and gained selling agreements with some of the largest banks and broker dealers in the United States. The company offers its products through a network of approximately 22 banks and broker dealers, representing approximately 12,000 financial advisers. The financial advisers at its bank and broker dealer partners can offer their clients guaranteed rates of return, protected growth, and income for life through the company’s secure series of annuity products. The company employs a hybrid distribution model in this channel, whereby some financial institutions partner directly with F&G and its sales team, and others work with an intermediary. As such, the company partners with a select number of financial institution intermediaries who have expertise in the channel and maintain the appropriate field wholesaling forces to be successful in this channel.
The top 5 states for the distribution of F&G retail products in the year ended December 31, 2024, were Florida, California, Pennsylvania, Texas and Ohio, which together accounted for 38.7% of FGL Insurance’s premiums.
Investments. The company bases all of its decisions on fundamental, bottom-up research, coupled with a top-down view that respects the cyclicality of certain asset classes. The types of assets in which the company may invest are influenced by various state laws, which prescribe qualified investment assets applicable to insurance companies.
FGL Insurance and certain other subsidiaries of F&G are party to investment management agreements (IMAs) with Blackstone ISG-I Advisors LLC (BIS) pursuant to which BIS is appointed as investment manager of the F&G Accounts.
For certain asset classes, the company continues to utilize specialized third-party investment managers. BIS, in accordance with the company’s IMAs, has delegated certain investment services to its affiliates, including Blackstone’s Credit, Real Estate Debt and Asset-Based Finance businesses, in each case, pursuant to separate sub-management agreements executed between BIS and each such affiliate.
Effective January 1, 2025, FGL NY Insurance and BIS entered into an IMA pursuant to which BIS is appointed as investment manager of substantially all assets in the general account of FGL NY Insurance. FGL NY Insurance terminated its current IMA with its current investment manager effective December 31, 2024.
The company’s investment portfolio consists of high quality fixed maturities, including publicly issued and privately issued corporate bonds, municipal and other government bonds, asset-backed securities (‘ABS’), residential mortgage-backed securities (‘RMBS’), commercial mortgage-backed securities (‘CMBS’), commercial mortgage loans (‘CMLs’), residential mortgage loans (‘RMLs’), limited partnership investments, and other investments. The company also maintains holdings in floating rate, and less rate-sensitive investments, including senior tranches of collateralized loan obligations (‘CLOs’), non-agency RMBS, and various types of ABS. The company also has a small amount of equity holdings required as part of the company’s funding arrangements with the FHLB.
The company currently maintain a well-matched asset/liability profile (asset duration, including cash and cash equivalents, of 4.9 years vs. liability duration of 5.8 years).
Outsourcing. The company’s F&G segment outsources the following functions to third-party service providers: new business administration (data entry and policy issue only); service of existing policies; underwriting administration of life insurance applications; call centers; information technology development and maintenance; certain investment accounting and custody; and co-located data centers and hosting of financial systems.
The company closely manages its outsourcing partners and integrate their services into the company’s operations.
Ratings. Within the company's F&G segment, access to funding and its related cost of borrowing, the attractiveness of certain of its products to customers, and requirements for derivatives collateral posting are affected by its credit ratings and insurance financial strength ratings, which are periodically reviewed by the rating agencies. Financial strength ratings and credit ratings are important factors affecting public confidence in an insurer and its competitive position in marketing products.
Reinsurance. Within the company’s F&G segment, the company cedes insurance to other insurance companies. The company uses reinsurance to diversify risks and earnings, to manage loss exposures, to enhance the company’s capital position, and to manage new business volume.
The company monitors the credit risk related to the ability of its reinsurers to honor their obligations under various agreements. To minimize the risk of credit loss on such contracts, the company generally diversifies its exposures among many reinsurers and limits the amount of exposure to each based on financial strength ratings, which are reviewed annually. The company is able to further manage risk with various forms of collateral or collateral arrangements, including secured trusts, funds withheld arrangements, and irrevocable letters of credit.
Wilton Reinsurance Transaction. Almost all of the life insurance policies in force issued before March 1, 2010, except for the return of premium benefits on term life insurance products, are subject to a reinsurance arrangement with Wilton Reassurance Company (‘Wilton Re’). Pursuant to the agreed upon terms, Wilton Re purchased through a 100% quota share reinsurance agreement certain FGL Insurance life insurance policies that are subject to redundant reserves, reported on a statutory basis, under Regulation XXX and Guideline AXXX, as well as another block of FGL Insurance’s in-force traditional, universal life and IUL insurance policies. The effects of this agreement are accounted for as reinsurance as the ceded policies qualify as insurance products and because the agreement satisfies the risk transfer requirements for GAAP.
Hannover Reinsurance Transaction. FGL Insurance has a reinsurance agreement with Hannover Life Reassurance Company of America (Bermuda) Ltd., an unaffiliated reinsurer, to reinsure an in-force block of its indexed annuity and fixed deferred annuity contracts with GMWB and Guaranteed Minimum Death Benefit (GMDB) guarantees. In accordance with the terms of this agreement, the company cede 70% net retention of secondary guarantee payments in excess of account value for GMWB and GMDB guarantees. The effects of this agreement are not accounted for as reinsurance as it does not satisfy the risk transfer requirements for GAAP; therefore, deposit accounting is applied.
Kubera Reinsurance Transaction. FGL Insurance has a reinsurance agreement with Kubera Insurance (SAC) Ltd. (Kubera), an unaffiliated reinsurer, to cede a quota share of certain indexed annuity statutory reserves on a coinsurance funds withheld basis, net of applicable existing reinsurance. This agreement has been amended several times to include additional FIA policies, with the latest amendment effective December 1, 2024. The effects of this agreement are not accounted for as reinsurance as it does not satisfy the risk transfer requirements for GAAP; therefore, deposit accounting is applied and FGL Insurance applies the right of offset in the reinsurance agreement.
Kubera & Somerset Reinsurance Transactions. FGL Insurance entered into a reinsurance agreement with Kubera, effective December 31, 2018, to cede certain fixed rate annuity (including MYGA) GAAP and statutory reserves on a coinsurance funds withheld basis, net of applicable existing reinsurance. Effective October 31, 2021, this agreement was novated from Kubera to Somerset Reinsurance Ltd. (‘Somerset’), a certified third-party reinsurer. Effective December 1, 2023, FGL Insurance executed an additional coinsurance funds withheld agreement with Somerset to cede certain flow MYGA business written effective on or after December 1, 2023. As the policies ceded to Somerset are investment contracts, there is no significant insurance risk present and the reinsurance agreements are accounted for as separate investment contracts.
Effective July 1, 2024, FGL Insurance amended the existing flow reinsurance agreement with Somerset to additionally cede the base contract benefits and GMWB riders attached under certain FIA policies on a coinsurance funds withheld quota share basis written on or after July 1, 2024. As the base contract benefits and GWMB riders are ceded to Somerset, there is sufficient insurance risk present that results in this portion of the reinsurance agreement being accounted for as reinsurance.
Everlake Reinsurance Transaction. Effective September 1, 2023, FGL Insurance executed a coinsurance agreement with Everlake Life Insurance Company (‘Everlake’), an unaffiliated reinsurer to cede, on a quota share basis, certain flow MYGA business written effective on or after September 1, 2023. As the policies ceded to Everlake are investment contracts, there is no significant insurance risk present and the effects of this agreement are accounted for as a separate investment contract.
Effective January 1, 2025, F&G amended the existing flow reinsurance agreement with Everlake Life Insurance Company (Everlake) to cede future additional MYGA business for agreed upon periods to Everlake pursuant to an offer and acceptance process, rather than on a flow basis. The amendment included a cession of an inforce block of certain MYGA policies on a coinsurance quota share basis.
Aspida Reinsurance Transaction. FGL Insurance has a reinsurance agreement with ASPIDA Life Re Ltd. (‘Aspida Re’), an unaffiliated reinsurer, to cede certain flow MYGA business, on a funds withheld coinsurance basis, net of applicable existing reinsurance, written effective on or after January 15, 2021. As the policies ceded to Aspida Re are investment contracts, there is no significant insurance risk present and therefore the reinsurance agreement is accounted for as a separate investment contract.
New Re Reinsurance Transaction. Effective December 31, 2022, FGL Insurance entered into an indemnity reinsurance agreement with New Reinsurance Company Ltd., an unaffiliated reinsurer and wholly owned subsidiary of Münchener Rückversicherungs-Gesellschaft Aktiengesellschaft in München (d/b/a Munich Re), to cede certain FIA policies. Effective July 1, 2023, this agreement was amended to reinsure additional FIA products. The coinsurance quota share is only applicable to the base contract benefits under the FIA policies. The yearly renewable term is applicable to the waiver of surrender charges and return of premium. The effects of this agreement are not accounted for as reinsurance as it does not satisfy the risk transfer requirements for GAAP; therefore, deposit accounting is applied and FGL Insurance applies the right of offset in the reinsurance agreement.
The CARVM Facility. Life insurance companies operating in the United States must calculate required reserves for life and annuity policies based on statutory principles. The insurance divisions have adopted the methodology contained in the NAIC Valuation Manual as the prescribed methodology for the insurance industry.
FGL Insurance has a reinsurance treaty with Raven Reinsurance Company (Raven Re), its wholly owned captive reinsurance company, to cede the Commissioners Annuity Reserve Valuation Method (CARVM) liability for annuity benefits where surrender charges are waived related to certain indexed annuities, deferred annuity and MYGA policies. In connection with the CARVM reinsurance agreement, FGL Insurance and Raven Re entered into an agreement with Nomura Bank International plc (NBI) to establish a reserve financing facility in the form of a letter of credit issued by NBI.
GMWB/GWP Reinsurance Transaction. Effective December 31, 2023, FGL Insurance recaptured its reinsurance arrangement with Canada Life Assurance Company (Canada Life) United States Branch covering indexed annuity policies with GMWB and guaranteed withdrawal payment (GWP) features and entered into a reinsurance treaty with Corbeau Re, Inc. (Corbeau Re), its wholly owned captive reinsurance company, to cede certain indexed annuity policies with GMWB and GWP. In connection with the reinsurance agreement between FGL Insurance and Corbeau Re, Corbeau Re entered into an excess of loss reinsurance agreement (XOL) with Canada Life Barbados Branch to finance the portion of statutory reserves considered to be non-economic.
PRT Reinsurance Transaction. Effective October 1, 2023, FGL Insurance recaptured a reinsurance agreement with its affiliate F&G Life Re Ltd. (F&G Life Re), a Bermuda reinsurer, covering a quota share of certain pension risk transfer group annuity contracts and entered into an agreement with its affiliate F&G Cayman Re Ltd. (F&G Cayman Re), a Cayman Islands reinsurer, to reinsure a quota share of certain PRT group annuity contracts (previously ceded to F&G Life Re) in addition to flow PRT group annuity contracts. Some of the contracts reinsured are held by FGL Insurance’s general account and others are held by a FGL Insurance separate account (which does not meet the GAAP definition of a separate account). Reinsurance of the general account contracts are maintained on a coinsurance funds withheld basis for the general account statutory reserves. Reinsurance of the separate account contracts are maintained on a modified coinsurance basis for the separate account statutory reserves and coinsurance basis for the general account statutory reserves supporting the separate account. In connection with the agreement, F&G Cayman Re entered into a financing agreement with Deutsche Bank AG (DB), operating out of its New York branch, whereby DB issued a letter of credit used to support the coinsured general account statutory reserves (generally considered to be the non-economic reserves).
Regulation - U.S. FGL Insurance, FGL NY Insurance, Raven Re and Corbeau Re are subject to comprehensive regulation and supervision in their domiciles, Iowa, New York, Vermont and Vermont, respectively, and in each state in which they do business. FGL Insurance does business throughout the United States and Puerto Rico, except for New York. FGL NY Insurance only does business in New York. Raven Re is a special purpose captive reinsurance company that only provides reinsurance to FGL Insurance under the CARVM Treaty. Corbeau Re, a wholly owned captive reinsurance company, reinsures certain of FGL Insurance’s indexed annuity policies with GMWB and GWP. FGL Insurance’s principal insurance regulatory authority is the IID; however, state insurance departments throughout the United States also monitor FGL Insurance’s insurance operations as a licensed insurer. The New York State Department of Financial Services (NYDFS) regulates the operations of FGL NY Insurance. The purpose of these regulations is primarily to protect insurers’ policyholders and beneficiaries and not their general creditors and shareholders of those insurers or of their holding companies.
Certain provisions of the Dodd-Frank Act are applicable to the company, its competitors or those entities with which the company does business.
Several states have adopted the revised NAIC model regulation, including FGL Insurance’s domiciliary state of Iowa. Management has instituted business procedures to comply with these revised requirements where required. FGL NY Insurance separately instituted new business procedures in response to the NYDFS best interest rule adopted in August 2019, which survived a legal challenge and deviates from the NAIC model regulation and is considered more onerous in certain respects including its broader application to life insurance sales.
FGL Insurance, along with FGL NY Insurance, designed and launched a compliance program in January 2022 requiring all agents selling IRA products to submit an acknowledgment with each IRA application indicating the agent has satisfied PTE 84-24 requirements on a precautionary basis in case the agent acted or is found to have acted as a fiduciary. Meanwhile the DOL has publicly announced its intention to consider future rulemaking that may revoke or modify PTE 84-24.
Regulation - Bermuda. F&G Life Re is a Bermuda exempted company incorporated under the Companies Act 1981, as amended (the ‘Companies Act’) and registered as a Class E insurer under the Insurance Act 1978, as amended, and its related regulations (the ‘Insurance Act’). F&G Life Re is regulated by the Bermuda Monetary Authority (‘BMA’).
Regulation - Cayman. F&G Cayman Re Ltd. (F&G Cayman Re) is licensed as a class D insurer in the Cayman Islands by the Cayman Islands Monetary Authority (CIMA). As a regulated insurance company, F&G Cayman Re is subject to the supervision of CIMA and CIMA may at any time direct F&G Cayman Re, in relation to a policy, a line of business or the entire business, to cease or refrain from committing an act or pursing a course of conduct and to perform such acts as in the opinion of CIMA are necessary to remedy or ameliorate the situation.
History
Fidelity National Financial, Inc. was incorporation in 2005.
