EX-99.2 3 fg3q2021financialsupplemen.htm EX-99.2 Document

Exhibit 99.2


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F&G Annuities & Life, Inc. (“F&G”) - An Operating Segment of Fidelity National Financial, Inc. (NYSE:FNF)         
Financial Supplement
September 30, 2021
(Year Ended December 31)

The financial statements and financial exhibits included herein are unaudited. F&G is an operating segment of FNF (the Company) and these financial statements and exhibits should be read in conjunction with the Company's periodic reports on Form 10-K, Form 10-Q and Form 8-K.

F&G (formerly NYSE:FG) was acquired by FNF (the "Business Combination") on June 1, 2020 ("Closing Date"). As a result of the Business Combination, F&G delisted from the NYSE and became a subsidiary of FNF.

All dollar amounts are presented in millions.

Non-GAAP Financial Measures

This document contains certain non-GAAP financial measures commonly used in our industry that, together with the relevant GAAP measures, may enhance a user’s ability to analyze the Company's operating performance and capital position for the periods presented. These measures should be considered supplementary to our results in accordance with GAAP and should not be viewed as a substitute for the GAAP measures and are not intended to replace GAAP financial results. Our non-GAAP measures may not be comparable to similarly titled measures of other organizations because other organizations may not calculate such non-GAAP measures in the same manner. Refer to the non-GAAP measures reconciliations and definitions within for further information.




1
F&G - An Operating Segment of FNF
Financial Supplement - September 30, 2021
(All periods are unaudited)
Page
Sales Results by Product
Reconciliation of Total Shareholders' Equity to Total Shareholders' Equity Excluding AOCI
Financial Strength Ratings
Total Product Net Investment Spread
FIA Net Investment Spread

2
F&G - An Operating Segment of FNF
Financial Supplement - September 30, 2021
(All periods are unaudited)

Consolidated Financial Highlights
Three months endedNine months ended
September 30, 2021June 30, 2021March 31, 2021December 31, 2020September 30, 2020September 30, 2021
Select Income Statement Data:
Net earnings (loss) attributable to common shareholders373 82 289 137 38 744 
Adjusted net earnings from continuing operations attributable to common shareholders (1)101 92 78 128 74 271 
Select Metrics:
Average Assets Under Management ("AAUM") (1)32,692 30,423 29,016 27,864 26,990 30,706 
Net investment spread (1)2.85 %2.95 %2.55 %2.55 %2.62 %2.78 %
(1) Refer to "Non-GAAP Financial Measures Definitions"


Sales Results by Product

The table below provides a summary of sales, which are not affected by the June 1, 2020 Business Combination, and are comparable to prior period data.
Three months endedNine months endedNine months ended
September 30, 2021June 30, 2021March 31, 2021December 31, 2020September 30, 2020September 30, 2021September 30, 2020
Sales
Fixed indexed annuities (FIA)1,073 1,135 1,047 947 815 3,255 2,512 
Fixed rate annuities (MYGA)458 512 467 362 253 1,437 414 
Total annuity1,531 1,647 1,514 1,309 1,068 4,692 2,926 
Index universal life (IUL)24 20 15 13 14 59 37 
Funding agreements (FABN/FHLB)1,150 1,000 125 100 — 2,275 100 
Pension risk transfer (PRT)371 — — — — 371 — 
Flow reinsurance— — — 37 51 — — 315 
Total Sales$3,076 $2,667 $1,654 $1,459 $1,133 $7,397 $3,378 





3
F&G - An Operating Segment of FNF
Financial Supplement - September 30, 2021
(All periods are unaudited)
            
Condensed Consolidated Balance Sheets
September 30, 2021June 30, 2021March 31, 2021December 31, 2020September 30, 2020
Assets
Investments:
Fixed maturity securities available for sale, at fair value, net of allowance for credit losses of $7 at September 30, 2021$28,550 $27,616 $25,768 $25,499 $24,218 
Preferred securities, at fair value870 882 908 965 917 
Equity securities, at fair value156 176 141 82 54 
Derivative investments581 691 542 548 381 
Mortgage loans, net of allowance for credit losses of $33 at September 30, 20213,484 2,794 2,374 2,031 1,614 
Investments in unconsolidated affiliates (a)2,022 1,667 1,281 1,156 1,125 
Other long-term investments454 448 447 449 438 
Short-term investments258 356 72 456 34 
Total investments$36,375 $34,630 $31,533 $31,186 $28,781 
Cash and cash equivalents2,320 1,016 995 889 1,014 
Trade and notes receivables11 11 11 10 2 
Reinsurance recoverable, net of allowance for credit losses of $19 at September 30, 2021 (a)3,492 3,297 3,404 3,174 3,152 
Goodwill (a)1,756 1,756 1,751 1,751 1,731 
Prepaid expenses and other assets662 415 470 413 448 
Lease assets8 8 8 8 7 
Other intangible assets, net (a)2,086 2,060 2,061 1,918 1,956 
Property and equipment, net13 13 13 11 7 
Income taxes receivable— — — 15 19 
Deferred tax asset (a)— 51 130 44 107 
Assets of discontinued operations— — 311 327 2,618 
Total assets$46,723 $43,257 $40,687 $39,746 $39,842 
(a) These line items included adjustments that were recorded during the remeasurement period subsequent to the June 1, 2020 acquisition. The following adjustments were recorded as of the opening balance sheet at June 1, 2020 during the quarter ending September 30, 2020: Investment in unconsolidated affiliates, $31, Goodwill, $6, Other intangible assets, net, ($37), and Deferred tax asset, $3. The following adjustments were recorded as of the opening balance sheet at June 1, 2020 during the quarter ending December 31, 2020: Goodwill, $20, Other intangible assets, net, ($56), Reinsurance recoverable, $47, and Deferred tax asset, $10. The following adjustments were recorded as of the opening balance sheet at June 1, 2020 during the quarter ending June 30, 2021: Reinsurance recoverable, ($289), Goodwill, $5, Other intangible assets, net, $61, and Deferred tax asset, $1.
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F&G - An Operating Segment of FNF
Financial Supplement - September 30, 2021
(All periods are unaudited)
Condensed Consolidated Balance Sheets (continued)
September 30, 2021June 30, 2021March 31, 2021December 31, 2020September 30, 2020
Liabilities and Shareholders' Equity
Contractholder funds (a)$33,988 $32,166 $29,592 $28,718 $27,488 
Future policy benefits (a)3,985 3,670 3,959 4,010 4,048 
Accounts payable and accrued liabilities (a)1,670 1,276 1,368 1,174 1,056 
Income taxes payable3 17 5 — — 
Deferred tax liability9 — — — — 
Notes payable979 589 589 589 589 
Funds withheld for reinsurance liabilities1,508 1,271 1,026 806 814 
Lease liabilities14 14 14 14 12 
Liabilities of discontinued operations— — 339 361 2,462 
Total liabilities$42,156 $39,003 $36,892 $35,672 $36,469 
Shareholders' equity:
Additional paid-in-capital2,748 2,746 2,744 2,741 2,739 
Retained earnings (accumulated deficit)880 507 425 136 (1)
Accumulated other comprehensive income (loss) ("AOCI")939 1,001 626 1,197 635 
Total shareholders' equity$4,567 $4,254 $3,795 $4,074 $3,373 
Total liabilities and shareholders' equity$46,723 $43,257 $40,687 $39,746 $39,842 
(a) Contractholder funds included a $3 adjustment that was recorded as of the opening balance sheet at June 1, 2020 during the quarter ending September 30, 2020; Contractholder funds, Future policy benefits, and Accounts payable and accrued liabilities included ($5), ($7), and $33 adjustments as of the opening balance sheet at June 1, 2020, respectively, during the quarter ending December 31, 2020; Additionally, Future policy benefits and Accounts payable and accrued liabilities included ($228) and $6 adjustments as of the opening balance sheet at June 1, 2020, respectively, during the quarter ending June 30, 2021



Reconciliation of Total Shareholders' Equity to Total Shareholders' Equity Excluding AOCI
September 30, 2021June 30, 2021March 31, 2021December 31, 2020September 30, 2020
Total shareholders' equity$4,567 $4,254 $3,795 $4,074 $3,373 
AOCI939 1,001 626 1,197 635 
Total shareholders' equity excluding AOCI (1)$3,628 $3,253 $3,169 $2,877 $2,738 
(1) Refer to "Non-GAAP Financial Measures Definitions"


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F&G - An Operating Segment of FNF
Financial Supplement - September 30, 2021
(All periods are unaudited)
Condensed Consolidated Statements of Operations
Three months endedNine months ended
September 30, 2021June 30, 2021March 31, 2021December 31, 2020September 30, 2020September 30, 2021
Revenues:
Life insurance premiums and other fees (a)$431 $62 $64 $58 $60 $557 
Interest and investment income481 487 373 327 305 1,341 
Recognized gains and losses, net15 253 102 282 77 370 
      Total revenues927 802 539 667 442 2,268 
Benefits and expenses:
Benefits and other changes in policy reserves185 575 (26)460 251 734 
Personnel costs32 32 29 33 23 93 
Other operating expenses22 26 28 30 33 76 
Depreciation and amortization210 65 144 64 56 419 
Interest expense6 7 8 8 7 21 
      Total benefits and expenses455 705 183 595 370 1,343 
Pre-tax earnings (loss) from continuing operations472 97 356 72 72 925 
Income tax expense(96)(21)(72)67 (6)(189)
Net earnings (loss) from continuing operations376 76 284 139 66 736 
   Earnings from discontinued operations, net of tax(3)6 5 (2)(28)8 
Net earnings (loss) attributable to common shareholders$373 $82 $289 $137 $38 $744 
(a) Included within "Escrow, title-related and other fees" in FNF 10-K/ 10-Q
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F&G - An Operating Segment of FNF
Financial Supplement - September 30, 2021
(All periods are unaudited)

Reconciliation from Net Earnings (Loss) to Adjusted Net Earnings (1)
Three Months EndedNine months ended
September 30, 2021June 30, 2021March 31, 2021December 31, 2020September 30, 2020September 30, 2021
Net earnings (loss) from continuing operations$376 $76 $284 $139 $66 $736 
Non-GAAP adjustments (1):
Recognized (gains) and losses, net(98)(63)(82)(76)(15)(243)
Indexed product related derivatives26 75 (185)54 14 (84)
Purchase price amortization7 6 7 7 7 20 
Transaction costs1 2 2 4 10 5 
Other non-recurring items (2)(284)— — — — (284)
Income taxes on non-GAAP adjustments73 (4)52 — (8)121 
Adjusted net earnings from continuing operations attributable to common shareholders (1)$101 $92 $78 $128 $74 $271 



Notable Items
Each quarterly reporting period, we identify notable items that help explain the trends in our Net earnings (loss) from continuing operations attributable to common shareholders and Adjusted net earnings (loss) from continuing operations attributable to common shareholders as we believe these items provide further clarity to the financial performance of the business.
Three Months EndedNine months ended
September 30, 2021June 30, 2021March 31, 2021December 31, 2020September 30, 2020September 30, 2021
Adjusted net earnings from continuing operations attributable to common shareholders (1)$101 $92 $78 $128 $74 $271 
Notable items [(unfavorable)/favorable]
Single premium immediate annuities ("SPIA") mortality & other reserve adjustments (a)7 3 7 — 10 17 
Assumption review and unlocking (b)— 8 — — — 8 
Other notable items (c)20 11 5 68 — 36 
(1) Refer to "Non-GAAP Financial Measures Definitions"
(2) Reflects adjustments to benefits and other changes in policy reserves and depreciation and amortization resulting from the implementation of a new actuarial valuation system.
(a) The release of annuity reserves associated with mortality of annuitants, which varies due to timing, volume and severity of experience, and other reserve adjustments.
(b) Reflects unlocking from updating our DAC, VOBA, DSI and cost of reinsurance amortization models for actual experience and equity market fluctuations.
(c) Costs incurred during research and exploration of potential merger or acquisition of a business or a group of insurance policies via asset acquisition or (inforce) reinsurance agreement, income from bond prepayment and CLO redemptions, changes in tax valuation and other net activity.


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F&G - An Operating Segment of FNF
Financial Supplement - September 30, 2021
(All periods are unaudited)


Adjusted Net Earnings Statement (1)
Three Months EndedNine months ended
September 30, 2021June 30, 2021March 31, 2021December 31, 2020September 30, 2020September 30, 2021
Revenues:
      Life insurance premiums and other fees (a)$430 $62 $64 $61 $60 $556 
      Interest and investment income (b)381 377 333 315 314 1,091 
      Recognized gains and losses, net (c)— — — — (1)— 
          Total revenues811 439 397 376 373 1,647 
Benefits and expenses:
      Benefits and other changes in policy reserves (d)577 214 188 202 177 979 
      Personnel costs32 32 29 33 23 93 
      Other operating expenses (e)22 24 26 25 23 72 
      Depreciation and amortization (f)49 46 48 46 56 143 
      Interest expense6 7 8 8 7 21 
         Total benefits and expenses686 323 299 314 286 1,308 
Pre-tax earnings (loss) from continuing operations125 116 98 62 87 339 
 Income tax expense(24)(24)(20)66 (13)(68)
Adjusted net earnings from continuing operations attributable to common shareholders (1)$101 $92 $78 $128 $74 $271 
Notable items included in adjusted net earnings attributable to common shareholders (2)$27 $22 $12 $68 $10 $61 

(1) Refer to "Non-GAAP Financial Measures Definitions"
(2) Refer to page 7 "Notable Items" for further detail of notable items.
(a) Life insurance premiums and other fees are included within "Escrow, title-related and other fees" in FNF 10-K/ 10-Q, and have been adjusted here to remove the effect of cost of reinsurance.
(b) Interest and investment income has been adjusted to remove the market volatility on the alternative investment portfolio.
(c) Recognized gains and losses (net) have been adjusted to remove the effect of recognized (gains) losses including changes in allowance for expected credit losses and OTTI; changes in fair values of indexed product related derivatives and embedded derivatives, net of hedging costs; and the change in fair value of the reinsurance related embedded derivative.
(d) Benefits and other changes in policy reserves has been adjusted to remove the effects of the changes in fair values of indexed product embedded derivatives, changes in allowance for expected credit losses on reinsurance recoverables, the fair value impacts of assumed reinsurance, those resulting from the implementation of a new actuarial system at September 30, 2021, and changes in the SOP 03-1 reserve resulting from the adjustments above, as applicable.
(e) Other operating expenses have been adjusted to remove the effects of transaction costs.
(f) Depreciation and amortization has been adjusted to remove the impact on DAC, VOBA, and DSI of the adjustments above, as applicable, purchase price amortization and those resulting from the implementation of a new actuarial valuation system at September 30, 2021.







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F&G - An Operating Segment of FNF
Financial Supplement - September 30, 2021
(All periods are unaudited)
Financial Strength Ratings
A.M. BestS&PFitchMoody's
Holding Company Ratings
F&G Annuities & Life, Inc. (formerly known as FGL Holdings)
Issuer Credit / Default RatingNot RatedBBB-BBBBa2
OutlookStableStableStable
CF Bermuda Holdings Limited
Issuer Credit / Default RatingNot RatedBBB-BBBBa1
OutlookStableStableStable
Fidelity & Guaranty Life Holdings, Inc.
Issuer Credit / Default Ratingbbb-BBB-BBBNot Rated
OutlookStableStableStable
Senior Unsecured Notesbbb-BBBBBBBaa2
OutlookStableStable
Operating Subsidiary Ratings
Fidelity & Guaranty Life Insurance Company
Financial Strength RatingA-A-A-Baa1
OutlookStableStableStableStable
Fidelity & Guaranty Life Insurance Company of New York
Financial Strength RatingA-A- A-Not Rated
OutlookStableStableStable
F&G Life Re Ltd
Financial Strength RatingNot RatedA-A-Baa1
OutlookStableStableStable
F&G Cayman Re Ltd
Financial Strength RatingNot RatedNot RatedA-Not Rated
OutlookStable
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F&G - An Operating Segment of FNF
Financial Supplement - September 30, 2021
(All periods are unaudited)
Total Product Net Investment Spread
Three Months EndedNine months ended
September 30, 2021June 30, 2021March 31, 2021December 31, 2020September 30, 2020September 30, 2021
Net investment income$481 $487 $373 $327 $305 $1,341 
AAUM (1)32,692 30,423 29,016 27,864 26,990 30,706 
Yield on AAUM (1)5.89 %6.40 %5.15 %4.69 %4.52 %5.82 %
Alternative investment yield adjustment (1)(1.23)%(1.43)%(0.56)%(0.17)%0.13 %(1.09)%
Adjusted Yield on AAUM (1)4.66 %4.97 %4.59 %4.52 %4.65 %4.73 %
Interest credits$63 $73 $74 $67 $67 $210 
Option & futures costs75 70 65 63 64 210 
Total interest credited and option costs$138 $143 $139 $130 $131 $420 
   Average account value30,469 28,273 27,252 26,450 25,688 28,766 
  Interest credited & option cost1.81 %2.02 %2.04 %1.97 %2.03 %1.95 %
   Net investment spread (1)2.85 %2.95 %2.55 %2.55 %2.62 %2.78 %
(1) Refer to "Non-GAAP Financial Measures Definitions" for further details.



















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F&G - An Operating Segment of FNF
Financial Supplement - September 30, 2021
(All periods are unaudited)
FIA Net Investment Spread
Three Months EndedNine months ended
September 30, 2021June 30, 2021March 31, 2021December 31, 2020September 30, 2020September 30, 2021
Net investment income (1)$368 $377 $276 $235 $215 $1,021 
AAUM (2)22,146 20,896 20,217 19,097 18,312 21,097 
Yield on AAUM (1) (2)6.65 %7.22 %5.46 %4.92 %4.70 %6.45 %
Alternative investment yield adjustment (2) (1.81)%(2.20)%(0.81)%(0.25)%0.20 %(1.62)%
Adjusted Yield on AAUM (1) (2)4.84 %5.02 %4.65 %4.67 %4.90 %4.83 %
Interest credits$2 $13 $15 $13 $14 $30 
Option & futures costs75 70 65 63 64 210 
Total interest credited and option costs$77 $83 $80 $76 $78 $240 
   Average account value20,680 19,842 19,028 18,442 17,948 19,856 
  Interest credited & option cost1.49 %1.67 %1.67 %1.65 %1.73 %1.61 %
   Net investment spread (1) (2)3.35 %3.35 %2.98 %3.02 %3.17 %3.22 %

(1) In December 2020, we restated prior period FIA net investment spread to reflect immaterial updates to FIA net investment income amounts. There was no impact to total product net investment spread amounts.
(2) Refer to "Non-GAAP Financial Measures Definitions" for further details.

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F&G - An Operating Segment of FNF
Financial Supplement - September 30, 2021
(All periods are unaudited)


Average Assets Under Management Rollforward

Three Months EndedNine months ended
September 30, 2021June 30, 2021March 31, 2021December 31, 2020September 30, 2020September 30, 2021
AAUM at beginning of period (1)$30,423 $29,016 $27,864 $26,990 $26,582 $27,322 
Net new business sales2,524 1,668 1,197 874 408 3,764 
Net reinsurance transactions and other(255)(261)(45)— — (380)
AAUM at end of period$32,692 $30,423 $29,016 $27,864 $26,990 $30,706 

Annuity Account Balance Rollforward (a)
Three Months EndedNine months ended
September 30, 2021June 30, 2021March 31, 2021December 31, 2020September 30, 2020September 30, 2021
Account balances at beginning of period:$24,774 $23,803 $22,992 $22,106 $21,442 $22,992 
Net deposits1,311 1,390 1,265 1,305 1,046 3,966 
Surrenders, withdrawals, deaths, etc.(625)(628)(585)(533)(482)(1,838)
Net flows686 762 680 772 564 2,128 
Premium and interest bonuses20 21 18 20 17 59 
Fixed interest credited and index credits217 225 148 131 114 590 
Guaranteed product rider fees(35)(37)(35)(37)(31)(107)
Account balance at end of period$25,662 $24,774 $23,803 $22,992 $22,106 $25,662 
(a) The rollforward reflects the vested account balance of our fixed index annuities and fixed rate annuities, net of reinsurance.
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F&G - An Operating Segment of FNF
Financial Supplement - September 30, 2021
(All periods are unaudited)

Annuity Liability Characteristics
Fixed Annuities Account ValueFixed Index Annuities Account Value
September 30, 2021
SURRENDER CHARGE PERCENTAGES:
No surrender charge$341 $2,478 
0.0% < 2.0%8 112 
2.0% < 4.0%41 711 
4.0% < 6.0%612 1,640 
6.0% < 8.0%1,765 3,364 
8.0% < 10.0%1,799 7,464 
10.0% or greater— 5,326 
$4,566 $21,095 
Fixed Annuities Account ValueFixed Index Annuities Account Value
September 30, 2021
CREDITED RATE (INCLUDING BONUS INTEREST) VS. ULTIMATE MINIMUM GUARANTEED RATE DIFFERENTIAL:
No differential$487 $1,376 
0.0% - 1.0%650 1,253 
1.0% - 2.0%1,528 8 
2.0% - 3.0%1,901 — 
Allocated to index strategies— 18,458 
$4,566 $21,095 









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F&G - An Operating Segment of FNF
Financial Supplement - September 30, 2021
(All periods are unaudited)

Summary of Invested Assets by Asset Class
September 30, 2021December 31, 2020
Amortized CostFair ValuePercentAmortized CostFair ValuePercent
Fixed maturity securities, available for sale:
United States Government full faith and credit$479 $472 1 %$45 $45 — %
United States Government sponsored entities83 85 — %105 106 — %
United States municipalities, states and territories1,241 1,301 4 %1,243 1,309 4 %
Foreign Governments132 137 1 %128 140 — %
Corporate securities:
Finance, insurance and real estate4,509 4,758 13 %4,267 4,572 15 %
Manufacturing, construction and mining856 920 3 %839 936 3 %
Utilities, energy and related sectors2,636 2,764 9 %2,532 2,762 9 %
Wholesale/retail trade2,226 2,345 6 %1,900 2,106 7 %
Services, media and other2,911 3,032 8 %2,568 2,793 9 %
Hybrid securities808 893 2 %888 963 3 %
Non-agency residential mortgage-backed securities621 646 2 %677 694 2 %
Commercial mortgage-backed securities2,602 3,006 8 %2,468 2,806 9 %
Asset-backed securities3,752 3,830 11 %1,920 1,999 6 %
CLO securities4,164 4,361 12 %4,021 4,268 14 %
Alternative investments:
Private equity933 933 2 %614 614 2 %
Real assets318 321 1 %280 288 1 %
Credit768 768 2 %254 254 1 %
Equity securities950 1,026 2 %959 1,047 3 %
Commercial mortgage loans1,984 2,011 5 %903 926 3 %
Residential mortgage loans1,500 1,473 4 %1,128 1,123 4 %
Other (primarily derivatives and company owned life insurance)896 1,035 3 %815 997 4 %
Short term investments258 258 1 %456 456 1 %
Total (a)$34,627 $36,375 100 %$29,010 $31,204 100 %
(a) Asset duration of 6.2 years and 6.8 years vs. liability duration of 7.4 years and 6.7 years for the periods ending September 30, 2021 and December 31, 2020, respectively.




14
F&G - An Operating Segment of FNF
Financial Supplement - September 30, 2021
(All periods are unaudited)
Credit Quality of Fixed Maturity Securities
September 30, 2021
NAIC DesignationFair ValuePercent
1$14,770 52 %
210,899 38 %
31,927 7 %
4747 2 %
5149 1 %
658 — %
$28,550 100 %

September 30, 2021
Rating Agency RatingFair ValuePercent
AAA$982 3 %
AA1,921 7 %
A7,273 25 %
BBB9,804 34 %
Not rated5,869 21 %
Total investment grade25,849 90 %
BB1,621 6 %
B and below565 2 %
Not rated515 2 %
Total below investment grade2,701 10 %
$28,550 100 %

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F&G - An Operating Segment of FNF
Financial Supplement - September 30, 2021
(All periods are unaudited)
Summary of Residential Mortgage Backed Securities by Collateral Type and NAIC Designation
September 30, 2021
Total by collateral typeAmortized CostFair Value
Government agency$83 $85 
Prime483 507 
Subprime59 59 
Alt-A79 80 
$704 $731 
September 30, 2021
Total by NAIC designationAmortized CostFair Value
1$673 $699 
217 18 
37 7 
46 6 
51 1 
$704 $731 


Top 5 Reinsurers

September 30, 2021
Financial Strength Rating
Parent Company/Principal ReinsurersReinsurance Recoverable (a)AM BestS&PFitchMoody's
Wilton Re$1,287  A+  not rated  A+  not rated
Kubera Insurance (SAC) Ltd789  not rated  not rated  not rated  not rated
Aspida Life Re Ltd717 A- not rated BBB not rated
Security Life of Denver103  not rated  A-  A-  Baa1
London Life Reinsurance Co.102  A+  not rated  not rated  not rated
(a) Reinsurance recoverables do not include unearned ceded premiums that would be recovered in the event of early termination of certain traditional life policies.

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F&G - An Operating Segment of FNF
Financial Supplement - September 30, 2021
(All periods are unaudited)
Non-GAAP Financial Measures Definitions
The following represents the definitions of non-GAAP measures used by F&G, as an operating segment of FNF:
Adjusted Net Earnings
Adjusted net earnings is a non-GAAP economic measure we use to evaluate financial performance each period. Adjusted net earnings is calculated by adjusting net earnings (loss) from continuing operations 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;
(iii) Purchase price amortization: the impacts related to the amortization of certain intangibles (internally developed software, trademarks and value of distribution asset (VODA)) recognized as a result of acquisition activities;
(iv) Transaction costs: the impacts related to acquisition, integration and merger related items; and
(v) Other "non-recurring", "infrequent" or "unusual items": Management excludes certain items determined to be “non-recurring”, “infrequent” or “unusual” from adjusted net earnings when incurred if it is determined these expenses are not a reflection of the core business and when the nature of the item is such that it is not reasonably likely to recur within two years and/or there was not a similar item in the preceding two years.
Adjustments to Adjusted net earnings are net of the corresponding impact on amortization of intangibles, as appropriate. The income tax impact related to these adjustments is measured using an effective tax rate, as appropriate by tax jurisdiction. While these adjustments are an integral part of the overall performance of F&G, market conditions and/or the non-operating nature of these items can overshadow the underlying performance of the core business. Accordingly, management considers this to be a useful measure internally and to investors and analysts in analyzing the trends of our operations.
Adjusted Net Earnings from Continuing Operations Attributable to Common Shareholders
Adjusted Net Earnings from continuing operations attributable to common shareholders is a non-GAAP economic measure we use to evaluate financial performance attributable to our common shareholders each period. Adjusted net earnings from continuing operations 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 Net 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.
Total Shareholders’ Equity Excluding AOCI
Total Shareholders’ Equity Excluding AOCI is based on Total Shareholders' Equity excluding the effect of AOCI. Since AOCI fluctuates from quarter to quarter due to unrealized changes in the fair value of available for sale investments, Management considers this non-GAAP financial measure to provide useful supplemental information internally and to investors and analysts assessing the level of earned equity on Total Shareholders' equity.
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F&G - An Operating Segment of FNF
Financial Supplement - September 30, 2021
(All periods are unaudited)
Non-GAAP Financial Measures Definitions (continued)
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) the net payable/receivable for the purchase/sale of investments, and
(v) cash and cash equivalents, excluding derivative collateral, at the beginning of the period and the end of each month in the period, divided by the total number of months in the period plus one.
Management considers this non-GAAP financial measure to be useful internally and to investors and analysts when assessing the rate of return on assets available for reinvestment.
Yield on AAUM
Yield on AAUM is calculated by dividing annualized net investment income by AAUM. Management considers this non-GAAP financial measure to be useful internally and to investors and analysts when assessing the level of return earned on AAUM.
Alternative Investment Yield Adjustment
Alternative investment yield adjustment is the current period yield impact of market volatility on the alternative investment portfolio. Management considers this non-GAAP financial measure to be useful internally and to investors and analysts when assessing the level of return earned on AAUM.
Adjusted Yield on AAUM
Adjusted Yield on AAUM is calculated by dividing annualized net investment income by AAUM, plus or minus the alternative investment yield adjustment. Management considers this non-GAAP financial measure to be useful internally and to investors and analysts when assessing the level of return earned on AAUM.
Net Investment Spread
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.

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