Fidelity National Financial Inc. (FNF) 2009年年度報告「NYSE」.pdf

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1、sTANDINg ThE TEsT OF TImEFIDELITY NATIONAL FINANCIAL,INC.2009 Annual Report Alamo Title InsuranceChicago Title Insurance CompanyCommonwealth Land Title Insurance CompanyFidelity National Title Insurance CompanyLawyers Title Insurance Corporationsecurity union Title Insurance CompanyserviceLink FNFs

2、National Lender PlatformTicor Title Insurance CompanysTANDINg ThE TEsT OF TImETmTmFIDELITY NATIONAL FINANCIAL,INC.1FINANCIAL HIGHLIGHTS(Dollars in millions,except per share amounts)2009 2008 2007INCome STATemeNT/STATemeNT oF CASH FLoWS:Year Ended December 31,Total Revenue$5,828$4,251$5,466 Cash Flow

3、 from Operations$380$5$337 Net Earnings(loss)$222$(179)$130 Diluted Net Earnings(loss)per Share$0.97$(0.85)$0.59bALANCe SHeeT:At December 31,Total Assets$7,934$8,368$7,588 Cash and Investment Portfolio$4,888$4,692$4,671 Reserve for Claim Losses$2,541$2,739$1,420 Total Equity$3,345$2,857$3,298Cash Fl

4、ow from OperationsTotal AssetsNet EarningsTotal Revenue$5,466$1300$337$7,588$5,828$222$380$7,934080808080707070709090909$4,251$(179)$5$8,368TO OuR shAREhOLDERs Despite operating against a difficult economic backdrop,2009 was a year of significant accomplishments that has Fidelity National Financial

5、well positioned as we enter 2010.We generated total revenue of$5.8 billion,pre-tax profits of$345 million,net earnings of$222 million and cash flow from operations of$380 million.All of these were significant increases and improvements over our 2008 results.The December 2008 acquisition of Lawyers T

6、itle and Commonwealth Title was fully integrated during the first half of 2009.From January through March,we aggressively removed costs from those operations and were able to return them to operational profitability by the month of March.The integration of Lawyers and Commonwealth was completed duri

7、ng the second quarter,with an overall total cost reduction of$265 million.We eliminated approximately 2,300 positions,more than 40%of the employees transferred at closing,and more than 240 offices as part of the aggressive integration.These underwriters are fully integrated into the FNF family and w

8、e look forward to their continued significant contribution to our market-leading title insurance business in 2010 and beyond.The first quarter of the year saw strong open order volumes as mortgage rates dropped below 5%and refinance volumes increased materially.That order strength continued into Apr

9、il and our stock price reflected the significantly improved outlook for the title insurance business in the winter and spring.In April,we were successful in issuing 18.2 million shares of our common stock for approximately$331 million in proceeds in order to further strengthen our balance sheet.Thos

10、e proceeds were primarily used to reduce the outstanding balance on our credit facility,repurchase our existing public debt and to make a capital infusion into Lawyers Title to bolster that underwriters balance sheet.Throughout 2009,we reduced our outstanding debt by nearly$490 million,while also gr

11、owing our equity by almost$460 million.As a result,our debt to capital ratio ended the year at approximately 21%,after beginning 2009 at more than 32%and book value per share increased by more than$1.10,or 8%,from the beginning of 2009,ending at$14.41 on December 31,2009.The summer and fall brought

12、very consistent order counts in our title business,as we averaged nearly 9,000 open orders per day for much of the period from the month of June through the middle part of December.We also generated solid financial results in that timeframe,yet the stock price continued to languish.As a result,we re

13、purchased approximately 6.5 million shares of our own stock from June of 2009 through January 2010,spending approximately$86.5 million,or about$13.30 per share.We continue to believe that our stock offers compelling value,particularly with it trading near book value.FIDELITY NATIONAL FINANCIAL,INC.3

14、William P.Foley,IIExecutive Chairman of the Board2009 also brought many successes in our other portfolio companies.Sedgwick continued to perform well,generating$700 million in revenue and more than$110 million in EBITDA during 2009.Sedgwick is an attractive asset and we look forward to unlocking mor

15、e of its value in 2010.Ceridian spent much of 2009 focused on cost reduction and control initiatives.That cost focus allowed the company to produce EBITDA of nearly$300 million on revenue of$1.5 billion,an EBITDA margin of 20%.Our specialty insurance group had another solid year,generating pre-tax p

16、rofits of$44 million,a 25%increase over 2008,on essentially flat revenue of$380 million,as they remain focused on profitability and risk management over pure top-line revenue growth.The October investment in Fidelity National Information Services has already generated a tremendous return,as our$50 m

17、illion investment is now worth more than$75 million.Cascade,our timber investment,Remy,our auto parts company and American Blue Ribbon Holdings,the restaurant company,are all valuable assets that we are confident will return significant value to our shareholders in the future.We are proud of our acc

18、omplishments in 2009.The integration of Lawyers Title and Commonwealth Title was a daunting task,but our employees were up to the challenge.We are now unquestionably the largest,most profitable title insurance company in the country.However,we are never satisfied.We will continue to manage our title

19、 business as we always have,with a continued dedication to our weekly operating metrics as we seek to maximize profitability in any market environment.We strengthened our balance sheet during 2009,reducing debt by$490 million and growing equity by$460 million,due,in large part to the April equity of

20、fering and solid financial results for the year.We have a number of attractive companies and we are confident that they will generate meaningful value for our shareholders over the next several years.As you will see in the pages that follow,we position our company to stand the test of time.While we

21、have lived through some great real estate markets,the last several years have been difficult environments.We believe that the truly strong companies show that strength most clearly in the most difficult of times,as we believe we have done during 2009.We appreciate your support and look forward to a

22、mutually successful 2010.As always,we remain committed to our ultimate goal of continuing to create value for our shareholders.sTANDINg ThE TEsT OF TImE4 FIDELITY NATIONAL FINANCIAL,INC.giza Pyramid,built around 2560 BC1847Chicago Title traces its roots to a young law clerk named Edward Rucker who d

23、evelops a system of tracking every recorded instrument and legal proceeding affecting real estate titles.Ruckers system saves attorneys the painstaking task of searching official records for transfer of real property.1848C.V.gillespie,a notary public and record searcher in san Francisco,launches the

24、 company that will eventually become Fidelity National Title Insurance Company.1871Employees of three predecessor companies of Chicago Title risk their lives to save land record from the great Chicago Fire.When the blaze destroys the Cook County land records,the title companies preserved records bec

25、ome the basis for Cook Countys land record system.1876Commonwealth Titles predecessor company issues the worlds first official title policy in Philadelphia.FIDELITY NATIONAL FINANCIAL,INC.51906During the devastating san Francisco earthquake and fire,employees of the predecessor company to Fidelity N

26、ational Title and their wives save the title plant and other important property records.The documents become a valuable resource when san Franciscos City hall and the hall of Records are destroyed in the disaster.1888The Title guarantee and Trust Company(later known as Chicago Title&Trust)issues the

27、 first guarantee policy in Illinois.1925Lawyers Title Insurance Company is incorporated in Richmond,Virginia and rapidly grows into a regional powerhouse.sTANDINg ThE TEsT OF TImE6 FIDELITY NATIONAL FINANCIAL,INC.Colosseum,completed in 80 AD1961Chicago Title Insurance Company is formed and chartered

28、 to conduct national business.1981With agency operations in maricopa and Pima counties in Arizona,Fidelity National Title Insurance Company is purchased from CIgNA.1985FNF becomes the first employee-owned title insurance underwriter.FIDELITY NATIONAL FINANCIAL,INC.71987FNF begins trading on the Amer

29、ican stock Exchange.1987Chicago Title acquires safeco Title,which has a history dating to 1908.It is now known as security union Title.1991Chicago Title&Trust acquires Ticor Title Insurance Company.Ticors heritage can be traced to 1893,with the merger of two Los Angeles abstract companies.sTANDINg T

30、hE TEsT OF TImEPhotograph by David Iliff8 FIDELITY NATIONAL FINANCIAL,INC.1992FNF moves its stock listing to the New York stock Exchange.1998FNF acquires Alamo Title.2000FNF completes the acquisition of Chicago Title Corporation and its title insurance subsidiaries,Chicago Title,Ticor Title and secu

31、rity union Title,making it the largest title insurance company in the country.sTANDINg ThE TEsT OF TImEFIDELITY NATIONAL FINANCIAL,INC.92003FNF relocates its corporate headquarters from santa Barbara,California to Jacksonville,Florida.2005FNF acquires serviceLink,the nations largest centralized clos

32、ing management company.2009FNF solidifies its position as the nations largest and most profitable title insurance company.2008FNF acquires Lawyers Title Insurance Corporation and Commonwealth Land Title Insurance Company,regaining the position as the largest title insurance company in the country.Ta

33、j mahal,completed in 1653FORm 10-KsTANDINg ThE TEsT OF TImEFIDELITY NATIONAL FINANCIAL,INC.UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549Form 10-K(Mark One)ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934(No Fee Required)For the Fiscal Year En

34、ded December 31,2009ornTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934(No Fee Required)Commission File No.1-32630Fidelity National Financial,Inc.(Exact name of registrant as specified in its charter)Delaware16-1725106(State or other jurisdiction of incorporati

35、on or organization)(I.R.S.Employer Identification No.)601 Riverside AvenueJacksonville,Florida 32204(Address of principal executive offices,including zip code)(904)854-8100(Registrants telephone number,including area code)Securities registered pursuant to Section 12(b)of the Act:Title of Each ClassN

36、ame of Each Exchange on Which RegisteredCommon Stock,$0.0001 par valueNew York Stock ExchangeSecurities registered pursuant to Section 12(g)of the Act:NoneIndicate by check mark if the registrant is a well-known seasoned issuer,as defined in Rule 405 of the SecuritiesAct.Yes No nIndicate by check ma

37、rk if the registrant is not required to file reports pursuant to Section 13 or Section 15(d)of theAct.Yes nNo Indicate by check mark whether the registrant(1)has filed all reports required to be filed by Section 13 or 15(d)of theSecurities Exchange Act of 1934 during the preceding 12 months(or for s

38、uch shorter period that the registrant was required to filesuch reports),and(2)has been subject to such filing requirements for the past 90 days.Yes No nIndicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site,if any,everyInteractive Data File r

39、equired to be submitted and posted pursuant to Rule 405 of Regulation S-T(232.405 of this chapter)during the preceding 12 months(or for such shorter period that the registrant was required to submit and post suchfiles).Yes nNo nIndicate by check mark if disclosure of delinquent filers pursuant to It

40、em 405 of Regulation S-K(229.405)is not containedherein,and will not be contained,to the best of registrants knowledge,in definitive proxy or information statements incorporatedby reference in Part III of this Form 10-K,or any amendment to this Form 10-K.nIndicate by check mark whether the registran

41、t is a large accelerated filer,an accelerated filer,a non-accelerated filer,or asmaller reporting company.See the definitions of“large accelerated filer,”“accelerated filer”and“smaller reporting company”inRule 12b-2 of the Exchange Act.(Check one):Large accelerated filer Accelerated filer nNon-accel

42、erated filer nSmaller reporting company n(Do not check if a smaller reporting company)Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the ExchangeAct).Yes nNo The aggregate market value of the shares of the common stock held by non-affiliates of the regis

43、trant as of June 30,2009 was$2,965,778,449,based on the closing price of$13.53 as reported by the New York Stock Exchange.As of January 31,2010,there were 227,388,702 shares of Common Stock outstanding.The information in Part III hereof is incorporated herein by reference to the registrants Proxy St

44、atement on Schedule 14A forthe fiscal year ended December 31,2009,to be filed within 120 days after the close of the fiscal year that is the subject of thisReport.FIDELITY NATIONAL FINANCIAL,INC.FORM 10-KTABLE OF CONTENTSPageNumberPART IItem 1.Business.1Item 1A.Risk Factors.18Item 1B.Unresolved Staf

45、f Comments.22Item 2.Properties.22Item 3.Legal Proceedings.22Item 4.Submission of Matters to a Vote of Security Holders.29PART IIItem 5.Market for Registrants Common Equity,Related Stockholder Matters and IssuerPurchases of Equity Securities.30Item 6.Selected Financial Data.32Item 7.Managements Discu

46、ssion and Analysis of Financial Condition and Results ofOperations.37Item 7A.Quantitative and Qualitative Disclosure About Market Risk.63Item 8.Financial Statements and Supplementary Data.65Item 9.Changes in and Disagreements With Accountants on Accounting and FinancialDisclosure.118Item 9A.Controls

47、 and Procedures.118Item 9B.Other Information.118PART IIIItem 10.Directors and Executive Officers of the Registrant.119Item 11.Executive Compensation.119Item 12.Security Ownership of Certain Beneficial Owners and Management and RelatedStockholder Matters.119Item 13.Certain Relationships and Related T

48、ransactions,and Director Independence.119Item 14.Principal Accounting Fees and Services.119PART IVItem 15.Exhibits,Financial Statement Schedules.119iPART IItem 1.BusinessWe are a holding company that is a provider,through our subsidiaries,of title insurance,specialtyinsurance,claims management servi

49、ces,and information services.We are the nations largest title insurancecompany through our title insurance underwriters Fidelity National Title,Chicago Title,CommonwealthLand Title,Lawyers Title,Ticor Title,Security Union Title,and Alamo Title which collectively issuedmore title insurance policies i

50、n 2008 than any other title insurance company in the United States.We alsoprovide flood insurance,personal lines insurance and home warranty insurance through our specialty insurancesubsidiaries.We are a leading provider of outsourced claims management services to large corporate andpublic sector en

51、tities through our minority-owned affiliate,Sedgwick CMS Holdings(“Sedgwick”)and aprovider of information services in the human resources,retail,and transportation markets through anotherminority-owned affiliate,Ceridian Corporation(“Ceridian”).On December 22,2008,we completed the acquisition of Lan

52、dAmerica Financial Group,Inc.s(“LFG”)two principal title insurance underwriters,Commonwealth Land Title Insurance Company(“Commonwealth”)and Lawyers Title Insurance Corporation(“Lawyers”),as well as United Capital Title Insurance Company(“United”)(collectively,the“LFG Underwriters”).The results of o

53、perations of the LFG Underwriters acquiredare included in our results of operations from December 22,2008 forward.For more information on thisacquisition,see note B of Notes to Consolidated Financial Statements.Prior to October 24,2006,we were known as Fidelity National Title Group,Inc.(“FNT”)and we

54、re amajority-owned subsidiary of another publicly traded company,also called Fidelity National Financial,Inc.(“Old FNF”).On October 24,2006,Old FNF transferred certain assets to us in return for the issuance of45,265,956 shares of our common stock to Old FNF.Old FNF then distributed to its sharehold

55、ers all of itsshares of our common stock,making FNT a standalone public company(the“2006 Distribution”).OnNovember 9,2006,Old FNF was then merged with and into another of its subsidiaries,Fidelity NationalInformation Services,Inc.(“FIS”),after which we changed our name to Fidelity National Financial

56、,Inc.(“FNF”).On November 10,2006,our common stock began trading on the New York Stock Exchange underthe trading symbol“FNF.”We currently have three reporting segments as follows:Fidelity National Title Group.This segment consists of the operations of our title insurance underwrit-ers and related bus

57、inesses.This segment provides core title insurance and escrow and other title-relatedservices including collection and trust activities,trustees sales guarantees,recordings andreconveyances.Specialty Insurance.This segment consists of certain subsidiaries that issue flood,home warranty,homeowners,au

58、tomobile and other personal lines insurance policies.Corporate and Other.This segment consists of the operations of the parent holding company,certainother unallocated corporate overhead expenses,other smaller operations,and our share in the operationsof certain equity method investments,including S

59、edgwick,Ceridian,and Remy International,Inc.(“Remy”).Competitive StrengthsWe believe that our competitive strengths include the following:Leading title insurance company.We are the largest title insurance company in the United States and aleading provider of title insurance and escrow and other titl

60、e-related services for real estate transactions.During 2008,our insurance companies,which include the LFG Underwriters,had a 45.7%share of theU.S.title insurance market,according to the Demotech Performance of Title Insurance Companies 2009Edition,an annual compilation of financial information from

61、the title insurance industry that is published byDemotech Inc.,an independent firm(“Demotech”).1Established relationships with our customers.We have strong relationships with the customers who useour title services.Our distribution network,which includes over 1,600 direct residential title offices a

62、nd almost7,500 agents,is among the largest in the United States.We also benefit from strong brand recognition in ourseven title brands that allows us to access a broader client base than if we operated under a single consolidatedbrand and provides our customers with a choice among brands.Strong valu

63、e proposition for our customers.We provide our customers with title insurance and escrowand other title-related services that support their ability to effectively close real estate transactions.We helpmake the real estate closing more efficient for our customers by offering a single point of access

64、to a broadplatform of title-related products and resources necessary to close real estate transactions.Proven management team.The managers of our operating businesses have successfully built our titlebusiness over an extended period of time,resulting in our business attaining the size,scope and pres

65、ence inthe industry that it has today.Our managers have demonstrated their leadership ability during numerousacquisitions through which we have grown and throughout a number of business cycles and significant periodsof industry change.Competitive cost structure.We have been able to maintain competit

66、ive operating margins in part bymonitoring our businesses in a disciplined manner through continual evaluation and management of our coststructure.When compared to our industry competitors,we also believe that our structure has fewer layers ofmanagement which allows us to operate with lower overhead

67、 costs.Commercial title insurance.While residential title insurance comprises the majority of our business,webelieve that we are the largest provider of commercial real estate title insurance in the United States.Ournetwork of agents,attorneys,underwriters and closers that service the commercial rea

68、l estate markets is one ofthe largest in the industry.Our commercial network combined with our financial strength makes our titleinsurance operations attractive to large national lenders that require the underwriting and issuing of largercommercial title policies.Corporate principles.A cornerstone o

69、f our management philosophy and operating success is the sixfundamental precepts upon which we were founded,which include:Autonomy and entrepreneurship;Bias for action;Customer-oriented and motivated;Minimize bureaucracy;Employee ownership;and Highest standard of conduct.These six precepts are empha

70、sized to our employees from the first day of employment and are integral tomany of our strategies described below.We believe that our competitive strengths position us well to take advantage of any improvements in thereal estate market in future years.StrategyFidelity National Title GroupOur strateg

71、y in the title insurance business is to maximize operating profits by increasing our marketshare and managing operating expenses throughout the real estate business cycle.To accomplish our goals,weintend to:Continue to operate multiple title brands independently.We believe that in order to maintain

72、andstrengthen our title insurance customer base,we must operate our strongest brands in a givenmarketplace independently of each other.Our national and regional brands include Fidelity National2Title,Chicago Title,Commonwealth Land Title,Lawyers Title,Ticor Title,Security Union Title andAlamo Title.

73、In most of our largest markets,we operate two,and in a few cases as many as five brands,including the brands acquired with the LFG Underwriters.This approach allows us to continue toattract customers who identify with one brand over another and allows us to utilize a broader base oflocal agents and

74、local operations than we would have with a single consolidated brand.Consistently deliver superior customer service.We believe customer service and consistent productdelivery are the most important factors in attracting and retaining customers.Our ability to providesuperior customer service and prov

75、ide consistent product delivery requires continued focus on providinghigh quality service and products at competitive prices.Our goal is to continue to improve theexperience of our customers,in all aspects of our business.Manage our operations successfully through business cycles.We operate in a cyc

76、lical business andour ability to diversify our revenue base within our core title insurance business and manage theduration of our investments may allow us to better operate in this cyclical business.Maintaining abroad geographic revenue base,utilizing both direct and independent agency operations a

77、nd pursuingboth residential and commercial title insurance business help diversify our title insurance revenues.Wecontinue to monitor,evaluate and execute upon the consolidation of administrative functions,legalentity structure,and office consolidation,as necessary,to respond to the continually chan

78、gingmarketplace.We maintain shorter durations on our investment portfolio to mitigate our interest rate riskand,in a rising interest rate environment,to increase our investment revenue,which may offset some ofthe decline in premiums and service revenues we would expect in such an environment.A mored

79、etailed discussion of our investment strategies is included in“Investment Policies and InvestmentPortfolio.”Continue to improve our products and technology.As a national provider of real estate transactionproducts and services,we participate in an industry that is subject to significant change,frequ

80、ent newproduct and service introductions and evolving industry standards.We believe that our future successwill depend in part on our ability to anticipate industry changes and offer products and services thatmeet evolving industry standards.In connection with our service offerings,we are continuing

81、 to deploynew information system technologies to our direct and agency operations.We expect to improve theprocess of ordering title and escrow services and improve the delivery of our products to our customers.Maintain values supporting our strategy.We believe that our continued focus on and support

82、 of ourlong-established corporate culture will reinforce and support our business strategy.Our goal is to fosterand support a corporate culture where our employees and agents seek to operate independently andprofitably at the local level while forming close customer relationships by meeting customer

83、 needs andimproving customer service.Utilizing a relatively flat managerial structure and providing our employeeswith a sense of individual ownership supports this goal.Effectively manage costs based on economic factors.We believe that our focus on our operatingmargins is essential to our continued

84、success in the title insurance business.Regardless of the businesscycle in which we may be operating,we seek to continue to evaluate and manage our cost structureand make appropriate adjustments where economic conditions dictate.This continual focus on our coststructure helps us to better maintain o

85、ur operating margins.Specialty InsuranceOur strategy in the specialty insurance business is to provide an efficient and effective deliverymechanism for property and casualty insurance policies placed directly and through independent agents.Weare positioned to be a low expense provider,while continui

86、ng to strictly adhere to pricing and underwritingdisciplines to maintain our underwriting profitability.We offer coverage under the U.S.National Flood Insurance Program(“NFIP”)through our threeunderwriters,Fidelity National Insurance Company,Fidelity National Property and Casualty InsuranceCompany a

87、nd Fidelity National Indemnity Insurance Company,which provide flood insurance in all350 states.We are the largest provider of NFIP flood insurance in the U.S.through our independentagent network.We provide an efficient methodology for obtaining insurance on newly acquired homes,whether newconstruct

88、ion or upon resale.We have an easy to use fully integrated website,which our agents use as acompletely paperless and fully automated quoting and policy delivery system.This system is in use forall of our property and casualty products.Our underwriting practice is conservative.Catastrophe exposure is

89、 closely managed on a real timebasis.We also purchase reinsurance to assist in maintaining our profitability and protecting our surplus.Possible Acquisitions,Dispositions,Minority Owned Operating Subsidiaries and FinancingsWith assistance from our advisors,on an ongoing basis we actively evaluate po

90、ssible strategictransactions,such as acquisitions and dispositions of business units and operating assets and businesscombination transactions,as well as possible means of financing the growth and operations of our businessunits or raising funds,through securities offerings or otherwise,for debt rep

91、ayment or other purposes.In thecurrent economic environment,we may seek to sell certain investments or other assets to increase ourliquidity.Further,our management has stated that we may make acquisitions in lines of business that are notdirectly tied to or synergistic with our core operating segmen

92、ts.There can be no assurance,however,that anysuitable opportunities will arise or that any particular transaction will be completed.AcquisitionsStrategic acquisitions have been an important part of our growth strategy.We made a number ofacquisitions over the past three years to strengthen and expand

93、 our service offerings and customer base in ourvarious businesses,to expand into other businesses or where we otherwise saw value.Acquisition of the LFG Underwriters.On December 22,2008,we completed the acquisition of the LFGUnderwriters.The total purchase price was$258.9 million,net of cash acquire

94、d of$5.9 million,and wascomprised of$153.9 million paid by two of our title insurance underwriters,Fidelity National Title InsuranceCompany and Chicago Title Insurance Company,a$50 million subordinated note due in 2013(see note I ofNotes to Consolidated Financial Statements),$50 million in FNF commo

95、n stock(3,176,620 shares valued at$15.74 per share at the time of closing),and$5 million in transaction costs.Acquisition of Equity Interest in Ceridian.On November 9,2007,we and Thomas H.Lee Partners,L.P.(“THL”),along with certain co-investors,completed the acquisition of Ceridian for$36 in cash pe

96、r share ofcommon stock,or approximately$5.3 billion.We contributed approximately$527 million of the total$1.6 billion equity funding for the acquisition of Ceridian,resulting in a 33%ownership interest by us,whichwe account for using the equity method of accounting for financial statement purposes.C

97、eridian is aninformation services company,servicing the human resources,transportation,and retail industries.Specifically,Ceridian offers a range of human resources outsourcing solutions and is a payment processor and issuer ofcredit,debit,and stored-value cards.Property Insight,LLC.On August 31,200

98、7,we completed the acquisition of Property Insight,LLC(“Property Insight”),a former FIS subsidiary,from FIS for$95 million in cash.Property Insight is a leadingprovider of title plant services for us,as well as various national and regional underwriters.Property Insightprimarily manages,maintains,an

99、d updates the title plants that are owned by us.Additionally,Property Insightmanages title plant construction activities for us.ATM Holdings,Inc.On August 13,2007,we completed the acquisition of ATM Holdings,Inc.(“ATM”),a provider of nationwide mortgage vendor management services to the loan origina

100、tion industry,for$100 million in cash.ATMs primary subsidiary is a licensed title insurance agency which provides centralizedvaluation and appraisal services,as well as,title and closing services to residential mortgage originators,banks,and institutional mortgage lenders throughout the United State

101、s.4Equity Interest in Remy.We held an investment in Remys Senior Subordinated Notes(the“Notes”)with a total fair value of$139.9 million until December 6,2007,at which time Remy implemented a pre-packaged plan of bankruptcy under Chapter 11 of the Bankruptcy Code.Pursuant to the plan of bankruptcy,th

102、e Notes were converted into 4,935,065 shares of Remy common stock and rights to buy 19,909 shares ofRemy Series B preferred stock.Upon execution of the plan of bankruptcy,we purchased all 19,909 shares ofthe preferred stock for$1,000 per share,or a total of$19.9 million,and then on the same date sol

103、d 1,000 ofthose shares to William P.Foley,II,our Chairman of the Board,for$1,000 per share,or a total of$1.0 million.As of December 31,2009,we held a 46%ownership interest in Remy,made up of 4,935,065 shares of Remycommon stock with a cost basis of$64.3 million and 18,909 shares of Remy Series B pre

104、ferred stock with acost basis of$19.5 million.We account for our investment in Remy using the equity method of accounting forfinancial statement purposes.As a result of the exchange of the Notes for the shares of common and preferredstock,we reversed the unrealized gain of$75.0 million that had prev

105、iously been recorded in accumulated othercomprehensive earnings in relation to the Notes.Remy,headquartered in Anderson,Indiana,is a leadingmanufacturer,remanufacturer and distributor of Delco Remy brand heavy-duty systems and Remy brandstarters and alternators,locomotive products and hybrid power t

106、echnology.Title InsuranceMarket for title insurance.While we have seen declines from 2007 to 2009 in the title insurance marketin the United States,the market remains large and grew significantly from 1995 until 2005.Demotech Inc.(“Demotech”),an independent firm providing services to the insurance i

107、ndustry,publishes an annual compila-tion of financial information from the title insurance industry called Demotech Performance of Title InsuranceCompanies.According to this publication,total operating income for the entire U.S.title insurance industrygrew from$4.8 billion in 1995 to$17.8 billion in

108、 2005 and then decreased to$17.6 billion in 2006,$15.2 billion in 2007,and to$11.3 billion in 2008.Growth in the industry is closely tied to variousmacroeconomic factors,including,but not limited to,growth in the gross domestic product,inflation,unemployment,the availability of credit,consumer confi

109、dence,interest rates and sales of and prices for newand existing homes,as well as the volume of refinancing of previously issued mortgages.Most real estate transactions consummated in the U.S.require the use of title insurance by a lendinginstitution before the transaction can be completed.Generally

110、,revenues from title insurance policies aredirectly correlated with the value of the property underlying the title policy,and appreciation in the overallvalue of the real estate market helps drive growth in total industry revenues.Industry revenues are also drivenby factors affecting the volume of r

111、esidential real estate closings,such as the state of the economy,theavailability of mortgage funding,and changes in interest rates,which affect demand for new mortgage loansand refinancing transactions.Both the volume and the average price of residential real estate transactions haveexperienced sign

112、ificant declines in many parts of the country,and it is uncertain how long these trends willcontinue.In 2008 and 2009,the sharply rising mortgage delinquency and default rates caused negativeoperating results at a number of banks and financial institutions and,as a result,have significantly reduced

113、thelevel of lending activity.Multiple banks have failed during this time and others may fail in the future,furtherreducing the capacity of the mortgage industry to make loans.Our revenues in future periods will continue tobe subject to these and other factors which are beyond our control and,as a re

114、sult,are likely to fluctuate.The U.S.title insurance industry is concentrated among a handful of industry participants.According toDemotech the top four title insurance companies accounted for 92.1%of net premiums written in 2008.Over30 independent title insurance companies accounted for the remaini

115、ng 7.9%of net premiums written in 2008.Over the years,the title insurance industry has been consolidating,beginning with the merger of Lawyers andCommonwealth in 1998 to create LFG,followed by our acquisition of Chicago Title in March 2000.Then,inDecember 2008,we acquired LFGs two principal title in

116、surance underwriters,Commonwealth and Lawyers,as well as United.Consolidation has created opportunities for increased financial and operating efficiencies forthe industrys largest participants and should continue to drive profitability and market share in the industry.5Title Insurance Policies.Gener

117、ally,real estate buyers and mortgage lenders purchase title insurance toinsure good and marketable title to real estate and priority of lien.A brief generalized description of theprocess of issuing a title insurance policy is as follows:The customer,typically a real estate salesperson or broker,escr

118、ow agent,attorney or lender,places anorder for a title policy.Company personnel note the specifics of the title policy order and place a request with the titlecompany or its agents for a preliminary report or commitment.After the relevant historical data on the property is compiled,the title officer

119、 prepares a preliminaryreport that documents the current status of title to the property,any exclusions,exceptions and/orlimitations that the title company might include in the policy,and specific issues that need to beaddressed and resolved by the parties to the transaction before the title policy

120、will be issued.The preliminary report is circulated to all the parties for satisfaction of any specific issues.After the specific issues identified in the preliminary report are satisfied,an escrow agent closes thetransaction in accordance with the instructions of the parties and the title companys

121、conditions.Once the transaction is closed and all monies have been released,the title company issues a titleinsurance policy.In a real estate transaction financed with a mortgage,virtually all real property mortgage lenders requiretheir borrowers to obtain a title insurance policy at the time a mort

122、gage loan is made.This lenders policyinsures the lender against any defect affecting the priority of the mortgage in an amount equal to theoutstanding balance of the related mortgage loan.An owners policy is typically also issued,insuring the buyeragainst defects in title in an amount equal to the p

123、urchase price.In a refinancing transaction,only a lenderspolicy is generally purchased because ownership of the property has not changed.In the case of an all-cashreal estate purchase,no lenders policy is issued but typically an owners title policy is issued.Title insurance premiums paid in connecti

124、on with a title insurance policy are based on(and typically apercentage of)either the amount of the mortgage loan or the purchase price of the property insured.Applicable state insurance regulations or regulatory practices may limit the maximum,or in some cases theminimum,premium that can be charged

125、 on a policy.Title insurance premiums are due in full at the closing ofthe real estate transaction.The lenders policy generally terminates upon the refinancing or resale of theproperty.The amount of the insured risk or“face amount”of insurance under a title insurance policy is generallyequal to eith

126、er the amount of the loan secured by the property or the purchase price of the property.The titleinsurer is also responsible for the cost of defending the insured title against covered claims.The insurersactual exposure at any given time,however,generally is less than the total face amount of polici

127、es outstandingbecause the coverage of a lenders policy is reduced and eventually terminated as a result of payment of themortgage loan.A title insurer also generally does not know when a property has been sold or refinancedexcept when it issues the replacement coverage.Because of these factors,the t

128、otal liability of a titleunderwriter on outstanding policies cannot be precisely determined.Title insurance companies typically issue title insurance policies directly through branch offices orthrough title agencies which are subsidiaries of the title insurance company,or indirectly through independ

129、entthird party agencies unaffiliated with the title insurance company.Where the policy is issued through a branchor wholly-owned subsidiary agency operation,the title insurance company typically performs or directs thetitle search,and the premiums collected are retained by the title company.Where th

130、e policy is issued throughan independent agent,the agent generally performs the title search(in some areas searches are performed byapproved attorneys),examines the title,collects the premium and retains a majority of the premium.Theremainder of the premium is remitted to the title insurance company

131、 as compensation,part of which is forbearing the risk of loss in the event a claim is made under the policy.The percentage of the premium retainedby an agent varies from region to region and is sometimes regulated by the states.The title insurance company6is obligated to pay title claims in accordan

132、ce with the terms of its policies,regardless of whether the titleinsurance company issues policies through its direct operations or through independent agents.Prior to issuing policies,title insurers and their agents attempt to reduce the risk of future claim losses byaccurately performing title sea

133、rches and examinations.A title insurance companys predominant expenserelates to such searches and examinations,the preparation of preliminary title reports,policies or commit-ments,the maintenance of title“plants,”which are indexed compilations of public records,maps and otherrelevant historical doc

134、uments,and the facilitation and closing of real estate transactions.Claim losses generallyresult from errors made in the title search and examination process,from hidden defects such as fraud,forgery,incapacity,or missing heirs of the property,and from closing related errors.Residential real estate

135、business results from the construction,sale,resale and refinancing of residentialproperties,while commercial real estate business results from similar activities with respect to properties witha business or commercial use.Commercial real estate title insurance policies insure title to commercial rea

136、lproperty,and generally involve higher coverage amounts and yield higher premiums.Residential real estatetransaction volume is primarily affected by macroeconomic and seasonal factors while commercial real estatetransaction volume is affected primarily by fluctuations in local supply and demand cond

137、itions for commercialspace.Direct and Agency Operations.We provide title insurance services through our direct operations andthrough independent title insurance agents who issue title policies on behalf of our title insurance companies.Our title insurance companies determine the terms and conditions

138、 upon which they will insure title to the realproperty according to their underwriting standards,policies and procedures.Direct Operations.In our direct operations,the title insurer issues the title insurance policy and retainsthe entire premium paid in connection with the transaction.Our direct ope

139、rations provide the followingbenefits:higher margins because we retain the entire premium from each transaction instead of paying acommission to an independent agent;continuity of service levels to a broad range of customers;and additional sources of income through escrow and closing services.We hav

140、e over 1,600 offices throughout the U.S.primarily providing residential real estate title insurance,including approximately 400 offices which were added with the acquisition of the LFG Underwriters onDecember 22,2008.During 2009 and 2008,as title insurance activity has slowed,we closed and consolida

141、teda number of our offices.We continuously monitor the number of direct offices to be in line with our Companystrategy and the current economic environment.Our commercial real estate title insurance business is operatedalmost exclusively through our direct operations.We maintain direct operations fo

142、r our commercial titleinsurance business in all the major real estate markets including New York,Los Angeles,Chicago,Atlanta,Dallas,Philadelphia,Phoenix,Seattle and Houston.Agency Operations.In our agency operations,the search and examination function is performed by anindependent agent or the agent

143、 may purchase the search and examination from us.In either case,the agent isresponsible to ensure that the search and examination is completed.The agent thus retains the majority of thetitle premium collected,with the balance remitted to the title underwriter for bearing the risk of loss in theevent

144、 that a claim is made under the title insurance policy.Independent agents may select among several titleunderwriters based upon their relationship with the underwriter,the amount of the premium“split”offered bythe underwriter,the overall terms and conditions of the agency agreement and the scope of

145、services offered tothe agent.Premium splits vary by geographic region,and in some states are fixed by insurance regulatoryrequirements.Our relationship with each agent is governed by an agency agreement defining how the agentissues a title insurance policy on our behalf.The agency agreement also set

146、s forth the agents liability to usfor policy losses attributable to the agents errors.An agency agreement is usually terminable without causeupon 30 days notice or immediately for cause.In determining whether to engage or retain an independentagent,we consider the agents experience,financial conditi

147、on and loss history.For each agent with whom we7enter into an agency agreement,we maintain financial and loss experience records.We also conduct periodicaudits of our agents and periodically decrease the number of agents with which we transact business in aneffort to reduce future expenses and manag

148、e risks.We transact business with approximately 7,500 agents,including approximately 3,000 which were added with the acquisition of the LFG Underwriters.Fees and Premiums.One method of analyzing our business is to examine the level of premiumsgenerated by direct and agency operations.The following t

149、able presents the percentages of our title insurance premiums generated by direct andagency operations:Amount%(a)Amount%Amount%200920082007Year Ended December 31,(Dollars in millions)Direct.$1,475.337.6%$1,140.342.3%$1,601.842.1%Agency.2,452.362.41,554.757.72,198.757.9Total title insurance premiums.

150、$3,927.6100.0%$2,695.0100.0%$3,800.5100.0%(a)The mix of agency premiums as a percentage of total title insurance premiums increased in 2009 due tothe acquisition of the LFG Underwriters in December 2008,which historically had a higher agencybusiness.The premium for title insurance is due in full whe

151、n the real estate transaction is closed.We recognizetitle insurance premium revenues from direct operations upon the closing of the transaction,whereas premiumrevenues from agency operations include an accrual based on estimates of the volume of transactions that haveclosed in a particular period fo

152、r which premiums have not yet been reported to us.The accrual for agencypremiums is necessary because of the lag between the closing of these transactions and the reporting of thesepolicies to us by the agent,and is based on estimates utilizing historical information.Geographic Operations.Our direct

153、 operations are divided into approximately 180 profit centers,whichinclude 35 added with the acquisition of the LFG Underwriters.Each profit center processes title insurancetransactions within its geographical area,which is usually identified by a county,a group of counties forminga region,or a stat

154、e,depending on the management structure in that part of the country.We also transact titleinsurance business through a network of approximately 7,500 agents,primarily in those areas in which agentsare the more prevalent title insurance provider.This includes approximately 3,000 agents which were add

155、edwith the acquisition of the LFG Underwriters.The following table sets forth the approximate dollar and percentage volumes of our title insurancepremium revenue by state.Amount%Amount%Amount%200920082007Year Ended December 31,(Dollars in millions)California.$691.317.6%$473.817.6%$626.016.5%Texas.40

156、6.110.3337.912.5480.012.6Florida.224.75.7208.47.7412.310.8New York.272.56.9199.27.4305.28.0Illinois.114.02.9118.54.4161.94.3All others.2,219.056.61,357.250.41,815.147.8Totals.$3,927.6100.0%$2,695.0100.0%$3,800.5100.0%Escrow,Title-Related and Other Fees.In addition to fees for underwriting title insu

157、rance policies,wederive a significant amount of our revenues from escrow,title-related and other services,including closing8services.The escrow and other services provided by us include all of those typically required in connectionwith residential and commercial real estate purchases and,refinance a

158、ctivities and default and appraisalservices.Escrow,title-related and other fees represented approximately 23.2%,25.2%,and 19.7%of ourrevenues in 2009,2008,and 2007,respectively.Specialty InsuranceWe issue various insurance policies and contracts,which include the following:Flood insurance.We issue n

159、ew and renewal flood insurance policies in conjunction with the NFIP.The NFIP bears all insurance risk related to these policies.Home warranty.We issue one-year,renewable contracts that protect homeowners against defects inhousehold systems and appliances.Personal lines insurance.We offer and underw

160、rite homeowners insurance in all 50 states.Automobileinsurance is currently underwritten in 31 states.We may expand into a limited number of additionalstates in 2010 where favorable underwriting potential exists.In addition,we underwrite personalumbrella,inland marine(boat and recreational watercraf

161、t),and other personal lines niche products inselected markets.Sales and MarketingOur sales and marketing efforts are primarily organized around our lines of business.Fidelity National Title GroupWe market and distribute our title and escrow products and services to customers in the residential andco

162、mmercial 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,we do notfocus our marketing efforts on the homeowner.We actively encourage our sales personnel to d

163、evelop newbusiness 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 brokersand attorneys who order title insurance policies for their clients.While

164、 our smaller,local clients remainimportant,large customers,such as national residential mortgage lenders,real estate investment trusts anddevelopers have become an increasingly important part of our business.The buying criteria of locally basedclients differ from those of large,geographically divers

165、e customers in that the former tend to emphasizepersonal relationships and ease of transaction execution,while the latter generally place more emphasis onconsistent product delivery across diverse geographical regions and the ability of service providers to meettheir information systems requirements

166、 for electronic product delivery.Specialty InsuranceSpecialty insurance is marketed through three distinct channels.We market our program through our in-house agency via direct mail to customers of our affiliated operations.This direct channel constitutedapproximately 13%of our non-flood premium wri

167、tings in 2009 and 15%in 2008 and 2007.The seconddistribution channel is through independent agents and brokers nationwide.Approximately 86%,83%,and79%of our non-flood premium and the vast majority of our flood business was placed through this channel in2009,2008,and 2007,respectively.We currently ha

168、ve in excess of 19,000 independent agencies nationwideactively producing business on our behalf.The third distribution channel is through independent agents inCalifornia who represent only FNF(“captive independent agents”).This channel,comprised of 12 captiveindependent agents at the end of 2009,acc

169、ounted for 1%,2%,and 6%of the non-flood premium volume in2009,2008,and 2007,respectively.9ClaimsAn important part of our operations is the handling of title and escrow claims.We employ a staff of over500 employees in our claims department,over 200 of which are attorneys.We also use the services of o

170、utsideattorneys.Our claims processing centers are located in Irvine,California,Omaha,Nebraska,and Jacksonville,Florida.We also have a clearance center located in Texas,which is responsible for handling minor,technicaldefects.In-house claims counsels who handle larger claims are also located in other

171、 parts of the country.Claims result from a wide range of causes.These causes generally include,but are not limited to,forgeries,misrepresentations,incorrect legal descriptions,signature and notary errors,unrecorded liens,mechanics liens,the failure to pay off existing liens,mortgage lending fraud,mi

172、shandling or theft ofsettlement funds(including independent agency defalcations),mistakes in the escrow process,issuance by titleagencies of unauthorized coverage,violations of creditors rights(such as claims of preference and fraudulentconveyance in bankruptcy proceedings)and defending insureds whe

173、n covered claims are filed against theirinterest in the property.Some claimants seek damages in excess of policy limits.Those claims are based onvarious legal theories,including in some cases allegations of negligence or an intentional tort.We occasionallyincur losses in excess of policy limits.Expe

174、rience shows that most policy claims and claim payments are madein the first six years after the policy has been issued,although claims are also incurred and paid many yearslater.Title losses due to independent agency defalcations typically occur when the independent agencymisappropriates funds from

175、 escrow accounts under its control.Such losses are usually discovered when theindependent agency fails to pay off an outstanding mortgage loan at closing(or immediately thereafter)fromthe proceeds of the new loan.Once the previous lender determines that its loan has not been paid off timely,itwill f

176、ile a claim against the title insurer.Claims are sometimes complex,vary greatly in dollar amounts and are affected by economic and marketconditions and the legal environment existing at the time claims are processed.In our commercial titlebusiness,we often issue polices with face amounts well in exc

177、ess of$100 million,and from time to timeclaims are submitted with respect to large policies.We believe we are appropriately reserved with respect toall claims(large and small)that we currently face.However,occasionally we experience large losses from titlepolicies that have been issued or our escrow

178、 operations,or overall worsening loss payment experience,whichrequire us to increase our title loss reserves.These events are unpredictable and adversely affect our earnings.Claims often result in litigation in which we may represent our insured and/or ourselves.We consider this typeof litigation to

179、 be an ordinary course aspect of the conduct of our business.We have taken several steps intended to address issues that contributed to increases in each of 2007 and2008 in our provisioning rate for losses occurring under policies written in prior years.Starting in the fourthquarter of 2008,we began

180、 to revise certain aspects of our approach to processing claims.Key changesimplemented include a greater effort to collect contributions from third parties that bear responsibility forlosses,more stringent enforcement of documentation requirements for proof of claims,a more efficient processfor deal

181、ing with minor,technical claim matters,and a greater focus on hiring legal counsel with lower billingrates.Notwithstanding the negative effects of real estate markets,our title claims paid in 2009 declined to$388.6 million compared to$504.5 million in 2008 on a pro forma basis.We are not able to pre

182、dict the extentto which this decline will be sustained over time.We also continued,in 2008 and 2009,reducing our totalnumber of agents,with a focus in part on agents producing higher claims ratios.Reinsurance and CoinsuranceWe limit our maximum loss exposure by reinsuring risks with other insurers u

183、nder excess of loss andcase-by-case(“facultative”)reinsurance agreements.Reinsurance agreements provide generally that thereinsurer is liable for loss and loss adjustment expense payments exceeding the amount retained by the cedingcompany.However,the ceding company remains primarily liable in the ev

184、ent the reinsurer does not meet itscontractual obligations.Facultative reinsurance agreements are entered into with other title insurers when thetransaction to be insured will exceed state statutory limits.Excess of loss reinsurance protects us from a lossfrom a single occurrence.For 2010,our excess

185、 of loss coverage is split into two tiers.The first tier applies to10losses in excess of a$10 million retention up to an aggregate of$100 million in loss from a single occurrence.Above a$100 million total loss,the second tier of our current excess of loss reinsurance program providesadditional cover

186、age above the first$100 million of loss from any occurrence up to$600 million peroccurrence,with the Company participating at 38%from$100 million to$200 million,and at 67%from$200 million to$600 million.In addition to reinsurance,we carry errors and omissions insurance and fidelity bond coverage,eac

187、h ofwhich can provide protection to us in the event of certain types of losses that can occur in our businesses.Our policy is to be selective in choosing our reinsurers,seeking only those companies that we consider tobe financially stable and adequately capitalized.In an effort to minimize exposure

188、to the insolvency of areinsurer,we review the financial condition of our reinsurers.We also use coinsurance in our commercial title business to provide coverage in amounts greater than wewould be willing or able to provide individually.In coinsurance transactions,each individual underwritingcompany

189、issues a separate policy and assumes a portion of the overall total risk.As a coinsurer we are onlyliable for the portion of the risk we assume.We also earn a small amount of additional income,which is reflected in our direct premiums,byassuming reinsurance for certain risks of other title insurers.

190、In our property and casualty lines of business,we purchase catastrophic reinsurance coverage in theamount of$110 million in excess of a$10 million retention.In addition,we are required to participate in theFlorida Hurricane Catastrophe Fund resulting in coverage of$11 million in excess of$3 million

191、retention.Wealso have a quota share agreement where we cede 80%of risks that exceed a coverage value of$750 thousandand a quota share agreement where we cede 50%of our umbrella business.Patents,Trademarks and Other Intellectual PropertyWe rely on a combination of contractual restrictions,internal se

192、curity practices,and copyright and tradesecret law to establish and protect our software,technology,and expertise.Further,we have developed anumber of brands that have accumulated substantial goodwill in the marketplace,and we rely on trademarklaw to protect our rights in that area.We intend to cont

193、inue our policy of taking all measures we deemnecessary to protect our copyright,trade secret,and trademark rights.These legal protections and arrangementsafford only limited protection of our proprietary rights,and there is no assurance that our competitors will notindependently develop or license

194、products,services,or capabilities that are substantially equivalent or superiorto ours.Technology and Research and DevelopmentAs a national provider of real estate transaction products and services,we participate in a dynamicindustry that is subject to significant regulatory requirements,frequent ne

195、w product and service introductions,and evolving industry standards.We believe that our future success will depend in part on our ability toanticipate industry changes and offer products and services that meet evolving industry standards.Inconnection with our service offerings,we are continuing to d

196、eploy new information system technologies to ourdirect and agency operations.We expect to improve the process of ordering title and escrow services andimprove the delivery of our products to our customers.In order to meet new regulatory requirements,we alsocontinue to improve our data collection and

197、 reporting abilities.CompetitionFidelity National Title GroupCompetition in the title insurance industry is based primarily on expertise,service and price.In addition,the financial strength of the insurer has become an increasingly important factor in decisions relating to thepurchase of title insur

198、ance,particularly in multi-state transactions and in situations involving real estate-relatedinvestment vehicles such as real estate investment trusts and real estate mortgage investment conduits.The11number and size of competing companies varies in the different geographic areas in which we conduct

199、 ourbusiness.In our principal markets,competitors include other major title underwriters such as The FirstAmerican Corporation,Old Republic International Corporation and Stewart Information Services Corporation,as well as numerous smaller title insurance companies,underwritten title companies and in

200、dependent agencyoperations at the regional and local level.Independent agency operations account for over 60%of our totaltitle insurance revenue.Several of the smaller competitors have closed their operations in the past few years asa result of the significant decrease in activity in the residential

201、 real estate market.Also,the removal ofregulatory barriers might result in new competitors entering the title insurance business,and those newcompetitors may include diversified financial services companies that have greater financial resources than wedo and possess other competitive advantages.Comp

202、etition among the major title insurance companies,expansion by smaller regional companies and any new entrants with alternative products could affect ourbusiness operations and financial condition.Specialty InsuranceIn our specialty insurance segment,we compete with the national,regional and local i

203、nsurance carriers.Depending on geographic location,various personal lines carriers,such as State Farm,Allstate,Farmers,Travelers,Hartford,Nationwide and numerous other companies compete for this personal lines business.Inour home warranty business,our competitors include American Home Shield and The

204、 First AmericanCorporation.In addition to price,service and convenience are competitive factors.We strive to competeprimarily through providing an efficient and streamlined product delivery platform.RegulationOur insurance subsidiaries,including title insurers,property and casualty insurers,underwri

205、tten titlecompanies and insurance agencies,are subject to extensive regulation under applicable state laws.Each of theinsurers is subject to a holding company act in its state of domicile,which regulates,among other matters,theability to pay dividends and enter into transactions with affiliates.The

206、laws of most states in which we transactbusiness establish supervisory agencies with broad administrative powers relating to issuing and revokinglicenses to transact business,regulating trade practices,licensing agents,approving policy forms,accountingpractices,financial practices,establishing reser

207、ve and capital and surplus as regards policyholders(“capitaland surplus”)requirements,defining suitable investments for reserves and capital and surplus and approvingrate schedules.The process of state regulation of changes in rates ranges from states which set rates,to stateswhere individual compan

208、ies or associations of companies prepare rate filings which are submitted for approval,to a few states in which rate changes do not need to be filed for approval.Since we are governed by both state and federal governments and the applicable insurance laws andregulations are constantly subject to cha

209、nge,it is not possible to predict the potential effects on our insuranceoperations,particularly our Fidelity National Title Group segment,of any laws or regulations that may becomemore restrictive in the future or if new restrictive laws will be enacted.Pursuant to statutory accounting requirements

210、of the various states in which our title insurers aredomiciled,these insurers must defer a portion of premiums as an unearned premium reserve for the protectionof policyholders(in addition to their reserves for known claims)and must maintain qualified assets in anamount equal to the statutory requir

211、ements.The level of unearned premium reserve required to be maintainedat any time is determined by statutory formula based upon either the age,number of policies,and dollaramount of policy liabilities underwritten,or the age and dollar amount of statutory premiums written.As ofDecember 31,2009,the c

212、ombined statutory unearned premium reserve required and reported for our titleinsurers was$1,978.3 million.In addition to statutory unearned premium reserves and reserves for knownclaims,each of our insurers maintains surplus funds for policyholder protection and business operations.Each of our insu

213、rance subsidiaries is regulated by the insurance regulatory authority in its respective stateof domicile,as well as that of each state in which it is licensed.The insurance commissioners of theirrespective states of domicile are the primary regulators of our insurance subsidiaries.Each of the insure

214、rs issubject to periodic regulatory financial examination by regulatory authorities,and certain of these examinationsare currently ongoing.12Under the statutes governing insurance holding companies in most states,insurers may not enter intocertain transactions,including sales,reinsurance agreements

215、and service or management contracts,with theiraffiliates unless the regulatory authority of the insurers state of domicile has received notice at least 30 daysprior to the intended effective date of such transaction and has not objected to,or has approved,the transactionwithin the 30-day period.As a

216、 holding company with no significant business operations of our own,we depend on dividends orother distributions from our subsidiaries as the principal source of cash to meet our obligations,including thepayment of interest on and repayment of principal of any debt obligations,and to pay any dividen

217、ds to ourstockholders.The payment of dividends or other distributions to us by our insurers is regulated by theinsurance laws and regulations of their respective states of domicile.In general,an insurance companysubsidiary may not pay an“extraordinary”dividend or distribution unless the applicable i

218、nsurance regulatorhas received notice of the intended payment at least 30 days prior to payment and has not objected to or hasapproved the payment within the 30-day period.In general,an“extraordinary”dividend or distribution isstatutorily defined as a dividend or distribution that,together with othe

219、r dividends and distributions madewithin the preceding 12 months,exceeds the greater of:10%of the insurers statutory surplus as of the immediately prior year end;or the statutory net income of the insurer during the prior calendar year.The laws and regulations of some jurisdictions also prohibit an

220、insurer from declaring or paying adividend except out of its earned surplus or require the insurer to obtain prior regulatory approval.During2010,our directly owned title insurers can pay dividends or make distributions to us of approximately$289.4 million without prior regulatory approval;however,i

221、nsurance regulators have the authority to prohibitthe payment of ordinary dividends or other payments by our title insurers to us(such as a payment under a taxsharing agreement or for employee or other services)if they determine that such payment could be adverse toour policyholders.The combined sta

222、tutory capital and surplus of our title insurers was$860.9 million and$634.9 million asof December 31,2009 and 2008,respectively.The combined statutory earnings(loss)of our title insurers were$270.4 million,$(170.5)million,and$204.8 million for the years ended December 31,2009,2008,and 2007,respecti

223、vely.As a condition to continued authority to underwrite policies in the states in which our insurers conducttheir business,they are required to pay certain fees and file information regarding their officers,directors andfinancial condition.Pursuant to statutory requirements of the various states in

224、 which our insurers are domiciled,they mustmaintain certain levels of minimum capital and surplus.Each of our insurers has complied with the minimumstatutory requirements as of December 31,2009.Our underwritten title companies are also subject to certain regulation by insurance regulatory or banking

225、authorities,primarily relating to minimum net worth.Minimum net worth requirements for each underwrittentitle company are as follows:$7.5 million for Fidelity National Title Company,$2.5 million for FidelityNational Title Company of California,$3.0 million for Chicago Title Company,and$0.4 million f

226、or TicorTitle Company of California,Commonwealth Land Title Company,and Lawyers Title Company.Thesecompanies were in compliance with their respective minimum net worth requirements at December 31,2009.We receive inquiries and requests for information from state insurance departments,attorneys genera

227、l andother regulatory agencies from time to time about various matters relating to our business.Sometimes thesetake the form of civil investigative subpoenas.We attempt to cooperate with all such inquiries.From time totime,we are assessed fines for violations of regulations or other matters or enter

228、 into settlements with suchauthorities which require us to pay money or take other actions.For a discussion of certain pending matters,see Item 3,Legal Proceedings.Before a person can acquire control of a U.S.insurance company,prior written approval must be obtainedfrom the insurance commissioner of

229、 the state in which the insurer is domiciled.Prior to granting approval of13an application to acquire control of a domestic insurer,the state insurance commissioner will consider suchfactors as the financial strength of the applicant,the integrity and management of the applicants Board ofDirectors a

230、nd executive officers,the acquirers plans for the insurers Board of Directors and executiveofficers,the acquirers plans for the future operations of the domestic insurer and any anti-competitive resultsthat may arise from the consummation of the acquisition of control.Generally,state statutes provid

231、e thatcontrol over a domestic insurer is presumed to exist if any person,directly or indirectly,owns,controls,holdswith the power to vote,or holds proxies representing 10%or more of the voting securities of the domesticinsurer.(In the state of Florida,where one of our title insurers is commercially

232、domiciled,control may bepresumed to exist upon acquisition of 5%or more of the insurers voting securities.)Because a personacquiring 10%or more of our common shares would indirectly control the same percentage of the stock ofour insurers,the insurance change of control laws would likely apply to suc

233、h a transaction(and any acquisitionof 5%or more would require filing a disclaimer of control with,or obtaining a change of control approvalfrom,the State of Florida).The National Association of Insurance Commissioners(“NAIC”)has adopted an instruction requiring anannual certification of reserve adeq

234、uacy by a qualified actuary.Because all of the states in which our titleinsurers are domiciled require adherence to NAIC filing procedures,each such insurer,unless it qualifies foran exemption,must file an actuarial opinion with respect to the adequacy of its reserves.RatingsOur title insurance unde

235、rwriters are regularly assigned ratings by independent agencies designed to indicatetheir financial condition and/or claims paying ability.The rating agencies determine ratings by quantitatively andqualitatively analyzing financial data and other information.Our title subsidiaries include Alamo Titl

236、e,ChicagoTitle,Commonwealth Land Title,Fidelity National Title,Lawyers Title,Continental Title Insurance Company(previously LandAmerica Title of New Jersey),Security Union Title,Ticor Title,and United Capital Title.Standard&Poors Ratings Group(“S&P”),Moodys Investors Service(“Moodys”),and A.M.Best C

237、ompany(“A.M.Best”)provide ratings for the entire FNF family of companies as a whole as follows:S&P(1)MoodysA.M.BestFNF family of companies.A-A3A-(1)S&P has also assigned a rating of BBB+to the LFG Underwriters.Demotech provides financial strength/stability ratings for each of our principal title ins

238、urance underwritersindividually,as follows:Alamo Title Insurance.AChicago Title Insurance Co.A”Chicago Title Insurance Co.of Oregon.ACommonwealth Land Title Insurance Co.AFidelity National Title Insurance Co.ALawyers Title Insurance Corporation.ALandAmerica NJ Title Insurance Company.ANations Title

239、Insurance of New York,Inc.ASecurity Union Title Insurance Co.ATicor Title Insurance Co.ATicor Title Insurance Co.of Florida.AUnited Capital Title Insurance Co.AThe ratings of S&P,Moodys,A.M.Best,and Demotech described above are not designed to be,and donot serve as,measures of protection or valuatio

240、n offered to investors.These financial strength ratings shouldnot be relied on with respect to making an investment in our securities.See“Item 1A.Risk Factors If therating agencies downgrade our Company,our results of operations and competitive position in the titleinsurance industry may suffer”for

241、further information.14Investment Policies and Investment PortfolioOur investment policy is designed to maximize total return through investment income and capitalappreciation consistent with moderate risk of principal,while providing adequate liquidity.The various statesin which we operate regulate

242、the types of assets that qualify for purposes of capital,surplus,and statutoryunearned premium reserves.Our investment policy specifically limits duration and non-investment gradeallocations in the core fixed-income portfolio.Maintaining shorter durations on the investment portfolio allowsfor the mi

243、tigation of interest rate risk.Equity securities are utilized to take advantage of perceived value or forstrategic purposes.Due to the magnitude of the investment portfolio in relation to our claims loss reserves,durations of investments are not specifically matched to the cash outflows required to

244、pay claims.As of December 31,2009 and 2008,the carrying amount,which approximates the fair value,of totalinvestments,excluding investments in unconsolidated affiliates,was$4.1 billion and$3.7 billion,respectively.We purchase investment grade fixed maturity securities,selected non-investment grade fi

245、xed maturitysecurities and equity securities.The securities in our portfolio are subject to economic conditions and normalmarket risks and uncertainties.Our fixed maturities include auction rate securities at December 31,2009 witha par value of$69.7 million and fair value of$45.2 million and at Dece

246、mber 31,2008,a par value of$88.8 million and fair value of$32.0 million,which were included in the assets of the LFG Underwriters thatwe acquired on December 22,2008.Our cost basis at December 31,2009 was$26.4 million,which representsthe fair value at the acquisition date.These auction rate securiti

247、es make up approximately one percent of ourtotal portfolio.Fair values for auction rate securities are provided by a third-party pricing service.The following table presents certain information regarding the investment ratings of our fixed maturityportfolio at December 31,2009 and 2008.Rating(1)Amor

248、tizedCost%ofTotalFairValue%ofTotalAmortizedCost%ofTotalFairValue%ofTotal20092008December 31,(Dollars in millions)AAA/Aaa.$1,154.134.4%$1,195.833.9%$1,154.940.7%$1,194.041.8%AA/Aa.868.125.9898.225.5621.421.9627.722.0A.930.227.7985.528.0778.527.5761.026.7BBB/Baa.329.59.8341.89.7231.98.2223.37.8B.22.40

249、.751.11.55.10.24.40.2Other.50.31.551.81.442.41.543.41.5$3,354.6100.0%$3,524.2100.0%$2,834.2100.0%$2,853.8100.0%(1)Ratings as assigned by Standard&Poors Ratings Group or Moodys Investors Services if a Standard&Poors rating is unavailable.The following table presents certain information regarding cont

250、ractual maturities of our fixed maturitysecurities:MaturityAmortizedCost%ofTotalFairValue%ofTotalDecember 31,2009(Dollars in millions)One year or less.$250.97.5%$254.17.2%After one year through five years.1,645.449.01,739.249.4After five years through ten years.942.628.1974.127.6After ten years.217.

251、26.5244.36.9Mortgage-backed/asset-backed securities.298.58.9312.58.9$3,354.6100.0%$3,524.2100.0%15The majority of our mortgage-backed and asset-backed securities were acquired as a result of theacquisition of the LFG Underwriters on December 22,2008.At December 31,2009 all of our mortgage-backed and

252、 asset-backed securities are rated AAA.The mortgage-backed and asset-backed securities are madeup of$177.9 million of agency mortgage-backed securities,$79.6 million of collateralized mortgageobligations,$15.2 million of commercial mortgage-backed securities,and$39.8 million in asset-backedsecuritie

253、s.Expected maturities may differ from contractual maturities because certain borrowers have the right tocall or prepay obligations with or without call or prepayment penalties.Because of the potential forprepayment on mortgage-backed and asset-backed securities,they are not categorized by contractua

254、l maturity.Fixed maturity securities with an amortized cost of$575.6 million and a fair value of$593.8 million werecallable at December 31,2009.Our equity securities at December 31,2009 and 2008 consisted of investments at a cost basis of$64.6 million and$79.8 million,respectively,and fair value of$

255、92.5 million and$71.5 million,respectively.The balance of equity securities at December 31,2009 is primarily composed of an investment in FIS stock of$50.0 million,which we purchased on October 1,2009,pursuant to an investment agreement between us andFIS dated March 31,2009 in connection with a merg

256、er between FIS and Metavante Technologies,Inc.We arerequired to hold this investment for a period of at least 6 months from the date of purchase in accordance withSecurities and Exchange Commission Rule 144.The fair value of the FIS stock was$75.4 million as ofDecember 31,2009.There were no signific

257、ant investments in banks,trust or insurance companies atDecember 31,2009 or 2008.At December 31,2009 and 2008,we also held$617.1 million and$644.5 million,respectively,ininvestments that are accounted for using the equity method of accounting,principally our ownership interestsin Sedgwick,Ceridian,a

258、nd Remy(see note D of Notes to Consolidated Financial Statements).Other long-term investments consist primarily of fixed-maturity structured notes as well as investmentsaccounted for using the cost method of accounting.As of December 31,2009,other long-term investmentsincluded structured notes at a

259、cost basis of$75 million and a fair value of$78.7 million at December 31,2009,which we purchased in the third quarter of 2009.Also included in other long-term investments wereinvestments accounted for using the cost method of accounting of$24.8 million and$18.3 million,as ofDecember 31,2009 and 2008

260、,respectively.Short-term investments,which consist primarily of securities purchased under agreements to resell,commercial paper and money market instruments which have an original maturity of one year or less,arecarried at amortized cost,which approximates fair value.As of December 31,2009 and 2008

261、,short-terminvestments amounted to$348.1 million and$788.4 million,respectively.Our investment results for the years ended December 31,2009,2008 and 2007 were as follows:200920082007December 31,(Dollars in millions)Net investment income(1).$188.1$153.8$219.8Average invested assets.$4,288.8$3,545.5$4

262、,415.0Effective return on average invested assets.4.4%4.3%5.0%(1)Net investment income as reported in our Consolidated Statements of Operations has been adjusted in thepresentation above to provide the tax equivalent yield on tax exempt investments.Loss ReservesFor information about our loss reserve

263、s,see Item 7.Managements Discussion and Analysis of FinancialCondition and Results of Operations Critical Accounting Policies.16EmployeesAs of January 31,2010,we had approximately 17,200 full-time equivalent employees.From 2006 to2008,we actively sought to reduce our head count as activity in our Fi

264、delity National Title Group segmentdeclined.As the economic environment and order counts began to stabilize in 2009,we curtailed efforts toreduce staffing levels in our legacy title operations,but aggressively reduced staff in the acquired LFGUnderwriters to meet our intended profitability standards

265、.We continue to monitor our staffing levels based oncurrent economic activity.We believe that our relations with employees are generally good.None of ouremployees are subject to collective bargaining agreements.Statement Regarding Forward-Looking InformationThe statements contained in this Form 10-K

266、 or in our other documents or in oral presentations or otherstatements made by our management that are not purely historical are forward-looking statements within themeaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of1934,including statements regard

267、ing our expectations,hopes,intentions,or strategies regarding the future.These statements relate to,among other things,future financial and operating results of Fidelity.In manycases,you can identify forward-looking statements by terminology such as“may,”“will,”“should,”“expect,”“plan,”“anticipate,”

268、“believe,”“estimate,”“predict,”“potential,”or“continue,”or the negative of these termsand other comparable terminology.Actual results could differ materially from those anticipated in thesestatements as a result of a number of factors,including,but not limited to:changes in general economic,business

269、,and political conditions,including changes in the financialmarkets;continued 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 weakU.S.economy;our potential inability

270、 to find suitable acquisition candidates,as well as the risks associated withacquisitions in lines of business that will not necessarily be limited to our traditional areas of focus,ordifficulties integrating acquisitions;our dependence on distributions from our title insurance underwriters as our m

271、ain source of cash flow;significant competition that our operating subsidiaries face;compliance with extensive government regulation of our operating subsidiaries and adverse changes inapplicable laws or regulations or in their application by regulators;regulatory investigations of the title insuran

272、ce industry;our business concentration in the State of California,the source of approximately 17.6%of our titleinsurance premiums;and other risks detailed elsewhere in this document and in our other filings with the SEC.We are not under any obligation(and expressly disclaim any such obligation)to up

273、date or alter ourforward-looking statements,whether as a result of new information,future events or otherwise.You shouldcarefully consider the possibility that actual results may differ materially from our forward-looking statements.Additional InformationOur website address is .We make available fre

274、e of charge on or through our website ourAnnual Report on Form 10-K,Quarterly Reports on Form 10-Q,Current Reports on Form 8-K and allamendments to those reports filed or furnished pursuant to Section 13(a)or 15(d)of the Securities ExchangeAct of 1934,as amended,as soon as reasonably practicable aft

275、er such material is electronically filed with orfurnished to the Securities and Exchange Commission.However,the information found on our website is notpart of this or any other report.17Item 1A.Risk FactorsIn addition to the normal risks of business,we are subject to significant risks and uncertaint

276、ies,includingthose listed below and others described elsewhere in this Annual Report on Form 10-K.Any of the risksdescribed herein could result in a significant or material adverse effect on our results of operations or financialcondition.GeneralIf adverse changes in the levels of real estate activi

277、ty occur,our revenues may decline.Title insurance revenue is closely related to the level of real estate activity which includes sales,mortgagefinancing and mortgage refinancing.The levels of real estate activity are primarily affected by the averageprice of real estate sales,the availability of fun

278、ds to finance purchases and mortgage interest rates.Both thevolume and the average price of residential real estate transactions have experienced declines in many parts ofthe country over the past 3 years,and these trends appear likely to continue.The volume of refinancingtransactions in particular

279、and mortgage originations in general declined over the past four years from 2005 andprior levels,resulting in a reduction of revenues in our businesses.We have found that residential real estate activity generally decreases in the following situations:when mortgage interest rates are high or increas

280、ing;when the mortgage funding supply is limited;and when the United States economy is weak.Declines in the level of real estate activity or the average price of real estate sales are likely to adverselyaffect our title insurance revenues.In 2009,the continued mortgage delinquency and default rates c

281、ausednegative operating results at a number of banks and financial institutions and,as a result,continue to suppressthe level of lending activity.The MBAs Mortgage Finance Forecast currently estimates an approximately$1.3 trillion mortgage origination market for 2010,which would be a decrease of 39.

282、5%from 2009.The MBAforecasts that the 39.5%decrease will result almost entirely from decreased refinance activity.Our revenues infuture periods will continue to be subject to these and other factors which are beyond our control and,as aresult,are likely to fluctuate.We have recorded goodwill as a re

283、sult of prior acquisitions,and a continued economic downturn couldcause these balances to become impaired,requiring write-downs that would reduce our operating income.Goodwill aggregated approximately$1,455.2 million,or 18.3%of our total assets,as of December 31,2009.Current accounting rules require

284、 that goodwill be assessed for impairment at least annually or wheneverchanges in circumstances indicate that the carrying amount may not be recoverable from estimated future cashflows.Factors that may be considered a change in circumstance indicating the carrying value of our intangibleassets,inclu

285、ding goodwill,may not be recoverable include,but are not limited to,significant under-performance relative to historical or projected future operating results,a significant decline in our stock priceand market capitalization,and negative industry or economic trends.No goodwill impairment charge wasr

286、ecorded in 2009.However,if there is a continued economic downturn,the carrying amount of our goodwillmay no longer be recoverable,and we may be required to record an impairment charge,which would have anegative impact on our results of operations and financial condition.We will continue to monitor o

287、ur marketcapitalization and the impact of a continued economic downturn on our business to determine if there is animpairment of goodwill in future periods.If economic and credit market conditions further deteriorate,it could have a material adverse impact onour investment portfolio.Our investment p

288、ortfolio is exposed to economic and financial market risks,including changes in interestrates,credit markets and prices of marketable equity and fixed-income securities.Our investment policy isdesigned to maximize total return through investment income and capital appreciation consistent withmoderat

289、e risk of principal,while providing adequate liquidity and complying with internal and regulatoryguidelines.To achieve this objective,our marketable debt investments are primarily investment grade,liquid,18fixed-income securities and money market instruments denominated in U.S.dollars.We also make i

290、nvestmentsin certain equity securities in order to take advantage of perceived value and for strategic purposes.In the past,economic and credit market conditions have adversely affected the ability of some issuers of investmentsecurities to repay their obligations and have affected the values of inv

291、estment securities.If the carrying valueof our investments exceeds the fair value,and the decline in fair value is deemed to be other-than-temporary,we will be required to write down the value of our investments,which could have a material negative impacton our results of operations and financial co

292、ndition.If we experience changes in the rate or severity of title insurance claims,it may be necessary for us torecord additional charges to our claim loss reserve.This may result in lower net earnings and the poten-tial for earnings volatility.By their nature,claims are often complex,vary greatly i

293、n dollar amounts and are affected by economicand market conditions and the legal environment existing at the time of settlement of the claims.Estimatingfuture title loss payments is difficult because of the complex nature of title claims,the long periods of timeover which claims are paid,significant

294、ly varying dollar amounts of individual claims and other factors.Fromtime to time,we experience large losses or an overall worsening of our loss payment experience in regard tothe frequency or severity of claims that makes us record additional charges to our claims loss reserve.Thereare currently pe

295、nding several large claims which we believe can be defended successfully without materialloss payments.However,if unanticipated material payments are required to settle these claims,it could resultin or contribute to additional charges to our claim loss reserves.These loss events are unpredictable a

296、ndadversely affect our earnings.At each quarter end,our recorded reserve for claim losses is initially the result of taking the priorrecorded reserve for claim losses,adding the current provision to that balance and subtracting actual paidclaims from that balance,resulting in an amount that manageme

297、nt then compares to the actuarial pointestimate provided in the actuarial calculation.Due to the uncertainty and judgment used by both managementand our actuary,our ultimate liability may be greater or less than our current reserves and/or our actuaryscalculation.If the recorded amount is within a r

298、easonable range of the actuarys point estimate,but not at thepoint estimate,management assesses other factors in order to determine our best estimate.These factors,which are more qualitative than quantitative,can change from period to period and include items such ascurrent trends in the real estate

299、 industry(which management can assess,but for which there is a time lag inthe development of the data used by our actuary),any adjustments from the actuarial estimates needed for theeffects of unusually large or small claims,improvements in our claims management processes,and other costsaving measur

300、es.Depending upon our assessment of these factors,we may or may not adjust the recordedreserve.If the recorded amount is not within a reasonable range of the actuarys point estimate,we wouldrecord a charge or credit and reassess the provision rate on a go forward basis.As a result of favorable claim

301、 loss development on prior policy years,we recorded a credit in 2009 of$74.4 million($47.1 million net of income taxes)to our provision for claim losses.As a result of adverseclaim loss development on prior policy years,we recorded charges in 2008 totaling$261.6 million($157.0 million net of income

302、taxes),in our provision for claim losses.These amounts were recorded inaddition to our average provision for claim losses of 7.25%and 8.5%,in 2009 and 2008,respectively,of titlepremiums.We will reassess the provision to be recorded in future periods consistent with this methodologyand can make no as

303、surance that we will not need to record additional charges in the future to increase reservesin respect of prior periods.Our insurance subsidiaries must comply with extensive regulations.These regulations may increase ourcosts or impede or impose burdensome conditions on actions that we might seek t

304、o take to increase therevenues of those subsidiaries.Our insurance businesses are subject to extensive regulation by state insurance authorities in each state inwhich they operate.These agencies have broad administrative and supervisory power relating to the following,among other matters:licensing r

305、equirements;trade and marketing practices;19 accounting and financing practices;capital and surplus requirements;the amount of dividends and other payments made by insurance subsidiaries;investment practices;rate schedules;deposits of securities for the benefit of policyholders;establishing reserves

306、;and regulation of reinsurance.Most states also regulate insurance holding companies like us with respect to acquisitions,changes ofcontrol and the terms of transactions with our affiliates.State regulations may impede or impose burdensomeconditions on our ability to increase or maintain rate levels

307、 or on other actions that we may want to take toenhance our operating results.In addition,we may incur significant costs in the course of complying withregulatory requirements.Further,at least one state legislature(New York)has recently proposed taking overthe title industry in that state and making

308、 it a state-run agency,as a means to increase state governmentrevenues.Although we think any such takeover is unlikely,if one or more such takeovers were to occur theycould adversely affect our business.We cannot be assured that future legislative or regulatory changes will notadversely affect our b

309、usiness operations.See“Item 1.Business Regulation.”State regulation of the rates we charge for title insurance could adversely affect our results of operations.Our title insurance subsidiaries are subject to extensive rate regulation by the applicable state agencies inthe jurisdictions in which they

310、 operate.Title insurance rates are regulated differently in the various states,withsome states requiring the subsidiaries to file and receive approval of rates before such rates become effectiveand some states promulgating the rates that can be charged.In almost all states in which our title subsidi

311、ariesoperate,our rates must not be excessive,inadequate or unfairly discriminatory.See also the risk factor belowrelating to regulatory conditions in California.Regulatory investigations of the insurance industry may lead to fines,settlements,new regulation or legaluncertainty,which could negatively

312、 affect our results of operations.We receive inquiries and requests for information from state insurance departments,attorneys general andother regulatory agencies from time to time about various matters relating to our business.Sometimes thesetake the form of civil investigative subpoenas.We attemp

313、t to cooperate with all such inquiries.From time totime,we are assessed fines for violations of regulations or other matters or enter into settlements with suchauthorities which require us to pay money or take other actions.These fines may be significant and actions weare required to take may advers

314、ely affect our business.Because we are dependent upon California for approximately 17.6 percent of our title insurance premi-ums,our business may be adversely affected by regulatory conditions in California.California is the largest source of revenue for the title insurance industry and,in 2009,Cali

315、fornia-basedpremiums accounted for 25%of premiums earned by our direct operations and 6%of our agency premiumrevenues.In the aggregate,California accounted for approximately 17.6%of our total title insurance premiumsfor 2009.A significant part of our revenues and profitability are therefore subject

316、to our operations inCalifornia and to the prevailing regulatory conditions in California.Adverse regulatory developments inCalifornia,which could include reductions in the maximum rates permitted to be charged,inadequate rateincreases or more fundamental changes in the design or implementation of th

317、e California title insuranceregulatory framework,could have a material adverse effect on our results of operations and financialcondition.20If the rating agencies downgrade our Company,our results of operations and competitive position in thetitle insurance industry may suffer.Ratings have always be

318、en an important factor in establishing the competitive position of insurancecompanies.Our title insurance subsidiaries are rated by S&P,Moodys,A.M.Best,and Demotech.Ratingsreflect the opinion of a rating agency with regard to an insurance companys or insurance holding companysfinancial strength,oper

319、ating performance and ability to meet its obligations to policyholders and are notevaluations directed to investors.Our ratings are subject to continued periodic review by rating agencies andthe continued retention of those ratings cannot be assured.If our ratings are reduced from their current leve

320、lsby those entities,our results of operations could be adversely affected.Our management has articulated a willingness to seek growth through acquisitions in lines of businessthat will not necessarily be limited to our traditional areas of focus or geographic areas.This expansionof our business subj

321、ects us to associated risks,such as the diversion of managements attention and lackof experience in operating such businesses,and may affect our credit and ability to repay our debt.Our management has stated that we may make acquisitions in lines of business that are not directly tiedto or synergist

322、ic with our core operating segments.Accordingly,we have in the past acquired,and may in thefuture acquire,businesses in industries or geographic areas with which management is less familiar than weare with our core businesses.These activities involve risks that could adversely affect our operating r

323、esults,such as diversion of managements attention and lack of substantial experience in operating such businesses.There can be no guarantee that we will not enter into transactions or make acquisitions that will cause us toincur additional debt,increase our exposure to market and other risks and cau

324、se our credit or financial strengthratings to decline.We are a holding company and depend on distributions from our subsidiaries for cash.We are a holding company whose primary assets are the securities of our operating subsidiaries.Ourability to pay interest on our outstanding debt and our other ob

325、ligations and to pay dividends is dependent onthe ability of our subsidiaries to pay dividends or make other distributions or payments to us.If our operatingsubsidiaries are not able to pay dividends to us,we may not be able to meet our obligations or pay dividendson our common stock.Our title insur

326、ance and specialty insurance subsidiaries must comply with state laws which require themto maintain minimum amounts of working capital,surplus and reserves,and place restrictions on the amountof dividends that they can distribute to us.Compliance with these laws will limit the amounts our regulateds

327、ubsidiaries can dividend to us.During 2010,our title insurers will be able to pay dividends or makedistributions to us without prior regulatory approval of approximately$289.4 million.The maximum dividend permitted by law is not necessarily indicative of an insurers actual ability to paydividends,wh

328、ich may be constrained by business and regulatory considerations,such as the impact ofdividends on surplus,which could affect an insurers ratings or competitive position,the amount of premiumsthat can be written and the ability to pay future dividends.Further,depending on business and regulatorycond

329、itions,we may in the future need to retain cash in our underwriters or even contribute cash to one ormore of them in order to maintain their ratings or their statutory capital position.Such a requirement could bethe result of investment losses,reserve charges,adverse operating conditions in the curr

330、ent economicenvironment or changes in interpretation of statutory accounting requirements by regulators.Our specialty insurance segment is a smaller operation;and as a result,it is unlikely to be a significantsource of dividends to us in 2010.We could have conflicts with FIS,and our chairman of our

331、Board of Directors and other officers anddirectors could have conflicts of interest due to their relationships with FIS.FIS and FNF were under common ownership by another publicly traded company,also called FidelityNational Financial,Inc.(“Old FNF”)until October 2006,when Old FNF distributed all of

332、its FNF shares tothe stockholders of Old FNF.In November 2006,Old FNF then merged into FIS.21Conflicts may arise between us and FIS as a result of our ongoing agreements and the nature of ourrespective businesses.We are party to a number of agreements with FIS,and we may enter into furtheragreements

333、 with FIS.Certain of our executive officers and directors could be subject to conflicts of interestwith respect to such agreements and other matters due to their relationships with FIS.Some of our executive officers and directors own substantial amounts of FIS stock and stock options.Such ownership could create or appear to create potential conflicts of interest when our directors and officersare