UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarter Ended June 30, 2008

FIDELITY NATIONAL FINANCIAL, INC.

(Exact name of registrant as specified in its charter)

Delaware		16-1725106
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification Number)

601 Riverside Avenue, Jacksonville, Florida		32204
(Address of principal executive offices)		(Zip Code)

(904) 854-8100
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES þ     NO o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES o     NO þ

     As of July 31, 2008, 211,457,680 shares of the Registrant’s Common Stock were outstanding.

 

 

FORM 10-Q
QUARTERLY REPORT
Quarter Ended June 30, 2008

INDEX

				Page
Part I:		FINANCIAL INFORMATION
Item 1.		Condensed Consolidated Financial Statements
A.		Condensed Consolidated Balance Sheets as of June 30, 2008 and December 31, 2007			3
B.		Condensed Consolidated Statements of Earnings for the three and six month periods ended June 30, 2008 and 2007			4
C.		Condensed Consolidated Statements of Comprehensive Earnings for the three and six month periods ended June 30, 2008 and 2007			5
D.		Condensed Consolidated Statement of Stockholders’ Equity for the six month period ended June 30, 2008			6
E.		Condensed Consolidated Statements of Cash Flows for the six month periods ended June 30, 2008 and 2007			7
F.		Notes to Condensed Consolidated Financial Statements			8
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations			21
Item 3.		Quantitative and Qualitative Disclosure About Market Risk			32
Item 4.		Controls and Procedures			32
Part II:		OTHER INFORMATION
Item 1.		Legal Proceedings			33
Item 1A.		Risk Factors			34
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds			35
Item 4.		Submission of Matters to a Vote of Security Holders			35
Item 6.		Exhibits			36
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32.1
EXHIBIT 32.2

Part I: FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)

		June 30,				December 31,
		2008				2007
		(Unaudited)
ASSETS
Investments:
Fixed maturities available for sale, at fair value, at June 30, 2008 includes $367,903 and $173,665, respectively, of pledged fixed maturities related to secured trust deposits and the securities lending program, at December 31, 2007 includes $335,270 and $264,202, respectively, of pledged fixed maturity securities related to secured trust deposits and the securities lending program		$	2,517,347			$	2,824,572
Equity securities, at fair value			38,174				93,272
Investments in unconsolidated affiliates			694,693				738,356
Other long-term investments			18,112				18,255
Short-term investments at June 30, 2008 and December 31, 2007 includes $63,935 and $178,568, respectively, of pledged short-term investments related to secured trust deposits			499,048				427,366
Total investments			3,767,374				4,101,821
Cash and cash equivalents, at June 30, 2008 includes $224,385 and $179,416, respectively, of pledged cash related to secured trust deposits and the securities lending program, and at December 31, 2007 includes $193,484 and $271,807, respectively, of pledged cash related to secured trust deposits and the securities lending program			495,120				569,562
Trade and notes receivables, net of allowance of $14,072 and $13,091, respectively, at June 30, 2008 and December 31, 2007			238,787				227,849
Goodwill			1,338,274				1,339,705
Prepaid expenses and other assets			569,198				467,831
Capitalized software			91,395				93,413
Other intangible assets			107,221				122,383
Title plants			334,629				331,888
Property and equipment, net			247,804				266,156
Income taxes receivable			58,334				67,245
		$	7,248,136			$	7,587,853
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Accounts payable and accrued liabilities, at June 30, 2008 and December 31, 2007, includes $179,416 and $271,807, respectively, of security loans related to the securities lending program		$	679,738			$	823,109
Accounts payable to Fidelity National Information Services, Inc.			5,223				13,890
Deferred revenue			113,277				114,705
Notes payable, at June 30, 2008 and December 31, 2007, includes $6,708 and $7,059, respectively, in notes payable to Fidelity National Information Services, Inc.			1,196,907				1,167,739
Reserve for claim losses			1,394,921				1,419,910
Secured trust deposits			643,916				689,935
Deferred tax liabilities			55,899				60,609
			4,089,881				4,289,897
Minority interests			48,594				53,868
Stockholders’ equity:
Preferred stock, $0.0001 par value; authorized 50,000,000 shares; issued and outstanding, none			—				—
Common stock, Class A, $0.0001 par value; authorized 600,000,000 shares as of June 30, 2008 and December 31, 2007; issued 224,328,557 as of June 30, 2008 and 223,069,076 as of December 31, 2007			22				22
Additional paid-in capital			3,259,590				3,236,866
Retained earnings			119,344				213,103
			3,378,956				3,449,991
Accumulated other comprehensive loss			(46,863	)			(16,630	)
Less treasury stock, 12,235,103 shares and 10,032,449 shares as of June 30, 2008 and December 31, 2007, respectively, at cost			(222,432	)			(189,273	)
			3,109,661				3,244,088
		$	7,248,136			$	7,587,853

See Notes to Condensed Consolidated Financial Statements

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share data)

		Three months ended								Six months ended
		June 30,								June 30,
		2008				2007				2008				2007
		(Unaudited)								(Unaudited)
REVENUE:
Direct title insurance premiums		$	321,040			$	448,504			$	625,819			$	867,101
Agency title insurance premiums			423,915				597,862				847,351				1,140,008
Escrow, title related and other fees			292,838				299,476				566,459				556,456
Specialty insurance			94,161				99,731				178,988				194,729
Interest and investment income			30,053				45,528				72,073				93,305
Realized gains and losses, net			17,791				3,899				26,268				10,281
Total revenue			1,179,798				1,495,000				2,316,958				2,861,880
EXPENSES:
Personnel costs			366,254				452,752				728,132				888,012
Other operating expenses			319,856				296,221				587,726				530,662
Agent commissions			328,800				462,876				656,809				883,033
Depreciation and amortization			34,716				31,192				71,611				60,546
Provision for claim losses			100,427				113,083				187,932				224,069
Interest expense			16,218				12,435				34,854				24,412
Total expenses			1,166,271				1,368,559				2,267,064				2,610,734
Earnings before income taxes, equity in (losses) income of unconsolidated affiliates, and minority interest			13,527				126,441				49,894				251,146
Income tax expense			1,167				40,471				13,342				85,516
Earnings before equity in (losses) income of unconsolidated affiliates and minority interest			12,360				85,970				36,552				165,630
Equity in (losses) income of unconsolidated affiliates			(6,349	)			(323	)			(4,668	)			1,859
Earnings before minority interest			6,011				85,647				31,884				167,489
Minority interest			(914	)			812				(2,286	)			(745	)
Net earnings		$	6,925			$	84,835			$	34,170			$	168,234
Basic earnings per share		$	0.03			$	0.39			$	0.16			$	0.77
Weighted average shares outstanding, basic			210,814				218,707				210,962				218,860
Diluted earnings per share		$	0.03			$	0.38			$	0.16			$	0.75
Weighted average shares outstanding, diluted			213,107				222,968				213,318				222,940
Cash dividends paid per share		$	0.30			$	0.30			$	0.60			$	0.60

See Notes to Condensed Consolidated Financial Statements

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
(In thousands)

		Three months ended								Six months ended
		June 30,								June 30,
		2008				2007				2008				2007
		(Unaudited)								(Unaudited)
Net earnings		$	6,925			$	84,835			$	34,170			$	168,234
Other comprehensive earnings (loss):
Unrealized (loss) gain on investments and other financial instruments, net (excluding investments in unconsolidated affiliates) (1)			(34,651	)			62,440				(22,520	)			56,823
Unrealized loss on investments in unconsolidated affiliates			(15,530	)			—				(14,238	)			—
Unrealized gain (loss) on foreign currency translation (2)			1,412				(145	)			3,119				(159	)
Reclassification adjustments for losses (gains) included in net earnings (3)			4,445				(2,433	)			3,406				(5,451	)
Other comprehensive (loss) earnings			(44,324	)			59,862				(30,233	)			51,213
Comprehensive (loss) earnings		$	(37,399	)		$	144,697			$	3,937			$	219,447

See Notes to Condensed Consolidated Financial Statements

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
(In thousands)
(Unaudited)

																		Accumulated
										Additional								Other
		Common Stock								Paid - in				Retained				Comprehensive				Treasury Stock
		Shares				Amount				Capital				Earnings				Income (Loss)				Shares				Amount				Total
Balance, December 31, 2007			223,069			$	22			$	3,236,866			$	213,103			$	(16,630	)			10,032			$	(189,273	)		$	3,244,088
Exercise of stock options			660				—				4,578				—				—				—				—				4,578
Tax benefit associated with the exercise of stock options			—				—				2,681				—				—				—				—				2,681
Other comprehensive income (loss)- unrealized gain on investments and other financial instruments (excluding investments in unconsolidated affiliates)			—				—				—				—				(19,114	)			—				—				(19,114	)
Other comprehensive loss — unrealized loss on investments in unconsolidated affiliates			—				—				—				—				(14,238	)			—				—				(14,238	)
Other comprehensive income (loss)- unrealized gain on foreign currency			—				—				—				—				3,119				—				—				3,119
Stock based compensation, including issuance of restricted stock			600				—				15,465				—				—				—				—				15,465
Purchase of treasury stock			—				—				—				—				—				2,203				(33,159	)			(33,159	)
Cash dividends ($0.60 per share)			—				—				—				(127,929	)			—				—				—				(127,929	)
Net earnings			—				—				—				34,170				—				—				—				34,170
Balance, June 30, 2008			224,329			$	22			$	3,259,590			$	119,344			$	(46,863	)			12,235			$	(222,432	)		$	3,109,661

See Notes to Condensed Consolidated Financial Statements

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

		Six months ended
		June 30,
		2008				2007
		(Unaudited)
Cash flows from operating activities:
Net earnings		$	34,170			$	168,234
Reconciliation of net earnings to net cash from operating activities:
Depreciation and amortization			71,611				60,546
Minority interest			(2,286	)			(745	)
Equity in losses (income) of unconsolidated affiliates			4,668				(1,859	)
Gain on sales of assets			(26,268	)			(10,281	)
Stock-based compensation cost			15,465				15,665
Tax benefit associated with the exercise of stock options			(2,681	)			(5,378	)
Change in assets and liabilities, net of effects from acquisitions:
Net (decrease) increase in reserve for claim losses			(24,989	)			8,468
Net decrease in secured trust deposits			5,081				8,414
Net (increase) decrease in trade receivables			(3,462	)			6,258
Net increase in prepaid expenses and other assets			(87,462	)			(25,961	)
Net decrease in accounts payable, accrued liabilities			(61,108	)			(51,763	)
Net increase in income taxes			15,223				56,251
Net cash (used in) provided by operating activities			(62,038	)			227,849
Cash flows from investing activities:
Proceeds from sales of investment securities available for sale			560,100				3,053,922
Proceeds from maturities of investment securities available for sale			164,410				216,870
Proceeds from sale of assets			927				1,072
Cash (paid) received as collateral on loaned securities, net			(1,855	)			426
Collections of notes receivable			3,536				3,845
Additions to title plants			(2,981	)			(7,016	)
Additions to property and equipment			(31,176	)			(50,587	)
Additions to capitalized software			(13,803	)			(16,175	)
Purchases of investment securities available for sale			(482,031	)			(3,608,838	)
Net (purchases of) proceeds from short-term investment activities			(165,775	)			406,954
Issuance of notes receivable			(435	)			(95	)
Proceeds from sale of partial interest in Sedgwick CMS			53,872				—
Acquisitions of businesses, net of cash acquired			(1,082	)			(51,675	)
Net cash provided by (used in) investing activities			83,707				(51,297	)
Cash flows from financing activities:
Borrowings			90,115				15,243
Debt service payments			(61,089	)			(1,322	)
Dividends paid			(127,929	)			(132,010	)
Subsidiary dividends paid to minority interest shareholders			(2,209	)			—
Stock options exercised			4,578				6,737
Tax benefit associated with the exercise of stock options			2,681				5,378
Purchases of treasury stock			(33,159	)			(35,159	)
Net cash used in financing activities			(127,012	)			(141,133	)
Net (decrease) increase in cash and cash equivalents, excluding pledged cash related to secured trust deposits			(105,343	)			35,419
Cash and cash equivalents, excluding pledged cash related to secured trust deposits at beginning of period			376,078				447,986
Cash and cash equivalents, excluding pledged cash related to secured trust deposits at end of period		$	270,735			$	483,405
Supplemental cash flow information:
Income taxes paid		$	3,879			$	29,992
Interest paid		$	34,829			$	24,060

See Notes to Condensed Consolidated Financial Statements

Fidelity National Financial, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note A — Basis of Financial Statements

     The unaudited financial information in this report includes the accounts of Fidelity National Financial, Inc. and its subsidiaries (collectively, the “Company” or “FNF”) prepared in accordance with generally accepted accounting principles and the instructions to Form 10-Q and Article 10 of Regulation S-X. All adjustments considered necessary for a fair presentation have been included. This report should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2007.

     In the course of an internal review of its treatment of certain costs relating to insurance policies issued by its specialty insurance group, the Company determined that certain costs should be deferred and amortized over the life of the policy consistent with the recognition of the premiums. The Company recorded an adjustment as of March 31, 2007, increasing prepaid and other assets and reducing other operating costs by $12.2 million, representing amounts that should have been deferred as of March 31, 2007 on policies issued over the prior twelve months. This adjustment is reflected in the accompanying unaudited condensed consolidated financial statements and is not material to the Company’s financial position or results of operations for any other previously reported annual periods.

     Certain other reclassifications have been made in the 2007 Condensed Consolidated Financial Statements to conform to classifications used in 2008.

Description of Business

     Fidelity National Financial, Inc. is a holding company that is a provider, through its subsidiaries, of title insurance, specialty insurance, claims management services, and information services. FNF is one of the nation’s largest title insurance companies through its title insurance underwriters — Fidelity National Title, Chicago Title, Ticor Title, Security Union Title, and Alamo Title — which issued approximately 26.7% of all title insurance policies issued nationally during 2007. FNF also provides flood insurance, personal lines insurance, and home warranty insurance through its specialty insurance subsidiaries. FNF is also a leading provider of outsourced claims management services to large corporate and public sector entities through its minority-owned affiliate, Sedgwick CMS (“Sedgwick”). FNF is also a provider of information services in the human resources, retail, and transportation markets through another minority-owned affiliate, Ceridian Corporation (“Ceridian”).

     The Company recently announced that its Board of Directors has authorized management to investigate strategic alternatives for certain of its specialty insurance businesses. The assets to be evaluated include the flood insurance and personal lines insurance businesses, but not the home warranty business.

Transactions with Related Parties

The Company has historically conducted business with Fidelity National Information Services, Inc. and its subsidiaries (“FIS”). A number of these business activities were agreements with entities which have been a part of FIS’s lender processing services segment. On July 2, 2008, FIS completed the spin-off of its lender processing services segment into a separate publicly traded company, referred to as Lender Processing Services, Inc. (“LPS”) As part of the spin-off of LPS, a number of these agreements have been amended and renegotiated to reflect the revised relationships between the Company and FIS and the new relationships between the Company and LPS. A summary of the agreements that were in effect with FIS and LPS through June 30, 2008 is as follows:

•

Agreements allowing FIS to provide title agency services. These agreements allow FIS to provide services to existing customers through loan facilitation transactions, primarily with large national lenders. The arrangement involves FIS providing title agency services which result in the issuance of title policies on behalf of title insurance underwriters owned by the Company. Subject to certain early termination provisions for cause, each of these agreements may be terminated upon five years’ prior written notice, which notice may not be given until after the fifth anniversary of the effective date of each agreement, which ranges from July 2004 through September 2006 (thus effectively resulting in a minimum ten-year term and a rolling one-

year term thereafter). Under these agreements, FIS retains commissions which, in aggregate, are equal to approximately 89% of the total title premium from title policies that FIS places with the Company’s subsidiaries. FIS also performs similar functions in connection with trustee sale guarantees, a form of title insurance that the Company’s subsidiaries issue as part of the foreclosure process on a defaulted loan. These agreements primarily relate to FIS’s lender processing services segment and will be between FNF and LPS subsequent to the spin-off.

•

Agreement for IT, data processing services and software development services. This agreement governs the expenses paid by the Company to FIS for providing IT support services and software development, primarily infrastructure support and data center management. Subject to certain early termination provisions (including the payment of minimum monthly service and termination fees), this agreement has an initial term of five years from February 2006 with an option to renew for one or two additional years. In connection with the spin-off, this agreement will be amended so that certain of the services, primarily those related to infrastructure support and data center management, will be provided by FIS on revised terms and conditions. In addition, in connection with the spin-off, the Company will enter into a new agreement with LPS for the provision of certain of the services that were previously provided under the existing agreement with FIS, primarily those related to software application development services and other IT-related services for the Company.

•

Agreements to provide administrative corporate support services to and from FIS. Since November 9, 2006, the Company has provided certain administrative corporate support services to FIS, and FIS has provided similar support services to the Company, relating to general management, statutory accounting, claims administration, corporate aviation and other administrative support services. The pricing of these services is at cost. In connection with the spin-off, the agreements will be amended in connection with services to be provided to or from FIS and LPS, respectively, and will remain on a cost basis.

•

Arrangements for other real estate, tax, and title support related services. Under these arrangements, the Company pays FIS for providing other real estate related services to the Company, which consist primarily of real estate and title related data services required by the Company’s title insurance operations and flood zone determination and reporting services used by the Company’s title insurers in connection with properties that may be located in special flood hazard areas. These arrangements primarily related to FIS’s lender processing services segment and will be between FNF and LPS subsequent to the spin-off.

•

Agreements for title plant access and title production services. Under these agreements, the Company’s title insurers provide FIS with title plant access for real property located in various states, including online database access, physical access to title records, use of space, image system use, and use of special software, as well as other title production services. For the title plant access, FIS pays monthly fees (subject to certain minimum charges) based on the number of title reports or products ordered and other services received. For the title production services, FIS pays for services based on the number of properties searched, subject to certain minimum use. The title plant access agreement has a term of 3 years beginning in November 2006 and is automatically renewable for successive 3 year terms unless either party gives 30 days’ prior written notice. The title production services agreement can be terminated by either party upon 30 days’ prior written notice. These agreements primarily related to FIS’s lender processing services segment and will be between FNF and LPS subsequent to the spin-off.

•

Real estate management, real estate lease and equipment lease agreements. Included in the Company’s revenues are amounts received related to leases of certain equipment to FIS and the sublease of certain office space, furniture and furnishings to FIS. In addition, the Company’s expenses include expenses for a lease of office space and equipment from FIS for the Company’s corporate headquarters and business operations as well as expenses for property management services by FIS for the Company’s corporate headquarters building. In connection with the spin-off and the transfer of certain real property from FIS to LPS, the Company will terminate its real estate lease with FIS and enter into a new lease with LPS on similar terms as the existing FIS lease. In addition, the Company will amend its sublease with FIS to take into account a reduction in the office space leased by FIS, and will enter into a new sublease with LPS for its sublease of office space in the Company’s headquarters’ building. The Company will also enter into a new property management agreement with LPS since LPS will replace FIS as the principal owner and manager of the Jacksonville headquarters campus.

•

Licensing, cost sharing, business processing and other agreements. These agreements provide for the reimbursement of certain amounts from the Company related to various licensing and cost sharing agreements, as well as the payment of certain amounts by FIS to the Company in connection with the use of certain intellectual property, including software and business processes, and other assets of or services. The software licenses have various terms, but generally may be terminated on 90 days’ prior notice. The business processing license and services agreement has a 10-year term, but in connection with the spin-off, its term will be amended to expire on July 2, 2009. Most of these agreements primarily related to FIS’s lender processing services segment and will be between FNF and LPS subsequent to the spin-off.

     On August 31, 2007, the Company completed the acquisition of Property Insight, LLC (“Property Insight”), a former FIS subsidiary, from FIS for $95 million in cash. Property Insight is a leading provider of title plant services for the Company, as well as various national and regional underwriters. Property Insight primarily manages, maintains and updates the title plants that are owned by the Company. Additionally, Property Insight manages potential title plant construction for the Company. Prior to August 31, 2007, the title plant assets of several of FNF’s title insurance subsidiaries were managed or maintained by Property Insight, as a subsidiary of FIS. The underlying title plant information and software were owned by each of the Company’s title insurance underwriters, but Property Insight managed and updated the information in return for either (i) a cash management fee or (ii) the right to sell that information to title insurers, including title insurance underwriters that the Company owns and other third party customers. In most cases, Property Insight was responsible for keeping the title plant assets current and fully functioning, for which the Company paid a fee to Property Insight based on the Company’s use of, or access to, the title plant. In addition, each applicable title insurance underwriter owned by the Company in turn received a royalty on sales of access to its title plant assets. The Company is also a party to agreements with FIS that permit FIS and certain of its subsidiaries to access and use (but not resell) the starters databases and back plant databases of the Company’s title insurance subsidiaries. Starters databases are the Company’s databases of previously issued title policies and back plant databases contain historical records relating to title that are not regularly updated. These agreements primarily related to FIS’s lender processing services segment and will be between FNF and LPS subsequent to the spin-off.

     A detail of related party items included in revenues and expenses is as follows:

		Three months ended				Three months ended				Six months ended				Six months ended
		June 30, 2008				June 30, 2007				June 30, 2008				June 30, 2007
						(in millions)
Agency title premiums earned		$	38.7			$	40.7			$	75.5			$	77.3
Rental revenue			6.3				—				12.3				—
Title plant revenue			2.1				—				4.7				—
Interest revenue			—				0 .2				—				0.4
Total revenue			47.1				40.9				92.5				77.7
Agency title commissions			34.3				36.1				66.8				68.3
Data processing costs			11.4				14.1				22.6				26.1
Corporate services allocated			(0.4	)			(0.6	)			(0.8	)			(1.5	)
Title insurance information expense			—				4.7				—				10.9
Other real-estate related information			3.6				4.0				7.1				7.3
Software development and services expense			14.3				12.9				27.2				25.0
Rental expense			—				(1.2	)			(0.5	)			(1.4	)
License and cost sharing agreements			7.6				4.6				9.8				6.9
Interest expense			0.1				—				0.1				—
Total expenses		$	70.9			$	74.6			$	132.3			$	141.6

     The Company’s payments to FIS for management and maintenance of title plant assets by Property Insight were $5.2 million and $11.9 million for the three and six month periods ended June 30, 2007, respectively. The Company’s revenues from title plant royalties were $0.5 million and $1.0 million for the three and six month periods ended June 30, 2007, respectively.

     The Company believes the amounts earned by the Company or charged to it under each of the foregoing arrangements are fair and reasonable. The Company believes the commissions earned are consistent with the average rate that would be available to a third party title agent given the amount and the geographic distribution of

the business produced and the low risk of loss profile of the business placed. In connection with the title plant management and maintenance services provided by FIS, the Company believes that the fees charged to the Company by FIS are at approximately the same rates that FIS and other similar vendors charge unaffiliated title insurers. The information technology infrastructure support and data center management services provided to the Company by FIS are priced within the range of prices that FIS offers to its unaffiliated third party customers for the same types of services. However, the amounts FNF earned or was charged under these arrangements were not negotiated at arm’s-length, and may not represent the terms that the Company might have obtained from an unrelated third party.

     Amounts due to FIS were as follows:

		June 30,				December 31,
		2008				2007
		(In millions)
Note payable to FIS		$	6.7			$	7.1
Due to FIS			5.2				13.9

     Prior to September 30, 2007, FNF had a note receivable balance of $12.5 million due from a subsidiary of FIS. The Company earned interest revenue of $0.2 million and $0.4 million on this note for the three and six month periods ended June 30, 2007, respectively. On September 30, 2007, the Company acquired certain leasing assets from FIS for $15 million. As part of this acquisition, the Company assumed $134.9 million in non-recourse notes payable, the $12.5 million note due to a subsidiary of FIS was forgiven, and the Company entered into an unsecured note payable to FIS in the amount of $7.3 million. The balance on this note at June 30, 2008 is $6.7 million and the company’s related interest expense was $0.1 million for each of the three and six month periods ended June 30, 2008. Also, as of June 30, 2008, and December 31, 2007, the Company owed $5.2 million and $13.9 million, respectively, to FIS as a result of related party transactions.

     Through August 31, 2007, the Company paid amounts to Property Insight for capitalized software development and for title plant construction. For the three and six month periods ended June 30, 2007, these amounts included capitalized software development costs of $2.2 million and $3.8 million, respectively, and amounts paid for capitalized title plant construction costs of $4.1 million and $9.7 million, respectively. During the six months ended June 30, 2008, the Company paid FIS $0.8 million for capitalized software development costs, none of which was paid in the three months ended June 30, 2008.

Recent Accounting Pronouncements

     In May 2008, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 162, “The Hierarchy of Generally Accepted Accounting Principles” (“SFAS 162”). SFAS 162 identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles in the United States. The FASB has concluded that the generally accepted accounting principles hierarchy should reside in the accounting literature established by the FASB and issued SFAS 162 to achieve that result. SFAS 162 is effective 60 days following the Securities and Exchange Commission’s approval of the Public Company Accounting Oversight Board’s amendments to AU Section 411, “The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles.” Management has determined that the adoption of SFAS 162 will not materially affect the Company’s statements of financial condition or operations.

     In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 51” (“SFAS 160”), requiring noncontrolling interests (sometimes called minority interests) to be presented as a component of equity on the balance sheet. SFAS 160 also requires that the amount of net income attributable to the parent and to the noncontrolling interests be clearly identified and presented on the face of the consolidated statement of income. This statement eliminates the need to apply purchase accounting when a parent company acquires a noncontrolling ownership interest in a subsidiary and requires that, upon deconsolidation of a subsidiary, a parent company recognize a gain or loss in net income after which any retained noncontrolling interest will be reported at fair value. SFAS 160 requires expanded disclosures in the consolidated financial statements that identify and distinguish between the interests of the parent’s owners and the

interest of the noncontrolling owners of subsidiaries. SFAS 160 is effective for periods beginning on or after December 15, 2008 and will be applied prospectively except for the presentation and disclosure requirements, which will be applied retrospectively for all periods presented. Management is currently evaluating the impact of this statement on the Company’s statements of financial position and operations, but has determined that a reclassification of its minority interest liabilities will be required.

     In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations” (“SFAS 141(R)”), requiring an acquirer in a business combination to recognize the assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree at their fair values at the acquisition date, with limited exceptions. The costs of the acquisition and any related restructuring costs will be expensed. Assets and liabilities arising from contingencies in a business combination are to be recognized at their fair value at the acquisition date and adjusted prospectively as new information becomes available. When the fair value of assets acquired exceeds the fair value of consideration transferred plus any noncontrolling interest in the acquiree, the excess will be recognized as a gain. Under SFAS 141(R), all business combinations will be accounted for by prospectively applying the acquisition method, including combinations among mutual entities and combinations by contract alone. SFAS 141(R) is effective for periods beginning on or after December 15, 2008 and will apply to business combinations occurring after the effective date.

     In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS 159”), which permits entities to choose to measure financial instruments and certain other items at fair value that are not currently required to be measured at fair value. SFAS 159 mandates certain financial statement presentation and disclosure requirements when a company elects to report assets and liabilities at fair value under SFAS 159. SFAS 159 is effective as of January 1, 2008 for calendar year entities and the Company has adopted SFAS 159 as of that date with no material effects on the Company’s statements of operations or financial condition.

Note B — Acquisitions

     The results of operations and financial position of the entities acquired during any year are included in the Consolidated Financial Statements from and after the date of acquisition. Based on the Company’s valuation, any differences between the fair value of the identifiable assets and liabilities and the purchase price paid are recorded as goodwill. There were no individually significant acquisitions during the six months ended June 30, 2008.

     Acquisition of Equity Interest in Ceridian

     On November 9, 2007, FNF and Thomas H. Lee Partners (“THL”), along with certain co-investors, completed the acquisition of Ceridian for $36 in cash per share of common stock, or approximately $5.3 billion. The Company contributed approximately $526.8 million of the total $1.6 billion equity funding for the acquisition of Ceridian and also received $36 million in fees associated with the syndication of investors in the acquisition, of which $12.3 million was recorded as income and $23.7 million was recorded as a reduction in the investment balance. This resulted in an investment balance of $503.1 million and a 33% ownership interest in Ceridian, which the Company accounts for using the equity method of accounting for financial statement purposes. Ceridian is an information 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 of credit, debit, and stored-value cards.

     Property Insight, LLC

     On August 31, 2007, the Company completed the acquisition of Property Insight, a former FIS subsidiary, from FIS for $95 million in cash. Property Insight is a leading provider of title plant services for the Company, as well as various national and regional underwriters. Property Insight primarily manages, maintains, and updates the title plants that are owned by the Company. Additionally, Property Insight manages title plant construction activities for the Company.

     ATM Holdings, Inc.

     On August 13, 2007, the Company completed the acquisition of ATM Holdings, Inc. (“ATM”), a provider of nationwide mortgage vendor management services to the loan origination industry, for $100 million in cash. ATM’s primary subsidiary is a licensed title insurance agency which provides centralized valuation and appraisal services, as well as title and closing services, to residential mortgage originators, banks and institutional mortgage lenders throughout the United States.

     Equity Interest in Remy International, Inc. (“Remy”)

     The Company held an investment in Remy’s 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, the Notes were converted into 4,935,065 shares of Remy common stock and rights to buy 19,909 shares of Remy Series B preferred stock. Upon execution of the plan of bankruptcy, the Company purchased the 19,909 shares of the preferred stock for $1,000 per share, or a total of $19.9 million, and simultaneously sold 1,000 of those shares on the same terms and conditions to William P. Foley, II, the Company’s chairman of the board, for $1,000 per share, or a total of $1.0 million. The Company now holds a 47% ownership interest in Remy, made up of 4,935,065 shares of Remy common stock with a cost basis of $64.3 million and 18,909 shares of purchased Remy Series B preferred stock with a cost basis of $19.5 million, and accounts for this investment using the equity method. During 2007, as a result of the exchange of the Notes for the shares of common and preferred stock, the Company reversed the unrealized gain of $75.0 million that had previously been recorded in accumulated other comprehensive earnings in relation to the Notes. During the first quarter of 2008, an external valuation of Remy was completed which indicated a higher value for Remy than the Company had initially anticipated. As a result, a $5.3 million gain was recorded in the first quarter of 2008. Remy, headquartered in Anderson, Indiana, is a leading manufacturer, remanufacturer and distributor of Delco Remy brand heavy-duty systems and Remy brand starters and alternators, locomotive products and hybrid power technology.

Note C — Earnings Per Share

     Basic earnings per share is computed by dividing net earnings available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share is calculated by dividing net earnings available to common stockholders by the weighted average number of common shares outstanding plus the impact of assumed conversions of potentially dilutive securities. The Company has granted certain options, warrants, and shares of restricted stock which have been treated as common share equivalents for purposes of calculating diluted earnings per share.

     The following table presents the computation of basic and diluted earnings per share:

		Three months ended								Six months ended
		June 30,								June 30,
		2008				2007				2008				2007
		(In thousands, except								(In thousands, except
		per share amounts)								per share amounts)
Net earnings, basic and diluted		$	6,925			$	84,835			$	34,170			$	168,234
Weighted average shares outstanding during the period, basic			210,814				218,707				210,962				218,860
Plus: Common stock equivalent shares assumed from conversion of options			2,293				4,261				2,356				4,080
Weighted average shares outstanding during the period, diluted			213,107				222,968				213,318				222,940
Basic earnings per share		$	0.03			$	0.39			$	0.16			$	0.77
Diluted earnings per share		$	0.03			$	0.38			$	0.16			$	0.75

     Options to purchase shares of the Company’s common stock that are antidilutive are excluded from the computation of diluted earnings per share. Antidilutive options totaled 7,367,725 shares and 2,034,742 shares for the three month periods ended June 30, 2008 and 2007, respectively, and 7,481,464 shares and 3,178,771 shares for the six month periods ended June 30, 2008 and 2007, respectively.

Note D — Fair Value Measurements

     In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS 157”). SFAS 157 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements by establishing a fair value hierarchy based on the quality of inputs used to measure fair value. SFAS 157 does not require any new fair value measurements, but applies under other accounting pronouncements that require or permit fair value measurements. SFAS 157 is effective for financial statements for fiscal years beginning after November 15, 2007. The Company adopted SFAS 157 as of January 1, 2008. FASB Staff Position SFAS No. 157-2, “Effective Date of FASB Statement No. 157,” delays the effective date of SFAS 157 with respect to nonfinancial assets and nonfinancial liabilities that are not remeasured at fair value on a recurring basis until fiscal years beginning after November 15, 2008. Accordingly, the Company has not yet applied the disclosure requirements of SFAS 157 to certain such nonfinancial assets for which fair value measurements are determined on a non-recurring basis only when there is an indication of potential impairment.

     The fair value hierarchy established by SFAS 157 includes three levels which are based on the priority of the inputs to the valuation technique. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. The Company has no financial instruments categorized as Level 3. In accordance with SFAS No. 157, the Company’s financial assets and liabilities that are recorded on the Condensed Consolidated Balance Sheets are categorized as Level 1 or 2 based on the inputs to the valuation techniques as follows:

Level 1. Financial assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that FNF has the ability to access.

Level 2. Financial assets and liabilities whose values are based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the asset or liability.

     The following table presents the Company’s fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of June 30, 2008 (in thousands):

		Level 1				Level 2				Total
Fixed maturities available for sale		$	—			$	2,517,347			$	2,517,347
Equity securities			38,174				—				38,174
Total		$	38,174			$	2,517,347			$	2,555,521

Note E — Investments

     The Company lends fixed maturity securities to financial institutions in short-term security lending transactions. The Company’s security lending policy requires that the cash received as collateral be 102% or more of the fair value of the loaned securities. These short-term security lending arrangements increase investment income with minimal risk. At June 30, 2008 and December 31, 2007, the Company had security loans outstanding with fair values of $173.7 million and $264.2 million, respectively, and held cash of $179.4 million and $271.8 million, respectively, as collateral related to these security loans which has been included in cash and in accounts payable and accrued liabilities.

     Gross unrealized losses on investment securities and the fair value of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at June 30, 2008 were as follows:

		Less than 12 Months								12 Months or Longer								Total
						Unrealized								Unrealized								Unrealized
		Fair Value				Losses				Fair Value				Losses				Fair Value				Losses
U.S. government and agencies		$	1,654			$	(21	)		$	8,776			$	(185	)		$	10,430			$	(206	)
States and political subdivisions			107,154				(1,566	)			240,513				(2,580	)			347,667				(4,146	)
Corporate securities			148,564				(6,152	)			344,751				(13,678	)			493,315				(19,830	)
Equity securities			23,545				(10,388	)			314				(844	)			23,859				(11,232	)
Total temporarily impaired securities		$	280,917			$	(18,127	)		$	594,354			$	(17,287	)		$	875,271			$	(35,414	)

     A substantial portion of the Company’s unrealized losses relate to debt securities. These unrealized losses were primarily caused by interest rate increases and market changes that the Company considers to be temporary. Because the Company has the intent and ability to hold these securities, the Company does not consider these investments to be other-than-temporarily impaired. The unrealized losses relating to equity securities were caused by market changes that the Company considers to be temporary and thus the Company does not consider these investments other-than-temporarily impaired. During the three months ended June 30, 2008, the Company recorded impairment charges totaling $7.6 million related to two of its fixed maturity securities and $2.0 million related to one of its equity securities that were deemed other than temporarily impaired. In addition to those charges, during the six months ended June 30, 2008, the Company recorded an impairment charge in the amount of $1.5 million related to one of its equity securities that was deemed other than temporarily impaired.

     Gross realized gains on investments were $30.0 million and $16.1 million for the three month periods ended June 30, 2008 and 2007, respectively, and $40.9 million and $30.6 million for the six month periods ended June 30, 2008 and 2007, respectively. Gross realized losses on investments were $12.0 million and $12.2 million for the three month periods ended June 30, 2008 and 2007, respectively, and $16.1 million and $22.0 million for the six month periods ended June 30, 2008 and 2007, respectively.

     Investments in unconsolidated affiliates are recorded using the equity method of accounting and, as of June 30, 2008 and December 31, 2007, consist of (in thousands):

		Ownership				June 30, 2008				December 31, 2007
Ceridian			33	%		$	480,885			$	503,118
Sedgwick			(a	)			109,895				131,160
Remy			47	%			78,496				79,958
Other		various					25,417				24,120
Total						$	694,693			$	738,356

     On June 5, 2008, the Company sold 20% of its 40% interest in Sedgwick for proceeds of $53.9 million, resulting in a pre-tax gain of $24.8 million. Subsequent to this sale, the Company owns 32% of Sedgwick.

     Summarized financial information for Ceridian is presented below for the time period subsequent to November 9, 2007, the date of acquisition. The Company accounts for its equity in Ceridian’s earnings on a three-month lag. Accordingly, FNF’s net earnings for the three month period ended June 30, 2008 include the Company’s equity in Ceridian’s earnings for the three months ended March 31, 2008, and net earnings for the six month period ended June 30, 2008 includes the Company’s equity in Ceridian’s earnings for the period from November 10, 2007 through March 31, 2008.

		March 31, 2008
		(in millions)
Total current assets		$	1,101.8
Goodwill and other intangible assets, net			4,902.0
Other assets			4,441.3
Total assets		$	10,445.1
Current liabilities		$	782.2
Long-term obligations, less current portion			3,527.0
Other long-term liabilities			4,661.8
Total liabilities			8,971.0
Equity			1,474.1
Total liabilities and equity		$	10,445.1

						Period from
		Three Months Ended				November 10, 2007,
		March 31, 2008				through March 31, 2008
		( in millions)
Total revenues		$	406.5			$	643.5
Loss before income taxes			(29.2	)			(48.4	)
Net loss			(22.1	)			(34.5	)

     During the three month periods ended June 30, 2008 and 2007, the Company recorded an aggregate of $(6.3) million and $(0.3) million, respectively, in equity in losses of unconsolidated affiliates. During the six month periods ended June 30, 2008 and 2007, the Company recorded an aggregate of $(4.7) million and $1.9 million in equity in (losses) earnings of unconsolidated affiliates.

Note F — Stock-Based Compensation Plans

     During the first three months of 2008, the Company granted 600,000 shares of restricted stock with a weighted average grant date fair value of $17.07 per share. There were no grants of stock-based compensation awards during the three months ended June 30, 2008. During the six months ended June 30, 2007, the Company granted 10,000 shares of restricted stock with a weighted average grant date fair value of $25.13 per share.

     Net income reflects stock based compensation expense of $8.5 million and $8.2 million for the three month periods ended June 30, 2008 and 2007, respectively, and $15.5 million and $15.7 million for the six month periods ended June 30, 2008 and 2007, respectively, which is included in personnel costs in the reported financial results.

Note G — Segment Information

     Summarized financial information concerning the Company’s reportable segments is shown in the following table.

     As of and for the three months ended June 30, 2008 (dollars in thousands):

		Fidelity National				Specialty				Corporate
		Title Group				Insurance				and Other				Total
Title premiums		$	744,955			$	—			$	—			$	744,955
Other revenues			268,118				94,161				24,720				386,999
Revenues from external customers			1,013,073				94,161				24,720				1,131,954
Interest and investment income, including realized gains and (losses)			23,983				2,973				20,888				47,844
Total revenues		$	1,037,056			$	97,134			$	45,608			$	1,179,798
Depreciation and amortization			30,058				1,508				3,150				34,716
Interest expense			1,345				155				14,718				16,218
Earnings (loss) before income taxes, equity in income (losses) of unconsolidated affiliates, and minority interest			5,071				13,227				(4,771	)			13,527
Income tax expense			284				4,685				(3,802	)			1,167
Equity in income (losses) of unconsolidated affiliates			471				—				(6,820	)			(6,349	)
Minority interest			320				—				(1,234	)			(914	)
Net earnings (loss)		$	4,938			$	8,542			$	(6,555	)		$	6,925
Assets		$	5,461,838			$	441,018			$	1,345,280			$	7,248,136
Goodwill			1,246,708				23,842				67,724				1,338,274

     As of and for the three months ended June 30, 2007 (dollars in thousands):

		Fidelity National				Specialty				Corporate
		Title Group				Insurance				and Other				Total
Title premiums		$	1,046,366			$	—			$	—			$	1,046,366
Other revenues			274,395				99,731				25,081				399,207
Revenues from external customers			1,320,761				99,731				25,081				1,445,573
Interest and investment income, including realized gains and (losses)			41,532				4,074				3,821				49,427
Total revenues		$	1,362,293			$	103,805			$	28,902			$	1,495,000
Depreciation and amortization			28,172				1,512				1,508				31,192
Interest expense			3,723				449				8,263				12,435
Earnings (loss) before income taxes, equity in income (losses) of unconsolidated affiliates, and minority interest			130,037				13,860				(17,456	)			126,441
Income tax expense			42,362				5,340				(7,231	)			40,471
Equity in income (losses) of unconsolidated affiliates			1,064				—				(1,387	)			(323	)
Minority interest			1,003				—				(191	)			812
Net earnings (loss)		$	87,736			$	8,520			$	(11,421	)		$	84,835
Assets		$	5,991,572			$	496,412			$	877,936			$	7,365,920
Goodwill			1,084,048				44,856				66,229				1,195,133

     As of and for the six months ended June 30, 2008 (dollars in thousands):

		Fidelity National				Specialty				Corporate
		Title Group				Insurance				and Other				Total
Title premiums		$	1,473,170			$	—			$	—			$	1,473,170
Other revenues			510,620				178,988				55,839				745,447
Revenues from external customers			1,983,790				178,988				55,839				2,218,617
Interest and investment income, including realized gains and (losses)			63,864				6,645				27,832				98,341
Total revenues		$	2,047,654			$	185,633			$	83,671			$	2,316,958
Depreciation and amortization			60,147				3,018				8,446				71,611
Interest expense			3,755				339				30,760				34,854
Earnings (loss) before income taxes, equity in income (losses) of unconsolidated affiliates, and minority interest			58,152				22,646				(30,904	)			49,894
Income tax expense			17,578				7,446				(11,682	)			13,342
Equity in income (losses) of unconsolidated affiliates			1,435				—				(6,103	)			(4,668	)
Minority interest			400				—				(2,686	)			(2,286	)
Net earnings (loss)		$	41,609			$	15,200			$	(22,639	)		$	34,170
Assets		$	5,461,838			$	441,018			$	1,345,280			$	7,248,136
Goodwill			1,246,708				23,842				67,724				1,338,274

     As of and for the six months ended June 30, 2007 (dollars in thousands):

		Fidelity National				Specialty				Corporate
		Title Group				Insurance				and Other				Total
Title premiums		$	2,007,109			$	—			$	—			$	2,007,109
Other revenues			514,568				194,729				41,888				751,185
Revenues from external customers			2,521,677				194,729				41,888				2,758,294
Interest and investment income, including realized gains and (losses)			86,067				8,046				9,473				103,586
Total revenues		$	2,607,744			$	202,775			$	51,361			$	2,861,880
Depreciation and amortization			55,089				3,070				2,387				60,546
Interest expense			7,032				854				16,526				24,412
Earnings (loss) before income taxes, equity in income of unconsolidated affiliates, and minority interest			244,174				39,286				(32,314	)			251,146
Equity in income of unconsolidated affiliates			1,699				—				160				1,859
Income tax expense			83,105				14,909				(12,498	)			85,516
Minority interest			932				—				(1,677	)			(745	)
Net earnings (loss)		$	161,836			$	24,377			$	(17,979	)		$	168,234
Assets		$	5,991,572			$	496,412			$	877,936			$	7,365,920
Goodwill			1,084,048				44,856				66,229				1,195,133

     The activities of the reportable segments include the following:

     Fidelity National Title Group

     This segment consists of the operations of FNF’s title insurance underwriters and related businesses. This segment provides core title insurance and escrow and other title related services including collection and trust activities, trustee’s sales guarantees, recordings and reconveyances.

     Specialty Insurance

     This segment consists of certain subsidiaries that issue flood, home warranty, homeowners, automobile, and other personal lines insurance policies.

     Corporate and Other

     The corporate and other segment consists of the operations of the parent holding company, certain other unallocated corporate overhead expenses, the operations of Fidelity National Real Estate Solutions, LLC

(“FNRES”), other smaller operations, and the Company’s share in the operations of certain equity investments, including Sedgwick, Ceridian, and Remy. In the first six months of 2008, the Company recorded a $2.7 million impairment charge to an intangible asset in the corporate and other segment.

Note H — Dividends

     On July 23, 2008, the Company’s Board of Directors declared a cash dividend of $0.30 per share, payable on September 30, 2008, to stockholders of record as of September 16, 2008. On April 23, 2008, the Company’s Board of Directors declared a cash dividend of $0.30 per share, which was paid on June 30, 2008, to stockholders of record as of June 13, 2008.

Note I — Pension and Postretirement Benefits

     The following details the Company’s periodic expense (income) for pension and postretirement benefits:

		For the Three Months Ended June 30,
		2008				2007				2008				2007
		Pension Benefits								Postretirement Benefits
		(In thousands, except per share amounts)
Service cost		$	—			$	—			$	—			$	—
Interest cost			2,252				2,219				234				107
Expected return on assets			(2,895	)			(2,660	)			—				—
Amortization of prior service cost			—				—				—				2
Amortization of actuarial loss			1,604				2,149				126				(316	)
Total net periodic expense (income)		$	961			$	1,708			$	360			$	(207	)

		For the Six Months Ended June 30,
		2008				2007				2008				2007
		Pension Benefits								Postretirement Benefits
		(In thousands, except per share amounts)
Service cost		$	—			$	—			$	—			$	—
Interest cost			4,504				4,438				468				379
Expected return on assets			(5,790	)			(5,320	)			—				—
Amortization of prior service cost			—				—				—				(11	)
Amortization of actuarial loss			3,208				4,298				252				—
Total net periodic expense		$	1,922			$	3,416			$	720			$	368

     There have been no material changes to the Company’s projected benefit payments under these plans since December 31, 2007 as disclosed in the Company’s Form 10-K filed on February 29, 2008.

Note J — Legal Proceedings

     In the ordinary course of business, the Company is involved in various pending and threatened litigation matters related to its operations, some of which include claims for punitive or exemplary damages. Management believes that no actions, other than those listed below, depart from customary litigation incidental to the Company’s business. As background to the disclosure below, please note the following:

	•		These matters raise difficult and complicated factual and legal issues and are subject to many uncertainties and complexities, including but not limited to the underlying facts of each matter, novel legal issues, variations between jurisdictions in which matters are being litigated, differences in applicable laws and judicial interpretations, the length of time before many of these matters might be resolved by settlement or through litigation and, in some cases, the timing of their resolutions relative to other similar cases brought against other companies, the fact that many of these matters are putative class actions in which a class has not been certified and in which the purported class may not be clearly defined, the fact that many of these matters involve multi-state class actions in which the applicable law for the claims at issue is in dispute and therefore unclear, and the current challenging legal environment faced by large corporations and insurance companies.
	•		In these matters, plaintiffs seek a variety of remedies including equitable relief in the form of injunctive and other remedies and monetary relief in the form of compensatory damages. In most cases, the monetary damages sought include punitive or treble damages. Often more specific information beyond the type of

relief sought is not available because plaintiffs have not requested more specific relief in their court pleadings. In addition, the dollar amount of damages sought is frequently not stated with specificity. In those cases where plaintiffs have made a statement with regard to monetary damages, they often specify damages either just above or below a jurisdictional limit regardless of the facts of the case. These limits represent either the jurisdictional threshold for bringing a case in federal court or the maximum they can seek without risking removal from state court to federal court. In the Company’s experience, monetary demands in plaintiffs’ court pleadings bear little relation to the ultimate loss, if any, that the Company may experience. None of the cases described below includes a statement as to the dollar amount of damages demanded. Instead, each of the cases includes a demand in an amount to be proved at trial.

	•		For the reasons specified above, it is not possible to make meaningful estimates of the amount or range of loss that could result from these matters at this time. The Company reviews these matters on an ongoing basis and follows the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 5, “Accounting for Contingencies” when making accrual and disclosure decisions. When assessing reasonably possible and probable outcomes, management bases its decision on its assessment of the ultimate outcome following all appeals.
	•		The Company intends to vigorously defend each of these matters. In the opinion of the Company’s management, while some of these matters may be material to the Company’s operating results for any particular period if an unfavorable outcome results, none will have a material adverse effect on its overall financial condition.

     There are class actions pending against several title insurance companies, including Security Union Title Insurance Company, Fidelity National Title Insurance Company, Chicago Title Insurance Company, Ticor Title Insurance Company of Florida and Ticor Title Insurance Company, alleging improper premiums were charged for title insurance. These cases allege that the named defendant companies failed to provide notice of premium discounts to consumers refinancing their mortgages, and failed to give discounts in refinancing transactions in violation of the filed rates.

     An amended complaint was filed in Illinois (Independent Trust v. Fidelity National Title Insurance Company of New York, filed on June 26, 2006 in the United States District Court for the Northern District of Illinois, Eastern Division) related to the litigation spawned by the defalcation of Intercounty Title Company of Illinois (“Intercounty”), a Fidelity agent in Chicago, IL. The plaintiff alleges the Company wrongfully used its funds to pay monies owed by the Company to customers of Intercounty. The plaintiff demands compensatory damages (which the plaintiff alleges are believed to be in excess of $20 million), punitive damages and other relief. The Company moved to dismiss, but the motion was denied. The Company subsequently moved for summary judgment, and that motion has been fully briefed and submitted.

     In February 2008, thirteen putative class actions were commenced against several title insurance companies, including Fidelity National Title Insurance Company, Chicago Title Insurance Company, Security Union Title Insurance Company and Ticor Title Insurance Company (collectively, the “Fidelity Affiliates”). The complaints also name Fidelity National Financial, Inc. (together with the Fidelity Affiliates, the “Fidelity Defendants”) as a defendant based on its ownership of the Fidelity Affiliates. The complaints, which are brought on behalf of a putative class of consumers who purchased title insurance in New York, allege that the defendants conspired to inflate rates for title insurance through the Title Insurance Rate Service Association, Inc. (“TIRSA”), a New York State-approved rate service organization which is also named as a defendant. Each of the complaints asserts a cause of action under the Sherman Act and several of the complaints include claims under the Real Estate Settlement Procedures Act as well as New York State statutory and common law claims. The complaints seek monetary damages, including treble damages, as well as injunctive relief. Subsequently, similar complaints were filed in many federal courts. There are now approximately 63 complaints pending alleging that the Fidelity Defendants conspired with their competitors to unlawfully inflate rates for title insurance in every major market in the United States. A motion was filed before the Multidistrict Litigation Panel to consolidate and or coordinate these actions in the United States District Court in the Southern District of New York. However, that motion was denied. The cases are generally being consolidated before one district court judge in each state and scheduled for the filing of consolidated complaints and motion practice.

     On September 24, 2007 a third party complaint was filed in the In Re Ameriquest Mortgage Lending Practices Litigation in the United States District Court for the Northern District of Illinois by Ameriquest Mortgage Company (“Ameriquest”) and Argent Mortgage Company (“Argent”) against numerous title insurers and agents including Chicago Title Company, Fidelity National Title Company, Fidelity National Title Insurance Company, American Pioneer Title Insurance Company (now known as Ticor Title Insurance Company of Florida), Chicago Title of Michigan, Fidelity National Title Insurance Company of New York, and Ticor Title Insurance Company (collectively, the “Fidelity Affiliates”). The third party complaint alleges that Ameriquest and Argent have been sued by a class of borrowers alleging that they violated the Truth in Lending Act (“TILA”) by failing to comply with the notice of right to cancel provisions and making misrepresentations in lending to the borrowers, who now seek money damages. Ameriquest and Argent allege that the Fidelity Affiliates contracted and warranted to close these loans in conformity with the lender’s instructions which correctly followed the requirements of TILA and contained no misrepresentations; therefore, if Ameriquest and Argent are liable to the class, then the Fidelity Affiliates are liable to them for failing to close the lending transactions as agreed. Ameriquest and Argent seek to recover the cost of resolving the class action against them including their attorney’s fees and costs in the action. The title defendants are organizing to form a defense group and, as requested by the court, are exploring the possibility of filing a single collective response.

     None of the cases described above includes a statement as to the dollar amount of damages demanded. Instead, each of the cases includes a demand in an amount to be proved at trial.

     The Company receives inquiries and requests for information from state insurance departments, attorneys general and other regulatory agencies from time to time about various matters relating to its business. Sometimes these take the form of civil investigative subpoenas. The Company attempts to cooperate with all such inquiries. From time to time, the Company is assessed fines for violations of regulations or other matters or enters into settlements with such authorities which require the Company to pay money or take other actions.

     In January 2007, the State of California adopted regulations that would have significant effects on the title insurance industry in California. The Company, as well as others, has been engaged in discussions with the California Department of Insurance (the “CDI”) regarding possible industry reforms that may result in the CDI’s decision to modify or repeal the regulations prior to their implementation. On June 17, 2008, the CDI filed with the Office of Administrative Law revised title insurance regulations containing substantial changes to the existing regulations. The hearings on the revised regulations are scheduled for the week of August 11, 2008, in San Francisco.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

     The statements contained in this Quarterly Report on Form 10-Q that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements regarding our expectations, hopes, intentions or strategies regarding the future. All forward-looking statements included in this document are based on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements. It is important to note that our actual results could vary materially from those forward-looking statements contained herein due to many factors, including, but not limited to: changes in general economic, business and political conditions, including changes in the financial markets; adverse changes in the level of real estate activity, which may be caused by, among other things, high or increasing interest rates, a limited supply of mortgage funding or a weak U. S. economy; our potential inability to find suitable acquisition candidates, acquisitions in lines of business that will not necessarily be limited to our traditional areas of focus, or difficulties in integrating acquisitions; our dependence on operating subsidiaries as a source of cash flow; significant competition that our operating subsidiaries face; compliance with extensive government regulation of our operating subsidiaries; and other risks detailed in the “Statement Regarding Forward-Looking Information,” “Risk Factors” and other sections of the Company’s Form 10-K and other filings with the Securities and Exchange Commission.

     In the course of an internal review of our treatment of certain costs relating to insurance policies issued by our specialty insurance group, we determined that certain costs should be deferred and amortized over the life of the policy consistent with the recognition of the premiums. We recorded an adjustment as of March 31, 2007, increasing prepaid and other assets and reducing other operating costs by $12.2 million, representing amounts that should have been deferred as of March 31, 2007 on policies issued over the prior twelve months. This adjustment is reflected in the unaudited condensed consolidated financial statements and is not material to the Company’s financial position or

results of operations for any other previously reported annual periods.

     The following discussion should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2007.

Overview

     We are a holding company that is a provider, through our subsidiaries, of title insurance, specialty insurance, claims management services, and information services. We are one of the nation’s largest title insurance companies through our title insurance underwriters — Fidelity National Title, Chicago Title, Ticor Title, Security Union Title, and Alamo Title — which issued approximately 26.7% of all title insurance policies issued nationally during 2007. We also provide flood insurance, personal lines insurance, and home warranty insurance through our specialty insurance subsidiaries. We are also a leading provider of outsourced claims management services to large corporate and public sector entities through our minority-owned affiliate, Sedgwick CMS (“Sedgwick”) and a provider of information services in the human resources, retail and transportation markets through another minority-owned affiliate, Ceridian Corporation (“Ceridian”).

     We currently have three reporting segments as follows:

	•		Fidelity National Title Group. This segment consists of the operations of our title insurance underwriters and related businesses. This segment provides core title insurance and escrow and other title related services including collection and trust activities, trustee’s sales guarantees, recordings and reconveyances.
	•		Specialty Insurance. The specialty insurance segment consists of certain subsidiaries that issue flood, home warranty, homeowners, automobile and other personal lines insurance policies. We recently announced that our Board of Directors has authorized us to investigate strategic alternatives for certain of our specialty insurance businesses. The assets to be evaluated include the flood insurance and personal lines insurance businesses, but not the home warranty business. However, there can be no assurance that any transaction will be completed.
	•		Corporate and Other. The corporate and other segment consists of the operations of the parent holding company, certain other unallocated corporate overhead expenses, the operations of Fidelity National Real Estate Solutions (“FNRES”), other smaller operations, and our share in the operations of certain equity investments, including Sedgwick, Ceridian, and Remy International (“Remy”).

     We are focused on evaluating our non-core assets and investments as potential vehicles for creating liquidity. We anticipate maintaining our $0.30 quarterly cash dividend through 2008 and we will continue to analyze the benefits of the current dividend level as we plan for 2009. However, we do continually assess our capital allocation strategy and weigh the benefit of continuing to pay the dividend at its current level versus reducing debt, repurchasing our stock, or conserving cash.

Transactions with Related Parties

     Our financial statements reflect transactions with Fidelity National Information Services (“FIS”), which is a related party. Please see Note A of Notes to Condensed Consolidated Financial Statements.

Results of Operations

Consolidated Results of Operations

     Net Earnings. The following table presents certain financial data for the periods indicated:

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2008				2007				2008				2007
		(Dollars in thousands,								(Dollars in thousands,
		except per share data)								except per share data)
Total revenue		$	1,179,798			$	1,495,000			$	2,316,958			$	2,861,880
Total expenses			1,166,271				1,368,559				2,267,064				2,610,734
Net earnings			6,925				84,835				34,170				168,234

     Revenue. The following table presents the components of our revenue:

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2008				2007				2008				2007
		(Dollars in thousands)								(Dollars in thousands)
Direct title insurance premiums		$	321,040			$	448,504			$	625,819			$	867,101
Agency title insurance premiums			423,915				597,862				847,351				1,140,008
Escrow, title-related and other fees			292,838				299,476				566,459				556,456
Specialty insurance			94,161				99,731				178,988				194,729
Interest and investment income			30,053				45,528				72,073				93,305
Realized gains and losses, net			17,791				3,899				26,268				10,281
Total revenue		$	1,179,798			$	1,495,000			$	2,316,958			$	2,861,880
Orders opened by direct title operations			462,600				622,100				1,024,800				1,274,500
Orders closed by direct title operations			307,500				408,700				615,300				799,100

     Total consolidated revenues decreased $315.2 million to $1,179.8 million in the three months ended June 30, 2008, compared to the 2007 period, consisting of decreases of $325.2 million in title related revenues and $6.7 million in specialty insurance revenues, partially offset by an increase of $16.7 million in the corporate and other segment. Total consolidated revenues decreased $544.9 million to $2,317.0 million in the first six months of 2008 compared to the 2007 period, consisting of decreases of $560.1 million in title related revenues and $17.1 million in specialty insurance revenues, partially offset by an increase of $32.3 million in the corporate and other segment.

     Consolidated title insurance premiums for the three and six-month periods were as follows:

		Three months ended June 30,																Six months ended June 30,
		2008				%				2007				%				2008				%				2007				%
						(Dollars in thousands)												(Dollars in thousands)
Title premiums from direct operations		$	321,040				43.1	%		$	448,504				42.9	%		$	625,819				42.5	%		$	867,101				43.2	%
Title premiums from agency operations			423,915				56.9	%			597,862				57.1	%			847,351				57.5	%			1,140,008				56.8	%
Total		$	744,955				100.0	%		$	1,046,366				100.0	%		$	1,473,170				100.0	%		$	2,007,109				100.0	%

     Title insurance premiums decreased 28.8% to $745.0 million in the three months ended June 30, 2008, as compared to 2007. The decrease was made up of a $127.5 million, or 28.4%, decrease in direct premiums and a $173.9 million, or 29.1%, decrease in premiums from agency operations. Title insurance premiums decreased 26.6% to $1,473.2 million in the first six months of 2008 as compared to 2007. The decrease was made up of a $241.3 million, or 27.8%, decrease in direct premiums and a $292.7 million, or 25.7%, decrease in premiums from agency operations.

     Title premiums from direct operations decreased $127.5 million, or 28.4%, in the three months ended June 30, 2008, and $241.3 million, or 27.8%, in the first six months of 2008 compared to the corresponding 2007 periods. In each period, the decrease was due to decreases in closed order volume and fee per file. Closed order volumes decreased to 307,500 in the three months ended June 30, 2008, from 408,700 in the three months ended June 30, 2007, and to 615,300 in the first six months of 2008 from 799,100 in the first six months of 2007, in each case reflecting declines in the purchase and refinance markets. The mortgage market continues to lack liquidity. Average mortgage interest rates in the first six months of 2008 have remained consistent with rates in the first six months of 2007 but have shown a slight increase in the second quarter of 2008. During the first six months of 2008, the Federal Reserve Bank continued to decrease the federal funds rate by a total of 225 basis points. The federal funds rate is now 2% compared to 5.25% in August 2007. As a result of the 2008 reductions in the rate, refinance order volumes increased temporarily in the first quarter. However, while a majority of these opened orders were ultimately closed, the increased level of order volumes was not sustained. The average fee per file in our direct operations was $1,484 in the three months ended June 30, 2008 compared to $1,627 in the three months ended June 30, 2007, and $1,466 in the first six months of 2008 compared to $1,593 in the first six months of 2007, with the decreases reflecting a decline in home values and a slowing commercial market.

     The decrease in agency premiums is primarily the result of a decrease in remitted and accrued agency premiums that is consistent with the decrease in direct title premiums.

     Escrow, title-related and other fees decreased $6.6 million, or 2.2%, to $292.8 million in the second quarter of 2008 compared to $299.5 million in the second quarter of 2007 and increased $10.0 million to $566.5 million in the first six months of 2008 from $556.5 million in the first six months of 2007. Trends in escrow and title related fees are to some extent related to title insurance activity generated by our direct operations. At Fidelity National Title Group, escrow fees, which are more directly related to our direct operations, decreased 26.4% and 26.6% in the three and six months periods ended June 30, 2008, respectively, compared to 2007. These decreases were generally consistent with the fluctuations in direct title insurance premiums and order counts. Other fees, excluding escrow fees, increased $33.7 million and $73.3 million at Fidelity National Title Group in the three and six months ended June 30, 2008, respectively, compared to 2007. These increases were primarily due to recent acquisitions, including Property Insight, LLC, and ATM Holding, Inc., and to growth in foreclosure related operations. Other fees decreased $0.4 million, or 1.4%, in the corporate and other segment in the three months ended June 30, 2008, compared to 2007. Other fees increased $14.0 million in the corporate and other segment in the first six months of 2008 compared to 2007, primarily due to a transaction relating to our timberland holdings and revenues relating to the purchase of certain leasing assets from FIS.

     Interest and investment income levels are primarily a function of securities markets, interest rates and the amount of cash available for investment. Interest and investment income was $30.1 million and $45.5 million in the three month periods ended June 30, 2008 and 2007, respectively, and $72.1 million and $93.3 million in the first six months of 2008 and 2007, respectively, with the 2008 decreases due to decreases in cash and invested assets and decreases in short-term interest rates.

     Net realized gains totaled $17.8 million in the three months ended June 30, 2008, and included a gain of $24.8 million on the sale of 20% of our interest in Sedgwick, $2.6 million in additional net realized gains, and impairment losses totaling $9.6 million on fixed maturity and equity investments that were deemed to be other than temporarily impaired. Net realized gains were $26.3 million in the first six months of 2008 and, in addition to the second quarter 2008 activity noted above, included an impairment loss of $1.5 million on an equity investment that was deemed to be other than temporarily impaired. Net realized gains were $3.9 million and $10.3 million in the three and six month periods ended June 30, 2007, each made up of a number of gains and losses on various transactions, none of which were individually significant.

     Expenses. The following table presents the components of our expenses:

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2008				2007				2008				2007
		(Dollars in thousands)								(Dollars in thousands)
Personnel costs		$	366,254			$	452,752			$	728,132			$	888,012
Other operating expenses			319,856				296,221				587,726				530,662
Agent commissions			328,800				462,876				656,809				883,033
Depreciation and amortization			34,716				31,192				71,611				60,546
Provision for claim losses			100,427				113,083				187,932				224,069
Interest expense			16,218				12,435				34,854				24,412
Total expenses		$	1,166,271			$	1,368,559			$	2,267,064			$	2,610,734