Edgar Filing: Fidelity National Financial, Inc.

Document

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

For the quarterly period ended June 30, 2017



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

Commission File Number 1-32630

FIDELITY NATIONAL FINANCIAL, INC.

______________________________________________________________________________________________________________________________________________________

(Exact name of registrant as specified in its charter)



Delaware		16-1725106
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer 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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required 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 such files).YES þ NO o

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



Large accelerated filer þ	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o	Emerging growth company o
		(Do not check if a smaller reporting company)

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

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

The number of shares outstanding of the Registrant's common stock as of June 30, 2017 were:

FNF Group Common Stock 272,833,047

FNFV Group Common Stock 65,121,022

FORM 10-Q

QUARTERLY REPORT

Quarter Ended June 30, 2017

TABLE OF CONTENTS




	Page
Part I: FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
A. Condensed Consolidated Balance Sheets as of June 30, 2017 and December 31, 2016	1
B. Condensed Consolidated Statements of Earnings for the three-month and six-month periods ended June 30, 2017 and 2016	2
C. Condensed Consolidated Statements of Comprehensive Earnings for the three-month and six-month periods ended June 30, 2017 and 2016	3
D. Condensed Consolidated Statements of Equity for the six-month periods ended June 30, 2017 and 2016	4
E. Condensed Consolidated Statements of Cash Flows for the six-month periods ended June 30, 2017 and 2016	5
F. Notes to Condensed Consolidated Financial Statements	6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3. Quantitative and Qualitative Disclosure About Market Risk	34
Item 4. Controls and Procedures	34
Part II: OTHER INFORMATION
Item 1. Legal Proceedings	35
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 6. Exhibits	36

Table of Contents

Part I: FINANCIAL INFORMATION


Item 1.	Condensed Consolidated Financial Statements

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in millions, except share data)



	June 30, 2017			December 31, 2016
	(Unaudited)
ASSETS
Investments:
Fixed maturity securities available for sale, at fair value, at June 30, 2017 and December 31, 2016 includes pledged fixed maturity securities of $351 and $332, respectively, related to secured trust deposits	$	2,182		$	2,432
Preferred stock available for sale, at fair value	323			315
Equity securities available for sale, at fair value	441			438
Investments in unconsolidated affiliates	574			558
Other long-term investments	62			54
Short-term investments, at June 30, 2017 and December 31, 2016 includes short-term investments of $19 and $212, respectively, related to secured trust deposits	532			487
Total investments	4,114			4,284
Cash and cash equivalents, at June 30, 2017 and December 31, 2016 includes $537 and $331, respectively, of pledged cash related to secured trust deposits	1,441			1,323
Trade and notes receivables, net of allowance of $24 and $26, at June 30, 2017 and December 31, 2016, respectively	547			531
Goodwill	5,007			5,065
Prepaid expenses and other assets	685			639
Capitalized software, net	560			580
Other intangible assets, net	859			1,030
Title plants	395			395
Property and equipment, net	594			616
Total assets	$	14,202		$	14,463
LIABILITIES AND EQUITY
Liabilities:
Accounts payable and accrued liabilities	$	1,294		$	1,434
Notes payable	2,438			2,746
Reserve for title claim losses	1,492			1,487
Secured trust deposits	892			860
Income taxes payable	190			65
Deferred tax liability	633			629
Total liabilities	6,939			7,221
Commitments and Contingencies:
Redeemable non-controlling interest by 21% minority holder of ServiceLink Holdings, LLC	344			344
Equity:
FNF Group common stock, $0.0001 par value; authorized 487,000,000 shares as of June 30, 2017 and December 31, 2016; outstanding of 272,833,047 and 272,205,261 as of June 30, 2017 and December 31, 2016, respectively, and issued of 285,670,733 and 285,041,900 as of June 30, 2017 and December 31, 2016, respectively	—			—
FNFV Group common stock, $0.0001 par value; authorized 113,000,000 shares as of June 30, 2017 and December 31, 2016; outstanding of 65,121,022 and 66,416,822 as of June 30, 2017 and December 31, 2016, respectively, and issued of 80,581,675 as of both June 30, 2017 and December 31, 2016	—			—
Preferred stock, $0.0001 par value; authorized 50,000,000 shares; issued and outstanding, none	—			—
Additional paid-in capital	4,637			4,848
Retained earnings	2,016			1,784
Accumulated other comprehensive earnings (loss)	31			(13		)
Less: treasury stock, 28,298,339 shares as of June 30, 2017 and 27,001,492 shares as of December 31, 2016, at cost	(643		)	(623		)
Total Fidelity National Financial, Inc. shareholders’ equity	6,041			5,996
Non-controlling interests	878			902
Total equity	6,919			6,898
Total liabilities, redeemable non-controlling interest and equity	$	14,202		$	14,463

See Notes to Condensed Consolidated Financial Statements

Table of Contents

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Dollars in millions, except per share data)



	Three months ended June 30,						Six months ended June 30,
	2017			2016			2017			2016
	(Unaudited)						(Unaudited)
Revenues:
Direct title insurance premiums	$	575		$	540		$	1,040		$	962
Agency title insurance premiums	726			691			1,309			1,221
Escrow, title-related and other fees	1,008			907			1,876			1,686
Restaurant revenue	288			292			561			585
Interest and investment income	34			37			63			67
Realized gains and losses, net	256			15			255			9
Total revenues	2,887			2,482			5,104			4,530
Expenses:
Personnel costs	788			707			1,503			1,359
Agent commissions	558			526			1,004			928
Other operating expenses	558			493			1,018			925
Cost of restaurant revenue	249			245			485			490
Depreciation and amortization	110			102			222			202
Provision for title claim losses	65			68			117			120
Interest expense	29			33			64			67
Total expenses	2,357			2,174			4,413			4,091
Earnings from continuing operations before income taxes and equity in (losses) earnings of unconsolidated affiliates	530			308			691			439
Income tax expense	226			101			304			150
Earnings from continuing operations before equity in (losses) earnings of unconsolidated affiliates	304			207			387			289
Equity in (losses) earnings of unconsolidated affiliates	(2		)	(1		)	(4		)	1
Net earnings from continuing operations	302			206			383			290
Less: Net earnings attributable to non-controlling interests	6			9			15			19
Net earnings attributable to Fidelity National Financial, Inc. common shareholders	$	296		$	197		$	368		$	271

Amounts attributable to Fidelity National Financial, Inc. common shareholders
Net earnings attributable to FNF Group common shareholders	$	175		$	187		$	246		$	260

Net earnings attributable to FNFV Group common shareholders	$	121		$	10		$	122		$	11

Earnings per share
Basic
Net earnings per share attributable to FNF Group common shareholders	$	0.65		$	0.69		$	0.91		$	0.95

Net earnings per share attributable to FNFV Group common shareholders	$	1.83		$	0.15		$	1.85		$	0.16
Diluted
Net earnings per share attributable to FNF Group common shareholders	$	0.63		$	0.67		$	0.88		$	0.93

Net earnings per share attributable to FNFV Group common shareholders	$	1.81		$	0.14		$	1.79		$	0.15

Weighted average shares outstanding FNF Group common stock, basic basis	271			272			271			273

Weighted average shares outstanding FNF Group common stock, diluted basis	277			281			278			281

Cash dividends paid per share FNF Group common stock	$	0.25		$	0.21		$	0.50		$	0.42

Weighted average shares outstanding FNFV Group common stock, basic basis	66			67			66			69

Weighted average shares outstanding FNFV Group common stock, diluted basis	67			70			68			71

See Notes to Condensed Consolidated Financial Statements

Table of Contents

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS

(In millions)



	Three months ended June 30,					Six months ended June 30,
	Three months ended June 30,					Six months ended June 30,
	2017			2016		2017		2016
	(Unaudited)					(Unaudited)
Net earnings	$	302		$	206	$	383	$	290
Other comprehensive earnings (loss):
Unrealized gain on investments and other financial instruments, net (excluding investments in unconsolidated affiliates) (1)	13			25		25		46
Unrealized gain on investments in unconsolidated affiliates (2)	4			2		11		15
Unrealized gain on foreign currency translation (3)	4			1		6		5
Reclassification adjustments for change in unrealized gains and losses included in net earnings (4)	(1		)	2		2		2
Other comprehensive earnings	20			30		44		68
Comprehensive earnings	322			236		427		358
Less: Comprehensive earnings attributable to non-controlling interests	9			9		17		19
Comprehensive earnings attributable to Fidelity National Financial, Inc. common shareholders	$	313		$	227	$	410	$	339

Comprehensive earnings attributable to FNF Group common shareholders	$	190		$	219	$	287	$	318

Comprehensive earnings attributable to FNFV Group common shareholders	$	123		$	8	$	123	$	21

_______________________________________


(1)	Net of income tax expense of $8 million and $16 million for the three-month periods ended June 30, 2017 and 2016, respectively, and $16 million and $29 million for the six-month periods ended June 30, 2017 and 2016, respectively.


(2)	Net of income tax expense of $3 million and $1 million for the three-month periods ended June 30, 2017 and 2016, respectively, and $7 million and $9 million for the six-month periods ended June 30, 2017 and 2016, respectively.


(3)	Net of income tax expense of $3 million and $1 million for the three-month periods ended June 30, 2017 and 2016, respectively, and $3 million for the six-month periods ended June 30, 2017 and 2016.


(4)	Net of income tax (benefit) expense of less than $(1) million and $1 million for the three-month periods June 30, 2017 and 2016, respectively, and $1 million for the six-month periods ended June 30, 2017 and 2016.

See Notes to Condensed Consolidated Financial Statements

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FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF EQUITY

(In millions)

(Unaudited)



	Fidelity National Financial, Inc. Common Shareholders
	FNF			FNFV									Accumulated
	Group			Group									Other													Redeemable
	Common			Common			Additional						Comprehensive			Treasury				Non-						Non-
	Stock			Stock			Paid-in			Retained			Earnings			Stock				controlling			Total			controlling
	Shares	$		Shares	$		Capital			Earnings			(Loss)			Shares	$			Interests			Equity			Interests
Balance, December 31, 2015	282	$	—	81	$	—	$	4,795		$	1,374		$	(69	)	15	$	(346	)	$	834		$	6,588		$	344
Exercise of stock options	2	—		—	—		12			—			—			—	—			—			12			—
Treasury stock repurchased	—	—		—	—		—			—			—			9	(200		)	—			(200		)	—
Other comprehensive earnings — unrealized gain (loss) on investments and other financial instruments	—	—		—	—		—			—			46			—	—			(2		)	44			—
Other comprehensive earnings — unrealized gain on investments in unconsolidated affiliates	—	—		—	—		—			—			15			—	—			—			15			—
Other comprehensive earnings — unrealized gain on foreign currency translation	—	—		—	—		—			—			5			—	—			—			5			—
Reclassification adjustments for change in unrealized gains and losses included in net earnings	—	—		—	—		—			—			2			—	—			—			2			—
Stock-based compensation	—	—		—	—		19			—			—			—	—			10			29			—
Dividends declared	—	—		—	—		—			(115		)	—			—	—			—			(115		)	—
Acquisitions of non-controlling interests	—	—		—	—		—			—			—			—	—			2			2			—
Subsidiary dividends declared to non-controlling interests	—	—		—	—		—			—			—			—	—			(3		)	(3		)	—
Net earnings	—	—		—	—		—			271			—			—	—			19			290			—
Balance, June 30, 2016	284	$	—	81	$	—	$	4,826		$	1,530		$	(1	)	24	$	(546	)	$	860		$	6,669		$	344

Balance, December 31, 2016	285	$	—	81	$	—	$	4,848		$	1,784		$	(13	)	27	$	(623	)	$	902		$	6,898		$	344
Exercise of stock options	1	—		—	—		16			—			—			—	—			—			16			—
Treasury stock repurchased	—	—		—	—		—			—			—			1	(20		)	—			(20		)	—
Other comprehensive earnings — unrealized gain on investments and other financial instruments	—	—		—	—		—			—			25			—	—			2			27			—
Other comprehensive earnings — unrealized gain on investments in unconsolidated affiliates	—	—		—	—		—			—			11			—	—			—			11			—
Other comprehensive earnings — unrealized gain on foreign currency translation	—	—		—	—		—			—			6			—	—			—			6			—
Reclassification adjustments for change in unrealized gains and losses included in net earnings	—	—		—	—		—			—			2			—	—			—			2			—
Black Knight repurchases of BKFS stock	—	—		—	—		—			—			—			—	—			(47		)	(47		)	—
Stock-based compensation	—	—		—	—		17			—			—			—	—			7			24			—
Dividends declared	—	—		—	—		—			(136		)	—			—	—			—			(136		)	—
Sale of OneDigital	—	—		—	—		—			—			—			—	—			(6		)	(6		)	—
Acquisitions of noncontrolling interests	—	—		—	—		—			—			—			—	—			9			9			—
Equity portion of debt conversions settled in cash	—	—		—	—		(244		)	—			—			—	—			—			(244		)	—
Subsidiary dividends declared to non-controlling interests	—	—		—	—		—			—			—			—	—			(4		)	(4		)	—
Net earnings	—	—		—	—		—			368			—			—	—			15			383			—
Balance, June 30, 2017	286	$	—	81	$	—	$	4,637		$	2,016		$	31		28	$	(643	)	$	878		$	6,919		$	344

See Notes to Condensed Consolidated Financial Statements

Table of Contents

FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)



	For the six months ended June 30,

	2017			2016
	(Unaudited)
Cash flows from operating activities:
Net earnings	$	383		$	290
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	222			202
Equity in losses (earnings) of unconsolidated affiliates	4			(1		)
Loss (gain) on sales of investments and other assets, net	12			(12		)
Gain on sale of OneDigital	(269		)	—
Impairment of assets	2			3
Stock-based compensation cost	24			29
Changes in assets and liabilities, net of effects from acquisitions:
Net change in pledged cash, pledged investments, and secured trust deposits	—			3
Net increase in trade receivables	(30		)	(31		)
Net increase in prepaid expenses and other assets	(65		)	(43		)
Net decrease in accounts payable, accrued liabilities, deferred revenue and other	(98		)	(81		)
Net increase in reserve for title claim losses	5			7
Net change in income taxes	101			8
Net cash provided by operating activities	291			374
Cash flows from investing activities:
Proceeds from sales of investment securities available for sale	200			165
Proceeds from calls and maturities of investment securities available for sale	283			214
Proceeds from the sale of cost method and other investments	14			36
Additions to property and equipment and capitalized software	(89		)	(180		)
Purchases of investment securities available for sale	(180		)	(387		)
Net (purchases of) proceeds from short-term investment securities	(238		)	351
Purchases of other long-term investments	(2		)	—
Contributions to investments in unconsolidated affiliates	(47		)	(130		)
Distributions from unconsolidated affiliates	44			44
Net other investing activities	(3		)	6
Acquisition of eLynx Holdings, Inc., net of cash acquired	—			(115		)
Proceeds from the sale of OneDigital	326			—
Other acquisitions/disposals of businesses, net of cash acquired	(83		)	(104		)
Net cash provided by (used in) investing activities	225			(100		)
Cash flows from financing activities:
Borrowings	759			87
Debt service payments	(922		)	(111		)
Black Knight treasury stock repurchases of BKFS stock	(47		)	—
Equity portion of debt conversions paid in cash	(243		)	—
Dividends paid	(136		)	(115		)
Subsidiary dividends paid to non-controlling interest shareholders	(4		)	(3		)
Exercise of stock options	16			12
Payment of contingent consideration for prior period acquisitions	(11		)	(1		)
Purchases of treasury stock	(16		)	(201		)
Net cash used in financing activities	(604		)	(332		)
Net decrease in cash and cash equivalents, excluding pledged cash related to secured trust deposits	(88		)	(58		)
Cash and cash equivalents, excluding pledged cash related to secured trust deposits at beginning of period	992			672
Cash and cash equivalents, excluding pledged cash related to secured trust deposits at end of period	$	904		$	614

See Notes to Condensed Consolidated Financial Statements

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FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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, “we,” “us,” “our,” or “FNF”) prepared in accordance with U.S. generally accepted accounting principles ("GAAP") 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. All adjustments made were of a normal, recurring nature. This report should be read in conjunction with our Annual Report on Form 10-K (our "Annual Report") for the year ended December 31, 2016.

Description of the Business

We have organized our business into two groups, FNF Group and FNF Ventures ("FNFV").

Through FNF Group, we are a leading provider of (i) title insurance, escrow and other title-related services, including trust activities, trustee sales guarantees, recordings and reconveyances and home warranty products and (ii) technology and transaction services to the real estate and mortgage industries. FNF Group is the nation’s largest title insurance company operating through its title insurance underwriters - Fidelity National Title Insurance Company, Chicago Title Insurance Company ("Chicago Title"), Commonwealth Land Title Insurance Company, Alamo Title Insurance and National Title Insurance of New York Inc. - which collectively issue more title insurance policies than any other title company in the United States. Through our subsidiary ServiceLink Holdings, LLC ("ServiceLink"), we provide mortgage transaction services including title-related services and facilitation of production and management of mortgage loans. FNF Group also provides industry-leading mortgage technology solutions, including MSP®, the leading residential mortgage servicing technology platform in the U.S., through its majority-owned subsidiary, Black Knight Financial Services, Inc. ("Black Knight").

Through FNFV group, our diversified investment holding company, we own majority and minority equity investment stakes in a number of entities, including American Blue Ribbon Holdings, LLC ("ABRH") and Ceridian HCM, Inc. ("Ceridian").

For information about our reportable segments refer to Note H Segment Information.

Recent Developments

On June 28, 2017, we signed a definitive agreement to acquire a majority ownership stake in Title Guaranty of Hawaii ("Title Guaranty"). Title Guaranty was previously an unaffiliated agent and will continue to be closely aligned with Chicago Title as it formally becomes part of the FNF title company family. Founded in 1896, Title Guaranty is the oldest title company in the State of Hawaii and is a leading provider of title and escrow services, with more than 300 employees in branches across the State of Hawaii providing title insurance and real estate closing services. Closing is contingent on regulatory clearance and is expected in the third quarter of 2017.

On May 24, 2017, we entered into certain equity commitment letters (the “Equity Commitment Letters”) with CF Corporation, a Cayman Islands exempted company (“CFCOU”), relating to its plan of merger (the "Merger" or “Merger Agreement”), dated May 24, 2017, among CFCOU, Fidelity & Guaranty Life, a Delaware corporation (“FGL”), and the other parties thereto. Pursuant to the Equity Commitment Letters, the Company has committed (the "FNF Commitment"), on the terms and subject to the conditions set forth therein, at the closing under the Merger Agreement, to purchase, or cause the purchase of, equity of CFCOU for an aggregate cash purchase price equal to $235 million plus up to an aggregate of $195 million to offset any redemptions of CFCOU’s ordinary shares made in connection with its shareholder vote to approve the transaction. The cash purchase price of $235 million includes: (i) $135 million of ordinary shares of CFCOU for $10.00 per share, and (ii) $100 million of preferred shares, plus additional amounts, if any, pursuant to the Company’s commitment to offset a portion of the redemptions of CFCOU’s ordinary shares, if any, and warrants. Additionally, the Company has committed, on the terms and subject to the conditions set forth therein, at the Closing, to purchase, or cause the purchase of, equity of CFCOU for an aggregate cash purchase price equal to two-thirds (2/3) of the aggregate amount, if any, not funded by one or more purchasers under the forward purchase agreements between CFCOU, CF Capital Growth, LLC and the counterparties thereto at or prior to the closing of the Merger, up to an aggregate amount of $200 million.

As consideration for the FNF Commitment and the agreements of the Company under the Equity Commitment Letters, the Company also entered into a fee letter agreement with CFCOU, dated May 24, 2017, pursuant to which CFCOU has agreed to pay to the Company the following fees at the closing of the Merger: (i) the original issue discount of $2 million in respect of the preferred shares; (ii) a commitment fee of $3 million; (iii) penny warrants convertible, in the aggregate, for 1.2% of CFCOU’s ordinary shares (on a fully diluted basis); and (iv) if, and to the extent, any amount of the preferred equity under the Company’s backstop commitment is funded (the “Backstop Equity”), (x) a funding fee of 0.5% of the amount of the Backstop Equity that is funded, and (y) penny warrants attached to the Backstop Equity that are convertible, in the aggregate, for the result of (1) the proportion of the Backstop Equity that is funded, and (2) 1.5% of CFCOU’s ordinary shares (on a fully diluted basis). The Merger is expected to close in the fourth quarter of 2017, subject to the approval of the shareholders of CFCOU and FGL, and receipt of

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FIDELITY NATIONAL FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — continued

required regulatory approvals and other customary closing conditions. In addition to the Equity Commitment Letters and FNF Commitment, the Company holds $37 million of equity securities of CFCOU as of June 30, 2017. The Company’s non-executive Chairman, William P. Foley, II, is also the Co-Executive Chairman of CF Corporation.

On May 22, 2017, FNF Group completed its acquisition of Hudson & Marshall, LLC ("H&M"), a full-service auction company and one of the nation's top real estate and property auction providers, for $53 million. FNF and H&M expect to partner to further enhance the services FNF can provide to its lender, servicer and real estate agent relationships. Additionally, H&M will be hosting ServiceLink Auction, a new, full-service auction platform that will be integrated with ServiceLink's suite of products and technologies.

On May 5, 2017, we signed a definitive agreement to sell Digital Insurance, LLC ("OneDigital") for $560 million in an all-cash transaction. The sale was finalized on June 6, 2017. After repayment of debt, payout to option holders and a minority equity investor and other transaction related payments, FNFV Group received $331 million from the sale, which includes $326 million of cash and $5 million of purchase price holdback receivable. We recognized a pre-tax gain of $269 million on the sale which is included in Realized gains and losses, net on the Condensed Consolidated Statement of Earnings. We retained no ownership in OneDigital and have no continuing involvement with OneDigital as of the date of the sale.

On May 3, 2017, our Board of Directors adopted a resolution to increase the size of our Board of Directors to thirteen and elected Heather H. Murren to serve on our Board of Directors. Ms. Murren will serve in Class I of our Board of Directors, and her term will expire at the annual meeting of our shareholders to be held in 2018. At this time, Ms. Murren has not been appointed to any committee of our Board.

Effective March 1, 2017, three of the Company’s title insurance underwriters, Fidelity National Title Insurance Company, Chicago Title Insurance Company and Commonwealth Land Title Insurance Company, redomesticated from their former states of domicile to Florida (the "Redomestication"). In conjunction with the Redomestication, the Company received a special dividend from these title insurance underwriters of $280 million on March 15, 2017.

On December 7, 2016, we announced that our Board of Directors approved a tax-free plan (the "Plan") whereby (1) we intend to distribute all 83.3 million shares of Black Knight Financial Services Inc. common stock that we currently own to FNF Group shareholders and (2) we intend to redeem all FNFV shares in exchange for shares of common stock of FNFV. Following the distributions, FNF, FNFV and Black Knight will each be independent, fully-distributed, publicly-traded common stocks, with FNF and FNFV no longer being tracking stocks. On May 10, 2017 we received the private letter ruling from the Internal Revenue Service ("IRS") approving certain aspects relating to the Plan. The Plan is subject to the filing and acceptance of a registration statement for both the Black Knight and FNFV transactions with the Securities and Exchange Commission, Black Knight and FNFV shareholder approvals and other customary closing conditions. The closing of the tax-free distributions of Black Knight and FNFV are not dependent on one another and will occur separately when the aforementioned closing conditions are met. The closing of the distributions is expected by the end of the third quarter of 2017.

Earnings Per Share

Basic earnings per share, as presented on the Condensed Consolidated Statement of Earnings, is computed by dividing net earnings available to common shareholders in a given period by the weighted average number of common shares outstanding during such period. In periods when earnings are positive, diluted earnings per share is calculated by dividing net earnings available to common shareholders by the weighted average number of common shares outstanding plus the impact of assumed conversions of potentially dilutive securities. For periods when we recognize a net loss, diluted earnings per share is equal to basic earnings per share as the impact of assumed conversions of potentially dilutive securities is considered to be antidilutive. We have granted certain stock options, shares of restricted stock, convertible debt instruments and certain other convertible share based payments which have been treated as common share equivalents for purposes of calculating diluted earnings per share for periods in which positive earnings have been reported.

The net earnings of Black Knight in our calculation of diluted earnings per share is adjusted for dilution related to certain Black Knight restricted stock granted to employees in accordance with ASC 260-10-55-20. We calculate the ratio of the Class B shares we hold to the total weighted average diluted shares of Black Knight outstanding and multiply such ratio by Black Knight's net earnings. The result is used as a substitution for Black Knight's net earnings attributable to FNF included in our consolidated net earnings in the numerator for our diluted earnings per share calculation. As the result had no effect for the three or six months ended June 30, 2017 and 2016, there were no adjustments made to net earnings attributable to FNF in our calculation of diluted earnings per share. There are no adjustments to earnings attributable to FNF in our calculation of basic earnings per share. There are no adjustments made to net earnings attributable to FNFV in our calculation of basic or diluted earnings per share.

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Options or other instruments which provide the ability to purchase shares of our common stock that are antidilutive are excluded from the computation of diluted earnings per share. There were no antidilutive options outstanding during the three or six-month periods ended June 30, 2017. There were two million antidilutive options outstanding during the three and six months ended June 30, 2016.

Recent Accounting Pronouncements

Revenue Recognition

In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). This ASU provides a new comprehensive revenue recognition model that requires companies to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. This update also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. This update permits the use of either the retrospective or cumulative effect transition method. ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations was issued by FASB in March 2016 to clarify the principal versus agent considerations within ASU 2014-09. ASU 2016-10 Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing was issued by the FASB in April 2016 to clarify how to determine whether goods and services are separately identifiable and thus accounted for as separate performance obligations. ASU 2016-12 Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients was issued by the FASB in May 2016 to clarify certain terms from the aforementioned updates and to add practical expedients for contracts at various stages of completion. ASU 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers, was issued by the FASB in December 2016 which includes thirteen technical corrections and improvements affecting narrow aspects of the guidance issued in ASU 2014-09.

We have completed our analysis of the impact of the standards for over 80% of our revenue, including all revenue recorded within direct title insurance premiums, agency title insurance premiums and restaurant revenue, and have concluded that these standards will not have a material impact on our accounting or reporting for these revenue streams. We continue to analyze certain revenue streams recorded within escrow, title-related and other fees primarily in our Black Knight segment. Black Knight has formed a project team and engaged a third-party professional services firm to assist with its evaluation. Based upon its initial assessment, Black Knight currently does not anticipate a material change to the pattern of its revenue recognition related to revenue earned from the majority of its technology business hosted software arrangements, data and analytics business arrangements with transaction or volume-based fees and perpetual license arrangements in both its technology and data and analytics businesses. However, due to the complexity of certain of its contracts, including contracts for multiple products and services related to each of its segments, the final determination will be dependent on contract-specific terms. During the second quarter, Black Knight continued its assessment with increased focus on more detailed contract reviews and further identification of data and disclosure requirements, including the effect on its processes, accounting system and design of internal controls. Black Knight is still in the process of quantifying the effects ASC 606 will have on its consolidated financial statements.

Upon issuance of ASU 2015-14, the effective date of ASU 2014-09 was deferred to annual and interim periods beginning on or after December 15, 2017. We will adopt the guidance on January 1, 2018. Either of the following transition methods is permitted: (i) a full retrospective approach reflecting the application of the new standard in each prior reporting period, or (ii) a modified retrospective approach with a cumulative-effect adjustment to the opening balance of retained earnings in the year the new standard is first applied. We are continuing to evaluate the approach we will use when transitioning to this new guidance.

Other Pronouncements

In January 2016, the FASB issued ASU No. 2016-01 Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The primary amendments required by the ASU include: requiring equity investments with readily determinable fair values to be measured at fair value through net income rather than through other comprehensive income; allowing entities with equity investments without readily determinable fair values to report the investments at cost, adjusted for changes in observable prices, less impairment; requiring entities that elect the fair value option for financial liabilities to report the change in fair value attributable to instrument-specific credit risk in other comprehensive income; and clarifying that entities should assess the need for a valuation allowance on a deferred tax asset related to available-for-sale debt securities in combination with other deferred tax assets. The amendments in this ASU are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The ASU requires a cumulative-effect adjustment of the balance sheet as of the beginning of the year of adoption. Early adoption of the ASU is not permitted, except for the provision related to financial liabilities for which the fair value option has been elected. We are currently evaluating the effect this new guidance will have on our consolidated financial statements and related disclosures and have not yet concluded on its effects. As of June 30, 2017, we held equity and preferred securities available for sale with combined gross unrealized gains and (losses) of

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$162 million and $(5) million, respectively.

In February 2016, the FASB issued ASU No. 2016-02 Leases (Topic 842). The amendments in this ASU introduce broad changes to the accounting and reporting for leases by lessees. The main provisions of the new standard include: clarifications to the definitions of a lease, components of leases, and criteria for determining lease classification; requiring virtually all leased assets, including operating leases and related liabilities, to be reflected on the lessee's balance sheet; and expanding and adding to the required disclosures for lessees. This update is effective for annual and interim periods beginning after December 15, 2018, including interim periods within those fiscal years. Early application of the standard is permitted. The ASU requires a modified retrospective approach to transitioning which allows for the use of practical expedients to effectively account for leases commenced prior to the effective date in accordance with previous GAAP, except that lessees are required to recognize a right-of-use asset and a lease liability for all operating leases at each reporting date based on the present value of the remaining minimum rental payments that were tracked and disclosed under previous GAAP. We are still evaluating the totality of the effects this new guidance will have on our business process and systems, consolidated financial statements, and related disclosures. We have identified a vendor with software suited to track and account for leases under the new standard. We have not concluded on the anticipated financial statement effects of adoption. We plan to adopt this standard on January 1, 2019.

In June 2016, the FASB issued ASU No. 2016-13 Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments. The amendments in this ASU introduce broad changes to accounting for credit impairment of financial instruments. The primary updates include the introduction of a new current expected credit loss ("CECL") model that is based on expected rather than incurred losses and amendments to the accounting for impairment of debt securities available for sale. This update is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. We are currently evaluating the effect this new guidance will have on our consolidated financial statements and related disclosures and have not yet concluded on its effects. We do not plan to early adopt the standard.

In August 2016, the FASB issued ASU No. 2016-15 Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The amendments in this ASU introduce clarifications to the presentation of certain cash receipts and cash payments in the statement of cash flows. The primary updates include additions and clarifications of the classification of cash flows related to certain debt repayment activities, contingent consideration payments related to business combinations, proceeds from insurance policies, distributions from equity method investees, and cash flows related to securitized receivables. This update is effective for annual periods beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption of this ASU is permitted, including in interim periods. The ASU requires retrospective application to all prior periods presented upon adoption. We are currently evaluating the effect this new guidance will have on our consolidated financial statements and related disclosures and have not yet concluded on its effects.

In November 2016, the FASB issued ASU No. 2016-18 Statement of Cash Flows (Topic 230): Restricted Cash. The amendments in this ASU require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. GAAP currently does not include specific guidance on the cash flow classification and presentation of changes in restricted cash. The Company currently excludes cash pledged related to secured trust deposits, which generally meets the definition of restricted cash, from the reconciliation of beginning-of-period to end-of-period total amounts shown on the statement of cash flows. This update is effective for annual periods beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption of this ASU is permitted, including in interim periods. The ASU requires retrospective application to all prior periods presented upon adoption. We are currently evaluating the effect this new guidance will have on our consolidated financial statements and related disclosures and have not yet concluded on its effects.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business to assist companies with evaluating whether transactions should be accounted for as acquisitions of assets or businesses. The new guidance requires a company to evaluate if substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets; if so, the set of assets and activities is not a business. The guidance also requires a business to include at least one substantive process and narrows the definition of outputs by more closely aligning it with how outputs are described in the guidance for revenue from contracts with customers. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. The guidance should be applied prospectively to any transactions occurring within the period of adoption. We do not expect this standard to have a material impact on our consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The guidance simplifies the measurement of goodwill impairment by removing step 2 of the goodwill

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impairment test, which requires the determination of the fair value of individual assets and liabilities of a reporting unit. The new guidance requires goodwill impairment to be measured as the amount by which a reporting unit’s carrying value exceeds its fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The amendments should be applied on a prospective basis. The new standard is effective for fiscal years beginning after December 15, 2019 with early adoption permitted for interim or annual goodwill impairment tests performed after January 1, 2017. We are currently evaluating the effect this new guidance will have on our consolidated financial statements and related disclosures and have not yet concluded on its effects.

In March 2017, the FASB issued ASU No. 2017-08, Receivables-Nonrefundable Fees and Other Costs (Topic 310-20): Premium Amortization on Purchased Callable Debt Securities. The amendments in this ASU shortens the amortization period for the premium on certain purchased callable debt securities to the earliest call date. The new guidance does not change the accounting for purchased callable debt securities held at a discount. This update is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption of this ASU is permitted, including in interim periods. We early adopted the standard as of January 1, 2017. The adoption of this standard did not have a material impact on our financial statements.


Note B.	Summary of Reserve for Claim Losses

A summary of the reserve for claim losses follows:



	Six months ended June 30,
	2017			2016
	(Dollars in millions)
Beginning balance	$	1,487		$	1,583
Change in reinsurance recoverable	(4		)	—
Claim loss provision related to:
Current year	113			114
Prior years	4			6
Total title claim loss provision	117			120
Claims paid, net of recoupments related to:
Current year	(2		)	(2		)
Prior years	(106		)	(111		)
Total title claims paid, net of recoupments	(108		)	(113		)
Ending balance of claim loss reserve for title insurance	$	1,492		$	1,590
Provision for title insurance claim losses as a percentage of title insurance premiums	5.0		%	5.5		%

We continually update loss reserve estimates as new information becomes known, new loss patterns emerge, or as other contributing factors are considered and incorporated into the analysis of reserve for claim losses. Estimating future title loss payments is difficult because of the complex nature of title claims, the long periods of time over which claims are paid, significantly varying dollar amounts of individual claims and other factors.

Due to the uncertainty inherent in the process and to the judgment used by management, the ultimate liability may be greater or less than our current reserves. If actual claims loss development varies from what is currently expected and is not offset by other factors, it is possible that our recorded reserves may fall outside a reasonable range of our actuary's central estimate, which may require additional reserve adjustments in future periods.

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Note C — Fair Value Measurements

The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of June 30, 2017 and December 31, 2016, respectively:



	June 30, 2017
	Level 1		Level 2		Level 3		Total
	(In millions)
Fixed maturity securities available for sale:
U.S. government and agencies	$	—	$	103	$	—	$	103
State and political subdivisions	—		548		—		548
Corporate debt securities	—		1,408		—		1,408
Mortgage-backed/asset-backed securities	—		52		—		52
Foreign government bonds	—		71		—		71
Preferred stock available for sale	41		282		—		323
Equity securities available for sale	441		—		—		441
Total assets	$	482	$	2,464	$	—	$	2,946



	December 31, 2016
	Level 1		Level 2		Level 3		Total
	(In millions)
Fixed maturity securities available for sale:
U.S. government and agencies	$	—	$	117	$	—	$	117
State and political subdivisions	—		615		—		615
Corporate debt securities	—		1,533		—		1,533
Mortgage-backed/asset-backed securities	—		58		—		58
Foreign government bonds	—		109		—		109
Preferred stock available for sale	32		283		—		315
Equity securities available for sale	438		—		—		438
Total assets	$	470	$	2,715	$	—	$	3,185

Our Level 2 fair value measures for fixed-maturities available for sale are provided by third-party pricing services. We utilize one firm for our taxable bond and preferred stock portfolio and another for our tax-exempt bond portfolio. These pricing services are leading global providers of financial market data, analytics and related services to financial institutions. We rely on one price for each instrument to determine the carrying amount of the assets on our balance sheet. The inputs utilized in these pricing methodologies include observable measures such as benchmark yields, reported trades, broker dealer quotes, issuer spreads, two sided markets, benchmark securities, bids, offers and reference data including market research publications. We review the pricing methodologies for all of our Level 2 securities by obtaining an understanding of the valuation models and assumptions used by the third-party as well as independently comparing the resulting prices to other publicly available measures of fair value and internally developed models. The pricing methodologies used by the relevant third-party pricing services are as follows:


•	U.S. government and agencies: These securities are valued based on data obtained for similar securities in active markets and from inter-dealer brokers.


•	State and political subdivisions: These securities are valued based on data obtained for similar securities in active markets and from inter-dealer brokers. Factors considered include relevant trade information, dealer quotes and other relevant market data.


•	Corporate debt securities: These securities are valued based on dealer quotes and related market trading activity. Factors considered include the bond's yield, its terms and conditions, and any other feature which may influence its risk and thus marketability, as well as relative credit information and relevant sector news.


•	Mortgage-backed/asset-backed securities: These securities are comprised of agency mortgage-backed securities, collateralized mortgage obligations, and asset-backed securities. They are valued based on available trade information, dealer quotes, cash flows, relevant indices and market data for similar assets in active markets.

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•	Foreign government bonds: These securities are valued based on a discounted cash flow model incorporating observable market inputs such as available broker quotes and yields of comparable securities.


•	Preferred stocks: These securities are valued by calculating the appropriate spread over a comparable U.S. Treasury security. Inputs include benchmark quotes and other relevant market data.

As of June 30, 2017 and December 31, 2016, we held no material assets or liabilities measured at fair value using Level 3 inputs.

The carrying amounts of short-term investments, accounts receivable and notes receivable approximate fair value due to their short-term nature. Additional information regarding the fair value of our investment portfolio is included in Note D Investments.

Note D — Investments

The carrying amounts and fair values of our available for sale securities at June 30, 2017 and December 31, 2016 are as follows:



	June 30, 2017
	Carrying		Cost		Unrealized		Unrealized			Fair
	Value		Basis		Gains		Losses			Value
	(In millions)
Fixed maturity securities available for sale:
U.S. government and agencies	$	103	$	103	$	—	$	—		$	103
State and political subdivisions	548		538		10		—			548
Corporate debt securities	1,408		1,393		17		(2		)	1,408
Mortgage-backed/asset-backed securities	52		51		1		—			52
Foreign government bonds	71		73		1		(3		)	71
Preferred stock available for sale	323		308		15		—			323
Equity securities available for sale	441		299		147		(5		)	441
Total	$	2,946	$	2,765	$	191	$	(10	)	$	2,946



	December 31, 2016
	Carrying		Cost		Unrealized		Unrealized			Fair
	Value		Basis		Gains		Losses			Value
	(In millions)
Fixed maturity securities available for sale:
U.S. government and agencies	$	117	$	117	$	—	$	—		$	117
State and political subdivisions	615		607		9		(1		)	615
Corporate debt securities	1,533		1,524		15		(6		)	1,533
Mortgage-backed/asset-backed securities	58		56		2		—			58
Foreign government bonds	109		117		—		(8		)	109
Preferred stock available for sale	315		312		6		(3		)	315
Equity securities available for sale	438		323		115		—			438
Total	$	3,185	$	3,056	$	147	$	(18	)	$	3,185

The cost basis of fixed maturity securities available for sale includes an adjustment for amortized premium or accreted discount since the date of purchase.

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The following table presents certain information regarding contractual maturities of our fixed maturity securities at June 30, 2017:



	June 30, 2017
	Amortized		% of		Fair		% of
Maturity	Cost		Total		Value		Total
	(Dollars in millions)
One year or less	$	639	30	%	$	641	29	%
After one year through five years	1,392		65		1,410		65
After five years through ten years	68		3		70		3
After ten years	8		—		9		1
Mortgage-backed/asset-backed securities	51		2		52		2
Total	$	2,158	100	%	$	2,182	100	%

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

Net 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, 2017 and December 31, 2016, were as follows (in millions):



June 30, 2017
	Less than 12 Months					12 Months or Longer					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
Corporate debt securities	$	410	$	(2	)	$	—	$	—		$	410	$	(2	)
Foreign government bonds	—		—			14		(3		)	14		(3		)
Equity securities available for sale	38		(5		)	—		—			38		(5		)
Total temporarily impaired securities	$	448	$	(7	)	$	14	$	(3	)	$	462	$	(10	)



December 31, 2016
	Less than 12 Months					12 Months or Longer					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
States and political subdivisions	$	107	$	(1	)	$	—	$	—		$	107	$	(1	)
Corporate debt securities	410		(4		)	11		(2		)	421		(6		)
Foreign government bonds	85		(4		)	20		(4		)	105		(8		)
Preferred stock available for sale	55		(2		)	42		(1		)	97		(3		)
Total temporarily impaired securities	$	657	$	(11	)	$	73	$	(7	)	$	730	$	(18	)

We recorded $1 million in impairment charges relating to investments during the three and six-month periods ended June 30, 2017 relating to a fixed maturity security of an investee entering Chapter 11 bankruptcy which has exhibited a decreasing fair market value and from which we are uncertain of our ability to recover our initial investment. We recorded no impairment charges relating to investments during the three-month period ended June 30, 2016. We recorded $3 million in impairment charges related to investments during the six-month period ended June 30, 2016 relating to an investment in an unconsolidated affiliate in which we determined the ability to recover our investment was unlikely. As of June 30, 2017, we held $1 million in fixed maturity securities for which an other-than-temporary impairment had been previously recognized. As of December 31, 2016, we held $7 million in fixed maturity and equity securities for which an other-than-temporary impairment had been previously recognized. It is possible that future events may lead us to recognize impairment losses related to our investment portfolio and that unanticipated future events may lead us to dispose of certain investment holdings and recognize the effects of any market movements in our condensed consolidated financial statements.

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The following table presents realized gains and losses on investments and other assets and proceeds from the sale or maturity of investments and other assets for the three- and six-month periods ended June 30, 2017 and 2016, respectively:



	Three months ended June 30, 2017										Six months ended June 30, 2017
	Gross Realized Gains		Gross Realized Losses			Net Realized Gains (Losses)			Gross Proceeds from Sale/Maturity		Gross Realized Gains		Gross Realized Losses			Net Realized Gains (Losses)			Gross Proceeds from Sale/Maturity
	(In millions)										(In millions)
Fixed maturity securities available for sale	$	1	$	(2	)	$	(1	)	$	203	$	4	$	(6	)	$	(2	)	$	438
Preferred stock available for sale	—		—			—			10		—		—			—			10
Equity securities available for sale	—		—			—			—		5		—			5			32
Gain on sale of OneDigital						269			331							269			331
Loss on debt conversions and debt refinancing						(20		)	—							(24		)	—
Other long term investments						9			14							9			14
Other realized gains and losses, net						(1		)	—							(2		)	—
Total						$	256		$	558						$	255		$	825



	Three months ended June 30, 2016										Six months ended June 30, 2016
	Gross Realized Gains		Gross Realized Losses			Net Realized Gains (Losses)			Gross Proceeds from Sale/Maturity		Gross Realized Gains			Gross Realized Losses			Net Realized Gains (Losses)			Gross Proceeds from Sale/Maturity
	(In millions)										(In millions)
Fixed maturity securities available for sale	$	2	$	(1	)	$	1		$	191	$	3		$	(1	)	$	2		$	349
Preferred stock available for sale	1		—			1			9		1		—	—			1			9
Equity securities available for sale	—		—			—			—		—		—	(1		)	(1		)	—
Investments in unconsolidated affiliates						—			—								(3		)	—
Other long-term investments						15			36								15			36
Other assets						(2		)	—								(5		)	—
Total						$	15		$	236							$	9		$	394

Investments in unconsolidated affiliates are recorded using the equity method of accounting. As of June 30, 2017 and December 31, 2016, investments in unconsolidated affiliates consisted of the following (dollars in millions):



	Current Ownership