Welcome to the FNF third quarter earnings call. At this time, all participant lines are in a listen-only mode and later there will be an opportunity for your questions. Instructions will be given at that time. (Operator instructions) As a reminder today’s conference call is being recorded. And I now like to turn the conference over to Dan Murphy. Please go ahead.

Thank you and good morning everyone and thanks for joining us for our third quarter 2008 Earnings Call. Joining me today are Bill Foley, Chairman of the Board; Al Stinson, Chief Executive Officer; Randy Quirk, President; and Tony Park, CFO. We will follow our normal this morning, starting with a brief strategic overview from Bill Foley, Al Stinson will provide an update on our operating companies. Randy Quirk will provide a more in-depth analysis of the title business, and Tony Park will finish with a review of the financial highlights. We will then open it up for your questions and finish with some concluding remarks from Bill Foley. This conference call may contain forward-looking statements that involve a number of risks and uncertainties. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. Forward-looking statements are based up management’s beliefs, as well as assumptions made by and information currently available to management. Because such statements are based on expectations as to future economic performance and are not statements of facts, actual results may differ materially from those projected. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. The risks and uncertainties, which forward-looking statements are subject to include, but are not limited to: changes in general economic and business and political conditions, including changes in the financial markets; continued weakness or adverse changes in the level of real estate activity, which may be caused by, among other things, high or increasing interest rates, a limited supply of mortgage funding or a weak US 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 regulations of our operating subsidiaries; and other risks detailed in the statement regarding the forward-looking information, risk factors and other sections of the company’s Form 10-K and other filings with the SEC. This conference call will be available for replay via webcast at our website at FNF.com. It will also be available through phone replay, beginning at 11:00 am Eastern today through October the 3i1th. The replay number is 800-475-6701 and the access code is 963633. Let me now turn the call over to our Chairman, Bill Foley.

Thanks, Dan. We continue to operate our businesses in an extremely difficult economic environment. Order counts from the title business continued to be very weak in July and August with a short-lived increase in early September that lasted only a few weeks. We remain focused on cost and expense management throughout the company as we eliminated approximately 1000 additional positions in the third quarter. Additionally, on October 1st, we instituted a 10% company-wide pay reduction that will most likely remain in place through the first quarter of 2009. We are doing everything that we can to shrink the cost structure of our operations, as we navigate through this tough operating environment. On the M&A front, we did make an opportunistic title acquisition during the quarter as we acquired all of the State of Colorado title and closing operations of the Mercury Companies. Mercury has a 30% market share in the state of Colorado during 2007, and we have now become the market share leader in that state. The purchase price was approximately $5 million plus the assumption of certain payables offset by receivables. We continued to move through the process on the sale of the specialty insurance business. We believe that we are very close to finalizing a definitive agreement on the transaction, but given the disruption in the economy, things have proceeded slower than we otherwise would have expected a few months ago. During the quarter we repurchased approximately 964,000 shares of our common stock for a total cost of about $12.8 million. The repurchase program is presently on hold. We are in the process of reviewing and increasing our filed title insurance rates across the country. To date, we have increased or are in the process of increasing title insurance rates between 15% and 20% in 22 different jurisdictions. Finally, our Board declared the fourth-quarter dividend yesterday at $0.15 per share, a 50% reduction from the previous quarterly dividend of $0.30 per share. In light of the significant slowdown in the title business, our company felt that a reduction in the dividend was prudent at this time. The reduction in the dividend generates additional liquidity and ensures the continued strength of our balance sheet. We anticipate maintaining the $0.15 dividend through 2009 and we'll review the dividend next October. Let me now turn the call over to our CEO, Al Stinson.

Thank you, Bill. Specialty insurance revenue was $100 million for the third quarter, a decline of $7 million from the third quarter of 2007. Flood insurance generated $47 million in revenue, and personal lines insurance contributed $33 million in revenue. Our specialty insurance business earnings were negatively impacted by the numerous hurricanes that hit during the summer, as we incurred homeowners losses during the quarter, but we won't see the majority of the benefit of the increased flood claim processing revenue until the fourth quarter. The homeowners business produced a loss ratio of 124% for the quarter as a result of those losses from the summer hurricanes. While we do not consolidate the results of Sedgwick, they produced revenue of $175 million and EBITDA of $27 million for a margin of nearly 16% for the third quarter. Pretax earnings at $7 million included interest expense of $7 million and depreciation and amortization of $10 million. We continued to own 32% of Sedgwick. We also do not consolidate the results of Ceridian, but they produced revenue of $384 million and EBITDA of $86 million, a margin of 22%. Pretax loss was about $29 million, included interest expense of $73 million and depreciation and amortization of $43 million. The company continues to execute its operational improvement plan despite the difficult economic environment, and the company will continue to seek further progress on improving the operations and financial performance as we head into 2009. We own 33% of Ceridian. Overall, our loss from equity investments was $2.7 million for the third quarter. The significant weakness in the capital markets also required us to record $42 million in realized losses during the quarter, with $7 million in actual realized losses from the sale of Washington Mutual bonds and $35 million in impairments from corporate…

Thank you, Al. Overall, total open order volumes were relatively stable within the quarter, however, overall lower absolute levels than we saw during the second quarter. For the entire quarter we opened 407,400 total orders for a quarterly average of approximately 6,400 open orders per business day, a sequential decline of approximately 12% from the second quarter this year, and a 22% decline from the third quarter of 2007. Looking at it monthly, we opened 6,200 orders per day in July, 6,100 orders per day in August and 6,800 orders per day in September. The month of September did see an increase in open orders for the several weeks, but the volume fell off significantly in the last week of the month. Refinanced orders as a percentage of total orders continued to decrease in the third quarter, comprising approximately 45% of opened and closed order volumes in the quarter versus approximately 55% in the second quarter. The refi percentage did jump to about 50% for the month of September. Finally, October open order accounts have declined to approximately 5,500 open orders per day, the lowest levels we have seen this year. With continued pressure on order counts, we remain focused on reducing our overall cost structure. We began the third quarter with approximately 8,800 employees in the direct field operations and ended the quarter with approximately 8,000, a reduction of about 800 positions or 9% during the third quarter. We also eliminated another 200 positions in other areas of the company, including agency operations and corporate operations for a total decrease of 1000 positions company-wide. The majority of these reductions came late in the quarter, so our reported results do not reflect any significant benefit from these reductions. As Bill mentioned, we acquired the Colorado operations of the Mercury Companies in August, and this added approximately 600 positions to our operations, giving us an actual field count of 8600 employees at quarter end. We also continued to close title and escrow offices during the third quarter, closing more than 115 offices at a total accelerated lease expense of $12.5 million. Additionally, on October 1st, we instituted a 10% company-wide pay reduction that will most likely remain in place through the first quarter of 2009. The commercial title business continues to outperform the residential business, as it showed flat sequential revenue in the third quarter. We opened approximately 14,800 commercial orders in our national commercial divisions and closed approximately 9200 commercial orders, generating more than $60 million in revenue. On a sequential basis open orders were down 9%, and closed orders declined by 3%, but a 2% increase in the fee per file generated nearly flat sequential revenue. Commercial order counts were down approximately 20% from the third quarter of 2007. Commercial revenue accounted for approximately 21% of total direct title premiums in the third quarter. Let me now turn the call over to Tony Park to review the financial highlights.

Thank you, Randy. FNF generated $990 million in revenue for the third quarter with a net loss of $198 million and cash flow from operations of $6 million. Those reported results include three material events. First, we recorded a $261.6 million reserve strengthening charge that I will discuss in more detail in a few minutes. Second, we recorded a $12.5 million abandoned lease expense, resulting from the acceleration of the present value of remaining lease obligations from those branches we decided to close during the quarter. Finally, as Al mentioned, the significant weakness in the capital markets required us to record $42 million in realized losses with $7 million in actual realized losses from securities sold and $35 million in impairments from corporate bonds and equities securities. Before taking these three items into account, the Title segment generated $22 million in pre-tax earnings for a pre-tax margin of 2.6%. The Title segment generated $873 million in total revenue for the third quarter, a decline of 29% from the third quarter of 2007 and a 16% sequential decline from the second quarter. The largest decline came in agency premiums as they fell by 24% sequentially and 40% versus the third quarter of 2007. This is attributable to both the overall decline in activity, as well as our efforts over the last several years to shrink the size of our agency network by eliminating low remitting agents and high claim producing agents. Direct title premiums has declined by 11% sequentially and 27% versus the third quarter of 2007. Personnel costs of $312 million were down $88 million or 22% versus the third quarter of 2007, a decreased by $29 million or 8% sequentially from the second quarter. As Bill and Randy mentioned, we did reduce total headcount by approximately 1000 positions, primarily…

(Operator Instructions) And our first question is from the line of Bob Napoli from Piper Jaffray. Please go ahead

Thank you, and good morning.

Good morning.

Just hoping that you would maybe give a little more color on what changed in the claims and what you're seeing coming out of the claims to raise the reserve that much. It seems, from listening to you, it sounds like nothing really changed but the trend just continued, and you must have expected the trend to improve or..?

Well, Bob, I would say this. I would like to emphasize that nothing specifically changed in the third quarter. What trend we have seen, though, over the past six or seven quarters is that we make a forecast of expected claims that we'll see in the following quarter and actual results have exceeded that forecast in nearly every one of those last six or seven quarters, sometimes by a lower factor, sometimes by a higher factor. So we recorded our reserves based on that model at our central estimate. But, given the pattern we had seen where our actual results continued to exceed our forecasted results; we realized that the current model needed to be adjusted. So we really stepped back from the current model and said, we're going to take a much more conservative approach to reserving. We're going to disregard all prior reported claims experience other than the last three years, those years being 2006 through 2008. We really used just the last three years to determine factors that would project our ultimate loss experience, really for all prior policy years. When we did that, it obviously created a pretty significant adjustment. So, again, it wasn't something that specifically happened in the third quarter of 2008, but rather a trend that we felt like we really needed to adjust the model.

If you could take the claims and, from just big picture, broadly put them into certain buckets by type and percentage of the claims by certain type, what would they be, what would that be? And has that changed much?

It really hasn't changed. The primary three, I would say, are search and exam errors, which has historically been the leading cause of claims. That's about roughly 30% of our claims experience. Fraud and forgery, I would say, there has probably been some change; that moved to number two in the last three years or so compared to what we saw historically. Certainly, in the '90s I would say that, that was a much lower number. I think fraud and forgery is running somewhere close to 20% currently. Then in closing-related errors and underwritten risk, are kind of three and four, and those move around between three and four. All told, those top three or four make up about two-thirds of our total losses.

Okay. Then I heard and I missed a little bit of discussion upfront about pricing increases. Wondering if maybe you could give a little bit of color on the pricing, on what your strategy is there.

Sure, Bob. There really has been price compression or price stability over about the last four or five years, with basically the boom in the real estate market. And we haven’t – we frankly have not been able to file and hold higher prices until, really recently. What we have done over the last 60 days is become very aggressive with regard to pricing, and our intention is to increase prices across the country at least 10% and up to 20% in this initial pass that we are now working on. To date, we are underway in 22 jurisdictions, and the price increases are between 10% and 20%. And that will include states such as California. It will take longer in states such as Texas, New Mexico, Florida, where the rates are promulgated and they are basically industry-wide rates. But in all of those cases we're going to be very aggressive about pushing for higher prices and also emphasizing higher agency splits. In other words, we need to retain more of the dollars that our agents are generating. We have gone back in now and reviewed our entire portfolio of agents. And if an agent was a 90/10, 89/11, 88/12, we basically have gone to those agents and said, you need to be 87/13, 86/14, 85/15; otherwise, we just can't maintain this relationship with you. So we're trying to be very aggressive relative to retention of dollars, and also increasing prices. By the way, the agency relationships are very supportive of price increases because, obviously, if the title rates go up by 20% in a particular state and we have an agent in that state, they generate 20% more dollars. If they have to give us 15% of those dollars instead of 12%, it's not quite as painful for them. So that's the approach we're taking relative to pricing and agency splits. So it was a long answer to kind of a short question.

What kind of feedback, though -- I mean for years, you have had, you have been beat up by regulators to reduce prices, reduce prices, reduce prices. And what kind of initial feedback are you getting? How long do you think it takes to start getting those price increases worked through, if you get approved?

In many states, it's simply file and 30 days later or 60 days later the rates are effective once you've gone through the posting period. We are receiving -- we are being supported in almost every state at this point in time, relative to increasing title insurance rates, simply because the industry is an important industry to our real estate economy or the portion of the economy driven by real estate. If title insurance is under pressure, just as mortgage insurance, it's important that the industry be healthy. We really believe, on that basis, the insurance commissioners that we are dealing with not only will be supportive, but they actually have been supportive toward our rate increases.

California included?

California included.

Okay, that's a big change. And how are your competitors following the moves?

Well, antitrust situations preclude us from communicating with our competitors. We have always been the leader in our industry, and hopefully our competitors will see that they too need to increase rates, and we won't be operating at a competitive disadvantage. Frankly, rates are not a sale factor in this kind of economy. They just really are not part of the real estate sale. The 10% or 20% increase we are talking about, on a $700 policy, might be between $70 and $140. And the consumer and the lender can afford to pay it.

And the last question on, with the loss you took this quarter, any response from regulators or rating agencies? What do you expect? And how confident are you in your liquidity?

Bob, this is Al. We have very good liquidity. That is not remotely an issue. I think, as Tony said, we have $445 million available under our line, so we see no problems. Tony runs a forecast out into 2009 and 2010, and we see no issues. In terms of our rating agencies, Dan was in communication yesterday with all three of them, and we didn't detect too much concern. They were, of course, pleased to hear about the dividend cut. So we will be talking to them in the near future, but I do not see a lot of movement there.

One thing to remember, Bob, in terms of liquidity, these claims are being paid by underwriters and the underwriters are in a very strong, liquid position, with our group of underwriters having almost $4 billion of an investment portfolio. That investment portfolio is largely dedicated to supporting the claims payment and claims processing structure in our company. So liquidity at the holding company is fine, but liquidity at the underwriters is even stronger with our strong investment portfolio. Our investment portfolio, frankly, equals the entire industry combined.

Bob, one further comment, we are well within the debt to cap ratios that the rating agencies like us to maintain.

Thank you.

Next we go to a question from the line of Doug Mewhirter from RBC Capital Markets. Please go ahead.

Hi, good morning, I had one more balance sheet question. How comfortable are you or your bankers with your covenants on your current credit line?

We are fine. I mean have a cushion, , so we -- I think the debt covenant in terms of debt to cap is 35%. We are at 29% currently, under that calculation, and we will be lower than that once we receive reimbursement under the primary reserve money market fund.

Okay. I had a question about, I guess, the California market. We have heard different reports in September of California real estate sales having a big spike, but also half of them are foreclosures. I would imagine that a foreclosure or a bank-owned sale, that the house might have a pretty unclean title with all sorts of liens and back taxes. Does the Bank actually clear up the title before it puts it on the market, or does that mean more work for you guys when you're trying to process that sale?

When the Bank takes back title to the property, whether it's in a foreclosure sale or actually in a deed- in-lieu situation, the Bank at that point clears the title exception. So back taxes, mechanics liens, whatever else might be against that property gets cleared off. Then, when the house is resold, it's a clean title. It's basically subject just to whatever type of loan the Bank would want to put on at that point.

Okay, that was about what I expected. My last question. What’s the, I guess your assumed loss ratio for the policies that you're writing in the last couple of quarters? Is there a way to get a number of that, or is it all kind of mixed up in the…?

We have a roughly 8.5% assumed loss ratio. That clearly is very immature at this point. We don't see losses. We see very few losses in the current policy year. We see more in the next, and then probably a lot more in the third. So at this point it's assumed 8.5%. I wouldn't be surprised, given the underwriting standards that have changed by lenders, given different things that have gone on the title industry in terms of training and controls. It wouldn't surprise me that three years from now we look back at a 2008 policy year and see considerably lower loss ratios. We just can't anticipate that at this point, so we are currently providing at 8.5%.

Okay, thanks, that's all my questions.

And next we have a question from the line of Nik Fisken from Stephens Incorporated. Please go ahead.

Hi good morning everybody.

Good morning.

What is your closing rate so far in October?

Our closing ratio over the last two or three months has been 65%. So it's early in the month, you don't really have a number for October, but that has been traditional. We had a surge in the September refinance openings. We don't know how many of those are going to close yet, and we don't know that that's going to have any effect on the closing ratio. But we have been running consistently about 65% really throughout most of the year.

And Bill, how long do you think it's going to take to get the plus 10 price increase?

Well, I mean, we are in the middle of it in 22 jurisdictions. I think 10 have already been completed, so within six months we should have 50 states, close to 50 states, done. And 10% may not be enough in a lot of states, and there are also nuances that can be employed, and especially in the commercial arena that in various states there would be certain preferred rates based upon liabilities. We are moving all of those rates up, and those rates might be going up 50%. So when I said 10% to 20%, that's the basic increase in insurance rates for the residential resale or refi transaction.

Yeah. And if you add up all the cost savings initiatives, what's the total amount of savings?

I have no idea.

I can tell you…

Because we are trying to catch a falling knife.

Right.

That's a tough one, Nick.

We're just doing it every quarter, and we're trying to save money every way we possibly can. I just thought of another one that I'm going to move on to Alan. That is, I don't think we cut our Board fees by 10%. So the next Board meeting they get cut by 20% because we missed them this Board meeting. So they can enjoy - they feel the pain just like the rest of us.

And Tony, on the provision, where are we if you add up all the years? Are we at 7.5 on average for all the years?

Nik, with the change in the model, what it -- it really goes and reforecasts each of the policy years and moves them all higher. So the numbers that we've been talking about for several quarters now, being on average 7.5%, a lot of those numbers moved up. You had probably the late '90s that now on average are somewhere in the high 6's. Then, you have the next four or five years, probably, that might average in the mid 7's. And then, you have '05, '06, '07, which probably average more in the mid 8's. So, that's -- and in some of those cases we had 90 basis point movements not because we had a real bad quarter but because we changed the model.

Right, okay. And then, on the commercial side, are you seeing any changes there on paid claims, or anything like that?

No. We haven't seen any trends that are any different on the commercial side. Given the surge in commercial business we have had over the last few years, commercial is making up a slightly higher percentage of our total losses. But in terms of loss ratios we haven't seen anything different.

Okay. And then the $35 million write-down, what was the split between equity and bonds? And, was there any of the Remy in there?

No, there was no Remy in there. The split, we had about $10 million in bonds -- no; we had $18 million in bonds.

The bonds are still current pays, and a lot of them are maturing within the next two to four years and we intend to hold to maturity. But under this mark-to-market accounting, we are forced to keep on taking these adjustments.

Last question, what do you think the next data point on specialty will be?

Within 30 days.

Okay, thank you so much.

And we have no further questions at this time, and I'll turn the call back to Mr. Foley for closing comments.

Thank you. As we move through the last quarter of 2008 and into 2009, we are focused on continuing to navigate our way through these challenging times, maintaining profitability in our title insurance operations, providing significant liquidity and ensuring the strength of our balance sheet. Thanks to all of you for joining us this morning.

Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation and for using AT&T executive teleconference.