##### Table of Contents









SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549




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Form 10-K



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|           |  |                                                                                                              
|---------- |  | -------------------------------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                                              
|          
|þ          |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR
	15(d)
	OF THE SECURITIES EXCHANGE ACT OF 1934 (No Fee
	Required)    
|          
|           |  | For the Fiscal Year Ended December 31,
	2001                                                                 
|          
|or        
|          
|o          |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR
	15(d)
	OF THE SECURITIES EXCHANGE ACT OF 1934 (No Fee
	Required)

Commission File No. 0-24961

American National Financial, Inc.

(Exact name of registrant as specified in its
charter)


|                                                                                                                |  |                                                                     
|--------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------
|California(State or other jurisdiction
	of incorporation or organization)                                       |  | 33-0731548(I.R.S. Employer
	Identification No.)                     
|                                                                                                               
|1111 E. Katella Avenue, Suite 220
	Orange, California 92867(Address of principal executive
	offices) (Zip Code) |  | (714) 289-4300(Registrants telephone
	number,
	including area code)

Securities registered pursuant to
Section 12(b) of the Act:

None


Securities registered pursuant to
Section 12(g) of the Act:

|                           |  |                       
|-------------------------- |  | ----------------------
|                           |  | Name of each exchange 
|Title of each class        |  | on which registered   
|                           |  |                       
|Common Stock, no par value |  | NASDAQ National Market

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 if disclosure of
delinquent filers pursuant to Item 405 of Regulation S-K is
not contained herein, and will not be contained, to the best of
registrants knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this
Form 10-K, or any amendment to this
Form 10-K.     þ

As of March 13, 2002, 7,103,219 shares of
common stock (no par value) were outstanding, and the aggregate
market value of the shares of the common stock held by
non-affiliates of the registrant was $15,210,418. The aggregate
market value was computed with reference to the closing price on
the NASDAQ National Market on such date.

Location of
Exhibit Index:The index to
exhibits is contained in Part IV herein on page number 51.

The information in Part III hereof is
incorporated herein by reference to the Registrants Proxy
Statement on Schedule 14A for the fiscal year ended
December 31, 2001, to be filed within 120 days after
the close of the fiscal year that is the subject of this Report.



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TABLE OF CONTENTS



|              |                                                                                                 |                                                   |  |  |  |  |  | 
|------------- | ----------------------------------------------------------------------------------------------- | ------------------------------------------------- |  |  |  |  |  | 
|PART I       
|              | Item 1. Business                                                                               
|              | Item 2. Properties                                                                             
|              | Item 3. Legal Proceedings                                                                      
|              | Item 4. Submissions of Matters to a vote of Security Holders                                   
|PART II      
|              | Item 5. Market for Registrants Common Stock and Related Shareholder Matters                   
|              | Item 6. Selected Financial Data                                                                
|              | Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations  
|              | Item 7A. Quantitative and Qualitative Disclosure about the Market Risk of Financial Instruments
|              | Item 8. Financial Statements and Supplementary Data                                            
|              |                                                                                                 | CONSOLIDATED BALANCE SHEETS                      
|              |                                                                                                 | CONSOLIDATED STATEMENTS OF EARNINGS              
|              |                                                                                                 | CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
|              |                                                                                                 | CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY  
|              |                                                                                                 | CONSOLIDATED STATEMENTS OF CASH FLOWS            
|              | Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure   
|PART III     
|              | Item 10. through 13.                                                                           
|PART IV      
|              | Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K                       
|SIGNATURES   
|EXHIBIT INDEX
|EXHIBIT 23.1 



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##### Table of Contents



TABLE OF CONTENTS

FORM 10-K

|         |  |                                                                                        |  |      |    | 
|-------- |  | -------------------------------------------------------------------------------------- |  | ---- | -- | 
|         |  |                                                                                        |  | Page
|         |  |                                                                                        |  |     
|PART I  
|Item 1.  |  | Business                                                                               |  |      | 2  | 
|Item 2.  |  | Properties                                                                             |  |      | 15 | 
|Item 3.  |  | Legal Proceedings                                                                      |  |      | 16 | 
|Item 4.  |  | Submission of Matters to a Vote of Security
	Holders                                   |  |      | 16 | 
|PART II 
|Item 5.  |  | Market for Registrants Common Stock and
	Related Stockholder Matters                  |  |      | 16 | 
|Item 6.  |  | Selected Financial Data                                                                |  |      | 17 | 
|Item 7.  |  | Managements Discussion and Analysis of
	Financial Condition and Results of Operations |  |      | 18 | 
|Item 7A. |  | Quantitative and Qualitative Market Risk
	Disclosures                                  |  |      | 26 | 
|Item 8.  |  | Statements and Supplementary Data                                                      |  |      | 28 | 
|Item 9.  |  | Changes in and Disagreements with Accountants on
	Accounting and Financial Disclosure  |  |      | 53 | 
|PART III
|Item 10. |  | Directors and Executive Officers of the Registrant                                     |  |      | 53 | 
|Item 11. |  | Executive Compensation                                                                 |  |      | 53 | 
|Item 12. |  | Security Ownership of Certain Beneficial Owners
	and Management                        |  |      | 53 | 
|Item 13. |  | Certain Relationships and Related Transactions                                         |  |      | 53 | 
|PART IV 
|Item 14. |  | Exhibits, Financial Statement Schedules and
	Reports on Form 8-K                       |  |      | 53 | 

1



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##### Table of Contents






PART I




Item 1.     Business

Introduction

American National Financial, Inc., through its
subsidiaries (collectively, we, the
Company, or ANFI) provides title
insurance services as well as other real estate related
financial and informational services including:



| |   |                                            
| | - | -------------------------------------------
| |  | escrow,                                    
|
| |  | real estate information,                   
|
| |  | trustee sale guarantees,                   
|
| |  | exchange intermediary services,            
|
| |  | document preparation and research services,
|
| |  | notary signing services,                   
|
| |  | property management and                    
|
| |  | appraisals.                                

In addition, we obtain specialized services for
customers, including tax reporting services and courier
services. We focus our business on the residential real estate
market and in 2001 generated the majority of our revenue from
issuing title insurance policies as an independent agent on
behalf of an affiliated title underwriter. For the years ended
December 31, 2001, 2000 and 1999, net title service revenue
represented approximately 55.6%, 52.8% and 57.5% of our
revenues, respectively.

Our primary operations are conducted in 16
counties, consisting of 85 offices, located in major
counties throughout California and Arizona (Maricopa, Pinal and
Pima). Our counties process real estate transactions within
their geographical area or region. Each county is operated as a
separate profit center.

During 1999, 2000 and 2001, we established
offices in Tennessee, Florida and New York to expand our current
customer base by developing agency relationships. In addition,
during 2001, we expanded our operations by opening several title
and escrow offices in California and Arizona, in addition to the
formation of the Wireless Title Service division.

Industry Overview

The title insurance industry consists of insurers
(underwriters) who issue policies through direct
operations or through agents. Our principal subsidiary, American
Title Company (ATC), is an agent, known in
California as an underwritten title company. ATC has
entered into an Issuing Agency Agreement to issue policies on
behalf of Chicago Title Insurance Company (CTIC), a
subsidiary of Fidelity National Financial, Inc.
(FNF), which is licensed in California and Arizona,
among other states. See Relationship with Fidelity
National Financial, Inc.



| |               
| | --------------
| | Title Policies

Title insurance policies insure title to real
estate. The beneficiaries of title insurance policies are
generally buyers of real property or mortgage lenders. The
policy protects the insured against title defects, liens and
encumbrances not specifically excepted from its coverage. Most
mortgage lenders require title insurance as a condition to
making loans secured by real estate.

Title insurance is different from other types of
insurance because it relates to past events that affect title to
property at the time of closing; it does not protect against
unforeseen future events. Prior to issuing policies,
underwriters can reduce or eliminate future losses by accurately
performing searches and examinations.

2



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Title insurance policies are issued on the basis
of a preliminary title report or commitment. These reports are
prepared after a search of public records, maps and other
relevant documents to ascertain title ownership and the
existence of easements, restrictions, rights of way, conditions,
encumbrances or other matters affecting the title to, or use of,
real property. A visual inspection or survey of the property may
also be made prior to the issuance of certain title insurance
policies.

A title companys major expense is the cost
of the search and examination function performed in preparing
preliminary title reports, commitments and title policies,
rather than the claim losses associated with the issuance of
these policies. The premium for title insurance is due in full
at the closing of the real estate transaction and is based upon
the purchase price of the property insured or the amount of the
mortgage loan and upon the type of coverage. Policy coverage
generally terminates upon resale or refinance of the property.
Coverage terms have become relatively standardized in accordance
with forms approved by state or national trade associations,
such as the American Land Title Association, the California Land
Title Association, New York Land Title Association and the
Land Title Association of Arizona. Among the most commonly
issued title insurance policies are standard or extended
coverage policies for owners and lenders and trustee sale
guarantees, which provide assurances to trustees concerning
certain information in connection with non-judicial foreclosures.



| |             
| | ------------
| | Title Plants

To facilitate preparing preliminary reports
without manually searching public copies of public records, maps
and other relevant historical documents are compiled and indexed
in title plants. These title plants relate to
particular counties and are kept current by the periodic
addition of copies of recorded documents affecting real property
in each particular county. Title companies often subscribe to
independent title information services to assist in updating
title plants and maintaining title records.



| |                                           
| | ------------------------------------------
| | The Title Policy and Underwriting
	Process

The following briefly describes the process of
issuing a title insurance policy:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) The customer, typically a real estate
	salesperson or broker, escrow agent or lender, places an order
	for a title policy.                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| | (ii) Relevant historical data on the
	property is compiled, and then the title officer prepares a
	preliminary title report describing (a) the current status
	of title and conditions affecting the property, (b) any
	exclusions, exceptions and/or limitations which the title
	underwriter might include in the policy and (c) specific
	issues which need to be addressed and resolved by the parties to
	the transaction before the title policy will be issued. The
	preliminary report is circulated to all the parties to consider
	specific issues, if any.
|
| | (iii) After resolution of the specific
	issues identified in the preliminary report, an escrow agent
	closes the transaction in accordance with the instructions of
	the parties and the title underwriters conditions.                                                                                                                                                                                                                                                                                                                                             
|
| | (iv) After the escrow agent closes the
	transaction and releases the monies, the title underwriter or
	agent issues the policies (a) to the owner and the lender
	on a new home sale or resale transaction or (b) to the
	lender only, on a refinance transaction.                                                                                                                                                                                                                                                                                                   

The terms and conditions upon which title to real
property will be insured are determined in accordance with the
standards, policies and procedures of the title underwriter. The
underwriter may have a relationship with a third party agent,
under which the agent issues the title insurance policy on
behalf of the underwriter. The agent performs the search and
examination function and retains a majority of the title premium
as a commission. The underwriter receives the remainder of the
premium collected by the agent in exchange for assuming the risk
on the policy.

Underwriting practices in California, Arizona and
New York are generally dictated by the California, Arizona
and New York Land Title Associations, although the
underwriters personnel interpret the application

3



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of these rules to specific circumstances.
Underwriters, such as Fidelity National Title Insurance Company
(FNTIC) and CTIC, also maintain and distribute
current information on title practices and procedures to its
issuing agents.


The maximum amount of liability for an insurer,
under a title insurance policy is usually the face amount of the
policy plus the cost of defending the insured title against an
adverse claim. The reserve for claim losses is based upon known
claims, as well as losses the insurer expects to incur based on
historical experience and other factors, including industry
averages, claim loss history, legal environment, geographic
considerations, expected recoupments and the types of policies
written. The title underwriter establishes a reserve for each
known claim based on a review and evaluation of potential
liability.

A non-affiliated agent that issues title
insurance on behalf of an insurer is not subject to the same
liability that the insurer faces under the policy. The agent is
not assuming risk on the title policy and its liability with
respect to the issuance of the policy is typically limited to a
specific amount, pursuant to an agreement with the insurer.



| |                                         
| | ----------------------------------------
| | Economic Factors Affecting the
	Industry

Title insurance revenue is closely related to the
level of real estate activity and the average price of real
estate sales. Real estate sales are directly affected by the
availability of funds to finance purchases. Other factors
affecting real estate activity include demand, mortgage interest
rates, family income levels and general economic conditions.
While the level of sales activity was relatively depressed in
certain geographical areas during the early 1990s,
decreases in mortgage interest rates since late 1995 and the
resulting improvement in the real estate market have had a
favorable effect on the level of real estate activity, including
refinancing and resale transactions and new home sales. The
overall economic environment, stable mortgage interest rates and
strength in the real estate market, especially in California,
contributed to very positive conditions for the industry
throughout 1997, 1998 and the first quarter of 1999. However,
mortgage rates began to climb during the last half of 1999 and
continued through 2000, virtually eliminating the volume of
refinance activity experienced in 1998 and early 1999. Beginning
in late 2000 and continuing throughout 2001, interest rate
decreases caused by actions taken by the Federal Reserve Bank
have brought interest rates to their lowest levels in
approximately two years, which was a 475 basis point reduction
since January 1, 2001. While the recent interest rate
decreases created opportunity for our industry, it is impossible
to predict the future direction interest rates and the real
estate market may move or fluctuate.



| |                    
| | -------------------
| | Competitive Factors

A key competitive factor in the title insurance
business is the ability to develop and maintain a qualified and
experienced group of professionals through which services are
delivered to customers. Title insurance business is typically
generated through relationships with persons in the real estate
industry such as independent escrow companies, real estate
brokers and agents, developers, mortgage brokers, mortgage
bankers, financial institutions and attorneys. Thus, the
relationships and contacts maintained by sales personnel are
critical to generating such business. In addition, the quality
of a title companys service, its responsiveness and its
ability to adapt to customers needs are important in
attracting and maintaining customers. Other competitive factors
include the financial strength and reputation of the insurer.

We believe that the price of title insurance is
typically not an important competitive factor. In both
California and Arizona, where our primary operations are
currently conducted, the minimum price of title insurance is
filed by the title underwriter and is regulated by the
Department of Insurance in California and by the State Banking
Commission in Arizona. In the event we expand operations into
states where regulatory authorities do not control prices, the
price of title insurance may also become an important
competitive factor.

4



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Our Title and Escrow Insurance Operations and
Products



| |                           
| | --------------------------
| | Title Insurance Operations

Our primary subsidiary, ATC, is an underwritten
title company licensed by the Department of Insurance of the
State of California. ATCs current business is limited to
issuing policies as an agent on behalf of CTIC, a subsidiary of
FNF. ATC acts exclusively as an agent for CTIC with respect to
the procurement of title insurance policies in 16 selected
counties in California and three counties in Arizona, subject to
certain exceptions. These exclusive arrangements with CTIC do
not apply to other counties into which the Company has expanded
due to the National Title Insurance of New York, Inc.
(National) acquisition. ATCs net title service
revenue consists of 88% of the gross title insurance premiums
collected on policies issued pursuant to its agreement with
CTIC. The remaining 12% is comprised of an 11% underwriting fee
paid to the underwriter and a 1% administrative service fee,
paid to FNTIC. As an agent, ATC is not subject to the loss and
reserve requirements applicable to insurers, and pursuant to its
agreements with CTIC, ATCs liability is limited to the
first $5,000 of loss under any policy issued by it on behalf of
CTIC, except in the case of negligence, or willful or reckless
conduct. To date, the amounts paid by us to CTIC in
reimbursement of CTICs claims losses under this
arrangement have not been material. See Relationship with
Fidelity National Financial, Inc.

We operate in 16 counties consisting of 85
offices located in California and Arizona. Each of our
branchs process real estate transactions within the
geographical area of the branch or region and each branch is
operated as a separate profit center.

In the years ended December 31, 2001, 2000
and 1999, the following ATC branch operations accounted for the
indicated percentages of our total gross title insurance premium
revenues:

|                  |                                |                                            |        |         |  |          |       |         |  |          |        |         |  |  |       |     |  |   |        |       |  |  |       |     | 
|----------------- | ------------------------------ | ------------------------------------------ | ------ | ------- |  | -------- | ----- | ------- |  | -------- | ------ | ------- |  |  | ----- | --- |  | - | ------ | ----- |  |  | ----- | --- | 
|                  |                                |                                           
|                  |                                | December 31,                              
|                  |                                |                                           
|                  |                                |                                            |        |         |  |         
|                  |                                | 2001                                       |        | 2000    |  | 1999    
|                  |                                |                                            |        |         |  |         
|                  |                                | Premiums                                   |        | Percent |  | Premiums |       | Percent |  | Premiums |        | Percent
|                  |                                |                                            |        |         |  |          |       |         |  |          |        |        
|                  |                                |                                           
|                  |                                | (Amounts in thousands, except percentages)
|Alameda, CA       |                                | $                                          | 8,701  |         |  |          | 10.4  | %       |  | $        | 5,173  |         |  |  | 10.4  | %   |  | $ | 3,693  |       |  |  | 6.3   | %  
|Contra Costa, CA  |                                |                                            | 6,244  |         |  |          | 7.4   |         |  |          | 2,672  |         |  |  | 5.4   |     |  |   | 2,775  |       |  |  | 4.8   |    
|Inland Empire, CA |                                |                                            |        |         |  |          |       |         |  |          |        |         |  |  |       |     |  |   |        |       |  |  |       |    
|                  | (Riverside and San Bernardino) |                                            |        | 4,534   |  |          |       | 5.4     |  |          |        | 2,666   |  |  |       | 5.4 |  |   |        | 2,646 |  |  |       | 4.5 | 
|Kern, CA          |                                |                                            | 3,408  |         |  |          | 4.1   |         |  |          | 2,776  |         |  |  | 5.6   |     |  |   | 3,096  |       |  |  | 5.3   |    
|Los Angeles, CA   |                                |                                            | 17,221 |         |  |          | 20.5  |         |  |          | 8,931  |         |  |  | 18.0  |     |  |   | 10,013 |       |  |  | 17.2  |    
|Orange, CA        |                                |                                            | 19,963 |         |  |          | 23.8  |         |  |          | 11,536 |         |  |  | 23.2  |     |  |   | 15,909 |       |  |  | 27.2  |    
|Maricopa, AZ      |                                |                                            | 4,269  |         |  |          | 5.1   |         |  |          | 3,105  |         |  |  | 6.3   |     |  |   | 4,045  |       |  |  | 6.8   |    
|Pima, AZ          |                                |                                            | 2,540  |         |  |          | 3.0   |         |  |          | 537    |         |  |  | 1.1   |     |  |   |       |       |  |  |      |    
|Sacramento, CA    |                                |                                            |       |         |  |          |      |         |  |          | 397    |         |  |  | 0.8   |     |  |   | 1,257  |       |  |  | 2.2   |    
|San Diego, CA     |                                |                                            | 7,484  |         |  |          | 8.9   |         |  |          | 3,340  |         |  |  | 6.7   |     |  |   | 3,831  |       |  |  | 6.6   |    
|San Mateo, CA     |                                |                                            | 1,673  |         |  |          | 2.0   |         |  |          | 1,188  |         |  |  | 2.4   |     |  |   | 1,263  |       |  |  | 2.2   |    
|Santa Barbara, CA |                                |                                            | 672    |         |  |          | 0.8   |         |  |          | 556    |         |  |  | 1.1   |     |  |   | 684    |       |  |  | 1.2   |    
|Santa Clara, CA   |                                |                                            | 3,694  |         |  |          | 4.4   |         |  |          | 2,110  |         |  |  | 4.2   |     |  |   | 4,028  |       |  |  | 6.9   |    
|Ventura, CA       |                                |                                            | 3,620  |         |  |          | 4.2   |         |  |          | 4,718  |         |  |  | 9.4   |     |  |   | 5,130  |       |  |  | 8.8   |    
|                  |                                |                                            |        |         |  |          |       |         |  |          |        |         |  |  |       |     |  |   |        |       |  |  |       |    
|                  |                                | $                                          | 84,023 |         |  |          | 100.0 | %       |  | $        | 49,705 |         |  |  | 100.0 | %   |  | $ | 58,370 |       |  |  | 100.0 | %  
|                  |                                |                                            |        |         |  |          |       |         |  |          |        |         |  |  |       |     |  |   |        |       |  |  |       |    



| |                          
| | -------------------------
| | Title Plants Arrangements

We lease title plants from FNTIC in Kern, San
Mateo and Santa Clara counties and CTIC in Tucson, for an
aggregate payment of $14,700 per month. At the expiration of the
lease, we will have an option to acquire these title plants for
nominal consideration. We have also entered into a capital lease
with Title Records, Inc. for the use of a title plant in Los
Angeles County, and have the right to acquire a copy of the

5



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public records, maps and other relevant
historical documents at that plant. We access title plants in
the other counties in which we operate through joint plant user
agreements with Smart Title Solutions and Security Union Title
Insurance Company, a subsidiary of FNF. See Relationship
with Fidelity National Financial, Inc.


Title plant maintenance activities constitute a
significant item of expense, since each document must be
reviewed and indexed. These costs plus the costs of subscribing
to various title information services and other plant expenses
range from approximately $2,000 to $31,500 per month, per county.



| |            
| | -----------
| | Escrow Fees

In addition to providing title insurance, we
provide escrow services that include all of those typically
required with residential and commercial real estate purchase
and finance activities. The fees from escrow services represent
approximately 23.7%, 26.6% and 28.2% of our total revenues in
2001, 2000 and 1999, respectively. Trends in escrow fees are
primarily related to title insurance activity. Escrow fees
during the three-year period ended December 31, 2001, fluctuated
in a pattern generally consistent with the volume of title
insurance premiums and order counts. The decrease in 2001 escrow
fees, as a percentage of total revenues, is consistent with
overall volume increases in total revenues.

Our Ancillary Services

In addition to issuing title insurance policies
and providing escrow services, we provide the ancillary services
described below. These services accounted for approximately
12.6%, 15.2% and 13.1% as a percentage of total revenues in
2001, 2000 and 1999, respectively.



| |                                
| | -------------------------------
| | Document Preparation
	Services.

Through American Document Services, Inc. we offer
a variety of services related to the documenting of real estate
transactions. These services include:



| |                                                                      
| | ---------------------------------------------------------------------
| | (i) preparing reconveyance and assignment
	documents,                
|
| | (ii) file research and document retrieval
	services, and             
|
| | (iii) recording services, including
	retrieval of recorded documents.

We can provide these services in every county and
township in the United States. Our ability to provide these
services is facilitated by independent abstract companies, title
companies and law firms.



| |                    
| | -------------------
| | Appraisal Services.

Through West Point Appraisal Services, Inc., an
appraisal management company, we offer a variety of residential
appraisal services to meet the various appraisal needs of our
customers. The services are provided through approved
independent appraisers.



| |                     
| | --------------------
| | Inspection Services.

Through West Point Properties, Inc., an
inspection company, we provide property inspection services to
our customers. These services are provided through independently
contracted inspectors.



| |                                                     
| | ----------------------------------------------------
| | Shortened Title Assurance Reports
	(STAR Product).

Our STAR product serves as a low-cost, limited
form of title protection for the benefit of lenders in
subordinate loan transactions where the primary lending criteria
is the borrowers creditworthiness rather than the security
interest in the real property.

6



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##### Table of Contents





| |                              
| | -----------------------------
| | Centralized Title and Escrow.

National Lenders Division, our central order
processing unit, provides customers with a centralized location
through which they can order title and escrow services. The
services offered through our National Lenders Division can be
provided on a nationwide basis.



| |                        
| | -----------------------
| | Trustee Sale Guarantee.

Our National Default Services division provides a
central location for all trustee sale guarantee requests
throughout California. Our services include providing ten-day
letter information, customized accounting and reporting
documents, fast track messenger services and electronic file
transfers. These services provide assurances to trustees
concerning certain information in connection with non-judicial
foreclosures of property secured by a deed of trust. Because the
number of foreclosures tends to increase as the real estate
market and the economy decline, this division tends to be
counter-cyclical to our title insurance business.



| |                              
| | -----------------------------
| | Property Management Services.

Through Landmark REO Management Services, Inc.,
we provide property management and disposition services for
foreclosure properties throughout the United States. These
services include the initial property inspection, eviction
coordination, property maintenance, the retention of a local
broker, and the supervision of escrow for the sale of the
property. Property management services are provided in
connection with foreclosures and therefore tend to be
counter-cyclical to our title insurance business.



| |                           
| | --------------------------
| | Document Signing Services.

Through Bancserv, Inc., we provide outsource
services to the real estate and banking industry through a
national network of qualified notaries public.



| |                   
| | ------------------
| | Exchange Services.

Through American National Exchange Services,
Inc., we offer Section 1031 exchange intermediary services,
which can facilitate safe, effective and creative solutions for
a range of exchange transactions involving single units to large
commercial and/or industrial properties.

Title Losses and Reserves

As an agent, ATC is not subject to the loss and
reserve requirements applicable to insurers. Pursuant to its
agreements with CTIC, ATCs liability is limited to the
first $5,000 of loss under any policy issued by it on behalf of
CTIC, except in the case of negligence, or willful or reckless
conduct. To date, our payments for reimbursement of claims
losses under these arrangements have not been material.

Underwriting, Losses and Reserves

We believe that the level of risk undertaken
pursuant to our underwriting standards is consistent with
industry standards. The maximum amount of liability under a
title insurance policy is usually the face amount of the policy
plus the cost of defending the insured title against an adverse
claim. The reserve for claim losses includes known claims as
well as losses National Title Insurance of New York, Inc.
(National) expects to incur, net of recoupments.
Each known claim is reserved for on the basis of a review as to
the estimated amount of the claim and the costs to settle a
claim. Reserves for claims that are incurred but not reported
are provided for at the time premium revenue is recognized based
on historical loss experience and other factors, including
industry averages, claim loss history, legal environment,
geographic considerations and types of policies written. The
occurrence of a significant major claim (those greater than
$500,000) in any given period could have a material adverse
effect on Nationals financial condition and results of
operations for such period.

If a loss is related to a policy issued by an
independent agent, National may proceed against the independent
agent pursuant to the terms of the agency agreement. In any
event, National may proceed against

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##### Table of Contents



third parties who are responsible for any loss
sustained under the title insurance policy under rights of
subrogation.


We believe that our quality controls and
underwriting standards help minimize our net title claims paid.
We will further reduce losses by following aggressive recoupment
procedures under rights of subrogation or warranties and by
carefully reviewing all claims.

Courts and juries sometimes award damages against
insurance companies, including title insurance companies, in
excess of policy limits. Such awards are typically based on
allegations of fraud, misrepresentation, deceptive trade
practices or other wrongful acts commonly referred to as
bad faith. Although National has not experienced
damage awards materially in excess of policy limits, the
possibility of such bad faith damage awards may cause increased
costs and difficulty in settling title claims.

National generally pays losses in cash. In some
instances claims are settled by purchasing the interest of the
insured in the real property or the interest of the adverse
claimant. Such interests are generally recorded as an asset on
Nationals books at the lower of cost or fair value less
selling costs and any related indebtedness is carried as a
liability.

National also accrues reserves related for losses
arising from the escrow, closing and disbursement functions due
to fraud or operational error based on historical experience.

Reinsurance

In the ordinary course of business, National
reinsures certain risks with other title insurers for the
purpose of limiting its maximum loss exposure and also assumes
reinsurance for certain risks of other title insurers for the
purpose of earning additional income. National cedes or assumes
a portion of certain policy liabilities under agent fidelity,
excess of loss and case-by-case reinsurance agreements.
Reinsurance agreements provide that the reinsurer is liable for
loss and loss adjustment expense payments exceeding the amount
retained by the ceding company. However, the ceding company
remains primarily liable in the event the reinsurer does not
meet its contractual obligations. National did not assume or
cede any significant policy liabilities during 2001, 2000 and
1999, respectively.

Competition

The title insurance industry is highly
competitive in the attraction and retention of customers and
independent agents. The number of competing companies and the
size of such companies varies in the different geographic areas
in which we conduct business. Generally, we compete with many
other title insurers and agents, with the most effective
competition coming from companies which possess greater capital
resources. Approximately 1,700 title companies, less than 75 of
which are underwriters, are members of the American Land Title
Association, the title insurance industrys national trade
association.

The title insurance industry, however, is heavily
concentrated. It is estimated that the five largest title
insurance underwriters, either directly or through their agents,
accounted for approximately 89% of the policy premium revenue in
the United States in 2000 and 90% in 1999. In our principal
markets, competitors currently include direct operations and
agents of the title insurance subsidiaries of Fidelity National
Financial, Inc., Chicago Title Corporation (which was acquired
by FNF on March 20, 2000), First American Financial
Corporation, LandAmerica Financial Group, Inc., Old Republic
International Corporation and Stewart Information Services
Corporation, as well as numerous independent agency operations
at the local level. We may also face competition from entrants
into the industry and the geographic markets it plans to service.

The escrow and other real estate related services
industry is also highly competitive and extremely fragmented.
Our competition with respect to such services includes not only
other title underwriters and title agents in the insurance
industry, but also companies, both local and nationally, that
specialize in providing a particular service.

Because the parties to a real estate transaction
are usually concerned with time schedules and costs associated
with delays in closing the transaction, competition is based
primarily on the quality and timeliness

8



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##### Table of Contents



of service. We believe that our competitive
position is enhanced by our quality customer service, and that
the price of title insurance is typically not an important
competitive factor.


Marketing

We attempt to increase the volume of our title
insurance and real estate related services business primarily
through customer solicitation by sales personnel. The primary
source of this business is from independent escrow companies,
real estate brokers and agents, developers, mortgage brokers,
mortgage bankers, financial institutions and attorneys. We
believe that the personal contacts maintained by our sales
personnel with these customers are critical to generating title
insurance business. We therefore actively encourage our branch
personnel to continually develop new business relationships with
persons in the real estate business community. In addition to
generating business through direct solicitation and general
advertising, we believe that excellent service is an important
competitive factor in attracting and retaining customers, and
measure customer service in terms of quality and timeliness in
the delivery of services.

Regulation

Title insurance companies, including
underwriters, underwritten title companies and independent
agents, are subject to extensive regulation under applicable
state laws. As an agent, we are subject to regulation in
California and Arizona. In California, we are regulated by the
Department of Insurance State of California and in Arizona is
regulated by the State Banking Department, State of Arizona. See
Note 9 to Notes to the Consolidated Financial Statements. Such
regulations include licensing requirements for the counties in
which we operate, and regulations relating to minimum levels of
net worth and working capital.

Current regulations require that ATC maintain a
minimum net worth of $400,000. The net worth of ATC was
$33.4 million, $23.0 million and $20.5 million
for the years ended December 31, 2001, 2000 and 1999,
respectively. See Note 9 of Notes to Consolidated Financial
Statements.

Insurance underwriters are usually subject to a
holding company act in their state of domicile that regulates,
among other matters, the ability to pay dividends and investment
policies. The laws of most states in which National transacts
business establish supervisory agencies with broad
administrative powers relating to issuing and revoking licenses
to transact business, regulating trade practices, licensing
agents, approving policy forms, accounting principles, financial
practices, establishing reserve and capital and surplus
requirements, defining suitable investments for reserves,
capital and surplus and approving rate schedules. In 1998, the
National Association of Insurance Commissioners approved
codified accounting practices that changed the definition of
what constitutes prescribed statutory accounting practices that
resulted in changes to the accounting policies that insurance
enterprises use to prepare their statutory financial statements
commencing in 2001. We have evaluated the effects of these rules
and believe they will not have a material effect on the
statutory capital and surplus of National.

Pursuant to statutory accounting requirements of
the various states in which National is licensed, it must defer
a portion of premiums earned as an unearned premium reserve for
the protection of policyholders and must maintain qualified
assets in an amount equal to the statutory requirements. The
level of unearned premium reserve required to be maintained at
any time is determined on a quarterly basis by statutory formula
based upon either the age, number of policies and dollar amount
of policy liabilities underwritten or the age and dollar amount
of statutory premiums written. The statutory unearned premium
reserve required and reported for National was
$3.0 million, $3.2 million and $3.7 million as of
December 31, 2001, 2000 and 1999, respectively.

National is regulated by the Insurance
Commissioner of the State of New York. Regulatory examinations
usually occur at three-year intervals and examination was in
progress for National (1998). In December 2000, the New York
Department of Insurance issued its draft report of the
December 31, 1998 examination. In February 2001, we
accepted the report as issued by the State of New York Insurance
Department for the 1998 examination and all issues and comments
were resolved. The findings in the examination report had no
impact on Nationals statutory results at December 31,
2001. National was notified that the report was adopted and
filed by the Department.

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##### Table of Contents



The Auditor Division of the Controller of the
State of California is currently conducting an examination of
the funds due the State of California under various escheatment
regulations for the years ended December 31, 1998 and
prior. We have not received a preliminary report as the audit is
ongoing. We do not believe that either the examinations being
performed by the insurance regulators or the Controller of the
State of California will have a material impact on our financial
position, our results of operations or our statutory capital and
surplus.

In June 2001, auditors from the State of
California, Department of Insurance commenced a market conduct
examination of ATC. Similar examinations have been or are being
conducted at virtually all companies in the title insurance
business. The examination is in its preliminary stages and is on
going. We are unable to form a professional judgement that an
unfavorable outcome is either probable or remote, however,
management does not believe that any outcome will have a
material affect on our financial statements.

Statutorily calculated net worth determines the
maximum insurable amount under any single title insurance
policy. As of January 1, 2002, Nationals self-imposed
single policy maximum insurable amount, which complies with
statutory limitations, was $6.0 million.

National is subject to regulations that restrict
its ability to pay dividends or make other distributions of cash
or property to its parent company without prior approval from
the Department of Insurance of the State of New York. The
maximum amount of dividends which can be paid by National to
shareholders without prior approval of the Insurance
Commissioner is subject to restrictions. No dividends, including
all dividends paid in the preceding twelve months, which exceed
10% of the outstanding capital shares can be paid without prior
approval unless after deducting dividends National has surplus
to policyholders at least equal to the greater of 50% of its
reinsurance reserves or 50% of the minimum capital required.
Additionally, dividends are further limited to Nationals
earned surplus. Based on this formula, National could pay
dividends to ATC of $38,400 during 2002.

Pursuant to statutory requirements of the State
of New York, National must maintain certain levels of minimum
capital and surplus. The statutory capital and surplus of
National was $3.7 million, $3.3 million and
$2.5 million at December 31, 2001, 2000 and 1999,
respectively. The statutory earnings of National were $617,000,
$684,000 and $426,000, for the years ended December 31,
2001, 2000 and 1999, respectively. National is compliant with
the minimum statutory requirements as of December 31, 2001.

Ratings

National is regularly assigned ratings by
independent agencies designed to indicate their financial
condition and/or claims paying ability. Financial data and other
information are supplied to the rating agencies and subjected to
quantitative and qualitative analyses from which the ratings are
derived. Nationals rating, as assigned during 2001, 2000
and 1999, is listed below:

|                                           |  |                              |   | 
|------------------------------------------ |  | ---------------------------- | - | 
|                                           |  | Demotech, Inc.              
|                                           |  | (Financial Stability Rating)
|                                           |  |                             
|National Title Insurance of New York, Inc. |  |                              | A | 

Investment Policies and Investment
Portfolio

Our investment policy is designed to maintain a
high quality portfolio, maximize income, minimize interest rate
risk and match the duration of the portfolio our liabilities.
Our practice is to purchase investment grade fixed maturity
securities. Our portfolio is subject to economic conditions and
normal market risks and uncertainties.

All of Nationals investment assets qualify
as admitted assets and for purposes of capital and
surplus and unearned premium reserves as prescribed by various
state insurance regulations. These investments are restricted by
the state insurance regulations of its domiciliary state and are
limited primarily to cash and cash equivalents, federal and
municipal governmental securities and other corporate
investments. See Managements Discussion and Analysis
of Financial Condition and Results of Operations 
Liquidity and Capital Resources.

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##### Table of Contents



The carrying amount of all of our investments,
which approximates the fair value of total investments, was
$24.7 million and $10.5 million for the years ended
December 31, 2001 and 2000, respectively.

The following table sets forth certain
information regarding the investment ratings of our fixed
maturity portfolio at December 31, 2001 and 2000:

|           |  |                                            |        |       |  |       |       |       |  |           |        |       |  |       |       |       |  |   |       |  |  |  |       |   |  |   |       |  |  |  |       |  
|---------- |  | ------------------------------------------ | ------ | ----- |  | ----- | ----- | ----- |  | --------- | ------ | ----- |  | ----- | ----- | ----- |  | - | ----- |  |  |  | ----- | - |  | - | ----- |  |  |  | ----- | -
|           |  |                                            |        |      
|           |  | 2001                                       |        | 2000 
|           |  |                                            |        |      
|           |  | Amortized                                  |        | % of  |  | Fair  |       | % of  |  | Amortized |        | % of  |  | Fair  |       | % of 
|Ratings(1) |  | Cost                                       |        | Total |  | Value |       | Total |  | Cost      |        | Total |  | Value |       | Total
|           |  |                                            |        |       |  |       |       |       |  |           |        |       |  |       |       |      
|           |  |                                           
|           |  | (Amounts in thousands, except percentages)
|AAA        |  | $                                          | 11,107 |       |  |       | 50.6  | %     |  | $         | 11,218 |       |  |       | 51.1  | %     |  | $ | 1,777 |  |  |  | 19.5  | % |  | $ | 1,780 |  |  |  | 21.0  | %
|AA         |  |                                            | 3,390  |       |  |       | 15.5  |       |  |           | 3,434  |       |  |       | 15.6  |       |  |   | 628   |  |  |  | 6.9   |   |  |   | 627   |  |  |  | 7.4   |  
|A          |  |                                            | 2,156  |       |  |       | 9.8   |       |  |           | 2,178  |       |  |       | 9.9   |       |  |   | 5,196 |  |  |  | 57.1  |   |  |   | 5,230 |  |  |  | 61.8  |  
|Other      |  |                                            | 5,278  |       |  |       | 24.1  |       |  |           | 5,135  |       |  |       | 23.4  |       |  |   | 1,504 |  |  |  | 16.5  |   |  |   | 825   |  |  |  | 9.8   |  
|           |  |                                            |        |       |  |       |       |       |  |           |        |       |  |       |       |       |  |   |       |  |  |  |       |   |  |   |       |  |  |  |       |  
|           |  | $                                          | 21,931 |       |  |       | 100.0 | %     |  | $         | 21,965 |       |  |       | 100.0 | %     |  | $ | 9,105 |  |  |  | 100.0 | % |  | $ | 8,462 |  |  |  | 100.0 | %
|           |  |                                            |        |       |  |       |       |       |  |           |        |       |  |       |       |       |  |   |       |  |  |  |       |   |  |   |       |  |  |  |       |  



---



|    |                                                       
|--- | ------------------------------------------------------
|(1) | Ratings as assigned by Standard & Poors
	Corporation.

The following table sets forth certain
information regarding our fixed maturity securities at
December 31, 2001. 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. Fixed maturity securities with an amortized cost of
$1.5 million and a fair value of $1.3 million were
callable at December 31, 2001:

|                                   |  |                                            |        |       |  |       |       |       |  |   |        |  |  |  |       |  
|---------------------------------- |  | ------------------------------------------ | ------ | ----- |  | ----- | ----- | ----- |  | - | ------ |  |  |  | ----- | -
|                                   |  |                                           
|                                   |  | 2001                                      
|                                   |  |                                           
|                                   |  | Amortized                                  |        | % of  |  | Fair  |       | % of 
|Maturity                           |  | Cost                                       |        | Total |  | Value |       | Total
|                                   |  |                                            |        |       |  |       |       |      
|                                   |  |                                           
|                                   |  | (Amounts in thousands, except percentages)
|One year or less                   |  | $                                          | 2,304  |       |  |       | 10.5  | %     |  | $ | 2,350  |  |  |  | 10.7  | %
|After one year through five years  |  | $                                          | 13,539 |       |  |       | 61.7  |       |  | $ | 13,706 |  |  |  | 62.4  |  
|After five years through ten years |  | $                                          | 6,088  |       |  |       | 27.8  |       |  | $ | 5,909  |  |  |  | 26.9  |  
|                                   |  |                                            |        |       |  |       |       |       |  |   |        |  |  |  |       |  
|                                   |  | $                                          | 21,931 |       |  |       | 100.0 | %     |  | $ | 21,965 |  |  |  | 100.0 | %
|                                   |  |                                            |        |       |  |       |       |       |  |   |        |  |  |  |       |  

Equity securities at December 31, 2001 and
2000 consist of investments as follows:

|                                        |  |                                            |     |       |  |      |       |       |  |   |       |  |  |   |       | 
|--------------------------------------- |  | ------------------------------------------ | --- | ----- |  | ---- | ----- | ----- |  | - | ----- |  |  | - | ----- | 
|                                        |  |                                           
|                                        |  | December 31,                              
|                                        |  |                                           
|                                        |  |                                            |     |      
|                                        |  | 2001                                       |     | 2000 
|                                        |  |                                            |     |      
|                                        |  |                                            |     | Fair  |  |      |       | Fair 
|                                        |  | Cost                                       |     | Value |  | Cost |       | Value
|                                        |  |                                            |     |       |  |      |       |      
|                                        |  |                                           
|                                        |  | (Amounts in thousands, except percentages)
|Industrial, miscellaneous and all other |  | $                                          | 656 |       |  | $    | 2,756 |       |  | $ | 1,657 |  |  | $ | 2,071 | 
|                                        |  |                                            |     |       |  |      |       |       |  |   |       |  |  |   |       | 

Our investment results for the years ended
December 31, 2001, 2000 and 1999 were as follows:

|                                            |  |                                            |        |      |  |      |        |   |  |   |        |  
|------------------------------------------- |  | ------------------------------------------ | ------ | ---- |  | ---- | ------ | - |  | - | ------ | -
|                                            |  |                                           
|                                            |  | December 31,                              
|                                            |  |                                           
|                                            |  | 2001                                       |        | 2000 |  | 1999
|                                            |  |                                            |        |      |  |     
|                                            |  |                                           
|                                            |  | (Amounts in thousands, except percentages)
|Net investment income(1)                    |  | $                                          | 1,262  |      |  | $    | 1,186  |   |  | $ | 930    |  
|Average invested assets                     |  |                                            | 30,438 |      |  |      | 18,798 |   |  |   | 20,573 |  
|Effective return on average invested assets |  |                                            | 4.1    | %    |  |      | 6.3    | % |  |   | 4.5    | %



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Net investment income as reported in the
	Consolidated Statements of Earnings has been adjusted in the
	presentation above to provide the tax equivalent yield on tax
	exempt investments and to exclude net realized capital gains on
	the sale of investments and other assets. Net realized capital
	gain (loss) totaled $1.0 million, ($139,000) and $0 in
	2001, 2000 and 1999, respectively.

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##### Table of Contents



Relationship with Fidelity National Financial,
Inc.

ATC, our primary subsidiary, commenced business
in 1989, and was acquired by FNF in January 1996, at which time
ATCs operations had been conducted solely in Kern County,
California. Following FNFs acquisition, ATCs
expansion strategy included acquiring and opening offices in
selected other counties located throughout California. In
January 1997, FNF contributed to ATC all of the outstanding
stock of American Title Insurance Agency of Arizona, Inc., a
title agency located in Phoenix, Arizona and Landmark REO
Management Services, Inc., a property management company.

We were incorporated in November 1996 by our
current management. In July 1997, we acquired 60% of the
outstanding stock of ATC from FNF for $6.0 million. We
funded the purchase price through debt, all of which we have
repaid from operations or as a result of our reorganization. In
November 1998, we acquired the remaining 40% of the outstanding
common stock of ATC from FNF in exchange for 2,309,996 shares of
Company common stock or approximately 43% of the outstanding
shares immediately prior to our initial public offering.
Concurrent with that reorganization, $3.5 million of our
debt from the initial acquisition of ATC stock was repaid. Our
stockholders (other than FNF) assumed the remaining unpaid
balance of the acquisition debt in the amount of
$1.2 million. In August 1997, ATC purchased all of the
outstanding common stock of Santa Barbara Title Company. In 1997
we formed our other subsidiaries, American Document Services,
Inc., West Point Appraisal Services, Inc., West Point Support
Services, Inc. and West Point Properties, Inc. In April 1999,
Santa Barbara Title Company (SBT) merged with ATC.
In December 2000, ANFI formed American National Exchange
Services, Inc.

In June 1999, we acquired National Title
Insurance of New York Inc., a New York domiciled underwriter,
from a subsidiary of FNF for $3.25 million. National is
licensed to issue title insurance in 34 states, the
District of Columbia and the U.S. Virgin Islands. Our
purpose in acquiring National was to own an underwriter, which
will enable us to both: (1) generate underwriting fees and
(2) expand geographically into counties and states in which
National is presently licensed. We believe our expansion can be
accomplished more quickly and cost-effectively through this
acquisition than through other means. We also believe that the
acquisition expands the business opportunities for our current
and potential employees and affiliates, aiding our recruitment
efforts, and will permit us to generate additional revenue by
writing title insurance policies in those geographic areas which
are not covered by ATCs exclusive agency arrangements with
CTIC.

In September 2000, we purchased the assets of
CTICs Pima County, Arizona operation, American Title
Agency of Pima County, Inc. The acquisition adds four offices,
located in Tucson, to our Arizona network. See Note 3 of
Notes to Consolidated Financial Statement.

We have a common director with FNF, resulting
from FNFs involvement in the organization of, and its
equity ownership position in us. In addition there is also
existing business and contractual relationships between the two
companies. Our principal subsidiary, ATC, was a wholly owned
subsidiary of FNF until July 1, 1997, when we acquired 60%
of ATCs outstanding common stock for $6.0 million in
cash. As a result of the reorganization and following our
initial public offering, FNF owned approximately 28.0% of our
outstanding common stock. In a private transaction on
June 7, 2001, we purchased 894,000 shares of our common
stock from FNF for $4.9 million or $5.45 per share, which
is FNFs cost. The fair market value of our common stock on
the transaction date was $4.99 per share. After this transaction
FNF owned approximately 19.5% of our common stock. See
Managements Discussion and Analysis of Financial
Condition and Results of Operations  Overview
and Note 12 of Notes to Consolidated Financial Statements.

CTIC entered into an Issuing Agency Agreement
with our wholly-owned subsidiary American Title Company
(ATC) where ATC agreed that until June 30, 2007 it
will act as an agent for CTIC with respect to the procurement of
title insurance policies in 16 counties in California and
Arizona, subject to certain exceptions. This exclusive
arrangement with CTIC does not apply to other counties into
which we expand in the future. Under the Issuing Agency
Agreement with CTIC, furnishing title insurance products and
services, ATC pays FNTIC an administration fee of 1% of gross
premiums for administrative services including

12



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##### Table of Contents



accounting, legal and human resources. This
administrative service arrangement can be terminated by ATC upon
90 days notice to FNTIC.


Employees

As of December 31, 2001, we had 1,013 full
time employees. We believe our success depends significantly on
attracting and retaining talented and experienced personnel. We
locate and recruit our personnel primarily through personal
contacts in the industry and our executive officers are actively
involved in the recruitment process. We offer competitive
packages of base and incentive compensation and benefits in
order to attract and motivate our employees. We believe our
employee relations are good.

Risk Factors

Our investment securities are speculative in
nature and an investment in such securities involves a high
degree of risk. You should consider, along with the other
information contained in this Annual Report on Form 10-K,
the following considerations and risks in evaluating an
investment in us.



| |                                       
| | --------------------------------------
| | Cyclical Nature of Real Estate
	Market

The title insurance industry is dependent on the
volume of real estate transactions that occur. Substantially all
of our title insurance, escrow and other real estate service
business result from:



| |   |                                                                             
| | - | ----------------------------------------------------------------------------
| |  | sales and refinancing of real estate, primarily
	residential properties, and
|
| |  | the construction and sale of new properties.                                

Real estate activity is cyclical in nature and is
highly sensitive to the cost and availability of long-term
mortgage funds and general economic conditions. Real estate
activity and, in turn, our revenue base, can be adversely
affected when:



| |   |                                            
| | - | -------------------------------------------
| |  | interest rates are high,                   
|
| |  | money supply for mortgages are limited, and
|
| |  | when the economy as a whole weakens.       

During 1998 and first half of 1999, low mortgage
interest rates and a strong California real estate market
contributed to increased residential transaction activity,
benefiting our business. However, the high volume of refinance
activity experienced in early 1999 virtually disappeared when
mortgage rates began to climb during the last half of 1999 and
2000. Beginning in late 2000 and continuing throughout 2001
interest rate decreases caused by Federal Reserve Bank actions
resulted in bringing interest rates to their lowest levels in
approximately two years, which was a 475 basis point
reduction since January 1, 2001, providing us with a
favorable business environment.

It is impossible to predict the future direction
interest rates and the real estate market may move or fluctuate.
No assurance can be given that historical levels of premiums and
fees received by us recently will occur in the future.



| |                         
| | ------------------------
| | Geographic Concentration

We derived substantially all of our revenues from
real estate transactions occurring in California. Due to the
relatively high cost of real estate in California, the real
estate market may be more sensitive to fluctuations in interest
rates and general economic conditions than other regions of the
United States. Adverse economic conditions affecting the
California real estate market could have a material adverse
effect on our business, financial condition and results of
operations.

13



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##### Table of Contents





| |                                                                               
| | ------------------------------------------------------------------------------
| | Risks Associated with the Relationship with
	Fidelity National Financial, Inc.

We maintain a close relationship with FNF and its
subsidiaries and rely upon them for a number of services in
connection with our operations. We agreed, that until
June 30, 2007, we will act exclusively as an agent for CTIC
with respect to the procurement of title insurance policies in
13 selected counties in California and three counties in
Arizona, subject to certain exceptions. In exchange for an
administrative fee, FNTIC provides a variety of services for
ATC, including accounting, legal and human resources services.
The unexpected loss of CTIC underwriting or FNTICs
administrative services, for any reason, could result in an
interruption in our operations until such services are secured
elsewhere, which could have a material adverse effect on our
business, financial condition and results of operations. See
Relationship with Fidelity National Financial, Inc.

Certain of FNFs subsidiaries are our
competitors in several of our markets. One of our directors and
certain officers is also a director or officer of FNF.
Accordingly, there is a possibility that our interests and
FNFs interests might conflict. There can be no assurance
that our director or our officers, in satisfying their fiduciary
duties and the requirements of applicable statutory laws to
ensure such conflicts are properly resolved, can or will act in
our best interests.



| |                                
| | -------------------------------
| | Risks Associated with
	National

In June 1999, ATC acquired all of the outstanding
capital stock of National from FNF. Due to the affiliated nature
of the parties, this should not be considered an arms
length transaction. National, a New York domiciled
insurance underwriter, is currently licensed to issue title
insurance policies in 34 states, the District of Columbia
and the U.S. Virgin Islands, with applications pending for
two other states. An element of our business strategy is to
utilize National not only as a means to generate underwriting
premiums but to expand geographically into states where we do
not currently operate. This was the primary purpose of the
National acquisition. In addition, National does not currently
underwrite a significant amount of title insurance policies
through direct operations or agency relationships and we are
required to commit resources to establish direct operations and
agency relationships in order to realize the benefits of this
acquisition. Cash resources for the development of National is
provided by current cash balances and internally generated
funds. Nationals principal value lies in the licenses it
holds to operate as an underwriter and the strategic options we
pursue in utilizing the licenses. There can be no assurance that
we will be able to develop any significant business or generate
title insurance premiums through National, or that we will
realize any of the benefits anticipated from the acquisition of
National.



| |            
| | -----------
| | Competition

The title insurance business is very competitive,
primarily in the areas of service and expertise. The size and
financial strength of the title insurer who underwrites the
policies are also important factors in decisions relating to the
purchase of title insurance. Many of our competitors have
greater financial, personnel, marketing and other resources, and
some are underwritten by larger title insurance companies. Also,
the removal of regulatory barriers in the future might result in
new competitors, including financial institutions, entering the
title insurance business. Intense competition among the more
established title insurance companies and any such new entrants
could have a material adverse effect on our business, financial
condition and results of operations.



| |                                        
| | ---------------------------------------
| | Risks Related to Possible
	Acquisitions

An element of our business strategy is to expand
our operations through the acquisition of complementary
businesses. We have no agreements, understandings or commitments
and are not currently engaged in negotiations with respect to
any additional acquisition. There can be no assurance that we
will be able to identify, acquire, profitably manage or
successfully integrate any businesses without incurring
substantial expenses, delays or other operational or financial
problems. Moreover, competition for acquisition candidates is
intense, which could both increase the price of any acquisition
targets and decrease the number of attractive companies
available for acquisition. Furthermore, acquisitions involve a
number of special risks, including

14



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##### Table of Contents



diversion of managements attention, failure
to retain key acquired personnel, increased costs to improve
managerial, operational, financial and administrative systems
and legal liabilities, some or all of which could materially and
adversely affect our business, operating results and financial
condition. We may have to issue additional equity securities or
incur indebtedness in order to finance the acquisition of other
businesses. In addition, there can be no assurance that acquired
businesses, if any, will achieve anticipated revenues and
earnings or performance at levels we have historically enjoyed.
Our failure to manage our acquisition strategy successfully
could materially and adversely affect our operating results and
financial condition.




| |                     
| | --------------------
| | Management of Growth

We are growing significantly, and we intend to
pursue further growth as part of our business strategy. Our
ability to effectively manage the growth of our operations will
require us to continue to improve our operational, financial and
other internal systems and to attract, develop, motivate and
retain our employees. Our rapid growth has presented and will
continue to present numerous operational challenges, such as the
assimilation of financial reporting systems, and will increase
the demands on our senior management and our systems and
internal controls. In addition, our success depends in large
part upon our ability to attract, develop, motivate and retain
talented employees with significant industry experience and
contacts. Such employees are currently in great demand and there
is significant competition for employees with the requisite
skills and experience from other national and regional title
companies. There can be no assurance that we will be able to
attract and retain the qualified personnel necessary to pursue
our growth strategy. There can be no assurance that we will be
able to maintain or accelerate our current growth, effectively
manage our expanding operations or achieve planned growth on a
timely or profitable basis. To the extent we are unable to
manage our growth effectively and efficiently, our business,
financial condition and results of operations could be
materially and adversely affected.

Cautionary Statements Regarding
Forward-Looking Information

We wish to caution readers that the
forward-looking statements contained in this Form 10-K
under Item 1. Business, Item 7.
Managements Discussion and Analysis of Financial Condition
and Results of Operations, Item 7a.
Quantitative and Qualitative Market Risk Disclosures and
elsewhere in this Form 10-K involve known and unknown risks
and uncertainties which may cause our actual results,
performance or achievements to be materially different from any
future results, performance or achievements expressed or implied
by any forward-looking statements made by or on behalf of us. In
connection with the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995, we are filing
the following cautionary statements identifying important
factors that in some cases have affected, and in the future
could cause our actual results to differ materially from those
expressed in any such forward-looking statements.

The factors that could cause our results to
differ materially include, but are not limited to, general
economic and business conditions, including interest rate
fluctuations; the impact of competitive products and pricing;
success of operating initiatives; adverse publicity; changes in
business strategy or development plans; quality of management;
availability, terms, and deployment of capital; the results of
financing efforts; business abilities and judgment of personnel;
issues, availability of qualified personnel; employee benefit
costs and changes in, or the failure to comply with government
regulations.






|        |           
|------- | ----------
|Item 2. | Properties

Our corporate office is currently located in
Orange, California. Most of our offices are leased, with the
exception of two buildings we own: a branch office building in
Phoenix, Arizona, and the corporate office building located at
1111 E. Katella Avenue, Orange, CA. The corporate
office building was acquired with the proceeds of a
$2.1 million original note that bears interest at the
lending institutions prime rate, and monthly principal payments
of $4,400 per month and collateralized by a deed of trust. The
outstanding balance at December 31, 2001 and 2000 was
$1.9 million and $2.0 million, respectively.

15



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##### Table of Contents



In February 2002, we entered into an agreement to
purchase an office building located in the County of Orange for
$1.1 million, based on certain conditions and inspections.
The close of escrow is anticipated on or around April 15,
2002.






|        |                  
|------- | -----------------
|Item 3. | Legal Proceedings

In the ordinary course of business, we are
subject to claims made under, and from time to time we are named
as defendants in legal proceedings relating to, policies of
insurance we have issued or other services performed on behalf
of insured policyholders and other customers. We are involved
from time to time in routine litigation incidental to the
conduct of our business, apart from claims made under title
insurance policies. There are currently no material pending
litigation proceedings to which we are a party or to which any
of our property is subject. See Managements
Discussion and Analysis of Financial Condition and Results of
Operations  Industry Overview and Recent
Developments and Note 11 of Notes to Consolidated
Financial Statements.

In June 2001, auditors from the State of
California, Department of Insurance commenced a market conduct
examination of ATC. Similar examinations have been or are being
conducted at virtually all companies in the title insurance
business. The examination is in its preliminary stages and is
ongoing. We are unable to form a professional judgement that an
unfavorable outcome is either probable or remote, however,
management does not believe that any outcome will have a
material affect on our financial statements.






|        |                                                      
|------- | -----------------------------------------------------
|Item 4. | Submissions of Matters to a vote of
	Security Holders

We did not submit any matters to a vote of
security holders in the fourth quarter of 2001.






PART II







Item 5.     Market
for Registrants Common Stock and Related Shareholder
Matters


We completed our initial public offering on
February 12, 1999. Prior to that time there was no market
for our common stock. The following table sets forth the range
of high and low closing prices for our common stock on the
NASDAQ stock exchange and the amounts of dividends per share on
our common stock.

|                              |                |      |   |      |  |           |   |      |  |  |   |     |  
|----------------------------- | -------------- | ---- | - | ---- |  | --------- | - | ---- |  |  | - | --- | -
|                              |                |      |   |      |  | Dividends
|                              |                | High |   | Low  |  | Declared 
|                              |                |      |   |      |  |          
|Year ended December 31, 2001: |                |      |   |      |  |           |   |      |  |  |   |    
|                              | First quarter  |      | $ | 4.55 |  |           | $ | 2.73 |  |  | $ | .09 |  
|                              | Second quarter |      |   | 5.14 |  |           |   | 3.64 |  |  |   | .09 |  
|                              | Third quarter  |      |   | 9.00 |  |           |   | 5.00 |  |  |   | .12 | 5
|                              | Fourth quarter |      |   | 8.60 |  |           |   | 6.55 |  |  |   | .12 | 5
|Year ended December 31, 2000: |                |      |   |      |  |           |   |      |  |  |   |    
|                              | First quarter  |      | $ | 3.58 |  |           | $ | 2.73 |  |  | $ | .09 |  
|                              | Second quarter |      |   | 3.41 |  |           |   | 2.50 |  |  |   | .09 |  
|                              | Third quarter  |      |   | 2.85 |  |           |   | 2.44 |  |  |   | .09 |  
|                              | Fourth quarter |      |   | 2.91 |  |           |   | 2.84 |  |  |   | .09 |  

The foregoing amounts have been adjusted to give
retroactive effect to a 10% stock dividend in May 2001.

Dividend Policy and Restriction on Dividend
Payments

Since the first quarter of 1999, we have paid
cash dividends on a quarterly basis, which payments have been
made at the discretion of our Board of Directors. In September
2001, our dividend per share increased to $.125. The continued
payment of dividends will depend upon operating results,
business requirements, regulatory considerations and other
factors. As of March 20, 2002, we had less than 800
shareholders of record.

16



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##### Table of Contents



National is subject to regulations that restrict
its ability to pay dividends or make other distributions of cash
or property to its parent company without prior approval from
the Department of Insurance of the State of New York. The
maximum amount of dividends which can be paid by National to
shareholders without prior approval of the Insurance
Commissioner is subject to restrictions. No dividends, including
all dividends paid in the preceding twelve months, which exceed
10% of the outstanding capital shares can be paid without prior
approval unless after deducting dividends National has surplus
to policyholders at least equal to the greater of 50% of its
reinsurance reserves or 50% of the minimum capital required.
Additionally, dividends are further limited to Nationals
earned surplus. Based on this formula, National could pay
dividends to ATC of $38,400 during 2002.




Item 6.     Selected
Financial Data

The following information should be read in
conjunction with the consolidated financial statements and the
notes thereto and Managements Discussion and
Analysis of Financial Condition and Results of Operations
included elsewhere in this Form 10K. Share per and share
data has been retroactively adjusted for the 10% stock dividend
in May 2001.

|                              |                                                      |                                            |   |        |         |      |   |        |        |  |   |        |        |  |   |        |        | 
|----------------------------- | ---------------------------------------------------- | ------------------------------------------ | - | ------ | ------- | ---- | - | ------ | ------ |  | - | ------ | ------ |  | - | ------ | ------ | 
|                              |                                                      |                                           
|                              |                                                      | Years Ended December 31,                  
|                              |                                                      |                                           
|                              |                                                      | 2001                                       |   | 2000   |         | 1999 |   | 1998  
|                              |                                                      |                                            |   |        |         |      |   |       
|                              |                                                      |                                           
|                              |                                                      | (Amounts in thousands, other than earnings
|                              |                                                      | per share, order and fee per file data)   
|Balance Sheet Data:           |                                                      |                                            |   |        |         |      |   |        |        |  |   |        |        |  |   |       
|                              | Cash and short term investments                      |                                            | $ | 10,018 |         |      | $ | 9,865  |        |  | $ | 4,875  |        |  | $ | 10,495 |       
|                              | Investments                                          |                                            |   | 24,721 |         |      |   | 10,533 |        |  |   | 14,022 |        |  |   | N/A    |       
|                              |                                                      | Total assets                               |   |        | 66,653  |      |   |        | 53,341 |  |   |        | 47,324 |  |   |        | 37,376 | 
|                              | Due to affiliate and capital leases with
	affiliates |                                            |   | 3,536  |         |      |   | 3,230  |        |  |   | 1,642  |        |  |   | 1,893  |       
|                              | Shareholders equity                                 |                                            |   | 35,913 |         |      |   | 31,977 |        |  |   | 32,031 |        |  |   | 19,898 |       
|Statement of Operations Data: |                                                      |                                            |   |        |         |      |   |        |        |  |   |        |        |  |   |       
|                              | Net title service revenue  related party            |                                            | $ | 75,564 |         |      | $ | 43,641 |        |  | $ | 51,366 |        |  | $ | 52,092 |       
|                              | Escrow fees                                          |                                            |   | 32,176 |         |      |   | 21,969 |        |  |   | 25,190 |        |  |   | 24,267 |       
|                              | Ancillary service fees                               |                                            |   | 17,080 |         |      |   | 12,550 |        |  |   | 11,362 |        |  |   | 14,697 |       
|                              | Investment income                                    |                                            |   | 2,268  |         |      |   | 1,047  |        |  |   | 930    |        |  |   | 369    |       
|                              | Other revenues                                       |                                            |   | 8,890  |         |      |   | 3,461  |        |  |   | 452    |        |  |   |       |       
|                              |                                                      |                                            |   |        |         |      |   |        |        |  |   |        |        |  |   |       
|                              |                                                      | Total revenue                              |   | $      | 135,978 |      |   | $      | 82,668 |  |   | $      | 89,300 |  |   | $      | 91,425 | 
|                              |                                                      |                                            |   |        |         |      |   |        |        |  |   |        |        |  |   |       
|                              | Personnel costs                                      |                                            | $ | 73,909 |         |      | $ | 51,189 |        |  | $ | 54,277 |        |  | $ | 49,435 |       
|                              | Other operating expenses                             |                                            |   | 34,362 |         |      |   | 22,742 |        |  |   | 19,266 |        |  |   | 17,477 |       
|                              | Title plant rent and maintenance                     |                                            |   | 7,946  |         |      |   | 5,322  |        |  |   | 6,264  |        |  |   | 7,156  |       
|                              |                                                      |                                            |   |        |         |      |   |        |        |  |   |        |        |  |   |       
|                              | Earnings before income taxes                         |                                            |   | 19,761 |         |      |   | 3,415  |        |  |   | 9,533  |        |  |   | 10,100 |       
|                              |                                                      |                                            |   |        |         |      |   |        |        |  |   |        |        |  |   |       
|                              | Net earnings                                         |                                            |   | 11,264 |         |      |   | 2,015  |        |  |   | 5,625  |        |  |   | 6,865  |       
|                              |                                                      |                                            |   |        |         |      |   |        |        |  |   |        |        |  |   |       
|Per Share Data:               |                                                      |                                            |   |        |         |      |   |        |        |  |   |        |        |  |   |       
|                              | Earnings per share:                                  |                                            |   |        |         |      |   |        |        |  |   |        |        |  |   |        |       
|                              |                                                      | Basic                                      |   | $      | 1.50    |      |   | $      | .25    |  |   | $      | .74    |  |   | $      | 1.93   | 
|                              |                                                      | Diluted                                    |   |        | 1.37    |      |   |        | .25    |  |   |        | .74    |  |   |        | 1.78   | 
|                              | Weighted average common shares outstanding:          |                                            |   |        |         |      |   |        |        |  |   |        |        |  |   |        |       
|                              |                                                      | Basic                                      |   |        | 7,509   |      |   |        | 8,069  |  |   |        | 7,556  |  |   |        | 3,545  | 
|                              |                                                      | Diluted                                    |   |        | 8,236   |      |   |        | 8,069  |  |   |        | 7,588  |  |   |        | 3,850  | 

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|                      |                                   |                                            |   |         |  |      |   |         |  |  |   |         |  |  |   |         | 
|--------------------- | --------------------------------- | ------------------------------------------ | - | ------- |  | ---- | - | ------- |  |  | - | ------- |  |  | - | ------- | 
|                      |                                   |                                           
|                      |                                   | Years Ended December 31,                  
|                      |                                   |                                           
|                      |                                   | 2001                                       |   | 2000    |  | 1999 |   | 1998   
|                      |                                   |                                            |   |         |  |      |   |        
|                      |                                   |                                           
|                      |                                   | (Amounts in thousands, other than earnings
|                      |                                   | per share, order and fee per file data)   
|Other Operating Data: |                                   |                                            |   |         |  |      |   |         |  |  |   |         |  |  |   |        
|                      | Gross title insurance premiums(1) |                                            | $ | 88,391  |  |      | $ | 51,113  |  |  | $ | 58,370  |  |  | $ | 59,206  | 
|                      | Orders opened(1)                  |                                            |   | 210,000 |  |      |   | 111,000 |  |  |   | 119,000 |  |  |   | 147,000 | 
|                      | Orders closed(1)                  |                                            |   | 127,000 |  |      |   | 73,200  |  |  |   | 88,900  |  |  |   | 98,300  | 
|                      | Average fee per file(1)           |                                            | $ | 848     |  |      | $ | 1,109   |  |  | $ | 940     |  |  | $ | 825     | 



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Average fee per file information for ATC, Pioneer
	Land Title and National direct branches consists of gross title
	insurance premiums, escrow fees and other title-related fees
	divided by the number of closed files (not including revenue
	generated by our STAR Product, which are excluded due to the
	abbreviated characteristics of the policy). In addition, non
	title-related revenues and investment income are excluded as
	there are no associated closed files. See
	Managements Discussion and Analysis of Financial
	Condition and Results of Operations.

Quarterly Financial Data (Unaudited)

Selected quarterly financial data is as follows:

|                                             |  |                                   |        |          |  |               |        |              |  |   |        |  |  |   |        | 
|-------------------------------------------- |  | --------------------------------- | ------ | -------- |  | ------------- | ------ | ------------ |  | - | ------ |  |  | - | ------ | 
|                                             |  |                                  
|                                             |  | Quarter Ended                    
|                                             |  |                                  
|                                             |  | March 31,                         |        | June 30, |  | September 30, |        | December 31,
|                                             |  |                                   |        |          |  |               |        |             
|                                             |  |                                  
|                                             |  | (In thousands, except share data)
|2001                                         |  |                                   |        |          |  |               |        |              |  |   |        |  |  |   |        | 
|Revenue                                      |  | $                                 | 28,298 |          |  | $             | 35,285 |              |  | $ | 33,523 |  |  | $ | 38,872 | 
|Earnings before income taxes                 |  |                                   | 3,830  |          |  |               | 5,769  |              |  |   | 4,892  |  |  |   | 5,270  | 
|Net earnings, basic and diluted basis        |  |                                   | 2,260  |          |  |               | 3,404  |              |  |   | 2,837  |  |  |   | 2,763  | 
|Basic earnings per share                     |  |                                   | .28    |          |  |               | .44    |              |  |   | .40    |  |  |   | .39    | 
|Diluted earnings per share                   |  |                                   | .26    |          |  |               | .41    |              |  |   | .36    |  |  |   | .35    | 
|Dividends paid per share                     |  |                                   | .09    |          |  |               | .09    |              |  |   | .125   |  |  |   | .125   | 
|2000                                         |  |                                   |        |          |  |               |        |              |  |   |        |  |  |   |        | 
|Revenue                                      |  | $                                 | 17,689 |          |  | $             | 20,916 |              |  | $ | 21,562 |  |  | $ | 22,501 | 
|Earnings (loss) before income taxes          |  |                                   | (563   | )        |  |               | 1,089  |              |  |   | 1,384  |  |  |   | 1,505  | 
|Net earnings (loss), basic and diluted basis |  |                                   | (332   | )        |  |               | 643    |              |  |   | 817    |  |  |   | 887    | 
|Basic earnings (loss) per share              |  |                                   | (.04   | )        |  |               | .08    |              |  |   | .10    |  |  |   | .11    | 
|Diluted earnings (loss) per share            |  |                                   | (.04   | )        |  |               | .08    |              |  |   | .10    |  |  |   | .11    | 
|Dividends paid per share                     |  |                                   | .09    |          |  |               | .09    |              |  |   | .09    |  |  |   | .09    | 






|        |                                                                                       
|------- | --------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis
	of Financial Condition and Results of Operations

The following discussion provides information to
help understand and assess significant changes and trends
related to our financial condition and results of operations.
You should read this discussion and analysis in conjunction with
the consolidated financial statements and the notes thereto.

18



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##### Table of Contents



Overview

Our revenue is closely related to the level of
real estate activity and the average price of real estate sales.
Real estate sales are directly affected by the availability of
funds to finance purchases. Other factors affecting real estate
activity include demand, mortgage interest rates, family income
levels and general economic conditions. Since late 1995,
decreases in mortgage interest rates and the resulting
improvement in the real estate market have had a favorable
effect on the level of real estate activity, including
refinancing transactions, new home sales and resale
transactions. The overall economic environment, stable mortgage
interest rates and strength in the California and West Coast
real estate market contributed to very positive conditions for
the industry throughout all of 1996, 1997 and 1998 and the first
six months of 1999. However, mortgage rates began to climb
during the last half of 1999 and continued through 2000,
virtually eliminating the volume of refinance activity
experienced in the prior year and early 1999. Beginning in late
2000 and continuing throughout 2001 interest rate decreases
caused by actions taken by the Federal Reserve Bank resulted in
bringing interest rates to their lowest levels in approximately
two years, which was a 475 basis point reduction since
January 1, 2001. The interest rate decreases created
opportunity for the industry.

Our revenues include net title service revenue
(which also includes trustee sale guarantee fees of
$1.2 million), escrow fees, ancillary service fees,
investment income and other revenues. Our operations generate
escrow fees from holding and disbursing funds and documents in
connection with the closing of real estate transactions. Escrow
fees generally fluctuate in a pattern consistent with the
fluctuation in net title service revenue.

Our ancillary services complement title and
escrow services. In addition, many of these real estate related
services are counter-cyclical to our title insurance and escrow
services.

Investment income consists of revenues received
from our investment portfolio. Other revenue represents income
derived from Nationals current office operations, which
include New York, Tennessee, Florida and independent agents.

Net title service revenue and escrow fee revenues
are recognized as income at the time the underlying real estate
transaction closes. Expenses directly related to the title and
escrow process are recognized as they are incurred, throughout
the duration of the transaction. As a result, our recognition of
revenue lags approximately 45-90 days behind the
recognition of the corresponding expenses. Other fees and
revenue are generally recognized as income at the time the
underlying transaction closes; however, certain other fees and
revenue are recognized as income over the period during which
the service is provided. These factors may result in
fluctuations in gross margins.

Net title service revenues consist of gross title
insurance premiums less underwriting fees paid to the
underwriter. Fees to underwriters represent the portion of gross
title insurance premiums paid by our underwritten title
companies to CTIC, pursuant to the terms of the Issuing Agency
Agreement.

Beginning in January 1997, ATC entered into an
Issuing Agency Agreement under which ATC pays CTIC an
underwriting fee equal to 11% of the gross title insurance
premiums received. In addition, ATC pays FNF a administrative
fee equal to 1% of gross title insurance premiums for certain
accounting, human resources and legal services provided by FNF.
We believe that the amount of these fees is reasonable in light
of the level of services received and the estimated costs of
performing these services internally.

While the number of orders that are closed
affects our revenue, personnel costs are the largest component
of our expenses. Since personnel costs are relatively fixed over
the short-term, in a rapidly declining market, reductions in the
number of orders can adversely affect margins. Gross margins are
also affected by the relative numbers of orders that relate to
refinancing transactions as compared to those relating to real
estate sale transactions.

The average fee per file and corresponding gross
margins are higher for real estate sale and resale transactions
than refinance transactions for three principal reasons:
(i) a larger percentage of sale and resale orders close as
compared to refinance orders, (ii) typically two policies
are issued in a resale transaction (one

19



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##### Table of Contents



each to the buyer and lender) whereas only one is
issued in a refinance transaction and (iii) the base rate
charged on sale and resale transactions is typically higher than
that charged on refinance transactions.


Because title insurance premiums are calculated
with regard to the purchase price of the property or the amount
of the related mortgage, average fees per file will also
increase during periods in which real estate prices and
corresponding mortgage loans are increasing.

Results of Operations

The following discussion presents a comparison of
2001, 2000 and 1999.

Revenue

The following table presents information
regarding the components of our revenue:

|                                        |               |                                  |         |         |  |      |        |        |  |   |        |        | 
|--------------------------------------- | ------------- | -------------------------------- | ------- | ------- |  | ---- | ------ | ------ |  | - | ------ | ------ | 
|                                        |               |                                 
|                                        |               | Year Ended December 31,         
|                                        |               |                                 
|                                        |               | 2001                             |         | 2000    |  | 1999
|                                        |               |                                  |         |         |  |     
|                                        |               |                                 
|                                        |               | (Amounts in thousands other than
|                                        |               | orders and fee per file)        
|Net title service revenue-related party |               | $                                | 75,564  |         |  | $    | 43,641 |        |  | $ | 51,366 |       
|Escrow fees                             |               |                                  | 32,176  |         |  |      | 21,969 |        |  |   | 25,190 |       
|Ancillary service fees                  |               |                                  | 17,080  |         |  |      | 12,550 |        |  |   | 11,362 |       
|Investment income                       |               |                                  | 2,268   |         |  |      | 1,047  |        |  |   | 930    |       
|Other revenue                           |               |                                  | 8,890   |         |  |      | 3,461  |        |  |   | 452    |       
|                                        |               |                                  |         |         |  |      |        |        |  |   |        |       
|                                        | Total revenue |                                  | $       | 135,978 |  |      | $      | 82,668 |  |   | $      | 89,300 | 
|                                        |               |                                  |         |         |  |      |        |        |  |   |        |       
|Orders closed                           |               |                                  | 127,000 |         |  |      | 73,200 |        |  |   | 88,900 |       
|Average fee per file                    |               | $                                | 848     |         |  | $    | 1,109  |        |  | $ | 940    |       

The premium increases from the first half of 1999
were indicative of the favorable market conditions existing
during that period. In the last six months of 1999 and
continuing through the year 2000, refinancing transactions
declined from the prior record levels. As the refinance
transactions decreased our fee per file increased due to the
shift from a refinance market to a market driven by new home
purchases and resales. The trend reversed in 2001 with the
decline in interest rates.

Total revenue in 2001 increased 64.5% to
$136.0 million from $82.7 million in 2000. The
increase in total revenues in 2001 is primarily the result of
our strength in our title and ancillary services, which were
positively impacted by favorable market conditions, especially
the favorable real estate market caused in part by reduced
interest rates and increased money supply. Total revenue in 2000
decreased 7.4% to $82.7 million from 1999 revenue of
$89.3 million. The decrease in total revenues from 1999 to
2000 is due to increased interest rates that resulted in a
significant decline in refinancing transactions and residential
resale and new home loans.

Net Title Service Revenue  related
party.Net title service revenue in
2001 increased $31.9 million, or 73.1% to
$75.6 million from $43.6 million in 2000. Net title
service revenue decreased $7.7 million or 15.0% to
$43.6 million from $51.4 million in 1999. The increase
in net title service revenue in 2001 was indicative to the
favorable market conditions existing in that period. The
decrease in 2000 net title service revenue was consistent with
the real estate environment and the decline in closed title
orders during 2000. The average fee per file decreased to $848
in 2001 compared with $1,109 in 2000 and $940 in 1999. The fee
per file fluctuation is consistent of the change in the
percentage mix of title orders closing in a refinance market to
the resale higher fee per file business. Gross title premiums
were $88.4 million, $51.1 million and
$58.4 million in 2001, 2000 and 1999, respectively.

Escrow Fees.Revenues from escrow fees increased
$10.2 million or 46.5% to $32.2 million in 2001 from
$22.0 million in 2000. In 2000, escrow fees decreased
$3.2 million or 12.8% to $22.0 million compared with
$25.2 million in 1999. Escrow fees are primarily related to
title insurance activity generated by the Companys direct
operations. The increase in 2001, is primarily the result of the
current market conditions relating to

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refinance activity largely fueled by continued
interest rate decreases. The decrease in escrow fees in 2000 was
due to interest rate increases beginning in late 1999 and
continuing through the beginning of 2000, along with the decline
of closed title orders during that period.


Ancillary Service Fees.Ancillary service fees increased
$4.5 million, or 36.1% to $17.1 million in 2001, from
$12.6 million in 2000. In 2000, ancillary fees increased
$1.2 million, or 10.5% to $12.6 million compared with
$11.4 million in 1999. The steady increase in ancillary
service fees is a result of the level and mix of business
related to the decrease of closed title orders. In 2000 we
acquired certain ancillary service companies in various separate
transactions. Our strategy is to strengthen the ancillary
service businesses through acquisitions and we continue to
evaluate opportunities to expand our ancillary services through
our core title and escrow business and our national presence. In
1999, we closed a branch operation related to the STAR product
that accounted for a portion of the decline in ancillary service
fees in that year.

Investment Income.Investment income is primarily a
function of security markets, interest rates and the amount of
cash available for investment. In 2001, investment income
increased $1.3 million of 116.6% to $2.3 million,
compared with $1.0 million in 2000. Average invested assets
increased 61.7% to $30.4 million from $18.8 million in
2000. The tax equivalent yield in 2001, excluding net realized
gains and losses, was 4.1% compared to 6.3% in 2000. The
increase in investment income in 2001 as compared to 2000 is the
result of net realized gains in 2001 of $1.0 million,
compared with net realized losses in 2000 of $139,000, partially
offset by a decrease in the tax equivalent yield, excluding net
realized gains and losses. The tax equivalent yield, excluding
gains and losses, decreased primarily as a result of significant
additions to our fixed income portfolio in the last quarter of
2001 at prevalent interest rates, which were significantly lower
than 2000 due to actions taken by the Federal Reserve Board.
During 2000, investment income increased $117,000 or 12.6% to
$1.0 million from $930,000 in 1999. Average invested assets
decreased 8.7% to $18.8 million from $20.6 million in
1999. The tax equivalent yield in 2000, excluding net realized
gains and losses, was 6.3% compared to 4.5% in 1999. Investment
income in 2000 increased from 1999 primarily as a result of an
increase in the tax equivalent yield, excluding net realized
gains and losses, partially offset by net realized losses of
$139,000 in 2000 compared to $0 in 1999. Although average
invested assets decreased in 2000 compared to 1999, the tax
equivalent yield increased primarily due to a shift to
strengthen our fixed income portfolio in 2000 as compared to
investments in interest bearing accounts and certificates of
deposit in 1999. Prior to 1999, we invested in interest bearing
accounts and certificates of deposit. During 1999, we
strengthened our balance sheet with the acquisition of National
and proceeds from the Initial Public Offering.

Other Revenue.Other
revenue in 2001 increased $5.4 million, or 156.9%, to
$8.9 million from $3.5 million in 2000. During 2000,
other revenue increased $3.0 million, or 665.7% from
$452,000 in 1999. The increase from 1999 is attributed to our
strategy to expand our National business.

Expenses

The following table presents the components of
the our expenses:

|                                 |                |                         |        |         |  |      |        |        |  |   |        |        | 
|-------------------------------- | -------------- | ----------------------- | ------ | ------- |  | ---- | ------ | ------ |  | - | ------ | ------ | 
|                                 |                |                        
|                                 |                | Year Ended December 31,
|                                 |                |                        
|                                 |                | 2001                    |        | 2000    |  | 1999
|                                 |                |                         |        |         |  |     
|                                 |                |                        
|                                 |                | (Amounts in thousands) 
|Personnel costs                  |                | $                       | 73,909 |         |  | $    | 51,189 |        |  | $ | 54,277 |       
|Other operating expenses         |                |                         | 34,362 |         |  |      | 22,742 |        |  |   | 19,226 |       
|Title plant rent and maintenance |                |                         | 7,946  |         |  |      | 5,322  |        |  |   | 6,264  |       
|                                 |                |                         |        |         |  |      |        |        |  |   |        |       
|                                 | Total expenses |                         | $      | 116,217 |  |      | $      | 79,253 |  |   | $      | 79,767 | 
|                                 |                |                         |        |         |  |      |        |        |  |   |        |       

Our principal costs include personnel costs,
other operating expenses and title plant rent and maintenance.
Personnel costs include both base salaries and commission
expense paid to employees and are the most significant operating
expense incurred. These expenses fluctuate with the level or
orders opened and closed and the mix of revenue.

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Other operating expenses consist of facilities
expenses, postage and courier services, computer services,
professional services, advertising expense, general insurance,
provision for claim losses, trade and note receivable
allowances, depreciation and amortization expense and interest
expense.

Title plant rent and maintenance costs consist of
payments to access title plants and the costs of updating these
plants. Title plant rent and maintenance costs include daily
update expenses that are dependent on the volume of real estate
transaction activity and a rental charge that is based on actual
usage.

Personnel Costs.Personnel costs totaled
$73.9 million, $51.2 million and $54.3 million
for the years ended December 31, 2001, 2000 and 1999,
respectively. As a percentage of total revenue, exclusive of
investment income, personnel costs were 55.3% in 2001, 62.7% in
2000 and 61.4% in 1999. Personnel costs include base salaries,
commissions and bonuses paid to employees and are the most
significant operating expense incurred. These costs fluctuate
with the level of orders opened and closed and the mix of
revenue. The decrease in personnel expenses is the result of our
ability to handle increased refinance activity without a
significant increase in staffing. We continue to take
significant measures to maintain appropriate personnel levels
and costs relative to the volume and mix of business and
revenues. We continue to monitor the prevailing market
conditions and will attempt to respond as necessary.

Other Operating Expenses.Other operating expenses totaled
$34.4 million, $22.7 million and $19.2 million
for the years ended December 31, 2001, 2000 and 1999,
respectively. As a percentage of total revenue, exclusive of
investment income, other operating expenses were 25.7% in 2001,
27.9% in 2000, and 21.8% in 1999. Other operating expenses
consist of facilities expenses, provision for claim losses,
professional services, advertising, postage and courier
services, data processing expense, general insurance, trade and
notes receivable allowance and depreciation. The decrease in
other operating expenses is attributable to our aggressive cost
control programs in order to maintain operating expenses
consistent with levels of revenues; however, certain fixed costs
are incurred regardless of revenue levels, resulting in
fluctuations year over year. Other operating expenses increased
as a percentage of total revenue in 2000 from 1999 due to
expansions and acquisitions, including travel, conventions and
other general and administrative costs. Those increases offset
much of our cost control efforts in 2000. We continuously review
and evaluate operating expenses relative to existing and
projected market conditions.

Title Plant Rent and Maintenance Expense.Title plant rent and maintenance
expense totaled $7.9 million, $5.3 million and
$6.3 million for the years ending December 31, 2001,
2000 and 1999, respectively. Title plant rent and maintenance
expense decreased as a percentage of total revenue, exclusive of
investment revenue, to 5.9% in 2001 from 6.5% in 2000 and from
7.1% in 1999. The year over year fluctuations in plant expense
is primarily a result of our expansion and various contract
negotiations within several counties in California and Arizona
combined with a reduction of the volume of business during 2000
compared to 1999. The agreements negotiated during 2000 resulted
in significant cost reductions for us.

Income Taxes.Income
taxes for 2001, 2000 and 1999 as a percentage of earnings before
income taxes was 43.0%, 41.0% and 41.0%, respectively. The
fluctuations in income taxes as a percentage of earnings before
income taxes are attributable to the effect of state income
taxes on our wholly-owned underwritten title company and the
ancillary service companies; a change in the amount and the
characteristics of net income, operating income versus
investment income; and the tax treatment of certain items.

Liquidity and Capital Resources

Cash Flows.Our
current cash requirements include debt service, debt relating to
capital leases, personnel and other operating expenses, taxes
and dividends on common stock. We believe that all anticipated
cash requirements for current operations will be met from
internally generated funds and through cash received from our
subsidiaries. Our cash requirements include expenses relating to
the development and expansion of Nationals business. We
presently have in place much of the infrastructure (principally
consisting of personnel) that will be used for this development.

Two significant sources of our funds are
dividends and distributions from our subsidiaries. As a holding
company, we receive cash from our subsidiaries in the form of
dividends and as reimbursement for operating

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and other administrative expenses we incur. These
reimbursements are executed within the guidelines of various
management agreements among us and our subsidiaries. Our
underwritten title company and our ancillary companies collect
premiums and fees and pay underwriting fees and operating
expenses. These companies are restricted only to the extent of
maintaining minimum levels of working capital and net worth, but
are not restricted by state regulations or banking authorities
in their ability to pay dividends and make distributions.


National is subject to regulations that restrict
its ability to pay dividends or make other distributions of cash
or property to its parent company without prior approval from
the Department of Insurance of the State of New York. The
maximum amount of dividends which can be paid by National to
shareholders without prior approval of the Insurance
Commissioner is subject to restrictions. No dividends, including
all dividends paid in the preceding twelve months, which exceed
10% of the outstanding capital shares can be paid without prior
approval unless after deducting dividends we have surplus to
policyholders at least equal to the greater of 50% of its
reinsurance reserves or 50% of the minimum capital required.
Additionally, dividends are further limited to Nationals
earned surplus. During 2002, our title insurance subsidiary
could pay dividends to its parent of $38,400.

Financing.We
entered into the following note payable agreements in
connections with the following purchases:



| |   |                                                                                                                                                                                                                                                                                                                                                                                      
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | On April 14, 1999 we purchased a home office
	building located in Orange, CA for $2.6 million. We
	borrowed $2.1 million, secured by a first trust deed. The
	terms of the note payable require monthly interest payments at
	prime rate and monthly principal payments of $4,000. The note
	matures on April 1, 2004.                                                               
|
| |  | In January 2000, we purchased 100% of the stock
	of Bancserv, Inc., a California corporation located in Yorba
	Linda, California. The purchase price was $1.3 million,
	$400,000 paid in cash and a $900,000 promissory note that bears
	interest at a rate of 7.5%, and is due in full on January 2005.
	The note requires monthly payments of $15,500 beginning
	February 14, 2000.
|
| |  | In February 2000, we purchased 100% of the stock
	of Pioneer Land Title Corporation. The purchase price was
	$1.8 million, $360,000 paid in cash and a $1.4 million
	promissory note that bears interest at 6.6% per annum from the
	purchase date through the fourth anniversary date.                                                                                              

Financing Obligations.Our financing obligation includes
notes payable in connection with the corporate office building
purchase, Pioneer Land Title Corporation and Bancserv, Inc.
acquisitions together with capital lease payments and operating
lease commitments. As of December 31, 2001, our annual
payments relating to these obligations are as follows:

|                          |                |                        |       |       |  |      |       |       |  |      |       |            |  |             |       |       |  |   |     |     |  |   |    |     |  |   |   |      |   |   |        |        | 
|------------------------- | -------------- | ---------------------- | ----- | ----- |  | ---- | ----- | ----- |  | ---- | ----- | ---------- |  | ----------- | ----- | ----- |  | - | --- | --- |  | - | -- | --- |  | - | - | ---- | - | - | ------ | ------ | 
|                          |                |                        |       |       |  |      |       |       |  |      |       |            |  | Portion     |       |      
|                          |                |                        |       |       |  |      |       |       |  |      |       |            |  | relating    |       |      
|                          |                | 2002                   |       | 2003  |  | 2004 |       | 2005  |  | 2006 |       | Thereafter |  | to interest |       | Total
|                          |                |                        |       |       |  |      |       |       |  |      |       |            |  |             |       |      
|                          |                |                       
|                          |                | (Amounts in thousands)
|Notes payable             |                | $                      | 566   |       |  | $    | 578   |       |  | $    | 2,369 |            |  | $           | 15    |       |  | $ |    |     |  | $ |   |     |  | $ |  |      |   | $ | 3,528  |       
|Capital lease obligations |                |                        |       |       |  |      |       |       |  |      |       |            |  |             |       |       |  |   |     |     |  |   |    |     |  |   |   |      |   |   |        |       
|                          | Affiliated     |                        |       | 170   |  |      |       | 170   |  |      |       | 170        |  |             |       | 170   |  |   |     | 170 |  |   |    | 243 |  |   |   | (269 | ) |   |        | 824    | 
|                          | Non-affiliated |                        |       | 222   |  |      |       | 222   |  |      |       | 222        |  |             |       | 222   |  |   |     | 222 |  |   |    | 204 |  |   |   | (262 | ) |   |        | 1,052  | 
|Operating lease payments  |                |                        | 4,998 |       |  |      | 4,208 |       |  |      | 2,501 |            |  |             | 1,465 |       |  |   | 580 |     |  |   | 78 |     |  |   |  |      |   |   | 13,830 |       
|                          |                |                        |       |       |  |      |       |       |  |      |       |            |  |             |       |       |  |   |     |     |  |   |    |     |  |   |   |      |   |   |        |       
|                          | Total          |                        | $     | 5,956 |  |      | $     | 5,178 |  |      | $     | 5,262      |  |             | $     | 1,872 |  |   | $   | 972 |  |   | $  | 525 |  |   |   | (531 | ) |   | $      | 19,234 | 
|                          |                |                        |       |       |  |      |       |       |  |      |       |            |  |             |       |       |  |   |     |     |  |   |    |     |  |   |   |      |   |   |        |       



| |                             
| | ----------------------------
| | Critical Accounting Policies

The accounting policies described below are those
we consider critical in preparing our Consolidated Financial
Statements. Certain of these policies require management to make
estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of certain contingent
assets and liabilities at the date of the Consolidated Financial
Statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from
those estimates. See Note 2 of Notes to the Consolidated

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Financial Statements for a more detailed
description of our significant accounting policies that have
been followed in preparing our Consolidated Financial Statements.


Revenue Recognition.Revenue fluctuates primarily with
changes in mortgage interest rates and economic conditions in
our markets, primarily California. While the number of orders
that are closed affects our revenue, personnel costs are the
largest component of our expenses. Since personnel costs are
relatively fixed over the short-term, in a rapidly declining
market, reductions in the number of orders can adversely affect
margins. Gross margins are also affected by the relative numbers
of orders that relate to refinancing transactions as compared to
those relating to real estate sale transactions.

Historically, the greatest volume of residential
resale activity has usually occurred in the spring and summer
months. However, events during the past five years, including
numerous actions taken by the Federal Reserve Board, have caused
unusual fluctuations in real estate activity, particularly in
the seasonal pattern of residential resale and refinance
activity. We cannot predict whether the usual spring and summer
increase in volume will continue to be affected by such factors.

To the extent real estate prices or mortgage
interest rates increase due to inflationary factors, our title
service revenue generally increases because premiums are
determined in part by the value of property or the amount of the
mortgage loan. Our personnel costs and other operating expenses
are also sensitive to inflation.

Investments.Our
investment portfolio is subject to risk of potential impairment
with economic downturns or a downgrade by individual securities.
We evaluate our portfolio periodically for other than temporary
declines, which, if identified, are recorded as realized losses.

Costs in Excess of Net Assets Acquired
(Goodwill).Intangible
assets include acquired licenses to operate within various
counties and the cost in excess of net assets acquired in
connection with the acquisitions. Intangibles were amortized on
a straight-line basis over a composite life of 25 years
throughout December 31, 2001. Prior to January 1,
2002, goodwill was tested for impairment under FAS 121.
Effective January 1, 2002, goodwill will not be amortized,
but will be subject to continual recoverability analysis. See
recent Accounting Pronouncements for further information.

Escrow Accounts.In
conducting our operations, we routinely hold customers
assets in trust, pending completion of real estate transactions.
Certain of these amounts are maintained in segregated bank
accounts and have not been included in our Consolidated Balance
Sheets. We have a contingent liability relating to proper
disposition of these balances for its customers which amounted
to $283.8 million at December 31, 2001.

Reserve for Claim
Losses.Our reserve for claim losses
includes known claims as well as losses we expect to incur, net
of recoupments. Each known claim is reserved for on the basis of
a review by us as to the estimated amount of the claim and the
costs required to settle the claim. Reserves for claims which
are incurred but not reported are provided for at the time
premium revenue is recognized based on historical loss
experience and other factors, including industry averages, claim
loss history, current legal environment, geographic
considerations and type of policy written. The occurrence of a
significant major claim in any given period could have a
material adverse effect on our financial condition and results
of operations for such period.

Recent Accounting Pronouncements.In July 2001, the Financial
Accounting Standards Board issued Statement of Financial
Accounting Standards No. 141, Business
Combinations (SFAS No. 141) and Statement
of Financial Accounting Standards No. 142, Goodwill
and Other Intangible Assets (SFAS
No. 142). SFAS No. 141 requires that all
business combinations be accounted for under the purchase
method. The statement further requires separate recognition of
intangible assets. The statement applies to all business
combinations initiated after June 30, 2001.

SFAS No. 142 requires intangible assets to
be initially recognized and measured based on fair value. The
statement also provides that goodwill should not be amortized,
but shall be tested for impairment annually, or more frequently
if circumstances indicate potential impairment, through a
comparison of fair value to its carrying amount. Existing
goodwill was amortized through December 31, 2001, after
which time amortization will cease. In accordance with SFAS
No. 142, we performed a transitional goodwill impairment
test and

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SFAS No. 142 is effective for periods
beginning after December 15, 2001. Goodwill amortization
expense for the twelve months ended December 31, 2001 was
$551,000 and we believe there will not be a material impact on
our financial statements as a result of this analysis.


In October 2001, the Financial Accounting
Standard Board issued Statement of Financial Accounting
Standards No. 144, Accounting for the Impairment of
Long-Lived Assets (SFAS No. 144) which
address financial accounting and reporting for the impairment or
disposal of long-lived assets. While SFAS No. 44 supersedes
Statement of Financial Accounting Standards No. 121,
Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of, it retains many of
the fundamental provisions of that statement. SFAS No. 144
will not have a material impact on our financial statement or
results of operations.

The following events affected our financial
statements over the past several years.



| |   |                                                                                                                                                                                                                                                                                                                                           
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | We received net proceeds of approximately
	$8.4 million in connection with our initial public offering
	on February 12, 1999. The underwriters exercised an option
	for over allotment to purchase an additional 165,000 shares at
	$5.45 per share on March 31, 1999, which resulted in net
	proceeds in the amount of $804,000.         
|
| |  | In December 2000 and continuing through
	April 2001, we purchased 378,293 shares of our common stock
	at a cost of $1.4 million (an average price per share of
	$3.67), pursuant to the Stock Repurchase Program approved by the
	Board of Directors in September 1999, authorizing the repurchase
	of 550,000 shares of our common stock.
|
| |  | In June 2001, we purchased 894,000 shares of our
	common stock from FNF for $4.9 million or $5.45 per share,
	which is FNFs cost. The fair market value of our common
	stock on the date of transaction was $4.99 per share. After
	this transaction FNF owned approximately 19.5% of our common
	stock.                                 
|
| |  | During the third quarter, we entered into a
	settlement agreement relating to an acquisition that resulted in
	a goodwill reduction in the amount of $620,000, thereby reducing
	intangible assets on the balance sheet.                                                                                                                  
|
| |  | In December 2001, the Board approved the
	cancellation and retirement of 1,336,637 shares of our common
	stock previously held in treasury.                                                                                                                                                                                               

The following chronology of transactions had
varying impacts on our financial statements. These acquisitions
transactions were accounted for under the purchase accounting
method. The results of operations were included in earnings from
the date of the acquisitions through December 31, 2001.



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | In January 1999, we agreed to purchase 100% of
	the assets of Pacific Printers, a printing company providing
	affiliated and non-affiliated reproduction of forms and printing
	material. The purchase price was $125,000, paid in cash.                                                                                                                                                                              
|
| |  | In February 1999, one of our directors exercised
	options and we received proceeds in the amount of $220,000.                                                                                                                                                                                                                                                                                                         
|
| |  | On April 14, 1999, we purchased a corporate
	office building located in Orange, California for
	$2.6 million. We borrowed $2.1 million, secured by a
	first trust deed. The terms of the note payable require monthly
	interest payments at prime rate and monthly principal payments
	of $4,000. The note matures on April 1, 2004. The costs
	associated with the relocation to the executive offices were
	minimal.
|
| |  | In May 1999, the Department of Insurance, State
	of New York, approved the acquisition of National Title
	Insurance of New York, Inc. by ATC from FNF. The
	$3.25 million transaction was paid in cash in June 1999.                                                                                                                                                                                                  
|
| |  | In January 2000, we purchased 100% of the stock
	of Bancserv, Inc., a California corporation located in Yorba
	Linda, California. Bancserv, Inc. is a document company
	providing outsource services to the real estate and banking
	industry through a national network of qualified notaries
	public. The purchase                                                                                                  

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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | price was $1.3 million, $400,000 paid in
	cash and a $900,000 promissory note that bears interest at a
	rate of 7.5%, and is due in full on January 2005. The note
	requires monthly payments of $15,500 beginning February 14,
	2000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  | In February 2000, we purchased 100% of the stock
	of Pioneer Land Title Corporation (Pioneer), a
	New York corporation. Pioneer provides title and escrow
	services in the state of New York. The purchase price was
	$1.8 million, $360,000 paid in cash and a $1.4 million
	promissory note that bears interest at 6.6% per annum from the
	purchase date through the fourth anniversary date.                                                                                                                                                                                                                                                                                                                                                                        
|
| |  | In February 2000, we purchased 100% of the
	membership interests of Emerald Mortgagee Assistance Company
	(EMAC), a full service provider of release and
	assignment document preparation, document retrieval and special
	title assistance headquartered in Colorado with operations
	nationwide. The purchase price of $1.9 million was paid in
	cash of $1.7 million, subject to certain purchase price
	adjustments based on the combined equity of EMAC and American
	Research Services, its affiliate, and 64,344 shares of our
	common stock. In July 2001, based on a settlement of the
	original purchase price, the shares of common stock and cash
	returned to the company resulted in a goodwill reduction in the
	amount of $620,000 on the balance sheet.

Recent Developments

In February 2002, we entered into an agreement
with Clark County Title Service, Inc. in order to gain access to
the Clark County title plant, at a purchase price of
$1.2 million.

Also in February 2002, we entered into a purchase
agreement with Sommerset Group, LLC, a California limited
liability company to purchase real property in the County of
Orange, California. Based upon certain conditions the purchase
price is $1.1 million, payable at the close of escrow,
which is anticipated on or about April 15, 2002.

On February 28, 2002, Pioneer National Title
of Nevada, Inc., a subsidiary of ATC, was licensed to engage in
the business of title insurance in the state of Nevada.

On March 13, 2002, the Companys Board
of Directors declared a quarterly cash dividend of $.125 per
share, payable on April 8, 2002 to stockholders of record
as of March 25, 2002.




Item 7A.     Quantitative
and Qualitative Disclosure about the Market Risk of Financial
Instruments

Our Consolidated Balance Sheets includes a
substantial amount of assets and liabilities whose fair values
are subject to market risks. The following sections address the
significant market risks associated with our financial
activities for the years ended 2001 and 2000.



| |                   
| | ------------------
| | Interest Rate Risk

Our fixed maturity investments and borrowings are
subject to interest rate risk. Increases and decreases in
prevailing interest rates generally translate into decreases and
increases in fair values of those instruments. Additionally,
fair values of interest rate sensitive instruments may be
affected by the creditworthiness of the issuer, prepayment
options, relative values of alternative investments, the
liquidity of the instrument and other general market conditions.



| |                  
| | -----------------
| | Equity Price Risk

The carrying values of investments subject to
equity price risks are based on quoted market prices or
managements estimates of fair value as of the balance
sheet date. Market prices are subject to fluctuation, and
consequently, the amount realized in the subsequent sale of an
investment may significantly differ from the reported market
value. Fluctuation in the market price of a security may result
from perceived changes in the underlying economic
characteristics of the investee, the relative price of
alternative investments and general market conditions.
Furthermore, amounts realized in the sale of a particular
security may be affected by the relative quantity of the
security being sold.

26



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##### Table of Contents



Caution should be used in evaluating our overall
market risk from the information below, since actual results
could differ materially because the information was developed
using estimates and assumptions as described below, and because
our reserve for claim losses (representing 9.1% of total
liabilities) is not included in the hypothetical effects.

The hypothetical effects of changes in market
rates or prices on the fair values of financial instruments
would have been as follows as of December 31, 2001:



| |    |                                                                                                                                                                                                                                                                                                                                               
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a. | An approximate $1.0 million net increase
	(decrease) in the fair value of fixed maturity securities
	would have occurred if interest rates had
	(decreased) increased by 100 basis points. The change
	in fair values was determined by estimating the present value of
	future cash flows using various models, primarily duration
	modeling.



| |    |                                                                                                                                                                                                                                                                  
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | b. | It is not anticipated that there would be a
	significant change in the fair value of other long-term
	investments or short-term investments if there was a change in
	market conditions, based on the nature and duration of the
	financial instruments involved.



| |    |                                                                                                                                                         
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------
| | c. | Interest expense on outstanding debt would have
	increased (decreased) approximately $19,000, if interest
	rates increased (decreased) 100 basis points.

27



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##### Table of Contents






Item 8.     Financial
Statements and Supplementary Data

INDEX TO FINANCIAL INFORMATION

AMERICAN NATIONAL FINANCIAL, INC. AND
SUBSIDIARIES

|                                                                                                        |  |      |    | 
|------------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|                                                                                                        |  | Page
|                                                                                                        |  |     
|Independent Auditors Report                                                                            |  |      | 29 | 
|Consolidated Balance Sheets as of
	December 31, 2001 and 2000                                           |  |      | 30 | 
|Consolidated Statements of Earnings for the years
	ended December 31, 2001, 2000 and 1999               |  |      | 31 | 
|Consolidated Statements of Comprehensive Earnings
	for the years ended December 31, 2001, 2000 and 1999 |  |      | 32 | 
|Consolidated Statements of Shareholders
	Equity for the years ended December 31, 2001, 2000 and 1999   |  |      | 33 | 
|Consolidated Statements of Cash Flows for the
	years ended December 31, 2001, 2000 and 1999             |  |      | 34 | 
|Notes to Consolidated Financial Statements                                                              |  |      | 35 | 

28



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##### Table of Contents



INDEPENDENT AUDITORS REPORT

The Board of Directors and Shareholders

American National Financial, Inc.:


We have audited the accompanying Consolidated
Balance Sheets of American National Financial, Inc. and
subsidiaries as of December 31, 2001 and 2000 and the
related Consolidated Statements of Earnings, Comprehensive
Earnings, Shareholders Equity and Cash Flows for each of
the years in the three-year period ended December 31, 2001.
These Consolidated Financial Statements are the responsibility
of the Companys management. Our responsibility is to
express an opinion on these consolidated financial statements
based on our audits.

We conducted our audits in accordance with
auditing standards generally accepted in the United States of
America. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the Consolidated Financial
Statements referred to above present fairly, in all material
respects, the consolidated financial position of American
National Financial, Inc. and subsidiaries as of
December 31, 2001 and 2000, and the results of their
operations and their cash flows for each of the years in the
three-year period ended December 31, 2001, in conformity
with accounting principles generally accepted in the United
States of America.



| |         
| | --------
| | KPMG LLP

Los Angeles, California

February 21, 2002


29



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##### Table of Contents



AMERICAN NATIONAL FINANCIAL, INC. AND
SUBSIDIARIES






CONSOLIDATED BALANCE SHEETS


|                                      |                                                                                                            |                                            |   |        |        |  |   |        |        | 
|------------------------------------- | ---------------------------------------------------------------------------------------------------------- | ------------------------------------------ | - | ------ | ------ |  | - | ------ | ------ | 
|                                      |                                                                                                            |                                           
|                                      |                                                                                                            | December 31,                              
|                                      |                                                                                                            |                                           
|                                      |                                                                                                            | 2001                                       |   | 2000  
|                                      |                                                                                                            |                                            |   |       
|                                      |                                                                                                            |                                           
|                                      |                                                                                                            | (In thousands, except                     
|                                      |                                                                                                            | share amounts)                            
|ASSETS                               
|Current assets:                       |                                                                                                            |                                            |   |        |        |  |   |       
|                                      | Cash and cash equivalents                                                                                  |                                            | $ | 9,400  |        |  | $ | 9,450  |       
|                                      | Short-term investments, at cost, which
	approximates fair market value                                     |                                            |   | 618    |        |  |   | 415    |       
|                                      | Accrued investment interest                                                                                |                                            |   | 383    |        |  |   | 145    |       
|                                      | Trade receivables, net of allowance for doubtful
	accounts of $2,011 in 2001 and $2,118 in 2000            |                                            |   | 3,803  |        |  |   | 3,925  |       
|                                      | Notes receivables  related party, net                                                                     |                                            |   | 1,812  |        |  |   | 2,141  |       
|                                      | Deferred tax asset                                                                                         |                                            |   | 3,737  |        |  |   | 3,182  |       
|                                      | Prepaid expenses and other current assets                                                                  |                                            |   | 507    |        |  |   | 819    |       
|                                      |                                                                                                            |                                            |   |        |        |  |   |       
|                                      |                                                                                                            | Total current assets                       |   |        | 20,260 |  |   |        | 20,077 | 
|                                      | Investment securities available for sale, at fair
	market value                                            |                                            |   | 24,721 |        |  |   | 10,533 |       
|                                      | Property and equipment, net                                                                                |                                            |   | 7,614  |        |  |   | 7,502  |       
|                                      | Title plants                                                                                               |                                            |   | 2,699  |        |  |   | 2,699  |       
|                                      | Deposits with the Insurance Commissioner                                                                   |                                            |   | 133    |        |  |   | 133    |       
|                                      | Intangibles, net of accumulated amortization of
	$2,022 in 2001 and $1,471 in 2000                         |                                            |   | 11,226 |        |  |   | 12,397 |       
|                                      |                                                                                                            |                                            |   |        |        |  |   |       
|                                      |                                                                                                            | Total assets                               |   | $      | 66,653 |  |   | $      | 53,341 | 
|                                      |                                                                                                            |                                            |   |        |        |  |   |       
|LIABILITIES AND SHAREHOLDERS
	EQUITY
|Current liabilities:                  |                                                                                                            |                                            |   |        |        |  |   |       
|                                      | Accounts payable and other accrued expenses                                                                |                                            | $ | 15,092 |        |  | $ | 5,998  |       
|                                      | Customer advances                                                                                          |                                            |   | 4,802  |        |  |   | 3,087  |       
|                                      | Current portion of long-term debt                                                                          |                                            |   | 566    |        |  |   | 555    |       
|                                      | Current portion of obligations under capital
	leases with affiliates                                       |                                            |   | 102    |        |  |   | 113    |       
|                                      | Current portion of obligations under capital
	leases with non-affiliates                                   |                                            |   | 146    |        |  |   | 135    |       
|                                      | Reserve for claim losses                                                                                   |                                            |   | 2,730  |        |  |   | 2,431  |       
|                                      | Income tax payable                                                                                         |                                            |   |       |        |  |   | 1,348  |       
|                                      | Due to affiliate                                                                                           |                                            |   | 2,712  |        |  |   | 2,294  |       
|                                      |                                                                                                            |                                            |   |        |        |  |   |       
|                                      |                                                                                                            | Total current liabilities                  |   |        | 26,150 |  |   |        | 15,961 | 
|                                      | Long-term debt                                                                                             |                                            |   | 2,962  |        |  |   | 3,528  |       
|                                      | Obligations under capital leases with affiliates                                                           |                                            |   | 722    |        |  |   | 823    |       
|                                      | Obligations under capital leases with
	non-affiliates                                                      |                                            |   | 906    |        |  |   | 1,052  |       
|                                      |                                                                                                            |                                            |   |        |        |  |   |       
|                                      |                                                                                                            | Total liabilities                          |   |        | 30,740 |  |   |        | 21,364 | 
|Shareholders equity:                 |                                                                                                            |                                            |   |        |        |  |   |       
|                                      | Preferred stock, no par value; authorized
	5,000,000 shares; issued and outstanding, none                  |                                            |   |       |        |  |   |       |       
|                                      | Common stock, no par value; authorized,
	50,000,000 shares; issued 7,095,769 in 2001 and 8,183,678 in 2000 |                                            |   |       |        |  |   |       |       
|                                      | Additional paid-in capital                                                                                 |                                            |   | 20,905 |        |  |   | 22,744 |       
|                                      | Retained earnings                                                                                          |                                            |   | 13,741 |        |  |   | 9,409  |       
|                                      | Accumulated other comprehensive income (loss)                                                              |                                            |   | 1,267  |        |  |   | (136   | )     
|                                      | Less treasury stock, 0 shares in 2001 and 15,257
	shares in 2000, at cost                                  |                                            |   |       |        |  |   | (40    | )     
|                                      |                                                                                                            |                                            |   |        |        |  |   |       
|                                      |                                                                                                            | Total shareholders equity                 |   |        | 35,913 |  |   |        | 31,977 | 
|                                      |                                                                                                            |                                            |   |        |        |  |   |       
|                                      |                                                                                                            | Total liabilities and shareholders equity |   | $      | 66,653 |  |   | $      | 53,341 | 
|                                      |                                                                                                            |                                            |   |        |        |  |   |       

See accompanying notes to consolidated financial
statements.

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AMERICAN NATIONAL FINANCIAL, INC. AND
SUBSIDIARIES






CONSOLIDATED STATEMENTS OF EARNINGS


|                                                                                |                                                                                                                                                               |                                       |        |        |         |      |       |        |        |   |       |        |        | 
|------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------- | ------ | ------ | ------- | ---- | ----- | ------ | ------ | - | ----- | ------ | ------ | 
|                                                                                |                                                                                                                                                               |                                      
|                                                                                |                                                                                                                                                               | Year Ended December 31,              
|                                                                                |                                                                                                                                                               |                                      
|                                                                                |                                                                                                                                                               | 2001                                  |        | 2000   |         | 1999
|                                                                                |                                                                                                                                                               |                                       |        |        |         |     
|                                                                                |                                                                                                                                                               |                                      
|                                                                                |                                                                                                                                                               | (In thousands, except per share data)
|Revenues:                                                                       |                                                                                                                                                               |                                       |        |        |         |      |       |        |        |   |       |       
|                                                                                | Net title service revenue  related
	party                                                                                                                    |                                       | $      | 75,564 |         |      | $     | 43,641 |        |   | $     | 51,366 |       
|                                                                                | Escrow fees                                                                                                                                                   |                                       |        | 32,176 |         |      |       | 21,969 |        |   |       | 25,190 |       
|                                                                                | Ancillary service fees                                                                                                                                        |                                       |        | 17,080 |         |      |       | 12,550 |        |   |       | 11,362 |       
|                                                                                | Investment income                                                                                                                                             |                                       |        | 2,268  |         |      |       | 1,047  |        |   |       | 930    |       
|                                                                                | Other revenue                                                                                                                                                 |                                       |        | 8,890  |         |      |       | 3,461  |        |   |       | 452    |       
|                                                                                |                                                                                                                                                               |                                       |        |        |         |      |       |        |        |   |       |       
|                                                                                |                                                                                                                                                               | Total revenues                        |        |        | 135,978 |      |       |        | 82,668 |   |       |        | 89,300 | 
|                                                                                |                                                                                                                                                               |                                       |        |        |         |      |       |        |        |   |       |       
|Expenses:                                                                       |                                                                                                                                                               |                                       |        |        |         |      |       |        |        |   |       |       
|                                                                                | Personnel costs                                                                                                                                               |                                       |        | 73,909 |         |      |       | 51,189 |        |   |       | 54,277 |       
|                                                                                | Other operating expenses includes $3,937, $3,801
	and $3,789 with affiliate for the twelve-month period ended
	December 31, 2001, 2000 and 1999, respectively |                                       |        | 34,362 |         |      |       | 22,742 |        |   |       | 19,226 |       
|                                                                                | Title plant rent and maintenance                                                                                                                              |                                       |        | 7,946  |         |      |       | 5,322  |        |   |       | 6,264  |       
|                                                                                |                                                                                                                                                               |                                       |        |        |         |      |       |        |        |   |       |       
|                                                                                |                                                                                                                                                               | Total expenses                        |        |        | 116,217 |      |       |        | 79,253 |   |       |        | 79,767 | 
|                                                                                |                                                                                                                                                               |                                       |        |        |         |      |       |        |        |   |       |       
|Earnings before income taxes                                                    |                                                                                                                                                               |                                       | 19,761 |        |         |      | 3,415 |        |        |   | 9,533 |       
|Income taxes                                                                    |                                                                                                                                                               |                                       | 8,497  |        |         |      | 1,400 |        |        |   | 3,908 |       
|                                                                                |                                                                                                                                                               |                                       |        |        |         |      |       |        |        |   |       |       
|Net earnings                                                                    |                                                                                                                                                               | $                                     | 11,264 |        |         | $    | 2,015 |        |        | $ | 5,625 |       
|                                                                                |                                                                                                                                                               |                                       |        |        |         |      |       |        |        |   |       |       
|Basic earnings per share                                                        |                                                                                                                                                               | $                                     | 1.50   |        |         |      | .25   |        |        | $ | .74   |       
|                                                                                |                                                                                                                                                               |                                       |        |        |         |      |       |        |        |   |       |       
|Weighted average shares outstanding, basic basis                                |                                                                                                                                                               |                                       | 7,509  |        |         |      | 8,069 |        |        |   | 7,556 |       
|                                                                                |                                                                                                                                                               |                                       |        |        |         |      |       |        |        |   |       |       
|Diluted earnings per share                                                      |                                                                                                                                                               | $                                     | 1.37   |        |         |      | .25   |        |        | $ | .74   |       
|                                                                                |                                                                                                                                                               |                                       |        |        |         |      |       |        |        |   |       |       
|Weighted average shares outstanding, diluted basis                              |                                                                                                                                                               |                                       | 8,236  |        |         |      | 8,069 |        |        |   | 7,588 |       
|                                                                                |                                                                                                                                                               |                                       |        |        |         |      |       |        |        |   |       |       
|Cash dividends per share, actual                                                |                                                                                                                                                               | $                                     | .45    |        |         |      | .40   |        |        | $ | .40   |       
|                                                                                |                                                                                                                                                               |                                       |        |        |         |      |       |        |        |   |       |       
|Cash dividends per share after giving retroactive
	effect to 10% stock dividend |                                                                                                                                                               | $                                     | .43    |        |         | $    | .36   |        |        | $ | .36   |       
|                                                                                |                                                                                                                                                               |                                       |        |        |         |      |       |        |        |   |       |       

See accompanying notes to consolidated financial
statements.

31



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AMERICAN NATIONAL FINANCIAL, INC. AND
SUBSIDIARIES




CONSOLIDATED STATEMENTS OF COMPREHENSIVE
EARNINGS


|                                      |                                                                     |                         |        |       |   |      |       |     |   |   |       |      |  
|------------------------------------- | ------------------------------------------------------------------- | ----------------------- | ------ | ----- | - | ---- | ----- | --- | - | - | ----- | ---- | -
|                                      |                                                                     |                        
|                                      |                                                                     | Year Ended December 31,
|                                      |                                                                     |                        
|                                      |                                                                     | 2001                    |        | 2000  |   | 1999
|                                      |                                                                     |                         |        |       |   |     
|                                      |                                                                     |                        
|                                      |                                                                     | (In thousands)         
|Net earnings                          |                                                                     | $                       | 11,264 |       |   | $    | 2,015 |     |   | $ | 5,625 |     
|Other comprehensive earnings  (loss) |                                                                     |                         |        |       |   |      |       |     |   |   |       |     
|                                      | Unrealized gains (losses) on investments,
	net(1)                   |                         |        | 1,959 |   |      |       | (29 | ) |   |       | (189 | )
|                                      | Reclassification adjustments for
	(gains) losses in net earnings(2) |                         |        | (556  | ) |      |       | 82  |   |   |       | 0    |  
|                                      |                                                                     |                         |        |       |   |      |       |     |   |   |       |     
|Other comprehensive earnings (loss)   |                                                                     |                         | 1,403  |       |   |      | 53    |     |   |   | (189  | )   
|                                      |                                                                     |                         |        |       |   |      |       |     |   |   |       |     
|Comprehensive earnings                |                                                                     | $                       | 12,667 |       |   | $    | 2,068 |     |   | $ | 5,436 |     
|                                      |                                                                     |                         |        |       |   |      |       |     |   |   |       |     



---



|    |                                                                                                                 
|--- | ----------------------------------------------------------------------------------------------------------------
|(1) | Net of income taxes (benefit) of
	$1.3 million, ($20,000) and ($116,000) for 2001, 2000 and
	1999, respectively.
|   
|(2) | Net of income taxes (benefit) of $420,000,
	($57,000) and $0 for 2001, 2000 and 1999, respectively.             

See accompanying notes to consolidated financial
statements.

32



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##### Table of Contents



AMERICAN NATIONAL FINANCIAL, INC. AND
SUBSIDIARIES






CONSOLIDATED STATEMENTS OF SHAREHOLDERS
EQUITY


|                           |                                                                                |                                                 |           |                |   |            |   |          |  |               |         |               |   |                 |     |        |   |   |        |        |   |   |        |        |   |   |       |       |   |   |        |        |  
|-------------------------- | ------------------------------------------------------------------------------ | ----------------------------------------------- | --------- | -------------- | - | ---------- | - | -------- |  | ------------- | ------- | ------------- | - | --------------- | --- | ------ | - | - | ------ | ------ | - | - | ------ | ------ | - | - | ----- | ----- | - | - | ------ | ------ | -
|                           |                                                                                |                                                 |           |                |   |            |   |          |  | Accumulated   |         |              
|                           |                                                                                | Common Stock                                    |           | Treasury Stock |   | Additional |   |          |  | Other         |         | Total        
|                           |                                                                                |                                                 |           |                |   | Paid-In    |   | Retained |  | Comprehensive |         | Shareholders
|                           |                                                                                | Shares                                          |           | Amount         |   | Shares     |   | Amount   |  | Capital       |         | Earnings      |   | (Loss) Earnings |     | Equity
|                           |                                                                                |                                                 |           |                |   |            |   |          |  |               |         |               |   |                 |     |       
|                           |                                                                                |                                                
|                           |                                                                                | (In thousands, except share and per share data)
|Balance, December 31, 1998 |                                                                                |                                                 | 5,408,806 |                |   | $          |  |          |  |               |        |               |   | $               |    |        |   | $ | 12,324 |        |   | $ | 7,574  |        |   | $ |      |       |   | $ | 19,898 |       
|                           | Other comprehensive earnings-unrealized loss on
	investment available for sale |                                                 |           |               |   |            |   |         |  |               |         |              |   |                 |     |       |   |   |        |       |   |   |        |       |   |   |       | (189  | ) |   |        | (189   | )
|                           | Stock options exercised                                                        |                                                 |           | 366,194        |   |            |   |         |  |               |         |              |   |                 |     |       |   |   |        | 220    |   |   |        |       |   |   |       |      |   |   |        | 220    |  
|                           | Cash dividends declared ($0.36 per share)                                      |                                                 |           |               |   |            |   |         |  |               |         |              |   |                 |     |       |   |   |        |       |   |   |        | (2,863 | ) |   |       |      |   |   |        | (2,863 | )
|                           | Issuance of shares                                                             |                                                 |           | 2,123,545      |   |            |   |         |  |               |         |              |   |                 |     |       |   |   |        | 9,340  |   |   |        |       |   |   |       |      |   |   |        | 9,340  |  
|                           | Net earnings                                                                   |                                                 |           |               |   |            |   |         |  |               |         |              |   |                 |     |       |   |   |        |       |   |   |        | 5,625  |   |   |       |      |   |   |        | 5,625  |  
|                           |                                                                                |                                                 |           |                |   |            |   |          |  |               |         |               |   |                 |     |        |   |   |        |        |   |   |        |        |   |   |       |       |   |   |        |       
|Balance, December 31, 1999 |                                                                                |                                                 | 7,898,545 |                |   |            |  |          |  |               |        |               |   |                 |    |        |   |   | 21,884 |        |   |   | 10,336 |        |   |   | (189  | )     |   | $ | 32,031 |       
|                           |                                                                                |                                                 |           |                |   |            |   |          |  |               |         |               |   |                 |     |        |   |   |        |        |   |   |        |        |   |   |       |       |   |   |        |       
|                           | Other comprehensive earnings-unrealized gain on
	investment available for sale |                                                 |           |               |   |            |   |         |  |               |         |              |   |                 |     |       |   |   |        |       |   |   |        |       |   |   |       | 53    |   |   |        | 53     |  
|                           | Cash dividends declared ($0.36 per share)                                      |                                                 |           |               |   |            |   |         |  |               |         |              |   |                 |     |       |   |   |        |       |   |   |        | (2,942 | ) |   |       |      |   |   |        | (2,942 | )
|                           | Issuance of shares                                                             |                                                 |           | 285,391        |   |            |   |         |  |               |         |              |   |                 |     |       |   |   |        | 860    |   |   |        |       |   |   |       |      |   |   |        | 860    |  
|                           | Purchase of treasury shares                                                    |                                                 |           |               |   |            |   |         |  |               |         | (15,257       | ) |                 |     | (40    | ) |   |        |       |   |   |        |       |   |   |       |      |   |   |        | (40    | )
|                           | Net earnings                                                                   |                                                 |           |               |   |            |   |         |  |               |         |              |   |                 |     |       |   |   |        |       |   |   |        | 2,015  |   |   |       |      |   |   |        | 2,015  |  
|                           |                                                                                |                                                 |           |                |   |            |   |          |  |               |         |               |   |                 |     |        |   |   |        |        |   |   |        |        |   |   |       |       |   |   |        |       
|Balance, December 31, 2000 |                                                                                |                                                 | 8,183,936 |                |   |            |  |          |  |               | (15,257 | )             |   |                 | (40 | )      |   |   | 22,744 |        |   |   | 9,409  |        |   |   | (136  | )     |   | $ | 31,977 |       
|                           |                                                                                |                                                 |           |                |   |            |   |          |  |               |         |               |   |                 |     |        |   |   |        |        |   |   |        |        |   |   |       |       |   |   |        |       
|                           | Exercise of stock options, including associated
	tax benefit                   |                                                 |           | 165,363        |   |            |   |         |  |               |         |              |   |                 |     |       |   |   |        | 631    |   |   |        |       |   |   |       |      |   |   |        | 631    |  
|                           | Other comprehensive earnings-unrealized gain on
	investment available for sale |                                                 |           |               |   |            |   |         |  |               |         |              |   |                 |     |       |   |   |        |       |   |   |        |       |   |   |       | 1,403 |   |   |        | 1,403  |  
|                           | Acquisition price reduction                                                    |                                                 |           |               |   |            |   |         |  |               |         | (64,344       | ) |                 |     | (200   | ) |   |        | (30    | ) |   |        | 30     |   |   |       |      |   |   |        | (200   | )
|                           | Cash dividends declared ($0.43 per share)                                      |                                                 |           |               |   |            |   |         |  |               |         |              |   |                 |     |       |   |   |        |       |   |   |        | (3,193 | ) |   |       |      |   |   |        | (3,193 | )
|                           | Issuance of shares                                                             |                                                 |           | 83,107         |   |            |   |         |  |               |         |              |   |                 |     |       |   |   |        | 218    |   |   |        |       |   |   |       |      |   |   |        | 218    |  
|                           | Stock repurchase                                                               |                                                 |           |               |   |            |   |         |  |               |         | (894,000      | ) |                 |     | (4,875 | ) |   |        |       |   |   |        |       |   |   |       |      |   |   |        | (4,875 | )
|                           | Purchase of treasury shares                                                    |                                                 |           |               |   |            |   |         |  |               |         | (363,036      | ) |                 |     | (1,312 | ) |   |        |       |   |   |        |       |   |   |       |      |   |   |        | (1,312 | )
|                           | Retirement of treasury shares                                                  |                                                 |           | (1,336,637     | ) |            |   |         |  |               |         | 1,336,637     |   |                 |     | 6,427  |   |   |        | (6,427 | ) |   |        |       |   |   |       |      |   |   |        |       |  
|                           | 10% stock dividend                                                             |                                                 |           |               |   |            |   |         |  |               |         |              |   |                 |     |       |   |   |        | 3,769  |   |   |        | (3,769 | ) |   |       |      |   |   |        |       |  
|                           | Net earnings                                                                   |                                                 |           |               |   |            |   |         |  |               |         |              |   |                 |     |       |   |   |        |       |   |   |        | 11,264 |   |   |       |      |   |   |        | 11,264 |  
|                           |                                                                                |                                                 |           |                |   |            |   |          |  |               |         |               |   |                 |     |        |   |   |        |        |   |   |        |        |   |   |       |       |   |   |        |       
|Balance, December 31, 2001 |                                                                                |                                                 | 7,095,769 |                |   | $          |  |          |  |               |        |               |   | $               |    |        |   | $ | 20,905 |        |   | $ | 13,741 |        |   | $ | 1,267 |       |   | $ | 35,913 |       
|                           |                                                                                |                                                 |           |                |   |            |   |          |  |               |         |               |   |                 |     |        |   |   |        |        |   |   |        |        |   |   |       |       |   |   |        |       

See accompanying notes to consolidated financial
statements.

33



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##### Table of Contents



AMERICAN NATIONAL FINANCIAL, INC. AND
SUBSIDIARIES




CONSOLIDATED STATEMENTS OF CASH
FLOWS


|                                                                                 |                                        |                                                              |                                                        |       |        |         |        |        |       |        |        |        |        |         |  
|-------------------------------------------------------------------------------- | -------------------------------------- | ------------------------------------------------------------ | ------------------------------------------------------ | ----- | ------ | ------- | ------ | ------ | ----- | ------ | ------ | ------ | ------ | ------- | -
|                                                                                 |                                        |                                                             
|                                                                                 |                                        | Year Ended December 31,                                     
|                                                                                 |                                        |                                                             
|                                                                                 |                                        | 2001                                                         |                                                        | 2000  |        | 1999   
|                                                                                 |                                        |                                                              |                                                        |       |        |        
|                                                                                 |                                        |                                                             
|                                                                                 |                                        | (In thousands)                                              
|Cash flows from operating activities:                                            |                                        |                                                              |                                                        |       |        |         |        |        |       |        |        |       
|Net earnings                                                                     |                                        | $                                                            | 11,264                                                 |       |        | $       | 2,015  |        |       | $      | 5,625  |       
|Adjustments to reconcile net earnings to cash
	provided by operating activities: |                                        |                                                              |                                                        |       |        |         |        |        |       |        |        |       
|                                                                                 | Depreciation and amortization          |                                                              |                                                        | 2,776 |        |         |        | 2,514  |       |        |        | 2,415  |       
|                                                                                 | (Gain) Loss on sale of investments     |                                                              |                                                        | (976  | )      |         |        | 139    |       |        |        |       |       
|                                                                                 | Loss on sale of property and equipment |                                                              |                                                        | 363   |        |         |        |       |       |        |        | 18     |       
|                                                                                 | Gain on sale of property and equipment |                                                              |                                                        | (4    | )      |         |        | (190   | )     |        |        |       |       
|                                                                                 | Changes in:                            |                                                              |                                                        |       |        |         |        |        |       |        |        |        |       
|                                                                                 |                                        | Accounts receivables, net                                    |                                                        |       | 122    |         |        |        | 939   |        |        |        | 4,053  |        
|                                                                                 |                                        | Interest receivable                                          |                                                        |       | (238   | )       |        |        | 100   |        |        |        | (245   | )      
|                                                                                 |                                        | Tax benefit associated with the exercise of stock
	options   |                                                        |       | 140    |         |        |        |      |        |        |        |       |        
|                                                                                 |                                        | Prepaid expenses and other assets                            |                                                        |       | 465    |         |        |        | 316   |        |        |        | 503    |        
|                                                                                 |                                        | Income taxes receivable (payable) and
	deferred income taxes |                                                        |       | (2,896 | )       |        |        | 1,376 |        |        |        | (3,876 | )      
|                                                                                 |                                        | Accounts payable and other accrued expenses                  |                                                        |       | 8,957  |         |        |        | (616  | )      |        |        | (1,016 | )      
|                                                                                 |                                        | Reserve for claim loss                                       |                                                        |       | 299    |         |        |        | 90    |        |        |        | (1,970 | )      
|                                                                                 |                                        | Due to (from) affiliates                                     |                                                        |       | 418    |         |        |        | 652   |        |        |        | (251   | )      
|                                                                                 |                                        | Customer advances                                            |                                                        |       | 1,715  |         |        |        | 1,308 |        |        |        | (411   | )      
|                                                                                 |                                        |                                                              |                                                        |       |        |         |        |        |       |        |        |       
|                                                                                 |                                        |                                                              | Total cash provided by operating activities            |       |        | 22,405  |        |        |       | 8,643  |        |        |        | 4,845   |  
|                                                                                 |                                        |                                                              |                                                        |       |        |         |        |        |       |        |        |       
|Cash flow from investing activities:                                             |                                        |                                                              |                                                        |       |        |         |        |        |       |        |        |       
|Purchase of property and equipment                                               |                                        |                                                              | (2,849                                                 | )     |        |         | (1,549 | )      |       |        | (6,011 | )     
|Additions to notes receivable                                                    |                                        |                                                              | (228                                                   | )     |        |         | (1,078 | )      |       |        | (1,401 | )     
|Collections on notes receivable                                                  |                                        |                                                              | 557                                                    |       |        |         | 266    |        |       |        | 72     |       
|Proceeds from sale of investment securities                                      |                                        |                                                              | 3,055                                                  |       |        |         | 5,059  |        |       |        |       |       
|Purchase of investment securities                                                |                                        |                                                              | (13,871                                                | )     |        |         | (1,656 | )      |       |        | (9,690 | )     
|Proceeds from short term investments                                             |                                        |                                                              |                                                       |       |        |         | 1,079  |        |       |        |       |       
|Proceeds from sale of property and equipment                                     |                                        |                                                              |                                                       |       |        |         | 220    |        |       |        | 395    |       
|Purchase of short term investments                                               |                                        |                                                              | (203                                                   | )     |        |         |       |        |       |        |       |       
|Purchase of title plant                                                          |                                        |                                                              |                                                       |       |        |         |       |        |       |        | (75    | )     
|Acquisition of subsidiaries, net of cash received                                |                                        |                                                              | 420                                                    |       |        |         | (2,542 | )      |       |        | (2,550 | )     
|                                                                                 |                                        |                                                              |                                                        |       |        |         |        |        |       |        |        |       
|                                                                                 |                                        |                                                              | Total cash used in investing activities                |       |        | (13,119 | )      |        |       | (201   | )      |        |        | (19,260 | )
|                                                                                 |                                        |                                                              |                                                        |       |        |         |        |        |       |        |        |       
|Cash flows from financing
	activities:                                           |                                        |                                                              |                                                        |       |        |         |        |        |       |        |        |       
|Borrowings                                                                       |                                        |                                                              |                                                       |       |        |         |       |        |       |        | 1,601  |       
|Repayment of long-term debt                                                      |                                        |                                                              | (555                                                   | )     |        |         | (570   | )      |       |        |       |       
|Proceeds from stock options exercised                                            |                                        |                                                              | 491                                                    |       |        |         |       |        |       |        | 220    |       
|Proceeds from issuance of common stock                                           |                                        |                                                              | 218                                                    |       |        |         | 660    |        |       |        | 9,340  |       
|Payments of capital lease obligations                                            |                                        |                                                              | (247                                                   | )     |        |         | (205   | )      |       |        | (867   | )     
|Dividends paid                                                                   |                                        |                                                              | (3,056                                                 | )     |        |         | (2,198 | )      |       |        | (2,863 | )     
|Repurchase of treasury stock                                                     |                                        |                                                              | (6,187                                                 | )     |        |         | (40    | )      |       |        |       |       
|                                                                                 |                                        |                                                              |                                                        |       |        |         |        |        |       |        |        |       
|                                                                                 |                                        |                                                              | Total cash provided by (used in) financing
	activities |       |        | (9,336  | )      |        |       | (2,353 | )      |        |        | 7,431   |  
|                                                                                 |                                        |                                                              |                                                        |       |        |         |        |        |       |        |        |       
|Increase (decrease) in cash and cash
	equivalents                                |                                        |                                                              | (50                                                    | )     |        |         | 6,089  |        |       |        | (6,984 | )     
|Cash and cash equivalents at the beginning of year                               |                                        |                                                              | 9,450                                                  |       |        |         | 3,361  |        |       |        | 10,345 |       
|                                                                                 |                                        |                                                              |                                                        |       |        |         |        |        |       |        |        |       
|Cash and cash equivalents at end of year                                         |                                        | $                                                            | 9,400                                                  |       |        | $       | 9,450  |        |       | $      | 3,361  |       
|                                                                                 |                                        |                                                              |                                                        |       |        |         |        |        |       |        |        |       
|Supplemental disclosure of cash flow
	information:                               |                                        |                                                              |                                                        |       |        |         |        |        |       |        |        |       
|                                                                                 | Cash paid during the year:             |                                                              |                                                        |       |        |         |        |        |       |        |        |        |       
|                                                                                 |                                        | Interest                                                     |                                                        | $     | 422    |         |        | $      | 475   |        |        | $      | 174    |        
|                                                                                 |                                        | Income taxes                                                 |                                                        |       | 5,059  |         |        |        | 1,741 |        |        |        | 7,441  |        
|                                                                                 | Non-cash investing activities:         |                                                              |                                                        |       |        |         |        |        |       |        |        |        |       
|                                                                                 |                                        | Dividend declared and unpaid                                 |                                                        |       | 881    |         |        |        | 744   |        |        |        |       |        
|Purchase of subsidiaries:                                                        |                                        |                                                              |                                                        |       |        |         |        |        |       |        |        |       
|                                                                                 | Assets acquired at fair value          |                                                              | $                                                      |      |        |         | $      | 1,156  |       |        | $      | 6,224  |       
|                                                                                 | Cost in excess of net assets acquired  |                                                              |                                                        | (620  | )      |         |        | 4,905  |       |        |        | 1,505  |       
|                                                                                 | Cash paid for acquisitions             |                                                              |                                                        | 420   |        |         |        | (2,565 | )     |        |        | (3,250 | )     
|                                                                                 |                                        |                                                              |                                                        |       |        |         |        |        |       |        |        |       
|                                                                                 | Liabilities assumed and debt issued    |                                                              | $                                                      | (200  | )      |         | $      | 3,496  |       |        | $      | 4,479  |       
|                                                                                 |                                        |                                                              |                                                        |       |        |         |        |        |       |        |        |       

See accompanying notes to consolidated financial
statements.


34



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##### Table of Contents



AMERICAN NATIONAL FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

1.     Description of
Business

American National Financial, Inc., formerly ATC
Holdings, Inc., was incorporated in the State of California in
November 1996 as a holding company for certain investments in
title and real estate related service companies. In March 1997,
3,329,040 of shares were issued to founding shareholders. Prior
to 1997, American National Financial, Inc. and subsidiaries
(collectively, the Company) had substantially no
operations. In April 1997, we received $6.0 million in
proceeds from the issuance of short-term notes payable, of which
$870,000 was due to certain members of management and the
remainder to a financial institution, in connection with an
agreement with Fidelity National Financial, Inc.
(FNF) to acquire a 60% interest in American Title
Company (ATC). Upon consummation of the sale in July
1997, we paid FNF $6.0 million for 60% of ATC. In August
1997, we refinanced all debt issued in April 1997. In November
1998, we acquired the remaining 40% interest in ATC in
connection with the reorganization.

In February 1999, we completed an Initial Public
Offering of 1,925,000 shares at $5.45 per share, resulting in
FNF then owning 31.5% of the outstanding shares and management
owning 37%. In connection with the offering, the underwriters
exercised an option for over allotment to purchase an additional
165,000 shares at $5.45 per share on March 31, 1999. See
Note 9.

Our principal operations are those of ATC. ATC is
an underwritten title company (UTC) in the state of
California and is engaged in the business of providing title
insurance and other related product services in connection with
real estate transactions. We operate throughout California, and
Maricopa, Pinal and Pima counties located in Arizona. ATC
functions as an agent of Chicago Title Insurance Company
(CTIC), affiliate and wholly-owned subsidiary of
FNF, owner of 19.5% of the Company common stock at
December 31, 2001. Title insurance policies are
underwritten by CTIC for an underwriting fee. The underwriting
agreement generally provides that ATC is liable under any single
policy for only the first $5,000 of losses. As a result of the
July 1997 transaction, FNFI agreed to make no claim on ATC for
claims arising from policies written prior to January 1,
1997.

In May 1999, the Department of Insurance, State
of New York, approved the acquisition of National Title
Insurance of New York, Inc. (National), a New
York domiciled underwriter, by American Title Company, a
subsidiary of American National Financial Inc., from FNF.
National is licensed to issue title insurance policies in
34 states, the District of Columbia and the
U.S. Virgin Islands. The $3.25 million dollar purchase
price was paid in cash and the transaction was completed in June
1999.

National did not underwrite any significant title
insurance policies through direct operations or agency
relationships during 2001, 2000 and 1999. National will allow us
to generate additional revenue by writing title insurance
policies in those geographic areas which are not covered by
ATCs agency arrangements with CTIC. See Note 12.

Our other subsidiaries include American Title
Insurance Agency of Arizona, Inc., American Title Agency of Pima
County, Inc., Landmark REO Management Services, Inc.; American
Document Services, Inc.; West Point Appraisal, Inc.; West Point
Properties, Inc.; West Point Support Services, Inc., Pacific
Printers, Pioneer Land Title Corporation, Bancserv, Inc.,
National Title Insurance of New York, Inc. and American National
Exchange Services, Inc. These subsidiaries are wholly-owned by
the Company.

2.     Summary of
Significant Accounting Policies



| |                            
| | ---------------------------
| | Principles of Consolidation

The accompanying Consolidated Financial
Statements include the accounts of the Company and its wholly
owned subsidiaries. All inter-company profits, transactions and
balances have been eliminated.

35



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##### Table of Contents



AMERICAN NATIONAL FINANCIAL, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



| |                          
| | -------------------------
| | Cash and Cash Equivalents

For purposes of reporting cash flows, highly
liquid instruments purchased with original maturities of three
months or less are considered cash equivalents. The carrying
amounts reported in the Condensed Consolidated Balance Sheets
for these instruments approximate their fair value.



| |                  
| | -----------------
| | Trade Receivables

The carrying amounts for trade receivables
approximate their fair value. Trade receivables are reported net
of allowance for doubtful accounts which represents
managements estimates of those balances that are not
collectible as of the balance sheet date.



| |                       
| | ----------------------
| | Property and Equipment

Property and equipment are recorded at cost, less
depreciation and amortization. Depreciation is computed using
the straight-line method based on the estimated useful lives of
the related assets that range from three to thirty years.
Leasehold improvements are amortized on a straight-line basis
over the lesser of the term of the applicable lease or the
estimated useful lives of such assets.



| |             
| | ------------
| | Title Plants

Title plants are historical title information
organized and maintained for use in performing title searches.
The December 31, 2001 and 2000 title plant balances are
comprised of the Companys capital leases. See
Note 11. Costs incurred to maintain, update and operate
title plants are expensed as incurred. Sales of title plants are
reported at the amount received net of the adjusted costs of the
title plant sold. Sales of title plant copies are reported at
the amount received. No cost is allocated to the sale of copies
of a title plant unless the carrying value of the plant is
diminished or impaired. Title plants are not amortized as they
are considered to have an indefinite life, if maintained.



| |            
| | -----------
| | Investments

The fixed maturity securities are purchased to
support our investment strategies, which are developed based on
many factors including rate of return, maturity, credit risk,
tax considerations and regulatory requirements. Fixed maturity
securities which may be sold prior to maturity to support the
Companys investment strategies are carried at fair value
and are classified as available for sale. Fair values for fixed
maturity securities are principally a function of current
interest rates and are based on quoted market prices.

Equity securities are considered to be available
for sale and carried at fair value. Fair values are based on
quoted market prices.

Short-term investments, which consist primarily
of securities purchased under agreements to resell, commercial
paper and money market instruments, which have an original
maturity of one year or less, are carried at amortized cost,
which approximates fair value.

Realized gains and losses on the sale of
investments are determined on the basis of the cost of the
specific investments sold and are credited or charged to income
on a trade date basis. Unrealized gains or losses on fixed
maturity and equity securities which are classified as available
for sale, net of applicable deferred income taxes (benefits),
are excluded from income and credited or charged directly to a
separate component of shareholders equity. If any
unrealized losses on fixed maturity or equity securities are
deemed other than temporary, such unrealized losses are
recognized as realized losses.

36



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##### Table of Contents



AMERICAN NATIONAL FINANCIAL, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



| |                  
| | -----------------
| | Intangible Assets

Intangible assets include acquired licenses to
operate within various counties and the cost in excess of net
assets acquired in connection with the acquisitions. Intangibles
are amortized on a straight-line basis over a composite life of
25 years at December 31, 2001. Impairment of
intangible assets is assessed based on an analysis of the
undiscounted cash flows generated by the underlying assets. No
impairment of intangible assets has been recognized.

In July 2001, the Financial Accounting Standards
Board issued Statement of Financial Accounting Standards
No. 141, Business Combinations (SFAS
No. 141) and Statement of Financial Accounting
Standards No. 142, Goodwill and Other Intangible
Assets (SFAS No. 142). SFAS No. 141
requires that all business combinations be accounted for under
the purchase method. The statement further requires separate
recognition of intangible assets. The statement applies to all
business combinations initiated after June 30, 2001.

SFAS No. 142 requires intangible assets to
be initially recognized and measured based on its fair value.
The statement also provides that goodwill should not be
amortized, but shall be tested for impairment annually, or more
frequently if circumstances indicate potential impairment,
through a comparison of fair value to its carrying amount.
Existing goodwill was amortized through December 31, 2001,
after which time amortization will cease and the Company will
perform a transitional goodwill impairment test. SFAS
No. 142 is effective for fiscal periods beginning after
December 15, 2001. The Company has evaluated the impact of
the new accounting standards on existing goodwill and other
intangible assets and does not anticipate any material impact on
the financial statements other than the discontinuance of
goodwill amortization, which was $551,000 in 2001.



| |                          
| | -------------------------
| | Capital Lease Obligations

Capital lease obligations for title plants are
recorded at the present value of the minimum lease payments at
the beginning of the lease terms. The monthly payments under the
leases are allocated between a reduction of the obligation and
interest expense so as to produce a constant periodic rate of
interest on the remaining balance of the obligation.



| |                    
| | -------------------
| | Revenue Recognition

Net title insurance premiums, escrow fees and
other related charges are recognized as revenue at the time of
closing of the related real estate transaction. Other service
charges are recognized when the service is provided. Premiums
from title policies written other than those underwritten by
National are presented net of the underwriting fee to affiliated
underwriters on the accompanying Consolidated Statements of
Earnings.



| |                       
| | ----------------------
| | Title and Claim Losses

Expenses are recognized when incurred. A
provision for claim losses on title policies is provided at the
time of closing of the related real estate transaction to cover
anticipated losses up to $5,000 per policy under the
underwriting fee with CTIC. Our reserve for ATC claim losses in
the amount of $1.2 million and $683,000 on these policies
is included in accounts payable and other accrued expenses as of
December 31, 2001 and 2000.



| |                         
| | ------------------------
| | Reserve for Claim Losses

Our reserve for National claim losses includes
known claims as well as losses we expects to incur, net of
recoupments. Each known claim is reserved for on the basis of a
review as to the estimated amount of the claim and the costs
required to settle the claim. Reserves for claims which are
incurred but not reported are provided for at the time premium
revenue is recognized based on historical loss experience and
other factors,

37



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##### Table of Contents



AMERICAN NATIONAL FINANCIAL, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

including industry averages, claim loss history,
current legal environment, geographic considerations and type of
policy written. The occurrence of a significant major claim in
any given period could have a material adverse effect on our
financial condition and results of operations for such period.
See Note 8.



| |            
| | -----------
| | Reinsurance

In the ordinary course of business, we reinsure
certain risks with other insurers for the purpose of limiting
its maximum loss exposure and also assumes reinsurance for
certain risks of other insurers for the purpose of earning
additional revenue. We may cede or assume a portion of certain
policy liabilities under agent fidelity, excess of loss and
case-by-case reinsurance agreements. Reinsurance agreements
provide that in the event of a loss (including costs,
attorneys fees and expenses) exceeding the retained
amounts, the reinsurer is liable for the excess amount assumed.
However, the ceding company remains primarily liable in the
event the reinsurer does not meet its contractual obligations.
Reinsurance activity is not considered significant.



| |             
| | ------------
| | Income Taxes

Deferred tax assets and liabilities are
recognized for temporary differences between the financial
reporting basis and the tax basis of our assets and liabilities
and expected benefits of utilizing net operating loss and credit
carryforwards. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in
the years in which those temporary differences are expected to
be recovered or settled. The impact on deferred taxes of changes
in tax rates and laws, if any, are applied to the years during
which temporary differences are expected to be settled and
recorded in the period enacted.



| |                  
| | -----------------
| | Segment Reporting

We provide a broad range of real estate services.
While our chief decision-makers monitor the revenue streams by
different real estate services, operations are managed and
financial performance is evaluated on a company-wide basis.
Accordingly, all of our operations are considered by management
to be aggregated in one reportable operating segment.



| |                   
| | ------------------
| | Earnings per Share

Basic earnings per share is computed by dividing
net earnings by the weighted average number of common shares
outstanding during the period. Dilutive earnings per share is
calculated by dividing net earnings by the weighted average
number of common shares outstanding plus the assumed conversions
of potential dilutive securities. We have granted certain
options which have been treated as common share equivalents for
purposes of calculating diluted earnings per share.

38



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##### Table of Contents



AMERICAN NATIONAL FINANCIAL, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

All data, with respect to earnings per share,
dividends per share and share information, including price per
share, where applicable, in the Consolidated Financial
Statements, has been retroactively adjusted to reflect the 10%
stock dividend.

|                           |                                  |                                 |        |       |  |      |       |       |  |   |       |       | 
|-------------------------- | -------------------------------- | ------------------------------- | ------ | ----- |  | ---- | ----- | ----- |  | - | ----- | ----- | 
|                           |                                  |                                
|                           |                                  | December 31,                   
|                           |                                  |                                
|                           |                                  | 2001                            |        | 2000  |  | 1999
|                           |                                  |                                 |        |       |  |     
|                           |                                  |                                
|                           |                                  | (In thousands, except per share
|                           |                                  | data)                          
|Net earnings               |                                  | $                               | 11,264 |       |  | $    | 2,015 |       |  | $ | 5,625 |      
|                           |                                  |                                 |        |       |  |      |       |       |  |   |       |      
|                           | Weighted average basic shares    |                                 |        | 7,509 |  |      |       | 8,069 |  |   |       | 7,556 | 
|                           |                                  |                                 |        |       |  |      |       |       |  |   |       |      
|Basic earnings per share   |                                  | $                               | 1.50   |       |  | $    | .25   |       |  | $ | .74   |      
|                           |                                  |                                 |        |       |  |      |       |       |  |   |       |      
|                           | Weighted average basic shares    |                                 |        | 7,509 |  |      |       | 8,069 |  |   |       | 7,556 | 
|                           | Effect of dilutive options       |                                 |        | 727   |  |      |       |      |  |   |       | 32    | 
|                           |                                  |                                 |        |       |  |      |       |       |  |   |       |      
|                           | Weighted average dilutive shares |                                 |        | 8,236 |  |      |       | 8,069 |  |   |       | 7,588 | 
|                           |                                  |                                 |        |       |  |      |       |       |  |   |       |      
|Diluted earnings per share |                                  | $                               | 1.37   |       |  | $    | .25   |       |  | $ | .74   |      
|                           |                                  |                                 |        |       |  |      |       |       |  |   |       |      

Options to purchase 350,000 shares, 392,748
shares and 370,265 shares of the Companys common stock
were not included in the computation of diluted earnings per
share because the options exercise price was greater than
the average market price of the common shares for the years
ended December 31, 2001, 2000 and 1999, respectively.



| |                     
| | --------------------
| | Management Estimates

The preparation of financial statements in
conformity with accounting principles generally accepted in the
United States of America requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements, and the reported
amounts of revenues and expenses during the reporting period.
Actual results could differ from these estimates.



| |                          
| | -------------------------
| | Certain Reclassifications

Certain reclassifications have been made in the
2000 and 1999 Consolidated Financial Statements to conform to
the classifications used in 2001.

3.     Acquisitions

In May 1999, the Department of Insurance, State
of New York, approved the acquisition of National Title
Insurance of New York, Inc., a New York domiciled
underwriter by ATC a subsidiary of American National Financial
Inc., from Fidelity National Financial, Inc. National Title
Insurance of New York, Inc. is licensed to issue title
insurance policies in 34 states, the District of Columbia and
the U.S. Virgin Islands. The $3.25 million dollar
purchase price was paid in cash and the transaction was
completed in June 1999. While the results of operations for
National continue to increase due to agency operations the
amounts are insignificant for 2001, 2000 and 1999.

In January 2000, we completed the acquisition of
Bancserv, Inc. a California corporation located in the county of
Orange, California. Bancserv, Inc. a document company, provides
outsource services to the real estate and banking industry
through a network of qualified notaries public. The purchase
price was $1.3 million, payable $400,000 in cash and a
$900,000 promissory note subject to certain purchase price
adjustments based on the audited closing date balance sheet. The
effects of the audit resulted in a purchase

39



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##### Table of Contents



AMERICAN NATIONAL FINANCIAL, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

price adjustment of $118,000. This transaction
was accounted for as a purchase. The balance of the promissory
note at December 31, 2001 was $497,600.

In February 2000, we purchased 100% of the stock
of Pioneer, a New York corporation providing title and
escrow services in the state of New York. The purchase
price was $1.8 million, payable $360,000 in cash

40



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##### Table of Contents



AMERICAN NATIONAL FINANCIAL, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

and a $1.4 million promissory note with
interest at 6.6% per annum, to be paid in equal annual
installments over a five-year period. The balance of the
promissory note at December 31, 2001 and 2000 was
$1.1 million and $1.4 million. This transaction was
accounted for as a purchase.

In February 2000, we purchased 100% of the
membership interests of EMAC, a full service provider of release
and assignment document preparation, document retrieval and
special title assistance located in Colorado. The purchase price
was $1.9 million, $1.7 million was paid in cash,
subject to certain purchase price adjustments based on the
combined equity of EMAC and American Research Services, its
affiliate, and 64,350 shares of the our common stock. This
transaction was accounted for as a purchase. In July 2001,
based on a settlement of the original purchase price, the shares
of common stock and cash returned to the company resulted in a
goodwill reduction in the amount of $620,000 on the balance
sheet.

In September 2000, we purchased 100% of the
assets of CTICs Pima County, Arizona operations, American
Title Agency of Pima County, Inc. The purchase price was
$105,000 and paid in cash. This transaction was accounted for as
a purchase. The assets acquired represents the fair market value
of a title plant located in Tucson.

The assets acquired, including cost in excess of
net assets acquired, and liabilities assumed, in the
acquisitions of National Title Insurance of New York, Inc.,
Bancserv Inc., Pioneer Land Title Corporation, Emerald Mortgagee
Assistance Company, LLC, and the CTIC Pima County operation are
summarized in the following table:

|                                       |  |                        |        |          |  |         |       |         |  |      |       |       |  |   |       |   |  |   |      |   |  |   |        |  
|-------------------------------------- |  | ---------------------- | ------ | -------- |  | ------- | ----- | ------- |  | ---- | ----- | ----- |  | - | ----- | - |  | - | ---- | - |  | - | ------ | -
|                                       |  | National               |        | Bancserv |  | Pioneer |       | Emerald |  | Pima |       | Total
|                                       |  |                        |        |          |  |         |       |         |  |      |       |      
|                                       |  |                       
|                                       |  | (Amounts in thousands)
|Tangible assets acquired at fair value |  | $                      | 6,224  |          |  | $       | 172   |         |  | $    | 165   |       |  | $ | 392   |   |  | $ | 427  |   |  | $ | 7,380  |  
|Cost in excess of net assets acquired  |  |                        | 1,505  |          |  |         | 1,100 |         |  |      | 1,725 |       |  |   | 2,080 |   |  |   |     |   |  |   | 6,410  |  
|Liabilities assumed at fair value      |  |                        | (4,479 | )        |  |         | (90   | )       |  |      | (90   | )     |  |   | (570  | ) |  |   | (322 | ) |  |   | (5,551 | )
|Goodwill price reduction               |  |                        |       |          |  |         |      |         |  |      |      |       |  |   | (620  | ) |  |   |     |   |  |   | (620   | )
|                                       |  |                        |        |          |  |         |       |         |  |      |       |       |  |   |       |   |  |   |      |   |  |   |        |  
|Total purchase price                   |  | $                      | 3,250  |          |  | $       | 1,182 |         |  | $    | 1,800 |       |  | $ | 1,282 |   |  | $ | 105  |   |  | $ | 7,619  |  
|                                       |  |                        |        |          |  |         |       |         |  |      |       |       |  |   |       |   |  |   |      |   |  |   |        |  

4.     Property and
Equipment

Property and equipment consists of the following:

|                                          |  |              |        |      |  |   |        |  
|----------------------------------------- |  | ------------ | ------ | ---- |  | - | ------ | -
|                                          |  |             
|                                          |  | December 31,
|                                          |  |             
|                                          |  | 2001         |        | 2000
|                                          |  |              |        |     
|                                          |  |             
|                                          |  | (Amounts in 
|                                          |  | thousands)  
|Furniture, fixtures and equipment         |  | $            | 8,451  |      |  | $ | 6,720  |  
|Leasehold improvements                    |  |              | 1,866  |      |  |   | 1,722  |  
|Office building                           |  |              | 3,275  |      |  |   | 3,275  |  
|                                          |  |              |        |      |  |   |        |  
|                                          |  |              | 13,592 |      |  |   | 11,717 |  
|Accumulated depreciation and amortization |  |              | (5,978 | )    |  |   | (4,215 | )
|                                          |  |              |        |      |  |   |        |  
|                                          |  | $            | 7,614  |      |  | $ | 7,502  |  
|                                          |  |              |        |      |  |   |        |  

40



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AMERICAN NATIONAL FINANCIAL, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

5.     Investment
Securities Available for Sale

It is our practice to purchase investment grade
fixed maturity securities. The securities in our portfolio are
subject to economic conditions and normal market risks and
uncertainties.

The carrying amount and fair values of the
Companys fixed maturity at December 31, 2001 and 2000
are as follows:

|                                                 |                                   |                        |        |            |  |            |     |       |  |   |      |      |   |   |        |        | 
|------------------------------------------------ | --------------------------------- | ---------------------- | ------ | ---------- |  | ---------- | --- | ----- |  | - | ---- | ---- | - | - | ------ | ------ | 
|                                                 |                                   |                       
|                                                 |                                   | December 31, 2001     
|                                                 |                                   |                       
|                                                 |                                   |                        |        | Gross      |  | Gross      |     |      
|                                                 |                                   | Amortized              |        | Unrealized |  | Unrealized |     | Fair 
|                                                 |                                   | Cost                   |        | Gains      |  | Losses     |     | Value
|                                                 |                                   |                        |        |            |  |            |     |      
|                                                 |                                   |                       
|                                                 |                                   | (Amounts in thousands)
|Fixed maturity investments (available for sale): |                                   |                        |        |            |  |            |     |       |  |   |      |      |   |   |        |       
|                                                 | U.S. government and agencies      |                        | $      | 7,138      |  |            | $   | 47    |  |   | $    | (1   | ) |   | $      | 7,184  | 
|                                                 | States and political subdivisions |                        |        | 1,736      |  |            |     | 57    |  |   |      |     |   |   |        | 1,793  | 
|                                                 | Corporate securities              |                        |        | 13,057     |  |            |     | 140   |  |   |      | (209 | ) |   |        | 12,988 | 
|                                                 |                                   |                        |        |            |  |            |     |       |  |   |      |      |   |   |        |       
|                                                 |                                   | $                      | 21,931 |            |  | $          | 244 |       |  | $ | (210 | )    |   | $ | 21,965 |       
|                                                 |                                   |                        |        |            |  |            |     |       |  |   |      |      |   |   |        |       

|                                  |  |                        |       |            |  |            |    |       |  |   |      |   |  |   |       | 
|--------------------------------- |  | ---------------------- | ----- | ---------- |  | ---------- | -- | ----- |  | - | ---- | - |  | - | ----- | 
|                                  |  |                       
|                                  |  | December 31, 2000     
|                                  |  |                       
|                                  |  |                        |       | Gross      |  | Gross      |    |      
|                                  |  | Amortized              |       | Unrealized |  | Unrealized |    | Fair 
|                                  |  | Cost                   |       | Gains      |  | Losses     |    | Value
|                                  |  |                        |       |            |  |            |    |      
|                                  |  |                       
|                                  |  | (Amounts in thousands)
|U.S. government and agencies      |  | $                      | 1,478 |            |  | $          | 23 |       |  | $ |     |   |  | $ | 1,501 | 
|States and political subdivisions |  |                        | 7,627 |            |  |            | 27 |       |  |   | (693 | ) |  |   | 6,961 | 
|                                  |  |                        |       |            |  |            |    |       |  |   |      |   |  |   |       | 
|                                  |  | $                      | 9,105 |            |  | $          | 50 |       |  | $ | (693 | ) |  | $ | 8,462 | 
|                                  |  |                        |       |            |  |            |    |       |  |   |      |   |  |   |       | 

The change in unrealized gains (losses) on
fixed maturities for the years ended December 31, 2001,
2000 and 1999 was $677,000, ($271,000) and $0, respectively.

The following tables sets forth certain
information regarding our investment securities at
December 31, 2001. 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. Investment securities with an amortized cost of
$1.5 million and $1.7 million and a fair value of
$1.3 million and $1.2 million were callable at
December 31, 2001 and 2000, respectively:

|                                   |  |                        |        |       |  |   |        | 
|---------------------------------- |  | ---------------------- | ------ | ----- |  | - | ------ | 
|                                   |  |                       
|                                   |  | December 31, 2001     
|                                   |  |                       
|                                   |  | Amortized              |        | Fair 
|                                   |  | Cost                   |        | Value
|                                   |  |                        |        |      
|                                   |  |                       
|                                   |  | (Amounts in thousands)
|Maturity                           |  |                        |        |       |  |   |        | 
|One year or less                   |  | $                      | 2,304  |       |  | $ | 2,350  | 
|After one year through five years  |  |                        | 13,539 |       |  |   | 13,706 | 
|After five years through ten years |  |                        | 6,088  |       |  |   | 5,909  | 
|                                   |  |                        |        |       |  |   |        | 
|                                   |  | $                      | 21,931 |       |  | $ | 21,965 | 
|                                   |  |                        |        |       |  |   |        | 

41



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##### Table of Contents



AMERICAN NATIONAL FINANCIAL, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

Equity securities at December 31, 2001 and
2000 consist of investments as follows:

|                                        |  |                        |     |       |  |      |       |       |  |   |       |  |  |   |       | 
|--------------------------------------- |  | ---------------------- | --- | ----- |  | ---- | ----- | ----- |  | - | ----- |  |  | - | ----- | 
|                                        |  |                       
|                                        |  | December 31,          
|                                        |  |                       
|                                        |  |                        |     |      
|                                        |  | 2001                   |     | 2000 
|                                        |  |                        |     |      
|                                        |  |                        |     | Fair  |  |      |       | Fair 
|                                        |  | Cost                   |     | Value |  | Cost |       | Value
|                                        |  |                        |     |       |  |      |       |      
|                                        |  |                       
|                                        |  | (Amounts in thousands)
|Industrial, miscellaneous and all other |  | $                      | 656 |       |  | $    | 2,756 |       |  | $ | 1,657 |  |  | $ | 2,071 | 
|                                        |  |                        |     |       |  |      |       |       |  |   |       |  |  |   |       | 

The carrying value of the Companys
investment in equity securities is fair value. As of
December 31, 2001, gross unrealized gains and gross
unrealized losses on equity securities were $2.1 million
and $0 million, respectively. Gross unrealized gains and
gross unrealized losses on equity securities were
$414,000 million and $0 million, respectively, as of
December 31, 2000.

The change in unrealized gains (losses) on
equity securities for the years ended December 31, 2001,
2000 and 1999 was $1.7 million, $414,000 and
$0 million, respectively.

Interest and investment income, including
realized gains (losses), consist of the following:

|                          |  |                        |       |      |  |      |       |  |  |   |     | 
|------------------------- |  | ---------------------- | ----- | ---- |  | ---- | ----- |  |  | - | --- | 
|                          |  |                       
|                          |  | December 31,          
|                          |  |                       
|                          |  | 2001                   |       | 2000 |  | 1999
|                          |  |                        |       |      |  |     
|                          |  |                       
|                          |  | (Amounts in thousands)
|Cash and cash equivalents |  | $                      | 319   |      |  | $    | 222   |  |  | $ | 291 | 
|Fixed maturity securities |  |                        | 1,735 |      |  |      | 645   |  |  |   | 427 | 
|Short term investments    |  |                        | 85    |      |  |      | 72    |  |  |   | 193 | 
|Notes receivable          |  |                        | 129   |      |  |      | 108   |  |  |   | 19  | 
|                          |  |                        |       |      |  |      |       |  |  |   |     | 
|                          |  | $                      | 2,268 |      |  | $    | 1,047 |  |  | $ | 930 | 
|                          |  |                        |       |      |  |      |       |  |  |   |     | 

Net realized gains (losses) included in
interest and investment income amounted to $1.0 million,
($139,000) and $0 for the years ended December 31, 2001,
2000 and 1999, respectively. All amounts are before applicable
income taxes.

During the years ended December 31, 2001,
2000 and 1999, gross realized gains on sales of fixed maturity
securities considered available for sale were $0, $0 and $0,
respectively; and gross realized losses were $24,000, $139,000
and $0, respectively. Gross proceeds from the sale of fixed
maturity securities considered available for sale amounted to
$1.1 million, $5.1 million and $0 million during
the years ended December 31, 2001, 2000 and 1999,
respectively.

During the years ended December 31, 2001,
2000 and 1999, gross realized gains on sales of equity
securities considered available for sale were $1.0 million,
$0 and $0, respectively; and gross realized losses were $0, $0
and $0, respectively. Gross proceeds form the sale of equity
securities amounted to $2.0 million, $0 and $0 during the
years ended December 31, 2001, 2000 and 1999, respectively.

42



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##### Table of Contents



AMERICAN NATIONAL FINANCIAL, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

6.     Income
Taxes

Income taxes (benefit) for years ended
December 31, 2001, 2000 and 1999 consists of the following
(amounts in thousands):

|                |  |         |        |          |  |       |        |   |  |   |       | 
|--------------- |  | ------- | ------ | -------- |  | ----- | ------ | - |  | - | ----- | 
|                |  |        
|                |  | 2001   
|                |  |        
|                |  | Current |        | Deferred |  | Total
|                |  |         |        |          |  |      
|Federal         |  | $       | 7,932  |          |  | $     | (1,219 | ) |  | $ | 6,713 | 
|State and local |  |         | 2,108  |          |  |       | (324   | ) |  |   | 1,784 | 
|                |  |         |        |          |  |       |        |   |  |   |       | 
|                |  | $       | 10,040 |          |  | $     | (1,543 | ) |  | $ | 8,497 | 
|                |  |         |        |          |  |       |        |   |  |   |       | 

|                |  |         |       |          |  |       |        |   |  |   |       | 
|--------------- |  | ------- | ----- | -------- |  | ----- | ------ | - |  | - | ----- | 
|                |  |        
|                |  | 2000   
|                |  |        
|                |  | Current |       | Deferred |  | Total
|                |  |         |       |          |  |      
|Federal         |  | $       | 2,022 |          |  | $     | (895   | ) |  | $ | 1,127 | 
|State and local |  |         | 478   |          |  |       | (205   | ) |  |   | 273   | 
|                |  |         |       |          |  |       |        |   |  |   |       | 
|                |  | $       | 2,500 |          |  | $     | (1,100 | ) |  | $ | 1,400 | 
|                |  |         |       |          |  |       |        |   |  |   |       | 

|                |  |         |       |          |  |       |      |   |  |   |       | 
|--------------- |  | ------- | ----- | -------- |  | ----- | ---- | - |  | - | ----- | 
|                |  |        
|                |  | 1999   
|                |  |        
|                |  | Current |       | Deferred |  | Total
|                |  |         |       |          |  |      
|Federal         |  | $       | 4,024 |          |  | $     | (783 | ) |  | $ | 3,241 | 
|State and local |  |         | 854   |          |  |       | (187 | ) |  |   | 667   | 
|                |  |         |       |          |  |       |      |   |  |   |       | 
|                |  | $       | 4,878 |          |  | $     | (970 | ) |  | $ | 3,908 | 
|                |  |         |       |          |  |       |      |   |  |   |       | 

The effective tax rate for the period reported
differs from the Federal statutory income tax rate as follows:

|                                                       |  |      |      |      |  |      |      |   |  |  |      |  
|------------------------------------------------------ |  | ---- | ---- | ---- |  | ---- | ---- | - |  |  | ---- | -
|                                                       |  | 2001 |      | 2000 |  | 1999
|                                                       |  |      |      |      |  |     
|Statutory Federal income tax rate                      |  |      | 35.0 | %    |  |      | 34.0 | % |  |  | 34.0 | %
|Non-deductible expenses                                |  |      | 1.1  |      |  |      | 6.9  |   |  |  | 1.9  |  
|Amortization of cost in excess of net assets
	acquired |  |      | 0.9  |      |  |      | 4.8  |   |  |  | 1.1  |  
|State taxes, net of Federal deduction                  |  |      | 5.5  |      |  |      | 5.7  |   |  |  | 4.3  |  
|Change in valuation allowance                          |  |      | (0.3 | )    |  |      | (9.2 | ) |  |  |     |  
|Other                                                  |  |      | 0.8  |      |  |      | (1.2 | ) |  |  | (0.3 | )
|                                                       |  |      |      |      |  |      |      |   |  |  |      |  
|                                                       |  |      | 43.0 | %    |  |      | 41.0 | % |  |  | 41.0 | %
|                                                       |  |      |      |      |  |      |      |   |  |  |      |  

43



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##### Table of Contents



AMERICAN NATIONAL FINANCIAL, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

The deferred tax assets and liabilities at
December 31, 2001 consist of the following:

|                                                           |  |                        |       |              |  |   |        |  
|---------------------------------------------------------- |  | ---------------------- | ----- | ------------ |  | - | ------ | -
|                                                           |  | Deferred Tax           |       | Deferred Tax
|                                                           |  | Assets                 |       | Liabilities 
|                                                           |  |                        |       |             
|                                                           |  |                       
|                                                           |  | (Amounts in thousands)
|Excess state income tax                                    |  | $                      | 553   |              |  | $ |       |  
|Provision for claim losses in excess of statutory
	amounts |  |                        | 267   |              |  |   |       |  
|Excess book over tax provision for bad debts               |  |                        | 859   |              |  |   |       |  
|Employee benefit and vacation accruals                     |  |                        | 893   |              |  |   |       |  
|Accrued liabilities                                        |  |                        | 1,780 |              |  |   |       |  
|Other                                                      |  |                        | 78    |              |  |   |       |  
|Excess tax depreciation over book                          |  |                        | 542   |              |  |   |       |  
|Net operating loss available for carryover                 |  |                        | 1,017 |              |  |   |       |  
|Investment securities                                      |  |                        |      |              |  |   | (868   | )
|Statutory unearned premium reserve                         |  |                        |      |              |  |   | (844   | )
|                                                           |  |                        |       |              |  |   |        |  
|                                                           |  |                        | 5,989 |              |  |   | (1,712 | )
|Less: valuation allowance                                  |  |                        | (540  | )            |  |   |       |  
|                                                           |  |                        |       |              |  |   |        |  
|Total deferred taxes                                       |  | $                      | 5,449 |              |  | $ | (1,712 | )
|                                                           |  |                        |       |              |  |   |        |  

The deferred tax assets and liabilities at
December 31, 2000 consist of the following:

|                                                           |                      |                        |       |              |  |   |      |      |  
|---------------------------------------------------------- | -------------------- | ---------------------- | ----- | ------------ |  | - | ---- | ---- | -
|                                                           |                      | Deferred Tax           |       | Deferred Tax
|                                                           |                      | Assets                 |       | Liabilities 
|                                                           |                      |                        |       |             
|                                                           |                      |                       
|                                                           |                      | (Amounts in thousands)
|Excess state income tax                                    |                      | $                      | 124   |              |  | $ |     |     
|Provision for claim losses in excess of statutory
	amounts |                      |                        | 263   |              |  |   |     |     
|Excess book over tax provision for bad debts               |                      |                        | 851   |              |  |   |     |     
|Employee benefit and vacation accruals                     |                      |                        | 558   |              |  |   |     |     
|Accrued liabilities                                        |                      |                        | 1,098 |              |  |   |     |     
|Other                                                      |                      |                        | 171   |              |  |   |     |     
|Excess tax depreciation over book                          |                      |                        | 402   |              |  |   |     |     
|Net operating loss available for carryover                 |                      |                        | 996   |              |  |   |     |     
|Investment securities                                      |                      |                        | 121   |              |  |   |     |     
|Statutory unearned premium reserve                         |                      |                        |      |              |  |   | (873 | )   
|                                                           |                      |                        |       |              |  |   |      |     
|                                                           |                      |                        | 4,584 |              |  |   | (873 | )   
|Less: valuation allowance                                  |                      |                        | (529  | )            |  |   |     |     
|                                                           |                      |                        |       |              |  |   |      |     
|                                                           | Total deferred taxes |                        | $     | 4,055        |  |   | $    | (873 | )
|                                                           |                      |                        |       |              |  |   |      |     

Based upon our current and historical pre-tax
earnings, management believes it is more likely than not that
the Company will realize the benefit of its existing net
deferred tax assets. Management believes the existing net
deductible temporary differences, after considering the
valuation allowance, will reverse during periods in which we
generate net taxable income. However, there can be no assurance
that we will generate any earnings or any specific level of
continuing earnings in future years. Certain tax planning or
other strategies could be implemented, if necessary, to
supplement income from operations to fully realize recorded tax
benefits. The valuation allowance of $540,000 in 2001 and
$529,000 in 2000 relates to National, whose net operating losses
are restricted as to their availability and Santa Barbara Title
(SBT).

44



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##### Table of Contents



AMERICAN NATIONAL FINANCIAL, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

7.     Long Term
Debt

In April 1999, we completed the purchase of a
home office building located in Orange, California for
$2.6 million. We financed $2.1 million, secured by a
first trust deed are required to make monthly interest payments
at prime (4.75%) and principal payments of $4,000. As of
December 31, 2001 and 2000, the principal balance was
$1.9 million and $2.0 million, respectively. The note
matures on April 1, 2004.

Long term debt consists of the following:

|                                                                                                                                   |  |              |       |      |  |   |       |  
|---------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ----- | ---- |  | - | ----- | -
|                                                                                                                                   |  |             
|                                                                                                                                   |  | December 31,
|                                                                                                                                   |  |             
|                                                                                                                                   |  | 2001         |       | 2000
|                                                                                                                                   |  |              |       |     
|                                                                                                                                   |  |             
|                                                                                                                                   |  | (Amounts in 
|                                                                                                                                   |  | thousands)  
|Bank promissory note secured by real estate, with
	monthly principal payments of $4,000 and interest due at prime,
	due April 2004 |  | $            | 1,938 |      |  | $ | 1,991 |  
|Promissory note, unsecured, with principal and
	interest due annually at 6.56%, due February 2004                                  |  |              | 1,080 |      |  |   | 1,440 |  
|Promissory note, unsecured, with principal and
	interest due monthly at 7.5%, due January 2005                                     |  |              | 510   |      |  |   | 652   |  
|                                                                                                                                   |  |              |       |      |  |   |       |  
|                                                                                                                                   |  |              | 3,528 |      |  |   | 4,083 |  
|Less current portion of long term debt                                                                                             |  |              | (566  | )    |  |   | (555  | )
|                                                                                                                                   |  |              |       |      |  |   |       |  
|Ending balance                                                                                                                     |  | $            | 2,962 |      |  | $ | 3,528 |  
|                                                                                                                                   |  |              |       |      |  |   |       |  

Principal maturities are as follows (amounts in
thousands):

|     |  |              |       |      |  |   |       | 
|---- |  | ------------ | ----- | ---- |  | - | ----- | 
|     |  |             
|     |  | December 31,
|     |  |             
|     |  | 2001         |       | 2000
|     |  |              |       |     
|     |  |             
|     |  | (Amounts in 
|     |  | thousands)  
|2002 |  | $            | 566   |      |  | $ | 555   | 
|2003 |  |              | 578   |      |  |   | 566   | 
|2004 |  |              | 2,369 |      |  |   | 578   | 
|2005 |  |              | 15    |      |  |   | 2,369 | 
|2006 |  |              |      |      |  |   | 15    | 
|     |  |              |       |      |  |   |       | 
|     |  | $            | 3,528 |      |  | $ | 4,083 | 
|     |  |              |       |      |  |   |       | 

8.     Summary of
Reserve for Claim Losses

A summary of the reserve for claim losses follows:

|                  |                                 |              |       |      |   |   |       |     |  
|----------------- | ------------------------------- | ------------ | ----- | ---- | - | - | ----- | --- | -
|                  |                                 |             
|                  |                                 | December 31,
|                  |                                 |             
|                  |                                 | 2001         |       | 2000
|                  |                                 |              |       |     
|                  |                                 |             
|                  |                                 | (Amounts in 
|                  |                                 | thousands)  
|Beginning balance |                                 | $            | 2,431 |      |   | $ | 2,341 |    
|                  | Provision for claim losses      |              |       | 454  |   |   |       | 164 |  
|                  | Claims paid, net of recoupments |              |       | (155 | ) |   |       | (74 | )
|                  |                                 |              |       |      |   |   |       |    
|Ending balance    |                                 | $            | 2,730 |      |   | $ | 2,431 |    
|                  |                                 |              |       |      |   |   |       |    

45



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##### Table of Contents



AMERICAN NATIONAL FINANCIAL, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

9.     Shareholders
Equity



| |                     
| | --------------------
| | Capital restrictions

Underwritten title companies are subject to
certain regulations by insurance regulatory or banking
authorities, primarily relating to minimum net worth and working
capital. Minimum net worth of $400,000 and minimum working
capital of $10,000 is required for ATC. The net worth of ATC was
$33.4 million, $23.0 million and $20.5 million at
December 31, 2001, 2000 and 1999, respectively. The working
capital of ATC was $15.6 million, $7.0 million and
$3.7 million on December 31, 2001, 2000 and 1999,
respectively.

National is subject to regulations that restrict
its ability to pay dividends or make other distributions of cash
or property to its parent company without prior approval from
the Department of Insurance of the State of New York. The
maximum amount of dividends which can be paid by National to
shareholders without prior approval of the Insurance
Commissioner is subject to restrictions. No dividends, including
all dividends paid in the preceding twelve months, which exceed
10% of the outstanding capital shares can be paid without prior
approval unless after deducting dividends the Company has
surplus to policyholders at least equal to the greater of 50% of
its reinsurance reserves or 50% of the minimum capital required.
Additionally, dividends are further limited to the
Companys earned surplus. Based on this formula, National
could pay dividends to its parent of $38,400 as of
January 1, 2002.

The statutory capital and surplus of National was
$3.7 million, $3.3 million and $2.5 million as of
December 31, 2001, 2000 and 1999. The statutory earnings of
National was $617,000, $684,000 and $426,000 for the years ended
December 31, 2001, 2000 and 1999, respectively.



| |               
| | --------------
| | Stock Activity

In February 1999, we completed an Initial Public
Offering of 1,925,000 shares at $5.45 per share, resulting in
Fidelity National Financial, Inc. then owning 31.5% of the
outstanding shares and 37.0% owned by management. We received
net proceeds of approximately $8.4 million. In connection
with the offering, the underwriters exercised an option for over
allotment to purchase an additional 165,000 shares at $5.45 per
share on March 31, 1999.

Beginning in September 1999, we issued shares to
employees for cash under the Employee Stock Purchase Plan
(ESPP). Shares issued for the years ended
December 31, 2001, 2000 and 1999 were 83,107 shares,
221,041 shares and 33,545 shares, respectively. In 2001, we also
purchased 265,615 shares for the ESPP plan. See Note 10.

Beginning in December 2000, and continuing
through April 2001, we purchased 378,293 shares at a cost of
$1.4 million (an average price per share of $3.67),
pursuant to the Stock Repurchase Program approved by the Board
of Directors in September 1999, authorizing the repurchase of
550,000 shares of our common stock.

In June 2001, we purchased 894,000 shares of our
common stock from Fidelity National Financial, Inc. for
$4.9 million or $5.45 per share, which is FNFs cost.
The fair market value of our common stock on date of transaction
was $4.99 per share. After this transaction FNF owned
approximately 19.5% of our common stock.

In December 2001, the Board approved the
cancellation and retirement of 1,336,637 shares of our common
stock previously held in treasury.

10.     Employee
Benefit Plans



| |                             
| | ----------------------------
| | Employee Stock Purchase Plan

In September 1999, shareholders approved the
adoption of an Employee Stock Purchase Plan (ESPP).
Under the terms of the ESPP, the plan encourages a sense of
proprietorship on the part of the employees of American National
Financial, Inc. and our subsidiary corporations by assisting
them in making

46



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##### Table of Contents



AMERICAN NATIONAL FINANCIAL, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

regular purchases of shares of our common stock.
Our employees may contribute an amount between 5% and 15% of
their base salary and certain commissions. We contribute varying
amounts as specified in the ESPP. During the years ended
December 31, 2001, 2000 and 1999, 235,581 shares, 221,041
shares and 33,545 shares were allocated to the employees based
on their contributions, at an average price of $7.42, $2.82 and
$3.79 per share, respectively. We contributed $200,700 and
$37,200 or the equivalent of 44,574 shares and 14,875 shares for
the years ended December 31, 2001 and 2000 and zero shares
in 1999, and in accordance with the employees matching
contribution. A total of 490,167 shares have been issued by the
ESPP since the adoption of the plan.



| |            
| | -----------
| | 401(k) Plan

We offer the American National Financial, Inc.
401(k) Profit Sharing Plan, a qualified voluntary contributory
savings plan, available to substantially all employees. Eligible
employees may contribute up to 15% of their pretax annual
compensation, up to the amount allowed pursuant to the Internal
Revenue Code. We may elect to make matching contributions. We
have not made any matching contributions.



| |                                                                
| | ---------------------------------------------------------------
| | Employee and Non-Employee Director Stock
	Purchase Loan Program

In September 1999, the Companys Board of
Directors approved the adoption of the American National
Financial, Inc. Employee Stock Purchase Loan Plan
(Employee Plan) and the Non-Employee Director Stock
Purchase Loan Program (Director Program). The
purpose of the Employee Plan and Directors Program is to provide
key employees and directors with further incentive to maximize
shareholder value. We authorized an aggregate of
$2.0 million in loans. The Employee Plan and the Director
Program funds must be used to make private or open market
purchases of Company common stock through a broker-dealer
designated by the Company. All loans are full recourse and
unsecured, and will have a five-year term. Interest will accrue
on the loans at a rate of six and one quarter percent
(6 1/4%) per annum due at maturity. At December 31,
2001 and 2000, interest was paid to the Company in the amount of
$10,000 and $105,000. Loans may be prepaid any time without
penalty. Loans were made in the amount of $1.7 million to
purchase 516,347 shares of our common stock at an average
purchase price of $3.61 per share. The fair values of the note
receivable are established using current market rates. The fair
value calculated at December 31, 2001 and 2000 was
$1.7 million and $1.5 million, respectively.



| |                  
| | -----------------
| | Stock Option Plan

In June 1999, shareholders approved the adoption
of the Stock Option Plan (1999 Option Plan). Under
the terms of the 1999 Option Plan, the Company may grant stock
options to certain executives, key employees and branch managers
of the Company and its subsidiaries. The purpose of the 1999
Plan is to attract, retain and reward key employees and to
provide incentives to those persons to improve operations and
increase profits. Individuals to whom options are granted may
reduce the exercise price of such options by electing to defer a
portion of their annual bonuses which would otherwise be payable
in cash. The maximum number of shares for which options may be
granted to any one person during any one calendar year under the
1999 Plan is two hundred twenty thousand (220,000) shares. The
number of shares reserved for issuance under the 1999 Plan and
subsequent amendments is 1,952,500 shares of common stock. The
per share option price is determined at the grant date. The
option price may be less than the fair market value of the
common stock at the date of grant to reflect the application of
the optionees deferred bonus, if applicable. Options
granted under the 1999 Option Plan shall be fully vested after
three years and be exercisable in such installments and for such
periods as may be fixed at the time of grant, however, in no
event should any stock options extend for a period in excess of
10 years from the date of grant.

In August 1998, the shareholders approved the
adoption of the 1998 Incentive Stock Plan (1998 Incentive
Plan). Under the terms of the 1998 Incentive Plan, the
Company may grant incentive or

47



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##### Table of Contents



AMERICAN NATIONAL FINANCIAL, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

nonqualified stock options to certain key
employees and non-employee directors or officers. The number of
shares issuable under the 1998 Incentive Plan is 715,000 shares
at not less than 100% and 85% of fair market value on the date
of the grant for incentive options and non-qualified options,
plus an additional 220,000 shares of common stock on the date of
each annual meeting of shareholders. Officers and other key
employees of the Company or of an affiliated company are
eligible to receive incentive stock options. Officers and our
other key employees or of an affiliated company, members of the
Board and other service providers are eligible to receive
nonqualified stock options. The term and provision for the
termination of each option shall be fixed by the Board of
Directors, but no option may be exercisable more than
10 years after the date it is granted. An incentive option
granted to a person who is a 10% shareholder on the date of the
grant shall not be exercisable more than 5 years after the
date it is granted. Each option shall vest and become
exercisable in one or more installments at such time or times
and subject to such conditions, including within limitation the
achievement of specified performance goals or objectives, as
shall be determined by the Board of Directors.As of
December 31, 1998, no options had been granted under the
1998 Incentive Plan. In connection with the February 1999
Initial Public Offering, 374,044 options were granted under the
1998 Incentive Plan at an exercise price of $5.45 per share.

A summary of the Companys stock option
activity for all stock option plans are as follows:

|                           |           |        |           |                  |   |             |      |      |  |  |           |  | 
|-------------------------- | --------- | ------ | --------- | ---------------- | - | ----------- | ---- | ---- |  |  | --------- |  | 
|                           |           |        |           | Weighted Average |   |            
|                           |           | Shares |           | Exercise Price   |   | Exercisable
|                           |           |        |           |                  |   |            
|Balance, December 31, 1998 |           |        | 366,194   |                  |   | $           | 0.60 |      |  |  |           | 
|                           | Granted   |        |           | 415,657          |   |             |      | 5.45 |  |  |           |  | 
|                           | Exercised |        |           | (366,194         | ) |             |      | 0.60 |  |  |           |  | 
|                           | Cancelled |        |           | (45,392          | ) |             |      | 5.45 |  |  |           |  | 
|                           |           |        |           |                  |   |             |      |      |  |  |           | 
|Balance, December 31, 1999 |           |        | 370,265   |                  |   | $           | 5.45 |      |  |  | 125,098   | 
|                           | Granted   |        |           | 1,751,552        |   |             |      | 2.32 |  |  |           |  | 
|                           | Cancelled |        |           | (120,517         | ) |             |      | 4.17 |  |  |           |  | 
|                           |           |        |           |                  |   |             |      |      |  |  |           | 
|Balance, December 31, 2000 |           |        | 2,001,300 |                  |   | $           | 2.79 |      |  |  | 717,486   | 
|                           | Granted   |        |           | 1,049,160        |   |             |      | 4.59 |  |  |           |  | 
|                           | Exercised |        |           | (165,363         | ) |             |      | 2.23 |  |  |           |  | 
|                           | Cancelled |        |           | (165,506         | ) |             |      | 3.07 |  |  |           |  | 
|                           |           |        |           |                  |   |             |      |      |  |  |           | 
|Balance, December 31, 2001 |           |        | 2,719,591 |                  |   | $           | 3.50 |      |  |  | 1,318,898 | 
|                           |           |        |           |                  |   |             |      |      |  |  |           | 

The weighted average remaining contractual life
of the options outstanding at December 31, 2001 is
5 years.

48



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##### Table of Contents



AMERICAN NATIONAL FINANCIAL, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

The following table sets forth options
outstanding and exercisable by price range as of
December 31, 2001:

|                         |  |                     |           |                     |  |          |      |                |  |          |      |  |  |  |           |  |  |   |      | 
|------------------------ |  | ------------------- | --------- | ------------------- |  | -------- | ---- | -------------- |  | -------- | ---- |  |  |  | --------- |  |  | - | ---- | 
|                         |  |                    
|                         |  | December 31, 2001  
|                         |  |                    
|                         |  |                     |           |                    
|                         |  | Options Outstanding |           | Options Exercisable
|                         |  |                     |           |                    
|                         |  |                     |           | Weighted            |  | Weighted |      |                |  | Weighted
|                         |  | Number              |           | Average             |  | Average  |      | Number         |  | Average 
|                         |  | Outstanding         |           | Remaining           |  | Exercise |      | Exercisable    |  | Exercise
|Range of Exercise Prices |  | as of 12/21/01      |           | Contractual Life    |  | Price    |      | as of 12/31/01 |  | Price   
|                         |  |                     |           |                     |  |          |      |                |  |         
|$1.32 - 1.32             |  |                     | 297,583   |                     |  |          | 8.20 |                |  | $        | 1.32 |  |  |  | 297,583   |  |  | $ | 1.32 | 
|1.59 - 1.59              |  |                     | 279,607   |                     |  |          | 9.06 |                |  |          | 1.59 |  |  |  | 279,607   |  |  |   | 1.59 | 
|1.59 - 1.59              |  |                     | 7,921     |                     |  |          | 9.06 |                |  |          | 1.59 |  |  |  | 7,921     |  |  |   | 1.59 | 
|2.44 - 2.44              |  |                     | 726,000   |                     |  |          | 8.76 |                |  |          | 2.44 |  |  |  | 260,369   |  |  |   | 2.44 | 
|2.73 - 2.73              |  |                     | 364,100   |                     |  |          | 8.20 |                |  |          | 2.73 |  |  |  | 176,371   |  |  |   | 2.73 | 
|3.35 - 3.41              |  |                     | 50,166    |                     |  |          | 8.51 |                |  |          | 3.37 |  |  |  | 9,835     |  |  |   | 3.38 | 
|4.85 - 4.85              |  |                     | 357,000   |                     |  |          | 9.45 |                |  |          | 4.85 |  |  |  | 0         |  |  |   | 0.00 | 
|5.46 - 5.46              |  |                     | 287,214   |                     |  |          | 7.18 |                |  |          | 5.46 |  |  |  | 287,212   |  |  |   | 5.46 | 
|6.95 - 6.95              |  |                     | 330,000   |                     |  |          | 9.74 |                |  |          | 6.95 |  |  |  | 0         |  |  |   | 0.00 | 
|7.15 - 7.15              |  |                     | 20,000    |                     |  |          | 9.89 |                |  |          | 7.15 |  |  |  | 0         |  |  |   | 0.00 | 
|                         |  |                     |           |                     |  |          |      |                |  |          |      |  |  |  |           |  |  |   |      | 
|$1.32 - 7.15             |  |                     | 2,719,591 |                     |  |          | 8.70 |                |  | $        | 3.50 |  |  |  | 1,318,898 |  |  | $ | 2.70 | 
|                         |  |                     |           |                     |  |          |      |                |  |          |      |  |  |  |           |  |  |   |      | 

We have elected to follow Accounting Principles
Board Opinion No. 25, Accounting for Stock Issued to
Employees (Opinion 25) and related
Interpretations in accounting for its 1998 and 1999 Stock Option
Plan. As discussed below, in managements opinion, the
alternative fair value accounting provided for under Statement
of Accounting Standards No. 123, Accounting for Stock
Based Compensation (Statement 123) requires use
of option valuation models that were not developed for use in
valuing employee stock options. Under Opinion 25, because
the exercise price of the Companys stock options equals
the market price of the underlying stock on the date of the
grant, no compensation expense is recognized.

Pro forma information regarding net earnings per
share is required by Statement 123, and has been determined
as if we had accounted for its employee stock options under the
minimum fair value method of that Statement. The minimum fair
value for these options was estimated at the date of grant using
a Black-Scholes option pricing model with the following
weighted-average assumptions. The risk free interest rate used
for options granted during 2001, 2000 and 1999 was 4.33%, 6.28%
and 5.19%. The expected dividend yield used for 2001, 2000 and
1999 was 6.58%, 10% and 10%. The weighted average expected life
of 5 years was used for 2001, 7 years was used for
2000 and 1999. The volatility factor for 2001, 2000 and 1999 was
84%, 48% and 80%, respectively.

For purpose of pro forma disclosures, the
estimated fair value of the options is amortized into expense
over the options vesting period. Our pro forma information
for the years ended December 31, 2001, 2000 and 1999
follows (amounts in thousands, except per share data):

|                                         |  |      |        |      |  |      |       |  |  |   |       | 
|---------------------------------------- |  | ---- | ------ | ---- |  | ---- | ----- |  |  | - | ----- | 
|                                         |  | 2001 |        | 2000 |  | 1999
|                                         |  |      |        |      |  |     
|Pro forma basic and diluted net earnings |  | $    | 10,923 |      |  | $    | 1,721 |  |  | $ | 5,557 | 
|Pro forma basic earnings per share       |  | $    | 1.45   |      |  | $    | 0.21  |  |  | $ | 0.74  | 
|Pro forma diluted earnings per share     |  | $    | 1.33   |      |  | $    | 0.21  |  |  | $ | 0.73  | 

49



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##### Table of Contents



AMERICAN NATIONAL FINANCIAL, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

11.     Commitments
and Contingencies



| |           
| | ----------
| | Litigation

From time to time, we are subject to legal
proceedings associated with claims made under policies of
insurance they have issued or other services performed on behalf
of insured policyholders and other customers. Management
believes that no such actions depart from customary litigation
incidental to the business of the Company and that resolution of
all such litigation will not have a material adverse effect on
the Company.



| |               
| | --------------
| | Trust Deposits

In conducting its operations, we routinely hold
customers assets in trust, pending completion of real
estate transactions. Such amounts are maintained in segregated
bank accounts and have not been included in the accompanying
consolidated balance sheets. We have a contingent liability
relating to proper disposition of these balances for its
customers, which amounted to $283.8 million and
$91.6 million at December 31, 2001 and 2000,
respectively.



| |                     
| | --------------------
| | Compliance Reporting

The State Banking Department, State of Arizona
(State Banking Department) delivered their report of
Examination of American Title Insurance of Arizona, Inc.
(formerly known as Nations Title Insurance of Arizona, Inc.) as
of and for the three-year period ending October 31, 1998,
on March 4, 1999. The report as forwarded to the Company by
State Banking Department indicated that we may not have been in
compliance with certain State Banking Department Regulations. On
September 15, 2000, we received notice from the State
Banking Department stating the matters detailed in the Report of
Examination were complete and required no further response.



| |                                      
| | -------------------------------------
| | Deposits with Insurance
	Commissioner

ATC is required to maintain certain amounts on
deposit with the California Insurance Commissioner in order to
operate in certain counties. The amount required by the
Department of Insurance, State of California and the Department
of Insurance, State of New York, is $112,500 and $20,000 at
December 31, 2001 and 2000, respectively. Additionally,
National is required to maintain certain amounts on deposit for
compliance requirements. The amount at December 31, 2001
and 2000 is $1.7 million and $1.3 million,
respectively.



| |                 
| | ----------------
| | Operating Leases

ATC leases certain of its premises and equipment
under operating leases that expire at various dates. Several of
these agreements include escalation clauses and provide for
purchases and renewal options for periods ranging from one to
five years during 2001.

50



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##### Table of Contents



AMERICAN NATIONAL FINANCIAL, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

Future minimum operating lease payments are as
follows:

|                                              |  |              |        | 
|--------------------------------------------- |  | ------------ | ------ | 
|                                              |  | December 31,
|                                              |  | 2001        
|                                              |  |             
|                                              |  | (Amounts in 
|                                              |  | thousands)  
|2002                                          |  | $            | 4,998  | 
|2003                                          |  |              | 4,208  | 
|2004                                          |  |              | 2,501  | 
|2005                                          |  |              | 1,465  | 
|2006                                          |  |              | 580    | 
|Thereafter                                    |  |              | 78     | 
|                                              |  |              |        | 
|Total future minimum operating lease payments |  | $            | 13,830 | 
|                                              |  |              |        | 

Rent expense incurred under operating leases
during the years ended December 31, 2001, 2000 and 1999 was
$4.8 million, $4.6 million and $4.4 million,
respectively, including $0, $216,000 and $416,000 paid to an
affiliate.



| |               
| | --------------
| | Capital Leases

In 1997, ATC entered into a capital lease
agreement with FNTIC, which expires in June 2007, for three
title plants. The gross amount of title plant recorded under
affiliated capital lease is $815,000 at December 31, 2001
and 2000, respectively.

In a separate, non-affiliated transaction, ATC
entered into a capital lease agreement during 1998 to purchase a
copy of a title plant. The gross amount of the title plant,
recorded under the capital lease, is $1.4 million at
December 31, 2001 and 2000. The capital lease agreement
expires in August 2007.

Future minimum capital lease payments are as
follows:

|                                                |  |                        |       |           |  |       |       |   |  |   |       |  
|----------------------------------------------- |  | ---------------------- | ----- | --------- |  | ----- | ----- | - |  | - | ----- | -
|                                                |  | To-Non                 |       | To        |  |      
|                                                |  | Affiliate              |       | Affiliate |  | Total
|                                                |  |                        |       |           |  |      
|                                                |  |                       
|                                                |  | (Amounts in thousands)
|2002                                            |  |                        | 222   |           |  |       | 170   |   |  |   | 392   |  
|2003                                            |  |                        | 222   |           |  |       | 170   |   |  |   | 392   |  
|2004                                            |  |                        | 222   |           |  |       | 170   |   |  |   | 392   |  
|2005                                            |  |                        | 222   |           |  |       | 170   |   |  |   | 392   |  
|2006                                            |  |                        | 222   |           |  |       | 170   |   |  |   | 392   |  
|Thereafter                                      |  |                        | 204   |           |  |       | 243   |   |  |   | 447   |  
|                                                |  |                        |       |           |  |       |       |   |  |   |       |  
|Total future minimum capital lease payments     |  |                        | 1,314 |           |  |       | 1,093 |   |  |   | 2,407 |  
|Portion relating to interest                    |  |                        | (262  | )         |  |       | (269  | ) |  |   | (531  | )
|                                                |  |                        |       |           |  |       |       |   |  |   |       |  
|Present value of minimum capital lease payments |  | $                      | 1,052 |           |  | $     | 824   |   |  | $ | 1,876 |  
|                                                |  |                        |       |           |  |       |       |   |  |   |       |  

12.     Related Party
Transactions

We pay fees to affiliated underwriter for
underwriting services and administrative services under the
exclusive agency agreement with CTIC. Underwriting services are
provided for five years commencing July 1997, and subject to a
mutually agreed five year extension to the original term
expiring in 2007, for a fee of 11% of gross title insurance
premiums. Administration fees payable to FNF is 1% of gross
title insurance premiums and is cancelable with 90 days
notice.

51



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##### Table of Contents



AMERICAN NATIONAL FINANCIAL, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

ATC leases a title plant from a subsidiary of
FNF. See Note 11. Additionally, the Company reimburses
subsidiaries of FNF for expenses incurred on its behalf. Such
reimbursements aggregated $3.7 million, $3.8 million
and $3.8 million for years ended December 31, 2001,
2000 and 1999, respectively.

In June 1999, we acquired National from a
subsidiary of FNF for $3.3 million. Pursuant to the terms
of the stock purchase agreement, effective with the purchase
date, National pays FNF specific fees for certain administrative
functions performs on behalf of the Company. The fees related to
National at December 31, 2001, 2000 and 1999 was $206,500,
$108,000 and $64,000, respectively.

We provide underwriting risk in National under
this agreement with FNF only for those geographic areas which
are not covered by ATCs agency arrangements.

In June 2001, we purchased 894,000 shares of our
common stock from Fidelity National Financial, Inc. for
$4.9 million or $5.45 per share, which is FNFs cost.
The fair market value of our common stock on date of transaction
was $4.99 per share. After this transaction FNF owned
approximately 19.5% of our common stock.

52



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##### Table of Contents






Item 9.     Changes
in and Disagreements with Accountants on Accounting and
Financial Disclosure

None.




PART III






Item 10. through 13.


Within 120 days after the close of its
fiscal year, the Company intends to file with the Securities and
Exchange Commission a definitive proxy statement pursuant to
Regulation 14A of the Securities Exchange Act of 1934 as
amended, which will include the election of directors, the
report of compensation committee on annual compensation, certain
relationships and related transactions and other business.




PART IV






Item 14.     Exhibits,
Financial Statement Schedules and Reports on
Form 8-K


(a)(1) Financial Statements.The
following is a list of the Consolidated Financial Statements of
American National Financial, Inc. and its subsidiaries included
in Item 8 of Part II.



| |                                                                                                         
| | --------------------------------------------------------------------------------------------------------
| | Independent Auditors Report.                                                                           
|
| | Consolidated Balance Sheets as of
	December 31, 2001 and 2000.                                          
|
| | Consolidated Statements of Earnings for the years
	ended December 31, 2001, 2000 and 1999.              
|
| | Consolidated Statements of Comprehensive Earnings
	for the years ended December 31, 2001, 2000 and 1999.
|
| | Consolidated Statements of Shareholders
	Equity for the years ended December 31, 2001, 2000 and 1999.  
|
| | Consolidated Statements of Cash Flows for the
	years ended December 31, 2001, 2000 and 1999.            
|
| | Notes to Consolidated Financial Statements.                                                             

(a)(2) Financial Statement Schedules.The following is a list of financial statement schedules
filed as part of this annual report on Form 10-K.



| |                                                                                                                                                                                               
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Schedule V:Valuation
	and Qualifying Accounts.                                                                                                                                                
|
| | All other schedules are omitted because they are
	not applicable or not required, or because the required
	information is included in the Consolidated Financial Statements
	of notes thereto.

(a) The following exhibits are filed
herewith or are incorporated by reference.

|        |     |             |  |                                                                                                                                                                                                                                                                 
|------- | --- | ----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |     |            
|Number  |     | Description
|        |     |            
|        | 2.1 |             |  | Stock Purchase Agreement dated January 1,
	1997 by and among the Registrant, Fidelity National Financial,
	Inc. and American Title Company, together with amendment,
	incorporated by reference from Form S-1, Registration
	No. 333-62353                      
|        | 2.2 |             |  | Stock Purchase Agreement dated December 31,
	1996 by and among American Title Company, Fidelity National
	Asset Recovery Services, Inc. and Fidelity National Financial,
	Inc., incorporated by reference from Form S-1, Registration
	No. 333-62353            
|        | 2.3 |             |  | Stock Purchase Agreement dated December 31,
	1996 by and among American Title Company, Nations Title
	Insurance of Arizona, Inc. and Fidelity National Financial,
	Inc., incorporated by reference from Form S-1, Registration
	No. 333-62353                   
|        | 2.4 |             |  | Stock Purchase Agreement dated March 16,
	1998 by and among Fidelity National Title Insurance Company of
	New York, National Title Insurance of New York, Inc. and
	American Title Company, incorporated by reference from
	Form S-1, Registration No. 333-62353

53



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##### Table of Contents



|        |       |             |  |                                                                                                                                                                                                              
|------- | ----- | ----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |            
|Number  |       | Description
|        |       |            
|        | 2.5   |             |  | Stock Purchase Agreement dated August 9,
	1997 by and between Pacific Coast Title of Santa Barbara County
	and American Title Company, incorporated by reference from
	Form S-1, Registration No. 333-62353  
|        | 2.6   |             |  | Stock Exchange Agreement dated August 21,
	1998 between the Registrant and Fidelity National Financial,
	Inc, incorporated by reference from Form S-1, Registration
	No. 333-62353                           
|        | 3.1   |             |  | Amended and Restated Articles of Incorporation,
	incorporated by reference from Form S-1, Registration
	No. 333-62353                                                                                        
|        | 3.2   |             |  | Bylaws of the Registrant, as amended,
	incorporated by reference from Form S-1, Registration
	No. 333-62353                                                                                                  
|        | 4.1   |             |  | Form of Common Stock Certificate, incorporated by
	reference from Form S-1, Registration No. 333-62353,
	incorporated by reference from Form S-1, Registration
	No. 333-62353                                
|        | 10.1  |             |  | 1998 Stock Incentive Plan, together with form of
	Nonqualified Stock Option Agreement and form of Incentive Stock
	Option Agreement, incorporated by reference from Form S-1,
	Registration No. 333-62353    
|        | 10.2  |             |  | Employment Agreement between the Registrant and
	Michael C. Lowther, incorporated by reference from
	Form S-1, Registration No. 333-62353                                                                    
|        | 10.3  |             |  | Employment Agreement between the Registrant and
	Wayne D. Diaz, incorporated by reference from
	Form S-1, Registration No. 333-62353                                                                         
|        | 10.4  |             |  | Employment Agreement between the Registrant and
	Dennis R. Duffy, incorporated by reference from Form S-1,
	Registration No. 333-62353                                                                       
|        | 10.5  |             |  | Employment Agreement between the Registrant and
	Barbara Ferguson, incorporated by reference from Form S-1,
	Registration No. 333-62353                                                                      
|        | 10.6  |             |  | Issuing Agency Agreement dated July 1, 1997
	between Fidelity National Title Insurance Company and American
	Title Company, incorporated by reference from Form S-1,
	Registration No. 333-62353             
|        | 10.7  |             |  | Issuing Agency Agreement dated August 25,
	1997 between Fidelity National Title Insurance Company and Santa
	Barbara Title Company, incorporated by reference from
	Form S-1, Registration No. 333-62353     
|        | 10.8  |             |  | Credit Agreement dated August 7, 1997
	between the Registrant and Imperial Bank, incorporated by
	reference from Form S-1, Registration No. 333-62353                                                        
|        | 10.9  |             |  | Note dated August 7, 1997 of the Registrant
	in favor of Imperial Bank, incorporated by reference from
	Form S-1, Registration No. 333-62353                                                                 
|        | 10.10 |             |  | Addendum to Note dated August 7, 1997
	between the Registrant and Imperial Bank, incorporated by
	reference from Form S-1, Registration No. 333-62353                                                        
|        | 10.11 |             |  | Standard Sublease dated January 28, 1998
	between American Title Company and Fidelity National Financial,
	Inc., incorporated by reference from Form S-1, Registration
	No. 333-62353                        
|        | 10.12 |             |  | Form of Indemnification Agreement, incorporated
	by reference from Form S-1, Registration No. 333-62353                                                                                                      
|        | 10.13 |             |  | Title Plant Lease Agreement dated July 1,
	1997 between Fidelity National Title Insurance Company and
	American Title Company, incorporated by reference from
	Form S-1, Registration No. 333-62353          
|        | 10.14 |             |  | Letter of Grant dated July 1, 1997 granting
	William P. Foley, II options to purchase
	60,500 shares of common stock of the Registrant,
	incorporated by reference from Form S-1, Registration
	No. 333-62353
|        | 10.15 |             |  | Stock Purchase Agreement dated January 14,
	2000 by and between Bancserv, Inc. and American National
	Financial, Inc., incorporated by reference from Form 10-K
	filed on March 27, 2000.                    
|        | 10.16 |             |  | Stock Purchase Agreement dated February 29,
	2000 by and among American National Financial, Inc. and
	Vincent L. Prandi and Daniel A. Ferrara, incorporated
	by reference from 10-Q filed on May 15, 2000    

54



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##### Table of Contents



|        |       |             |  |                                                                                                                                                                                                                            
|------- | ----- | ----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |            
|Number  |       | Description
|        |       |            
|        | 10.17 |             |  | Membership Interest Purchase Agreement dated
	February 29, 2000 by and among American National Financial,
	Inc. and Angela Muirhead and Lawrence E. Castle,
	incorporated by reference from the 10-Q filed on May 15,
	2000
|        | 10.18 |             |  | Charter of the Audit Committee of the American
	National Financial, Inc. Board of Directors, incorporated by
	reference from the 10-Q filed on August 14, 2000                                                             
|        | 10.19 |             |  | Asset Purchase Agreement dated July 25, 2000
	by and among American National Financial, Inc. and Chicago Title
	Insurance Company, incorporated by reference from the 10-Q filed
	on November 13, 2000                     
|        | 10.20 |             |  | Employment Agreement by and between American
	National Financial, Inc. and Carl A. Strunk, as of
	August 14, 2001, incorporated by reference from the 10-Q
	filed on November 2, 2001                                      
|        | 21    |             |  | List of Subsidiaries of Registrant, incorporated
	by reference from Form S-1, Registration No. 333-62353                                                                                                                   
|        | 21.1  |             |  | American National Finance, Inc. 401(k) Profit
	Sharing Plan Adoption Agreement Adoption Agreement, incorporated
	by reference from S-8, Registration No. 333-64894 on
	July 11, 2001                                       
|        | 23.1  |             |  | KPMG Consent                                                                                                                                                                                                               

(b)Reports on Form 8-K.The
Company filed no reports on Form 8-K during the fourth
quarter ending December 31, 2001.

55



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##### Table of Contents






SIGNATURES

Pursuant to the requirements of Section 13
or 15(d) of the Securities Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.



| |                                  
| | ---------------------------------
| | AMERICAN NATIONAL FINANCIAL, INC.



| |     |                       
| | --- | ----------------------
| | By: | /s/ MICHAEL C. LOWTHER

| |                          
| | -------------------------
| |                          
| | Michael C. Lowther       
| | Chairman of the Board and
| | Chief Executive Officer  

Date: March 20, 2002

Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the Registrant and in the
capacities and on the dates indicated.

|                                             |  |                                                                                                              |  |               
|-------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------ |  | --------------
|Signature                                    |  | Title                                                                                                        |  | Date          
|                                             |  |                                                                                                              |  |               
|/s/ MICHAEL C. LOWTHERMichael C. Lowther     |  | Chief Executive Officer and Director                                                                         |  | March 20, 2002
|                                            
|/s/ WAYNE D. DIAZWayne D. Diaz               |  | President and Director                                                                                       |  | March 20, 2002
|                                            
|/s/ CARL A. STRUNKCarl A. Strunk             |  | Executive Vice President, Chief Financial Officer
	(Principal Financial and Accounting Officer) and Director |  | March 20, 2002
|                                            
|/s/ BARBARA A. FERGUSONBarbara A. Ferguson   |  | Executive Vice President and Director                                                                        |  | March 20, 2002
|                                            
|/s/ WILLIAM P. FOLEY, IIWilliam P. Foley, II |  | Director                                                                                                     |  | March 20, 2002
|                                            
|/s/ BRUCE ELIEFFBruce Elieff                 |  | Director                                                                                                     |  | March 20, 2002
|                                            
|/s/ MATTHEW K. FONGMatthew K. Fong           |  | Director                                                                                                     |  | March 20, 2002
|                                            
|/s/ BRUCE L. NELSONBruce L. Nelson           |  | Director                                                                                                     |  | March 20, 2002

56



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##### Table of Contents



INDEPENDENT AUDITORS REPORT

The Board of Directors

American National Financial, Inc.:


Under date of February 21, 2002, we reported
on the Consolidated Balance Sheets of American National
Financial, Inc. and subsidiaries as of December 31, 2001
and 2000, and the related Consolidated Statements of Earnings,
Comprehensive Earnings, Shareholders Equity and Cash Flows
for each of the years in the three-year period ended
December 31, 2001, which are included in the Annual Report
on Form 10-K. In connection with our audits of the
aforementioned consolidated financial statements, we also
audited the related financial statement schedule in the Annual
Report on Form 10-K. This financial statement schedule is
the responsibility of the Companys management. Our
responsibility is to express an opinion on this financial
statement schedule based on our audits.

In our opinion, such schedule, when considered in
relation to the basic consolidated financial statements taken as
a whole, presents fairly, in all material respects, the
information set forth therein.



| |         
| | --------
| | KPMG LLP

Los Angeles, California

March 21, 2002


57



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##### Table of Contents



SCHEDULE V

AMERICAN NATIONAL FINANCIAL, INC. AND
SUBSIDIARIES

VALUATION AND QUALIFYING ACCOUNTS

Years Ended December 31, 2001, 2000 and
1999


|                              |                                                                                    |                        |   |            |       |            |   |            |       |           |   |       |      |      |   |     |       |     |   |       |       | 
|----------------------------- | ---------------------------------------------------------------------------------- | ---------------------- | - | ---------- | ----- | ---------- | - | ---------- | ----- | --------- | - | ----- | ---- | ---- | - | --- | ----- | --- | - | ----- | ----- | 
|                              |                                                                                    |                        |   |            |       |            |   |           
|COL. A                        |                                                                                    | COL. B                 |   | COL. C     |       | COL. D     |   | COL. E    
|                              |                                                                                    |                        |   |            |       |            |   |           
|                              |                                                                                    |                        |   |            |       |            |   |           
|                              |                                                                                    |                        |   | Additions  |       |            |   |           
|                              |                                                                                    |                        |   |            |       |            |   |           
|                              |                                                                                    | Balance at             |   | Charged to |       |            |   |            |       | Balance  
|                              |                                                                                    | Beginning              |   | Costs and  |       | Other      |   | Deductions |       | at End   
|Description                   |                                                                                    | of Period              |   | Expenses   |       | (Describe) |   | (Describe) |       | of Period
|                              |                                                                                    |                        |   |            |       |            |   |            |       |          
|                              |                                                                                    |                       
|                              |                                                                                    | (Amounts in thousands)
|Year ended December 31, 2001: |                                                                                    |                        |   |            |       |            |   |            |       |           |   |       |      |      |   |     |       |     |   |      
|                              | Reserve for claim losses                                                           |                        | $ | 2,431      |       |            | $ | 504        |       |           | $ | (180  | )(4) |      | $ | 25  | (2)   |     | $ | 2,730 |      
|                              | Reserve for title and escrow losses                                                |                        |   | 836        |       |            |   | 867        |       |           |   | 539   | (2)  |      |   |    |       |     |   | 1,164 |      
|                              | Allowance on:                                                                      |                        |   |            |       |            |   |            |       |           |   |       |      |      |   |     |       |     |   |       |      
|                              |                                                                                    | Trade receivables      |   |            | 2,118 |            |   |            | 1,240 |           |   |       | (95  | )(2) |   |     | 1,252 | (1) |   |       | 2,011 | 
|                              | Amortization of cost in excess of net assets
	acquired and other intangible assets |                        |   | 1,471      |       |            |   | 551        |       |           |   |      |      |      |   |    |       |     |   | 2,022 |      
|Year ended December 31, 2000: |                                                                                    |                        |   |            |       |            |   |            |       |           |   |       |      |      |   |     |       |     |   |      
|                              | Reserve for claim losses                                                           |                        | $ | 2,341      |       |            | $ | 164        |       |           | $ | (74   | )(4) |      | $ |    |       |     | $ | 2,431 |      
|                              | Reserve for title and escrow losses                                                |                        |   | 821        |       |            |   | 10         |       |           |   | 5     | (4)  |      |   |    |       |     |   | 836   |      
|                              | Allowance on:                                                                      |                        |   |            |       |            |   |            |       |           |   |       |      |      |   |     |       |     |   |       |      
|                              |                                                                                    | Trade receivables      |   |            | 2,097 |            |   |            | 642   |           |   |       | 35   | (2)  |   |     | 656   | (1) |   |       | 2,118 | 
|                              | Amortization of cost in excess of net assets
	acquired and other intangible assets |                        |   | 959        |       |            |   | 512        |       |           |   |      |      |      |   |    |       |     |   | 1,471 |      
|Year ended December 31, 1999: |                                                                                    |                        |   |            |       |            |   |            |       |           |   |       |      |      |   |     |       |     |   |      
|                              | Reserve for claim losses                                                           |                        | $ |           |       |            | $ | (1,979     | )     |           | $ | 4,320 | (3)  |      | $ |    |       |     | $ | 2,341 |      
|                              | Reserve for title and escrow losses                                                |                        |   | 991        |       |            |   | 10         |       |           |   | 5     | (4)  |      |   | 185 | (1)   |     |   | 821   |      
|                              | Allowance on:                                                                      |                        |   |            |       |            |   |            |       |           |   |       |      |      |   |     |       |     |   |       |      
|                              |                                                                                    | Trade receivables      |   |            | 1,896 |            |   |            | 1,385 |           |   |       | 252  | (3)  |   |     | 1,436 | (1) |   |       | 2,097 | 
|                              | Amortization of cost in excess of net assets
	acquired and other intangible assets |                        |   | 609        |       |            |   | 350        |       |           |   |      |      |      |   |    |       |     |   | 959   |      



---



|    |                                                                                                                                                              
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Represents uncollectible accounts written off,
	change in reserve due to reevaluation of specific items and
	change in reserve due to sale of certain assets.
|   
|(2) | Recovery on previous accounts written off.                                                                                                                   
|   
|(3) | Reserves assumed from National acquisition in
	June 1999.                                                                                                    
|   
|(4) | Represents payments.                                                                                                                                         
|   
|(5) | Change in provision for claim loss.                                                                                                                          

S-1



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##### Table of Contents






EXHIBIT INDEX

|        |       |             |  |                                                                                                                                                                                                                                                                 
|------- | ----- | ----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |            
|Number  |       | Description
|        |       |            
|        | 2.1   |             |  | Stock Purchase Agreement dated January 1,
	1997 by and among the Registrant, Fidelity National Financial,
	Inc. and American Title Company, together with amendment,
	incorporated by reference from Form S-1, Registration
	No. 333-62353                      
|        | 2.2   |             |  | Stock Purchase Agreement dated December 31,
	1996 by and among American Title Company, Fidelity National
	Asset Recovery Services, Inc. and Fidelity National Financial,
	Inc., incorporated by reference from Form S-1, Registration
	No. 333-62353            
|        | 2.3   |             |  | Stock Purchase Agreement dated December 31,
	1996 by and among American Title Company, Nations Title
	Insurance of Arizona, Inc. and Fidelity National Financial,
	Inc., incorporated by reference from Form S-1, Registration
	No. 333-62353                   
|        | 2.4   |             |  | Stock Purchase Agreement dated March 16,
	1998 by and among Fidelity National Title Insurance Company of
	New York, National Title Insurance of New York, Inc. and
	American Title Company, incorporated by reference from
	Form S-1, Registration No. 333-62353
|        | 2.5   |             |  | Stock Purchase Agreement dated August 9,
	1997 by and between Pacific Coast Title of Santa Barbara County
	and American Title Company, incorporated by reference from
	Form S-1, Registration No. 333-62353                                                     
|        | 2.6   |             |  | Stock Exchange Agreement dated August 21,
	1998 between the Registrant and Fidelity National Financial,
	Inc, incorporated by reference from Form S-1, Registration
	No. 333-62353                                                                              
|        | 3.1   |             |  | Amended and Restated Articles of Incorporation,
	incorporated by reference from Form S-1, Registration
	No. 333-62353                                                                                                                                           
|        | 3.2   |             |  | Bylaws of the Registrant, as amended,
	incorporated by reference from Form S-1, Registration
	No. 333-62353                                                                                                                                                     
|        | 4.1   |             |  | Form of Common Stock Certificate, incorporated by
	reference from Form S-1, Registration No. 333-62353,
	incorporated by reference from Form S-1, Registration
	No. 333-62353                                                                                   
|        | 10.1  |             |  | 1998 Stock Incentive Plan, together with form of
	Nonqualified Stock Option Agreement and form of Incentive Stock
	Option Agreement, incorporated by reference from Form S-1,
	Registration No. 333-62353                                                       
|        | 10.2  |             |  | Employment Agreement between the Registrant and
	Michael C. Lowther, incorporated by reference from
	Form S-1, Registration No. 333-62353                                                                                                                       
|        | 10.3  |             |  | Employment Agreement between the Registrant and
	Wayne D. Diaz, incorporated by reference from
	Form S-1, Registration No. 333-62353                                                                                                                            
|        | 10.4  |             |  | Employment Agreement between the Registrant and
	Dennis R. Duffy, incorporated by reference from Form S-1,
	Registration No. 333-62353                                                                                                                          
|        | 10.5  |             |  | Employment Agreement between the Registrant and
	Barbara Ferguson, incorporated by reference from Form S-1,
	Registration No. 333-62353                                                                                                                         
|        | 10.6  |             |  | Issuing Agency Agreement dated July 1, 1997
	between Fidelity National Title Insurance Company and American
	Title Company, incorporated by reference from Form S-1,
	Registration No. 333-62353                                                                
|        | 10.7  |             |  | Issuing Agency Agreement dated August 25,
	1997 between Fidelity National Title Insurance Company and Santa
	Barbara Title Company, incorporated by reference from
	Form S-1, Registration No. 333-62353                                                        
|        | 10.8  |             |  | Credit Agreement dated August 7, 1997
	between the Registrant and Imperial Bank, incorporated by
	reference from Form S-1, Registration No. 333-62353                                                                                                           
|        | 10.9  |             |  | Note dated August 7, 1997 of the Registrant
	in favor of Imperial Bank, incorporated by reference from
	Form S-1, Registration No. 333-62353                                                                                                                    
|        | 10.10 |             |  | Addendum to Note dated August 7, 1997
	between the Registrant and Imperial Bank, incorporated by
	reference from Form S-1, Registration No. 333-62353                                                                                                           
|        | 10.11 |             |  | Standard Sublease dated January 28, 1998
	between American Title Company and Fidelity National Financial,
	Inc., incorporated by reference from Form S-1, Registration
	No. 333-62353                                                                           
|        | 10.12 |             |  | Form of Indemnification Agreement, incorporated
	by reference from Form S-1, Registration No. 333-62353                                                                                                                                                         



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##### Table of Contents



|        |       |             |  |                                                                                                                                                                                                                            
|------- | ----- | ----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |            
|Number  |       | Description
|        |       |            
|        | 10.13 |             |  | Title Plant Lease Agreement dated July 1,
	1997 between Fidelity National Title Insurance Company and
	American Title Company, incorporated by reference from
	Form S-1, Registration No. 333-62353                        
|        | 10.14 |             |  | Letter of Grant dated July 1, 1997 granting
	William P. Foley, II options to purchase
	60,500 shares of common stock of the Registrant,
	incorporated by reference from Form S-1, Registration
	No. 333-62353              
|        | 10.15 |             |  | Stock Purchase Agreement dated January 14,
	2000 by and between Bancserv, Inc. and American National
	Financial, Inc., incorporated by reference from Form 10-K
	filed on March 27, 2000.                                  
|        | 10.16 |             |  | Stock Purchase Agreement dated February 29,
	2000 by and among American National Financial, Inc. and
	Vincent L. Prandi and Daniel A. Ferrara, incorporated
	by reference from 10-Q filed on May 15, 2000                  
|        | 10.17 |             |  | Membership Interest Purchase Agreement dated
	February 29, 2000 by and among American National Financial,
	Inc. and Angela Muirhead and Lawrence E. Castle,
	incorporated by reference from the 10-Q filed on May 15,
	2000
|        | 10.18 |             |  | Charter of the Audit Committee of the American
	National Financial, Inc. Board of Directors, incorporated by
	reference from the 10-Q filed on August 14, 2000                                                             
|        | 10.19 |             |  | Asset Purchase Agreement dated July 25, 2000
	by and among American National Financial, Inc. and Chicago Title
	Insurance Company, incorporated by reference from the 10-Q filed
	on November 13, 2000                     
|        | 10.20 |             |  | Employment Agreement by and between American
	National Financial, Inc. and Carl A. Strunk, as of
	August 14, 2001, incorporated by reference from the 10-Q
	filed on November 2, 2001                                      
|        | 21    |             |  | List of Subsidiaries of Registrant, incorporated
	by reference from Form S-1, Registration No. 333-62353                                                                                                                   
|        | 21.1  |             |  | American National Finance, Inc. 401(k) Profit
	Sharing Plan Adoption Agreement Adoption Agreement, incorporated
	by reference from S-8, Registration No. 333-64894 on
	July 11, 2001                                       
|        | 23.1  |             |  | KPMG Consent