As of December 31, 2000, we leased office and storage space as follows:
(3) We completed the merger of our wholly owned subsidiary, ACS Systems, Inc., with and into Micro General on May 14, 1998. This transaction was accounted for as a reverse merger of Micro General into ACS, with Micro General as the surviving legal entity. The selected consolidated financial data above includes the balance sheet accounts of Micro General at December 31, 2000, 1999 and 1998 and the results of its operations for the years ended December 31, 2000 and 1999 and for the period from May 14, 1998 through December 31, 1998. As of December 31, 2000, we owned 65.7% of Micro General.
Title insurance premiums increased to $1,946.2 million in 2000 from $939.5 million in 1999. In 1999, title premiums increased 3.2% from $910.3 million in 1998. The premium increases from 1998 to 1999 were indicative of the favorable market conditions existing during that period. In 1999, refinance transactions declined from record levels in 1998 to levels consistent with historical norms due to interest rate increases caused by actions taken by the Federal Reserve Board. Increases in mortgage interest rates were partially offset by consumer confidence in the overall economy, which resulted in record home sales in 1999. As the volume of refinance transactions decreased, the market shifted, beginning in the second half of 1999 and continuing through 2000, from a refinance-driven market to a more traditional market driven by new home purchases and resales. In 2000, the decrease in real estate market activity was more than offset by the addition of the Chicago Title operations and an increase in the average fee per file. The increase in fee per file is consistent with a return to more normalized levels of refinance activity and the continuing increase in home prices, as well as increased commercial activity as we continue to grow our National Commercial Division. The addition of the Chicago Tile operations during 2000 has also impacted the mix of business between our direct and agency operations as compared with prior years.
realized losses. Interest and investment income in 1999 was $32.0 million, compared with $44.5 million in 1998, a decrease of $12.5 million, or 28.0%. Average invested assets, excluding real estate, increased 13.4% to $547.4 million, from $482.5 million in 1998. The tax equivalent yield in 1999, excluding net realized losses, was 6.2%. The decrease in investment income in 1999 from 1998 is the result of net realized losses in 1999 of $76, compared with net realized gains in 1998 of $17.2 million, offset by an increase in interest and dividend income generated by the increased invested asset base and interest rate increases during the year. Included in 1998 net realized gains is a gain from the conversion of our investment in Data Tree Corporation of approximately $9.7 million.
Other operating expenses consist primarily of facilities expenses, title plant maintenance, premium taxes (which insurance underwriters are required to pay on title premiums in lieu of franchise and other state taxes), postage and courier services, computer services (including personnel costs associated with information technology support), professional services, advertising expenses, general insurance, depreciation and trade and notes receivable allowances. We continue to be committed to cost control measures. In response to market
The following describes the significant accounting policies of Fidelity National Financial, Inc. and its subsidiaries (collectively, the "Company") which have been followed in preparing the accompanying Consolidated Financial Statements.
Class B Certificates approximates fair value at December 31, 1999 since the interest rate paid on the Class A and Class B Certificates approximates market rates.
Based upon the Company's current and historical pretax earnings, management believes it is more likely than not that the Company will realize the benefit of its existing deferred tax assets, net of the recorded valuation allowance. Management believes the existing net deductible temporary differences will reverse during periods in which the Company generates net taxable income. However, there can be no assurance that the Company 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.
business, regulating trade practices, licensing agents, approving policy forms, accounting principles, financial practices, establishing reserve and capital and surplus as regards policyholders ("capital and surplus") requirements, defining suitable investments for reserves and 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 and will result in changes to the accounting policies that insurance enterprises use to prepare their statutory financial statements commencing in 2001. The Company has evaluated the impact of these rules and believes that the rules do not have a material effect on the statutory capital and surplus of its insurance subsidiaries.
Transactions under all stock option plans, including stock options granted by the Company's Board of Directors which are outside of the Company's stock option plans, are as follows:
The Company generates a significant amount of title insurance premiums in California and Texas. In 2000, on an unaudited pro forma basis, assuming the Chicago Title merger had been consummated on January 1, 2000, the Company generated 21.4% and 15.5% of its total title premiums in California and Texas, respectively. In 1999 and 1998 California and Texas accounted for 30.8% and 19.1% and 33.1% and 19.6% of total title premiums, respectively.
Emerging Issues Task Force No. 99-20, "Recognition of Interest Income and Impairment on Purchased and Retained Beneficial Interests in Securitized Financial Assets", ("EITF 99-20") sets forth the rules for recognizing interest income on all credit-sensitive mortgage and asset-backed securities and certain prepayment-sensitive securities including agency Interest-only strips, whether purchased or retained in securitization, and determining when these securities must be written down to fair value because of impairment. EITF 99-20 is effective for all fiscal quarters beginning after March 15, 2001. Early adoption is permitted. The Company has decided not to early adopt EITF 99-20. Application of provisions of the EITF are to be adopted prospectively. Adoption of EITF 99-20 will require impairments to the valuation of residual interest in securitizations to be recorded as a reduction to the carrying value of the residual interests through a charge to earnings. The initial potential impact of adoption would be a charge to earnings of approximately $3.2 million in 2001.