Fidelity National Financial Inc

NYSE:FNF

Earnings Call Transcript 2021-Q1

[Operator]

Good morning, ladies and gentlemen, and welcome to the FNF 2021 First Quarter Earnings Call. During today’s presentation all parties will be in a listen-only mode. Following the presentation, the conference will be opened for questions with instructions to follow at that time. As a reminder, this conference call is being recorded.

I would now like to turn the call over to Jamie Lillis, Investor Relations for FNF. Please go ahead, sir.

[Jamie Lillis, Investor Relations]

Thank you, operator. And good morning, everyone. Thank you for joining our first quarter 2021 earnings conference call. Joining me today is our CEO, Randy Quirk; President, Mike Nolan; CFO, Tony Park; and F&G's CEO, Chris Blunt.

We'll begin today with a brief strategic overview from Randy, Mike will review the Title business, Chris will review F&G, and Tony will finish with a review of the financial highlights. We'll then open the call for your questions and finish with some concluding remarks from Randy.

But before we begin, I would like to remind you that this conference call may contain forward-looking statements that involve a number of risks and uncertainties, in particular, the COVID-19 pandemic. There is a significant uncertainty about the duration and extent of the impact of this pandemic. Additionally, statements that are not historical facts, including statements about our expectations, hopes, intentions or strategies regarding the future are forward-looking statements. Forward-looking statements are based on management's beliefs as well as assumptions made by and information currently available to management at the time of this call. Because such statements are based on expectations as to future financial and operating results and are not statements of fact, actual results may differ materially from those projected. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

The risks and uncertainties, which forward-looking statements are subject to include, but are not limited to, the risks and other factors detailed in our press release dated yesterday and in the statement regarding forward-looking information, risk factors and other sections of the company's Form 10-K and other filings with the SEC. This conference call will be available for replay via webcast at our website at fnf.com. It will also be available through phone replay beginning at 3:00 p.m. Eastern Time today through May 14. The replay number is [phone] and the access code is 13718683.

Let me now turn the call over to our CEO, Randy.

[Randy Quirk, Chief Executive Officer]

Thank you, Jamie. I would like to start by thanking our employees for their efforts in helping FNF achieve industry-leading results to start the year. Our team continued to perform at a high level despite the challenging environment that we have all endured as they kept our operations running smoothly, while maintaining a steadfast-focus on our customers.

In our Title segment, we achieved record first quarter results generating adjusted pre tax title earnings of $512 million, compared to $279 million in the year ago quarter, an a 19.9% adjusted pre tax title margin, compared with 14.4% in the first quarter of 2020.

We also continue to invest in technology, as we roll out new applications which enhance the user experience efficiency and safety of the Title and closing process, while leveraging our unmatched national scale. Mike, will go into more detail on this in a minute.

Turning to F&G, we continue to execute on our growth strategy with strong top line growth and bottom line profitability during the quarter. Fixed indexed annuity sales for the quarter were at record levels and growth was further fueled by our momentum in the bank and broker dealer channel, where we are gaining significant traction within the first year of launch.

As a result of our asset growth and disciplined approach to managing net investment spread, we delivered strong earnings during the first quarter, which Chris will discuss further in a few minutes.

The credit rating upgrades as a result of the acquisition have enabled us to actively pursue expansion into institutional products, such as the pension risk transfer market, which will be a significant or strategic focus this year.

With the strong growth opportunities that we see, additional capital will be necessary to realize F&Gs full potential. However, our current plan includes utilizing a third-party reinsurance strategy to provide that necessary growth capital.

The plan also includes an expected return of capital of $150 million annually from F&G to FNF or roughly 6% of our original investment beginning in 2022. We believe this is a meaningful return on capital and a sustainable long term.

Looking forward, we remain committed to long term value creation for our shareholders for our thoughtful capital allocation program, while also focusing on supporting the future growth of our business.

Yesterday we announced a quarterly cash dividend of $0.36 per share, and at the end of 2020, we announced a share buyback program of $500 million. During the first quarter we purchased 2.8 million shares for $112 million at an average price of 39.95 per share. And since announcing the buyback plan, we have purchased 6.9 million shares for $264 million at an average price of 38.28 per share.

Let me now turn the call over to Mike Nolan to discuss the Title Insurance business in more detail.

[Mike Nolan, President]

Thank you, Randy. Randy touched upon our record first quarter results as we continue to benefit from low interest rates, driving strong origination demand and the continued rebound in commercial real estate activity.

For the first quarter we generated adjusted pre tax Title earnings of $512 million, an 84% increase over the first quarter of 2020. Our adjusted pre tax Title margin was 19.9%, a 550 basis point increase over the prior year quarter. With a 58% increase in direct orders closed, driven by a 103% increase in daily refinance orders closed, a 21% increase in daily purchase orders closed and a 12% increase in total commercial orders closed.

Total commercial revenue was $257 million, compared with the year ago quarter of $245 million due to the 12% increase in closed orders, while total commercial fee per file is down slightly compared to the year ago quarter.

For the first quarter, total orders opened averaged 12,600 per day, with January at 13,500, February at 13,300 and March at 11,400. For April, total orders opened were over 10,700 per day as we continue to see strong demand in purchase activity, while we have begun to see some decline in the refinance market compared to last year's robust levels.

Daily purchase orders open were up 18% in the quarter versus the prior year. For April, daily purchase orders opened were up 90% versus the prior year. Refinance orders opened increased by 15% on a daily basis versus the first quarter of 2020. For April daily refinance orders opened were down 23% versus the prior year.

Lastly, total commercial orders opened per day increased by 12% over the first quarter of 2020. Commercial opened orders per day remained strong compared to the fourth quarter and to the year ago first quarter.

For April, total commercial orders opened per day were up 72% over April of 2020. We remain optimistic that the order volumes we have seen over the last several quarters will drive strong commercial performance in 2021.

We are also pleased with the ongoing rollout of our strategic technology initiatives that improve the production and delivery of our core products and services and better the overall transaction experience of home buyers and sellers, borrowers and real estate professionals.

Our proprietary title automation technology and the engines that search, collect and process data remain at the core of our operations. Our digital inHere experience platform continues to be deployed and has been well received by our expert mobile, escrow and settlement employees, consumers and clients.

Let me now turn the call over to Chris Blunt to review F&Gs first quarter highlights.

[Chris Blunt, Chief Executive Officer, F&G]

Thanks, Mike. The first quarter picked up a great start to 2021 with record sales levels. Our fixed indexed annuity or FIA sales in the first quarter were $1 billion, up 11% from the sequential quarter.

Total annuity sales of $1.6 billion in the first quarter were up 16% from the sequential quarter. We continue to see significant growth ahead, driven by strong momentum in our primary independent agent channel and traction in new channels.

We're now three quarters into our financial institutions channel launch and continue to be thrilled with the results. The first quarter total annuity results include $410 million from our newest channel, and we expect to comfortably exceed our $1 billion goal for 2021.

With these strong sales results, we grew average assets under management or AAUM to $29 billion, driven by approximately $1.1 billion of net new business flows in the first quarter. Our spread results continue to track in line with historical trends, demonstrating our continued pricing discipline and active in-force management to achieve targeted spread.

Total product net investment spread was 255 basis points in the quarter, and FIA net investment spread was 298 basis points. Adjusted net earnings for the first quarter were $78 million. Strong earnings were driven by steady spread results and AAUM growth.

NET favorable items in the period were $12 million, primarily as a result of favorable mortality and investment income on CLO redemptions held at a discount to par.

Adjusted net earnings, excluding notable items were $66 million, up from $60 million in the fourth quarter, which included $4 million of higher strategic spend for faster than expected launch into new channels.

Turning briefly to the investment portfolio. As of quarter end, the portfolio's net unrealized gain position remained strong at $1.1 billion, and there were no credit related impairments in the quarter. In summary, we continue to execute on our plan coming out of the FNF acquisition and we remain confident in our future prospects.

With that, I will now turn the call over to Tony Park to review FNFs first quarter financial highlights.

[Tony Park, Chief Financial Officer]

Thank you, Chris. We generated $3.1 billion in total revenue in the first quarter, with the Title segment producing $2.5 billion, F&G producing $539 million and the corporate segment generating $42 million.

First quarter net earnings were $605 million, which includes net recognized gains of $43 million versus net recognized loss of the $320 million in the first quarter of 2020. The net recognized gains and losses in each period are primarily due to mark-to-market accounting treatment of equity and preferred stock securities. Whether the securities were disposed of in the quarter or continue to be held in our investment portfolio. Excluding net recognized gains and losses, our total revenue was $3.1 billion as compared with $1.9 billion in the first quarter of 2020.

Adjusted net earnings from continuing operations were $455 million, or $1.56 per diluted share. The Title segment contributed $395 million. F&G contributed $78 million and the corporate and other segment had an adjusted net loss of $18 million.

Excluding net recognized losses of $59 million, our Title segment generated $2.6 billion in total revenue for the first quarter, compared with $1.9 billion in the first quarter of 2020.

Direct premiums increased by 37% versus the first quarter of 2020. Agency revenue grew by 45% and escrow title-related and other fees increased by 22% versus the prior year.

Personnel costs increased by 18%, and other operating expenses increased by 7%. All in, the Title business generated a 90.9% adjusted pre tax title margin, representing a 550 basis point increase versus the first quarter of 2020.

Interest income in the Title and Corporate segments of $29 million declined $24 million, as compared with the prior year quarter due to reduction of short term interest rates on our corporate cash balances, and our 1031 exchange business. FNF debt outstanding was $2.7 billion on March 31 for a debt to total capital ratio of 24.6%.

Our title claims paid a $46 million were $35 million lower than our provision of $81 million for the quarter. The carried reserve for title claim losses is currently $87 million, or 5.7% above the actuary central estimate. We continue to provide for title claims at 4.5% of total title premiums.

Finally, our Title and Corporate investment portfolio totaled $5.9 billion at March 31. Included in the $5.9 billion, our fixed maturity and preferred securities of $2.3 billion with an average duration of 2.9 years and an average rating of 8.2 [ph]

Equity securities of $1.3 billion, short term and other investments of $300 million and cash of $2 billion. We ended the quarter with just over $1.1 billion in cash and short term liquid investments at the holding company level.

Let me now turn the call back to our operator to allow for any questions.

[Operator]

Thank you. Ladies and gentlemen at this time we will be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of John Campbell with Stephens. Please proceed with your question.

[John Campbell, Stephens]

Hey. Guys, good morning. Congrats on a great quarter.

[Randy Quirk, Chief Executive Officer]

Hey, thanks, John. Good morning.

[John Campbell, Stephens]

On the centralized refi channel, I just want to touch on that real fast. If you guys can maybe just talk to, you know, maybe the percent of refi orders running through that channel now and then just to kind of directionally how the margins have looked in the channel over the last couple quarters?

[Mike Nolan, President]

Sure, John, it's Mike. Generally, ServiceLink has about you know, 25% to 30% of our open refi volume, it can move around depending on the month. But that's a pretty good number over time. And the first quarter margins were 36%, which is really strong margin, obviously, in the centralized refi. channel, I think that was up against 33% or so, yeah, 30% in the prior year, and you know, we've had nice revenue growth there, I think the revenues up 81%, quarter-over-quarter. So pleased with what we've seen on the ServiceLink side.

[Randy Quirk, Chief Executive Officer]

And 34% in the fourth quarter of 2020. So pretty consistent. Yeah, thanks.

[John Campbell, Stephens]

Okay, that's helpful. And then as we think about, you know, the prospects of refi, maybe lightening up a little bit here, next couple quarters. How easy is it to protect that type of margin on the way down?

[Mike Nolan, President]

Well, you know, John, we'll do what we always do, as we see those volumes come out, particularly in refi, we'll have to adjust our expenses accordingly, you know, whether you can maintain a 36% margin is really a function of just how far it's falling off. But we're pretty confident that we can manage the expenses as those orders fall off, if they do.

[John Campbell, Stephens]

Okay, it makes sense. And then the $1.1 billion of cash at the holding company level, that seems like that's way above what you guys typically carry. Any particular reason that's such a high level and any thoughts about what you might do with that over the next couple of quarters?

[Tony Park, Chief Financial Officer]

Yeah, John, this is, Tony. It's a good question. And you're right, when you're generating the kind of cash flow that we are, it does accumulate. We started the quarter at about a $1 billion. We upstream from both regulated and unregulated subs about $400 million. We spent $107 million on our common dividend, about $30 million in interest expense. And as we mentioned earlier, $112 million in buybacks, so we landed a little over $1.1 billion at the end of Q1.

You know, we'll look for various uses as we work our way through the year. Obviously, our dividend is very important to us. And that'll run us little over $400 million for the course of 2021, we have about $80 million in interest expense obligations throughout the year.

We have another roughly - we're about halfway through our commitment of $500 million in buybacks. So we have about $250 million left over the course of really into the third quarter to exhaust that commitment. And then the board will have to take a look at where we stand in terms of the authorization, but my expectation would, would be that they would strongly consider re-upping on the buyback if we continue to sit on large volume of cash.

As I would expect, we do, I mean, we're going to have a strong cash flow year, I believe, again, similar to what we did last year and the year before, probably well north of a $1 billion in cash flowing up to parent. So we'll see where we stand.

I think you heard in Randy's comments, thoughts around F&G, we believe now it won't start until 2022. But we do believe that we'll be getting a return of capital from F&G based on our expectations and strategies there. So that'll just add to the corporate coffers in terms of cash flowing up to the parent.

Now we may provide some leverage, they have room to borrow on F&Gs balance sheet, so we may provide some intercompany leverage to them to the tune of maybe $350 million. So that can be a use and of course, M&A opportunities that show up on the Title side, we're always looking some of those show up where we buy them within the Title subs. And some of them use parent company cash. So I know kind of a long-winded explanation. But that's where we stand. And of course, it's a good problem to have a $1 billion plus in parent company cash.

[John Campbell, Stephens]

Yeah, undoubtedly. That’s [ph] rich man's problem. So that's a good place to be for sure. If I could squeeze in maybe one more here. And I'm guessing this has fallen off probably a pretty good bit over the last call it, two years. But how big is that 1031 exchange business now, how much you guys generating out of that now?

[Randy Quirk, Chief Executive Officer]

I don't have that number right in front of me.

[Tony Park, Chief Financial Officer]

Yeah. I do have on the interest side, which is, I would say the biggest part of it, it's fallen off substantially. We were running, call it, almost $19 million a quarter in interest income in our 1031 exchange business. And now it's running $4 million on a quarterly basis. So we've already seen that. In fact, we've seen that over the last several quarters, I think our net spread there is something like, you know, 33 basis points, which is better than short term money right now. But it's well off the almost 200 basis points that we were earning, you know, back up, you know, before the Fed made those adjustments.

In terms of falling off from a business standpoint, that hasn't happened at all. I mean, we're between what $4 million and $5 billion in balance…

[Randy Quirk, Chief Executive Officer]

Yeah, we're actually a little over $5 billion, actually at record balance levels, John and record transactional levels. But I did pull up a number while – while Tony was speaking and, you know, because of the change in rates, even though we have record transaction levels, as I've said and balances, our revenue, first quarter over first quarter last year is down $9 million from 22, last year to 13 this year. And if you went back one more year, you know, there'll be another substantial fall off because this has been kind of a two year falling knife, if you will, around the rates.

[John Campbell, Stephens]

Yeah, makes sense. And I guess, we'll have to wait and see what the Biden administration does with 1031 exchange, but $4 million a quarter seems like it's pretty bearable either way it goes. Okay. Thanks, guys

[Operator]

Our next question comes from the line of Mark DeVries with Barclays. Please proceed with your question.

[Mark DeVries, Barclays]

Yeah, I had a question about the implications of you know, the really robust home price appreciation we've been seeing for kind of average revenue per order. Is it still right to assume that roughly 50% of that gets kind of passed on. So if we've had, you know, 12% HPA over the last year that you've got a nice, let's call it 6% kind of tailwind to average revenue per order, kind of just ignoring the impact of mix?

[Tony Park, Chief Financial Officer]

Yeah, I think that's fair, Mark, I mean, and 50% or 60% that is kind of a staggered scale. So it's, you know, it's a little, I guess you earn more on a $200,000 home as a percentage than you do on a $300,000. So it's kind of a gradual increase. But yeah, we certainly benefit from home price appreciation. I did some rough numbers and on the purchase - the refi side, has been fairly consistent for a long period of time at roughly $1,000 in order, title and closing.

On the purchase side, though, I did some rough numbers, I think it was March to March or April to April. And it looked to me like we've seen about a 14% increase in average fee per file. Now, some of that may be geography and deal size. But some of that certainly is going to be just home price appreciation.

[Mark DeVries, Barclays]

Okay, that's helpful. And then can you just give us some color on what you're seeing in your commercial pipeline, kind of, you know, deal size, kind of diversity of transactions we're seeing and how that shaping up?

[Mike Nolan, President]

Sure, Mark, it's Mike. And you know, as I said, in the opener, we're very optimistic on commercial, a couple of data points in the first quarter, our average open orders per day were over 1000, you know, total commercial orders. We've never done that before. So that's a record. April was also over 1000. So that just gives you an idea that sort of the transactional velocity we're seeing.

We've also seen a good growth in our national orders in the first quarter up, you know, high single digits, both to the fourth quarter last year and the first quarter last year. So that's very encouraging. And I would say our national commercial managers are reporting an optimistic that we're seeing some bigger transactions coming back into play, some multi sites. So I think that'll bode well as we get into the second and third quarters.

Kind of from an asset class standpoint, it's pretty similar to what we've talked about before, still seeing strength and, you know, multifamily and industrial. Those are probably, you know, the consistent, strong asset classes across, you know, the past quarters. Energy, gaming, you know, kind of in and out, but very good when we have it.

And I think, you know, health and medical is another area that that's a good segment. And I think people are optimistic that, you know, we might see some, some improvement in some of the segments that have lagged more like retail and hospitality as we move into the year, and kind of on a geographic basis, all markets are improving, and we're even seeing, you know, in New York, where we've kind of had that that is one of the tougher markets given the shutdowns there and other things, seen a nice rebound there. And I think as the economy further opens up, it bodes very well for commercial.

[Mark DeVries, Barclays]

Okay. And how are those commercial margins coming in relative to your average total margins?

[Mike Nolan, President]

First quarter, it looks like commercial margins were for a national operation, so not our total commercial, because that's kind of embedded. We were at 26% and our direct operations, which include mobile commercial, we're just under 29%. So pretty similar. I think those national margins will kind of come up as we go through the year and we close more, you know, hopefully larger transactions and just more transactions overall.

[Mark DeVries, Barclays]

Okay, great. Thank you.

[Operator]

Our next question comes from the line of Andrew Kukhnin [ph] with Credit Suisse. Please proceed with your question.

[Unidentified Analyst]

Hey, good afternoon. So just following up on the earlier question about capital deployment, I think in the past, we've talked about fidelity national being able to roll - run one hold – at holdco and unencumbered with up to, you know, as low as $150 million of cash.

So the question is, where is a good place for it to be I mean, you know, what you were talking about being at billion on e with a lot of cash flow coming up to the holdco. You know, what's kind of a comfortable area where you'd like to be.

And perhaps you could talk about some of the specific M&A opportunities that you might be seeing out there right now.

[Tony Park, Chief Financial Officer]

Just on the comfort level, and in cash, $150 million, is probably adequate only because we do expect, you know, recurring regular dividends up from our subs. Now, if we entered a period of time where you know, the market were a little more challenging, then you'd probably want to be sitting on little more of that. You know, we have to be cognizant of that, as it comes due most of our debts been extended out and is frankly, pretty cheap.

But we do have I think, $400 million of debt coming due in September of 2022. So that's something that's - it's in the back of the mind a little bit. But yeah, I mean, it is a good problem to have to be flush with cash at this point. I think, though, the buyback is you know, is second only maybe to the dividend the buyback is very prominent. If your guys comment a little bit on…

[Randy Quirk, Chief Executive Officer]

I would just say, this is this is Randy, we probably have 1520 potential acquisitions around the country on the board that we're looking at relative to the agent - agency side of our business, some small, maybe some escrow companies, and then some medium to larger opportunities.

But we always have those in the flow and work those pretty regularly. We don't know which ones are going to come to fruition yet. But we stay and play with that on a regular basis to kind of fill out our footprint, which is pretty extensive, but there's still more opportunities. We got two or three that are on the board that looked like that they might get to conclusion.

We have our real estate technology companies. We're always looking at maybe adding to our menu of services. In the lead generation business, the CRM business. So we were staying in play, we just need to get to the - to the right deals, that makes sense, and then will execute.

[Unidentified Analyst]

I see. So it sounds like there are some fields that could absorb the bulk of that - that cash at the holdco no?

[Randy Quirk, Chief Executive Officer]

Well, I would say that these are not large, large deals, and they take some time. And, you know, we pass on many, and then we move on others. But I know if Tony might talk about how that all adds up. But, they are there- for the most part, midsize acquisitions.

[Tony Park, Chief Financial Officer]

I can say $100 to $300 million, maybe on Title company acquisitions, I don't think it would be anything more than that.

[Unidentified Analyst]

Got it. And then just a quick follow up on that, you know, really solid answer to the commercial questions. So, I mean, with closed orders up 12% in the quarter, open orders of 10%. It kind of - the read through would be that, it could be that or even better as we go through the year, was that the right read on your earlier response?

[Randy Quirk, Chief Executive Officer]

Well, in terms of that being the trend for future quarters…

[Unidentified Analyst]

Yeah…

[Randy Quirk, Chief Executive Officer]

Open - and I don't know that I'm saying that, Andrew, because you know, you have more volatility really in commercial order flow quarter to quarter. But we are seeing record levels of commercial orders right now. And that really bodes well for I think closings as we go through the next the next few quarters.

And also encouraged by the improvement in orders in the National operations, which, you know, probably a little bit more of the brunt of the fall off in the pandemic last year. And just as a maybe a reminder, we have 21 National commercial offices, and they generate about 60% of the total revenue in commercial in the company. So they're very, very important. And then, you know, by 40% is done through our local distributed footprint. That's also handling residential refinance and purchase transactions.

[Unidentified Analyst]

Got it. And just one, one last one for Chris, the MYGA [ph] business at, you know, $460 million in retail value, I think that was fourfold versus last year in the same quarter. And it sounds like it's these new channels. But maybe Chris could give a little color on, you know, has that number kind of leveled out? Do you think it could grow a lot? And what's the competitive landscape? Are you getting good returns in that business?

[Chris Blunt, Chief Executive Officer, F&G]

Yeah. All great questions. So yeah, the business has been quite steady. As you know, as its core product for banks in particular, unlike the independent agent channel, where we are always quite competitive, but it was, you know, much more of an opportunistic are secondary product for that channel. So I do think we're going to continue to see growth there.

We do like the returns that we're getting, obviously, it's not the same margin that we get on FIA sales, but what we're really pleased with is where we're selling fixed annuities we are getting the flow through and also selling indexed annuity.

So it is a bit of a door opener, it's a very easy thing. It's an excuse for new producers to get licensed with your company learn the F&G stories. So what we're most pleased with is that is then translating into the cross sale and getting them interested in our FIA products. So we feel really, really good about the direction of the channel right now.

And the other is just banks are drowning in deposits. I mean, you probably read this everywhere, but it's the numbers are just astronomical, and they don't have any place to put the money. And you know, annuity revenues have become a meaningful source of revenue for the banks. So they're not only not fighting it, they're quite supportive of us selling fixed annuities through their channels.

[Unidentified Analyst]

Thanks, Chris.

[Operator]

[Operator Instructions] Our next question comes from the line of Bose George with KBW. Please proceed with your question.

[Bose George, KBW]

Good afternoon…

[Randy Quirk, Chief Executive Officer]

Hey, Borse…

[Bose George, KBW]

So first, on the margin side, what was the margin on the agents [ph] channel in the quarter?

[Randy Quirk, Chief Executive Officer]

The agency margin for the quarter was 10%, which is what might be the best quarter we've ever had or right there with the best quarter we've added in terms of terms of agency that compares up against 7.9% in the year. Actually, the fourth quarter was 10.4%. So we're just down from the fourth quarter, but still a really strong, really strong margin.

[Tony Park, Chief Financial Officer]

And I think fourth quarter was a record at 10 [ph]

[Bose George, KBW]

Switching to [indiscernible] In terms of the operating earnings this quarter, should we just sort of pull out that this $12 million of you have one time items and is that kind of a reasonable run rate?

[Tony Park, Chief Financial Officer]

Yeah, I probably say maybe pull out half of it. And the reason I say that is, we've had very consistent mortality gains in our SPIA [ph] book or immediate annuity book. It's a very, you say it in a polite way, it's an old group of policies, so average ages in the 80s. So there's more upside than downside there, so that that's core. Clearly we saw some elevated mortality gains, and I suspect we're doing the analysis, I suspect it's sadly COVID related.

So I think if you look back over time, we've averaged probably $6 million a quarter last year of positive gain there. This one was 16. So, you know, if you said the 66 versus the 78, it's probably somewhere in between the two.

[Bose George, KBW]

That's helpful. Thanks. And then let's see, just one follow up on the question about the 1031. In terms of transactions, commercial transaction, you guys, like if it's a 1031 transaction that's happened, do you know what percentage that is of your transactions or when it takes place you don't necessarily know if it's a 1031 or not, or they're just any color put, put the percentage of that volume as a total commercial volume?

[Randy Quirk, Chief Executive Officer]

I don't think we have that number. Tony, I just don't think we have that, I don't either. I mean, not every 1031 exchange is a commercial. No, there's a lot of residential actually 1031s. I think we've also learned just looking at the, you know, the proposed tax policy, which certainly isn't policy yet. At least I learned that a lot of our transactions are actually well below $500,000 in proceeds not - I mean, I don't know how much of the gain is included in that. But the fact that 500,000 is proceeds, you know, the gain is lower than that. And so there's really a lot that I guess would be un-impacted by policy change, right.

[Bose George, KBW]

Okay, that's helpful. Okay, great. Thanks a lot, guys.

[Randy Quirk, Chief Executive Officer]

Thanks, Bose.

[Operator]

There are no further questions in the queue. I'd like to hand the call back to Randy Quirk for closing remarks.

[Randy Quirk, Chief Executive Officer]

Thank you. We are very pleased with our first quarter Title results. As the year is off to a great start, our team continues to execute delivering industry leading performance. In addition to our title results, F&Gs strong results, solid investment portfolio and growth initiatives remain on track. And we look forward to their further execution on these initiatives in 2021.

Lastly, our capital allocation priorities remain focused on deploying capital in a way that best maximize shareholder value through our quarterly dividend, share repurchases and continued investment in our business.

We look forward to speaking with you and updating you on our second quarter earnings call. Thank you.

[Operator]

Ladies and gentlemen, this does concludes today's teleconference. Thank you for your participation. You may disconnect your lines at this time and have a wonderful day.