Fidelity National Financial Inc

NYSE:FNF

Earnings Call Transcript 2019-Q4

[Operator]

Good day, ladies and gentlemen, and welcome to the FNF 2019 Fourth 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, Managing Director, Solebury Trout]

Thank you, operator and good morning, everyone. Thank you for joining our fourth quarter 2019 earnings conference call. Joining me today are our Chairman, Bill Foley; CEO, Randy Quirk; President, Mike Nolan; CFO, Tony Park and F&G CEO, Chris Blunt. We'll begin with a brief strategic overview from Bill. Randy will review the title business and Tony will finish with a review of the financial highlights and open the call for your questions and finish with concluding remarks from Bill Foley.

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. 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. 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 2:00 PM Eastern today through February 21. The replay number is 844-512-2921 and the access code is 13697834.

Let me now turn the call over to our Chairman, Bill Foley.

[Bill Foley, Chairman]

Thank you, Jamie. The fourth quarter was another strong quarter for our title business, finishing off a banner year. We generated adjusted pre-tax title earnings of $355 million and a 16.3% adjusted pre-tax title margin during the fourth quarter. For the year, we generated adjusted pre-tax title earnings of $1.3 billion, a record with an adjusted pre-tax title margin of 16.3%, which was our best since 2003. I will let Randy go into more details on the title business in a moment.

Turning to our acquisition of FGL Holdings or F&G, which we announced last week. FNF has agreed to acquire F&G for $12.50 per share of common stock in an equity deal valued at approximately $2.7 billion. We expect the transaction to be more than 20% accretive on a pro forma basis to FNF's 2021 earnings and 10% accretive on a pro forma basis to FNF's 2020 earnings, assuming the transaction closes by June 30, 2020. Through the acquisition, FNF will expand into the retirement and insurance business, which will diversify FNF's cash and income streams beyond title insurance.

Importantly, we expect F&G to reduce the risk and volatility inherent in our title operations by providing a counterbalance to FNF's earnings sensitivity to mortgage interest rates while offering significant and immediate earnings accretion. Ideally -- additionally, we are excited with F&G's very attractive growth outlook as the retirement and insurance businesses benefiting from an aging demographic and accommodated government policy which are driving robust demand for their products. FNF also offers F&G size, scale, and financial strength, which will allow F&G to capitalize on incremental organic and inorganic growth opportunities. Of note, we expect our acquisition to accelerate F&G's ratings upgrades, which will open new broker dealer and bank channels for the distribution of its retirement and insurance products.

We also see the potential for cross-selling retirement and insurance products through FNF's extensive bank network. Looking forward, we are committing to creating meaningful long-term value for our shareholders through a thoughtful capital allocation strategy focused on dividends, share repurchases, debt pay down and further investments in our business segments. We have no plans to alter our current dividend policy and as a reminder during the fourth quarter, we raised our quarterly dividend 6.5%, to $0.33 per share which used $90 million in available holding company cash.

With the addition of F&G's earnings and cash flow, we would expect to increase our dividend over time. We will continue to be opportunistic buyers of our stock, in accordance with our existing buyback authorization. During the quarter and prior to the blackout period, we repurchased 80,000 shares and a total of 2.1 million shares throughout the year. Our current repurchase plan has 22.2 million shares remaining on the authorization. FNF holding company cash inflows were $350 million -- $351 million primarily from the $335 million in underwriter and non-underwriter dividends in the fourth quarter and $16 million in principal and interest on the inter-company servicelink note. The net result was we ended the fourth quarter with approximately $1.1 billion in available holding company cash.

I'll now turn the call over to Randy Quirk to discuss the title insurance business.

[Randy Quirk, CEO]

Thank you, Bill. We generated adjusted pre-tax title earnings of $355 million, a $97 million or 38% increase over the strong fourth quarter of 2018. Our adjusted pre-tax title margin was 16.3%, a 210 basis point increase over the prior year. We had a 39% increase in direct orders closed comprised of a 5% increase in daily purchase orders closed, a 139% increase in daily refinance orders closed and an 11% increase in total commercial orders closed. Purchase orders opened increased by 3% versus the fourth quarter of 2018, refinance orders opened increased by 110% versus the fourth quarter of 2018, as the current mortgage rate environment drives refinances' volumes.

Lastly, total commercial orders opened increased by 20% over the fourth quarter of 2018. This quarter produced improving trends in purchase orders opened, a strong continued quarter of refinance orders opened as well as ongoing strength in commercial orders opened. We expect mortgage originations to remain strong through the first half of the year and then begin to moderate through the remainder of 2020. For the fourth quarter, total orders opened averaged 7,800 per day with October at 8,500, November at 8,200 and December at 6,700. Purchase orders opened were up 3% and closed orders were up 5% on a daily basis in the fourth quarter.

Daily purchase orders opened in October were up by 1% versus the prior year period while November was up 4% and December was up 5% versus the prior period. Refinance orders opened and closed increased by 110% and 139% respectively on a daily basis versus the fourth quarter of 2018. For the month of January, total orders opened were over 8,800 per day with a steady increase each week and nearly 10,500 orders opened per day in the first week of February. Daily purchase orders opened for the month of January increased by 5% versus the prior year and daily refinance orders opened increased by 98% over the prior year period. Total commercial revenue of $321 million was a 2% decline versus the record-breaking fourth quarter of 2018, driven primarily by a 12% decrease in the fee per file, partially offset by an 11% increase in closed orders. Commercial orders opened increased by 20% in the fourth quarter versus the prior year.

Total commercial revenue for the year 2019 was our best annual revenue performance since we began tracking total commercial revenue in 2015. Lastly staffing levels remained relatively stable during the fourth quarter. However, in the second and third quarter, our staffing needs increased by approximately 500 as a result of the open order and closed order volume increase.

Let me now turn the call over to Tony Park to review the financial highlights.

[Tony Park, CFO]

Thank you, Randy. We generated $2.4 billion in total revenue in the fourth quarter with the Title segment generating all but the $52 million of revenue we generated in our Corporate segment. Net earnings were $340 million which included $131 million in net realized gains. Adjusted net earnings were $263 million or $0.95 per diluted share. Excluding net realized gains of $135 million, our Title segment generated $2.2 billion in total revenue for the fourth quarter, 20% increase from the fourth quarter of 2018. Direct premiums increased by 14% versus the fourth quarter of 2018. Agency revenue grew by 23% and escrow title related and other fees also increased by 23% versus the prior year.

Personnel costs increased by 11% and other operating expenses grew by 19%. All in the title business generated a 16.3% adjusted pre-tax title margin, a 210 basis point increase versus the fourth quarter of 2018. Included in the increase in operating expenses were some unusual dispute and litigation-related items, including the settlement of a case dating back nearly two decades. Since these types of expenses show up from time to time, we don't exclude them from adjusted earnings. However, it is relevant to point them out. Those amounts were over -- were approximately $24 million and negatively impacted our title margin by over 100 basis points. Interest income of $55 million was a $3 million increase over the prior year as we saw the positive impact of the reinvestment of proceeds from maturing fixed income securities and increased cash and short-term investment balances partly offset by a decline in short-term interest rates, on the interest we earn, on the client exchange funds we hold in our 1031 exchange business.

FNF debt outstanding was $838 million on December 31 for a debt to total capital ratio of 12.8%. Our claims paid of $53 million were $13 million lower than our provision of $66 million for the fourth quarter. The carried reserve for claims losses is currently $34 million or 2% above the actuary's central estimate. We continue to provide claims at 4.5% of total title premiums. Finally, our investment portfolio totaled $5.8 billion at December 31. Included in the $5.8 billion, are fixed maturity and preferred securities of $2.5 billion with an average duration of 3.6 years and an average rating of A2. Equity securities of $800 million, short-term and other investments of $1.1 billion and cash of $1.4 billion. Of the $1.4 billion in cash over $1.1 billion currently sits at the holding company level.

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

[Operator]

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Thank you. Our first question comes from the line of Mark DeVries with Barclays. Please proceed with your questions.

[Mark DeVries, Barclays]

Thanks. First question is for Randy. Randy, could you just talk a little bit more about what you saw in your commercial volumes in the quarter as you noted, orders closed was actually up, but revenue per order was down. What the characteristics of the business you saw and then also the pipeline as you indicated, probably the biggest increase since you've started monitoring it and the open orders kind of your optimism going forward. Thanks.

[Mike Nolan, President]

Hey, Mark. It's actually Mike. In the fourth quarter, there was a couple of things about the order values, one they are up substantially as you saw 20%, but we did have a couple of big multi-site transactions that we didn't have in the fourth quarter of 2018 and that partly drove the increase in open orders. It also had an effect on the average fee per file because you're spreading that aggregate premium over many more locations and it just lowers the average fee per file when you do the math. I'd also point out that in the fourth quarter last year that was a really tough comp that was probably one of our -- I think it was probably our highest average fee per file in national commercial that we've ever had, with a number of large single site transactions in some high rate states. And I think the pipeline, if you look at the back half of the year, we were up 15% in the third quarter '20, in the fourth and I think another 15& in January. So we're just seeing really strong order volumes and strong pipeline.

[Mark DeVries, Barclays]

Okay, got it. And next question, maybe for Bill, assuming the F&G transaction closes as plan, how do you think about the relative attractiveness of the different options you'll have for deploying your free cash flow coming out of the title business. Where do you see the best returns between investing in any F&G business, buybacks, M&A dividends et cetera.

[Bill Foley, Chairman]

Yes, I think M&A is -- is other than perhaps buying blocks of business on the F&G side, will not be significant. What I would like to see us do is continue to look at our dividend and move our dividend North and then also reengage on the stock repurchase program and we're -- we've just got a couple of open items going on right now with F&G. So we're precluded from repurchasing shares at this particular time, but as soon as the window opens, we intend to go back in and start our normal daily stock repurchase plans or repurchase program. So F&G will be exciting for us. It's a growth business, we're going to enable them to get a ratings bump, ratings increase, which will allow different channels, open up for F&G. And that will kind of be where M&A occurs to the extent there is M&A and then there's also always opportunities and possibilities with regard to title agents that we may want to assimilate and bring into our -- bring into our company. But there aren't a lot available, but there are some and we will continue to try and grow our market share, either through acquisition or through organic growth by taking market share from the other large players.

[Mark DeVries, Barclays]

Okay, thank you.

[Operator]

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

[Bose George, KBW]

Yes, good afternoon. Actually, can you give us some guidance on your expectation for interest income next year just assuming interest rates stay fairly stable?

[Tony Park, CFO]

Sure, Bose. This is Tony. So we generated about $225 million in interest income over the course of 2019 and as you know, we went through a period of three Fed rate adjustments downward. So we will feel a little pressure as we move our way through 2020. My expectation is over the course of 2020, we will probably decline about $20 million and that's fairly spread equally, maybe a little less in Q1 relative to the prior year Q1, but then it will pick up a little bit gradually. And so again, you could almost average it out about $5 million of impact on a comp basis per quarter.

[Bose George, KBW]

Okay, great. That's helpful, thanks. And then actually, last quarter you guys spoke about potentially building a bank and I was just, is that still on the agenda and any potential timing for that?

[Bill Foley, Chairman]

It is still on the agenda. We deferred our filings, we are ready to submit our filings, but we decided to defer the filings until the F&G transaction was concluded. We just didn't want to confuse regulators with two -- kind of two significant filings at the same time.

[Bose George, KBW]

Is this something we could see in 2021?

[Bill Foley, Chairman]

Yes, it is something you could see, you could see the filings or the applications in 2021. The timing, that's really that's out of our control.

[Bose George, KBW]

Great, thanks.

[Operator]

Our next question comes from the line of Mackenzie Aron with Zelman. Please proceed with your question.

[Mackenzie Aron, Zelman & Associates]

Thanks, good afternoon. Just was wondering if you could talk a little bit about margin expectations this year, given, it sounds like commercial is going to be very strong, especially in the first half of the year. But recognizing back half of the year, revise [ph] might start to become a headwind, so just any color or guidance you could give around margins this year?

[Randy Quirk, CEO]

Yes, this is Randy. Well, as you know, our margins here this year at 16.3% was significant. We're going to come in with a very good first quarter -- second quarter with the refinance volume and we do have growth in the purchase market. That's -- it's got momentum that we think could continue on throughout the rest of the year and of course, the commercial markets are very solid, very stable and got a great pipeline going in with the 20% increase in open orders that Mike had mentioned. So you know, we're looking for another very, very good year first quarter, we'll have a little bit of seasonality.

Our measure, our target has always been a 15% year-in -- year-end margin, but I think we can push up from there and get it up into that 16% range again. So we're looking for a solid year, we need to see what rates do of course but our expectations are pretty high. We're not in a good place right now and we'll get it -- obviously a better measure as we get through the first six months of the year, but I think, getting back up in this range is a very good possibility.

[Mackenzie Aron, Zelman & Associates]

Great, thank. you.

[Operator]

Our next question comes from the line of Sohem Bhonsle with SIG. Please proceed with your question.

[Soham Bhonsle]

Good morning, guys. Just had a couple on F&G,I guess, as we think about your earnings mix going forward longer term, after the acquisition, it looks like it's going to be 25.75 [ph] FG title. Where would you like that mix to go to and where you would feel adequately hedged. I guess, which is the point of this acquisition.

[Bill Foley, Chairman]

I would like to think more in terms of what are the assets under management going to end up being F&G and our goal is to double the assets under management in five years. If that were to happen, we're probably going to be at 50-50 company earnings-wise, but that's really our -- that's our primary focus is to keep growing assets under management and Chris can talk about that through that too, if you want to chime in.

[Chris Blunt, CEO, F&G]

Yes, I think, again, a couple of key points. This is Chris Blunt. One, this is just an accelerator to the strategy that is already in place. So we don't need outsized additional growth to achieve that over the next five years. Bill mentioned the ratings upgrade obviously that's critical for us. So that will be a big accelerant to our organic growth and we are effectively capital self-sufficient at the moment and so this is -- the potential capital infusion or need would really be, if we just simply stepped on the gas from here.

[Soham Bhonsle]

Got it. And then I was just wondering on investment income, I think F&G's yield is somewhere in the 4.5% range with the Blackstone relationship. Has there been any discussion internally on maybe moving some of the FNF book over there to sort of get that yield accretion over time?

[Bill Foley, Chairman]

Yes, there has been discussion and that's kind of a -- that's part of our plan is to take some of this free cash, we have sitting at FNF that we just leave in money market funds and so on and free up some of that and let Chris work with it -- with Blackstone.

[Soham Bhonsle]

Are there any kind of thoughts on timing on that. I mean, is that right after the acquisition or something for 2021?

[Bill Foley, Chairman]

It will be after -- be after the acquisition, and right now, Chris is busy consolidating some offices and working through, we're working through the acquisition plan, but it wouldn't be that complicated to give Blackstone some additional funds.

[Soham Bhonsle]

Got it. Thank you.

[Operator]

Our next question comes from the line of Pablo Singzon with JPMorgan. Please proceed with your question.

[Pablo Singzon, JPMorgan]

Hi, thanks for taking my question. So the first one is, as we think about F&G growth potential and rating upgrades. I was wondering if you could talk about the implications of moving from a BBB plus to an A minus compared to moving from an A minus and A, which I think you had characterize may be a longer-term outcome. So I guess you know what distribution channels, open up with new A minus and are there certain partners that you can only transact within of that A. And Chris, prior to the FNF deal was your broker rule out this year just premise and being rated BBB?

[Chris Blunt, CEO, F&G]

Hey, great question, so I'll answer in reverse order. Yes, the -- the rollout that's going to occur in the second quarter of this year into independent broker-dealer and banks was assuming A minus. If you know those distribution channels. That's kind of the minimum table stakes. So we had hoped that maybe a year out 18 months out we could get to that next upgrade so accelerating that is very meaningful to us. So as a -- hopefully, at some point Solid A, with an AM Best A minus with the S&P's and the Moody's, and Fitches of the world, that is a very big deal for us. So that will open up faster deeper penetration into independent broker-dealers that opens up banks and then combined with all of the great relationships with FNF has so and then it will also bring into play markets that we have not been able to really plan in yet like pension risk transfer. So this is kind of taking what was a good growth story and a lot of initiatives in 2021 and 2022 and basically rolling it forward a year, year and a half.

[Pablo Singzon, JPMorgan]

Okay, that's helpful. And then, Chris, just a second one in F&G's statutory earnings which I view as a proxy for cash flow. And I guess the context of this question is just a topic of cash flow generation, which I think is one of the themes investors in FNF focus on. So in the past you had pegged STAT earnings at about $200 million every year, which if I understood correctly is truly excess capital, net of any organic growth requirements and so just recognizing the nuances between GAAP and STAT, how should we think about the $200 million in the context of your operating earnings, which if you go back and census should grow by about 30% over the next couple of years. Should we expect a similar trajectory for STAT cash flow but maybe perhaps to the lag?

[Chris Blunt, CEO, F&G]

Yes, so Pablo, I need to be little careful here because you should know, we got our earnings release coming up on the 26th. But a couple of comments that we've made before. As I said when we project forward pre FNF, we felt we were capital self-sufficient for the growth plans that we had at the time. So now having the potential at least for additional capital if needed just allows us to accelerate that growth. One thing you've seen from us consistently and I don't expect that that would change is our STAT earnings have been pretty consistent and tracking our GAAP earnings, which hopefully gives folks comfort that we're straight down the middle on how we account for things. So I don't want to make any prognostications, but yes, this should be a positive in terms of access to capital and nothing that would cause it to be a negative.

[Pablo Singzon, JPMorgan]

Okay. Thanks for your answers.

[Operator]

[Operator Instructions] Our next question comes from the line of John Campbell with Stephens. Please proceed with your question.

[John Campbell, Stephens]

Hey guys, good morning. Bill or maybe Tony just a bigger picture question on FGL, it's clearly been that was some -- somewhat mixed reception. You guys have had a couple of days, since the announcement. I'm sure you've talked to lot of investors. What's the main push back or maybe what's the most common thing you think FNF investors are missing with this deal?

[Tony Park, CFO]

Well, the main push back, I think it's just surprise currently and I think that people anticipated that we were going to do something with the excess cash, but I don't, I don't think that they knew exactly what and a lot of people were hopeful that we would give it to them either in the form of a buyback or a dividend and when that didn't happen. I think you've seen some people maybe that were holders or sellers, I think you also have some ARB [ph] activity that influences right out of the gate something like this. Chris, could probably speak to maybe some of the things that people miss in F&G that might be different than similar companies in their industry.

[Chris Blunt, CEO, F&G]

Yes, Tony, I think that's right. I would add that. We're not a traditional life insurance company. So that's probably the biggest misunderstood component that people need to get in and do their homework to appreciate, we've got a young book of fixed-indexed and indexed annuities. So we don't have lot of legacy assets. We've proven over time the Company is pretty resilient to movements in interest rates. We've been able to maintain a very consistent net spread with rates everywhere from 140 on the 10-year to 3% on the 10 year. So I think there is a sense if you don't know the space everybody gets lumped together, low rates, bad for insurance companies. Yes, for traditional legacy insurance companies, but we are much more of a spread lender where we can reprice our liabilities on a regular basis. So that's probably number one. The second is this issue of what we're late in the credit cycle and what's in that portfolio. We've actually taken credit risk down during the Blackstone period, where Blackstone has been managing the FG portfolio and we've done stress test, which we would release publicly, we've had independent folks verify that. So the miss there is, you're getting some extra yield, but it must be coming at the harm of credit, actually we've enhanced credit.

We've been doing things like selling BBB corporates and buying higher rated structured securities, CMBS, asset-backed securities. So it's really, sort of getting your head around. We believe we've improved the credit profile, some of those securities, a little less liquid, but we have very sticky liabilities at a ton of liquidity. So I think those are probably the two that most of our investors took them a while to get their arms around that because the sector, the life sector when rates are down just doesn't trade. Well, but most of what people are concerned about it doesn't apply to us.

[John Campbell, Stephens]

Okay, that makes sense. Thank you. And then I guess also bigger picture with FGL, Bill, is there a way that Cannae kind of fits into this future landscape.

[Bill Foley, Chairman]

I don't see this is a Cannae opportunity. Cannae is more focused on FinTech and Sintex type investments of data companies. If we were to get involved in a kind of an area of business that we're ahead of the relationship with F&G, with -- it would be in a kind of a marketing side. Marketing organizations. But I don't really feel like this is a Cannae type investment.

[John Campbell, Stephens]

Okay, that makes sense. One last quick one, Tony. Thanks for calling out the legal fees. We were little curious about the title pretax margins. So I think you said that was 100 bps of an impact, a little curious, why you didn't back that out of adjusted results. Is there any particular reason or is this some type of expense that maybe continues over the near term, anything to call out there.

[Tony Park, CFO]

So it's a continuation of the expense, but I do want to be careful about cherry picking this type of stuff. We do have legal expenses that flow through every quarter. These were just a lot bigger than what we normally have and so I want to be careful that I don't call them out one quarter and then maybe when they're down the next that I don't mention it just from SEC purposes. So it's a fair question. And as you know, we don't like to back out a lot of stuff. Other than the standard stuff we normally do. So I thought it made more sense just to call it out in this phone call. And I think it was about 110 basis points, back of the envelope.

[John Campbell, Stephens]

Okay, thanks for the color.

[Operator]

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

[Mark Hughes, SunTrust]

Yes, thank you. Good afternoon. You had very strong numbers in the escrow title, other fees also agency, I wonder if you could talk about what's driving that dynamic here lately and also about the sustainability.

[Tony Park, CFO]

I'll give Mike, the agency side but on the escrow and other. We do have stronger escrow fees as a percentage of refi, especially in the west. And so if you see direct premiums up 14% or 15% our escrow fees were up 25% or 28% on those particular orders just because you sort of have a minimum fee for escrow and so that was part of that. We also had stronger revenue on in the loan care area where they've taken on a lot more loans over the course of the last 12 months and also in the ServiceLink valuations business, we were stronger there in revenue versus Q4 of a year ago. So that's why you see a lot of strength there.

[Mike Nolan, President]

Yes, on the agency side. Mark, it's Mike. We're very pleased with the agency results, we had a record quarter and a record year. And we really feel like we're taking share in some key markets in the agency world including Florida, in places like Pennsylvania, New Jersey and Georgia. The market share numbers that we have through the first 9 months of the year show us up a full point. Nationally, which is a strong increase in market share.

[Mark Hughes, SunTrust]

Thank you. And then would it be too much to ask on the February, you described -- it looks like good acceleration, presumably some of that's seasonality. Can you say, and I think you said that the purchase market continues to have good momentum. How did that the February compare year-over-year. I think January is up 5. Any sense on how February is trending.

[Randy Quirk, CEO]

Yes, this is Randy. Of course, we only had -- one week end of February and we did have in the week of February record refinance order volume ever so that again that was for one week. But the purchase increase held 3.5%, 4% but again that was, that was one week and with purchase, typically it will grow as you move through the month, but that was, that's a one-week look at February. But of course going in the right direction.

[Chris Blunt, CEO, F&G]

Yes, I'll just add there, Mark, as well that the total open orders. And again, early part of February we're over 10,000, I think 10,500 up against 8800 in January. Right. So big increase.

[Mark Hughes, SunTrust]

Yes. And then one final question on the F&G, the goal to double assets in five years. Is there kind of a notional template. How much of that should be organic versus how much might be a lock or PRT transactions.

[Chris Blunt, CEO, F&G]

Yes, I would say that the overwhelming out part of that will be organic growth. So that does not assume any large transactions. Not that we wouldn't take a swing at a couple of smaller size blocks or a flow transaction, for example, but the bulk of that is just running out the playbook of we've been growing at 20% in our core IMO channel that that doesn't show signs of we're not anticipating that slowing for any particular reason. And now we add in banks and broker-dealers. A couple of small block transactions maybe a flow deal here or there. It's not heroic assumptions to get to that doubling.

[Mark Hughes, SunTrust]

Thank you.

[Operator]

Our next question is a follow-up question from Soham Bhonsle with SIG. Please proceed with your question.

[Soham Bhonsle]

Hi guys, thanks. Just a follow-up on fee per file was down 15% year-over-year. And I know there is some mix shift there, but there's a lot of going on this year with refi and purchase and how are you guys thinking about fee per file for the year on a year-over-year basis.

[Bill Foley, Chairman]

I would -- it's Mike. I would think, we may get a little bit of an increase if purchase grows and refi is down a little bit. So you get a positive shift there and I would think commercial fee per file would be consistent with levels in 2019.

[Soham Bhonsle]

Okay. So is that mid singles growth reasonable for this year?

[Bill Foley, Chairman]

Yes, I mean. Yes, I would think that's, that's a reasonable expectation.

[Tony Park, CFO]

I mean, lot of it's going to depend on mix, if we have a lot more refi especially at the start of the year, we'll see some pressure on the fee per file and that's really what you see a 15% decline, it has a lot to do with -- with the fact that we just had a ton of refis that closed in Q4.

[Soham Bhonsle]

Yes, makes sense. Thank you.

[Operator]

Our next question is a follow-up question from Mark Hughes with SunTrust. Please proceed with your question.

[Mark Hughes, SunTrust]

Yes. Thank you. On the F&G, I know that one of -- one of the folks in your space American Equity yesterday had good results, they talked about a lengthening of the assets, more persistency, lower lapses and therefore, you're getting higher long-term earnings, I'm just sort of curious whether you've seen that phenomenon in your books, have you already taken into new account when you look at your financials. Just a couple of words on that topic would be helpful.

[Chris Blunt, CEO, F&G]

Yes, this is Chris. Again I probably have to be real careful just given where we are in our timing of our own earnings announcements, but probably the most important thing is strong topline growth and we're not -- just say, we're not seeing any negative patterns. So I'll maybe just leave it at that.

[Mark Hughes, SunTrust]

Very good. Thank you.

[Operator]

Our next question is a follow-up question from John Campbell with Stephens. Please proceed with your question.

[John Campbell, Stephens]

Hey guys, thanks. Just one quick follow-up. On the agent remittance rate that looks like it's worked in your favor relative to last year, last two quarters. I was thinking maybe with seasonality, some of the western states, there maybe a little bit higher remittance rate. I thought that would actually work against you this quarter, is there something structural there that's helping that.

[Bill Foley, Chairman]

John, it's Mike. As you know, we actually don't do much agency business in the western states. I think, it's really the growth we've had in markets like Florida vis-a-vis some other markets where we have better promulgated splits in a market like that and also markets like in the Carolinas.

[John Campbell, Stephens]

Okay, thank you.

[Operator]

Mr. Foley, we have no further questions at this time, I would now like to turn the floor back over to you for closing comments.

[Bill Foley, Chairman]

Thank you. We are very pleased with our fourth quarter title results that rounded out a record-breaking year. Looking to 2020, with an anticipated moderation in mortgage originations later in the year, we will remain vigilant on our expenses as we manage the expected slowdown in volumes. Lastly, we're excited to welcome F&G into the FNF family in the coming months. Upon completion of our pending merger. Thank you for joining us today and we look forward to updating everyone on our first quarter call.

[Operator]

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