Fidelity National Financial Inc (FNF) Q1 2021 Earnings Call Transcript

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Fidelity National Financial Inc (FNF 1.68%)
Q1 2021 Earnings Call
May 7, 2021, 12:00 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good morning, ladies and gentlemen, and welcome to the FNF's 2021 First Quarter Earnings Call. [Operator Instructions] 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 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 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 PM Eastern Time today through May 14. The replay number is 844-512-2921 and the access code is 13718683.

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

Raymond R. 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 and 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&G's 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 is sustainable long-term.

Looking forward, we remain committed to long-term value creation for our shareholders through 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 repurchased 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.

Michael J. 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 was 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 opened 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 local 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 -- President and Chief Executive Officer, F&G

Thanks, Mike. The first quarter kicked off 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 remains 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.

Anthony J. 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 $539million; 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 losses of $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 19.9% 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 to $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 of $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 are fixed maturity and preferred securities of $2.3 billion with an average duration of 2.9 years and an average rating of A2; 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.

Questions and Answers:

Operator

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

John Campbell -- Stephens -- Analyst

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

Michael J. Nolan -- President

Hey, thanks, John. Good morning.

John Campbell -- Stephens -- Analyst

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

Michael J. Nolan -- President

Sure, John. It's Mike. Generally, ServiceLink has about 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.

Anthony J. Park -- Chief Financial Officer

Yeah, 30% [Phonetic] in the prior year.

Michael J. Nolan -- President

Yeah, in the prior year, and we've had nice revenue growth there. I think the revenue is up 81% quarter-over-quarter. So pleased with what we've seen on the ServiceLink side.

Anthony J. Park -- Chief Financial Officer

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

Michael J. Nolan -- President

Yeah, thanks.

John Campbell -- Stephens -- Analyst

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

Michael J. Nolan -- President

Well, 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, 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 -- Analyst

Okay, 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 carry. Any particular reason that's at such a high level and any thoughts about what you might do with that over the next couple of quarters?

Anthony J. 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 $1 billion. We up-streamed 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. We'll look for various uses as we work our way through the year. Obviously, our dividend is very important to us and that will run us a 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 where we stand in terms of the authorization. But my expectation would be that they would strongly consider reupping 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 $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 will 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&G's balance sheet. So we may provide some inter-company 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, $1 billion-plus dollars in parent company cash.

John Campbell -- Stephens -- Analyst

Yeah. Undoubtedly, that's a 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 the 1031 Exchange business now? How much are you guys generating out of that now?

Michael J. Nolan -- President

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

Anthony J. 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 have seen that over the last several quarters. I think our net spread there is something like 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 back before the 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 billion and $5 billion and...

Michael J. Nolan -- President

Yeah, we're actually a little bit over $5 billion. We're actually at record balance levels, John, and record transactional levels. But I did pull up a number while Tony was speaking and because of the change in rates, even though we have record transactional levels, as I've said, and balances, our revenue, first quarter over first quarter last year is down $9 million from $22 million last year to $13 million this year and if you went back one more year, there'd 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 -- Analyst

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, it 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 -- Analyst

Yeah, I had a question about the implications of 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 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?

Anthony J. Park -- Chief Financial Officer

Yeah, I think that's fair, Mark. I mean 50% or 60%, it is kind of a staggered scale. So 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 -- Analyst

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

Michael J. Nolan -- President

Sure, Mark, it's Mike. And 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 a 1,000, total commercial orders, we've never done that before. So, that's a record. April was also over a 1,000 so that just gives you an idea of the sort of the transactional velocity we're seeing. We've also seen good growth in our national orders in the first quarter, up 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 and optimistic that we're seeing some bigger transactions coming back into play, some multi-sites. So I think that will 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, we're still seeing strength in multi-family and industrial. Those are probably the consistent strong asset classes across the past quarters. Energy, gaming, kind of, is in and out, but very good when we have it and I think health and medical is another area. That's a good segment and I think people are optimistic that we might see 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 in New York, where we've kind of have that as 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 -- Analyst

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

Michael J. Nolan -- President

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

Mark DeVries -- Barclays -- Analyst

Okay, great. Thank you.

Operator

Our next question comes from the line of Andrew Kligerman with Credit Suisse. Please proceed with your question.

Andrew Kligerman -- Credit Suisse -- 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 go run at the holdco unencumbered with up to as low as $150 million of cash. So the question is where is a good place for it to be? I mean, what you were talking about being at $1.1 billion and with a lot of cash flow coming up to the holdco, 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.

Anthony J. Park -- Chief Financial Officer

Yeah, just on the comfort level in cash, $150 million is probably adequate only because we do expect recurring regular dividends up from our subs. Now if we entered a period of time where the market were a little more challenging, then you'd probably want to be sitting on a little more of that. We have to be cognizant of debt 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 the buyback is second only, maybe, to the dividend, the buyback is very prominent. Do you guys want to comment a little bit on the...

Raymond R. Quirk -- Chief Executive Officer

Yeah, I would just say -- this is Randy. We probably have 15, 20 potential acquisitions around the country on the board that we're looking at relative to the 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 stand -- 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 look 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're staying in play. We just need to get to the right deals that makes sense and then we'll execute.

Andrew Kligerman -- Credit Suisse -- Analyst

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

Raymond R. Quirk -- Chief Executive Officer

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

Anthony J. Park -- Chief Financial Officer

I could see us spending $100 million to $300 million maybe on title company acquisitions. I don't think it would be anything more than that.

Andrew Kligerman -- Credit Suisse -- Analyst

Got it. And just a quick follow-up on that really solid answer to the commercial question. So, I mean, with closed orders up 12% in the quarter, opened orders up 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?

Michael J. Nolan -- President

Well, you mean in terms of that being the trend for future quarters in terms of opened and closed?

Andrew Kligerman -- Credit Suisse -- Analyst

Yeah.

Michael J. Nolan -- President

I don't know that I'm saying that, Andrew, because 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 few quarters, and also encouraged by the improvement in orders in the national operations, which probably bore 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 about 40% is done through our local distributed footprint that's also handling residential refinance and purchase transactions.

Andrew Kligerman -- Credit Suisse -- Analyst

Got it. And just one last one for Chris. The MYGA business at $460 million in retail value, I think that was four-fold versus last year in the same quarter. And it sounds like it's these new channels, but maybe, Chris, could you give a little color on -- 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 -- President and Chief Executive Officer, F&G

Yeah. All great questions. So, yeah, that business has been quite steady. As you know, it's a core product for banks, in particular, unlike the independent agent channel where we are always quite competitive. But it was much more of an opportunistic or 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 at also selling indexed annuities. 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 story. So what we're most pleased with is that is then translating into the cross-sell and getting them interested in our FIA product. 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 annuity revenues would 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.

Andrew Kligerman -- Credit Suisse -- 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 -- Analyst

Hey, guys. Good afternoon.

Michael J. Nolan -- President

Hey, Bose.

Bose George -- KBW -- Analyst

Couple of questions, so first on the margin side, what's the -- what was the margin on the agent channel in the quarter?

Anthony J. Park -- Chief Financial Officer

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

Michael J. Nolan -- President

And I think fourth quarter was a record at 10.4%.

Bose George -- KBW -- Analyst

Great, thanks. And then just switching to F&G. Just in terms of the operating earnings this quarter, should we just sort of pull out that this $12 million of -- you have a one-time items and is that kind of a reasonable run rate?

Chris Blunt -- President and Chief Executive Officer, F&G

Yeah, I'd probably say maybe pull out half of it. And the reason that I say that is we had very consistent mortality gains in our [Indecipherable] book, our median annuity book, it's a very -- to say it in a polite way, it's an old group of policies, so average age is in the 80s. So there is more upside than downside there. So 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 million. So if you said the $66 million versus the $78 million, it's probably somewhere in between the two.

Bose George -- KBW -- Analyst

That's great, that's helpful, thanks. And then actually 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 percent of that is of your transactions or when it takes place you don't necessarily know if it's a 1031 or not or, yeah, just any color for the percentage of that volume as a total commercial volume?

Michael J. Nolan -- President

I don't think we have that number. Tony, I just don't think we have that.

Anthony J. Park -- Chief Financial Officer

I don't either. I mean, not every 1031 Exchange is at commercial.

Michael J. Nolan -- President

Now, there's a lot of residential actually 1031s.

Anthony J. Park -- Chief Financial Officer

Yeah. I think we've also learned, just looking at 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. 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 is really a lot that, I guess, would be unimpacted by policy change.

Michael J. Nolan -- President

Right.

Bose George -- KBW -- Analyst

Okay, yeah, that's helpful. So, OK, great, thanks a lot, guys.

Anthony J. Park -- Chief Financial Officer

Thanks, Bose.

Michael J. Nolan -- President

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.

Raymond R. 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 an 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 the 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

[Operator Closing Remarks]

Duration: 40 minutes

Call participants:

Jamie Lillis -- Investor Relations

Raymond R. Quirk -- Chief Executive Officer

Michael J. Nolan -- President

Chris Blunt -- President and Chief Executive Officer, F&G

Anthony J. Park -- Chief Financial Officer

John Campbell -- Stephens -- Analyst

Mark DeVries -- Barclays -- Analyst

Andrew Kligerman -- Credit Suisse -- Analyst

Bose George -- KBW -- Analyst

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