Earnings Call Transcript - FNF Q3 2021

Operator, Operator

Good morning, ladies and gentlemen, and welcome to the FNF 2021 Third Quarter Earnings Call. 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 third 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 the 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. 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 Wednesday, November 10. The replay number is (844) 512-2921, and the access code is 13723639. Let me now turn the call over to our CEO, Randy.

Randy Quirk, CEO

Thank you, Jamie. We are very pleased with our record-setting third quarter results as we increased revenues by 31% to $3.9 billion, which resulted in adjusted net earnings growth of 39% to $604 million, both as compared with the 2020 third quarter. Our Title business continued to deliver record results, while F&G expanded into new institutional channels, which positions us well for strong asset growth. Importantly, we grew our holding company cash balance by 25% to $1.5 billion compared to $1.2 billion at the end of the second quarter of 2021. Cash on our balance sheet grew despite our continued activity in returning capital to our shareholders through share buybacks and our quarterly dividend. As Tony will discuss in more detail, the cash growth was delivered primarily through our organic business results. During the quarter, we took advantage of exceptional interest rates and issued $450 million of 3.2% senior notes with a 30-year maturity. We also funded a $400 million intercompany loan with F&G to fund their growth. Overall, our results this quarter speak to the dynamic business model that we have created and which we believe positions us for success through varying market cycles. Turning to our Title results, we delivered adjusted pretax title earnings of $669 million, with an adjusted pretax title margin of 21.7% in the 2021 third quarter compared with adjusted pretax title earnings of $528 million and an adjusted pretax title margin of 21.2% in the 2020 comparable quarter. Our third quarter margins and earnings were the strongest third quarter results in our company's history, which speaks to our market-leading position combined with outstanding execution by our entire team. Turning to F&G, we continue to be very pleased with the results this quarter as we open new channels of distribution and accelerate our sales growth, driving assets under management at the end of the third quarter to nearly $35 billion, an increase of 9% in the quarter. This growth was driven by strong retail annuity sales and F&G's interest in institutional markets. Total assets under management have grown 31% since we closed the acquisition, and we are well on our way towards our goal of more than doubling assets under management in five years. As F&G's assets continue to grow, they provide an increasingly important component of our overall earnings. Looking forward, we will continue to evaluate our capital allocation strategy as we remain committed to long-term value creation for our shareholders while also focusing on supporting the future growth of our businesses. Share buybacks are an important component of our strategy, and we were active once again, having purchased 1.3 million shares for $61 million at an average price of $46.29 per share through the third quarter. In the first week of October, we reached our $500 million share buyback target, which we announced in the fourth quarter of 2020. Lastly, we announced yesterday a quarterly cash dividend of $0.44 per share, an increase of 10% from our previous quarterly dividend. This is the second consecutive quarter that we have increased our dividend, given our strong earnings and cash flows through the first three quarters of the year. 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. As Randy highlighted, our third quarter results were the best third quarter in the company's history. And I want to add my thanks and congratulations to our employees for their dedication and focus on taking care of our customers and driving our industry-leading performance. For the third quarter, we generated adjusted pretax title earnings of $669 million, a 27% increase over the third quarter of 2020. Our adjusted pretax title margin was 21.7%, a 50 basis point increase over the prior year quarter. The results were driven by a 25% increase in average fee per file, a 9% increase in daily purchase orders closed, and a 31% increase in total commercial orders closed, partially offset by a 21% decrease in daily refinance orders closed. Total commercial revenue was a record $366 million compared with the year-ago quarter of $216 million due to the 31% increase in closed orders and a 28% increase in total commercial fee per file. For the third quarter, total orders opened averaged 10,800 per day, with July at 11,000, August at 11,000, and September at 10,300. For October, total orders opened were 9,300 per day, as we saw solid demand and purchase activity, while the refinance market continues to moderate compared with last year's robust levels. Daily purchase orders opened were up 1% in the quarter versus the prior year. And for October, daily purchase orders opened were up 4% versus the prior year. Refinance orders opened decreased by 33% on a daily basis versus the third quarter of 2020. For October, daily refinance orders opened were down 38% versus the prior year. Lastly, total commercial orders opened per day increased by 15% over the third quarter of 2020. Commercial opened orders per day were just under the record levels we saw in the second quarter. For October, total commercial opened orders per day were up 15% over October of 2020. Importantly, commercial opened orders per day have exceeded 1,000 orders each of the last nine months, having consistently been in record territory and will provide momentum as we close out 2021 and begin 2022, given the longer tail for closings in commercial as compared with residential. Our Title business has performed very well through the third quarter with commercial and purchase volumes more than offsetting the decline in refinance activity. Looking forward, while refinance volumes may continue to moderate, it is important to note that direct refinance revenue only contributed approximately 19% of total direct revenue in the third quarter compared with 27% in the third quarter of last year. On a sequential basis, refinance revenue contributed 21% of total direct revenue in the second quarter and 33% in the first quarter of this year. Additionally, refinance fee per file in the third quarter was approximately $1,000 as compared with nearly $3,400 for purchase, providing a strong counterbalance to declines in refinance revenue. We will also continue to watch our expenses closely and react to changes in our opened and closed order volumes. Another critical aspect of our business has been our longer-term focus on integrating and leveraging automation, which has significantly improved our performance, as can be seen by our profitability this cycle. During the quarter, we reached a significant milestone as more than 2 million consumers have now been invited to begin their transactions on our digital inHere Experience Platform through Start inHere, and more than 1.3 million have chosen to do so. As we have discussed, inHere transforms the real estate transaction by improving the safety and simplicity needed to start, track, notarize, and close real estate transactions. We are very pleased with our customers' adoption of our digital platform, as we believe it will not only improve their satisfaction with our service and product, but also improve our efficiency. Ultimately, we believe the inHere Experience Platform, combined with our scale and our history and expertise in building market-leading technology solutions, positions FNF to grow market share. Let me now turn the call over to Chris Blunt to review F&G's third quarter highlights.

Chris Blunt, CEO of F&G

Thanks, Mike. At F&G, we're fully executing on our product and channel diversification strategy while leveraging our core capabilities and modernizing our operating platform. This year has demonstrated our transformation from a previously monoline business into a well-diversified and leading provider of solutions in both retail and institutional markets. We achieved record sales in the third quarter, surpassing $3 billion in total sales for the quarter and $7 billion in total sales for the first nine months of the year, which in turn have boosted ending assets under management to nearly $35 billion as of September 30, as Randy mentioned previously. In the third quarter, annuity sales in our retail channel were $1.5 billion, up 43% from the third quarter of 2020 and down slightly from the record sequential quarter. We see ongoing success with our independent agent distribution and continue to expand our bank and broker-dealer channels. We are now distributing through a dozen active bank and broker-dealer distribution partners. We are very pleased that our recent expansion into institutional markets has been exceptionally strong. Let me provide a few brief details. F&G has issued $1.2 billion of funding agreement-backed notes in September, following our inaugural $750 million issuance in June. Both issuances saw extremely strong market demand and attractive pricing. F&G has also successfully entered the pension risk transfer market, closing $371 million of transactions in the third quarter and securing an additional $564 million of transactions in the fourth quarter. Based on transactions secured to date, F&G will assume approximately $900 million in pension liabilities and provide annuity benefits to over 22,000 retirees. Overall, institutional sales were $2.6 billion for the first nine-month period. And with the additional $500 million pension risk transfer volume secured in the fourth quarter, we're on track to achieve $3 billion of institutional sales in 2021. With these strong top line results, average assets under management, or AAUM, has reached $32.7 billion, driven by approximately $2.3 billion of net new business flows in the third quarter. We are focused on generating scale benefits by increasing assets under management while continuing to leverage Blackstone's unique investment management capabilities to deliver consistent spread. Turning to spread, our results continue to be strong. Total product net investment spread was 285 basis points in the third quarter and FIA net investment spread was 335 basis points. Adjusting for favorable notable items, total product spread was 248 basis points and FIA spread was 293 basis points, both in line with our historical trends and consistent with our disciplined approach to pricing. Let me wrap up with a few thoughts on earnings. First, F&G's net earnings attributable to common shareholders of $373 million for the third quarter included a $224 million one-time favorable adjustment from an actuarial system conversion, reflecting modeling enhancements and other refinements and represents less than 1% of reserves. This conversion was a significant milestone in our multiyear effort to deliver a modern, scalable platform, which will provide operating leverage with scale over time. This one-time favorable adjustment was excluded from adjusted net earnings along with other standard items. Next, F&G's adjusted net earnings for the third quarter were $101 million. Strong earnings were driven by record AAUM and strong spread results from disciplined pricing actions on both new business as well as our in-force book. Net favorable items in the period were $27 million. Adjusted net earnings, excluding notable items, were $74 million, up from $70 million in the second quarter. In summary, during the third quarter, we've delivered record sales and strong earnings for F&G. Our profitable growth strategy is firing on all cylinders, and we have successfully diversified our sources of premiums. We remain excited about the opportunity to further contribute to the overall FNF strategy in the years ahead. With that, I'll now turn the call over to Tony Park to review FNF's third quarter financial highlights.

Tony Park, CFO

Thank you, Chris. We generated $3.9 billion in total revenue in the third quarter, with the Title segment producing $2.9 billion, F&G producing $927 million, and the Corporate segment generating $44 million. Third quarter net earnings were $732 million, which includes net recognized losses of $154 million versus net recognized gains of $73 million in the third 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 $4 billion as compared with $2.9 billion in the third quarter of 2020. Adjusted net earnings from continuing operations were $604 million or $2.12 per diluted share. The Title segment contributed $521 million. F&G contributed $101 million. And the Corporate segment had an adjusted net loss of $18 million. Excluding net recognized losses of $169 million, our Title segment generated $3.1 billion in total revenue for the third quarter compared with $2.5 billion in the third quarter of 2020. Direct premiums increased by 22% versus the third quarter of 2020. Agency premiums grew by 34%. And escrow title-related and other fees increased by 14% versus the prior year. Personnel costs increased by 15%. And other operating expenses increased by 17%. All in, the Title business generated a 21.7% adjusted pretax title margin, representing a 50 basis point increase versus the third quarter of 2020. Interest and investment income in the Title and Corporate segments of $27 million declined $4 million as compared with the prior year quarter due to decreases in bond interest, dividends received on preferred stock, and a slight decrease in income from our 1031 Exchange business. In September, we closed an issuance of $450 million of 3.2% senior notes due September of 2051. We're very pleased with the market's receptivity to our issuance as well as the very attractive rate that we were able to secure. We also put in place a $400 million intercompany loan to fund F&G's growth and to better optimize their capital structure. FNF debt outstanding was $3.1 billion on September 30 for a debt-to-total capital ratio of 24.9%. Our title claims paid of $55 million were $45 million lower than our provision of $100 million for the third quarter. The carried reserve for title claim losses is currently $95 million or 5.9% above the actuary's central estimate. We continue to provide for title claims at 4.5% of total title premiums. Our title and corporate investment portfolio totaled $6.7 billion at September 30. Included in the $6.7 billion are fixed maturity and preferred securities of $2.2 billion with an average duration of 2.8 years and an average rating of A2, equity securities of $1.2 billion, short-term and other investments of $500 million, and cash of $2.8 billion. We ended the quarter with $1.5 billion in cash and short-term liquid investments at the holding company level. Let me end with a few thoughts on capital allocation. Our capital allocation strategy remains a key focus of the Board. We're focused on returning capital to shareholders while making strategic investments in our businesses. Our current level of cash generation supports the following: first, FNF's $500 million annual common dividend; next, our $100 million annual interest expense on FNF debt; third, our $400 million 5.5% senior notes, which are due in September of 2022; and finally, our share repurchases. We've continued to make share repurchases throughout the third quarter and into the fourth. During the quarter, we purchased 1.3 million shares at an average purchase price of $46.29 per share. And in the first week of October, we completed our previously announced $500 million share repurchase plan. In total, we repurchased 12 million shares at an average price of $41.62 since announcing the plan in October of last year. With regard to F&G, at the time of the merger last year, we stated that we expected F&G to double assets and earnings over five years through organic growth. Given current momentum, we foresee that F&G's growth is running about one year ahead of schedule. For 2021, F&G is on a trajectory to double its annual sales and has materially diversified its business with channel expansion in new retail and institutional markets. Capital funding for this growth includes $400 million in debt capital from FNF in the third quarter as well as third-party financial reinsurance with an existing partner in the fourth quarter. Based on current forecasts, we expect to contribute $200 million to $300 million of new equity capital in 2022. And with F&G's 25% debt-to-capital target, we believe F&G has ample financial flexibility to execute on our growth strategy and capture market opportunities. Beyond that horizon and subject to ongoing sales momentum, there may be an additional capital investment required in 2023, which could take the form of converting our existing $400 million term loan to equity capital. But we believe that at that point, we will be reaching a level where F&G is self-funding. Given the compelling growth prospects, it is more attractive to defer any immediate return of capital from F&G in order to support its growing and stable sources of earnings and target a return of capital a few years down the line. FNF has enough capital generation to do all of the above, and we view the marginal return on capital into F&G as attractive and strategically important to our dynamic business model to achieve long-term value creation and attractive shareholder returns. Let me now turn the call back to our operator to allow for any questions.

Operator, Operator

And our first question is from the line of Mark DeVries with Barclays.

Mark DeVries, Analyst

My first question is for Chris. Chris, I was interested in more detailed thoughts about what you think is driving the strength in the sales growth in retail. How much of that is kind of in the channels you've opened? How much of that is kind of just the attractiveness of the product in this environment? And how much may be further penetrating the agent channel?

Chris Blunt, CEO of F&G

Sure. Great questions, Mark. Yes, I would say we're experiencing strong growth across the board. Our core independent agent business is growing at a solid double-digit rate. We've also seen rapid expansion in bank and dealer channels, which has contributed to the growth in retail. Additionally, the institutional side was completely new to us a year ago, so that's all additional growth. In summary, I would say all three areas are currently contributing to our success.

Mark DeVries, Analyst

Okay. Great. And then next question for Tony. I mean it sounds like there’s a lot of great growth to fund there, and you may commit up to $700 million, I think, of equity capital over the next couple of years. Can you just talk about how the returns of that compare to buying back FNF stock here, which is trading at a pretty material discount to where it historically has traded?

Tony Park, CFO

I think we believe that all of the above are important allocation strategies. Yes, it’s up to $700 million in equity capital toward F&G. But keep in mind, we’ve already funded $400 million of that in the form of a note, which is easily convertible. So from a parent company cash standpoint, the $400 million is already gone. However, the Board discussed completing the $500 million plan over a course of 12 months regarding buybacks, and we have a share authorization of $24 million still existing. The Board is very excited about continuing to deploy some of that capital towards buybacks. I would expect that as soon as the blackout window opens, we will return to the market to buy back shares. We paused a little during the quarter because we were in a blackout period while working on the bond offering. Otherwise, we likely would have repurchased more shares in the quarter.

Operator, Operator

And our next question comes from the line of Bose George with KBW.

Bose George, Analyst

Can we track the growth of operating income by looking at AUM growth, and is that the best approach at this time?

Chris Blunt, CEO of F&G

Yes. This is Chris. I think that’s right. I think as you model out AUM growth, we’ve talked about kind of a rule of thumb of 1% on assets, net of everything, including tax. And I think that’s still a good number with the potential for a little bit of spread expansion beyond that.

Bose George, Analyst

Okay. Great. Touching on the previous topic, if the market doesn’t fully recognize the efforts at F&G and its valuation, are there any alternatives you can consider to demonstrate that value, like you have with tracking stocks in the past? Or are there other interim strategies that could be implemented to help?

Chris Blunt, CEO of F&G

Yes. Tony, this is Chris. You want me to start?

Tony Park, CFO

Yes.

Chris Blunt, CEO of F&G

I think the simplest solution would be to increase our use of reinsurance, whether that means reinsuring a portion of our block or entering into a flow deal on some of our new sales, which would quickly free up some capital. I’ll let Tony discuss other options.

Tony Park, CFO

Yes. I mean I think that’s right. I think our view is that we’re building a great asset here. I mean look at the earnings growth, the portfolio growth, the opportunities in the sales channel to grow this thing. As I mentioned earlier, we’re a year ahead of schedule in terms of doubling earnings and the portfolio, and I think we’re excited about that. And so I get that different people have different perceptions of how much value we’re getting currently in our share price, and I don’t disagree with any of that. But we do believe that even if it’s not currently recognized, the value is there. And we think that in some form or fashion, it will be recognized. And for the time being, we’ll continue to create that value and then kind of deal with that second part a little later down the road.

Operator, Operator

And our next question comes from the line of Andrew Kligerman with Credit Suisse.

Andrew Kligerman, Analyst

I want to kind of follow up on the title margins at 21.7% pretax. I think it’s the fifth consecutive quarter where you were at 20% or better, yet your guidance is 15% to 20%. Maybe you could help just give some scenarios where it might fall into your guidance range? Or are we in a new normal?

Mike Nolan, President

Andrew, it’s Mike. We have been discussing the 15% to 20% range for several years. For a considerable time, we weren't even reaching the 15% mark. We have always indicated that to hit the higher end of that range, we would require a very strong purchase market, accompanied by a solid commercial market and a moderately good refinance market. Currently, we are witnessing what could be a record-level commercial market, alongside a strong purchase market, and likely an improvement in the refinance market as well. Thus, margin performance is certainly influenced by where the volumes are, and we can't assume refinance volumes will this year be as strong as last year, which was likely the best in U.S. history. That said, we anticipate our margins to remain robust as we approach the fourth quarter and foresee solid margins next year. However, I believe we are not yet ready to adjust the 15% to 20% range at this point.

Andrew Kligerman, Analyst

Okay. And for Chris, the sales are really robust. And I get that you’ve got new channels there. As we look toward 2022, particularly in the retail areas, the FIAs, the MYGAs, do you see that growth kind of tapering off? Could it be flattish? What are you thinking as we go into 2022 in terms of sales volumes, given that you’ve had these new channels for a while? And with that, also, what types of returns on capital are you targeting as you write this new FIA and MYGA business?

Chris Blunt, CEO of F&G

Sure. I would say a couple of things. First, while we can’t expect to double our growth every year, we will continue to see solid double-digit growth from our core agent business. I anticipate even better growth in the bank and broker-dealer sectors, as we are still not fully penetrated in those areas and are actively adding more partners. I would estimate that we could add around six new relationships next year. Expect strong growth from our agents and ongoing growth from banks and broker-dealers. On the institutional side, we are optimistic about the FABN market, which has seen significant growth. Although we are limited in the volume we can write, we do have the capacity to take on more business there, and we are pleased with our initial results in the PRT space. While I won’t provide an exact percentage, I foresee good growth from these channels next year. Regarding returns, we don’t disclose individual product pricing, but we are seeing attractive returns on equity, especially when compared to other options available to the company.

Operator, Operator

Our next question is from the line of John Campbell with Stephens.

John Campbell, Analyst

Congratulations on your ongoing success. It appears you have some capital set aside for F&G. However, I believe you have $1.5 billion in cash at the holding company. Clearly, you will generate a significant amount of free cash moving forward. Additionally, you have over $600 million from the LITE and Paysafe investments, which will become more liquid as lockup periods expire. Therefore, you will have an abundance of cash over time. You've mentioned buybacks, but can you also discuss your plans regarding dividends and the potential payout ratio you are considering? Regarding M&A, I know it can be challenging to pursue larger title acquisitions, but could you share your thoughts on pursuing non-title M&A opportunities and your interest level in that area?

Tony Park, CFO

Thanks, John. It’s Tony. I’ll begin, and Mike can provide details on the title acquisitions. Yes, we have substantial cash and continue to generate healthy cash flow. It’s crucial to understand that the funds tied up in LITE and Paysafe belong to our insurance company, so even if we were to liquidate those assets, the cash wouldn’t benefit the parent company; it's part of the insurance company's portfolio. That said, our cash generation is strong. We have a $500 million annual dividend commitment, which we successfully raised twice recently, with an 11% increase last quarter and another 10% this quarter. We’re comfortable maintaining this without specifically targeting a payout ratio. Given our financial situation, we believe in rewarding our shareholders through cash dividends, and we’ll consider potential increases moving forward. We also discussed the bonds maturing in September next year, which involves a $400 million obligation that will require cash. Additionally, stock buybacks will be a significant part of our strategy as we support F&G growth. We have not allocated all of our cash spending planned for the next year to 18 months, so there is still some flexibility. We will keep you updated as we progress. Mike, feel free to add your insights.

Mike Nolan, President

Sure. I’d add a few things. John, we’re always on the lookout for acquisitions that can add value to the company, whether it’s on the title side, and there’s a number of opportunities to continue to add agent acquisitions. We’re doing those. A lot of them are smaller; we don’t always announce them. But on the non-title side, we have a number of businesses that could be potential beneficiaries of acquisitions if it makes sense. We’ve got our real estate tech businesses. We’ve got just our overall technology strategies with digital and SoftPro and title automation. And then there could be things in our ServiceLink businesses that could be additive. But we’re not going to do acquisitions just for acquisition’s sake. And we also know that you don’t always know when something shows up that you want to act on. So it can be good to have some cash to be able to move quickly when those opportunities show up.

John Campbell, Analyst

Yes, that makes sense. Chris, I have two quick questions. First, regarding the growth in assets under management over the next four years, that's impressive. I'd like to know about the growth by channel and how you plan to bridge that over the coming years. Additionally, I've noticed that the net investment spread has improved significantly in the last two quarters compared to previous quarters. I'm curious about the factors contributing to this strength and its sustainability.

Chris Blunt, CEO of F&G

Sure. Yes. I think it’s best to approach this in reverse order. Our partners at Blackstone have done an excellent job sourcing attractive private investment opportunities for us. This provides essential support for our balance sheet, which is smaller compared to many of our competitors. This has been a key factor in our competitive advantage. Over time, it may lessen as we grow, but that's still a few years away. We're also benefiting from scale, as adding $10 billion in assets helps lower our expense ratios. In terms of competition, we are now ranked 2nd or 3rd in the independent channel for FIA sales, which is a solid position, and there is still room for growth. I believe we can aim to be the number 1 player in that channel over time, although our current volume and positioning may limit us a bit. In the bank and broker-dealer sectors, we are just beginning to tap into that vast market, having around a dozen distribution partners, which leaves room for expansion and deeper engagement with existing partners. This presents significant growth potential. Regarding funding agreement-backed notes, there is limited capacity for that on our balance sheet, but we do have some near-term ability. For the PRT business, I expect it to grow, especially if interest rates increase. If asked to prioritize, I see growth in our core agent channel, faster growth in bank and broker-dealer, and strong growth in PRT, while we will be selective to ensure we meet our return targets.

Operator, Operator

And our next question is from the line of Mark Hughes with Truist.

Mark Hughes, Analyst

On the commercial, is there any sign that some of that volume is being pulled forward from next year, maybe around tax considerations? Is that a thing?

Mike Nolan, President

Sure, Mark. This is Mike. We don't have any evidence that, that's happening. I have not heard that. It would be anecdotal probably at best. And when you look at the length of the performance in our orders, nine months now of 1,000 orders per day opened commercial orders, we only did that once before 2021. That was in February of 2020. That's quite a bit of pull forward. So I don't really see it, but there might be a small amount of it, but just hard to know.

Mark Hughes, Analyst

Then you had mentioned that, I think, for inHere, 1.3 million had accepted your offer. Does that mean anything material to either revenue or profitability if you get more mix shift in that direction?

Mike Nolan, President

I would say not initially. The way to think about it is as a gateway to creating a complete digital transaction for all participants, including buyers and sellers. It provides us with some efficiencies upfront since they input information in a secure environment, rather than through email, directly into our production system. With 1.3 million transactions since the beginning, we're gaining some efficiency in terms of obtaining that information and providing better security with the acknowledgment and wire safe form, among other things. This will lead us toward doing more transactions digitally, culminating in the execution of documents for the closing. We're excited about the adoption rate being close to 65%, which indicates a significant number of consumers are looking for alternative ways to transact. We believe we've built a platform that will serve as a strong differentiator for us in the long run.

Mark Hughes, Analyst

If interest rates begin to rise, you mentioned a 1% return. Should we expect the spreads to increase as interest rates rise? What has your experience been in the past during periods of increasing interest rates?

Chris Blunt, CEO of F&G

Sure. Yes. And obvious point, but some of it depends on how that rate increase happens. So any increase in LIBOR, we would get a one-for-one benefit more. So we got about 15% of our portfolio in floating rate securities. The longer end of the curve takes a little longer to get into the portfolio because we’re pretty tightly ALM-matched, but you would see some benefit there. And generally, a little easier to capture a bit higher spread in a rising rate environment. And then third component is just demand for the core products. Obviously, if you’re offering 3% on a fixed deferred annuity versus 2%, there’s just going to be greater demand for that. So I think those are the three that would benefit. So yes, you would see some impact pretty quickly and then I think over time, some incremental impact.

Operator, Operator

And we have reached the end of the question-and-answer session. I'll now turn the call over to Mr. Randy Quirk for closing remarks.

Randy Quirk, CEO

Thank you. We continue to be very pleased with our team's execution as our Title business delivered the strongest margins and earnings for the third quarter in our company's history. Our F&G team also continues to execute at an extremely high level as we open new market opportunities, which is driving accelerated asset growth and improved earnings. Taken together, we are building a company that has a financial model designed to deliver strong earnings as market conditions change. It is very exciting to see our vision for the acquisition of F&G begin to come to fruition as well as the transformation of our business model. We look forward to speaking with you and updating you on our fourth quarter earnings call.

Operator, Operator

And this concludes today's conference; you may disconnect your lines at this time. Thank you for your participation.