Gentlemen, welcome to the FNF Acquisition of FGL Holdings conference call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions with instructions to follow at that time. As a reminder, this conference is being recorded. I would now like to turn the call over to Jamie Lewis, Investor Relations of FNF. Please go ahead, sir.
Thank you, Operator, and good morning, everyone. Thank you for joining our call to discuss FNF's acquisition of FGL Holdings. Joining me today are our Chairman, Bill Foley, FGL Holdings President and CEO, Chris Blunt, and FNF's CEO, Randy Quirk, President, Mike Nolan, and CFO, Tony Park. We'll begin today's call with a brief overview of the transaction from Bill and Chris, and then open the call for your questions. Additionally, a slide deck to complement today's discussion has been filed with the SEC and is also available in the IR section of our website. 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 today 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 February 7th. The replay number is 844-512-2921, and the access code is 136-989-90. Let me now turn the call over to our Chairman, Bill Foley.
Thank you, Jamie. I will discuss the transaction we announced earlier today before turning the call over to Chris, who will then review F&G's products and offerings as well as the growth outlook of the business. We announced the signing of a merger agreement under which Fidelity National Financial will acquire FGL Holdings, F&G for $12.50 per share of common stock, representing a total equity value of approximately $2.7 billion. We expect F&G to be more than 20% accretive to FNF's pro forma adjusted earnings in 2021 and more than 10% accretive on a pro forma basis to FNF's full-year adjusted earnings in 2020, assuming the transaction closes on June 30th, 2020. Following the termination of our merger agreement with Stewart Information Services, the FNF board and management underwent a comprehensive review of FNF's capital allocation strategy.
We conclude that expanding into the retirement and insurance business through the acquisitions of F&G Holdings would maximize value for our shareholders. After three years as a minority owner and with new leadership in F&G, we made the decision to acquire the remaining equity in F&G as a way to diversify our earnings and reduce the risk and volatility inherent in our title operations. F&G offers an attractive return on capital in an industry with strong secular growth. It will perform well in economic environments that may be more challenging for title insurance. During our ownership of F&G, we have come to know its business well and have developed a deep respect for its management led by Chris Blunt. Chris and his senior team will continue to lead F&G, and we expect them to continue to successfully execute on their business plan.
Importantly, the F&G brand has a long and respected history in the life and annuity insurance industry, and we see tremendous potential in investing in and growing the F&G business. We believe FNF's size, scale, and financial strength will provide significant advantages and allow F&G to capitalize on incremental organic and inorganic growth opportunities. Looking at the acquisition and growth opportunities in more detail, I see several benefits of our acquisition. First, F&G's business will diversify FNF's cash and income streams away from title insurance in a transaction that is immediately and significantly accretive to our earnings. F&G's income is currently countercyclical to FNF. It performs best when long-term rates are rising, while FNF incomes perform best in a falling or low-rate environment. As a result, we expect F&G to reduce our risk and volatility by providing a counterbalance to FNF's earnings sensitivity to mortgage rates.
This will also level our cash flow, making it more predictable. Second, F&G's retirement insurance business has strong growth as an aging demographic, and accommodative government policy is driving strong demand. This can be seen in F&G's third quarter-end 2019 results, where adjusted operating income to shareholders increased by 27% over the year-ago quarter, while delivering a 19.3% return on equity. Third, we expect our acquisition to accelerate F&G's ratings upgrades, which will open new broker-dealer and bank channels for distribution of its retirement insurance products. Additionally, we see the potential for cross-selling retirement insurance through FNF's extensive bank network. Lastly, we see an opportunity to leverage FNF's strong capital allocation skills in an adjacent consolidating insurance industry for sustained outsized free cash flow growth, while enhancing F&G's capacities to consolidate in an industry rich with attractive targets.
As part of FNF's capital allocation strategy, FNF shareholders should be comforted that FNF has no plans to alter its current dividend policy as a result of this transaction, and we will continue to be opportunistic buyers of our stock in accordance with our existing buyback authorization. Returning to the financing of the transaction, we expect to finance the equity portion of the acquisition with 60% cash and 40% in FNF common stock, with an exchange ratio of 0.2558 for shareholders who elect all stock consideration subject to proration. As a result, FNF will issue approximately 24 million common FNF shares to F&G shareholders, which will include F&G underwriters representing approximately 7% of FNF's pro forma diluted shares outstanding. FNF will also acquire the F&G preferred stock that it does not already own, with a face value of approximately $321 million as of December 31st, 2019.
Including the assumption of F&G's $550 million of senior notes due in 2025, FNF's pro forma debt to total capital is expected to be approximately 26% at the close of this transaction. The closing of the transaction is subject to certain closing conditions, including the approval by F&G shareholders, federal and state regulatory approvals, and the satisfaction of other customary closing conditions. We expect the closing to be in the second or third quarter of 2020. To conclude, we are very excited to welcome F&G, its employees, and its policyholders to the FNF family. We see a tremendous opportunity to create value for our shareholders upon closing the transaction and believe we will see earnings accretion of at least 20% to FNF's pro forma 2021 earnings. I'll now turn the call over to Chris Blunt for his comments.
Great. Thanks, Bill. I know I speak for the leadership team here at F&G when I say that we're excited about joining with FNF. For those of you that are new to our story, Fidelity & Guaranty, or F&G, is a 60-year-old life insurance and annuity company focused on the U.S. middle market. We sell our products through a deep network of independent agents. Our two primary products, fixed indexed annuities and indexed universal life, are two of the fastest-growing products in the industry, and our sales are outpacing the industry in both categories. A fixed index annuity offers clients a guarantee against losing principal due to market movements and an ability to earn a return tied to their chosen index. Needless to say, it's designed to tap into the enormous pre-retirement market here in the U.S.
Next quarter, we will expand our distribution into the affluent and high-net-worth markets via our launch into the independent broker-dealer channel. In addition, the combination with FNF will allow us to leverage their extensive relationships with banks to jump-start our growth there as well. Moreover, the transaction will reduce F&G's borrowing costs. Our high cost of debt has been a headwind to our organic and inorganic growth. By retiring our preferred equity and combining with a countercyclical company like FNF, we believe this transaction will accelerate our path toward further rating agency upgrades. F&G has a proven track record of delivering consistent spread income, in part because of our long-term investment partnership with Blackstone, and that has helped us to produce ROEs in the high teens.
In anticipation of the transaction, F&G has enhanced and extended the mutually beneficial investment management partnership with Blackstone, which will continue under FNF and includes Blackstone's world-class embedded investment support functions. Blackstone has helped F&G successfully reposition its portfolio to achieve higher investment performance while minimizing risk and upgrading its financial strength rating. F&G's management team and unique deep relationship with Blackstone provides meaningful differentiation from competitors. Finally, I'm personally excited to work with Bill, given his track record of strategically deploying capital to help companies grow and to exploit opportunities in attractive markets. In short, we're poised to make a great growth story even better, and personally, I can't wait to get started. So with that, I'm happy to take your questions.
Thank you. At this time, we will be conducting a question-and-answer session. We ask that you limit yourself to one main question and one follow-up, and then re-queue for additional questions. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, as we poll for questions. Our first question comes from the line of Mark DeVries with Barclays. Please proceed with your question.
Yeah, thanks. Could you discuss any revenue and expense synergies you're assuming in the accretion math? And more specifically, I think you alluded to in the release the potential for some cross-sell. Could you talk more about the cross-sell potential you see? Thanks.
Yeah. In this case, we really aren't baking in any sort of significant synergies into our model. F&G is a pretty efficiently run company. Chris has a few ideas with regard to some offices he may consolidate, but it's not a significant number, and of course, we'll look at that. There are certain other areas that are going to be interesting. Chris, or F&G, outsources many functions to third parties. Some of those functions can be handled internally by FNF, such as statutory accounting and statutory reporting, claims management, where FNF has kind of a deep and long history of dealing with those particular areas of the business.
We're very excited about our ability to move toward various - I wouldn't call them mid-size banks, but those banks in the $15 billion-$100 billion range, where FNF has deep and long-lasting relationships based upon our escrow deposit relationships and our banking relationships in terms of title insurance relationships and so on. And we believe that we will be able to give Chris's team, or F&G's team, access to those institutions in terms of being involved in their wealth management practice. And Chris can probably address this a little more articulately than I can, but this should allow Chris to penetrate his primary area of focus on a new business basis going forward. And Chris, I don't know if you'd like to add to that.
Yeah. No, that was great, Bill. I would say that particularly when it comes to banks, so right now, our near-term focus has been independent broker-dealers, but given our focus on fixed annuities as opposed to variable annuities, banks are just an enormous channel. We are typically number one or number two in something called MYGA sales. It's just a multi-year guaranteed annuity, but that is through the independent channel. That tends to be the smallest of the channels you can participate in. So we know, largely because of the partnership with Blackstone, we're able to be super competitive there, generate some good returns. So we're really excited about the efforts to expand into banks, not just because of the relationships, but obviously the hopefully acceleration from a ratings perspective. So I think that's something that, from our perspective, is a very significant point of upside.
Okay. Got it. Thank you.
Our next question comes from the line of Bose George with KBW. Please proceed with your question.
Hey, guys. Good afternoon. Actually, F&G seems to be a business that trades maybe six, seven times earnings, maybe a little better. Do you think this will change over time? Do you think there's a risk that the FNF multiple will be impacted by this? I'm just wondering what you think the street is missing here because, obviously, stock's down a reasonable amount despite the 20% accretion that's expected.
We believe that F&G has been hamstrung by its capital structure over the last three years. It was the result of a sale to a SPAC, and it ended up with a large amount of preferred stock, very expensive for F&G to manage. By removing the preferred stock and changing F&G's capital structure, then enabling it to gain earnings upgrades, we believe the P/E ratio of F&G will naturally expand and move more toward FNF's P/E ratio. It's going to take a little patience, and it's going to take some time as the results start rolling through. I'm very excited about F&G, particularly as a counterbalance to FNF's cyclical earnings. We've been very fortunate the last few years in a low-interest rate environment, and we've done well.
I've always had a goal of developing a relationship in another insurance space that would be countercyclical to our own business, and F&G does exactly that. F&G will tend to earn quite a bit more once when rates are higher, and that's the exact time when FNF's title orders decrease pretty sharply, so that's really our rationale. I think that we laid out the rationale pretty well, and I believe Chris addressed his piece pretty well also.
Okay. Thanks.
As you said, the only thing I would - sorry, the only thing I'd add to that, which is important, because you asked the question, "What's the market missing?" I think our frustration on the F&G side for a while now has been not a lot of differentiation within our space. So we're an insurer with a young, pretty sticky book of liabilities. We're effectively a spread lender. We don't have a lot of legacy assets that were priced many, many years ago. And so from an earnings standpoint, it trades at a ridiculously low multiple, my humble opinion, because it gets treated as a price to book despite the fact that it has almost nothing in common with a lot of the other kind of mainline traditional insurers that are sitting on a bunch of legacy assets. Remember, our liabilities can be repriced on a regular basis.
So that, I would say, is what the market has missed from the beginning.
Okay. Great. That's helpful. Thanks. And then actually, just switching to the FNF capital return, I mean, you noted that buybacks will continue opportunistically. Can you just provide a little more detail just because, obviously, it had slowed? There was a very modest amount in the third quarter. Just what we should kind of think about over the next whatever, 12-18 months?
Yeah. Well, thanks. And that's an important aspect of this transaction as well. FNF, over the last several years, built up a fairly large cash balance. So the need for additional cash to fund the cash portion of this purchase price is really going to be negligible. So it really doesn't change FNF's dividend policy, and I believe we've raised our dividend consistently in the fall for the last five or six years. And it won't change our buyback policy, which is generally based upon a certain number of shares per day being repurchased. But once we entered into negotiations with F&G, we suspended the buyback policy just based upon SEC rules and regulations. So now that this is behind us, you'll start seeing the buybacks start in again.
I'm very hopeful that we'll maintain nice dividend expansion based upon F&G's ability to aid the overall company with free cash flow.
And just as a reminder, so the buyback, the daily number is 25-50 thousand a day, was that?
I'd let Tony answer that one. I think Tony Park is on.
Hey, Tony.
Yeah, I'm on it. It was 15,000 a day, and then we moved it to 25,000 a day, Bose. But then, as Bill mentioned, we were blacked out almost immediately following that. So I think the plan would be to look at 25,000 as we move forward.
Okay. Great. Thanks a lot.
Our next question comes from the line of John Campbell with Stephens Inc. Please proceed with your question.
Hey, guys. Good morning. Thanks for taking our questions. First, I mean, we've obviously got a lot more homework to do on the life insurance and annuity markets, but maybe if you could help us out on the regulatory side of things, are there any issues, I guess, that could maybe act as a ripple effect or maybe limit the title business?
This is going to be a separate subsidiary of FNF, so the title business will stand as a sister company with a parent board of directors. And our management structure for F&G is going to be an internal board, small internal board, to make sure that Chris can manage his business effectively and we can continue to look at various portfolios as they come his direction in terms of quicker expansion of our asset base. And regulatorily, we have great relationships with the regulators, FNF does, and has for years and years. And we don't see any regulatory impairments or impediments to the transaction. And Chris, would you like to add to that?
I would agree with that. Good relationship with our home state regulator, which is Iowa. FNF and Bill are well-known in the insurance world, and so this should be well received.
Okay. And then on the cash component of the proceeds, I think you guys said you got about $1 billion at the hold co and then, I guess, roughly $1 billion of new debt. But I guess, Tony, any sense for the blended rate on that debt or if you can maybe shortcut just the degree of interest expense lift kind of on an annualized basis?
Yeah. I think we've estimated in the models roughly 4%, although the markets are currently well better than that. I mean, I think it's more like 2.5%-3% if you look at the markets. And at this point, we wouldn't know exactly how much we would need to borrow because the cash is a moving target. We had roughly $1 billion at the end of the third quarter. We'll update you next week on where we stand at year-end. But we continue to generate cash and accumulate cash. And so we may be in a position where we're not borrowing that much. And we certainly have a revolver available to us if we need to use that. It's an $800 million undrawn facility at LIBOR plus 145. So that can kind of give you a sense of the cost.
Okay. Great. Thanks, guys.
Our next question comes from the line of Andrew Kligerman with Credit Suisse. Please proceed with your question.
Hey. Good morning, well, good afternoon. And question around with this transaction, I think what's so interesting to me is that in many cases, rating agencies and regulators will give some sort of a diversification credit when you have disparate types of insurance business. And so I was wondering if that is indeed the case here and if you could provide us with some quantification potentially of how much capital that might technically free up and allow for F&G to do more deals with that capital.
Yeah. I think I'll let Tony answer this one if that's all right?
I think our sense was that they did like the diversification of our revenue streams. But at the same time, they're rating agencies, and they want to make sure that we do what we say we're going to do. So they're going to wait and see. We are anticipating that F&G gets upgraded one notch at closing, so that's a positive. And they'll affirm or have affirmed FNF's ratings. And I think as we move forward, they'll look at the diversification and give us some credit. And then to some extent, they'll look at where we stand on a debt-to-cap ratio and maybe give us some negatives. And right now, I think those two kind of wash out. But as we pay down our debt, as we are known to do when we generate excess cash, I think we'll get more credit on the diversification side.
I think that's positive. In fact, I think one of the agencies, I don't know if it's in their release or not, but they had some very constructive and positive comments about us diversifying into another line of insurance.
Interesting. And then as a follow-on to that, I think that F&G had cited about $300-plus million in redeployable capital available to do transactions. Will that still be the number deployed? Or with this acquisition, is there more capital that could come from FNF to do deals down the road well above this $300 million?
Our goal is to grow F&G. You're correct in terms of $300 million of deployable capital. What we will be examining are a number of portfolios. They come to the various other underwriters fairly consistently from insurance companies that are trying to dispose of pieces or portions of their portfolio. The only thing I would say is we won't get involved in long-term care in terms of an acquisition of a portfolio. We're going to take them as they come. Part of the beauty of this transaction is that FNF is sort of at the size it can be in its space, in title insurance space.
And while we can grow with the market, and we can grow by taking market share, and it's a slow grinding process, this will give us the opportunity to grow a countercyclical business to our own business. And we'll deploy capital to help support that growth.
I see. And if I could just sneak one last question.
Yeah. This is Chris. Sorry, this is Chris. The only thing I'd add to that is in the near term, just continue to ramp up organic growth. I mean, our sales engine is doing great. The early calls with our distribution partners were understandably incredibly enthusiastic and positive. They see the benefits of a parent company with a lot of free cash flow. So I would say, yes, helpful as we look at block opportunities. But in the near term, it's really path to an upgrade, expanding into new channels, and leaning into the pipes that we've already built.
I see. And if I could just sneak one quick one in. What happens to Blackstone's position post the transaction? Will they be out of both companies from a shareholder standpoint?
They will be. They will be. Both preferred and common, but as part of this transaction, we've extended the term of our investment management agreement with Blackstone, and we're able to use the Blackstone name in terms of marketing our products, so we have a great relationship with Blackstone. We're very pleased with how supportive they were of this transaction.
Awesome. Thanks so much for the insights.
Our next question comes from the line of Mark Hughes with SunTrust. Please proceed with your question.
Yeah. Thank you. Good afternoon.
Good afternoon.
Could you talk about the cash flow from this business, especially if you do start to accelerate the growth with the ratings upgrade? Will it be cash flow positive? Will you need some extra capital in order to grow it? And kind of what is the rule of thumb when we think about capital generation or capital needs?
Yeah. Chris, do you want to handle this one?
Sure. Yeah. I would say the quick answer to that is we're capital self-sufficient right now. So we're able to have enough capital to fund our growth. And so it's really a function of should there be either opportunistic transactions or even faster growth rates where we might need some additional capital from the parent company.
If we think about the 2021 outlook, what's kind of the base case in terms of cash, either cash flow or cash need?
Yeah. I would say neutral. We're basically consuming all the capital that we're throwing off with very high growth.
Yeah. Thank you for that. And then one question. Just in thinking about the strategic kind of long-term positioning, do you view this as a complement to the title business that is something that is long-term in nature, or is this an opportunistic acquisition? You've certainly done those and had great success in the past, but one where you create value and then you look at your alternatives at some future date.
At this time, we're really looking at this as a key diversification of our title insurance business into another line of insurance to sustain growth. And the key thing for me has always been the balancing of our earnings at FNF, which can come under pretty severe stress in a higher interest rate environment. And it just gets tough for us because the title orders tend to dry up. And we've been very fortunate the last three or four, well, seven years with a low interest rate environment. So this is really a balance to make sure that FNF can continue growing, paying its dividend, continue buying stock back, but have a diversification in its portfolio that I think is very advantageous.
Thank you.
Our next question comes from the line of Ryan Krueger with KBW. Please proceed with your question.
Hi. Thanks. I had a follow-up on the M&A strategy. Is it still the same as before and focused on block transactions in the spread space, or would you also consider other business lines? I know not long-term care, but are you still focused exclusively on spread business, or would you expand?
No. We'll take a look at acquisition opportunities. I mean, I think the first order of business is to get our approvals in line, close this business, settle down, make sure we have everything organized properly, that there's good communication between the two lines of business, let Chris continue really a fairly aggressive organic growth plan, which is working, and be opportunistic as other ideas come our direction. But I wouldn't expect to see anything in the immediate future. We've got work to do now. And we'll do our job, and then we'll be opportunistic.
Thanks. And then what happens to the offshore tax advantage that F&G had under this transaction? And how does that change? Assuming it goes away, how does that change the strategy?
It's all in our pro forma that we prepared. The 20% accretion next year includes becoming domestic again. It really isn't. It's just not significant.
Okay. Thank you.
Our next question comes from the line of Geoffrey Dunn with Dowling & Partners. Please proceed with your question.
Thanks. Tony, I wanted to revisit your commentary on buyback. It would seem to me that in the near term, the more cash you can accumulate versus have to finance even with an LLC, the better. So are you saying you're going to actively be buying stock in the first half, or is this something that you intend to return to this after the deal closes? I would think we would probably intend to return to that after the deal closes. And you're right. I think to the extent we can accumulate cash toward this deal, that's less that we have to borrow. So that makes logical sense. Okay. And then Bill and Chris, can you elaborate a little bit more on this cross-sell concept? I mean, on the surface to me, my immediate reaction with this is more a financial transaction.
Can you talk about the point of sale that FNF interacts with, with its escrow relationships and title services relative to the point of sale or access to the wealth management? I assume it's not the same person. So can you elaborate on how this strategic opportunity could develop?
I mean, I've already had discussions with a number of bank CEOs. This is not going to be an immediate opportunity in the large bank space. In that banking space of the $10-$12 billion to $75-$100 billion, that's where FNF's relationships with senior-level management at various institutions allows us to go directly into the wealth management group. You're absolutely correct. Both the title insurance origination business and the escrow depository relationships are with different people in different sides of the bank. I believe Chris's greatest opportunity is going to be in those slightly smaller mid-sized banks where myself or Randy can make a call, talk to the CEO, and gain Chris access. His products are outstanding, and they're perfect for these types of banking institutions. Maybe a much tougher sell at B of A or Wells Fargo or J.P. Morgan.
But in these not quite as large banks that don't have the depth that some of the super banks have, that's going to be our opportunity. And I believe we're going to be very successful. Chris has to go about it in the right way and be patient because when you're dealing with financial institutions, it's about patience and about just keeping at it and keep talking and keep working. But with these smaller institutions where we have escrow deposits, that's a very important component of their banking business. And we'll get the access. We just have to have the right sales team in place. And Chris, do you want to add to that?
Yeah. I think of it as sort of a bottom-up, top-down approach, frankly. So this is kind of the world I grew up in, right, was broker-dealer and bank distribution throughout my career. So it's a very friendly space to me. But when you have sort of at the ground level, which a number of us have in our organization, relationships with those wealth management folks, but if through FNF you've got CEO-level relationship, that's a really winning combination. The other thing I was mentioning before, I think this just adds to the credibility when you're walking in as part of a $15 billion market cap company versus a $2.5 billion market cap company. And the ratings really do matter in the bank channel. So I would say A minus, for example, from AM Best is kind of the minimum to get in there.
Accelerating that path, if we're able to do it, to get to straight A with the competitiveness of our products is going to be just a home run.
Okay. And then this last question. When you think about accretion, Bill, I would assume that you guys aren't factoring in improvement from rates or anything like that, that the 2021 outlook is kind of status quo on rates, and you're just excited about the business if rates stay low for a while.
Absolutely. No, absolutely. We factored in no rate adjustments. And we actually took out the offshore piece of the tax advantage. So we've been very, very conservative in our pro forma.
Okay. Thank you.
Our next question comes from the line of Jack Micenko with Susquehanna Financial Group. Please proceed with your question.
Hi. I was hoping, Chris, you could maybe talk about some of the opportunity on the organic side. It sounds like - and pardon the ignorance here coming from the title side - but it sounds like the gating factor on some of this growth is the ratings. I think you said you're quite large in the independent channel, but that's a small channel. Is there a way you could size either market share or dollars or somehow understand what that organic opportunity looks like, sort of line of sight from the next year or two?
Yeah. And I've said this before publicly, so I don't think, I think it's fine. I believe pre-acquisition by FNF, we can double the institution just through organic growth in a five-year period of time. So that's a combination of continued growth in our core channels. We've been growing at an almost 20% clip through our core independent agent channels. And keep in mind, many of these are relationships that go back decades. So this is not folks that we met last week. So that's been a core strength of this institution. Now, as we expand in with support from our partner at Blackstone into the broker-dealer channel, where they are the largest seller of alternatives. And so they have tremendous relationships with all the gatekeepers and key wealth management players. That's, again, also the world I grew up in earlier in my career. So that has big upside.
I would say that market is larger than where we are today in the IMO space. And then when you say pure fixed product, it's banks. That's where the money is. That's where the savings dollars are. That's where all the conservative investors are. So I think also equal in size. So if I were to just, we can get you exact stats, but the way I walk around mentally thinking about it, you've got this core engine we have right now throwing off probably four billion or so of sales. Now we're going to go into broker-dealer, which is equally large, maybe larger, and banks. That's why we get so enthusiastic. And it's also why now having a parent organization with capital is just terrific.
So yeah, our gating issues were always, we had enough capital to be self-sufficient, but it would have been hard for us to step on the gas from here without going out and doing another capital raise. And then similarly, the rating support from FNF. So yeah, if you said, "How big is it?" I think we can double the place through organic growth.
All right. That's helpful. Thanks. And then, Bill, going back to the title commentary, it sounds like you feel like you've hit terminal velocity in market share there, and obviously coming off the Stewart transaction or lack of transaction. When you think about incremental dollar of capital for the business, I mean, are you still in the agent acquisition market in title, or is the upside and accretion here, does it feel like you'll either maintain or maybe even see a little share on title and the best dollar in for the foreseeable future is on the F&G side?
No. We're going to continue acquiring agents. There are not a lot of agents of size left to be acquired. But a year and a half ago or two years ago, we acquired TG of Hawaii, good-sized agent. And we're also still growing our market share not only in our own commercial space and direct operations space, but in the agency space. It's just kind of a 0.5% a year growth, 0.75% a year growth. So it's a slow process. I mean, my goal is to have every title order originated be a Fidelity National Title or affiliate order. But it's going to take a while to get there. So no, we're not changing anything in terms of what our game plan was at Fidelity. It's a great cash flow machine. We have the infrastructure in place. We have terrific management.
So we're going to keep on emphasizing our title insurance side of the business. It's where the majority of our—it's where the majority of our capital is deployed, has been deployed. And we want to balance that with our stock buyback program. And also, I believe that we need to keep on—we need to keep on increasing our dividend. So there are going to be a lot of needs for capital. And Chris isn't going to get all the capital he wants, but we're going to try and support him as much as we possibly can to help him grow and get that organic double in organic revenue growth double or asset size double. So it's going to be a balancing act. But Randy and Mike, they'll handle this. They're very experienced guys.
I appreciate you taking my questions.
Our next question comes from the line of Alex Scott with Goldman Sachs. Please proceed with your question.
Hi. Thanks for taking the question. I guess the first one I had was just on the rate sensitivity. It sounds like that was part of the rationale here. So it sounds neutralizing in ways. So I guess about a quarter of the earnings of the pro forma company, is it neutralized to that point? Or at what point with F&G growing, would it reach a level that would neutralize the rate sensitivity? And would you let it go beyond that if you have M&A opportunities through F&G?
I think you're talking a few years off, and I think we'll see what the opportunities are at that point in time, but one of the core ideas, as you said, is to balance the rate sensitivity we have on the title side, and I'd love to see Chris double the size of his business in the next five years, and then we'll see where we go.
Got it. So in your view, for deals that are potentially out there, you can still look at larger opportunities because it's not really a consideration at the moment that it would actually cause you to be exposed to low rates?
That's right. Yeah. That's right.
Got it. Okay. Thank you.
Our next question comes from the line of Mark DeVries with Barclays. Please proceed with your question.
Yeah. I was just hoping to get an update if you can provide it on any terms around this updated partnership with Blackstone, whether there's kind of any material changes to what you pay them and the length of the agreement.
I don't know what's disclosable at this point, Chris.
I don't know either, to be honest.
We did extend the agreement, and we have some preferred pricing at various levels of asset management when assets under management achieve certain other stepstones. And so we view it as a very favorable agreement with the best money manager/investment advisor in the world. So we did extend it, and we do have breakpoints in terms of the fees we pay at various levels of assets under management.
Okay. So no changes that would materially change your expectations around the type of spread you can generate?
No. It would only improve. It would only improve.
Okay. Got it. Thank you.
Our next question comes from the line of Jeffrey Dunn with Dowling & Partners. Please proceed with your question.
Thanks. Sorry. One more follow-up on capital management, Tony. In the past, I mean, you're not levering up as much as you have in some deals in the past, but obviously, you're putting on some leverage here. And typically, after that, FNF starts aggressively paying down that debt. So as you weigh the higher leverage and buyback, what are your thoughts post-close here?
I think we're comfortable in the mid-20s. So I think we'll have optionality in terms of where we want to deploy our capital, whether we invest it in the F&G business, whether we go to raising the dividend or the buybacks, or pay down debt if there aren't other options. I mean, at this point, other than the revolver, which we could use, but if we issue senior debt, it may not be prepayable. So we may sit on that kind of leverage at 26% or mid-20% for some period of time and really not need much in the way of cash to service that debt.
Okay. Thanks.
Ladies and gentlemen, we have reached the end of our question and answer session, and now we'd like to turn the call back over to Mr. Bill Foley for any closing remarks.
Okay. Yeah. Thanks for everyone for attending the conference call this morning. We appreciate your participation. We appreciate your questions. We believe we have great things to come with the FNF-F&G merger. I'm looking forward to working with Chris, and thanks for your time today.
Ladies and gentlemen, this concludes today's teleconference. You may now disconnect your lines at this time. Thank you for your participation and have a wonderful day.