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Fidelity National Financial Inc (NYSE:FNF)
Q2 2019 Earnings Call
Jul 17, 2019, 11:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by and welcome to the FNF 2019 Second Quarter Earnings Call. [Operator Instructions] Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions]

I would now like to turn the conference over to your host, Dan Murphy. Please go ahead.

Daniel Kennedy Murphy -- Senior Vice President and Treasurer

Thank you. Good morning, everyone, and thank you for joining us for our second quarter 2019 earnings conference call. Joining me today are CEO, Randy Quirk; President, Mike Nolan; CFO, Tony Park; and EVP, Brent Bickett. We'll begin with a brief strategic overview from Randy. Mike will review the title business, 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.

This conference call may contain forward-looking statements that involve a number of risks and uncertainties. Statements that are not historical facts, including statements about our expectations, hopes, intentions or strategies regarding the future, are forward-looking statements. Forward-looking statements are based on management's beliefs, as well as assumptions made by and information currently available to management. Because such statements are based on expectations as to future financial and operating results, and are not statements of fact, actual results may differ materially from those projected.

We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. The risks and uncertainties, which forward-looking statements are subject to include, but are not limited to, the risks and other factors detailed in our press release dated yesterday and in the statement regarding forward-looking information, risk factors and other sections of the Company's Form 10-K and other filings with the SEC.

This conference call will be available for replay via webcast at our website at fnf.com. It will also be available through phone replay beginning at 1.00 PM Eastern Time today, through July the 24th. The replay number is 800-475-6701, and the access code is 469222.

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

Raymond R. Quirk -- Chief Executive Officer

Thank you, Dan. The second quarter was a very strong performance for our title business, as we generated adjusted pre-tax title earnings of $363 million and a 17.7% adjusted pre-tax title margin, both of which were our best quarter performance since the third quarter of 2003, nearly 16 years ago. I will let Mike go into more detail on the title business. With respect to the acquisition of Stewart Information Services, we recently exercised our second option to extend the closing date of the transaction an additional three months to September 18, 2019. We continue to work with the FTC and the New York State Department of Financial Services to seek approval of the proposed acquisition and we have meetings scheduled with the FTC in both July and August. If the approvals are obtained, we remain confident that the Stewart acquisition can create meaningful long-term value for our shareholders. We are not able to further comment or take questions on Stewart.

In April, our board declared a $0.31 per share second quarter 2019 cash dividend, which used $85 million in available cash from the holding company in June. We also repurchased 720,000 shares of stock during the second quarter for approximately $28 million. Cash inflows were $450 million, primarily from the $323 million in underwriter and non-underwriter dividends that were paid up to the FNF holding company level in the second quarter. The $102 million in interest and full repayment of the Cannae line of credit that was originally drawn in February. And $25 million in principal and interest on the intercompany ServiceLink note. The net result was that we ended the second quarter with approximately $862 million in available holding company cash. In the first week of July, Cannae again borrowed a full $100 million under the line of credit, which reduced our cash holding at the holding company by $100 million.

Let me now turn the call over to Mike Nolan to discuss the title insurance business.

Mike Nolan -- President

Thanks, Randy. We generated adjusted pre-tax title earnings of $363 million, a $26 million or 8% increase over the very strong second quarter of 2018. Our adjusted pre-tax title margin was 17.7%, a 60 basis point or 4% increase over the prior year. Direct orders closed decreased 1%, comprised of a 6% reduction in daily purchase orders closed, a 3% decrease in total commercial orders closed, and a 25% increase in daily refinance orders closed. Purchase orders opened declined by 2% versus the second quarter of 2018, a sequential improvement from the 6% decrease in the first quarter of 2019 versus the prior year.

Refinance orders opened increased by 51% versus the second quarter of 2018, as the decline in mortgage rates appears to be more persistent than many originally expected. Lastly, total commercial orders opened increased by 8% over the second quarter of 2018. With strong second quarter refinance orders opened, an improving trend in purchase orders opened and continued strength in commercial orders opened, we are well-positioned to continue to produce strong financial results in our title business as we enter the second half of 2019.

For the second quarter, total orders opened averaged 8,500 per day with April at 8,400; May at 8,100; and June increasing to 9,000. Purchase orders opened and closed were down 2% and 6% respectively on a daily basis in the second quarter. In both April and June, purchase orders opened were down by just 1% versus the prior year periods. Refinance orders opened and closed, increased by 51% and 25% respectively on a daily basis versus the second quarter of 2018. The best month of the quarter was June, when refinance orders opened increased by 82% over June of 2018. For the first-two weeks of July, total orders opened were approximately 8,800 per day. Daily purchase orders opened declined by 2% versus the prior year and daily refinance orders opened increased by 83% over the prior year period.

Total commercial revenue of $286 million was a 2% increase over the second quarter of 2018, driven primarily by a 5% increase in the commercial fee per file somewhat offset by a 3% decrease in closed commercial orders. Commercial orders opened increased by 8% in the second quarter versus the prior year, positioning us well for the back half of 2019. Our first half 2019, total commercial revenue of $517 million was our strongest first half revenue performance since we began tracking total commercial revenue in 2015.

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

Anthony J. Park -- Chief Financial Officer

Thank you, Mike. We generated more than $2.1 billion in total revenue in the second quarter with the title segment generating all but the $52 million of revenue in our corporate segment. Net earnings were $266 million, which included $41 million in realized gains, primarily due to the mark-to-market accounting treatment of equity and preferred stock securities in our investment portfolio. Adjusted net earnings were $255 million or $0.92 per diluted share.

In our title segment, excluding realized gains of $46 million, primarily due to the mark-to-market accounting treatment of the equity and preferred stock securities in our investment portfolio, we generated just over $2 billion in total revenue for the second quarter, a 4% increase from the second quarter of 2018. Direct premiums increased by 4% versus the second quarter of 2018. Agency revenue grew by 3% and escrow title related and other fees increased by 2% versus the prior year. Personnel costs increased by 3% and other operating expenses grew by only 2%. All in the title business generated a 17.7% adjusted pre-tax title margin, a 60 basis point increase versus the second quarter of 2018.

Interest income of $59 million was a $16 million increase over the prior year, as we continued to see the positive impact of higher short-term interest rates on the interest we earn on the client exchange funds we hold in our 1031 Exchange business, the reinvestment of proceeds from maturing fixed income securities and from cash and short-term investments. FNF debt outstanding was $838 million on June 30th, for debt-to-capital ratio of just under 14%. Our claims paid $66 million were $4 million higher than our provision of $62 million for the second quarter. The carried reserve for claims losses is currently $28 million or 2% above the actuary central estimate. We continue to provide for claims at 4.5% of total title premiums.

Finally, our investment portfolio totaled more than $5.2 billion at June 30th. From a regulated standpoint, we have $1.4 billion in statutory reserves, $90 million in deferred revenue at our Home Warranty company, $1.6 billion in regulated cash and investments and $900 million in secured trust deposits, for a total of $4 billion in regulated cash and investments. From an unregulated perspective, we have nearly $900 million of unregulated cash as of June 30th. There is $200 million in cash and investments at ServiceLink and other subsidiaries, and $140 million in equity method investments, all of which are restricted primarily by minimum working capital or other regulatory requirements.

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

Questions and Answers:

Operator

[Operator Instructions] And our first question will come from the line of Mark Devries with Barclays. Your line is open.

Mark Devries -- Barclays -- Analyst

Thank you, Tony, question for you. Could you help us think through what the impact could be on investment income, if the Fed does in fact ease in the back half of this year, as it's widely expected?

Anthony J. Park -- Chief Financial Officer

Sure, Mark. No problem. $59 million we generated in the second quarter of 2019, that's up -- up against $43 million in the second quarter of 2018. Included within the $59 million is about $5 million that we receive every second quarter from some title plant ownership interests we carry in the state of Texas. So that's kind of an annual event, but it's always in the second quarter. So you can expect that third quarter interest and investment income comes down by that $5 million at a minimum. And then our expectation is really Q3 we're looking at about $54 million, so not a lot of change in interest and investment income, but for the $5 million decline. But then as you work your way through the next few quarters, we do expect some erosion based on at least one or two Fed rate reductions, some erosion in our short-term interest and investment income. So I'm thinking somewhere in the $50 million-ish in the fourth quarter of 2019, maybe a little lower than that in the first quarter of 2020, maybe $48 million, and then bump back up in Q2 with the Texas title plant dividends to maybe around $54 million or so in the second quarter of 2020.

Mark Devries -- Barclays -- Analyst

Okay. That helpful. And is that assuming basically 50 basis points of Fed funds using, which I believe is consensus now?

Anthony J. Park -- Chief Financial Officer

Yes. It is .

Mark Devries -- Barclays -- Analyst

Okay. Great. Thank you. That's helpful. And then, interested in getting some color on particularly the commercial pipeline and how that's looking for the back half of the year, I know, you're optimistic, but just any color you can give us on kind of geographic diversity transaction sizes, anything else will be helpful? Thanks.

Mike Nolan -- President

Sure, Mark. It's Mike. Yeah. We have very good quarter with opens up 8%. And again, it's very broad-based. Our national commercial orders were up 10% for the quarter and our local were up 7%. So, good strength in both. We had some nice larger deals that closed in the quarter. You probably noticed that our national commercial fee per file is up quite a bit, I think maybe 8%. And we're seeing, transactions, -- larger transactions in a variety of segments from energy to gaming, office. We had a couple of nice multi-sites that closed in the quarter. And the pipeline, looks pretty good as we go into the second quarter.

Geographically, Texas is doing very, very well. It's one of our stronger markets. But other mid-tier markets like Pittsburgh, DC, Virginia, the Midwest, Ohio, Minnesota, Chicago are all performing well. And then, we're still seeing some nice transactions that get exported out of New York, a lot of the larger deals that occur around the country still get sourced in New York and we're seeing some good strength there as well.

Mark Devries -- Barclays -- Analyst

Okay. Great. Thank you.

Mike Nolan -- President

Thanks.

Operator

And next we go to the line of George Bose with KBW. Your line is open.

George Bose -- KBW -- Analyst

Hey, guys. This is Bose. The first question, just in terms of the -- I wanted to ask about your margin expectation for the back half of the year, and also the headcount was up. I guess I'd say relatively modestly given the increase in orders, just thoughts there, it could see a little bit of catch up in the headcount?

Mike Nolan -- President

Sure, Bose. It's Mike. On the head count, we did add 290 people on our field operations and really just dealing with the increased in volume. And if you look at our open orders per day in the second quarter kind of versus the first. We are up about 1,300 per day on the open side and I think, maybe a similar number on the close side or maybe a little bit lower on the closed side, but that's a lot of volume and you do have to staff into that and we've done that in the second quarter. I think as we move into the third, we're going to need to add some additional staff and we'll really use our productivity metrics to guide us on both the kind of open per employee and close per employee side. And we may need to add another maybe 150 to 200 people in the third quarter, but we're going to be very careful with that end. And if we see order trends going in a different direction, then we'll react accordingly.

On margin expectations, we would expect the third quarter to be another very good quarter. I think, as you know, the second quarter tends to be our highest margin quarter of the year. And typically, what we see is that in the third quarter, commercial comes off a bit historically to the second quarter. Usually the second and fourth your best quarters. So commercial could be down a bit, but it'll still be a very good quarter. And then purchase tends to fall off slightly in the third quarter as well, just historical trends. And then on the plus side, we'll have more refi closing, so it'll be a very good quarter, but hard to call, what the exact margin will be.

George Bose -- KBW -- Analyst

Okay. Great. That's helpful. Thanks. And then, actually just switching over to capital and if the Stewart deal falls through, could you just remind us, how much capital you feel could be available for buybacks and just how much capital you'd like to keep at the holding company?

Anthony J. Park -- Chief Financial Officer

Sure, Bose. This is Tony. So we started the quarter, call it, $530 million or so in cash on hand at the parent company. So pretty close to a position where we could fully fund the cash portion of the Stewart transaction. We did upstream a total from subsidiaries of about $350 million. During the second quarter, we paid our common dividend of $85 million modest buybacks, 15,000 shares a day, 720,000 total shares we bought back in Q2 for about $30 million. And then, as we mentioned, Cannae repaid a $100 million on the revolver. So we ended the quarter at a very strong $862 million in cash on hand at the parent company. And then, if we kind of fast forward through the balance of the year. We expect another call it, $500 million or so from dividends from our subsidiaries.

And then from an outflow perspective, $170 million in dividends to shareholders, we've anticipated about $90 million in buybacks. That would keep us at 15,000 a day through Q3 and bumping that to about 30,000 a day in Q4. And then Cannae did reborrow the $100 million, but that still gets us at about $1 billion of cash on hand at year end and that absent the Stewart transaction. So with Stewart obviously $550 million or $600 million obligation, plenty of money on hand to fund that with still more money in the coffers. If we weren't able to close on Stewart, we've got $1 billion, we'd probably want comfortably $200 million of cash on hand at the Holdco, which would leave us about $800 million of capital.

And then, of course, your question, what do you do with that? And certainly the board will take a good, hard look at number of things, including our dividend policy, as we typically do in our October Board Meeting, where we typically raise the dividend. I'm sure they'd look at that. We'll continue to look at M&A, agents, underwriters, maybe technology, maybe something in the ServiceLink space, and then stock buybacks. We have 23 million shares under our current authorization. So, I'm sure they'll take a strong look at potential for more aggressive buybacks as well. So all things are on the table, with $1 billion of cash at Holdco.

George Bose -- KBW -- Analyst

Okay. Thanks. I have one quick follow-up. Is an accelerated stock repurchase one of the options?

Anthony J. Park -- Chief Financial Officer

I guess, I would say there's nothing that we would take off the table at this point. We've not done within FNF an accelerated buyback in the past, but that doesn't mean we would not do that. So I wouldn't say that. We've also typically not borrowed money to buyback shares in the past. But again, with where we stand from a leverage standpoint at 14% or sub-14% debt to cap, I suppose all things would be on the table.

George Bose -- KBW -- Analyst

Okay, Great. Helpful. Thanks, guys.

Operator

Next we'll go to the line of Jason Deleeuw with Piper Jaffray. Your line is open.

Jason Deleeuw -- Piper Jaffray -- Analyst

Yes. Good morning. Thanks for taking the question. And just a little bit more color on commercial. Were there any specific large deals that may have moved into the quarter or moved out or anything kind of shifting quarter-to-quarter that we should be aware of? And then the strength that you saw in commercial, is it just kind of broad base for the whole industry or do you think there was some share gains, just looking for a little bit of color on that?

Mike Nolan -- President

Yeah, Jason. It's Mike. In terms of the quarter, I don't know that things really shifted and we actually had some transactions that we thought were going to close in the quarter that moved into the third quarter. But we did have a number of large transactions, as I mentioned, we had a couple of big multi-sites that closed in the quarter. And I mentioned a couple of energy deals, those tend to be bigger and gaining deal, so you get larger transactions there.

One of the other things, we're seeing that's kind of affecting fee per file is that our mix has shifted on the closed side, where we're closing more resale transactions commercially than in the prior year. And the fee per file tends to be a bit bigger with the resale transaction, as you know, because with a refi, you're not ensuring the full value of the property. You're ensuring the debt and so we're getting a benefit from that. But I wouldn't say there was a big shift of pulling transactions forward into the quarter. Actually, maybe the opposite.

And the second question, again, remind me, Jason?

Jason Deleeuw -- Piper Jaffray -- Analyst

Share -- market share trends.

Mike Nolan -- President

It's hard to know that we don't have great transparency in the market share. All we can rely on is probably what the other companies report in terms of their overall commercial performance quarter-by-quarter. I don't think -- I think we're the first ones out. So we'll see what the other companies report and then, we might know if we had a little bit of a gain.

Jason Deleeuw -- Piper Jaffray -- Analyst

All right. That's very helpful. Thank you. And then another question on kind of why switch gears here on the iBuyers are instant buyers, and that emerging trend in residential real estate seems like it's continues to pick up a strong head of steam here and there is a lot of interest. And just, I mean, it seems like it would be a net positive for title insurance, but I would just like to kind of get FNF thoughts on how you're thinking about the iBuyers in terms of market opportunity or any challenges there, just general thoughts on that trend?

Mike Nolan -- President

Sure, Jason. It's an absolute opportunity. They're going to control and they are controlling transactional volume just like other customers control, whether their realtors or lenders or attorneys and so on. And we're pursuing them just like we pursue other customers. And it's an opportunity both for our directs and we're working with many of these entities today as we speak. And it could also be an opportunity on the agency side, some of these iBuyers are either thinking about forming title agencies or have formed title agencies and we can talk to them about that as well and we are. So it's really a very good opportunity and, whether it continues to grow at the same pace, it's hard to know. I think, there's certain markets where it plays stronger than other markets. It seems like Arizona is one of those, for example. But we just see as an opportunity and we're pursuing it as such.

Jason Deleeuw -- Piper Jaffray -- Analyst

Helpful. Thank you very much.

Operator

Thank you. Our next question is from Jack Micenko from SIG. Please go ahead.

Jack Micenko -- SIG -- Analyst

Hi. Good morning. First question, I want to talk through your thoughts on fee per file. Obviously, you've got some nice commercial momentum going in and I think there's some mixed benefit too. As looking at 3Q and 4Q, you've got a little more refi on the resi side so that's a lower fee business. I guess the question is sort of setting aside that it's all revenue and that's all good. The fee per file growth overall continue the positive trajectory in 3Q and 4Q, or do we see some moderation because of the mix?

Mike Nolan -- President

Jack, it's Mike. A little hard to predict. It's interesting, if you look at the second quarter, a residential fee per file was up 1% over the second quarter of 2018. We had a stronger mix of refinance closings in that quarter. So other things being equal, you would expect that, the fee per file would have come down, and it didn't. So I think we're still seeing, a bit of a benefit from a home price appreciation. And it's just hard to predict how that plays out the next two quarters. I would expect that we'll have a higher percentage of refinance closings in the third quarter than we had in the second. And that could certainly put pressure on the residential fee per file. And then commercial, you tend to see that just bouncing around more, but it's been consistently up really over the past couple of years really.

Jack Micenko -- SIG -- Analyst

Okay. And then a lot of the driver of the positive operating leverage this quarter was in the other operating expense. Anything in there one time or, can you speak to some of the sustainability of the lower -- potentially the lower run rate? And you talked about adding people in the personnel side to address volumes, but just curious on the OpEx side?

Anthony J. Park -- Chief Financial Officer

Hi, Jack. It's Tony. Yeah. Nothing that did comes to mind as unusual or one time in the other operating expenses, as you probably know, the major buckets in that category are facilities costs and that's been pretty stable, that's our largest expense. And then we have a cost of sale, that's typically variable with business and so that ought to fluctuate with some of our businesses. We have had growth at some of our businesses like LoanCare, which is our subservicer and so we've seen a little bit of an increase there. But we are enjoying some pretty strong operating leverage to your point on not only other operating expenses, but in personnel costs as well. But again, no one timer, so I would expect that the third quarter looks pretty similar to what we saw in Q2.

Jack Micenko -- SIG -- Analyst

Okay. Appreciate that. And one more just sneak on the heels of Bose's question around accelerated buyback, is it -- could we add maybe potential special dividend is something that would also be considered on the table per your earlier answer to his questions?

Anthony J. Park -- Chief Financial Officer

Yeah. I think, I would give the same answer, which is everything would be on the table. Our board is very sophisticated and we've been around a long time returning strong returns to our shareholders in a number of different ways. And, in a prior iteration of our companies, we owned a company that you might know now as FIS and we recapitalized that back in 2005 and paid a special dividend there. So it's -- again, everything is on the table and we'll just see how things play out.

Jack Micenko -- SIG -- Analyst

All right. Great. Thanks for taking my questions.

Operator

Thank you. The next question is from Mackenzie Aron from Zelman & Associates. Please go ahead.

Mackenzie Aron -- Zelman & Associates -- Analyst

Thanks. Good morning. Congrats on the quarter. Just one question with the Stewart deal lingering, just curious if there's been any impact that you've noticed on the ground thinking kind of from an agent perspective. Are you seeing anything from a competitive dynamic or kind of any update you can give us on how the deals uncertainty is potentially impacting the business, if at all?

Mike Nolan -- President

Mackenzie, its Mike. Are you asking, if we think it's impacting Stewart's business?

Mackenzie Aron -- Zelman & Associates -- Analyst

No more, just competitive dynamics if agents are moving away from Stewart and maybe you all are picking that up in any way or from a talent perspective.

Mike Nolan -- President

Okay. Thanks for the clarification. I would say that it's been -- for me, pretty consistent and that we've not seen a lot of that. I think Stewart's done a very good job really from our view of kind of maintaining their -- and retaining their people and their agents. So we really haven't noticed a lot of disruption, if you will, at this location site inside their business.

Mackenzie Aron -- Zelman & Associates -- Analyst

Okay. Great. And then just lastly, in terms of the tax rate through the end of the year, should it be right around 24% from the tax rate guidance?

Anthony J. Park -- Chief Financial Officer

Yeah, Mackenzie. It's Tony. I think probably I would model 25% for the balance of the year, that's what I guided toward. In Q2, we came in a little lower than that at about 24.5%, but I think 25% is a pretty good number.

Mackenzie Aron -- Zelman & Associates -- Analyst

Okay. Thank you.

Operator

Thank you. Our next question is from Mark Hughes from SunTrust. Please go ahead.

Mark Hughes -- SunTrust -- Analyst

Yeah. Thank you very much. Hope you might reflect on times in the past, we have seen this kind of interest rate trajectory. Obviously, interest rates have come down and really seen a nice spike in refi, potential for further rate cuts. Do you -- would you think that you'd see steady volume of refi, is there usually, just kind of an initial rush and then it tapers off? I know you don't forecast, but I wonder if there's any historical parallels you could point to that might get some perspective on volume as we think about coming quarters.

Mike Nolan -- President

Yeah, Mark. It's an interesting question. I don't know that we've really gone back and looked at that. All these cycles have a life to them and at some point they do slow down. What we're seeing right now is that the refi activity continues to accelerate. We were up 82% June over June on refi opens and sitting in July, we're still running at about that number even slightly ahead. And when we look at our ServiceLink business, they were up 100% second quarter over second quarter and $124% in June and kind of holding at that number. So at least for now, we're seeing a pretty accelerated environment and we think it's got a little bit of legs to it probably certainly in July and maybe into August. But it's just hard to know predicting beyond that.

Mark Hughes -- SunTrust -- Analyst

Understood. And then agency commissions were fractionally higher this quarter anything to the --

Mike Nolan -- President

I think the agency trend that is very similar to what we see on the direct side and they benefit from the refinancing activity just like we do. And I don't think there's anything there that we've noticed.

Anthony J. Park -- Chief Financial Officer

And spread-wise, it could depend on geography because depending on where we're getting a little bit more revenue that'll influence the display, we typically run somewhere in that 76%to 77% and I think we're still within that range.

Mark Hughes -- SunTrust -- Analyst

Thank you.

Operator

Your next question is from the line of John Campbell from Stephens. Please go ahead.

John Campbell -- Stephens -- Analyst

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

Mike Nolan -- President

Thanks.

John Campbell -- Stephens -- Analyst

On the title margin on the lift. I just want to maybe unpack that a little bit. So, I mean, clearly, the investment income helps you guys, but could you talk to the headwind from ServiceLink and then maybe how much of a positive impact you saw from the centralized refi business?

Mike Nolan -- President

Yeah, I think, ServiceLink does because it operates a number of different businesses. There is a little bit of a headwind and total margin in that business runs maybe somewhere in the 12%range, whereas if you took our title business on a stand-alone basis without ServiceLink, we're somewhere in the low to mid 18% for the quarter. So we do have that and that's because, I mean, if you look at just the refi business, the title refi business at ServiceLink, it's over 30% margin in that business. But then if you look at some of the other lower margin businesses, you have appraisal, which runs somewhere in the 12% range and you have field services, which is a property preservation business, which is a single-digit margin business.

And then you have LoanCare, which is in growth mode and there's been a little bit of a headwind, if you will, on the margin as we take on more loans and sort of assimilate that. And so that's been in the roughly 12% range and so that's why maybe you have a little bit of headwind currently there. I think looking forward to the extent that we continue on a refi run, you'll see continued strong performance out of ServiceLink on the title and closed side. And I could see us even expanding on that 30%, 31% margin there.

John Campbell -- Stephens -- Analyst

Okay. That's helpful. And then on escrow, that looks like, I guess within the escrow, another line looks like escrow might have bounced back a bit, but is that mostly driven by just better -- just the improving purchase market or you've been able to take price there with new products or offerings? Anything to can out there?

Anthony J. Park -- Chief Financial Officer

Yeah. Nothing really new in there, and there's a lot of different pieces that comprise that line item, in fact now there's a new disclosure requirement that you'll see in our SEC filings that breaks down our revenue into a number of different components. And so you can really see what drives that. Yes, the purchase market drives the escrow side of things. But if you look at title relate and other fees, you see, we've got a Home Warranty and we've got LoanCare, we've got valuations, we've got some default business, we have field services. So a number of different businesses in there. And year-over-year Q2, we had a 4.3% increase in direct premium versus just the 2.2% increase in escrow and other fees. And that's really because you have different dynamics in some of those other businesses.

John Campbell -- Stephens -- Analyst

Okay. That's helpful. Thanks, guys.

Anthony J. Park -- Chief Financial Officer

Yeah.

Operator

Next question is from Chris Gamaitoni from Compass Point. Please go ahead.

Chris Gamaitoni -- Compass Point -- Analyst

Hi. Good morning, everyone. Thanks for taking my call. Is there any color on the real state technology business for the quarter, revenue side trajectory?

Raymond R. Quirk -- Chief Executive Officer

Hi. This is Randy. On the technology side, we're -- year-over-year, we had a revenue growth of 5%. Sold platforms to the lead teams of realtors, we're up 10%. Client growth overall, we're up 9%. So it is progressing halfway through the year. It was a little bit of a slow start to the year based on the -- at the back half of '18, some slowdown on the purchase side, on the real estate side. But we are coming out well in the first half, and we believe it will accelerate further in the second half of the year.

Chris Gamaitoni -- Compass Point -- Analyst

All right. And just getting back to the capital structure. I think you historically said around 20% debt-to-capital is your target range. Obviously, we're well below that. If Stewart doesn't close even with the buyback, still have you 4 percentage points to 5 percentage points below where that target range is? Is that just a nice buffer to have or is it something you'd actually manage to? How do you think about your debt to cap, capital levels in the future?

Anthony J. Park -- Chief Financial Officer

Hi, Chris. It's Tony. I think right now, it's a nice buffer to have. It allows flexibility. We've been an acquisitive company over the course of our 30 plus years, and I wouldn't be surprised to see an acquisition or multiple acquisitions come along that would have us flex that. We've ranged anywhere from a high of a 42% debt to cap when we bought Chicago title to 13.7% which is where we sit today. I don't think we would borrow just to borrow, but in fact, I'm sure we wouldn't. But certainly, if a deal came along or if we decided on some sort of shareholder return, then 20% to 25% is a very comfortable range for us.

Chris Gamaitoni -- Compass Point -- Analyst

Okay. And on the deal, I think you previously communicated that Fidelity National is focused in real estate, moving forward in the real estate market industry and that can be broad. But is that still holding? That would be something tangentially related to residential or related to real estate?

Anthony J. Park -- Chief Financial Officer

Yes.

Chris Gamaitoni -- Compass Point -- Analyst

Thank you so much.

Anthony J. Park -- Chief Financial Officer

Thanks, Chris.

Operator

Thank you. Our final question is from Geoffrey Dunn from Dowling & Partners. Please go ahead.

Geoffrey Dunn -- Dowling & Partners -- Analyst

Thanks. Just first, a number revisit. Mike, I missed the details on the purchase on refi per day in early July. I think you said purchase was either -- it was down 2% refi up over 80%?

Mike Nolan -- President

Sure, Geoffrey. Purchase was down 2%in the first couple of weeks in July. And then, refi was up 83% over last July.

Geoffrey Dunn -- Dowling & Partners -- Analyst

Okay. Thanks. And then Tony, I wanted to come back to something you said about buyback. I think you've indicated an expectation for about 30,000 per day in Q4. Did I hear that right?

Anthony J. Park -- Chief Financial Officer

Yeah. You heard it right. And again, that's not really a forecast as much as -- and that kind of what I'd modeled and at this point to end the year at about $1 billion. But again, we're really waiting for a resolution on Stewart. And once we get to that point, then we'll see how things play out.

Geoffrey Dunn -- Dowling & Partners -- Analyst

Okay. I guess, I want to ask on that because I think Bill had integrated before the idea of wanting to repurchase the amount of shares that you would issue in the Stewart deal over the course of a one year period. And it seems to me that you'd be in an even better position to buyback stock if the Stewart deal didn't close. And to buyback the 15 million plus odd shares, you're probably looking at more of, 75,000 per day. So I'm just wondering why your forecast going in the year end isn't at least at that level, given previous comments and your cash resources.

Anthony J. Park -- Chief Financial Officer

Yeah. Again, it was almost a placeholder. I think that once we have a resolution on Stewart, which will happen pretty soon. We don't know, pretty sure we'll know absent some change in the contract will know by the start of the fourth quarter where we stand and at that point, my expectation would be the board looks at our capital of roughly $1 billion and decides, OK, what are we going to do here? How we are going to handle our dividend policy? How aggressive do we want to be on a buyback? And so I wouldn't read too much into the 30,000 a day other than it was just sort of a number I put in there, not knowing at this point whether Stewart happen or Stewart doesn't happen.

Geoffrey Dunn -- Dowling & Partners -- Analyst

Gotcha. Okay. And then either for Randy or Mike, if you look at the metrics of order counts per headcount, the leverage this quarter was one of the highest levels we've seen in some time. Is that just because you ran things so tightly or has the extent of the refi activity surprised you on the upside?

Raymond R. Quirk -- Chief Executive Officer

Sure, I'll take that. This is Randy. As the order count accelerated quickly through the second quarter and you're correct on our metrics, our productivity standards in the second quarter, we're reopening 16 orders per employee, closing 10. In June, we were opening about 18 and closing 12. So that ran up pretty quickly. What we know about the third quarter is that we'll have increased closings, so we'll have to. As Mike said earlier, we'll have to add staff so that we can bring that -- really that productivity number on the closing side from 12 maybe down to the 11 range or 10.5. You can run it hot as it comes up quickly but you can't really sustain it through a number of months. So where will -- and again that just leads to the staffing levels, not that we've been holding back, but we always operate conservatively. But we do want to be able to close deal service to customers and take care of our employees.

Geoffrey Dunn -- Dowling & Partners -- Analyst

So as you think about Q3 versus Q2, seeing that you kind of have a bit of an expense lag that makes keeping the margin flat. I think this is directionally in line with what you have been suggesting, but keeping the margins flat seems like a high order until Q3.

Raymond R. Quirk -- Chief Executive Officer

Yeah. There will be some expense lag, you're correct. As we went through the second quarter, I believe we -- of the 291, that we brought on board, it was roughly 100 employees per month. So that time just slipped into the third quarter. There's just some stack-up on the event.

Geoffrey Dunn -- Dowling & Partners -- Analyst

Okay. All right. Thank you.

Mike Nolan -- President

Thank you.

Operator

Thank you. And at this time, there are no further questions. Thank you. Please go ahead with closing remarks.

Raymond R. Quirk -- Chief Executive Officer

The second quarter was the strongest quarterly performance in nearly 16 years for our title business. With strong second quarter refinance opened orders and improving trend in purchase orders opened and continued strength in commercial orders opened, we are well-positioned to continue to produce strong financial results in our title business as we enter the second half of 2019. Thank you for joining us today.

Operator

[Operator Closing Remarks]

Duration: 44 minutes

Call participants:

Daniel Kennedy Murphy -- Senior Vice President and Treasurer

Raymond R. Quirk -- Chief Executive Officer

Mike Nolan -- President

Anthony J. Park -- Chief Financial Officer

Mark Devries -- Barclays -- Analyst

George Bose -- KBW -- Analyst

Jason Deleeuw -- Piper Jaffray -- Analyst

Jack Micenko -- SIG -- Analyst

Mackenzie Aron -- Zelman & Associates -- Analyst

Mark Hughes -- SunTrust -- Analyst

John Campbell -- Stephens -- Analyst

Chris Gamaitoni -- Compass Point -- Analyst

Geoffrey Dunn -- Dowling & Partners -- Analyst

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