© 2024 Alpha Spread Limited. All Rights Reserved.
www.alphaspread.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on www.alphaspread.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. In no event shall Alpha Spread Limited be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on www.alphaspread.com, or relating to the use of, or inability to use, www.alphaspread.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance.
You don't have any saved screeners yet
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Good morning and welcome to FNF's Second Quarter 2022 Earnings Call. [Operator Instructions] As a reminder, this conference call is being recorded.
I would now like to turn the call over to Lisa Foxworthy-Parker, Senior Vice President of Investor and External Relations. Please go ahead.
Great. Thanks, operator and welcome again, everyone.
Before we begin and as a reminder, today's earnings call may include forward-looking statements and projections under the Private Securities Litigation Reform Act which do not guarantee future events or performance. We do not undertake any duty to revise or update such statements to reflect new information, subsequent events or changes in strategy. Please refer to our most recent quarterly and annual reports and other SEC filings for a discussion of the factors that could cause actual results to differ materially from those expressed or implied. We will be discussing certain non-GAAP measures on this call which we believe are relevant in assessing the financial performance of the business and you'll find reconciliations of these metrics within our earnings materials available on the company's website.
Yesterday, we issued a press release which is also available on our website. Today's conference call will be available for webcast replay at fnf.com. It will also be available through telephone replay beginning at 2:00 p.m. Eastern Time today through August 10, 2022. Joining me this morning to discuss our results in further detail are Mike Nolan, CEO; Tony Park, CFO; and Chris Blunt, F&G's CEO. We look forward to addressing your questions following the conclusion of our prepared remarks.
And with that, I'll now turn the call over to Mike.
Thank you, Lisa and good morning. Overall, we have had another strong set of results for the second quarter.
Our Title business continues to perform well despite slowing mortgage originations, having generated total revenue of $2.6 billion in the quarter. For a second quarter result, this reflects the second best in FNF history in terms of total revenue, adjusted pretax Title earnings and adjusted pretax Title margin. Similarly, F&G continues to deliver on its diversified growth strategy with assets under management crossing the $40 billion milestone at June 30. And we are on track to complete the dividend distribution of 15% ownership of F&G to FNF shareholders early in the fourth quarter of this year.
Turning to our Title business. There is certainly much commentary focusing on slowing mortgage originations as mortgage rates have risen rapidly this year. We have seen this in our refinance volumes which started to decline in the second quarter of last year and now appear to be bottoming through the second quarter of this year. Additionally, residential purchase volumes have moderated from the record levels that we experienced in the year ago second quarter. As daily purchase orders closed were down 5% in April, 10% in May and 17% in June for an overall 11% decrease in the second quarter compared to the prior year.
Given the daily commentary in the media, it is easy to lose perspective on the current state of the U.S. housing market. While we expect residential purchase demand to continue to moderate in the second half of the year as compared to the record levels seen last year, 2022 will still be one of the strongest residential purchase markets in the last 15 years. Additionally, we continue to benefit from strength in the commercial market and home price appreciation in the residential purchase market. Notably, our commercial fee per file has increased 34% and residential purchase fee per file has increased 7%, both versus the prior year. This strength has provided an important buffer to moderating volumes combined with our disciplined approach to expense management which I will touch on more in a moment.
Turning to our Title results in more detail. Total orders opened averaged 6,900 per day in the second quarter. For the month of July, total orders opened were 6,000 per day. Looking at orders opened by type. Daily purchase orders opened were down 12% from the second quarter of 2021 and down 20% for the month of July versus the prior year. Refinance orders opened per day were down 67% from the second quarter of 2021 and down 74% for the month of July versus the prior year. Lastly, total commercial orders opened per day were down 8% from the second quarter of 2021 and lower by 11% for the month of July versus the prior year. For July, total commercial orders opened were over 900 per day, giving us positive momentum going into the third quarter. Overall, we have seen solid Title revenue for the quarter.
Total revenue, excluding recognized gains and losses, was $2.8 billion, a 7% decrease compared with the second quarter of 2021. For the quarter, we delivered adjusted pretax Title earnings of $529 million and adjusted pretax Title margin of 18.9% which increased from 17.1% in the sequential quarter, although down from the record prior year. Of note, total commercial revenue was $436 million, a second quarter record compared with the year ago quarter of $347 million driven by the 34% increase in total commercial fee per file, partially offset by a 6% decrease in closed orders. Importantly, we are managing the business the way we always have, by closely watching the real-time trend in opened and closed orders and adjusting our operations and expense base accordingly. We have a demonstrated track record of navigating economic cycles as we work to effectively manage margin.
Overall, we began reducing Title head count in the fourth quarter of 2021 and have reduced Title head count by approximately 8% over the last three quarters. We will continue to watch our open and closed orders carefully as we rapidly adapt to changing market needs.
As the industry leader, our strong balance sheet positions us to take advantage of opportunities in the current market as we focus on growing our Title business and market share. To that end, we continue to recruit revenue-attached talent and are also actively looking at Title agency acquisitions. We believe that opportunities will increase to acquire good businesses at attractive multiples.
We will also continue to make investments in technology to ensure we maintain and extend our market-leading position. Over the last decade, we have created an innovative and scalable technology platform in our Title business with expansive offerings to service the broader real estate industry. We remain excited about our inHere Experience Platform and continue to develop and add new features to enhance the user experience. We have deployed the platform to approximately 90% of our residential operations, with the remainder slated to come on board in the third quarter. And our mobile app now has approximately 100,000 real estate agents actively using it to track their orders.
Turning to F&G and which Chris will discuss in more detail in a moment. Second quarter sales rose by 15% year-over-year to $3.1 billion, with assets under management ending the quarter at $40.3 billion which is significantly ahead of our original expectations when we completed the acquisition. At the time of the merger, we stated that we expected F&G to double assets to $50 billion over five years through organic growth. F&G's assets under management growing to $40 billion only two years following the acquisition demonstrates their ability to grow profitably by capturing market share while expanding in new distribution channels.
Importantly, F&G contributed 24% to our adjusted earnings this quarter as compared to 16% in the year ago second quarter. As F&G's assets under management continue to grow, so too will their earnings contributions to FNF. We view this as a competitive advantage as F&G's primarily spread-based businesses provides a steady and growing source of earnings that will benefit FNF over time as well as a countercyclical business model to Title. By retaining approximately 85% ownership of F&G following our dividend distribution, we will continue to benefit from their growth while also highlighting the substantial equity value that has been and will continue to be created.
Finally, I would like to wrap up by thanking our employees. Our team has continued to perform extremely well and kept our operations running efficiently with a laser focus and commitment to providing customers with an exceptional customer experience.
Let me now turn the call over to Chris Blunt to review F&G's second quarter highlights.
Thanks, Mike. During the second quarter, F&G generated total group sales of $3.1 billion which boosted ending assets under management to $40.3 billion as of June 30. We generated a record $2.2 billion of retail sales, up 34% from the prior year quarter. Our retail sales volume reflects expanding relationships with new and existing distribution partners, traction from a comprehensive product portfolio that meets a broad range of consumer needs and increased demand given higher interest rates.
Turning to institutional markets. Funding agreement issuances were nearly $900 million in the second quarter compared with $1 billion of issuances in the prior year. There were no pension risk transfer transactions in the current quarter, similar to the prior year since we launched into this market during the second half of 2021. Although we target annual year-over-year growth in institutional sales of pension risk transfer and funding agreements, we expect sales will be lumpier and more opportunistic in our institutional channels than in our retail channels.
For pension risk transfer, we are maintaining an active pipeline and the industry volumes are typically seasonal with a bias toward deals closing in the second half of the year. Importantly, we continue to deliver consistent topline growth and net spread across varying market cycles. Adjusting for favorable investment income and notable items, total net investment spread was 254 basis points, in line with our historical trends and consistent with our disciplined approach to pricing.
With regard to earnings, F&G's adjusted net earnings for the second quarter were $128 million. Adjusted net earnings for the quarter included net favorable items of $36 million, primarily as a result of actuarial assumption updates. We have updated assumptions for our fixed indexed annuity guaranteed minimum withdrawal benefits based on utilization experience relative to our more conservative assumptions as well as our net earned rate assumptions which we will continue to monitor in response to significant changes in the macro environment.
Adjusted net earnings, excluding notable items, were $92 million in the second quarter, an increase of $22 million or 31% compared to $70 million in the prior year quarter. Adjusted return on assets of 110 basis points for the first half of 2022 was driven by our growing AAUM and strong spread results from disciplined pricing actions on both new business as well as our in-force book. Our financial results demonstrate the underlying earnings power of the F&G business model, particularly in a rising rate environment. We are well-positioned for future growth and on track for FNF to take F&G public through the dividend of 15% of the common stock of F&G to FNF shareholders.
F&G has now filed its confidential Form 10 registration statement with the SEC for the partial spin-off. This is a significant milestone in the transaction process which remains on track to close early in the fourth quarter of this year, subject to customary approvals.
We see our public listing as a vote of confidence in our business while maintaining benefit from the continued partnership of FNF's majority ownership. We anticipate the transition back to being a stand-alone public company will help to reinforce the value of F&G and allow investors to invest directly in F&G to capitalize on the earnings and cash flow potential of our in-force book as well as the potential upside from our new business platform. We look forward to providing further updates in the coming months.
Last but certainly not least, I'd like to thank our team for their extraordinary efforts and dedication. You have my sincere appreciation.
With that, I will now turn the call over to Tony Park to review FNF's second quarter financial highlights.
Thank you, Chris. Starting with our consolidated results.
We generated $2.6 billion in total revenue in the second quarter. Second quarter net earnings were $382 million, including net recognized losses of $676 million versus net earnings of $552 million including $232 million of net recognized gains in the second quarter of 2021. The net recognized gains and losses in each period are primarily due to mark-to-market accounting treatment of equity and preferred stock securities, whether the securities were disposed of in the quarter or continue to be held in our investment portfolio.
Excluding net recognized gains and losses, our total revenue was $3.3 billion as compared with $3.6 billion in the second quarter of 2021. Adjusted net earnings from continuing operations was $530 million or $1.90 per diluted share compared with $593 million or $2.06 per share for the second quarter of 2021. The Title segment contributed $418 million, F&G contributed $128 million and the Corporate segment had an adjusted net loss of $16 million.
Turning to the Title segment's financial highlights. Our Title segment generated $2.8 billion in total revenue in the second quarter, excluding net recognized losses of $249 million compared with $3 billion in the second quarter of 2021.
Direct premiums decreased by 5% versus the second quarter of 2021. Agency premiums decreased by 4% and escrow Title-related and other fees decreased by 16% versus the prior year. Personnel costs decreased by 1% and other operating expenses decreased by 4%. All in, the Title business generated an 18.9% adjusted pretax Title margin for the quarter, a decrease of 380 basis points versus the record 22.7% in the prior year quarter.
Our Title and corporate investment portfolio totalled $6.5 billion at June 30. Interest and investment income in the Title and Corporate segments of $38 million increased $11 million as compared with the prior year quarter, primarily due to increases in income from our 1031 Exchange business and short-term investments. Given the rising rate environment, we would anticipate the potential for higher investment income. To help put it in perspective, for the Title and Corporate portfolio, we would expect approximately $5 million in additional quarterly income for each 25 basis point increase in Fed funds with some moderation after about 200 basis points.
Our Title claims paid of $55 million were $38 million lower than our provision of $93 million for the second quarter. The carried reserve for Title claim losses is approximately $91 million or 5% above the actuary central estimate. We continue to provide for Title claims at 4.5% of total Title premiums.
Let me wrap up with a few thoughts on capital and liquidity. We remain focused on ensuring a balanced capital allocation strategy as we navigate the current environment. This encompasses making investments in title technology and other strategic initiatives to support innovation and organic growth in the business, continuing to evaluate sensible strategic M&A opportunities in real estate-related businesses, title agencies and technology acquisitions, paying a generous quarterly dividend to our shareholders and repurchasing shares.
With regard to capital funding commitments to F&G, as shared in prior quarters, as expected, we converted the existing $400 million intercompany term loan into equity during the quarter. Going forward, F&G intends to fund its continued growth with their growing statutory earnings, reinsurance programs and unused debt capacity. F&G's adjusted debt to total capitalization ratio is 11% at June 30 and they expect to manage to a 25% debt-to-capital ratio long-term target in line with ratings.
We ended the quarter with $1.6 billion in cash and short-term liquid investments at the holding company level, an increase of $100 million versus the sequential quarter. FNF's consolidated debt was $3.1 billion on June 30 which includes $400 million of 5.5% senior notes that will mature in September of 2022. Our annual interest expense on debt outstanding is approximately $100 million.
During the second quarter, we paid common dividends of $0.44 per share for a total of $122 million. We view our current $500 million annual common dividend as sustainable. The dividend is reviewed quarterly and expected to increase over time, subject to cash flows, alternative uses of capital and market conditions.
FNF continues to return excess cash to shareholders over time through share repurchases and has remained active throughout the second quarter and into the third quarter. During the second quarter, we repurchased 4.3 million shares for a total of $172 million at an average price of $39.76 per share. This compares to the first quarter of 2022, where we repurchased 2.75 million shares for a total of $134 million. For the second quarter, we have returned almost $300 million of capital to our shareholders through common dividends and share repurchases.
For the full year, we have returned approximately $550 million through common dividends and share repurchases.
This concludes our prepared remarks and let me now turn the call back to our operator for questions.
[Operator Instructions] And our first question comes from the line of Mark DeVries with Barclays.
Could you talk a little bit more about what you're seeing in the commercial pipeline, both from a volume and transaction size perspective? If I heard correctly, I think you indicated open orders are down 11% versus 6% realized in the quarter. Is that accurate? But I guess, more importantly, what are you seeing on transaction size? I'm just trying to figure out what to think about the fee per file looking like in 3Q?
Sure, Mark. It's Mike. First, we said -- you are correct that July over July, total commercial orders were down 11%. And for the quarter, 2Q-over-2Q, they were down 8%. And when we look at the difference between the national and the local, that might help answer your question. The local orders are falling off a bit more than the national. Local 2Q-over-2Q were down 11% and national was only down 3%. So we're still seeing really good strength, I think, in the larger transactions. I mean 3%, you can get those kind of swings in any given quarter on the national side that tend to be lumpier, obviously. And we've had pretty strong fee per file in the first half of the year. Can't tell you exactly what will happen but I would expect it to maybe be marginally better in the second half.
Okay. That's helpful. And then turning to F&G. Chris, you've already shown really strong growth of late, obviously, kind of ahead of the guidance for growth when the merger was closed. But what do you think the outlook is for growth over the next year or so with rates moving higher and demand picking up?
Yes. Great question. Obviously, it's going to be difficult to -- we've been doubling sales and going at quite a clip. But we think we can still grow at a solid double-digit growth rate going forward. And we also think we can continue to gain market share. So we're pretty optimistic. I think for us, going forward, it's really about optimizing return on capital across the different channels because, again, we now have five channels of distribution, whereas two years ago, we really just had one.
Okay. Got it. And then just one last question on the outlook for spread on new business. I mean we've seen a lot of spread widening in the credit markets. Is there an opportunity to realize slightly wider spreads on new business than you have on your existing business?
Yes. I think short answer is yes. It's always easier to capture some additional basis points when you're in a rising rate environment. Some of it is just the lag effect of price business by the time you get it deployed, you're picking up a little bit of extra spread. So I think that's a fair assumption.
Our next question comes from the line of Mark Hughes with Truist Securities.
Mike, when you say you think -- when you think the commercial fee per file will be a little higher in the second half. Is that year-over-year or relative to the first half. How are you thinking?
Yes. No, I appreciate the clarification. I was thinking more to the first half which was, as I said, really strong. I mean the pipeline is good. We have a lot of large transactions. But we also had a really strong fee per file in the fourth quarter last year. And whether we match up to that, it's just hard to say.
Yes. Understood. And then when you think about the residential purchase orders in July, down 20%. Any particular trajectory through the quarter? How is that the last week or so?
I would say, fairly consistent. You're talking about the month of July, Mark?
Yes. That's right. Yes.
I would say it's fairly consistent in terms of the trajectory probably seeing from a geographic standpoint, a little more of a falloff in our Western states and our kind of Midwest and Southeast direct operations. It's not a significant difference but fairly consistent in July.
Okay. And then, Chris, it looks like you did pretty well with MYGA this quarter. How do you feel like you're positioned from a competitive standpoint as we sit here in the 3Q kind of both FIAs and MYGAs?
Yes. I'd say we continue to be well-positioned in both. Again, a lot of that comes from the investment edge that we've got in terms of the ability to source and originate private assets relative to the relatively small size of our general account portfolio. So I'd say nothing's changed there. And again, for us, it's really about try to maximize return on capital across the different channels. And then from a new business perspective, we're up to, I want to say, 18 bank and broker-dealer distribution partners. And that's a channel that we entered two years ago. So I think we've got plenty of opportunities to source premiums. But I'd say right now, our retail business is just humming.
Our next question comes from the line of Bose George with KBW.
Actually, one more on commercial. The industry fee per file that we track was not as strong as the increase that you guys have seen. And so I was just curious, like have you seen a mix change in your -- in commercial? Like are there larger deals that are driving some of that?
Yes. Bose, it's Mike. I think it is larger deals. I don't know if it's a real mix shift from an asset class standpoint, for example but just maybe more multisite portfolio kind of deals. And again, really strength in the national fee per file that's really helping drive the overall.
Okay, great. That makes sense. And then I guess, as people kind of worry about economic downturns and weakness in purchase and commercial. Just wanted to revisit the range you've given, the 15% to 20% range for your margin. I mean is that something you think is sort of sustainable if we see a meaningful downturn in sort of purchase and commercial?
Yes. I think it's tough to find meaningful, I guess. But I would say, right now, we still feel 15% to 20% is the right margin outlook in the near term, at least. We expect margins to be strong in the second half. We've got good commercial activity but we will have pressure from the trends on residential in terms of our purchase -- residential purchase and refinance closings as we go through the back half. So it just becomes paramount on us to continue to manage our expenses. And we've taken, as we said, about 7% of our direct head count out in the first half. We took another 3% out in July and we'll just continue to track very closely to the order activity to protect margin as best we can.
Okay, great. That makes sense. Actually, one small one. How much dividend income from the Title subs was there in investment income this quarter?
So, we don't -- if we get dividend income from our Title subs, that doesn't count as investment income because that's basically intercompany transactions. So as you know, the investment income is driven -- at least the increase lately is driven by our short-term investments as well as our 1031 Exchange balances which get short-term rates. And with the with the increases that -- in Fed funds over the course of the year, I think there have been nine 25 basis point increases now. We are seeing a nice upward trend and expect that for each 25 basis point bump, we're going to pick up about $5 million in quarterly income.
Okay. So that makes sense. I was confused. I thought there was a quarter in which there was some dividend income in there as well. So, okay.
Yes. Thanks, Bose. Just to clarify, we used to have dividend income from Title plant investments that always showed up in Q2. Now we spread those out throughout the year, so it isn't a one-time situation. So there's nothing unusual in our Q2 results.
Our next question comes from the line of John Campbell with Stephens Inc.
Nice work in the quarter. On the -- back to the Title margins, I'm just trying to get a little bit of better sense for the kind of the underlying expense line. Obviously, Title revenue down, you guys were able to bring expenses down a little bit. But just as we think about next year -- I know there's a lot of moving parts here. But if you were to hold Title revenue kind of flattish and the mix is basically the same, just given underlying cost inflation and whatnot and then kind of offsetting that, I guess, with efficiencies. Do you think you could hold Title pretax margins flat, assuming flattish revenues?
Yes. John, this is Tony. Maybe I'll give it a shot, although it's a bit of a hypothetical but I would say any time you're in a mode where you're taking costs out, it takes a little bit for that to take full effect, if you will. And so I would say, yes, if we were flat a year later, we would have the benefit of all those changes, those cost cuts that are underway or midstream. And so I think flat to better margin in a light-type revenue environment is fully reasonable. Would you agree with that?
Yes. I would agree with that, Tony. And Tony's point around sometimes with the transitioning market, it takes a little time to kind of catch it, if you will. I think we saw that in the second quarter with direct premium revenue down 5% but personnel costs only down 1% even with the staff cuts. I think you'll start to see that trending better as we go forward. So I would agree with Tony's comments.
Okay. That's very helpful. I just felt kind of a mismatch a little bit on the timing of the cost saves relative to the revenues. And then Tony, you mentioned the investments in technology. I don't know if you have this on hand, any sense for the reinvestment, whether that be in technology or just kind of all in, what that looks like on an annual basis versus maybe last year or prior years? Has there been a step up there?
Yes. That's a tough one because we don't track it specifically as to how much we're investing in technology. It's just part of our run rate. I would say there's probably not a significant step up but it's certainly, we haven't made any cuts in that area. If I were to go back a couple of years, yes, we're probably spending a little bit more on technology as we roll out inHere and make improvements to the system but nothing specific that I would call out.
Okay. That's helpful. If I could squeeze in maybe just one more quick one. On the escrow and other line, that dropped a bit sharper than the title premiums. What are the kind of moving pieces to consider there? And just directionally, how that's going to hold up relative to the Title premium declines, maybe over the back half?
Yes. Fair question. So direct premiums were down 5%. Escrow and other were down, I don't know, 15%, 16%, something like that. That's driven a lot by escrow fees which were actually down 21%. The reason that is, it's because with refis coming down so dramatically -- I mean refis as a percentage of total direct revenue were only 8% in the quarter, refi revenue versus total direct. So you can see how much that's fallen off. But refis relative to purchase and commercial have a higher escrow fee just because the Title premium is really so low and the escrow fee is often a flat fee. And so that's why escrow fees are off 21%.
We also had a couple of businesses that were down a little bit. Our loan care subservicing business was off about $25 million. Our valuation -- ServiceLink valuations business was off about $25 million in revenue. So those were the larger pieces. But I would say, generally speaking, you would probably expect to see a little bit more connection between direct premiums and escrow and other as we get through the back half of the year.
Our next question comes from the line of Andrew Kligerman with Credit Suisse.
I'm thinking about the 30-year mortgage rate which kind of sits around 5.5%. It's come off a bit over the last month or two and with purchase orders closed down about 11% in the quarter. Do you think that could kind of bounce back up a little bit with this 30-year coming in? And just generally, how do you think about the 30-year relative to what you're doing with purchase volumes?
Well Andrew, it's Mike. It's hard to predict mortgage rates, I think, as we've seen this year and they moved a lot quicker than people thought. But I think our current view is somewhat that they'd be fairly stable through the back half of the year. As you pointed out, they did moderate a bit. I think the 10-year now was maybe up yesterday and slightly today but had moderated quite a bit from where it was just in mid-June and rates had come down. So, I think if rates are stable then that helps with keeping order volumes stable other than the normal seasonality that we get every year. So we're in the seasonal decline now. And if that holds steady, I think we'll be in good shape. If rates move higher, then you could have a bit more of effect than the seasonal. So I don't know if that's answering the question but maybe I'll pause there.
Yes. Yes. No, I think it does. In other words, you feel like with rates where we are right now, all else equal, you could see a movement maybe in line to maybe better than where we are right now. Is that kind of the thinking?
Well, I guess I wouldn't say that purchase order volume would increase unless rates moved downward and created that opportunity because pretty much every year, you have a peak of purchase open order activity usually in the second quarter and then it declined seasonally pretty much every month. And then it kind of comes back to next year as you hit January and rises again into the second and that cycle repeats itself. So, I don't want to say that I'm expecting purchase open orders to increase on a per day basis in the balance of the year but would expect with rates steady that it just be the normal seasonal falloff.
And then just quickly staying on this, if the 30-year were to kind of move north of 6%, would you expect a sharp drop off?
I would expect probably a sharper drop off.
Got it. And you mentioned earlier in the call just potentially looking at title agencies. Could you give a sense of what that addressable market is in terms of acquisitions? Are there just a ton of small ones out there? Are there any big ones, if you could help size it, would be very interested.
Well, I would say -- and it's Mike again that the potential is quite sizable. You have over 20,000 independent title agents in the industry. So the addressable market is pretty large. The acquisitions, maybe an average agent acquisition is in the $10 million revenue range, some smaller, some larger. There's not -- there's a smaller number that would be north of $50 million, for example. But there's a lot of opportunities and we've had markets where we've bought a number of maybe average-sized agents in a particular market and you buy five, six, seven of those and you put together a nice revenue flow in that market.
Got it. Really helpful. If I could sneak one more in too, to Chris. Just on that terrific sales volume up 34% in retail and you mentioned that you were in one channel two years ago, now five. Is the bulk of the growth going to come from banks and broker-dealers going forward?
Yes. I think just mathematically, it will. But keep in mind, last year, we grew our independent agent channel by 20%. So those relationships are strong. Our sales are concentrated in sort of 10 of the larger, more sophisticated players. And so those relationships are as good as they've ever been. So I don't want to discount that. I think that will continue to grow. We think we can still gain market share there. But yes, combination of same-store sales growth amongst existing banks and BDs and the fact that we had five or six new ones every year, you'll just see a faster growth rate coming from there. But we -- but in retail, we would expect it to come from all three channels.
[Operator Instructions] Our next question comes from the line of Ryan Gilbert with BTIG.
I appreciate all the details that you've shared on this call. I was hoping to get a sense of how home price appreciation progressed throughout the second quarter and into July and to the extent that you're seeing any variations in home price trends by geography?
Yes. I guess, I mean, we don't track home price appreciation. We let others do that. In terms of our fee per file, I would say we're seeing a little bit of moderation. I don't remember the exact trend. But if you look at the past few years, it's grown pretty dramatically on the purchase side. And now it's -- I would say it's in the single digits, somewhere around probably 7%. On the purchase side in fee per file relative to Q2 of last year. And as I recall, that's coming down from maybe 9% in the prior quarter and probably low double digits in quarters before that.
Okay. And do you think it took a step down in July from where fee per file was in the second quarter?
Yes, I do. I think -- and year-over-year, I think it took a step down. I think I looked at it, it was somewhere, I think, probably short of a 5% increase. So clearly -- I think moderation in some respects, is going to be a good thing because, especially with the rise in mortgage rates to keep affordability in check to the extent it is, I think it's okay if we stop the home price appreciation train and even if it's flat or falls a little bit, I don't think that would be a bad thing for us.
Okay. Got it. And then I was hoping you could expand on your comments around refinance volume getting near a bottom. I know it's a small piece of your business at this point but just looking at the mortgage applications data, it looks like refinance volume got progressively worse through July. So yes, just any expanding comments on the bottoming that you're seeing in refinance would help.
Sure, Ryan. Yes, we saw in July that our refinance openings did come off, a little bit off June but they were right around high 1,300 numbers in July and about 1,450 in June. So I guess that's the comment on maybe a relative bottoming. Certainly, we don't know where they go from here but it does feel -- there's always seems to be kind of a trough level in refinance volumes. And we're probably looking at order volumes that look a lot more like where we were in 2018 -- in the back half of 2018 relative to the refinance market.
And our next question comes from the line of Geoffrey Dunn with Dowling & Partners.
Tony, just two number questions really. Can you update the remaining dividend capacity expectation for the second half, both from regulated and unregulated businesses?
Yes, happy to. I think we're a little over $400 million left from our regulated companies and that's kind of locked in. We know that at the beginning of the year and we take that incrementally throughout the year, so basically $200 million per quarter. The unregulated is a little harder to predict because it's real-time cash flow that's generated from those companies. We've been running about 50% from regulated, 50% from unregulated. But if the market comes off a little bit in the second half, I could see that maybe being a little short of the $400 million, so maybe call it, $350 million from unregulated in the second half.
Okay. And understanding F&G obviously has the near-term spin and some self-funding initiatives undertake. But can you -- your thoughts in terms of the eventuality of F&G beginning to return capital to its shareholders, including obviously, FNF as the majority and the potential sizing that that could initially take?
Sure. This is Chris. So yes, I would expect that we would be a source of capital over time. Obviously, the new FG Board is going to have to decide on what the dividend policy for FG will be but we're hoping to clarify that prior to the spin.
Okay. But is there -- I guess when you say you're looking to clarify that, does that mean that we could expect something sooner rather than later? Or is this something that's maybe more of a '24-type eventuality given funding initiatives, etcetera?
Yes. I'm not trying to be overly coy but obviously, that would be for the Board to decide. But as we said in the announcement, we're on track for probably early fourth quarter spin to shareholders. And our hope would be to be able to clarify what the dividend policy would be prior to that taking place.
And this will conclude our question-and-answer session. I will now turn the conference back over to CEO, Mike Nolan, for closing remarks.
Thank you. We are pleased with our overall results at this midyear mark despite the uncertainty and volatility in the current macro environment. FNF is well-positioned to execute through this higher mortgage rate environment due to our disciplined operating strategy and long history of navigating market cycles. Likewise, F&G is poised to benefit from the rising rate environment and is on track to list as a publicly traded company later this year.
Thanks for your time this morning. We appreciate your interest in FNF and look forward to updating you on our third quarter earnings call.
Thank you for attending today's presentation and the conference call has concluded. You may now disconnect.