Fidelity National Financial Inc

NYSE:FNF

Earnings Call Transcript 2020-Q1

[Operator]

Good morning, ladies and gentlemen, and welcome to the FNF 2020 First Quarter Earnings 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 call is being recorded.

I would now like to turn the call over to Jamie Lillis, Investor Relations for FNF. Please go ahead, sir.

[Jamie Lillis, IR]

Thank you, operator, and good morning, everyone. Thank you for joining our first quarter 2020 earnings conference call. Joining me today is our Chairman, Bill Foley; CEO, Randy Quirk; President, Mike Nolan; CFO, Tony Park; and F&G’s CEO, Chris Blunt.

We’ll begin with a brief strategic overview from Bill. Randy 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 Bill Foley.

Before we begin, I would like to remind you that this conference call may contain forward-looking statements that involve a number of risks and uncertainties, in particular the COVID-19 pandemic. There is significant uncertainty about the duration and extent of the impact of this pandemic. Additionally, statements that are not historical facts including statements about our expectations, hopes, intentions or strategies regarding the future are forward-looking statements.

Forward-looking statements are based on management’s beliefs as well as assumptions made by an information currently available to management at the time of this call. Because such statements are based on expectations as the future financial and operating results and are not statements of facts, actual results may differ materially from those projected. We undertake no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise.

The risks and uncertainties which forward-looking statements are subject to include but are not limited to the risks and other factors detailed in our press release dated yesterday and in the statement regarding forward-looking information, risk factors and other sections of the Company’s Form 10-K and other filings with the SEC. This conference call will be available for replay via webcast at our website at fnf.com. It will also be available through phone replay, beginning at 3:00 premium Eastern times today and run through April 30th. The replay number is 844-512-2921 and the access code is 13701392.

Let me now turn the call over to our Chairman, Bill.

[Bill Foley, Chairman]

Thank you, Jamie.

Before I begin, I want to take a moment and address the current environment, which has rapidly changed with the spread of COVID-19 over the last six weeks. Everyday lives have been impacted as all of you know, especially the way we work and do business. The important work our company performs to facilitate residential and commercial real estate settlements and closings has been designated by the U.S. Department of Homeland Security as part of the essential, critical infrastructure workforce.

During these challenging times, the safety and health of our vital employees and customers comes first. At the onset of the pandemic, our management team worked to transition nearly 80% of our more than 25,000-person workforce, based throughout the U.S. Canada and India to a remote work environment, focusing on productivity without foregoing security. This is a testament to not only the operational capabilities of our management team, but also the significant investments that we have made in technology, which provides FNF a competitive advantage during these trying times. This has enabled the title production and title commitment process to continue to flow smoothly. I want to thank all of our employees who adapted to this new environment and have maintained the high quality of their work.

I’ll let Randy go into more detail on the title business momentarily. Touching on the highlights of our title businesses in the first quarter. We generated adjusted pretax title earnings of $279 million, compared to $172 million in the comparable year-ago quarter, and 14.4% adjusted pretax title margin, compared to 11.3% in the first quarter of 2019.

Turning the acquisition of FGL Holdings, which we agreed in early February to acquire for $12.50 per share of common stock in a cash and equity transaction valued at approximately $2.7 billion. Yesterday, we signed a credit agreement for a $1 billion, 364-day delayed-draw term loan, which along with the cash on hand and our undrawn credit facility offers ample capacity to fund the F&G acquisition, while also providing liquidity and flexibility to operate FNF in the current market environment.

We are well on track to completing the acquisition by the end of the second quarter or the beginning of the third quarter, once we received all regulatory and F&G shareholder approvals. Currently, we are still waiting on regulatory approvals from New York and Iowa, and the F&G shareholder vote. We continue to be excited about the opportunity to combine the F&G business would FNF, given the many strategic benefits that we see even in a more challenged working environment like what we are experiencing today. Assuming we close the deal by the end of the second quarter, we continue to expect the transaction to be more than 10% accretive on a pro forma basis to FNF’s 2020 earnings per share, and more than 20% accretive on a pro forma basis to FNF’s 2021 earnings per share. Importantly, F&G provides FNF with a countercyclical business with strong growth tailwinds, which will be enhanced by FNF’s strong balance sheet and cross-sell opportunities.

Looking forward, we remain committed to creating meaningful long-term value for our shareholders through our capital allocation strategy. We announced yesterday afternoon our quarterly cash dividend of $0.33 per share, which will use approximately $90 million in available holding company cash. As a reminder, this reflects the previous dividend increase of 6.5% from the fourth quarter. We have no plans to alter our current dividend policy.

Regarding our share repurchase program, during the quarter, we repurchased 3.25 million shares for $94 million. Our current repurchase plan has 19.9 million shares remaining under the authorization. We have made the decision to temporarily suspend our buyback program, given our pending acquisition of F&G combined with the uncertain market and economic backdrop, as a result of the COVID-19 pandemic.

I’ll now turn the call over to Randy Quirk to discuss the title business in more detail.

[Randy Quirk, CEO]

Thank you, Bill.

We generated strong adjusted pretax title earnings of $279 million, a 62.2% increase over the first quarter of 2019. Our adjusted pretax title margin was 14.4%, a 310 basis-point increase over the prior year. We had a 43% increase in direct orders closed, comprised of a 3% increase in daily purchase order closed, a 130% increase in daily refinance orders closed, and a 3% increase in total commercial orders closed.

Purchase orders opened increased by 1% versus the first quarter of 2019. Refinance orders opened increased by 170% versus the first quarter of 2019 as the mortgage rate environment heading into the first quarter drove strong refinance volumes. Lastly, total commercial orders opened increased by 13% over the first quarter of 2019.

The quarter started strong with healthy trends in purchase orders opened, continued strength in refinance orders opened and closed, and commercial orders remained strong, following what has been an incredible five-year run.

Total commercial revenue increased by 6% to $245 million compared to the year-ago quarter of $231 million due to a 3% increase in closed orders, and a 2% increase in fee per file.

For the first quarter, total orders opened averaged 11,000 per day with January at 8,800, February at 11,100 and March at 13,000. Daily purchased orders opened in January were up by 5% versus the prior year period, while February was up 11% and March was down 11% versus the prior year period.

Refinance orders opened increased by 170% on a daily basis versus the first quarter of 2019. As you would expect, it wasn’t until the last few weeks of the quarter that we began to see a decline in refinance and purchase orders. For the first three weeks of April, total orders opened were over 9,200 per day. Purchase orders opened per day declined by 47% versus the prior year period and refinance orders opened per day increased by 122% versus the prior year. With the continued shelter-in-place orders and many state mandates now sustaining through mid-May combined with ongoing social distancing concerns, we would expect a decline in purchase -- in the purchase market to continue through the second quarter and possibly into the third quarter.

While it is hard to forecast the duration and impact of the pandemic on the residential and commercial real estate markets, our team has a long history and deep experience operating through challenging markets. Today, we are leveraging our investments in technology and utilizing online resources as we mobilize our teams to close orders. Real estate closings for the most part require physical signing of certain documents, and we are making accommodations in our office environment, while adhering to the social distancing guidelines and limiting physical contact as we work to protect our employees and customers.

As order counts decreased at the end of March due to the spread of COVID-19 and the resulting state shelter-in-place orders, we quickly responded by reducing expenses to adapt to the market. During the month of April, we made the difficult decision to reduce staffing in our field operations by 18%, and in our corporate environment by 11%. We expect the annualized savings from these reductions to be approximately $200 million. We will continue to closely monitor the market and we’ll utilize all available levers we can to manage our expenses, mitigate margin degradations and maximize our cash flow. We remain committed to maximizing profitability in all market environments.

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

[Tony Park, CFO]

Thank you, Randy.

We generated $1.6 billion in total revenue in the first quarter, with the title segment producing all but the $11 million loss of revenue generated in our corporate segment. First quarter net losses were $61 million, which included $320 million in pre-tax net realized losses driven by mark-to-market accounting treatment of equity and preferred stocks securities in our investment portfolio. Excluding net realized losses, our total revenue was $1.9 billion, as compared with $1.6 billion in the first quarter of 2019.

Adjusted net earnings were $202 million or $0.73 per diluted share. Excluding net realized losses of $313 million, our title segment generated $1.9 billion in total revenue for the first quarter, a 27% increase from the first quarter of 2019.

Direct premiums increased by 24% versus the first quarter of 2019. Agency revenue grew by 33% and escrow, title-related and other fees increased by 27% versus the prior year. Personnel costs increased by 16% and other operating expenses grew by 21%. All-in, the title business generated a 14.4% adjusted pretax title margin, a 310 basis-point increase versus the first quarter of 2019.

Interest income of $53 million, declined by $1 million, as compared with the prior year quarter. FNF debt outstanding was $839 million on March 31st for a debt to total capital ratio of 13.3%. Our claims paid was $48 million, were $10 million lower than our provision of $58 million for the first quarter. The carried reserve for claim losses, currently $48 million or 3% above our actuary central estimate. We continued to provide for claims at 4.5% of total title premiums.

Yesterday, as Bill mentioned, we signed a credit agreement for a $1 billion, 364-day delayed-draw term-loan. Given the challenging economic backdrop, the additional financing secured allows FNF to maintain adequate liquidity to weather the current business challenges and close on the acquisition of F&G in the coming weeks. That said, we are continuously monitoring the credit markets closely for the appropriate opportunity to refinance the term-loan with longer term bonds.

Finally, our investment portfolio totaled $5.4 billion at March 31st. Included in the $5.4 billion are fixed maturity and preferred securities of $2.4 billion with an average duration of 3.8 years and an average rating of A2, equity securities of $600 million, short-term and other investments at $1.5 billion and cash of $900 million. We currently have over $1.1 billion in cash and short-term liquid investments at the holding company level.

Before I turn the call over to the operator for questions, Chris Blunt, F&G’s CEO will be participating in the Q&A portion of the call. Given that F&G has not yet released results for the first quarter and is scheduled to do so on May 6th, he is unable to answer any specific questions related to the first quarter.

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

[Operator]

[Operator Instructions] And our first question comes from George Bose of KBW. Please go ahead.

[BoseGeorge]

Hey, guys. This is Bose. The first question I had was just on the commercial trends in April. I don’t know if I missed that, but where is commercial revenues trending year-over-year?

[Mike Nolan, President]

Hey, Bose. It’s Mike. I’ll start by saying that the first quarter, we really built on the already strong inventory we had with commercial orders up 13%. Having said that, we saw a slowdown as we got into March. March on the open order side was flat to last March. So, we kind of had a deceleration. And the trends on the open orders side in the first 13 days as they hold, our open orders will probably be up about 25% to 30% on the open side. It’s really tough to predict revenue and to give you any guidance on revenue because, it’s just too early in the month and too early in the quarter.

[BoseGeorge]

Yes. That’s very helpful. Thanks. And then, just given the trends that you’re seeing on the purchase side, commercial, and assuming that goes for a few months, any thoughts on where you think your margin trend’s over the course of the year?

[Mike Nolan, President]

Yes. I’ll start again, Bose. I think, as you know, we don’t give guidance. And there is a good reason for that. It’s very difficult to project those kinds of things. As we go into the second quarter, we would expect, with the fall-off in purchase that we’ve seen in April and the potential fall-off in commercial, that revenue will not be as strong and margins generally move with revenue. But, as you also know, we do everything we can to minimize that margin impact with expense reductions. And we’ll certainly be taking all the actions we need to take to maximize our margins.

[BoseGeorge]

Okay, great. Actually, just one FG. With the movements we’ve had in the market, I assume there will be like -- and you have to, I guess, use purchase accounting when that transaction is done and kind of mark that portfolio to fair value. Does that change the earnings outlook going forward? Does that create a scenario where your earnings outlook potentially improves or just any color on how that purchase accounting fair value -- how that impacts future earnings?

[Bill Foley, Chairman]

Chris, do you want to -- to the extent you can, do you want to take that?

[Chris Blunt, CEO, F&G]

Sure. I guess, I’ll just try to answer maybe more generically. As you know, when you go through the process, so we will mark the investment portfolio to market. So, given where it’s trading, most portfolios are trading right now, you’d expect to pick up in the listed yield on the portfolio. So that would be one impact. The other would be to look at all of your actuarial assumptions. Now, having said that, since we just went through an acquisition 2.5 years ago, those are pretty fresh. So, yes, those would be probably the two big drivers that you could see.

[BoseGeorge]

Okay. So, I was just trying to tie that back to the 10% accretion, whether that could be incremental upside is based on where the mark comes in that’s effectively going to drive the yield going forward, is that something we should think about?

[Tony Park, CFO]

Yes. I think -- this is Tony. I think, a couple of things to think about. One is that, I think F&G’s earnings and revenue are less volatile probably than FNF’s in a market like this because their earnings will be driven off of an investment portfolio that is pretty stable. So, to the extent FNF is impacted negatively by -- at least in the short term, by order volumes and potentially a disruption in real estate activity, that would put maybe a short-term damper on FNF’s earnings. And so, given the stability of F&G’s earnings, you would think that the math would give you even a more accretive analysis.

Now, maybe all that settles out in 2021 and you’re back to the numbers that we gave you, which frankly were very conservative at 20% for a full year and 10% for half year. But I could definitely see those accretion numbers going higher.

[Randy Quirk, CEO]

And the only thing I might add that is just a reminder to everyone that our earnings are driven by our in-force -- it’s a net spread model and we run a very tight ALM. So, I think to Tony’s point, the near-term volume impact is not as significant for us.

[Operator]

Our next question comes from Mark DeVries of Barclays. Please go ahead.

[Mark DeVries, Barclays]

Yes, thanks. Just a question, a follow-up question on that accretion math. Tony, can you just remind us the ways in which you think that that guidance is conservative. And in what ways have the changes that we’ve seen in recent months made you more optimistic that the accretion can come in higher than what you’re guiding to?

[Tony Park, CFO]

Yes. I guess, generally speaking, we wanted to be careful when we even gave those numbers initially. And so, we were conservative, both with the FNF forecast, as well as a F&G. We took about a 25% haircut off of kind of what they thought things would look like. Now, that was obviously before any of the dislocation that we’ve seen now. But, as I just mentioned, to the extent that FNF deals a short-term disruption in real estate activity that would drive our earnings lower. And if F&G maintains relative stability, I think you really see a positive accretion now, ideally FNF bounces back in a quarter or so and kind of the run rate gets you back to where you were before. And then still, I think the math is conservative. We said greater than 20%, but the numbers -- and those of you who’ve done the analysis, the numbers actually played out stronger than that. So, yes, I think, there’s real accretion upside once we get back to kind of a normal marketplace.

[Mark DeVries, Barclays]

Okay. And your latest thoughts on the funding costs around this transaction? Where is that term loan price at? And do you have any sense for, if you went to the market today, determine out what your cost would be?

[Tony Park, CFO]

So, I guess, the current term loan, $1 billion deal that we signed yesterday, a bank loan for one year is LIBOR plus 200. And, the marketplace, the bond markets maybe three or four weeks ago as you know were pretty volatile, and that’s when we had to start this process. If we had to do a deal today, I think it would be a lot easier to do, but three weeks ago it wasn’t. And so, really, spreads have settled down. I think probably an all-in cost looks -- the estimates we gave in our analysis in February were 4%. And, I think we’re well within that even if we’ve refinanced that $1 billion now, I think we could land at 4%, maybe even a little better.

[Mark DeVries, Barclays]

Okay. Got it. And then, just one more question on the commercial business. It sounds like your decline so far in April has come in kind of materially lower than FAF, which just told that they’re down kind of 37% on the order count. Is there anything kind of qualitatively different about your commercial business that could explain the more resistant -- or resilient volumes that you’re seeing?

[Mike Nolan, President]

It’s Mike. I don’t know what differences may exist between the two companies. Our commercial footprint is probably larger. We certainly have much more volume on the local side, which influences commercial order volumes. So, I think that’s part of it. And then, I would just kind of remind everybody, we’re talking about a pretty small data set to extrapolate from. But, it could be that local influence as much as anything.

[Mark DeVries, Barclays]

Okay. Is the local holding up better than the national?

[Mike Nolan, President]

Just a little bit. Yes. And it’s not a significant difference. But, through the first 13 days, local is not down as much as the national orders.

[Mark DeVries, Barclays]

Got it. Thank you.

[Operator]

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

[Jack Micenko, SIG]

Good morning. I wanted to just ask your thoughts on title loss ratio. Obviously, Fannie Mae, [ph] they increased their outlook a little earlier today. You are a little higher than them, I think going into the quarter. Conceptually, it makes sense when new set of eyes come on these files in tough times. Just kind of general thoughts directionally? Is it something you would expect to sort of move with, in time as well or is the underwriting environment today so different and just in terms of forbearance plan really is more of a wait-and-see kind of approach?

[Tony Park, CFO]

Yes. Jack, this is Tony. I would say to your latter point, I think probably it’s a wait-and-see approach for us. We feel pretty good. We certainly feel good about our reserve position and kind of the cushion that we are sitting on today, which isn’t substantial, but there’s a little something there. We’re also seeing -- continue to see trends really over the last seven or eight years that show us that loss ratios in the 3.5% to may be 4%. So the fact that we’re providing a 4.5% is still a little bit conservative relative to even what we’ve seen for the last several years. Potentially, yes, we see loss ratios kick up a little bit, especially if there’s foreclosures. We’ve seen that in a past cycle and it drove loss ratios higher. Although we certainly have changed some underwriting practices. I think, our fraud awareness is a lot stronger, certainly on the commercial side with mechanics lien exposure. I think, our underwriting is much stronger. So, I’m not expecting higher losses, but at the same time, we’re going to watch it closely. And if we see anything show up, we’ll make those adjustments then.

[Jack Micenko, SIG]

Okay. And then, on the plus 13 and the commercial open comp in the first quarter. Was there anything there that either pushed business from 4Q to 1Q or maybe pulled business forward into the quarter, or is that just up 13 continued blocking and tackling and winning business on a day-to-day?

[Mike Nolan, President]

Jack, it’s Mike. I didn’t hear the very first part of your question about 13%. On the orders?

[Jack Micenko, SIG]

Yes. On the commercial. I was wondering if there was any push forward...

[Mike Nolan, President]

Nothing I am particularly aware of. I think, it was a continuation of the trends we really saw in the back half of 2019. We were up 20% in the fourth quarter. And I just think there’s a lot of momentum in the commercial market. And then of course, we’ve got kind of stopped a bit by the shelter-in-place and the concerns around the virus.

[Jack Micenko, SIG]

Okay. All right. Thank you.

[Operator]

Our next question comes from John Campbell of Stephens, Inc. Please go ahead.

[John Campbell, Stephens, Inc.]

Hey, guys. Just two quick questions here. I mean, obviously, one of your competitors made a pretty bold call on refi this year. Just want to kind of get your view on the broader outlook. I think, they were calling for about a 50% or so increase versus last year. I don’t know, if it’s best for Mike or Randy. But, what do you guys think as far as purchase versus refi this year?

[Randy Quirk, CEO]

This is Randy. Let me address the purchase side. We came into the first -- well, through the first quarter, purchase was strong. It was building as we got into the middle part of March, when stay-at-home orders came in, and that’s when we saw a significant of fall-off in purchase. We went from March at about 3,500 purchase orders per day down in April at about 2,500 -- 2,600 purchase orders open per day. So, there was a pretty considerable drop-off as we move through the month of March, 45% from start to finish in the month. The thing is that we have seen it settle down. And it looks like -- and of course, it’s a moving target, but over the last three weeks, it looks we’ve bottomed out. And in fact, the purchase volume has ticked up slightly over the last 3 weeks and even into the first 3 days of this week. So, long-term, if some of these orders get lifted, particularly in some of the major states, it started to feel like people are thinking about real estate again versus really what felt like a dramatic shift in the month of March.

So, we feel that it’s going to come back and come back gradually and we could be seen signs of it so far in the month of April. However, like Mike mentioned earlier, it’s pretty small data set. But we’re no longer in a decline, at least for the first three weeks.

[Mike Nolan, President]

And John, I’ll add on the refi side of the question. I think, if somebody was saying there’s going to be a 50% increase in refi, I think that’s very much in line with the latest forecast from Fannie and MBA calling for about $1.4 trillion refinance market,, and last year it was about a $700 billion. So, that would be in line with what those groups are calling for. Hard to predict what the real number’s going to be. But, we continue to see very strong refi volumes. We’re up 170% in the first quarter. We’re up 122% in April. And while that sounds like maybe it’s fallen off a little bit, it’s actually -- we’re opening more refis in April than we were in the first quarter on average. The count is a little different and that April of last year was our best refinance month of the year. So, it still appears to be a very strong refi market, deals are closing. And tough to call how long it continues, but it’s very active right now.

[John Campbell, Stephens, Inc.]

Okay. That make sense. Thanks for the color, guys. And then, Chris, thanks again for jumping on the call. That’s always good to hear your insight. Just on FGL, just outside of the next quarter or so, I mean it sounds like that there is some stabilization in the model where you guys can offset some of the market pressure. But bigger picture, you guys were calling for some kind of rating upgrades and kind of opening up the channel. Is that still -- do you feel like that’s still in line? Is that something you guys can still achieve or is it kind of up in the air at this point?

[Chris Blunt, CEO, F&G]

Yes, great question. So, I would say, strategy remains the same and still on pace for a lot of those initiatives that you talked about. We’ve had good dialog with reading agencies, continuing a pace with channel expansion. The other thing, I guess I would point out here is, while there’s a sort of near term pressure of agents getting in front of clients, one -- we have a pretty much all electronic process and I personally bought a couple of our contracts in the last two weeks, it took less than a half an hour, and there was no physical contact needed. The longer term issue I think has actually been enhanced by this. And if you think about our core product, we guarantee people they can’t lose money and we give them a potential upside through an index of their choice. And so, given that there’s $10 trillion still sitting in mutual -- larger long-term macro is going to swamp in the long run, any sort of short term issues that could be encountered around agents having to change how they do business.

[John Campbell, Stephens, Inc.]

Makes sense. Thanks, guys.

[Operator]

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

[Mark Hughes, SunTrust]

Yes. Thank you. I wonder, Chris, could talk about the spread management in this kind of environment where there is so much pressure on interest rates? How do you manage that? How much room do you have against contractual minimum? And then, new money yields. Could you talk about that?

[Chris Blunt, CEO, F&G]

Sure. So, couple of comments. One, I would say that while treasury yields have come down quite a bit, as you know, spreads have blown out. And in the beginning, it was quite indiscriminant. So, you were seeing, AAA and AA security spreads blowing out. And so, I think for us, it’s the total all-in yield that matters much more so than just whatever the treasury rate is. So, we do meet on a very regular basis, particularly in volatile environments we talk about it pretty much constantly. As you know, we have an ability to re-price our in-force once a year, which is generally sufficient timing to re-price. We re-price new business at least once a month. But in volatile environments we can do it more often than that. The other thing that I think you’ll see happen is, if you had a strong capital position coming into this, then you can continue to write new business because you’re not worried about running out of capital. If you did not, that’s going to put pressure on some carriers to slow down their sales, leave certain markets. The other issue is, if you have a big legacy in-force that’s very tied to the current level of interest rates, that’s going to put pressure as well. And that’s why again, I think in the intermediate long-term, we view this is going to be a pretty good environment for us.

[Mark Hughes, SunTrust]

Thank you.

[Operator]

Our next question comes from Mackenzie Aron of Zelman & Associates. Please go ahead.

[Mackenzie Aron, Zelman & Associates]

Thanks. A couple quick questions. First, could you just clarify, on the share repurchase intention, I understand that the macro makes sense to step out of the market and with the FG deal. So, when should we expect that there will be potentially a resumption in those repurchases?

[Bill Foley, Chairman]

Tony, do you want me to handle this one?

[Tony Park, CFO]

Sure.

[Bill Foley, Chairman]

Well, we are pretty aggressive in terms of our repurchase program over the beginning. And as the stock started -- as the price started moving downward, we started repurchasing more shares. And we actually started repurchasing up to 250,000 shares a day when the price got below about $25. With the FGL deal pending, and it looks like it’s going to close sooner rather than later, but we don’t know because we don’t have a shareholders vote and we haven’t gotten a response, an approval yet from Iowa and from New York, but we are anticipating those shortly. Once, FGL closes and we get a little more clarity on the COVID-19, then we’ll be back in the markets and we’ll be repurchased again. We just thought that for the next 30 days, 45 days or so, while we’re working through FGL, it’d be wise just to preserve cash in this situation and make sure we can maintain our dividend and we continue paying the dividend, plus acquire the FGL assets. And then, we’ll revisit probably in early June. But, we were pretty aggressive in the first quarter. I mean, it is I think 3.9 million shares and then we kept on purchasing into April. So, we’re just trying to be conservative. We have a very strong balance sheet. It’s a fortress balance sheet. And we’re trying capital -- conservative capital allocation strategies. So, I hope that answers or is responsive.

[Mackenzie Aron, Zelman & Associates]

Yes. That’s very helpful. And then, secondly, on the investment income, can you just frame what the impact will be in the second quarter, perhaps for the remainder of the year in this from the lower rate environment?

[Tony Park, CFO]

Sure. Mackenzie, this is Tony. Yes. We had a pretty strong first quarter with $53 million in interest and investment income. But, as you know, a fair amount of that comes from 1031 Exchange money, which is short-term rates and cash and short-term investments, which are short-term rates obviously. And so, really the impact from the 150 basis-point moves that the Fed made in Q1 and maybe some lingering effect from their moves back in 2019, we’re really going to feel some pressure in the next few quarters on investment income, especially in, like I said, 1031 Exchange and cash and investments. So, I could see that $53 million dropping into the mid-30s in Q2 and probably trending in that direction. I see, interest and investment income for the full year of 2020 being somewhere in the $150 million range versus about 2.25 in 2019.

[Operator]

Our next question comes from Chris Gamaitoni of Compass Point. Please go ahead.

[Chris Gamaitoni, Compass Point]

Thanks for taking my call. I wanted to kind of understand the layoffs relative to volume outlook, at least one of your peers, and you noted stability and expecting potential improvement in order volume as we move past the COVID issue. I’m just wondering what the layoffs imply relative to future volume. And if the shift into being more refinance centric, if it’s more efficient, you need less people. I guess, my question is really -- do you have enough capacity if the market improves?

[Randy Quirk, CEO]

Yes, sure. This is Randy, Chris. Yes, we will have the capacity when the market improves. It was a difficult decision to engage reductions to this degree. But, as we -- as I’d already mentioned, as we move through the month of March, our order volume was coming down very, very quickly. So, we needed to get aggressive on our response to that. As I said, we have now maybe seen it bottoming out on the purchase side, as Mark had mentioned, refi is going to keep moving. There are some efficiencies on the refinance side in terms of productivity. So, we believe, we’re close to being staffed properly now. What we did do is we don’t typically have a severance program, but we did pick up COBRA expenses for those people that were reduced for 90 days in the hopes that, if and when this market is coming back, we can start bringing people back in. But, we’ve been through these types of situations before. We have always staffed our metrics, which really revolve around open files per employee. So, we did need to follow the orders down, but we’re confident. And as unfortunate as it was, these are unprecedented times. But, we believe when it’s -- as it’s coming back, we’ll be able to have really no particular issues staffing adequately.

[Chris Gamaitoni, Compass Point]

Okay. That’s all I have. Thanks.

[Operator]

Our last question is a follow-up from Mark Hughes with SunTrust. Please go ahead.

[Mark Hughes, SunTrust]

Thank you. I’m sorry if I missed this. Did you give the number for refi orders per day in April? I think, you said they’re were up 122% on a day count.

[Tony Park, CFO]

Correct. Yes, per order for April. Correct -- per day, yes.

[Mark Hughes, SunTrust]

And then, what was the April of last year, if I might ask? I just want to make sure I have the refi per day…

[Tony Park, CFO]

I’ll give you the absolute numbers because I don’t know what the percentage increase was. But in April of this year, we opened just about 6,500 refis a day and April of last year it was a 5,050.

[Mark Hughes, SunTrust]

Perfect. Thank you very much.

[Operator]

This concludes our question-and-answer session. I would now like to turn the conference back over to Bill Foley for any closing remarks.

[Bill Foley, Chairman]

Thank you. Well, we are very pleased with our first quarter title results as the year was off to regular start, we were mindful of the challenges ahead. Due to the ongoing pandemic, which has greatly impacted our country, we are diligently watching our expenses as we manage the anticipated slowdown in volume. We look forward to updating you on our second quarter call and hope everyone is able to stay healthy and safe. Thanks again.

[Operator]

The conference has now concluded. Thank you for attending today’s presentation and you may now disconnect.