8-K
TIPTREE INC. (TIPT)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 9, 2022
TIPTREE INC.
(Exact Name of Registrant as Specified in Charter)
| Maryland | 001-33549 | 38-3754322 | ||||||
|---|---|---|---|---|---|---|---|---|
| (State or Other Jurisdiction<br>of Incorporation) | (Commission<br>File Number) | (I.R.S. Employer<br>Identification No.) | 299 Park Avenue | 13th Floor | New York | NY | 10171 | |
| --- | --- | --- | --- | --- | ||||
| (Address of Principal Executive Offices) | (Zip Code) |
(212) 446-1400
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | |
|---|---|---|---|
| Common Stock, par value $0.001 per share | TIPT | NASDAQ | Capital Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02 | Results of Operations and Financial Condition. |
|---|
On March 9, 2022, Tiptree Inc. (the “Company” or “Tiptree”) issued a press release announcing its results of operations for the year ended December 31, 2021. A copy of the press release is furnished as Exhibit 99.1 hereto and incorporated herein by reference.
| Item 7.01 | Regulation FD Disclosure. |
|---|
Included in the press release furnished as Exhibit 99.1 was an announcement that the board of directors of the Company has declared a cash dividend of $0.04 per share to Tiptree’s stockholders, with a record date of March 21, 2022 and a payment date of March 28, 2022.
On March 9, 2022, the Company posted an investor presentation dated March 2022 on the Investor Resources section of www.tiptreeinc.com. The investor presentation is furnished as Exhibit 99.2 to this Form 8-K and incorporated herein by reference. Tiptree’s website is not intended to function as a hyperlink, and the information contained on such website is not a part of this Form 8-K.
The information in Items 2.02 and 7.01 of this Current Report on Form 8-K, including the information contained in Exhibits 99.1 and 99.2, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities under that Section. Furthermore, the information in Items 2.02 and 7.01 of this Current Report on Form 8-K, including the information contained in Exhibits 99.1 and 99.2, shall not be deemed to be incorporated by reference into the filings of the Company under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
| Item 9.01 | Financial Statements and Exhibits. |
|---|
(d) List of Exhibits:
| 99.1 | Tiptree Inc. press release, dated March 9, 2022 |
|---|---|
| 99.2 | Tiptree Inc. Investor Presentation - March 2022 |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| TIPTREE INC. | |||
|---|---|---|---|
| Date: | March 9, 2022 | By: | /s/ Jonathan Ilany |
| Name: Jonathan Ilany | |||
| Title: Chief Executive Officer |
Document
Exhibit 99.1
TIPTREE REPORTS FOURTH QUARTER AND 2021 RESULTS
New York, New York - March 9, 2022 - Tiptree Inc. (NASDAQ:TIPT) (“Tiptree” or the “Company”), today announced its financial results for the quarter and year ended December 31, 2021.
“2021 was one of Tiptree’s best years since its founding in June 2007. Tiptree’s revenues, earnings and total return to shareholders all set records. More specifically, our specialty insurer, Fortegra also produced record results, with adjusted return on equity of 22% while growing premiums and equivalents at 32%. Importantly, we believe Fortegra is well positioned to continue their history of producing best-in-class returns over the long-term. In addition, our mortgage and shipping businesses also reported excellent results for the year, benefiting from favorable market conditions”, said Tiptree’s Executive Chairman, Michael Barnes.
Barnes added, “As we enter our 15th year of operations, we see a clear path to continuing to grow our businesses and to achieving superior results for our shareholders. Having our share price move higher to properly reflect Tiptree’s true intrinsic value remains our highest priority, and we believe significant progress toward that end will be made in this coming year.”
| ($ in thousands, except per share information) | Q4’21 | Q4’20 | FY’21 | FY’20 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Total revenues | $ | 319,534 | $ | 257,395 | $ | 1,200,514 | $ | 810,301 | ||||
| Net income (loss) attributable to common stockholders | $ | (426) | $ | 14,270 | $ | 38,132 | $ | (29,158) | ||||
| Diluted earnings per share | $ | (0.01) | $ | 0.40 | $ | 1.09 | $ | (0.86) | ||||
| Cash dividends paid per common share | $ | 0.04 | $ | 0.04 | $ | 0.16 | $ | 0.16 | ||||
| Return on average equity | (0.4) | % | 17.6 | % | 11.4 | % | (6.4) | % | ||||
| Non-GAAP: (1) | ||||||||||||
| Adjusted net income | $ | 16,859 | $ | 16,191 | $ | 63,869 | $ | 51,431 | ||||
| Adjusted return on average equity | 16.8 | % | 17.6 | % | 16.5 | % | 13.1 | % | ||||
| Book value per share | $ | 11.22 | $ | 10.90 | $ | 11.22 | $ | 10.90 |
(1) See “—Non-GAAP Reconciliations” for a discussion of non-GAAP financial measures.
Full-Year 2021 Summary
•Revenues of $1.2 billion, increased 48.2%, driven by growth in insurance and shipping operations and investment gains in 2021 compared to losses in 2020. Excluding the impact from investment gains and losses, revenues increased 32.9% versus prior year.
•Net income of $38.1 million, increased significantly from a net loss in 2020, represented an annualized return on average equity of 11.4%.
•Adjusted net income of $63.9 million, increased 24.2%, reflecting higher earnings in insurance and shipping operations. Adjusted return on average equity of 16.5%, compared to 13.1% in 2020.
•On October 12, 2021, Tiptree announced a $200 million investment in Fortegra from Warburg Pincus, which is expected to close in Q2’22 and will result in an approximate 24% ownership of the business on an as converted basis.
•Declared a dividend of $0.04 per share to stockholders of record on March 21, 2022 with a payment date of March 28, 2022.
Fourth Quarter 2021 Summary
•Revenues for the quarter of $319.5 million, an increase of 24.1% from Q4’20.
•Net loss for the quarter was $0.4 million, compared to net income of $14.3 million in Q4’20 driven by improved operating performance in our insurance and shipping businesses, more than offset by declines in mortgage income, lower investment performance compared to prior year investment gains, and higher stock-based compensation expense (and related tax impacts) driven by Tiptree’s Q4’21 stock price performance.
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•Adjusted net income of $16.9 million for the quarter, an increase of 4.1% from Q4’20 driven by growth in insurance and shipping operations. Q4’21 Adjusted return on average equity of 16.8%, compared to 17.6% in Q4’20.
Segment Financial Highlights - Fourth Quarter and Total Year 2021
Insurance (The Fortegra Group):
| ($ in thousands) | Q4’21 | Q4’20 | FY’21 | FY’20 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Gross written premiums and premium equivalents | $ | 575,948 | $ | 490,920 | $ | 2,194,024 | $ | 1,666,942 | ||||
| Revenues | $ | 262,606 | $ | 208,762 | $ | 984,130 | $ | 691,061 | ||||
| Income before taxes | $ | 20,288 | $ | 26,530 | $ | 69,857 | $ | 26,948 | ||||
| Return on average equity | 17.4 | % | 27.5 | % | 17.1 | % | 8.1 | % | ||||
| Combined ratio | 89.4 | % | 90.0 | % | 90.6 | % | 91.5 | % | ||||
| Non-GAAP: (1) | ||||||||||||
| Adjusted net income | $ | 20,382 | $ | 13,588 | $ | 66,782 | $ | 43,423 | ||||
| Adjusted return on average equity | 27.2 | % | 18.6 | % | 22.2 | % | 15.2 | % |
(1) See “—Non-GAAP Reconciliations” for a discussion of non-GAAP financial measures.
•Fortegra’s gross written premiums and premium equivalents increased 17.3% for the quarter and 31.6% for the year driven by growth in U.S. specialty insurance lines and service contract businesses in U.S. and Europe. As a function of Fortegra’s premium growth, the combination of unearned premiums and deferred revenues on the balance sheet grew to $1,658.8 million, up $399.1 million, or 31.7%, from December 31, 2020.
•Revenues increased 25.8% for the quarter and 42.4% for the year driven by premium growth and investment gains in 2021 compared to losses in 2020. Excluding the impact of investment gains and losses, revenues increased by 39.5% over 2020.
•The combined ratio for the quarter was 89.4%, compared to 90.0% in Q4’20. For total year 2021, the combined ratio was 90.6%, compared to 91.5% in 2020. Operating and technology efficiencies contributed to an improved expense ratio, while the underwriting ratio remained stable.
•Income before taxes for the quarter of $20.3 million. Total year 2021 income before taxes of $69.9 million compared to $26.9 million in the prior year. Return on equity was 17.1% for 2021, as compared to 8.1% in 2020.
•Adjusted net income for the quarter was $20.4 million, up 50.0% from Q4’20. Adjusted net income for 2021 was $66.8 million, up 53.8%, driven by revenue growth and an improved combined ratio. The adjusted return on average equity was 22.2% for 2021, as compared to 15.2% in 2020.
Tiptree Capital:
| ($ in thousands) | Q4’21 | Q4’20 | FY’21 | FY’20 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenues | $ | 56,928 | $ | 48,633 | $ | 216,384 | $ | 119,240 | ||||
| Income before taxes | $ | 7,584 | $ | 7,794 | $ | 45,617 | $ | (30,140) | ||||
| Return on average equity | 3.6 | % | 8.8 | % | 22.2 | % | (12.7) | % | ||||
| Non-GAAP: (1) | ||||||||||||
| Adjusted net income | $ | 4,559 | $ | 10,021 | $ | 28,197 | $ | 33,075 | ||||
| Adjusted return on average equity | 10.1 | % | 24.1 | % | 16.2 | % | 17.8 | % |
(1) See “—Non-GAAP Reconciliations” for a discussion of non-GAAP financial measures.
•Mortgage income before taxes was $28.4 million in 2021, as compared to $31.1 million in 2020, with the decrease driven by a decline in gain on sale margins, partially offset by higher servicing fees and positive fair value adjustments on the mortgage servicing portfolio. Adjusted return on average equity was 28.8% in 2021.
•Maritime transportation income before taxes was $11.6 million in 2021, as compared to $1.5 million in 2020, with the increase driven by cyclically high dry-bulk charter rates.
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•Within Tiptree Capital, our investment in Invesque contributed unrealized gains of $3.1 million in 2021 compared to a loss of $67.7 million in 2020.
Corporate:
Corporate expenses include expenses of the holding company for interest expense, employee compensation and benefits, and public company and other expenses. For the quarter, corporate expenses were $17.0 million compared to $9.8 million in Q4’20 and for the year were $50.1 million, up from $35.7 million in 2020. The increase in both periods was primarily driven by increased stock-based compensation expense related to improved earnings and stock price performance.
Non-GAAP
Management uses Adjusted net income and Adjusted return on average equity as measurements of operating performance. Management believes these measures provide supplemental information useful to investors as they are frequently used by the financial community to analyze financial performance and comparison among companies. Management uses Adjusted net income and adjusted return on average equity as part of its capital allocation process and to assess comparative returns on invested capital. Adjusted net income represents income before taxes, less provision (benefit) for income taxes, and excluding the after-tax impact of various expenses that we consider to be unique and non-recurring in nature, stock-based compensation, net realized and unrealized gains (losses), and intangibles amortization associated with purchase accounting. Adjusted net income and Adjusted return on average equity are not measurements of financial performance or liquidity under GAAP and should not be considered as an alternative or substitute for GAAP net income. See “Non-GAAP Reconciliations” for a reconciliation of these measures to their GAAP equivalents.
Earnings Conference Call
Tiptree will host a conference call on Thursday, March 10, 2022 at 9:00 a.m. Eastern Time to discuss its Q4 and full year 2021 financial results. A copy of our investor presentation, to be used during the conference call, as well as this press release, will be available in the Investor Relations section of the Company’s website, located at www.tiptreeinc.com.
The conference call will be available via live or archived webcast at http://www.investors.tiptreeinc.com. To listen to a live broadcast, go to the site at least 15 minutes prior to the scheduled start time in order to register, download and install any necessary audio software. To participate in the telephone conference call, please dial 1-877-407-4018 (domestic) or 1-201-689-8471 (international). Please dial in at least five minutes prior to the start time.
A replay of the call will be available from Thursday, March 10, 2022 at 12:00 p.m. Eastern Time, until midnight Eastern on Thursday, March 17, 2022. To listen to the replay, please dial 1-844-512-2921 (domestic) or 1-412-317-6671 (international), Passcode: 13727150.
About Tiptree
Tiptree Inc. (NASDAQ: TIPT) allocates capital to select small and middle market companies with the mission of building long-term value. Established in 2007, we have a significant track record investing in the insurance sector and across a variety of other industries, including mortgage origination, specialty finance and shipping. With proprietary access and a flexible capital base, we seek to uncover compelling investment opportunities and support management teams in unlocking the full value potential of their businesses. For more information, please visit tiptreeinc.com and follow us on LinkedIn.
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Forward-Looking Statements
This release contains “forward-looking statements” which involve risks, uncertainties and contingencies, many of which are beyond the Company’s control, which may cause actual results, performance, or achievements to differ materially from anticipated results, performance, or achievements. All statements contained in this release that are not clearly historical in nature are forward-looking, and the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “project,” “should,” “target,” “will,” or similar expressions are intended to identify forward-looking statements. Such forward-looking statements include, but are not limited to, statements about the Company’s plans, objectives, expectations for our businesses and intentions. The forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, many of which are beyond our control, are difficult to predict and could cause actual results to differ materially from those expressed or forecast in the forward-looking statements. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including, but not limited to those described in the section entitled “Risk Factors” in the Company’s Annual Report on Form 10-K, and as described in the Company’s other filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as to the date of this release. The factors described therein are not necessarily all of the important factors that could cause actual results or developments to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors also could affect our forward-looking statements. Consequently, our actual performance could be materially different from the results described or anticipated by our forward-looking statements. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Except as required by the federal securities laws, we undertake no obligation to update any forward-looking statements.
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Tiptree Inc.
Consolidated Balance Sheets
($ in thousands, except share data)
| As of December 31, | ||||
|---|---|---|---|---|
| 2021 | 2020 | |||
| Assets: | ||||
| Investments: | ||||
| Available for sale securities, at fair value, net of allowance for credit losses | $ | 577,448 | $ | 377,133 |
| Loans, at fair value | 105,583 | 90,732 | ||
| Equity securities | 138,483 | 123,838 | ||
| Other investments | 168,656 | 219,701 | ||
| Total investments | 990,170 | 811,404 | ||
| Cash and cash equivalents | 175,718 | 136,920 | ||
| Restricted cash | 19,368 | 58,355 | ||
| Notes and accounts receivable, net | 454,369 | 370,452 | ||
| Reinsurance receivables | 880,836 | 728,009 | ||
| Deferred acquisition costs | 379,373 | 229,430 | ||
| Goodwill | 179,103 | 179,236 | ||
| Intangible assets, net | 122,758 | 138,215 | ||
| Other assets | 146,844 | 162,034 | ||
| Assets held for sale | 250,608 | 181,705 | ||
| Total assets | $ | 3,599,147 | $ | 2,995,760 |
| Liabilities and Stockholders’ Equity | ||||
| Liabilities: | ||||
| Debt, net | $ | 393,349 | $ | 366,246 |
| Unearned premiums | 1,123,952 | 860,690 | ||
| Policy liabilities and unpaid claims | 331,703 | 233,438 | ||
| Deferred revenue | 534,863 | 399,211 | ||
| Reinsurance payable | 265,569 | 224,660 | ||
| Other liabilities and accrued expenses | 306,536 | 362,865 | ||
| Liabilities held for sale | 242,994 | 175,112 | ||
| Total liabilities | $ | 3,198,966 | $ | 2,622,222 |
| Stockholders’ Equity: | ||||
| Preferred stock: $0.001 par value, 100,000,000 shares authorized, none issued or outstanding | $ | — | $ | — |
| Common stock: $0.001 par value, 200,000,000 shares authorized, 34,124,153 and 32,682,462 shares issued and outstanding, respectively | 34 | 33 | ||
| Additional paid-in capital | 317,459 | 315,014 | ||
| Accumulated other comprehensive income (loss), net of tax | (2,685) | 5,674 | ||
| Retained earnings | 68,146 | 35,423 | ||
| Total Tiptree Inc. stockholders’ equity | 382,954 | 356,144 | ||
| Non-controlling interests | 17,227 | 17,394 | ||
| Total stockholders’ equity | 400,181 | 373,538 | ||
| Total liabilities and stockholders’ equity | $ | 3,599,147 | $ | 2,995,760 |
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Tiptree Inc.
Consolidated Statements of Operations
($ in thousands, except share data)
| Three Months Ended <br>December 31, | Year Ended<br>December 31, | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | ||||||
| Revenues: | |||||||||
| Earned premiums, net | $ | 186,649 | $ | 132,997 | $ | 685,552 | $ | 477,991 | |
| Service and administrative fees | 69,111 | 52,683 | 260,525 | 186,973 | |||||
| Ceding commissions | 2,957 | 4,884 | 11,784 | 21,101 | |||||
| Net investment income | 8,565 | 1,113 | 17,896 | 9,916 | |||||
| Net realized and unrealized gains (losses) | 31,082 | 55,782 | 151,350 | 62,410 | |||||
| Other revenue | 21,170 | 9,936 | 73,407 | 51,910 | |||||
| Total revenues | 319,534 | 257,395 | 1,200,514 | 810,301 | |||||
| Expenses: | |||||||||
| Policy and contract benefits | 89,814 | 69,137 | 327,012 | 236,898 | |||||
| Commission expense | 104,103 | 73,038 | 396,683 | 280,210 | |||||
| Employee compensation and benefits | 60,062 | 47,843 | 207,322 | 172,737 | |||||
| Interest expense | 10,784 | 9,064 | 37,674 | 32,582 | |||||
| Depreciation and amortization | 6,176 | 5,334 | 24,437 | 17,578 | |||||
| Other expenses | 37,704 | 28,411 | 142,044 | 109,148 | |||||
| Total expenses | 308,643 | 232,827 | 1,135,172 | 849,153 | |||||
| Income (loss) before taxes | 10,891 | 24,568 | 65,342 | (38,852) | |||||
| Less: provision (benefit) for income taxes | 9,875 | 8,403 | 21,291 | (13,627) | |||||
| Net income (loss) | 1,016 | 16,165 | 44,051 | (25,225) | |||||
| Less: net income (loss) attributable to non-controlling interests | 1,442 | 1,895 | 5,919 | 3,933 | |||||
| Net income (loss) attributable to common stockholders | $ | (426) | $ | 14,270 | $ | 38,132 | $ | (29,158) | |
| Net income (loss) per common share: | |||||||||
| Basic earnings per share | $ | (0.01) | $ | 0.42 | $ | 1.13 | $ | (0.86) | |
| Diluted earnings per share | $ | (0.01) | $ | 0.40 | $ | 1.09 | $ | (0.86) | |
| Weighted average number of common shares: | |||||||||
| Basic | 33,996,324 | 33,213,307 | 33,223,792 | 33,859,775 | |||||
| Diluted | 33,996,324 | 33,213,307 | 33,688,256 | 33,859,775 | |||||
| Dividends declared per common share | $ | 0.04 | $ | 0.04 | $ | 0.16 | $ | 0.16 |
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Tiptree Inc.
Non-GAAP Reconciliations (Unaudited)
Non-GAAP Financial Measures — Adjusted net income and Adjusted return on average equity
The Company defines Adjusted net income as income before taxes, less provision (benefit) for income taxes, and excluding the after-tax impact of various expenses that we consider to be unique and non-recurring in nature, including merger and acquisition related expenses, stock-based compensation, net realized and unrealized gains (losses) and intangibles amortization associated with purchase accounting. We use adjusted net income as an internal operating performance measure in the management of business as part of our capital allocation process. We believe adjusted net income provides useful supplemental information to investors as it is frequently used by the financial community to analyze financial performance between periods and for comparison among companies. Adjusted net income should not be viewed as a substitute for income before taxes calculated in accordance with GAAP, and other companies may define adjusted net income differently.
We define Adjusted return on average equity as Adjusted net income expressed on an annualized basis as a percentage of average beginning and ending stockholder’s equity during the period. We use Adjusted return on average equity as an internal performance measure in the management of our operations because we believe it gives our management and other users of our financial information useful insight into our results of operations and our underlying business performance. Adjusted return on average equity should not be viewed as a substitute for return on average equity calculated in accordance with GAAP, and other companies may define adjusted return on average equity differently.
| Three Months Ended December 31, 2021 | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Tiptree Capital | |||||||||||||||||
| ($ in thousands) | Insurance | Mortgage | Other | Corporate | Total | ||||||||||||
| Income (loss) before taxes | $ | 20,288 | $ | 3,288 | $ | 4,296 | $ | (16,981) | $ | 10,891 | |||||||
| Less: Income tax (benefit) expense | (7,281) | (434) | (642) | (1,518) | (9,875) | ||||||||||||
| Less: Net realized and unrealized gains (losses) | 1,272 | (723) | 421 | — | 970 | ||||||||||||
| Plus: Intangibles amortization (1) | 3,830 | — | — | — | 3,830 | ||||||||||||
| Plus: Stock-based compensation expense | 659 | — | 4 | 6,750 | 7,413 | ||||||||||||
| Plus: Non-recurring expenses | 82 | — | 209 | — | 291 | ||||||||||||
| Plus: Non-cash fair value adjustments | — | — | (1,003) | — | (1,003) | ||||||||||||
| Less: Tax on adjustments | 1,532 | (182) | (675) | 3,667 | 4,342 | ||||||||||||
| Adjusted net income | $ | 20,382 | $ | 1,949 | $ | 2,610 | $ | (8,082) | $ | 16,859 | |||||||
| Adjusted net income | $ | 20,382 | $ | 1,949 | $ | 2,610 | $ | (8,082) | $ | 16,859 | |||||||
| Average stockholders’ equity | $ | 299,236 | $ | 62,065 | $ | 119,016 | $ | (79,155) | $ | 401,162 | |||||||
| Adjusted return on average equity | 27.2 | % | 12.6 | % | 8.8 | % | NM% | 16.8 | % | ||||||||
| Three Months Ended December 31, 2020 | |||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||
| Tiptree Capital | |||||||||||||||||
| ($ in thousands) | Insurance | Mortgage | Other | Corporate | Total | ||||||||||||
| Income (loss) before taxes | $ | 26,530 | $ | 9,627 | $ | (1,833) | $ | (9,756) | $ | 24,568 | |||||||
| Less: Income tax (benefit) expense | (6,436) | (3,005) | (1,118) | 2,156 | (8,403) | ||||||||||||
| Less: Net realized and unrealized gains (losses) | (13,505) | 1,265 | 1,686 | — | (10,554) | ||||||||||||
| Plus: Intangibles amortization (1) | 2,255 | — | — | — | 2,255 | ||||||||||||
| Plus: Stock-based compensation expense | 909 | 1,069 | 19 | (39) | 1,958 | ||||||||||||
| Plus: Non-recurring expenses | 1,232 | — | 284 | 405 | 1,921 | ||||||||||||
| Plus: Non-cash fair value adjustments | — | — | 820 | — | 820 | ||||||||||||
| Less: Tax on adjustments | 2,603 | 134 | 1,073 | (184) | 3,626 | ||||||||||||
| Adjusted net income | $ | 13,588 | $ | 9,090 | $ | 931 | $ | (7,418) | $ | 16,191 | |||||||
| Adjusted net income | $ | 13,588 | $ | 9,090 | $ | 931 | $ | (7,418) | $ | 16,191 | |||||||
| Average stockholders’ equity | $ | 291,845 | $ | 55,254 | $ | 111,248 | $ | (90,732) | $ | 367,615 | |||||||
| Adjusted return on average equity | 18.6 | % | 65.8 | % | 3.3 | % | NM% | 17.6 | % | Notes | |||||||
| --- | --- | ||||||||||||||||
| (1) | Specifically associated with acquisition purchase accounting. See Note (3) Acquisitions. |
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| Year Ended December 31, 2021 | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Tiptree Capital | ||||||||||||||
| ($ in thousands) | Insurance | Mortgage | Other | Corporate | Total | |||||||||
| Income (loss) before taxes | $ | 69,857 | $ | 28,407 | $ | 17,210 | $ | (50,132) | $ | 65,342 | ||||
| Less: Income tax (benefit) expense | (18,438) | (4,882) | (1,992) | 4,021 | (21,291) | |||||||||
| Less: Net realized and unrealized gains (losses) | (3,732) | (5,798) | (3,091) | — | (12,621) | |||||||||
| Plus: Intangibles amortization (1) | 15,329 | — | — | — | 15,329 | |||||||||
| Plus: Stock-based compensation expense | 2,006 | 331 | 213 | 8,581 | 11,131 | |||||||||
| Plus: Non-recurring expenses | 2,158 | — | 938 | 2,171 | 5,267 | |||||||||
| Plus: Non-cash fair value adjustments | — | — | (3,170) | — | (3,170) | |||||||||
| Less: Tax on adjustments | (398) | (624) | 655 | 4,249 | 3,882 | |||||||||
| Adjusted net income | $ | 66,782 | $ | 17,434 | $ | 10,763 | $ | (31,110) | $ | 63,869 | ||||
| Adjusted net income | $ | 66,782 | $ | 17,434 | $ | 10,763 | $ | (31,110) | $ | 63,869 | ||||
| Average stockholders’ equity | $ | 300,820 | $ | 60,433 | $ | 113,717 | $ | (88,111) | $ | 386,859 | ||||
| Adjusted return on average equity | 22.2 | % | 28.8 | % | 9.5 | % | NM% | 16.5 | % | |||||
| Year Ended December 31, 2020 | ||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Tiptree Capital | ||||||||||||||
| ($ in thousands) | Insurance | Mortgage | Other | Corporate | Total | |||||||||
| Income (loss) before taxes | $ | 26,948 | $ | 31,102 | $ | (61,242) | $ | (35,660) | $ | (38,852) | ||||
| Less: Income tax (benefit) expense | (3,725) | (7,066) | 13,624 | 10,794 | 13,627 | |||||||||
| Less: Net realized and unrealized gains (losses) | 13,804 | 4,018 | 67,668 | — | 85,490 | |||||||||
| Plus: Intangibles amortization (1) | 9,213 | — | — | — | 9,213 | |||||||||
| Plus: Stock-based compensation expense | 2,287 | 2,482 | 174 | 3,172 | 8,115 | |||||||||
| Plus: Non-recurring expenses | 3,418 | — | 624 | 758 | 4,800 | |||||||||
| Plus: Non-cash fair value adjustments | — | — | (2,141) | — | (2,141) | |||||||||
| Less: Tax on adjustments | (8,522) | (1,958) | (14,210) | (4,131) | (28,821) | |||||||||
| Adjusted net income | $ | 43,423 | $ | 28,578 | $ | 4,497 | $ | (25,067) | $ | 51,431 | ||||
| Adjusted net income | $ | 43,423 | $ | 28,578 | $ | 4,497 | $ | (25,067) | $ | 51,431 | ||||
| Average stockholders’ equity | 285,760 | 47,202 | 138,606 | (79,092) | 392,476 | |||||||||
| Adjusted return on average equity | 15.2 | % | 60.5 | % | 3.2 | % | NM% | 13.1 | % |
___________________________
The footnote below corresponds to the tables above, under “—Adjusted Net Income - Non-GAAP” and “—Adjusted Return on Average Equity - Non-GAAP”.
| Notes | |
|---|---|
| (1) | Specifically associated with acquisition purchase accounting. See Note (3) Acquisitions. |
Non-GAAP Financial Measures — Book value per share
Management believes the use of this financial measure provides supplemental information useful to investors as book value is frequently used by the financial community to analyze company growth on a relative per share basis. The following table provides a reconciliation between total stockholders’ equity and total shares outstanding, net of treasury shares.
| ($ in thousands, except per share information) | As of December 31, | |||
|---|---|---|---|---|
| 2021 | 2020 | |||
| Total stockholders’ equity | $ | 400,181 | $ | 373,538 |
| Less: Non-controlling interests | 17,227 | 17,394 | ||
| Total stockholders’ equity, net of non-controlling interests | $ | 382,954 | $ | 356,144 |
| Total common shares outstanding | 34,124 | 32,682 | ||
| Book value per share | $ | 11.22 | $ | 10.90 |
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exh992investorpresentati
Investor Presentation – Fourth Quarter 2021 March 2022 Financial Information for the three and twelve months ended December 31, 2021 EXHIBIT 99.2
1 Disclaimers LIMITATIONS ON THE USE OF INFORMATION This presentation has been prepared by Tiptree Inc. and its consolidated subsidiaries (“Tiptree", "the Company" or "we”) solely for informational purposes, and not for the purpose of updating any information or forecast with respect to Tiptree, its subsidiaries or any of its affiliates or any other purpose. Tiptree reports a non-controlling interest in certain operating subsidiaries that are not wholly owned. Unless otherwise noted, all information is of Tiptree on a consolidated basis before non-controlling interest. Neither Tiptree nor any of its affiliates makes any representation or warranty, express or implied, as to the accuracy or completeness of the information contained herein and no such party shall have any liability for such information. These materials and any related oral statements are not all-inclusive and shall not be construed as legal, tax, investment or any other advice. You should consult your own counsel, accountant or business advisors. Performance information is historical and is not indicative of, nor does it guarantee future results. There can be no assurance that similar performance may be experienced in the future. SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS This document contains "forward-looking statements" which involve risks, uncertainties and contingencies, many of which are beyond Tiptree's control, which may cause actual results, performance, or achievements to differ materially from anticipated results, performance, or achievements. All statements contained herein that are not clearly historical in nature are forward-looking, and the words "anticipate," "believe," "estimate," "expect,“ “intend,” “may,” “might,” "plan," “project,” “should,” "target,“ “will,” "view," “confident,” or similar expressions are intended to identify forward-looking statements. Such forward-looking statements include, but are not limited to, statements about Tiptree's plans, objectives, expectations and intentions. The forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, many of which are beyond our control, are difficult to predict and could cause actual results to differ materially from those expressed or forecast in the forward-looking statements. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including, but not limited to those described in the section entitled “Risk Factors” in Tiptree’s Annual Report on Form 10-K, and as described in the Tiptree’s other filings with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as to the date of this release. The factors described therein are not necessarily all of the important factors that could cause actual results or developments to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors also could affect our forward-looking statements. Consequently, our actual performance could be materially different from the results described or anticipated by our forward-looking statements. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Except as required by the federal securities laws, we undertake no obligation to update any forward- looking statements. MARKET AND INDUSTRY DATA Certain market data and industry data used in this presentation were obtained from reports of governmental agencies and industry publications and surveys. We believe the data from third-party sources to be reliable based upon our management’s knowledge of the industry, but have not independently verified such data and as such, make no guarantees as to its accuracy, completeness or timeliness. NOT AN OFFER OR A SOLICIATION This document does not constitute an offer or invitation for the sale or purchase of securities or to engage in any other transaction with Tiptree, its subsidiaries or its affiliates. The information in this document is not targeted at the residents of any particular country or jurisdiction and is not intended for distribution to, or use by, any person in any jurisdiction or country where such distribution or use would be contrary to local law or regulation. NON-GAAP MEASURES In this document, we sometimes use financial measures derived from consolidated financial data but not presented in our financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP"). Certain of these data are considered “non-GAAP financial measures” under the SEC rules. These non-GAAP financial measures supplement our GAAP disclosures and should not be considered an alternative to the GAAP measure. Management's reasons for using these non-GAAP financial measures and the reconciliations to their most directly comparable GAAP financial measures are posted in the Appendix.
2 2021 Highlights Revenue $1,200.5 million 48.2% vs. prior year Adjusted Net Income2 $63.9 million 24.2% vs. prior year Book Value per share2,3 $11.22 4.4% vs. 12/31/20 Net income1 $38.1 million vs. prior year net loss of $29.2 million Overall Adjusted net income2 of $63.9 million, with a 16.5% adj ROAE2, driven by improvement in insurance and shipping operations. On October 12, 2021, announced a $200 million investment in Fortegra from Warburg Pincus, which is expected to close in Q2’22 and will result in an approximate 24% ownership of Fortegra on an as converted basis. Insurance $2.2 billion of gross written premiums and premium equivalents (GWPPE)4, 32% increase from PY driven growth in admitted and E&S insurance lines and fee-based service contract offerings Combined ratio of 90.6% improved from 91.5% in PY driven by the continued scalability of Fortegra’s technology and shared service platform, which improved the expense ratio, while the underwriting ratio remained stable. Adjusted net income of $66.8 million, up 54% from PY driven by revenue growth and improved combined ratio. Adjusted ROAE of 22.2%. Tiptree Capital Mortgage Adjusted net income of $17.4 million and Adjusted ROAE of 28.8% Shipping Adjusted net income improved to $10.7 million from $2.3 million in PY due to cyclical high in dry-bulk rates ($ in millions, except per share information) 1 Net income (loss) attributable to common stockholders. 2 For a reconciliation of Non-GAAP metrics Adjusted net income, adjusted return on average equity and book value per share to GAAP financials, see the Appendix. 3 Year-over-year total return defined as cumulative dividends paid of $0.16 per share plus book value per share as of December 31, 2021. 4 Gross written premium and premium equivalents are the base used to calculate the service fee income for non-insurance products. This base includes the amount charged to end consumers for a warranty or a car club membership.
Financial Results Q4’20 Q4'21 2020 2021 Total Revenues $257.4 $319.5 $810.3 $1,200.5 Net income (loss) $14.3 $(0.4) $(29.2) $38.1 Diluted EPS $0.40 $(0.01) $(0.86) $1.09 Adjusted net income1 $16.2 $16.9 $51.4 $63.9 Adjusted ROAE1 17.6% 16.8% 13.1% 16.5% Total shares outstanding 32.7 34.1 Book Value per share1 $10.90 $11.22 3 1 For a reconciliation of Non-GAAP metrics Adjusted net income, adjusted return on average equity and book value per share to GAAP financials, see the Appendix. ($ in millions, except per share information) $10.6 $13.6 $20.4 $1.6 $9.1 $1.9 $(5.4) $(7.4) $(8.1) $3.7 $0.9 $2.6 $10.5 $16.2 $16.9 Q4'19 Q4'20 Q4'21 $32.8 $43.4 $66.8 $3.9 $28.6 $17.4 $(23.2) $(25.1) $(31.1) $14.1 $4.5 $10.8 $27.6 $51.4 $63.9 2019 2020 2021 Corporate Fortegra Mortgage Tiptree Capital - Other Key Highlights – Q4’21 Adjusted Net Income by business Revenues up 31%, excluding the impact of investment gains/losses • Continued growth in Fortegra’s earned premiums, service and administration fees and investment income • Cyclical high in dry-bulk charter rates • Mortgage origination volumes down 9% with gain on sale margins down 170bps; partially offset by increased servicing fees & positive MSR marks Adj net income of $16.9mm, increased by 4% versus prior year; Net income decreased by $14.7mm to $(0.4)mm • Improved combined ratio at Fortegra driven by operating efficiencies • Offset by increased performance-based incentive compensation expense and related tax impacts BVPS of $11.22 increased by 4.4% over prior year driven by net income • Decrease of $0.15 from Q3’21 driven by unrealized losses on available for sale securities (impacting AOCI)
Tiptree Snapshot 4 ($ in millions) Adjusted Net Income1 1) See the appendix for a reconciliation of Non-GAAP measures including Adjusted Net Income. 2) Estimated Based on Warburg Pincus valuation multiple of 13.5x Adj. Net Income, multiplied LTM Adjusted Net Income of $66.8 million, multiplied by Tiptree’s 79.5% ownership pro-forma as of closing date. 3) Pro-forma Q4’21 Tiptree holdco book equity of $(87) million plus $140 million of transaction proceeds that will be used to extinguish $110 million of Fortress debt, assumed from Tiptree, and $30 million to repay notes to Tiptree, used for general corporate purposes. Adj ROAE% 13.1% 16.5% Tiptree Sum of the Parts $51.4 $63.9 2020 2021 $717 million2 (Transaction multiple) $177 million (Book value ex. NCI) Holding Company $53 million3 (Book value) $947 million $19.57 Value/TIPT diluted share Pro-forma SOTP Value $4.83 $1.45 $25.85
Specialty Insurance Performance Highlights Q4’21
6 Fortegra – Financial Performance Highlights Continued growth supported by specialty insurance program expansion and onboarding new agents, with a focus on stable, improved profitability • Growth in unearned premiums and deferred revenue to $1.7Bn, a 32% increase year-over-year • Underwriting and fee revenues increased to $261mm, up 36% • Continued investment in strategic growth initiatives ✓ Specialty admitted & E&S lines ✓ Capital-light warranty solutions ✓ European expansion Produced stable, growing results from underwriting and fees • Underwriting margin of $67mm, up 34%, driven by growth in all business lines • Combined ratio improved to 89.4% Capital and liquidity remain strong and continue to support growth objectives Underwriting and Fee Margin1 Underwriting and Fee Revenues1 Combined Ratio 1 2 3 Summary Financials Insurance products Q4’21 Highlights & Outlook 30 39 18 25 2 3 $50 $67 Q4'20 Q421 138 186 47 62 7 12 $192 $261 Q4'20 Q4'21 73.9% 74.3% 16.1% 15.1% 90.0% 89.4% Q4'20 Q4'21 ($ in millions) U.S. Warranty Solutions U.S Insurance Europe Warranty Solutions Expense Ratio Underwriting Ratio Europe Warranty Solutions U.S. Warranty Solutions U.S. Insurance 1 See the appendix for a reconciliation of Non-GAAP measures including Adjusted Net Income, Adjusted return on average equity, underwriting and fee revenues and underwriting and fee margin. 2 Gross written premiums and premium equivalents are the base used to calculate the service fee income for non-insurance products. This base includes the amount charged to end consumers for a warranty or a car club membership. Q4’20 Q4’21 2020 2021 Premiums & equivalents2 $490.9 $575.9 $1,666.9 $2,194.0 Revenue $208.8 $262.6 $691.1 $984.1 Pre-tax income (loss) $26.5 $20.3 $26.9 $69.9 Adjusted net income1 $13.6 $20.4 $43.4 $66.8 Adjusted ROAE1 18.6% 27.2% 15.2% 22.2% Combined ratio 90.0% 89.4% 91.5% 90.6% Unearned premiums & Deferred revenue $1,259.7 $1,658.8
Robust growth trajectory while maintaining underwriting profitability 76.5% 74.6% 74.7% 15.9% 16.9% 15.9% 92.4% 91.5% 90.6% 2019 2020 2021 $32.8 $43.4 $66.8 2019 2020 2021 7 ($ in millions) Gross Written Premiums & Equivalents Underwriting & Fee Revenues and Margin1 Adjusted Net Income1 966 1,064 1,438 297 550 652 34 53 104 $1,297 $1,667 $2,194 2019 2020 2021 Combined Ratio Adj. ROAE%1 Adj. Net Income U/W Ratio Expense Ratio U.S. Insurance U.S. Warranty Solutions Europe Warranty Solutions 1 See the appendix for a reconciliation of Non-GAAP measures including Adjusted Net Income, Adjusted return on average equity, underwriting and fee revenues and underwriting and fee margin. 12% 15% 526 508 690 87 163 231 7 23 47 $620 $693 $968 2019 2020 2021 105 107 141 37 62 90 3 7 13 $146 $176 $245 2019 2020 2021 U/W & Fee Revenues U/W & Fee Margin 22%
Insurance Investment Portfolio Cash & Equivalents 15% Government & Agency 39% Corporate Bonds 16% Fixed Income ETFs 6% Muni & ABS 8% Equities 6% Other Alternatives 10% Cash & Equivalents 18% Government & Agency 46% AAA 2% AA 9% A 17% BBB 1% Fixed Income ETFs 7% $767mm 8 2021 Investment Mix Liquid and Highly-Rated Fixed Income Portfolio ($ in millions) 589 767 124 144 $713 $910 2020 2021 Other investments Fixed Income & Cash Return Metrics $910mm ◼ ~2.6 year duration ◼ $608mm Blackrock managed ◼ AA+ rating ◼ 1.3% book yield 2020 2021 Net investment income – P&L $9.9) $17.9) Net realized and unrealized gains (losses) – P&L $(11.9) $(2.0) Unrealized gains (losses) on AFS Securities – OCI $5.1) $(10.8)
Performance Highlights Q4’21
75.8 81.8 60.5 60.4 26.0 29.1 3.7 11.0 $166.0 $182.3 2020 2021 Financial drivers Pre-tax income Adjusted Net Income1 2020 2021 2020 2021 Mortgage $31.1 $28.4 $28.6 $17.4 Senior living (Invesque)2 (65.1) 3.1 2.0 - Maritime transportation 1.5 11.6 2.3 10.7 Other 2.4 2.5 0.2 - Total $(30.1) $45.6 $33.1 $28.2 10 Tiptree Capital – Financial Performance Highlights Mortgage: • Mortgage origination volumes of $1,608mm, down 3% from 2020 • Pre-tax income below PY from decline in margins partially offset by higher servicing fees & positive FV adjustments on MSR asset • MSR asset of $30mm, including positive MTM of $5.8mm in 2021 Maritime transportation: • Cyclical highs in dry-bulk charter rates driven by vessel supply and demand imbalance • Partially offset by softness in tanker rates Senior living (Invesque – IVQ.U): • Observing positive trends in senior living, skilled nursing and medical office sectors • 2021 unrealized gains of $3.1mm, compared to losses of $67.7mm in 2020 Mortgage Maritime transportation Seniors Housing (Invesque/Care)2 1 See the appendix for a reconciliation of Non-GAAP measures including Adjusted Net Income. 2 17.0m of Invesque common shares, 2.9m shares held in the insurance company investment portfolio. On balance sheet at fair value - $34.8 million, $28.8 million in Tiptree Capital as of December 31, 2021. Equity Capital Allocation 2021 Highlights ($ in millions) Other
$51.4 $63.9 2020 2021 11 Continued growth and underwriting performance at Fortegra Improvement in long-term, net investment income Focused on long-term shareholder value creation Summary & Outlook ($ in millions, except per share information) Adjusted Net Income1 ✓ Diversification of our underlying operations supported strong results ― Fortegra continues to deliver record top-line and return on equity ― Strong performance from mortgage & shipping operations ✓ $200 million investment in Fortegra from Warburg Pincus expected to close in Q2’22 1 See the appendix for a reconciliation of Non-GAAP measures including Adjusted Net Income and Adjusted return on average equity. 1 2 3 2021 Highlights Looking Ahead 13.1% 16.5% Adjusted ROAE1
Appendix Non-GAAP Reconciliations • Insurance underwriting and fee revenue • Insurance underwriting and fee margin • Book Value per share • Adjusted net income
2021 Capital Allocation & Annual Performance Comparison 131 Represents total stockholders’ equity. Total stockholders’ equity net of other non-controlling interests was $383.0 million as of December 31, 2021. 2 See the appendix for a reconciliation of Non-GAAP metrics including Adjusted net income and adjusted return on average equity. Adjusted net income of $63.9mm, up 24.2% from 2020 • Adjusted return on average equity of 16.5%1 Insurance: • 22.2% Adjusted return on average equity • Growth in insurance underwriting and fee revenues • Combined ratio improvement Tiptree Capital: • 16.2% Adjusted return on average equity • Positive operating contributions from shipping investments • Strong returns in mortgage business while margins and volumes normalize 2021 Highlights Stockholders’ Equity1 Adjusted Net Income2 Business Lines 2021 2020 2021 Insurance $303.9 $43.4 $66.8 - Underwriting & fees $34.9 $58.1 - Investments $8.5 $8.7 Tiptree Capital $182.3 $33.1 $28.2 Corporate $(86.0) $(25.1) $(31.1) Total Tiptree $400.2 $51.4 $63.9 ($ in millions) Operating Performance
Non-GAAP Reconciliations 14 Adjusted Net Income We define adjusted net income as income before taxes, less provision (benefit) for income taxes, and excluding the after-tax impact of various expenses that we consider to be unique and non-recurring in nature, including merger and acquisition related expenses, stock-based compensation, net realized and unrealized gains (losses) and intangibles amortization associated with purchase accounting. We use adjusted net income as an internal operating performance measure in the management of business as part of our capital allocation process. We believe adjusted net income provides useful supplemental information to investors as it is frequently used by the financial community to analyze financial performance between periods and for comparison among companies. Adjusted net income should not be viewed as a substitute for income before taxes calculated in accordance with GAAP, and other companies may define adjusted net income differently. We present adjustments for amortization associated with acquired intangible assets. The intangible assets were recorded as part of purchase accounting in connection with Tiptree’s acquisition of FFC in 2014, Defend in 2019, and Smart AutoCare and Sky Auto in 2020. The intangible assets acquired contribute to overall revenue generation, and the respective purchase accounting adjustments will continue to occur in future periods until such intangible assets are fully amortized in accordance with the respective amortization periods required by GAAP. We define adjusted return on average equity as adjusted net income expressed on an annualized basis as a percentage of average beginning and ending stockholder’s equity during the period. We use adjusted return on average equity as an internal performance measure in the management of our operations because we believe it gives our management and other users of our financial information useful insight into our results of operations and our underlying business performance. Adjusted return on average equity should not be viewed as a substitute for return on average equity calculated in accordance with GAAP, and other companies may define adjusted return on average equity differently. Book value per share Management believes the use of book value per share provides supplemental information useful to investors as it is frequently used by the financial community to analyze company growth on a relative per share basis. Insurance – Underwriting and Fee Revenues We generally manage our exposure to the underwriting risk we assume using both reinsurance (e.g., quota share and excess of loss) and retrospective commission agreements with our partners (e.g., commissions paid are adjusted based on the actual underlying losses incurred), which mitigate our risk. Period-over-period comparisons of revenues and expenses are often impacted by the PORCs and distribution partners’ choice as to whether to retain risk, specifically service and administration fees and ceding commissions, both components of revenue, and policy and contract benefits and commissions paid to our partners and reinsurers. Generally, when losses are incurred, the risk which is retained by our partners and reinsurers is reflected in a reduction in commissions paid. In order to better explain to investors the underwriting performance of the Company’s programs and the respective retentions between the Company and its agents and reinsurance partners, we use the non-GAAP metrics underwriting and fee revenues and underwriting and fee margin. We define underwriting and fee revenues as total revenues from our Insurance segment excluding net investment income, net realized and unrealized gains (losses). Underwriting and fee revenues represents revenues generated by our underwriting and fee-based operations and allows us to evaluate our underwriting performance without regard to investment income. We use this metric as we believe it gives our management and other users of our financial information useful insight into our underlying business performance. Underwriting and fee revenues should not be viewed as a substitute for total revenues calculated in accordance with GAAP, and other companies may define underwriting and fee revenues differently. Insurance - Underwriting and Fee Margin We define underwriting and fee margin as income before taxes from our Insurance segment, excluding net investment income, net realized and unrealized gains (losses), employee compensation and benefits, other expenses, interest expense and depreciation and amortization. Underwriting and fee margin represents the underwriting performance of our underwriting and fee-based programs. As such, underwriting and fee margin excludes general administrative expenses, interest expense, depreciation and amortization and other corporate expenses as those expenses support the vertically integrated business model and not any individual component of our business mix. We use this metric as we believe it gives our management and other users of our financial information useful insight into the specific performance of our underlying underwriting and fee program. Underwriting and fee income should not be viewed as a substitute for income before taxes calculated in accordance with GAAP, and other companies may define underwriting and fee margin differently.
15 Non-GAAP Reconciliations – Underwriting & Fee Revenues & Margin We define underwriting and fee revenues as total revenues from our Insurance segment excluding net investment income, net realized and unrealized gains (losses). Underwriting and fee revenues represents revenues generated by our underwriting and fee-based operations and allows us to evaluate our underwriting performance without regard to investment income. We use this metric as we believe it gives our management and other users of our financial information useful insight into our underlying business performance. Underwriting and fee revenues should not be viewed as a substitute for total revenues calculated in accordance with GAAP, and other companies may define underwriting and fee revenues differently. We define underwriting and fee margin as income before taxes from our Insurance segment, excluding net investment income, net realized and unrealized gains (losses), employee compensation and benefits, other expenses, interest expense and depreciation and amortization. Underwriting and fee margin represents the underwriting performance of our underwriting and fee-based programs. As such, underwriting and fee margin excludes general administrative expenses, interest expense, depreciation and amortization and other corporate expenses as those expenses support the vertically integrated business model and not any individual component of our business mix. We use this metric as we believe it gives our management and other users of our financial information useful insight into the specific performance of our underlying underwriting and fee program. Underwriting and fee income should not be viewed as a substitute for income before taxes calculated in accordance with GAAP, and other companies may define underwriting and fee margin differently. Management uses Book value per share, which is a non-GAAP financial measure. Management believes the use of this financial measure provides supplemental information useful to investors as it is frequently used by the financial community to analyze company growth on a relative per share basis. Tiptree’s book value per share was $11.22 as of December 31, 2021 compared with $10.90 as of December 31, 2020. Total stockholders’ equity, net of other non-controlling interests for the Company was $383.0 million as of December 31, 2021, which comprised total stockholders’ equity of $400.2 million adjusted for $17.2 million attributable to non-controlling interest at certain operating subsidiaries that are not wholly owned by the Company, such as Luxury and management interests in subsidiaries. Total stockholders’ equity, net of other non- controlling interests for the Company was $356.1 million as of December 31, 2020, which comprised total stockholders’ equity of $373.5 million adjusted for $17.4 million attributable to non-controlling interest at subsidiaries that are not wholly owned by the Company. ($ in thousands) For the Year Ended December 31, 2021 2020 2019 Total revenues $ 984,130 $ 691,061 $ 635,085 Less: Net investment income (17,896) (9,916) (8,667) Less: Net realized and unrealized gains (losses) 2,006 11,944 (6,896) Underwriting and fee revenues $ 968,240 $ 693,089 $ 619,522 For the Year Ended December 31, 2021 2020 2019 Income (loss) before income taxes $ 69,857 $ 26,948 $ 37,030 Less: Net investment income (17,896) (9,916) (8,667) Less: Net realized and unrealized gains (losses) 2,006 11,944 (6,896) Plus: Depreciation and amortization 17,223 10,835 9,105 Plus: Interest expense 17,576 15,487 14,766 Plus: Employee compensation and benefits 76,552 65,089 49,789 Plus: Other expenses 79,227 55,594 50,657 Underwriting and fee margin $ 244,545 $ 175,981 $ 145,784 As of December 31, 2021 2020 2019 Total stockholders’ equity $ 400,181 $ 373,538 $ 411,415 Less: Non-controlling interests 17,227 17,394 13,353 Total stockholders’ equity, net of non-controlling interests $ 382,954 $ 356,144 $ 398,062 Total common shares outstanding 34,124 32,682 34,563 Book value per share $ 11.22 $ 10.90 $ 11.52
16 Non-GAAP Reconciliations – Adjusted Net Income (1) Specifically associated with acquisition purchase accounting. See Note (3) Acquisitions in the December 31, 2021 Form 10-K. ($ in thousands) Year Ended December 31, 2021 Tiptree Capital Insurance Mortgage Other Corporate Total Income (loss) before taxes $ 69,857 $ 28,407 $ 17,210 $ (50,132) $ 65,342 Less: Income tax (benefit) expense (18,438) (4,882) (1,992) 4,021 (21,291) Less: Net realized and unrealized gains (losses) (3,732) (5,798) (3,091) – (12,621) Plus: Intangibles amortization (1) 15,329 – – – 15,329 Plus: Stock-based compensation 2,006 331 213 8,581 11,131 Plus: Non-recurring expenses 2,158 – 938 2,171 5,267 Plus: Non-cash fair value adjustments – – (3,170) – (3,170) Less: Tax on adjustments (398) (624) 655 4,249 3,882 Adjusted net income $ 66,782 $ 17,434 $ 10,763 $ (31,110) $ 63,869 Adjusted net income $ 66,782 $ 17,434 $ 10,763 $ (31,110) $ 63,869 Average stockholders’ equity 300,820 60,433 113,717 (88,111) 386,859 Adjusted return on average equity 22.2% 28.8% 9.5% NM% 16.5% Year Ended December 31, 2020 Tiptree Capital Insurance Mortgage Other Corporate Total $ 26,948 $ 31,102 $ (61,242) $ (35,660) $ (38,852) (3,725) (7,066) 13,624 10,794 13,627 13,804 4,018 67,668 – 85,490 9,213 – – – 9,213 2,287 2,482 174 3,172 8,115 3,418 – 624 758 4,800 – – (2,141) – (2,141) (8,522) (1,958) (14,210) (4,131) (28,821) $ 43,423 $ 28,578 $ 4,497 $ (25,067) $ 51,431 $ 43,423 $ 28,578 $ 4,497 $ (25,067) $ 51,431 285,760 47,202 138,606 (79,092) 392,476 15.2% 60.5% 3.2% NM% 13.1% Year Ended December 31, 2019 Tiptree Capital Insurance Mortgage Other Corporate Total Income (loss) before taxes from continuing operations $ 37,030 $ 2,959 $ 23,391 $ (34,241) $ 29,139 Less: Income tax (benefit) expense (8,455) (640) (4,457) 4,535 (9,017) Less: Net realized and unrealized gains (losses) (6,896) 2,056 (6,148) – (10,988) Plus: Intangibles amortization (1) 7,510 – – – 7,510 Plus: Stock-based compensation 2,891 170 – 3,299 6,360 Plus: Non-recurring expenses 1,975 – 202 2,079 4,256 Plus: Non-cash fair value adjustments – – (153) – (153) Less: Tax on adjustments (1,249) (616) 1,248 1,108 491 Adjusted net income $ 32,806 $ 3,929 $ 14,083 $ (23,220) $ 27,598 Adjusted net income $ 32,806 $ 3,929 $ 14,083 $ (23,220) $ 27,598 Average stockholders’ equity 266,397 32,785 161,133 (54,978) 405,337 Adjusted return on average equity 12.3% 12.0% 8.7% NM% 6.8%
TiptreeInc. ir@tiptreeinc.com