Tiptree Inc 8-K, filed Aug 4, 2021
Tiptree Inc. (TIPT)
8-K
2021-08-04
For: 2021-08-03
View Original
Added on
April 04, 2026
About this 8-K
Tiptree Inc filed this 8-K on August 4, 2021, reporting on events of August 3, 2021.
Items reported
- Item 2.02: Financial results
- Item 5.02: Director or officer change, or executive pay
- Item 7.01: Regulation FD disclosure
- Item 9.01: Financial statements and exhibits
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): August 3, 2021
(Exact Name of Registrant as Specified in Charter)
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||||||||||||
| (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):
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | |||||||||
| 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 August 4, 2021, Tiptree Inc. (the “Company” or “Tiptree”) issued a press release announcing its results of operations for the quarter ended June 30, 2021. A copy of the press release is furnished as Exhibit 99.1 hereto and incorporated herein by reference.
| Item 5.02 | Departure of Directors or Certain officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements for Certain Officers. | ||||
(e)
Performance Restricted Stock Units
On August 3, 2021, the members of the Compensation, Nominating and Governance Committee (the “CNG Committee”), consisting solely of independent members of the Board of Directors of Tiptree, awarded 1,500,000 performance restricted stock units (“PRSUs”) under the Tiptree Inc. 2017 Omnibus Incentive Plan (the “Plan”) to each of Michael Barnes, Executive Chairman, and Jonathan Ilany, Chief Executive Officer, and 500,000 PRSUs to Randy Maultsby, President (together, the “Grantees”). A portion of the total number of PRSUs subject to the award will generally vest upon achievement of each of five Tiptree share price target milestones ranging from $15 to $60 (adjusted for dividends paid) prior to the tenth anniversary of the date of grant, subject to the Grantee’s continued employment with Tiptree. As an incentive to keep the Grantees focused on long-term share price appreciation, the PRSU awards provide an opportunity for the Grantees to earn PRSUs upon achievement of the second, third, fourth, and fifth share price milestones that were not earned for achievement of the first, second, third, and fourth share price milestones.
This award reflects the CNG Committee’s desire for the Grantees to continue to lead Tiptree for an additional significant number of years and to create significant shareholder value over time. The PRSUs are intended to cover three years of equity compensation for the Grantees, and the CNG Committee does not intend to grant new equity awards to them over the next three years. Following stockholder approval of an increase in the share pool available under the Plan, a Grantee may elect to exchange PRSUs for performance-based restricted stock having the same economic and vesting terms but with current voting rights.
The foregoing description does not purport to be complete and is qualified in its entirety by reference to the full text of the award agreement governing the PRSUs filed herewith as Exhibit 10.1, which is incorporated by reference herein.
Base Salary Increases
In addition, the CNG Committee has increased the annual base salary of Mr. Barnes to $1,000,000, of Mr. Ilany to $1,000,000 and of Mr. Maultsby to $500,000, in each case effective as of January 1, 2022.
Modified RSU Incentive Plan
The CNG Committee also modified the incentive plan for Tiptree’s other executive officers. Rather than require that 20% of an executive’s total incentive compensation be granted in three-year annual vesting restricted stock units (“RSUs”), the executive shall receive either (a) 100% of the executive’s incentive compensation in cash or (b) up to 20% of the executive’s incentive compensation in RSUs that cliff-vest on the third anniversary of the grant date (with the remaining percentage of the executive’s incentive compensation to be paid in cash), provided that upon vesting, Tiptree shall issue two shares of common stock for each vested RSU. The unvested RSUs will be entitled to dividend equivalents. For year, 2021, this decision between the two options shall be made at the discretion of the CNG Committee and beginning in 2022, the executive may make this decision.
The foregoing description does not purport to be complete and is qualified in its entirety by reference to the full text of the award agreement governing the RSUs, the form of which is filed as Exhibit 10.5 to Tiptree’s Annual Report on Form 10-K (File No. 001-33549), filed on March 14, 2018 and herein incorporated 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 August 23, 2021 and a payment date of August 30, 2021.
On August 4, 2021, the Company posted an investor presentation dated August 2021 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:
| 10.1 | |||||
| 99.1 | |||||
| 99.2 | |||||
| 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: | August 4, 2021 | By: | /s/ Jonathan Ilany | ||||||||
| Name: Jonathan Ilany | |||||||||||
| Title: Chief Executive Officer | |||||||||||
EXHIBIT 10.1
PERFORMANCE RESTRICTED STOCK UNIT AGREEMENT
UNDER THE TIPTREE INC. 2017 OMNIBUS INCENTIVE PLAN
UNDER THE TIPTREE INC. 2017 OMNIBUS INCENTIVE PLAN
| Name of Participant: | [●] | ||||
Maximum Number of Performance Restricted Stock Units (“PRSUs”): | [●] | ||||
| Grant Date | [DATE] | ||||
This Performance Restricted Stock Unit Agreement (this “Agreement”) is between Tiptree Inc., a Maryland corporation (the “Company”), and the Participant named above.
For good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and the Participant hereby agree as follows:
1.Award of Performance Restricted Stock Units. On the Grant Date, the Company grants to the Participant PRSUs, on the terms and conditions hereinafter set forth and in accordance with the terms of the Tiptree Inc. 2017 Omnibus Incentive Plan (as it may be amended from time to time, the “Plan”), for that number of shares of the Company’s Common Stock, par value $0.001 per share (“Shares”), indicated above.
2.Vesting. Subject to the terms and conditions of this Agreement, the PRSUs shall become vested based upon the achievement by the Company of specified Average Price (defined below) Share prices within five pre-established determination periods (collectively, the “Determination Periods”), in each case, as set forth below and subject to the Participant’s continued service with the Company on any such vesting date together with the additional terms, conditions and limitations set forth below:
| Company Share Price Target* | Number of PRSUs that Vest | Determination Period | ||||||
| $15 | [ ] | First Determination Period: Not later than [Date] [2 years following Grant Date] | ||||||
| $20 | [ ] | Second Determination Period: Not later than [Date] [4 years following Grant Date] | ||||||
| $30 | [ ] | Third Determination Period: Not later than [Date] [6 years following Grant Date] | ||||||
| $45 | [ ] | Fourth Determination Period: Not later than [Date] [8 years following Grant Date] | ||||||
| $60 | [ ] | Final Determination Period: Not later than [Date] [10 years following Grant Date] | ||||||
*Company Share Price Targets will be adjusted for dividends.
(a)If the average of the thirty (30) trading day closing stock price of a Share (the “Average Price”) during a given Determination Period does not satisfy the Company Share Price Target set forth in the preceding table for such Determination Period, the PRSUs associated with such Company Share Price Target shall no longer be eligible to vest with respect to that Company Share Price Target. However, such PRSUs may be eligible to vest in a subsequent Determination Period if, but only if, a higher Company Share Price Target is achieved, as described in the following sentence. If the Average Price satisfies a subsequent Company Share Price Target associated with a later occurring Determination Period, the PRSUs associated with any lower Company Share Price Target for which vesting has not occurred will vest during such later Determination Period. For the avoidance of doubt, the “make-up” vesting described in the preceding sentence will only occur if the Average Price during a later Determination Period is equal to or greater than the Company Share Price Target associated with such later Determination Period and not the Company Share Price Target associated with any earlier occurring Determination Period. The date, if any, within a Determination Period when PRSUs become vested as a result of the achievement of a Company Share Price Target is herein referred to as a “Vesting Date.”
(i)Example: If the Average Price during the First Determination Period does not satisfy the $15 Company Share Price Target, the PRSUs associated with the $15 Company Share Price Target shall not vest during the First Determination Period. However, if the Average Price during the Second Determination Period is equal to or greater than the $20 Company Share Price Target, the PRSUs associated with the $15 Company Share Price Target (as well as the PRSUs associated with the $20 Company Share Price Target) shall vest during the Second Determination Period. If the Average Price during the Second Determination Period is
2
greater than the $15 Company Share Price Target but below the $20 Company Share Price Target, neither the PRSUs associated with the $15 Company Share Price Target nor the PRSUs associated with the $20 Company Share Price Target shall vest during the Second Determination Period.
(b)No PRSUs shall vest following the Final Determination Period and any such PRSUs that remain unvested as of the Final Determination Period shall be forfeited and cancelled as of such date for no consideration.
(c)For purposes of this Agreement, “service with the Company” means the Participant’s continued service as an employee of, or officer or other service provider with, the Company, any parent or subsidiary of the Company or any other entity that directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with the Company, including Corvid Peak Holdings, L.P. The Participant’s service with the Company shall not be deemed to have terminated if the Participant takes any military leave, sick leave, or other bona fide leave of absence approved by the Company regardless of whether pay is suspended during such leave.
3.Exchange Right. Notwithstanding anything in this Agreement to the contrary, in the event that the Company’s stockholders approve an increase to the Plan’s share pool, as set forth in Section 3.1 of the Plan, not later than 30 calendar days from the Company’s 2022 annual meeting of stockholders, the Participant shall have a right to exchange the award of PRSUs under this Agreement, to the extent unvested, for an equal number of shares of unvested Restricted Stock (the “Exchange”). The Participant must provide written notice to the Company of his election of the Exchange not later than 30 days following the date of the stockholder approval described in the preceding sentence. The unvested Restricted Stock received pursuant to the Exchange shall be subject to a restricted stock award agreement, to be approved by the Committee or by the Board, that contains terms and conditions substantially similar to the terms and conditions of this Agreement, including but not limited to vesting and forfeiture; provided, however, that the restricted stock agreement shall provide that the Participant has the right to vote any shares of Restricted Stock of which he is the record owner on the record date for such vote.
4.Issuance of Shares. The Company shall issue to the Participant (or his beneficiary in the event of a Vesting Date that occurs following the death of the Participant) within thirty (30) days following a Vesting Date, a number of Shares equal to the number of PRSUs vesting on such Vesting Date. Such Shares may be delivered to the Participant either by book-entry registration or in the form of a certificate or certificates, registered in the Participant’s name or in the names of the Participant’s legal representatives, beneficiaries or heirs, as applicable. The Participant shall have no further rights with regard to the PRSUs once the underlying Shares have been delivered to the Participant. Notwithstanding the foregoing, the Company, in its sole discretion, may, if Shares are not available under the Plan or any successor plan at the time the PRSUs are settled in accordance with the terms of this Section 4, instead deliver cash equal to the Fair Market Value of the Shares underlying such vested PRSUs.
5.Effect of Termination of Employment.
3
(a)Except as provided in Section 5(b), the Participant’s rights to PRSUs that are not vested shall be immediately and irrevocably forfeited upon a termination of the Participant’s service with the Company, including the right to receive dividend equivalents as provided in Section 8(b) of this Agreement.
(b)Notwithstanding the foregoing, in the event that a termination of the Participant’s service with the Company occurs:
(i)due to the Participant’s death or due to the Participant’s Disability (as defined below), any unvested PRSUs shall remain outstanding and eligible to vest during each Determination Period that follows such termination if the Company Share Price Targets for such Determination Periods are met in accordance with Section 2; or
(ii)due to (A) a termination of the Participant’s service by the Company without Cause (as defined below), or (B) following the third anniversary of the Grant Date, as a result of the Participant’s Retirement (as defined below), then any unvested PRSUs shall remain outstanding and eligible to vest during each Determination Period that follows such termination if the Company Share Price Targets for such Determination Periods are met in accordance with Section 2; provided, however, that all unvested PRSUs shall be forfeited in the event that the Participant engages in Competition (as defined below).
(c)“Cause” shall mean any one of the following (i) any event constituting “Cause” as defined in any employment agreement, if any, then in effect between the Participant and the Company or any of its Affiliates, (ii) the Participant’s engagement in misconduct which is materially injurious to the Company or any of its Affiliates, (iii) the Participant’s failure to substantially perform his duties to the Company or any of its Affiliates, (iv) the Participant’s repeated dishonesty in the performance of his duties to the Company or any of its Affiliates, (v) the Participant’s commission of an act or acts constituting any (x) fraud against, or misappropriation or embezzlement from the Company or any of its Affiliates, (y) crime involving moral turpitude, or (z) offense that could result in a jail sentence of at least 30 days or (vi) the Participant’s material breach of any confidentiality or non-competition covenant entered into between the Participant and the Company or any of its Affiliates.
(d)“Competition” shall mean the Participant engaging in, participating in, carrying on, owning, or managing, directly or indirectly, either for himself or as a partner, stockholder, officer, director, employee, agent, independent contractor, representative, co-venturer, or consultant (whether compensated or not), any business, partnership, corporation, or other enterprise that is a Competitive Business.
(e)“Competitive Business” shall mean (i) an asset management business of similar size and scope as the Company (a “Competitor”); provided that an asset management business shall be excluded from the definition of Competitor if (A) the average assets under management of that business over the three (3) years prior to the date of termination of the Participant’s service with the Company is equal to or exceeds the greater of (x) $5.0 billion and (y) 120% of the assets under management of, and assets owned by, the Company on the date of the termination of the Participant’s service with the Company, and (B) that such entity has reported EBITDA (or other similar measure) equal to or exceeding 120% of the Adjusted
4
EBITDA as most recently publicly reported by the Company prior to the date of the termination of the Participant’s service with the Company; or (ii) a business of similar size and scope as, and providing similar products or services to, any subsidiary of the Company, including, if applicable, an asset management subsidiary, which represents more than 20% of the Adjusted EBITDA as most recently publicly reported by the Company, but only if such subsidiary is not being treated as a discontinued operation under GAAP or in the process of being sold or otherwise wound down as of the date of the termination of the Participant’s service with the Company (a “Material Subsidiary Competitor”); provided, however, that the foregoing shall not prohibit the Participant from (i) after the termination of the Participant’s service with the Company, performing services for an entity that is engaged in a Competitive Business, so long as the Participant is not providing services in a material way for that part of the business that is engaged in a Competitive Business and that part of the business that constitutes a Competitive Business does not represent 20% or more of the earnings of such entity; or (ii) being a passive owner of not more than 2% of the outstanding stock of any class of a corporation or other business entity which is publicly traded.
(f)“Disability” shall have the meaning as defined under the Company’s long-term disability plan or policy that covers the Participant, or, in the event that the Company has no long-term disability plan or policy covering the Participant or such definition does not comply with Section 409A of the Code, “Disability” shall have the same meaning as defined under Section 409A of the Code.
(g)“Retirement” shall mean a termination by the Participant of his or her service with the Company following the Participant’s attainment of age fifty-five (55) but only if the Participant has satisfied the Rule of 65 (defined below), provided that the Participant has delivered a “written notice of termination,” which meets the requirements set forth below, to the Company at least thirty (30) days prior to the scheduled Retirement and otherwise complies with the definition of “Retirement” set forth immediately below. For purposes of this definition, “Retirement” will generally mean that the Participant is not working at all, except for (i) engaging in certain charitable or not-for-profit endeavors, (ii) management of the Participant’s personal investments, or (iii) providing advisory services on a limited basis or serving as a member of the board of directors of a public or private company (in each case, other than with respect to a Competitive Business). For purposes of this definition, “a written notice of termination” shall include, but shall not be limited to, a statement of the Participant’s intention to terminate his or her service with the Company that (x) specifies the Participant’s date of termination, (y) certifies that the Participant will not be employed by or provide services to any entity other than personal services provided to a charitable or non-profit organization, advisory services provided to an individual or entity on a limited basis or service as a member of the board of directors of a public or private company on the terms set forth above (and, if accepting such employment or providing such services, identifying the organization, individual or entity, as applicable, by name and describing the position, duties and/or relationships with such organization, individual or entity, as applicable), and (z) acknowledges the Participant’s agreement to provide other information regarding the Participant's reasons for termination and subsequent business activity upon request of the Company. For purposes of the definition of “Retirement”, “Rule of 65” means that the sum of the Participant’s age and years of combined
5
and continuous service with the Company equals at least sixty-five (65). For purposes of determining the Rule of 65, only full years of service with the Company shall count as years of combined and continuous service.
6.Effect of a Change in Control. In the event of a Change in Control, unvested PRSUs that have not been previously forfeited shall (a) with respect to that portion of the unvested PRSUs, if any, that are associated with a Company Share Price Target(s) that is less than or equal to the transaction value on a per Share basis, immediately vest, with the Company issuing to the Participant on the effective date of the Change in Control a number of Shares equal to the number of PRSUs vesting on such date; and (b) with respect to that portion of the PRSUs, if any, that are associated with a Company Share Price Target(s) that is greater than the transaction value on a per Share basis, be immediately and irrevocably forfeited for no consideration, unless otherwise assumed in the Change in Control.
7.Transfer Restrictions.
(a)Notwithstanding anything to the contrary in this Agreement, the PRSUs may not be sold, assigned, transferred, pledged, or otherwise encumbered by the Participant.
(b)No transfer by will or the applicable laws of descent and distribution of any Shares which are issuable to the Participant upon settlement of the PRSUs by reason of the Participant’s death shall be effective to bind the Company unless the Committee administering the Plan shall have been furnished with written notice of such transfer and a copy of the will or such other evidence as the Committee may deem necessary to establish the validity of the transfer.
8.Distributions and Adjustments.
(a)If there is any change in the number or character of the Shares without additional consideration paid to the Company (through any stock dividend or other distribution, recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of shares or otherwise), other than a dividend in which the PRSU is credited with dividend equivalent rights pursuant to Section 8(b) below, the Committee administering the Plan shall, in such manner and to such extent (if any) as it deems appropriate and equitable, adjust the number of PRSUs subject to this Agreement and the Company Share Price Targets accordingly, in its sole discretion. Any fractional PRSU resulting from an adjustment under this Section 8(a) shall be rounded down to the nearest whole unit.
(b)Unvested PRSUs shall not be entitled to be credited with dividend equivalents.
9.Taxes.
(a)The Participant acknowledges that the Participant shall consult with the Participant’s own tax advisor regarding the federal, state and local tax consequences of the grant of the PRSUs, payment of dividend equivalents on the PRSUs, the vesting of the PRSUs and
6
issuance of Shares to the Participant in settlement of the PRSUs, the Exchange, and any other matters related to this Agreement. The Participant is relying solely on the Participant’s advisors and not on any statements or representations of the Company or any of its agents. The Participant understands that the Participant is solely responsible for the Participant’s own tax liability that may arise as a result of this grant or any other matters related to this Agreement.
(b)In order to comply with all applicable federal, state or local income tax laws or regulations, the Company may take such action as it deems appropriate to ensure that all income and payroll taxes, which are the Participant’s sole and absolute responsibility, are withheld or collected from the Participant at the minimum required withholding rate.
(c)In accordance with the terms of the Plan, and such rules as may be adopted by the Committee administering the Plan, the Participant may elect, on or before the date that the amount of any tax required to be withheld is determined, to satisfy any applicable tax withholding obligations arising from the receipt of, or the lapse of restrictions relating to, the PRSUs (including property attributable to the PRSUs described in Section 8(b) above) by:
(i)delivering cash (including check, draft, money order or wire transfer made payable to the order of the Company),
(ii)to the extent permitted by the Committee, in its sole discretion, having the Company withhold a portion of the Shares to be issued to the Participant in settlement of the PRSUs having a Fair Market Value equal to the minimum tax withholding amount for such taxes (at the time of settlement and/or upon the earlier vesting of the PRSUs, as applicable), or
(iii)delivering to the Company Shares having a Fair Market Value equal to the minimum tax withholding amount for such taxes. The Company shall not deliver any fractional Share but shall pay, in lieu thereof, the Fair Market Value of such fractional Share.
10.General Provisions.
(a)Interpretations. This Agreement is subject in all respects to the terms of the Plan. A copy of the Plan is available to the Participant upon request. Terms used herein which are defined in the Plan shall have the respective meanings given to such terms in the Plan, unless otherwise defined herein. In the event that any provision of this Agreement is inconsistent with the terms of the Plan, the terms of the Plan shall govern. Any question of administration or interpretation arising under this Agreement shall be determined by the Committee administering the Plan, and such determination shall be final, conclusive and binding upon all parties in interest.
(b)No Right to Continued Service. Nothing in this Agreement or the Plan shall be construed as giving the Participant the right to be retained as an employee, officer or other service provider to the Company. In addition, the Company may at any time dismiss the Participant from service free from any liability or any claim under this Agreement, unless otherwise expressly provided in this Agreement.
7
(c)Securities Matters. The Company shall not be required to issue or deliver any Shares until the requirements of any federal or state securities or other laws, rules or regulations (including the rules of any securities exchange) as may be determined by the Company to be applicable are satisfied.
(d)Headings. Headings are given to the sections and subsections of this Agreement solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of this Agreement or any provision hereof.
(e)Saving Clause. If any provision(s) of this Agreement shall be determined to be illegal or unenforceable, such determination shall in no manner affect the legality or enforceability of any other provision hereof.
(f)Section 409A of the Code. The PRSUs granted hereunder are intended to be exempt from, or comply with, the requirements of Section 409A of the Code and shall be interpreted in a manner consistent with that intention. Notwithstanding the foregoing or any provision of the Plan or this Agreement, if any provision of this Agreement contravenes Section 409A of the Code or could cause the Participant to incur any tax, interest or penalties under Section 409A of the Code, the Board or the Committee, as applicable, may, in its sole discretion, and without the Participant’s consent, modify such provision to (i) comply with, or avoid being subject to, Section 409A of the Code, or to avoid the incurrence of any taxes, interest and penalties under Section 409A of the Code, and/or (ii) maintain to the maximum extent practicable, the original intent and economic benefit to the Participant of the applicable provision without materially increasing the cost to the Company or contravening the provisions of Section 409A of the Code. This Section 9(f) does not create an obligation on the part of the Company to modify the Plan or this Agreement and does not guarantee that the PRSUs or Shares distributed hereunder shall not be subject to taxes, interest and penalties under Section 409A of the Code. For purposes of this Agreement, to the extent required to satisfy the requirements of Section 409A of the Code, references to termination of service with the Company shall be required to mean a “separation of service” within the meaning of Section 409A of the Code and the regulations thereunder (after giving effect to the presumptions contained therein).
(g)Rights as a Stockholder. The Participant shall have no rights as a stockholder of the Company with respect to any Shares issuable upon the vesting of the PRSUs until the date that the Shares are issued to the Participant.
(h)Clawback. If the Company’s fiscal year end financials are restated and it is found that the Participant’s misconduct led to the restatement, any unvested PRSUs granted hereunder may be forfeited and Shares received by the Participant upon settlement of the PRSUs or proceeds received by the Participant upon the sale of Shares received upon settlement of the PRSUs may be recovered in an amount determined by the Committee and to the maximum extent required to comply with the Dodd-Frank Wall Street Reform and Consumer Protection Act.
8
(i)Nature of Payments. This Agreement is in consideration of services performed or to be performed for the Company or any subsidiary, division or business unit of the Company. Any income or gain realized pursuant to this Agreement shall constitute a special incentive payment to the Participant and shall not be taken into account, to the extent permissible under applicable law, as compensation for purposes of any of the employee benefit plans of the Company or any subsidiary except as may be determined by the Committee or by the Board or board of directors of the applicable subsidiary.
(j)Governing Law. The internal law, and not the law of conflicts, of the State of Maryland shall govern all questions concerning the validity, construction and effect of this Agreement.
(k)Notices. The Participant shall send all written notices regarding this Agreement or the Plan to the Company at the following address:
Tiptree Inc.
299 Park Avenue
13th Floor
New York, New York 10171
Attn: General Counsel
Email: legal@tiptreeinc.com
299 Park Avenue
13th Floor
New York, New York 10171
Attn: General Counsel
Email: legal@tiptreeinc.com
(l)Benefit and Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto, their respective successors, permitted assigns, and legal representatives. The Company has the right to assign this Agreement, and such assignee shall become entitled to all the rights of the Company hereunder to the extent of such assignment.
**Signature Page Follows**
9
IN WITNESS WHEREOF, the Company by one of its duly authorized officers has executed this Agreement as of the day and year first above written.
TIPTREE INC.
By:
Name:
Title:
ACKNOWLEDGED AND AGREED
By:
Name:
Dated:
10
Exhibit 99.1
TIPTREE REPORTS SECOND QUARTER AND SIX-MONTH 2021 RESULTS
•Revenues of $299.7 million, an increase of 50.4% from second quarter 2020. Year-to-date revenues of $594.4 million, an increase of 80.7%, driven by growth in insurance and mortgage operations and net realized and unrealized gains in 2021 period compared to losses in 2020 period. Excluding the impact from investment gains and losses, year-to-date revenues increased 34.9% versus prior year.
•Net income for the quarter was $8.0 million, an increase from $3.8 million in 2020. Year-to-date net income of $36.6 million, representing a 20.4% annualized ROAE.
•Adjusted net income of $13.1 million for the quarter, an increase of 24.7% from prior year. Year-to-date adjusted net income of $26.3 million, an increase of 50.7%, driven by improvement in insurance, mortgage and shipping operations. Year-to-date annualized Adjusted ROAE of 13.5%, compared to 9.2% in the prior year period.
•Book value per share of $11.59 as of June 30, 2021, when combined with dividends paid of $0.16 per share, increased 17.9% from the prior year.
•Declared a dividend of $0.04 per share to stockholders of record on August 23, 2021 with a payment date of August 30, 2021.
New York, New York - August 4, 2021 - Tiptree Inc. (NASDAQ:TIPT) (“Tiptree” or the “Company”), a holding company that combines specialty insurance operations with investment management, today announced its financial results for the three and six months ended June 30, 2021.
“Our second-quarter performance was a continuation of positive trends we have experienced over the past year”, said Tiptree Executive Chairman, Michael Barnes. “Fortegra had an extremely strong first half with premium and equivalents growth of 51% while maintaining best-in-class profitability. We continue to believe in the strength of the platform and its ability to produce growth and returns in excess of its peers over the long-term.”
Barnes added, “Our mortgage business had another excellent quarter as the rate environment and home price appreciation continue to be tailwinds. Our shipping business also showed positive results for the quarter based on persistent favorable market conditions, particularly in the dry-bulk sector. Overall, we believe Tiptree is well positioned for the second half of 2021 and going forward.”
| ($ in thousands, except per share information) | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||
| GAAP: | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
| Total revenues | $ | 299,687 | $ | 199,194 | $ | 594,375 | $ | 328,865 | ||||||||||||||||||
| Net income (loss) attributable to common stockholders | $ | 7,969 | $ | 3,816 | $ | 36,550 | $ | (56,191) | ||||||||||||||||||
| Diluted earnings per share | $ | 0.22 | $ | 0.10 | $ | 1.05 | $ | (1.64) | ||||||||||||||||||
| Cash dividends paid per common share | $ | 0.04 | $ | 0.04 | $ | 0.08 | $ | 0.08 | ||||||||||||||||||
| Return on average equity | 9.0 | % | 5.1 | % | 20.4 | % | (29.6) | % | ||||||||||||||||||
Non-GAAP: (1) | ||||||||||||||||||||||||||
Adjusted net income | $ | 13,125 | $ | 10,526 | $ | 26,280 | $ | 17,433 | ||||||||||||||||||
| Adjusted return on average equity | 13.1 | % | 12.2 | % | 13.5 | % | 9.2 | % | ||||||||||||||||||
| Book value per share | $ | 11.59 | $ | 9.97 | $ | 11.59 | $ | 9.97 | ||||||||||||||||||
____________________________
(1) For information relating to Adjusted net income, Adjusted return on average equity and book value per share, including a reconciliation to GAAP financials, see “—Non-GAAP Reconciliations” below.
Earnings Conference Call
Tiptree will host a conference call on Thursday, August 5, 2021 at 9:00 a.m. Eastern Time to discuss its second quarter 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.
Page 1
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, August 5, 2021 at 1:00 p.m. Eastern Time, until midnight Eastern on Thursday, August 12, 2021. To listen to the replay, please dial 1-844-512-2921 (domestic) or 1-412-317-6671 (international), Passcode: 13720336.
Segment Financial Highlights - Second Quarter and Year-to-date 2021
Insurance (Fortegra Group):
•The Fortegra Group crossed a significant milestone with over $2.0 billion in trailing twelve month gross written premiums and premium equivalents (GWPPE), delivering a 23.8% CAGR since 2017.
•GWPPE of $571.5 million in the second quarter, an increase of 79.2% from the prior year period. Year-to-date GWPPE of $1,076.5 million, up 51.3%, driven by robust 49.6% organic growth across all lines of business.
•Total revenues of $252.3 million, up 52.9% compared to second quarter 2020. Year-to-date revenues of $474.8 million, up 54.0%, driven by growth in domestic admitted and surplus insurance lines, as well as continued growth in fee-based warranty programs. Excluding the impact of realized and unrealized gains and losses, revenues increased by 37.5% over the prior year-to-date period.
•The combined ratio for the quarter was 92.1%, consistent with the prior year. The year-to-date 2021 combined ratio was 91.8%, compared to 92.9% in the prior year period. Technology efficiencies contributed to an improved expense ratio, while the underwriting ratio remained stable.
•Income before taxes of $14.7 million, up 4.4% as compared to second quarter 2020. Year-to-date 2021 income before taxes of $36.2 million compared to a loss before taxes of $13.0 million for the prior year period. Annualized return on average equity was 19.4% for year-to-date 2021, as compared to (5.9)% in 2020.
•Adjusted net income for the quarter was $14.1 million, up 56.8% from the prior year period. Adjusted net income year-to-date was $26.9 million, up 51.6%, driven by revenue growth and an improved combined ratio. The adjusted return on average equity was 18.3% for year-to-date 2021, as compared to 12.8% in 2020.
•The combination of unearned premiums and deferred revenues on the balance sheet of $1,441.1 million grew by $408.5 million, or 39.6%, from June 30, 2020 to June 30, 2021 as a result of Fortegra’s growth in GWPPE.
Mortgage:
•Income before taxes of $5.8 million compared to $7.4 million second quarter 2020. Year-to-date income before taxes of $18.9 million, as compared to $6.3 million in the prior year.
•Adjusted net income of $11.5 million, an increase of $3.9 million from second quarter 2020. The increase was driven by growth in volumes and margins resulting from reduced interest rates and home price appreciation. Adjusted return on average equity was 34.3%.
Results by Segment
We classify our business into two reportable segments, Insurance and Mortgage, with the remainder of our operations aggregated into Tiptree Capital - Other. Corporate activities include holding company interest expense, corporate employee compensation and benefits, and other expenses, including, but not limited to, public company expenses. The following table present summary financial data for the three and six months ended June 30, 2021 and 2020.
Page 2
| ($ in thousands) | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||
| Insurance | $ | 252,255 | $ | 164,954 | $ | 474,818 | $ | 308,294 | |||||||||||||||
| Mortgage | 25,272 | 28,812 | 59,766 | 45,032 | |||||||||||||||||||
| Tiptree Capital - other | 22,160 | 5,428 | 59,791 | (24,461) | |||||||||||||||||||
| Corporate | — | — | — | — | |||||||||||||||||||
| Total revenues | $ | 299,687 | $ | 199,194 | $ | 594,375 | $ | 328,865 | |||||||||||||||
| Income (loss) before taxes: | |||||||||||||||||||||||
| Insurance | $ | 14,704 | $ | 14,088 | $ | 36,232 | $ | (13,029) | |||||||||||||||
| Mortgage | 5,775 | 7,405 | 18,852 | 6,315 | |||||||||||||||||||
| Tiptree Capital - other | 2,620 | (9,188) | 17,614 | (54,429) | |||||||||||||||||||
| Corporate | (11,624) | (7,871) | (21,831) | (16,174) | |||||||||||||||||||
| Total income (loss) before taxes | $ | 11,475 | $ | 4,434 | $ | 50,867 | $ | (77,317) | |||||||||||||||
| Non-GAAP - Adjusted net income: | |||||||||||||||||||||||
| Insurance | $ | 14,091 | $ | 8,988 | $ | 26,867 | $ | 17,724 | |||||||||||||||
| Mortgage | 4,059 | 7,427 | 11,524 | 7,623 | |||||||||||||||||||
| Tiptree Capital - other | 2,064 | (221) | 2,631 | 3,070 | |||||||||||||||||||
| Corporate | (7,089) | (5,668) | (14,742) | (10,984) | |||||||||||||||||||
Total adjusted net income (1) | $ | 13,125 | $ | 10,526 | $ | 26,280 | $ | 17,433 | |||||||||||||||
(1) For further information relating to the Company’s Adjusted net income, including a reconciliation to GAAP income (loss) before taxes, see “—Non-GAAP Reconciliations.”
The table below provides a break down between net realized and unrealized gains and losses from Invesque and other securities which impacted our consolidated results on a pre-tax basis. Many of our investments are carried at fair value and marked to market through unrealized gains and losses. As a result, we expect our earnings relating to these investments to be relatively volatile between periods. Our fixed income securities are primarily marked to market through AOCI in stockholders’ equity and do not impact net realized and unrealized gains and losses until they are sold.
| ($ in thousands) | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||||||
Net realized and unrealized gains (losses)(1) | $ | 3,397 | $ | 6,211 | $ | 13,612 | $ | (18,580) | |||||||||||||||||||||
| Net realized and unrealized gains (losses) - Invesque | $ | 169 | $ | (11,891) | $ | 16,812 | $ | (70,604) | |||||||||||||||||||||
(1) Excludes Invesque and Mortgage realized and unrealized gains and losses.
Non-GAAP
Management uses Adjusted net income and book value per share 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.
About Tiptree
Tiptree Inc. (NASDAQ: TIPT) is a holding company that allocates capital across a broad spectrum of businesses, assets and other investments. Our principal operating business, Fortegra, is a specialty insurance underwriter and service provider, which focuses on niche business lines and fee-oriented services. We also allocate capital to a diverse group of businesses and investments that we refer to as Tiptree Capital. For more information, please visit www.tiptreeinc.com.
Forward-Looking Statements
Page 3
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.
Page 4
Tiptree Inc.
Condensed Consolidated Balance Sheets
($ in thousands, except share data)
| As of | |||||||||||
| June 30, 2021 | December 31, 2020 | ||||||||||
| Assets: | |||||||||||
| Investments: | |||||||||||
| Available for sale securities, at fair value, net of allowance for credit losses | $ | 447,300 | $ | 377,133 | |||||||
| Loans, at fair value | 97,405 | 90,732 | |||||||||
| Equity securities | 204,539 | 123,838 | |||||||||
| Other investments | 206,188 | 219,701 | |||||||||
| Total investments | 955,432 | 811,404 | |||||||||
| Cash and cash equivalents | 141,661 | 136,920 | |||||||||
| Restricted cash | 36,275 | 58,355 | |||||||||
| Notes and accounts receivable, net | 394,348 | 370,452 | |||||||||
| Reinsurance receivables | 762,751 | 728,009 | |||||||||
| Deferred acquisition costs | 306,622 | 229,430 | |||||||||
| Goodwill | 179,236 | 179,236 | |||||||||
| Intangible assets, net | 130,429 | 138,215 | |||||||||
| Other assets | 164,455 | 162,034 | |||||||||
| Assets held for sale | 140,348 | 181,705 | |||||||||
| Total assets | $ | 3,211,557 | $ | 2,995,760 | |||||||
| Liabilities and Stockholders’ Equity | |||||||||||
| Liabilities: | |||||||||||
| Debt, net | $ | 381,871 | $ | 366,246 | |||||||
| Unearned premiums | 968,580 | 860,690 | |||||||||
| Policy liabilities and unpaid claims | 285,640 | 233,438 | |||||||||
| Deferred revenue | 472,610 | 399,211 | |||||||||
| Reinsurance payable | 230,590 | 224,660 | |||||||||
| Other liabilities and accrued expenses | 333,935 | 362,865 | |||||||||
| Liabilities held for sale | 133,282 | 175,112 | |||||||||
| Total liabilities | $ | 2,806,508 | $ | 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, 33,395,395 and 32,682,462 shares issued and outstanding, respectively | 33 | 33 | |||||||||
| Additional paid-in capital | 314,983 | 315,014 | |||||||||
| Accumulated other comprehensive income (loss), net of tax | 2,689 | 5,674 | |||||||||
| Retained earnings | 69,313 | 35,423 | |||||||||
| Total Tiptree Inc. stockholders’ equity | 387,018 | 356,144 | |||||||||
| Non-controlling interests | 18,031 | 17,394 | |||||||||
| Total stockholders’ equity | 405,049 | 373,538 | |||||||||
| Total liabilities and stockholders’ equity | $ | 3,211,557 | $ | 2,995,760 | |||||||
Page 5
Tiptree Inc.
Condensed Consolidated Statements of Operations
($ in thousands, except share data)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||||||
| Earned premiums, net | $ | 176,958 | $ | 107,255 | $ | 323,877 | $ | 228,576 | |||||||||||||||||||||
| Service and administrative fees | 63,700 | 42,865 | 121,750 | 86,589 | |||||||||||||||||||||||||
| Ceding commissions | 3,080 | 4,535 | 6,105 | 11,060 | |||||||||||||||||||||||||
| Net investment income | 3,234 | 2,292 | 6,001 | 5,780 | |||||||||||||||||||||||||
| Net realized and unrealized gains (losses) | 36,092 | 30,110 | 105,463 | (32,331) | |||||||||||||||||||||||||
| Other revenue | 16,623 | 12,137 | 31,179 | 29,191 | |||||||||||||||||||||||||
| Total revenues | 299,687 | 199,194 | 594,375 | 328,865 | |||||||||||||||||||||||||
| Expenses: | |||||||||||||||||||||||||||||
| Policy and contract benefits | 89,193 | 49,147 | 156,367 | 110,023 | |||||||||||||||||||||||||
| Commission expense | 99,543 | 67,903 | 188,188 | 138,304 | |||||||||||||||||||||||||
| Employee compensation and benefits | 45,693 | 40,678 | 98,617 | 79,179 | |||||||||||||||||||||||||
| Interest expense | 8,981 | 7,646 | 18,233 | 15,197 | |||||||||||||||||||||||||
| Depreciation and amortization | 6,208 | 4,371 | 12,142 | 8,234 | |||||||||||||||||||||||||
| Other expenses | 38,594 | 25,015 | 69,961 | 55,245 | |||||||||||||||||||||||||
| Total expenses | 288,212 | 194,760 | 543,508 | 406,182 | |||||||||||||||||||||||||
| Income (loss) before taxes | 11,475 | 4,434 | 50,867 | (77,317) | |||||||||||||||||||||||||
| Less: provision (benefit) for income taxes | 2,427 | (5) | 11,179 | (21,186) | |||||||||||||||||||||||||
| Net income (loss) | 9,048 | 4,439 | 39,688 | (56,131) | |||||||||||||||||||||||||
| Less: net income (loss) attributable to non-controlling interests | 1,079 | 623 | 3,138 | 60 | |||||||||||||||||||||||||
| Net income (loss) attributable to common stockholders | $ | 7,969 | $ | 3,816 | $ | 36,550 | $ | (56,191) | |||||||||||||||||||||
| Net income (loss) per common share: | |||||||||||||||||||||||||||||
| Basic earnings per share | $ | 0.24 | $ | 0.11 | $ | 1.10 | $ | (1.64) | |||||||||||||||||||||
| Diluted earnings per share | $ | 0.22 | $ | 0.10 | $ | 1.05 | $ | (1.64) | |||||||||||||||||||||
| Weighted average number of common shares: | |||||||||||||||||||||||||||||
| Basic | 32,898,769 | 33,984,195 | 32,661,195 | 34,269,096 | |||||||||||||||||||||||||
| Diluted | 33,567,897 | 33,984,195 | 34,842,812 | 34,269,096 | |||||||||||||||||||||||||
| Dividends declared per common share | $ | 0.04 | $ | 0.04 | $ | 0.08 | $ | 0.08 | |||||||||||||||||||||
Page 6
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 June 30, 2021 | |||||||||||||||||||||||||||||
| Tiptree Capital | |||||||||||||||||||||||||||||
| ($ in thousands) | Insurance | Mortgage | Other | Corporate | Total | ||||||||||||||||||||||||
| Income (loss) before taxes | $ | 14,704 | $ | 5,775 | $ | 2,620 | $ | (11,624) | $ | 11,475 | |||||||||||||||||||
| Less: Income tax (benefit) expense | (3,334) | (1,366) | (34) | 2,307 | (2,427) | ||||||||||||||||||||||||
Less: Net realized and unrealized gains (losses)(1) | (2,808) | (600) | (142) | — | (3,550) | ||||||||||||||||||||||||
| Plus: Intangibles amortization (2) | 3,835 | — | — | — | 3,835 | ||||||||||||||||||||||||
| Plus: Stock-based compensation expense | 500 | 166 | 4 | 479 | 1,149 | ||||||||||||||||||||||||
| Plus: Non-recurring expenses | 1,834 | — | 281 | 2,171 | 4,286 | ||||||||||||||||||||||||
| Plus: Non-cash fair value adjustments | — | — | (695) | — | (695) | ||||||||||||||||||||||||
| Less: Tax on adjustments | (640) | 84 | 30 | (422) | (948) | ||||||||||||||||||||||||
| Adjusted net income | $ | 14,091 | $ | 4,059 | $ | 2,064 | $ | (7,089) | $ | 13,125 | |||||||||||||||||||
| Adjusted net income | $ | 14,091 | $ | 4,059 | $ | 2,064 | $ | (7,089) | $ | 13,125 | |||||||||||||||||||
| Average stockholders’ equity | $ | 281,041 | $ | 72,364 | $ | 121,129 | $ | (73,310) | $ | 401,223 | |||||||||||||||||||
| Adjusted return on average equity | 20.1 | % | 22.4 | % | 6.8 | % | NM% | 13.1 | % | ||||||||||||||||||||
| Three Months Ended June 30, 2020 | |||||||||||||||||||||||||||||
| Tiptree Capital | |||||||||||||||||||||||||||||
| ($ in thousands) | Insurance | Mortgage | Other | Corporate | Total | ||||||||||||||||||||||||
| Income (loss) before taxes | $ | 14,088 | $ | 7,405 | $ | (9,188) | $ | (7,871) | $ | 4,434 | |||||||||||||||||||
| Less: Income tax (benefit) expense | (2,785) | (1,746) | 2,059 | 2,477 | 5 | ||||||||||||||||||||||||
Less: Net realized and unrealized gains (losses)(1) | (5,635) | 1,471 | 9,841 | — | 5,677 | ||||||||||||||||||||||||
| Plus: Intangibles amortization (2) | 2,534 | — | — | — | 2,534 | ||||||||||||||||||||||||
| Plus: Stock-based compensation expense | 492 | 896 | 7 | 657 | 2,052 | ||||||||||||||||||||||||
| Plus: Non-recurring expenses | 44 | — | — | 41 | 85 | ||||||||||||||||||||||||
| Plus: Non-cash fair value adjustments | — | — | (871) | — | (871) | ||||||||||||||||||||||||
| Less: Tax on adjustments | 250 | (599) | (2,069) | (972) | (3,390) | ||||||||||||||||||||||||
| Adjusted net income | $ | 8,988 | $ | 7,427 | $ | (221) | $ | (5,668) | $ | 10,526 | |||||||||||||||||||
| Adjusted net income | $ | 8,988 | $ | 7,427 | $ | (221) | $ | (5,668) | $ | 10,526 | |||||||||||||||||||
| Average stockholders’ equity | $ | 279,013 | $ | 36,646 | $ | 119,506 | $ | (89,402) | $ | 345,763 | |||||||||||||||||||
| Adjusted return on average equity | 12.9 | % | 81.1 | % | (0.7) | % | NM% | 12.2 | % | ||||||||||||||||||||
Page 7
| Notes | |||||
| (1) | Results for the three months ended June 30, 2021 included $16 of incentive fees paid with respect to specific unrealized and realized gains that are added-back to Adjusted net income. | ||||
| (2) | Specifically associated with acquisition purchase accounting. See Note (3) Acquisitions. | ||||
| Six Months Ended June 30, 2021 | |||||||||||||||||||||||||||||
| Tiptree Capital | |||||||||||||||||||||||||||||
| ($ in thousands) | Insurance | Mortgage | Other | Corporate | Total | ||||||||||||||||||||||||
| Income (loss) before taxes | $ | 36,232 | $ | 18,852 | $ | 17,614 | $ | (21,831) | $ | 50,867 | |||||||||||||||||||
| Less: Income tax (benefit) expense | (7,763) | (4,462) | (2,941) | 3,987 | (11,179) | ||||||||||||||||||||||||
Less: Net realized and unrealized gains (losses)(1) | (12,432) | (4,020) | (13,908) | — | (30,360) | ||||||||||||||||||||||||
| Plus: Intangibles amortization (2) | 7,669 | — | — | — | 7,669 | ||||||||||||||||||||||||
| Plus: Stock-based compensation expense | 872 | 331 | 12 | 999 | 2,214 | ||||||||||||||||||||||||
| Plus: Non-recurring expenses | 2,104 | — | 281 | 2,171 | 4,556 | ||||||||||||||||||||||||
| Plus: Non-cash fair value adjustments | — | — | (1,352) | — | (1,352) | ||||||||||||||||||||||||
| Less: Tax on adjustments | 185 | 823 | 2,925 | (68) | 3,865 | ||||||||||||||||||||||||
| Adjusted net income | $ | 26,867 | $ | 11,524 | $ | 2,631 | $ | (14,742) | $ | 26,280 | |||||||||||||||||||
| Adjusted net income | $ | 26,867 | $ | 11,524 | $ | 2,631 | $ | (14,742) | $ | 26,280 | |||||||||||||||||||
| Average stockholders’ equity | $ | 292,865 | $ | 67,292 | $ | 113,430 | $ | (84,295) | $ | 389,292 | |||||||||||||||||||
| Adjusted return on average equity | 18.3 | % | 34.3 | % | 4.6 | % | NM% | 13.5 | % | ||||||||||||||||||||
| Six Months Ended June 30, 2020 | |||||||||||||||||||||||||||||
| Tiptree Capital | |||||||||||||||||||||||||||||
| ($ in thousands) | Insurance | Mortgage | Other | Corporate | Total | ||||||||||||||||||||||||
| Income (loss) before taxes | $ | (13,029) | $ | 6,315 | $ | (54,429) | $ | (16,174) | $ | (77,317) | |||||||||||||||||||
| Less: Income tax (benefit) expense | 4,878 | (1,231) | 11,731 | 5,808 | 21,186 | ||||||||||||||||||||||||
| Less: Net realized and unrealized gains (losses) | 27,968 | 2,819 | 58,396 | — | 89,183 | ||||||||||||||||||||||||
| Plus: Intangibles amortization (2) | 4,702 | — | — | — | 4,702 | ||||||||||||||||||||||||
| Plus: Stock-based compensation expense | 843 | 896 | 158 | 1,826 | 3,723 | ||||||||||||||||||||||||
| Plus: Non-recurring expenses | 2,239 | — | — | 448 | 2,685 | ||||||||||||||||||||||||
| Plus: Non-cash fair value adjustments | — | — | (520) | — | (520) | ||||||||||||||||||||||||
| Less: Tax on adjustments | (9,877) | (1,176) | (12,266) | (2,890) | (26,209) | ||||||||||||||||||||||||
| Adjusted net income | $ | 17,724 | $ | 7,623 | $ | 3,070 | $ | (10,984) | $ | 17,433 | |||||||||||||||||||
| Adjusted net income | $ | 17,724 | $ | 7,623 | $ | 3,070 | $ | (10,984) | $ | 17,433 | |||||||||||||||||||
| Average stockholders’ equity | 277,900 | 36,934 | 143,720 | (79,252) | 379,302 | ||||||||||||||||||||||||
| Adjusted return on average equity | 12.8 | % | 41.3 | % | 4.3 | % | NM% | 9.2 | % | ||||||||||||||||||||
___________________________
| Notes | |||||
| (1) | Results for the three months ended June 30, 2021 included $64 of incentive fees paid with respect to specific unrealized and realized gains that are added-back to Adjusted net income. | ||||
| (2) | Specifically associated with acquisition purchase accounting. See Note (3) Acquisitions. | ||||
Non-GAAP Financial Measures — Book value per share
Management believes the use of this financial measure provides supplemental information useful to investors as book value is frequently used by the financial community to analyze company growth on a relative per share basis. The following table provides a reconciliation between total stockholders’ equity and total shares outstanding, net of treasury shares.
($ in thousands, except per share information) | As of June 30, | ||||||||||||||||
| 2021 | 2020 | ||||||||||||||||
| Total stockholders’ equity | $ | 405,049 | $ | 347,189 | |||||||||||||
| Less: Non-controlling interests | 18,031 | 11,368 | |||||||||||||||
| Total stockholders’ equity, net of non-controlling interests | $ | 387,018 | $ | 335,821 | |||||||||||||
| Total common shares outstanding | 33,395 | 33,676 | |||||||||||||||
| Book value per share | $ | 11.59 | $ | 9.97 | |||||||||||||
Page 8
Investor Presentation – Second Quarter 2021 August 2021 Financial Information for the three and six months ended June 30, 2021
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 Year-to-Date Highlights Revenue $594.4 million 80.7% vs. prior year Adjusted Net Income2 $26.3 million 50.7% vs. prior year Book Value per share2,3 $11.59 17.9% vs. 6/30/20 Net income1 $36.6 million vs. prior year net loss of $56.2 million Overall Adjusted net income2 of $26.3 million, with a 13.5% adj ROAE2, driven by improvement in insurance, mortgage and shipping operations. Book value per share of $11.59, when combined with dividends of $0.16 per share, increased 17.9% versus PY. Insurance The Fortegra Group crossed a significant milestone with over $2.0 billion in trailing twelve month gross written premiums and premium equivalents (GWPPE)4, delivering a 23.8% CAGR since 2017. Combined ratio of 91.8% improved from 92.9% in PY as technology efficiencies contributed to a decreased expense ratio while the underwriting ratio remained consistent. Adjusted net income of $26.9 million, up 52% from PY driven by revenue growth and improved combined ratio. Annualized Adjusted ROAE of 18.3%. Tiptree Capital Mortgage Adjusted net income of $11.5 million, an increase of $3.9 million from PY, driven by growth in volumes and margins resulting from the low interest rate environment and home price appreciation. Shipping business began to see results in line with the original thesis, particularly in the dry-bulk sector. ($ 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 June 30, 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.
Q2’20 Q2'21 Q2’20 YTD Q2’21 YTD Total Revenues $199.2 $299.7 $328.9 $594.4 Net income (loss) $3.8 $8.0 $(56.2) $36.6 Diluted EPS $0.10 $0.22 $(1.64) $1.05 Adjusted net income1 $10.5 $13.1 $17.4 $26.3 Adjusted ROAE1 12.2% 13.1% 9.2% 13.5% Total shares outstanding 33.7 33.4 Book Value per share1 $9.97 $11.59 3 Financial Results Revenues up 45%, excluding the impact of investment gains/losses, and net income improved by $4.2mm to $8.0mm • Continued growth in Fortegra’s earned premiums, service and administration fees and investment income • Mortgage origination volumes and margins remain strong • Increase in dry-bulk charter rates Adj net income of $13.1mm, increased by 25% versus prior year • Growth in Fortegra’s revenues and stable combined ratio • Improved performance in Tiptree Capital • Performance improvement in all businesses drove higher corporate incentive compensation year-over-year BVPS of $11.59 increased by 17.9% over prior year driven by net income • Decrease of $0.04 from Q1’21 driven by exchange of dilutive securities 1 For a reconciliation of Non-GAAP metrics Adjusted net income, adjusted return on average equity and book value per share to GAAP financials, see the Appendix. ($ in millions, except per share information) $7.4 $9.0 $14.1 $- $7.4 $4.1 $(5.9) $(5.7) $(7.1) $2.7 $(0.2) $2.1 $4.1 $10.5 $13.1 Q2'19 Q2'20 Q2'21 $13.4 $17.7 $26.9 $0.3 $7.6 $11.5 $(11.5) $(11.0) $(14.7) $6.9 $3.1 $2.6 $9.1 $17.4 $26.3 Q2'19 YTD Q2'20 YTD Q2'21 YTD Corporate Insurance Mortgage Tiptree Capital - Other Key Highlights – Q2’21 Adjusted Net Income by business
Q2’21 Capital Allocation & Annual Performance Comparison 4 Operating Performance 1 Total stockholders’ equity shown. Net of other non-controlling interests total stockholders’ equity was $387.0 million as of June 30, 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 $60.3mm, up 67.8% from Q2’20 • Adjusted return on average equity of 16.0%1 Insurance: • 18.4% Adjusted return on average equity • Growth in insurance underwriting and fee revenues • Combined ratio improvement Tiptree Capital: • 20.8% Adjusted return on average equity • Strong mortgage volumes and margins • Positive operating contributions from shipping investments Q2’21 Last Twelve Month Highlights Stockholders’ Equity1 Adjusted Net Income2 Business Lines Q2’21 Q2’20 LTM Q2’21 LTM Insurance $288.0 $37.1 $52.6 - Underwriting & fees $29.2 $44.4 - Investments $7.9 $8.2 Tiptree Capital $195.5 $21.5 $36.5 Corporate $(78.5) $(22.7) $(28.8) Total Tiptree $405.0 $35.9 $60.3 - Total shares outstanding 33.7 33.4 ($ in millions)
Insurance Performance Highlights Q2’21
6 Fortegra – Financial Performance Highlights Continued growth through insurance and warranty program expansion and onboarding new agents, with a focus on stable, improved profitability • Growth in unearned premiums and deferred revenue to $1.4Bn, a 40% increase year-over-year • Underwriting and fee revenues increased to $246mm, up 57% • Continued investment in strategic growth initiatives ✓ U.S. Insurance admitted and E&S programs ✓ Capital-light warranty solutions ✓ European expansion Produced stable, growing results from underwriting and fees • Underwriting margin of $57mm, up 44%, driven by strong performance in warranty and specialty commercial programs • Consistent combined ratio of 92.1% 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 Financials1 Insurance products Q2’21 Highlights & Outlook 24 35 14 21 2 1 $40 $57 Q2'20 Q2'21 115 179 37 56 4 11 $157 $246 Q2'20 Q2'21 74.5% 76.7% 17.6% 15.5% 92.1% 92.1% Q2'20 Q2'21 ($ 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 Adjusted net income, adjusted return on average equity, underwriting and fee revenues and underwriting and fee margin to GAAP financials. 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. Q2’20 Q2’21 Q2’20 YTD Q2'21 YTD Premiums & equivalents2 $318.9 $571.5 $711.4 $1,076.5 Revenue $165.0 $252.3 $308.3 $474.8 Pre-tax income (loss) $14.1 $14.7 $(13.0) $36.2 Adjusted net income1 $9.0 $14.1 $17.7 $26.9 Adjusted ROAE1 12.9% 20.1% 12.8% 18.3% Combined ratio 92.1% 92.1% 92.9% 91.8% Unearned premiums & Deferred revenue $1,032.6 $1,441.1
77.1% 75.1% 75.5% 16.2% 17.7% 16.3% 93.3% 92.9% 91.8% Q2'19 YTD Q2'20 YTD Q2'21 YTD $13.4 $17.7 $26.9 Q2'19 YTD Q2'20 YTD Q2'21 YTD 7 Robust growth trajectory while maintaining underwriting profitability ($ in millions) Gross Written Premiums & Equivalents Underwriting & Fee Revenues and Margin1 Adjusted Net Income1 432 440 703 119 250 334 23 22 40 $573 $711 $1,076 Q2'19 YTD Q2'20 YTD Q2'21 YTD 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 Adjusted net income, adjusted return on average equity, underwriting and fee revenues and underwriting and fee margin to GAAP financials. 10% 13% $295 $330 $456 Q2'19 YTD Q2'20 YTD Q2'21 YTD $68 $82 $112 Q2'19 YTD Q2'20 YTD Q2'21 YTD U/W & Fee Revenues U/W & Fee Margin 18%
Earned Premiums, Net 69% Service and Administrative Fees 27% Other Income(2) 4% U.S. Insurance 65% U.S. Warranty Solutions 31% Europe Warranty Solutions 4% 1 Gross written premiums & premium equivalents 2 Includes ceding commissions, net investment income & other revenue, excluding net realized & unrealized gains (losses). Credit Insurance 10% Collateral Protection 13% Niche Personal Lines 8% Warranty Insurance 12% Commercial 22% Auto Warranty 20% Consumer Goods Warranty 3% Premium Finance 5% Warranty Services 3% Europe Warranty Solutions 4% Diversified product mix with emphasis on small premium-per- risk ecosystems & minimal catastrophic exposure Products & services distributed through independent & retail agents with each party’s interest economically aligned Complementary mix of underwriting revenue from insurance business and unregulated fee revenue from service business leads to more stable earnings Q2’21 LTM Total Revenues $829mm Q2’21 LTM GWPPE(1) $2.0Bn Key Highlights Revenue MixProduct Mix Q2’21 LTM GWPPE(1) $2.0Bn Line of Business 8 Insurance & Fee Revenue Mix Supports Consistent & Sustainable Growth
9 1 NAIC, 2020. 2 NAIC, 2019. 3 Allied Market Research, 2019 Extended Warranty Report, North America. We are well-positioned to capitalize on a substantial opportunity in the insurance industry. New & Renewal Programs ◼ Excess & Surplus Insurance — Fortegra Specialty formed Q4’20 ◼ Admitted Insurance — Growth in new & renewal programs ◼ Warranty Solutions — Capital-light business model Continued Geographic Expansion ◼ Entered Europe in 2018 ◼ Central & Western Europe Maintain & Expand Existing Programs ◼ $1.4Bn UEP & Deferred Revenue ◼ ~95% persistency with insurance agents ◼ Recent acquisitions to accelerate growth A B C $56bn¹ $627bn² $53bn³ $31bn³ Addressable Market 503 599 728 807 895 57 74 91 386 459 1 30 67 87 $560 $674 $849 $1,260 $1,441 2017 2018 2019 2020 Q2'21 U.S. Insurance U.S. Warranty Solutions Europe Warranty Solutions Unearned Premiums & Deferred Revenues Continue to Execute Growth Plan $62mm $1,265mm $634mm $71mm Fortegra LTM GWPPE
Cash & Equivalents 10% Government & Agency 28% Corporate Bonds 15% Fixed Income ETFs 12% Muni & ABS 11% Equities 9% Other Alternatives 15% Cash & Equivalents 13% Government & Agency 37%AAA 5% AA 12% A 16% BBB 2% Fixed Income ETFs 15% $623mm 10 Insurance Investment Portfolio Q2’21 Investment Mix Liquid and Highly-Rated Fixed Income Portfolio ($ in millions) 474 623 124 191 $598 $815 Q2'20 Q2'21 Other investments Fixed Income & Cash Income Statement Metrics $815mm ◼ ~2.3 year duration ◼ $438mm Blackrock managed ◼ AA rating ◼ 1.5% book yield Q2’20 Q2'21 Q2’21 YTD Q2’21 YTD Net investment income $2.3 $3.2 $5.8) $6.0 Net realized and unrealized gains (losses) $5.6 $2.8 $(28.0) $12.5
Performance Highlights Q2’21
74.8 77.1 39.9 74.1 35.2 39.9 5.8 4.4 $155.7 $195.5 Q2'20 Q2'21 Financial drivers Pre-tax income Adjusted Net Income1 Q2’20 YTD Q2’21 YTD Q2’20 YTD Q2’21 YTD Mortgage $6.3 $18.9 $7.6 $11.5 Senior living (Invesque)2 (55.9) 13.9 2.0 - Maritime transportation 0.9 2.5 1.1 2.6 Other 0.6 1.2 - 0.1 Total $(48.1) $36.5 $10.7 $14.2 12 Tiptree Capital – Financial Performance Highlights Mortgage: • Pre-tax income increased over PY from improved volumes and margins driven by low interest rates and home price appreciation • Mortgage origination volumes of $796mm, up 7% year-over-year • MSR asset of $23mm, including positive MTM of $4.0mm in 2021 Senior living (Invesque – IVQ.U): • Year-to-date unrealized gains of $13.9mm • Observing positive trends in senior living, skilled nursing and medical office sectors • Excess liquidity from Apr’20 dividend suspension and recent operator restructurings used to reduce leverage levels Maritime transportation: • Supply/demand imbalance in dry-bulk sector drove improvement in charter rates and revenues • Partially offset by softness in tanker rates Mortgage Maritime transportation Seniors Housing (Invesque/Care)2 1 See the appendix for a reconciliation of Adjusted net income to GAAP financials. 2 17.0m of Invesque common shares, 2.9m shares held in the insurance company investment portfolio. On balance sheet at fair value - $47.9 million, $39.6 million in Tiptree Capital as of June 30, 2021. Tiptree Capital Equity Q2’21 Year-to-date Highlights ($ in millions) Other
$17.4 $26.3 Q2'20 YTD Q2'21 YTD 13 Continued growth and underwriting performance at Fortegra Maintain focus on business execution Focus on growing and improving long-term, net investment income Summary & Outlook ($ in millions, except per share information) BVPS & Dividends Paid1 Adjusted Net Income1 ✓ Strong, steady growth in underlying operations in first half 2021 ✓ Continued execution on growth initiatives at insurance and mortgage businesses 1 See the appendix for a reconciliation of Adjusted net income, adjusted return on average equity and Book value per share to GAAP financials. 1 2 3 Book value per share Dividends paid $9.97 $11.59 $0.08 $0.08 Q2'20 Q2'21 First Half 2021 Highlights Looking ahead 9.2% 13.5%Adjusted ROAE1
14 Appendix Non-GAAP Reconciliations • Insurance underwriting and fee revenue • Insurance underwriting and fee margin • Book Value per share • Adjusted net income
15 Non-GAAP Reconciliations 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.
16 Non-GAAP Reconciliations – Underwriting and 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. ($ in thousands) Three Months Ended, June 30, 2021 2020 Total revenues $ 252,255 $ 164,954 Less: Net investment income (3,234) (2,292) Less: Net realized and unrealized gains (losses) (2,824) (5,635) Underwriting and fee revenues $ 246,197 $ 157,027 Three Months Ended June 30, 2021 2020 Income (loss) before income taxes $ 14,704 $ 14,088 Less: Net investment income (3,234) (2,292) Less: Net realized and unrealized gains (losses) (2,824) (5,635) Plus: Depreciation and amortization 4,407 2,630 Plus: Interest expense 4,525 3,582 Plus: Employee compensation and benefits 18,392 14,916 Plus: Other expenses 21,491 12,688 Underwriting and fee margin $ 57,461 $ 39,977 As of June 30, 2021 2020 Total stockholders’ equity $ 405,049 $ 347,189 Less: Non-controlling interests 18,031 11,368 Total stockholders’ equity, net of non-controlling interests $ 387,018 $ 335,821 Total common shares outstanding 33,395 33,676 Book value per share $ 11.59 $ 9.97 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 $11.59 as of June 30, 2021 compared with $9.97 as of June 30, 2020. Total stockholders’ equity, net of other non-controlling interests for the Company was $387.0 million as of June 30, 2021, which comprised total stockholders’ equity of $405.0 million adjusted for $18.0 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 $335.8 million as of June 30, 2020, which comprised total stockholders’ equity of $347.2 million adjusted for $11.4 million attributable to non-controlling interest at subsidiaries that are not wholly owned by the Company. Six Months Ended, June 30, 2021 2020 $ 474,818 $ 308,294 (6,001) (5,780) (12,496) 27,968 $ 456,321 $ 330,482 Six Months Ended June 30, 2021 2020 $ 36,232 $ (13,029) (6,001) (5,780) (12,496) 27,968 8,598 4,900 8,829 7,230 37,481 31,958 39,123 28,908 $ 111,766 $ 82,155
17 Non-GAAP Reconciliations – Adjusted Net Income ($ in thousands) Three Months Ended June 30, 2021 Tiptree Capital Insurance Mortgage Other Corporate Total Income (loss) before taxes $ 14,704 $ 5,775 $ 2,620 $ (11,624) $ 11,475 Less: Income tax (benefit) expense (3,334) (1,366) (34) 2,307 (2,427) Less: Net realized and unrealized gains (losses) (1) (2,808) (600) (142) – (3,550) Plus: Intangibles amortization (2) 3,835 – – – 3,835 Plus: Stock-based compensation expense 500 166 4 479 1,149 Plus: Non-recurring expenses 1,834 – 281 2,171 4,286 Plus: Non-cash fair value adjustments – – (695) – (695) Less: Tax on adjustments (640) 84 30 (422) (948) Adjusted net income $ 14,091 $ 4,059 $ 2,064 $ (7,089) $ 13,125 Adjusted net income $ 14,091 $ 4,059 $ 2,064 $ (7,089) $ 13,125 Average stockholders’ equity 281,041 72,364 121,129 (73,310) 401,223 Adjusted return on average equity 20.1% 22.4% 6.8% NM% 13.1% Six Months Ended June 30, 2021 Tiptree Capital Insurance Mortgage Other Corporate Total Income (loss) before taxes $ 36,232 $ 18,852 $ 17,614 $ (21,831) $ 50,867 Less: Income tax (benefit) expense (7,763) (4,462) (2,941) 3,987 (11,179) Less: Net realized and unrealized gains (losses) (1) (12,432) (4,020) (13,908) – (30,360) Plus: Intangibles amortization (2) 7,669 – – – 7,669 Plus: Stock-based compensation expense 872 331 12 999 2,214 Plus: Non-recurring expenses 2,104 – 281 2,171 4,556 Plus: Non-cash fair value adjustments – – (1,352) – (1,352) Less: Tax on adjustments 185 823 2,925 (68) 3,865 Adjusted net income $ 26,867 $ 11,524 $ 2,631 $ (14,742) $ 26,280 Adjusted net income $ 26,867 $ 11,524 $ 2,631 $ (14,742) $ 26,280 Average stockholders’ equity 292,865 67,292 113,430 (84,295) 389,292 Adjusted return on average equity 18.3% 34.3% 4.6% NM% 13.5% (1) For the three months ended June 30, 2021, included $16 and for the six months ended June 30, 2021, included $64 of incentive fees paid with respect to specific unrealized and realized gains that are added-back to Adjusted net income. (2) Specifically associated with acquisition purchase accounting. See Note (3) Acquisitions. Three Months Ended June 30, 2020 Tiptree Capital Insurance Mortgage Other Corporate Total $ 14,088 $ 7,405 $ (9,188) $ (7,871) $ 4,434 (2,785) (1,746) 2,059 2,477 5 (5,635) 1,471 9,841 – 5,677 2,534 – – – 2,534 492 896 7 657 2,052 44 – – 41 85 – – (871) – (871) 250 (599) (2,069) (972) (3,390) $ 8,988 $ 7,427 $ (221) $ (5,668) $ 10,526 $ 8,988 $ 7,427 $ (221) $ (5,668) $ 10,526 279,013 36,646 119,506 (89,402) 345,763 12.9% 81.1% (0.7)% NM% 12.2% Six Months Ended June 30, 2020 Tiptree Capital Insurance Mortgage Other Corporate Total $ (13,029) $ 6,315 $ (54,429) $ (16,174) $ (77,317) 4,878 (1,231) 11,731 5,808 21,186 27,968 2,819 58,396 – 89,183 4,702 – – – 4,702 843 896 158 1,826 3,723 2,239 – – 446 2,685 – – (520) – (520) (9,877) (1,176) (12,266) (2,890) (26,209) $ 17,724 $ 7,623 $ 3,070 $ (10,984) $ 17,433 $ 17,724 $ 7,623 $ 3,070 $ (10,984) $ 17,433 277,900 36,934 143,720 (79,252) 379,302 12.8% 41.3% 4.3% NM% 9.2% Trailing Twelve Months Ended June 30, 2021 Tiptree Capital Insurance Mortgage Other Corporate Total $ 76,209 $ 43,639 $ 10,801 $ (41,317) $ 89,332 (16,366) (10,297) (1,048) 8,973 (18,738) (26,596) (2,821) (4,636) – (34,053) 12,180 – – – 12,180 2,316 1,917 28 2,345 6,606 3,283 – 905 2,483 6,671 – – (2,973) – (2,973) 1,540 41 981 (1,309) 1,253 $ 52,566 $ 32,479 $ 4,058 $ (28,825) $ 60,278 $ 52,566 $ 32,479 $ 4,058 $ (28,825) $ 60,278 285,006 57,025 118,544 (84,456) 376,119 18.4% 57.0% 3.4% NM% 16.0%
TiptreeInc. ir@tiptreeinc.com