8-K
TIPTREE INC. (TIPT)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 8, 2023
TIPTREE INC.
(Exact Name of Registrant as Specified in Charter)
| Maryland | 001-33549 | 38-3754322 | ||||||
|---|---|---|---|---|---|---|---|---|
| (State or Other Jurisdiction<br>of Incorporation) | (Commission<br>File Number) | (I.R.S. Employer<br>Identification No.) | 660 Steamboat Road | 2nd Floor | Greenwich | CT | 06830 | |
| --- | --- | --- | --- | --- | ||||
| (Address of Principal Executive Offices) | (Zip Code) |
(212) 446-1400
(Registrant’s telephone number, including area code)
Former address: 299 Park Avenue, 13th Floor, New York, NY 10171
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | |
|---|---|---|---|
| Common Stock, par value $0.001 per share | TIPT | NASDAQ | Capital Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02 | Results of Operations and Financial Condition. |
|---|
On March 8, 2023, Tiptree Inc. (the “Company” or “Tiptree”) issued a press release announcing its results of operations for the year ended December 31, 2022. A copy of the press release is furnished as Exhibit 99.1 hereto and incorporated herein by reference.
| Item 7.01 | Regulation FD Disclosure. |
|---|
Included in the press release furnished as Exhibit 99.1 was an announcement that the board of directors of the Company has declared a cash dividend of $0.05 per share to Tiptree’s stockholders, with a record date of March 20, 2023 and a payment date of March 27, 2023.
On March 8, 2023, the Company posted an investor presentation dated March 2023 on the Investor Resources section of www.tiptreeinc.com. The investor presentation is furnished as Exhibit 99.2 to this Form 8-K and incorporated herein by reference. Tiptree’s website is not intended to function as a hyperlink, and the information contained on such website is not a part of this Form 8-K.
The information in Items 2.02 and 7.01 of this Current Report on Form 8-K, including the information contained in Exhibits 99.1 and 99.2, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities under that Section. Furthermore, the information in Items 2.02 and 7.01 of this Current Report on Form 8-K, including the information contained in Exhibits 99.1 and 99.2, shall not be deemed to be incorporated by reference into the filings of the Company under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
| Item 9.01 | Financial Statements and Exhibits. |
|---|
(d) List of Exhibits:
| 99.1 | Tiptree Inc. press release, dated March 8, 2023 |
|---|---|
| 99.2 | Tiptree Inc. Investor Presentation - March 2023 |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| TIPTREE INC. | |||
|---|---|---|---|
| Date: | March 8, 2023 | By: | /s/ Jonathan Ilany |
| Name: Jonathan Ilany | |||
| Title: Chief Executive Officer |
Document
Exhibit 99.1
TIPTREE REPORTS FOURTH QUARTER AND 2022 RESULTS
Greenwich, Connecticut - March 8, 2023 - Tiptree Inc. (NASDAQ:TIPT) (“Tiptree” or the “Company”), today announced its financial results for the quarter and year ended December 31, 2022.
“2022 was a strong year for Tiptree, with our operating businesses performing well. Revenues for the year increased to a record $1.4 billion, while contributing an adjusted return on equity of 13.6%. As we look forward, we see significant opportunities to grow our businesses and are confident in the long-term outlook for the company”, said Tiptree’s Executive Chairman, Michael Barnes.
| Fourth Quarter | Year Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands, except per share information) | 2022 | 2021 | 2022 | 2021 | ||||||||
| Total revenues | $ | 369,528 | $ | 319,534 | $ | 1,397,752 | $ | 1,200,514 | ||||
| Net income (loss) attributable to common stockholders | $ | 871 | $ | (426) | $ | (8,274) | $ | 38,132 | ||||
| Diluted earnings per share | $ | 0.02 | $ | (0.01) | $ | (0.23) | $ | 1.09 | ||||
| Cash dividends paid per common share | $ | 0.04 | $ | 0.04 | $ | 0.16 | $ | 0.16 | ||||
| Return on average equity | 0.9 | % | (0.4) | % | (2.1) | % | 11.4 | % | ||||
| Non-GAAP: (1) | ||||||||||||
| Adjusted net income | $ | 14,568 | $ | 16,859 | $ | 63,401 | $ | 63,869 | ||||
| Adjusted return on average equity | 11.1 | % | 16.8 | % | 13.6 | % | 16.5 | % | ||||
| Book value per share | $ | 10.92 | $ | 11.22 | $ | 10.92 | $ | 11.22 |
(1) See “—Non-GAAP Reconciliations” for a discussion of non-GAAP financial measures. Adjusted net income is presented before the impacts of non-controlling interests.
Fourth Quarter 2022 Summary
•Revenues for the quarter of $369.5 million, an increase of 15.6% from Q4'21, driven by growth in Fortegra’s specialty insurance lines and the gain on sale of two product tankers. Excluding investment gains and losses, revenues were up 11.5%.
•Net income of $0.9 million compared to net loss of $0.4 million in Q4'21, driven by the gain on sale of two product tankers and growth in our insurance business, partially offset by unrealized losses on Invesque shares and declines in our mortgage business.
•Adjusted net income of $14.6 million decreased by 13.6% from $16.9 million in Q4'21, driven by declines in our mortgage business. Adjusted return on average equity was 11.1% for the quarter.
•Completed the sale of two remaining product tankers for $49.0 million, representing a gain of $13.6 million, or 44% as compared to Q3’22 book value. Total proceeds from dry-bulk vessel and product tanker sales in 2022 were $116.7 million, or a net gain of $34.8 million.
•Declared a dividend of $0.05 per share (an increase of 25%) to stockholders of record on March 20, 2023 with a payment date of March 27, 2023.
Full-Year 2022 Summary
•In June 2022, Tiptree closed the previously announced $200 million strategic investment in Fortegra by Warburg Pincus. As part of the closing, $113 million of Tiptree’s corporate debt was repaid in full. In the year ended December 31, 2022, Tiptree recognized a $63.2 million pre-tax gain in stockholders’ equity from the investment in Fortegra, which was partially offset by an increase in deferred tax liability associated with the tax deconsolidation of Fortegra. Of the total deferred tax liability of $44.8 million, $33.1 million impacted net income with the remainder impacting stockholders’ equity directly.
•Revenues of $1.4 billion, an increase of 16.4% from 2021, driven by growth in our insurance business, increases in charter rates and the gain on sale of five vessels in our maritime operations, and increased revenues from our mortgage servicing
Page 1
portfolio, partially offset by lower mortgage volume and margins and investment losses in 2022 compared to gains in 2021. Excluding investment gains and losses, revenues were up 17.2%.
•Net loss of $8.3 million compared to net income of $38.1 million in 2021, driven primarily by the deferred tax liability associated with the tax deconsolidation of Fortegra and unrealized losses on investments, partially offset by gain on sale of five vessels and growth in insurance operations.
•Adjusted net income of $63.4 million decreased by 0.7% from prior year, driven by growth in specialty insurance and shipping operations, more than offset by declines in mortgage volumes and margins. Adjusted return on average equity was 13.6%.
•The Company repurchased 165,040 shares for the year ended December 31, 2022 at an average price of $10.44 per share.
Segment Financial Highlights - Fourth Quarter 2022 and Total Year 2022
Insurance (The Fortegra Group):
| Fourth Quarter | Year Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands) | 2022 | 2021 | 2022 | 2021 | ||||||||
| Gross written premiums and premium equivalents | $ | 723,773 | $ | 575,948 | $ | 2,680,771 | $ | 2,194,024 | ||||
| Revenues | $ | 345,408 | $ | 262,606 | $ | 1,248,796 | $ | 984,130 | ||||
| Income before taxes | $ | 29,093 | $ | 20,288 | $ | 68,150 | $ | 69,857 | ||||
| Return on average equity | 23.2 | % | 17.4 | % | 14.6 | % | 17.1 | % | ||||
| Combined ratio | 89.8 | % | 89.4 | % | 90.7 | % | 90.6 | % | ||||
| Non-GAAP: (1) | ||||||||||||
| Adjusted net income | $ | 23,939 | $ | 20,382 | $ | 83,832 | $ | 66,782 | ||||
| Adjusted return on average equity | 29.3 | % | 27.2 | % | 26.1 | % | 22.2 | % |
(1) See “—Non-GAAP Reconciliations” for a discussion of non-GAAP financial measures. Adjusted net income is presented before the impacts of non-controlling interests.
•Fortegra’s gross written premiums and premium equivalents increased 25.7% for the quarter and 22.2% for the year driven by growth in U.S. specialty insurance lines and service contract businesses in U.S. and Europe. As a function of Fortegra’s premium growth, the combination of unearned premiums and deferred revenues on the balance sheet grew to $2.0 billion, up $348 million, or 21.0%, from December 31, 2021.
•Revenues increased 31.5% for the quarter and 26.9% for the year driven by premium growth in specialty admitted and E&S lines, and service contract businesses in U.S. and Europe. Excluding the impact of investment gains and losses, revenues increased by 27.1% for the quarter and 28.7% for the year.
•The combined ratio for the quarter was 89.8%, compared to 89.4% in Q4'21 driven by consistent underwriting performance and scalability of the operating platform. Total year 2022 combined ratio of 90.7%, consistent with prior year.
•Income before taxes for the quarter was $29.1 million. Total year 2022 income before taxes of $68.2 million compared to $69.9 million in the prior year. Return on equity for 2022 was 14.6%, as compared to 17.1% in 2021, impacted by unrealized investment losses.
•Adjusted net income for the quarter was $23.9 million, up 17.4% from Q4'21. Adjusted net income for 2022 was $83.8 million, up 25.5% from prior year driven by revenue growth and consistent combined ratio. The adjusted return on average equity was 26.1% for 2022, as compared to 22.2% in 2021, with the improvement driven by strong underwriting and fee income.
•In April 2022, Fortegra acquired ITC Compliance GRP Limited for net cash consideration of $15.0 million, which further establishes Fortegra's footprint in Europe and provides a wholly vertical compliance solution for the U.K. automotive market.
•In February 2023, Fortegra acquired Premia Solutions Limited, one of the largest providers of automotive protection products in the United Kingdom, for net cash consideration of approximately $20.8 million.
Page 2
Tiptree Capital:
| Fourth Quarter | Year Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands) | 2022 | 2021 | 2022 | 2021 | ||||||||
| Revenues | $ | 24,120 | $ | 56,928 | $ | 148,956 | $ | 216,384 | ||||
| Income before taxes | $ | 8,459 | $ | 7,584 | $ | 32,277 | $ | 45,617 | ||||
| Return on average equity | 21.8 | % | 14.4 | % | 16.9 | % | 22.2 | % | ||||
| Non-GAAP: (1) | ||||||||||||
| Adjusted net income | $ | (787) | $ | 4,559 | $ | 8,969 | $ | 28,197 | ||||
| Adjusted return on average equity | (2.5) | % | 10.1 | % | 5.8 | % | 16.2 | % |
(1) See “—Non-GAAP Reconciliations” for a discussion of non-GAAP financial measures. Adjusted net income is presented before the impacts of non-controlling interests.
•Tiptree Capital income before taxes for the quarter was $8.5 million compared to $7.6 million in the prior year driven by the gain on sale of two tankers.
•Tiptree Capital Income before taxes for the year was $32.3 million, down from the prior year as contributions from our maritime transportation business were more than offset by declines in origination volumes and gain on sale margins in our mortgage business.
•Maritime transportation income before taxes was $49.8 million in 2022, as compared to $11.6 million in 2021, with the increase driven by the gain on sale of five vessels and cyclically high dry-bulk and product tanker charter rates.
•Mortgage income before taxes was $0.9 million in 2022, as compared to $28.4 million in 2021, with the decrease driven by a decline in gain on sale margins, partially offset by higher servicing fees and positive fair value adjustments on the mortgage servicing portfolio.
Corporate:
Corporate includes expenses of the holding company for interest expense, employee compensation and benefits, audit and professional fees, and public company and other expenses. For the quarter, corporate expenses were $12.5 million compared to $17.0 million in Q4'21 and for the year were $46.4 million compared to $50.1 million. The decrease for each respective period was driven by lower incentive compensation expense and interest expense as we repaid our corporate holding company borrowings in June 2022.
Non-GAAP
Management uses Adjusted net income and Adjusted return on average equity as measurements of operating performance. Management believes these measures provide supplemental information useful to investors as they are frequently used by the financial community to analyze financial performance and comparison among companies. Management uses Adjusted net income and adjusted return on average equity as part of its capital allocation process and to assess comparative returns on invested capital. Adjusted net income represents income before taxes, less provision (benefit) for income taxes, and excluding the after-tax impact of various expenses that we consider to be unique and non-recurring in nature, stock-based compensation, net realized and unrealized gains (losses), and intangibles amortization associated with purchase accounting. Adjusted net income and Adjusted return on average equity are presented before the impacts of non-controlling interests. Adjusted net income and Adjusted return on average equity are not measurements of financial performance or liquidity under GAAP and should not be considered as an alternative or substitute for GAAP net income. See “Non-GAAP Reconciliations” for a reconciliation of these measures to their GAAP equivalents.
Earnings Conference Call
Tiptree will host a conference call on Thursday, March 9, 2023 at 9:00 a.m. Eastern Time to discuss its Q4 and full year 2022 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 3
The conference call will be available via live or archived webcast at http://www.investors.tiptreeinc.com. To listen to a live broadcast, go to the site at least 15 minutes prior to the scheduled start time in order to register, download and install any necessary audio software. To participate in the telephone conference call, please dial 1-877-407-4018 (domestic) or 1-201-689-8471 (international). Please dial in at least five minutes prior to the start time.
A replay of the call will be available from Thursday, March 9, 2023 at 12:00 p.m. Eastern Time, until midnight Eastern on Thursday, March 16, 2023. To listen to the replay, please dial 1-844-512-2921 (domestic) or 1-412-317-6671 (international), Passcode: 13734675.
About Tiptree
Tiptree Inc. (NASDAQ: TIPT) allocates capital to select small and middle market companies with the mission of building long-term value. Established in 2007, we have a significant track record investing in the insurance sector and across a variety of other industries, including mortgage origination, specialty finance and shipping. With proprietary access and a flexible capital base, we seek to uncover compelling investment opportunities and support management teams in unlocking the full value potential of their businesses. For more information, please visit tiptreeinc.com and follow us on LinkedIn.
Forward-Looking Statements
This release contains “forward-looking statements” which involve risks, uncertainties and contingencies, many of which are beyond the Company’s control, which may cause actual results, performance, or achievements to differ materially from anticipated results, performance, or achievements. All statements contained in this release that are not clearly historical in nature are forward-looking, and the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “project,” “should,” “target,” “will,” or similar expressions are intended to identify forward-looking statements. Such forward-looking statements include, but are not limited to, statements about the Company’s plans, objectives, expectations for our businesses and intentions. The forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, many of which are beyond our control, are difficult to predict and could cause actual results to differ materially from those expressed or forecast in the forward-looking statements. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including, but not limited to those described in the section entitled “Risk Factors” in the Company’s Annual Report on Form 10-K, and as described in the Company’s other filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as to the date of this release. The factors described therein are not necessarily all of the important factors that could cause actual results or developments to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors also could affect our forward-looking statements. Consequently, our actual performance could be materially different from the results described or anticipated by our forward-looking statements. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Except as required by the federal securities laws, we undertake no obligation to update any forward-looking statements.
Page 4
Tiptree Inc.
Condensed Consolidated Balance Sheets
($ in thousands, except share data)
| As of | ||||
|---|---|---|---|---|
| December 31,<br>2022 | December 31,<br>2021 | |||
| Assets: | ||||
| Investments: | ||||
| Available for sale securities, at fair value, net of allowance for credit losses | $ | 611,980 | $ | 577,448 |
| Loans, at fair value | 64,843 | 105,583 | ||
| Equity securities | 85,776 | 138,483 | ||
| Other investments | 73,025 | 168,656 | ||
| Total investments | 835,624 | 990,170 | ||
| Cash and cash equivalents | 538,065 | 175,718 | ||
| Restricted cash | 12,782 | 19,368 | ||
| Notes and accounts receivable, net | 502,311 | 454,369 | ||
| Reinsurance receivables | 1,176,090 | 880,836 | ||
| Deferred acquisition costs | 498,925 | 379,373 | ||
| Goodwill | 186,608 | 179,103 | ||
| Intangible assets, net | 117,015 | 122,758 | ||
| Other assets | 172,143 | 146,844 | ||
| Assets held for sale | — | 250,608 | ||
| Total assets | $ | 4,039,563 | $ | 3,599,147 |
| Liabilities and Stockholders’ Equity | ||||
| Liabilities: | ||||
| Debt, net | $ | 259,366 | $ | 393,349 |
| Unearned premiums | 1,357,436 | 1,123,952 | ||
| Policy liabilities and unpaid claims | 567,193 | 331,703 | ||
| Deferred revenue | 649,150 | 534,863 | ||
| Reinsurance payable | 305,097 | 265,569 | ||
| Other liabilities and accrued expenses | 367,748 | 306,536 | ||
| Liabilities held for sale | — | 242,994 | ||
| Total liabilities | $ | 3,505,990 | $ | 3,198,966 |
| 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, 36,385,299 and 34,124,153 shares issued and outstanding, respectively | 36 | 34 | ||
| Additional paid-in capital | 382,645 | 317,459 | ||
| Accumulated other comprehensive income (loss), net of tax | (39,429) | (2,685) | ||
| Retained earnings | 54,113 | 68,146 | ||
| Total Tiptree Inc. stockholders’ equity | 397,365 | 382,954 | ||
| Non-controlling interests: | ||||
| Fortegra preferred interests | 77,679 | — | ||
| Common interests | 58,529 | 17,227 | ||
| Total non-controlling interests | 136,208 | 17,227 | ||
| Total stockholders’ equity | 533,573 | 400,181 | ||
| Total liabilities and stockholders’ equity | $ | 4,039,563 | $ | 3,599,147 |
Page 5
Tiptree Inc.
Condensed Consolidated Statements of Operations
($ in thousands, except share data)
| Three Months Ended <br>December 31, | Year Ended<br>December 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |||||
| Revenues: | ||||||||
| Earned premiums, net | $ | 242,531 | $ | 186,649 | $ | 904,765 | $ | 685,552 |
| Service and administrative fees | 87,837 | 69,111 | 320,720 | 260,525 | ||||
| Ceding commissions | 3,994 | 2,957 | 13,880 | 11,784 | ||||
| Net investment income | 2,055 | 8,565 | 12,219 | 17,896 | ||||
| Net realized and unrealized gains (losses) | 19,933 | 31,082 | 69,983 | 151,350 | ||||
| Other revenue | 13,178 | 21,170 | 76,185 | 73,407 | ||||
| Total revenues | 369,528 | 319,534 | 1,397,752 | 1,200,514 | ||||
| Expenses: | ||||||||
| Policy and contract benefits | 122,252 | 89,814 | 452,605 | 327,012 | ||||
| Commission expense | 140,251 | 104,103 | 522,686 | 396,683 | ||||
| Employee compensation and benefits | 39,730 | 60,062 | 182,657 | 207,322 | ||||
| Interest expense | 5,403 | 10,784 | 30,240 | 37,674 | ||||
| Depreciation and amortization | 5,259 | 6,176 | 22,973 | 24,437 | ||||
| Other expenses | 31,602 | 37,704 | 132,580 | 142,044 | ||||
| Total expenses | 344,497 | 308,643 | 1,343,741 | 1,135,172 | ||||
| Income (loss) before taxes | 25,031 | 10,891 | 54,011 | 65,342 | ||||
| Less: provision (benefit) for income taxes | 18,913 | 9,875 | 50,450 | 21,291 | ||||
| Net income (loss) | 6,118 | 1,016 | 3,561 | 44,051 | ||||
| Less: net income (loss) attributable to non-controlling interests | 5,247 | 1,442 | 11,835 | 5,919 | ||||
| Net income (loss) attributable to common stockholders | $ | 871 | $ | (426) | $ | (8,274) | $ | 38,132 |
| Net income (loss) per common share: | ||||||||
| Basic earnings per share | $ | 0.02 | $ | (0.01) | $ | (0.23) | $ | 1.13 |
| Diluted earnings per share | $ | 0.02 | $ | (0.01) | $ | (0.23) | $ | 1.09 |
| Weighted average number of common shares: | ||||||||
| Basic | 36,330,653 | 33,996,324 | 35,531,149 | 33,223,792 | ||||
| Diluted | 37,161,862 | 33,996,324 | 35,531,149 | 33,688,256 | ||||
| Dividends declared per common share | $ | 0.04 | $ | 0.04 | $ | 0.16 | $ | 0.16 |
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. Adjusted net income is presented before the impacts of non-controlling interests.
We define Adjusted return on average equity as Adjusted net income expressed on an annualized basis as a percentage of average beginning and ending stockholder’s equity during the period. We use Adjusted return on average equity as an internal performance measure in the management of our operations because we believe it gives our management and other users of our financial information useful insight into our results of operations and our underlying business performance. Adjusted return on average equity should not be viewed as a substitute for return on average equity calculated in accordance with GAAP, and other companies may define adjusted return on average equity differently.
| Three Months Ended December 31, 2022 | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Tiptree Capital | ||||||||||||||
| ($ in thousands) | Insurance | Mortgage | Other | Corporate | Total | |||||||||
| Income (loss) before taxes | $ | 29,093 | $ | (2,476) | $ | 10,935 | $ | (12,521) | $ | 25,031 | ||||
| Less: Income tax (benefit) expense | (10,152) | 511 | (2,076) | (7,196) | (18,913) | |||||||||
| Less: Net realized and unrealized gains (losses) | (2,804) | 973 | (10,495) | — | (12,326) | |||||||||
| Plus: Intangibles amortization (1) | 4,083 | — | — | — | 4,083 | |||||||||
| Plus: Stock-based compensation expense | 47 | — | (98) | 1,656 | 1,605 | |||||||||
| Plus: Non-recurring expenses | 1,813 | — | 140 | — | 1,953 | |||||||||
| Plus: Non-cash fair value adjustments | (939) | — | 1 | — | (938) | |||||||||
| Less: Tax on adjustments (2) | 2,798 | (150) | 1,948 | 9,477 | 14,073 | |||||||||
| Adjusted net income | $ | 23,939 | $ | (1,142) | $ | 355 | $ | (8,584) | $ | 14,568 | ||||
| Adjusted net income | $ | 23,939 | $ | (1,142) | $ | 355 | $ | (8,584) | $ | 14,568 | ||||
| Average stockholders’ equity | $ | 326,431 | $ | 55,726 | $ | 70,628 | $ | 73,789 | $ | 526,574 | ||||
| Adjusted return on average equity | 29.3 | % | (8.2) | % | 2.0 | % | NM% | 11.1 | % | |||||
| Three Months Ended December 31, 2021 | ||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Tiptree Capital | ||||||||||||||
| ($ in thousands) | Insurance | Mortgage | Other | Corporate | Total | |||||||||
| Income (loss) before taxes | $ | 20,288 | $ | 3,288 | $ | 4,296 | $ | (16,981) | $ | 10,891 | ||||
| Less: Income tax (benefit) expense | (7,281) | (434) | (642) | (1,518) | (9,875) | |||||||||
| Less: Net realized and unrealized gains (losses) | 1,272 | (723) | 421 | — | 970 | |||||||||
| Plus: Intangibles amortization (1) | 3,830 | — | — | — | 3,830 | |||||||||
| Plus: Stock-based compensation expense | 659 | — | 4 | 6,750 | 7,413 | |||||||||
| Plus: Non-recurring expenses | 82 | — | 209 | — | 291 | |||||||||
| Plus: Non-cash fair value adjustments | — | — | (1,003) | — | (1,003) | |||||||||
| Less: Tax on adjustments (2) | 1,532 | (182) | (675) | 3,667 | 4,342 | |||||||||
| Adjusted net income | $ | 20,382 | $ | 1,949 | $ | 2,610 | $ | (8,082) | $ | 16,859 | ||||
| Adjusted net income | $ | 20,382 | $ | 1,949 | $ | 2,610 | $ | (8,082) | $ | 16,859 | ||||
| Average stockholders’ equity | $ | 299,236 | $ | 62,065 | $ | 119,016 | $ | (79,155) | $ | 401,162 | ||||
| Adjusted return on average equity | 27.2 | % | 12.6 | % | 8.8 | % | NM% | 16.8 | % |
Page 7
| Year Ended December 31, 2022 | ||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Tiptree Capital | ||||||||||||||||||||||||||||||
| ($ in thousands) | Insurance | Mortgage | Other | Corporate | Total | |||||||||||||||||||||||||
| Income (loss) before taxes | $ | 68,150 | $ | 874 | $ | 31,403 | $ | (46,416) | $ | 54,011 | ||||||||||||||||||||
| Less: Income tax (benefit) expense | (21,251) | (363) | (5,545) | (23,291) | (50,450) | |||||||||||||||||||||||||
| Less: Net realized and unrealized gains (losses) | 20,347 | (7,003) | (18,788) | — | (5,444) | |||||||||||||||||||||||||
| Plus: Intangibles amortization (1) | 16,229 | — | — | — | 16,229 | |||||||||||||||||||||||||
| Plus: Stock-based compensation expense | 2,423 | — | — | 7,093 | 9,516 | |||||||||||||||||||||||||
| Plus: Non-recurring expenses | 3,374 | — | (729) | 2,108 | 4,753 | |||||||||||||||||||||||||
| Plus: Non-cash fair value adjustments | (939) | — | 3,555 | — | 2,616 | |||||||||||||||||||||||||
| Less: Tax on adjustments (2) | (4,501) | 1,834 | 3,731 | 31,106 | 32,170 | |||||||||||||||||||||||||
| Adjusted net income | $ | 83,832 | $ | (4,658) | $ | 13,627 | $ | (29,400) | $ | 63,401 | ||||||||||||||||||||
| Adjusted net income | $ | 83,832 | $ | (4,658) | $ | 13,627 | $ | (29,400) | $ | 63,401 | ||||||||||||||||||||
| Average stockholders’ equity | $ | 321,320 | $ | 57,575 | $ | 98,373 | $ | (10,390) | $ | 466,878 | ||||||||||||||||||||
| Adjusted return on average equity | 26.1 | % | (8.1) | % | 13.9 | % | NM % | 13.6 | % | Year Ended December 31, 2021 | ||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||||||||||||
| Tiptree Capital | ||||||||||||||||||||||||||||||
| ($ in thousands) | Insurance | Mortgage | Other | Corporate | Total | |||||||||||||||||||||||||
| Income (loss) before taxes | $ | 69,857 | $ | 28,407 | $ | 17,210 | $ | (50,132) | $ | 65,342 | ||||||||||||||||||||
| Less: Income tax (benefit) expense | (18,438) | (4,882) | (1,992) | 4,021 | (21,291) | |||||||||||||||||||||||||
| Less: Net realized and unrealized gains (losses) | (3,732) | (5,798) | (3,091) | — | (12,621) | |||||||||||||||||||||||||
| Plus: Intangibles amortization (1) | 15,329 | — | — | — | 15,329 | |||||||||||||||||||||||||
| Plus: Stock-based compensation expense | 2,006 | 331 | 213 | 8,581 | 11,131 | |||||||||||||||||||||||||
| Plus: Non-recurring expenses | 2,158 | — | 938 | 2,171 | 5,267 | |||||||||||||||||||||||||
| Plus: Non-cash fair value adjustments | — | — | (3,170) | — | (3,170) | |||||||||||||||||||||||||
| Less: Tax on adjustments (2) | (398) | (624) | 655 | 4,249 | 3,882 | |||||||||||||||||||||||||
| Adjusted net income | $ | 66,782 | $ | 17,434 | $ | 10,763 | $ | (31,110) | $ | 63,869 | ||||||||||||||||||||
| Adjusted net income | $ | 66,782 | $ | 17,434 | $ | 10,763 | $ | (31,110) | $ | 63,869 | ||||||||||||||||||||
| Average stockholders’ equity | $ | 300,820 | $ | 60,433 | $ | 113,717 | $ | (88,111) | $ | 386,859 | ||||||||||||||||||||
| Adjusted return on average equity | 22.2 | % | 28.8 | % | 9.5 | % | NM% | 16.5 | % | Notes | ||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||||||||
| (1) | Specifically associated with acquisition purchase accounting. See Note (9) Goodwill and Intangible Assets, net, of the Company’s Form 10-K for the period ended December 31, 2022. | |||||||||||||||||||||||||||||
| (2) | Tax on adjustments represents the tax applied to the total non-GAAP adjustments and includes adjustments for non-recurring or discrete tax impacts. For the three months and year ended December 31, 2022, included in the adjustment is an add-back of $9.0 million and $33.1 million, respectively, related to deferred tax expense from the WP Transaction. |
Non-GAAP Financial Measures — Book value per share
Management believes the use of this financial measure provides supplemental information useful to investors as book value is frequently used by the financial community to analyze company growth on a relative per share basis. The following table provides a reconciliation between total stockholders’ equity and total shares outstanding, net of treasury shares.
| ($ in thousands, except per share information) | As of December 31, | |||
|---|---|---|---|---|
| 2022 | 2021 | |||
| Total stockholders’ equity | $ | 533,573 | $ | 400,181 |
| Less: Non-controlling interests | 136,208 | 17,227 | ||
| Total stockholders’ equity, net of non-controlling interests | $ | 397,365 | $ | 382,954 |
| Total common shares outstanding | 36,385 | 34,124 | ||
| Book value per share | $ | 10.92 | $ | 11.22 |
Page 8
exhibit992investorpresye
Investor Presentation – Fourth Quarter 2022 March 2023 Financial Information for the three and twelve months ended December 31, 2022 EXHIBIT 99.2
1 Disclaimers LIMITATIONS ON THE USE OF INFORMATION This presentation has been prepared by Tiptree Inc. and its consolidated subsidiaries (“Tiptree", "the Company" or "we”) solely for informational purposes, and not for the purpose of updating any information or forecast with respect to Tiptree, its subsidiaries or any of its affiliates or any other purpose. Tiptree reports a non-controlling interest in certain operating subsidiaries that are not wholly owned. Unless otherwise noted, all information is of Tiptree on a consolidated basis before non-controlling interest. Neither Tiptree nor any of its affiliates makes any representation or warranty, express or implied, as to the accuracy or completeness of the information contained herein and no such party shall have any liability for such information. These materials and any related oral statements are not all-inclusive and shall not be construed as legal, tax, investment or any other advice. You should consult your own counsel, accountant or business advisors. Performance information is historical and is not indicative of, nor does it guarantee future results. There can be no assurance that similar performance may be experienced in the future. SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS This document contains "forward-looking statements" which involve risks, uncertainties and contingencies, many of which are beyond Tiptree's control, which may cause actual results, performance, or achievements to differ materially from anticipated results, performance, or achievements. All statements contained herein that are not clearly historical in nature are forward-looking, and the words "anticipate," "believe," "estimate," "expect,“ “intend,” “may,” “might,” "plan," “project,” “should,” "target,“ “will,” "view," “confident,” or similar expressions are intended to identify forward-looking statements. Such forward-looking statements include, but are not limited to, statements about Tiptree's plans, objectives, expectations and intentions. The forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, many of which are beyond our control, are difficult to predict and could cause actual results to differ materially from those expressed or forecast in the forward-looking statements. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including, but not limited to those described in the section entitled “Risk Factors” in Tiptree’s Annual Report on Form 10-K, and as described in the Tiptree’s other filings with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as to the date of this release. The factors described therein are not necessarily all of the important factors that could cause actual results or developments to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors also could affect our forward-looking statements. Consequently, our actual performance could be materially different from the results described or anticipated by our forward-looking statements. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Except as required by the federal securities laws, we undertake no obligation to update any forward- looking statements. MARKET AND INDUSTRY DATA Certain market data and industry data used in this presentation were obtained from reports of governmental agencies and industry publications and surveys. We believe the data from third-party sources to be reliable based upon our management’s knowledge of the industry, but have not independently verified such data and as such, make no guarantees as to its accuracy, completeness or timeliness. NOT AN OFFER OR A SOLICIATION This document does not constitute an offer or invitation for the sale or purchase of securities or to engage in any other transaction with Tiptree, its subsidiaries or its affiliates. The information in this document is not targeted at the residents of any particular country or jurisdiction and is not intended for distribution to, or use by, any person in any jurisdiction or country where such distribution or use would be contrary to local law or regulation. NON-GAAP MEASURES In this document, we sometimes use financial measures derived from consolidated financial data but not presented in our financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP"). Certain of these data are considered “non-GAAP financial measures” under the SEC rules. These non-GAAP financial measures supplement our GAAP disclosures and should not be considered an alternative to the GAAP measure. Management's reasons for using these non-GAAP financial measures and the reconciliations to their most directly comparable GAAP financial measures are posted in the Appendix.
2 2022 Highlights Revenue $1.40 billion 16.4% vs. prior year Adjusted Net Income2 $63.4 million (0.7)% vs. prior year Book Value per share2,3 $10.92 2.6% vs. 9/30/22 Net Loss1 $(8.3) million vs. prior year net income of $38.1 million Overall Adj. net income2 of $63mm, with a 13.6% adj. ROAE2, driven by strong performance in insurance & shipping. Closed the previously announced $200mm strategic investment in Fortegra by Warburg Pincus. Closing of the investment in Fortegra increased Tiptree equity by $63mm pre-tax, partially offset by $45mm of tax impact related to the tax deconsolidation of Fortegra ($33mm impacting 2022 earnings). Repaid $113mm of corporate debt. Sold all five shipping vessels for $117mm, or a net gain of $35mm, including the sale of two product tankers in Q4’22 for an aggregate of $49mm, a 44% gain compared to Q3’22 book value. Increased dividend by 25% to $0.05 for Mar’23 payment; Repurchased 165,040 shares at $10.44 per share. Insurance $2.7Bn of gross written premiums & premium equivalents (GWPPE)4, a 22% increase from PY driven by growth in specialty admitted & E&S insurance lines & fee-based service contract offerings. Stable combined ratio at 90.7%, driven by consistent underwriting and scalable operating platform. Adj. net income of $84mm, up 26% from PY driven by revenue growth. Adj. ROAE of 26%. Acquired ITC Compliance in Apr’22 for $15.0mm and Premia in Feb’23 for $20.8mm, further expanding European presence. Tiptree Capital Mortgage & shipping contributed pre-tax income of $32.3mm ($ 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. Adjusted net income is presented before the impacts of non-controlling interests. 3 Quarterly total return defined as cumulative dividends paid of $0.04 per share plus change in book value per share as of December 31, 2022. 4 Gross written premium and premium equivalents are the base used to calculate the service fee income for non-insurance products. This base includes the amount charged to end consumers for a warranty or a car club membership.
Financial Results Q4’21 Q4'22 2021 2022 Total Revenues $319.5 $369.5 $1,200.5 $1,397.8 Net income (loss) $(0.4) $0.9 $38.1 $(8.3) Diluted EPS $(0.01) $0.02 $1.09 $(0.23) Adjusted net income1 $16.9 $14.6 $63.9 $63.4 Adjusted ROAE1 16.8% 11.1% 16.5% 13.6% Total shares outstanding 34.1 36.4 Book Value per share1 $11.22 $10.92 31 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. Adjusted net income is presented before the impacts of non-controlling interests. 2 Includes dividends paid. Quarterly total return defined as dividends paid of $0.04 per share plus change in book value per share as of December 31, 2022. ($ in millions, except per share information) $13.6 $20.4 $23.9 $10.0 $4.6 $(0.8) $(7.4) $(8.1) $(8.6) $16.2 $16.9 $14.6 Q4'20 Q4'21 Q4'22 Corporate Fortegra Tiptree Capital Key Highlights – Q4’22 Adjusted Net Income by business Revenues • 15.6% increase driven by growth in Fortegra’s specialty insurance lines and shipping revenues, including gain on sale of two product tankers • Excluding investment gains and losses, revenues were up 11.5% Net income of $0.9mm, driven by revenue growth and consistent combined ratio at Fortegra and the gain on sale of two product tankers, offset by declines in mortgage volumes and incremental deferred tax expense related to WP transaction Adj net income of $14.6mm, decreased by 13.6% from PY; • Continued growth at Fortegra, more than offset by declines in mortgage business and decreased shipping revenues due to the sale of all five vessels BVPS of $10.92 decreased by 1.3%2 over PY and increased 2.6%2 from PQ • Rising interest rates drove unrealized losses on fixed income securities of $44mm for Q4’22 YTD (AOCI impact), $8.2mm improvement vs Q3’22 (expect to hold to maturity) • Closing of the Warburg investment (Q2’22) resulted in $63.2mm pre-tax increase to equity, offset by $44.8mm of tax impact related to the tax deconsolidation of Fortegra $43.4 $66.8 $83.8 $33.1 $28.2 $9.0 $(25.1) $(31.1) $(29.4) $51.4 $63.9 $63.4 2020 2021 2022
Specialty Insurance Performance Highlights Q4’22
5 Fortegra – Financial Performance Highlights Product & distribution expansion driving continued growth, while maintaining underwriting discipline • GWPPE of 724mm, or 26% growth driven by E&S and warranty lines • Unearned premiums and deferred revenue grew to $2.0Bn, a 21% increase year-over-year • Underwriting & fee revenues increased to $341mm, up 30% from PY Produced stable, growing results from underwriting and fees • Underwriting margin of $78mm, up 16%, driven by growth in admitted and E&S lines • Year-to-date combined ratio consistent at 90.7% • Adj. ROAE of 26.1%, driven by insurance and service offerings Capital and liquidity remain strong and continue to support growth objectives Underwriting and Fee Margin1 Underwriting and Fee Revenues1 Combined Ratio 1 2 3 Summary Financials Insurance products Q4’22 Highlights & Outlook 39 49 25 24 3 5$67 $78 Q4'21 Q4'22 186 249 62 75 12 16 $261 $341 Q4'21 Q4'22 74.3% 77.1% 15.1% 12.7% 89.4% 89.8% Q4'21 Q4'22 ($ in millions) U.S. Warranty Solutions U.S Insurance Europe Expense Ratio Underwriting Ratio Europe U.S. Warranty Solutions U.S. Insurance 1 See appendix for a reconciliation of Non-GAAP measures including Adjusted Net Income, Adjusted return on average equity, underwriting and fee revenues and underwriting and fee margin. Adjusted net income is presented before the impacts of non-controlling interests. 2 Gross written premiums and premium equivalents are the base used to calculate the service fee income for non-insurance products. This base includes the amount charged to end consumers for a warranty or a car club membership. Q4’21 Q4’22 2021 2022 Premiums & equivalents2 $575.9 $723.8 $2,194.0 $2,680.8 Revenue $262.6 $345.4 $984.1 $1,248.8 Pre-tax income (loss) $20.3 $29.1 $69.9 $68.2 Adjusted net income1 $20.4 $23.9 $66.8 $83.8 Adjusted ROAE1 27.2% 29.3% 22.2% 26.1% Combined ratio 89.4% 89.8% 90.6% 90.7% Unearned Premiums & Deferred Revenues $1,658.8 $2,006.6
Growth oriented while maintaining underwriting profitability 76.5% 74.6% 74.7% 77.6% 15.9% 16.9% 15.9% 13.1% 92.4% 91.5% 90.6% 90.7% 2019 2020 2021 2022 $32.8 $43.4 $66.8 $83.8 2019 2020 2021 2022 6 ($ in millions) Gross Written Premiums & Equivalents1 Underwriting & Fee Revenues and Margin2 Adjusted Net Income2 966 1,064 1,438 1,690 297 550 652 853 34 53 104 138 $1,297 $1,667 $2,194 $2,681 2019 2020 2021 2022 Combined Ratio Adj. ROAE%1 Adj. Net Income U/W Ratio Expense Ratio U.S. Insurance U.S. Warranty Solutions Europe 1 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. 2 See the appendix for a reconciliation of Non-GAAP measures including Adjusted Net Income, Adjusted return on average equity, underwriting and fee revenues and underwriting and fee margin. Adjusted net income is presented before the impacts of non-controlling interests. 12% 22% U/W & Fee Revenues U/W & Fee Margin 26%15% 105 107 141 172 37 62 90 88 3 7 13 21 $146 $176 $245 $282 2019 2020 2021 2022 526 508 690 922 87 163 231 275 7 23 47 60 $620 $693 $968 $1,257 2019 2020 2021 2022
Investment Portfolio Cash & Equivalents 34% Government & Agency 33% Corporate Bonds 14% Fixed Income ETFs 5% Muni & ABS 6% Equities 1% Other Alternatives 7% Cash & Equivalents 37% Government & Agency 36% AA 5% A 14% BBB 1% Fixed Income ETFs 5% $1,057mm 7 Asset Allocation Liquid and Highly-Rated Fixed Income Portfolio ($ in millions) 767 1,057 144 97 $910 $1,154 2021 2022 Other investments Fixed Income & Cash Return Metrics (Pre-tax) $1,154mm ◼ 2.3 year duration ◼ AA+ ratingQ4’21 Q4'22 2021 2022 Net investment income $8.6 $2.1 $17.9 $12.2 Net realized and unrealized gains (losses) $(7.0) $2.8 $(2.0) $(20.3) Adjusted net income1 $2.1 $3.7 $8.7 $11.4 2.7%1.3%Book yield 1 See the appendix for a reconciliation of Non-GAAP measures including Adjusted Net Income.
Fortegra Summary & Outlook 8 ($ in millions) Adjusted Net Income1 1) See the appendix for a reconciliation of Non-GAAP measures including Adjusted Net Income and Adjusted ROAE. Adjusted net income is presented before the impacts of non-controlling interests. 2022 Highlights $66.8 $83.9 2021 2022 ✓ Record top-line premiums ($2.7Bn) ✓ Record Adjusted Net income ($84mm) and Adjusted ROAE (26%) Outlook Adjusted ROAE %1 14.3% 18.0% 7.9% 8.1% 22.2% 26.1% 2021 2022 • Expect continued growth and consistency of underwriting • Continued investment in strategic growth areas ✓ Specialty admitted & E&S lines ✓ Capital-light warranty offerings ✓ European expansion Lift from Warranty Solutions Insurance
Performance Highlights Q4’22
81.8 57.6 60.4 54.7 29.1 13.0 11.0 4.2 $182.3 $129.6 2021 2022 Financial drivers Pre-tax income (loss) Q4’21 Q4’22 2021 2022 Mortgage $3.3 $(2.5) $28.4 $0.9 Senior living (Invesque)2 (0.4) (3.1) 3.1 (16.0) Maritime transportation 3.9 13.3 11.6 49.8 Other 0.8 0.8 2.5 (2.4) Total $7.6 $8.5 $45.6 $32.3 10 Tiptree Capital – Financial Performance Highlights Maritime transportation: • Favorable valuations led to strategic sales of vessels • Sold three bulkers and two tankers for net gain of $34.8mm Mortgage: • Mortgage origination volumes of $1.1Bn, down 29% from PY • Headwinds in volumes and margins partially offset by servicing revenues and active cost management • MSRs of $41mm, including $7.0mm positive MTM in the year Senior living (Invesque – IVQ.U): • Observing positive operating trends in certain healthcare real estate sectors • Unrealized losses of $16.0mm in 2022, compared to PY gains of $3.1mm Mortgage Maritime transportation Seniors Housing (Invesque/Care)2 1 See the appendix for a reconciliation of Non-GAAP measures including Adjusted Net Income. 2 17.0m of Invesque common shares, 2.9m shares held in the insurance company investment portfolio. On balance sheet at fair value - $15.5 million, $12.8 million in Tiptree Capital as of December 31, 2022. Capital Allocation 2022 Highlights ($ in millions) Other
01 Summary & Outlook
Financial Snapshot 12 ($ in millions) Adjusted Net Income1 1) See the appendix for a reconciliation of Non-GAAP measures including Adjusted Net Income. Adjusted net income is presented before the impacts of non-controlling interests. 2) Estimated based on Warburg Pincus valuation multiple of 13.5x Adj. Net Income, multiplied by 2022 Adj. Net Income of $83.8 million, multiplied by Tiptree’s 72.4% as converted ownership as of Q4’22 less deferred tax liability of $40.0 million recorded as of Q4’22. 3) Includes Tiptree Inc. stockholders’ equity of Mortgage, Tiptree Capital – Other and Corporate, excluding the deferred tax liability relating to Tiptree’s investment in Fortegra. 4) Diluted shares as of December 31, 2022, represents basic outstanding shares of 36,385,299 plus dilutive shares of 1,725,032 which includes unvested RSUs, outstanding options (assumed to be exercised cashless) and certain exchangeable subsidiary awards. Adj ROAE% 16.5% 13.6% Sum of the Parts $63.9 $63.4 2021 2022 $779 million2 (Transaction multiple) $232 million3 (Book value ex. NCI) $1,011 million $20.45 Value/TIPT diluted share4 Pro-forma SOTP Value $6.09 $26.54
13 • Significant opportunities to achieve value creation objectives at Fortegra • Capital available to redeploy into long-term value creating opportunities Summary & Outlook ($ in millions) ✓ Strong operating performance from our businesses – Fortegra continues to deliver strong top-line growth and return on equity – Solid contributions from favorable shipping environment both in charter rates and vessel valuations ✓ $200mm investment in Fortegra from Warburg Pincus closed in Jun’22 1 See the appendix for a reconciliation of Non-GAAP measures including Adjusted Net Income and Adjusted return on average equity. 2022 Highlights Looking Ahead
Appendix Non-GAAP Reconciliations • Insurance underwriting and fee revenue • Insurance underwriting and fee margin • Book Value per share • Adjusted net income
Non-GAAP Reconciliations 15 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. Adjusted net income is presented before the impacts of non-controlling interests. 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 Producer Owned Reinsurance Company (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 non-GAAP metrics of 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 – UW & Fee Revenues & Margin, BVPS ($ in thousands, except per share information) 2022 2021 2020 2022 2021 2020 Total revenues 1,248,796$ 984,130$ 691,061$ 345,408$ 262,606$ 208,762$ Less: Net investment income (12,219) (17,896) (9,916) (2,055) (8,565) (1,113) Less: Net realized and unrealized gains (losses) 20,347 2,006 11,944 (2,804) 7,010 (15,367) Underwriting and fee revenues 1,256,924$ 968,240$ 693,089$ 340,549$ 261,051$ 192,282$ 2022 2021 2020 2022 2021 2020 Income (loss) before income taxes 68,150$ 69,857$ 26,948$ 29,093$ 20,288$ 26,530$ Less: Net investment income (12,219) (17,896) (9,916) (2,055) (8,565) (1,113) Less: Net realized and unrealized gains (losses) 20,347 2,006 11,944 (2,804) 7,010 (15,367) Plus: Depreciation and amortization 18,551 17,223 10,835 4,854 4,318 3,606 Plus: Interest expense 20,054 17,576 15,487 4,888 4,479 4,269 Plus: Employee compensation and benefits 87,918 76,552 65,089 23,759 19,545 17,162 Plus: Other expenses 78,832 79,227 55,594 20,311 20,059 15,020 Underwriting and fee margin 281,633$ 244,545$ 175,981$ 78,046$ 67,134$ 50,107$ 2022 2021 2020 Total stockholders’ equity 533,573$ 400,181$ 373,538$ Less: Non-controlling interests 136,208 17,227 17,394 Total stockholders’ equity, net of non-controlling interests 397,365$ 382,954$ 356,144$ Total common shares outstanding 36,385 34,124 32,682 Book value per share 10.92$ 11.22$ 10.90$ Year Ended December 31, Year Ended December 31, As of December 31, Three Months Ended December 31, Three Months Ended December 31,
17 Non-GAAP Reconciliations – FY Adjusted Net Income The footnotes below correspond to the tables above, under “—Adjusted Net Income - Non-GAAP and “—Adjusted Return on Average Equity - Non-GAAP”. Adjusted net income is presented before the impacts of non-controlling interests. Tiptree’s subsidiary ownership percentage as of December 31, 2022 was Fortegra 79.5%, Tiptree Marine 95%, Reliance (Mortgage) 100%. (1) Specifically associated with acquisition purchase accounting. See Note (9) Goodwill and Intangible Assets, net. (2) Tax on adjustments represents the tax applied to the total non-GAAP adjustments and includes adjustments for non-recurring or discrete tax impacts. For the year 2022, included in the adjustment is an add-back of $31.1 million related to deferred tax expense from the WP Transaction. ($ in thousands) Insurance Mortgage Other Corporate Total Insurance Mortgage Other Corporate Total Income (loss) before taxes 68,150$ 874$ 31,403$ (46,416)$ 54,011$ 69,857$ 28,407$ 17,210$ (50,132)$ 65,342$ Less: Income tax (benefit) expense (21,251) (363) (5,545) (23,291) (50,450) (18,438) (4,882) (1,992) 4,021 (21,291) Less: Net realized and unrealized gains (losses) 20,347 (7,003) (18,788) - (5,444) (3,732) (5,798) (3,091) - (12,621) Plus: Intangibles amortization (1) 16,229 - - - 16,229 15,329 - - - 15,329 Plus: Stock-based compensation expense 2,423 - - 7,093 9,516 2,006 331 213 8,581 11,131 Plus: Non-recurring expenses 3,374 - (729) 2,108 4,753 2,158 - 938 2,171 5,267 Plus: Non-cash fair value adjustments (939) - 3,555 - 2,616 - - (3,170) - (3,170) Less: Tax on adjustments (2) (4,501) 1,834 3,731 31,106 32,170 (398) (624) 655 4,249 3,882 Adjusted net income 83,832$ (4,658)$ 13,627$ (29,400)$ 63,401$ 66,782$ 17,434$ 10,763$ (31,110)$ 63,869$ Adjusted net income 83,832$ (4,658)$ 13,627$ (29,400)$ 63,401$ 66,782$ 17,434$ 10,763$ (31,110)$ 63,869$ Average stockholders’ equity 321,320$ 57,575$ 98,373$ (10,390)$ 466,878$ 300,820$ 60,433$ 113,717$ (88,111)$ 386,859$ Adjusted return on average equity 26.1% (8.1)% 13.9% NM% 13.6% 22.2% 28.8% 9.5% NM% 16.5% Insurance Mortgage Other Corporate Total Insurance Mortgage Other Corporate Total Income (loss) before taxes 26,948$ 31,102$ (61,242)$ (35,660)$ (38,852)$ 37,030$ 2,959$ 23,391$ (34,241)$ 29,139$ Less: Income tax (benefit) expense (3,725) (7,066) 13,624 10,794 13,627 (8,455) (640) (4,457) 4,535 (9,017) Less: Net realized and unrealized gains (losses) 13,804 4,018 67,668 - 85,490 (6,896) 2,056 (6,148) - (10,988) Plus: Intangibles amortization (1) 9,213 - - - 9,213 7,510 - - - 7,510 Plus: Stock-based compensation expense 2,287 2,482 174 3,172 8,115 2,891 170 - 3,299 6,360 Plus: Non-recurring expenses 3,418 - 624 758 4,800 1,975 - 202 2,079 4,256 Plus: Non-cash fair value adjustments - - (2,141) - (2,141) - - (153) - (153) Less: Tax on adjustments (2) (8,522) (1,958) (14,210) (4,131) (28,821) (1,249) (616) 1,248 1,108 491 Adjusted net income 43,423$ 28,578$ 4,497$ (25,067)$ 51,431$ 32,806$ 3,929$ 14,083$ (23,220)$ 27,598$ Adjusted net income 43,423$ 28,578$ 4,497$ (25,067)$ 51,431$ 32,806$ 3,929$ 14,083$ (23,220)$ 27,598$ Average stockholders’ equity 285,760$ 47,202$ 138,606$ (79,092)$ 392,476$ 266,397$ 32,785$ 161,133$ (54,978)$ 405,337$ Adjusted return on average equity 15.2% 60.5% 3.2% NM% 13.1% 12.3% 12.0% 8.7% NM% 6.8% Year Ended December 31, 2021 Tiptree Capital Year Ended December 31, 2022 Tiptree Capital Year Ended December 31, 2020 Year Ended December 31, 2019 Tiptree Capital Tiptree Capital
18 Non-GAAP Reconciliations – Q4 Adjusted Net Income ($ in thousands) Insurance Mortgage Other Corporate Total Insurance Mortgage Other Corporate Total Income (loss) before taxes 29,093$ (2,476)$ 10,935$ (12,521)$ 25,031$ 20,288$ 3,288$ 4,296$ (16,981)$ 10,891$ Less: Income tax (benefit) expense (10,152) 511 (2,076) (7,196) (18,913) (7,281) (434) (642) (1,518) (9,875) Less: Net realized and unrealized gains (losses) (2,804) 973 (10,495) - (12,326) 1,272 (723) 421 - 970 Plus: Intangibles amortization (1) 4,083 - - - 4,083 3,830 - - - 3,830 Plus: Stock-based compensation expense 47 - (98) 1,656 1,605 659 - 4 6,750 7,413 Plus: Non-recurring expenses 1,813 - 140 - 1,953 82 - 209 - 291 Plus: Non-cash fair value adjustments (939) - 1 - (938) - - (1,003) - (1,003) Less: Tax on adjustments (2) 2,798 (150) 1,948 9,477 14,073 1,532 (182) (675) 3,667 4,342 Adjusted net income 23,939$ (1,142)$ 355$ (8,584)$ 14,568$ 20,382$ 1,949$ 2,610$ (8,082)$ 16,859$ Average stockholders’ equity 326,431$ 55,726$ 70,628$ 73,789$ 526,574$ 299,236$ 62,065$ 119,016$ (79,155)$ 401,162$ Adjusted return on average equity 29.3% (8.2)% 2.0% NM% 11.1% 27.2% 12.6% 8.8% NM% 16.8% Insurance Mortgage Other Corporate Total Income (loss) before taxes 26,530$ 9,627$ (1,833)$ (9,756)$ 24,568$ Less: Income tax (benefit) expense (6,436) (3,005) (1,118) 2,156 (8,403) Less: Net realized and unrealized gains (losses) (13,505) 1,265 1,686 - (10,554) Plus: Intangibles amortization (1) 2,255 - - - 2,255 Plus: Stock-based compensation expense 909 1,069 19 (39) 1,958 Plus: Non-recurring expenses 1,232 - 284 405 1,921 Plus: Non-cash fair value adjustments - - 820 - 820 Less: Tax on adjustments (2) 2,603 134 1,073 (184) 3,626 Adjusted net income 13,588$ 9,090$ 931$ (7,418)$ 16,191$ Adjusted net income 13,588$ 9,090$ 931$ (7,418)$ 16,191$ Average stockholders’ equity 291,845$ 55,254$ 111,248$ (90,732)$ 367,615$ Adjusted return on average equity 18.6% 65.8% 3.3% NM% 17.6% Three Months Ended December 31, 2021 Tiptree Capital Tiptree Capital Three Months Ended December 31, 2020 Tiptree Capital Three Months Ended December 31, 2022 The footnotes below correspond to the tables above, under “—Adjusted Net Income - Non-GAAP and “—Adjusted Return on Average Equity - Non- GAAP”. Adjusted net income is presented before the impacts of non-controlling interests. Tiptree’s subsidiary ownership percentage as of December 31, 2022 was Fortegra 79.5%, Tiptree Marine 95%, Reliance (Mortgage) 100%. (1) Specifically associated with acquisition purchase accounting. See Note (9) Goodwill and Intangible Assets, net. (2) Tax on adjustments represents the tax applied to the total non-GAAP adjustments and includes adjustments for non-recurring or discrete tax impacts. For the quarter 2022, included in the adjustment is an add-back of $9.0 million related to deferred tax expense from the WP Transaction.
TiptreeInc. ir@tiptreeinc.com