Tiptree Announces First Quarter 2025 Results

Tiptree Announces First Quarter 2025 Results April 30, 2025 Tiptree Inc. (NASDAQ:TIPT) (“Tiptree” or the “Company”), today announced its financial results for the first quarter 2025. The Company commented, “We are extremely pleased with the strong first quarter results, headlined by a 20% adjusted return on average equity. Fortegra achieved 13.5% growth in premium and premium equivalents, while delivering a combined ratio of 89.9%, despite substantial industry-wide catastrophic losses during the quarter. Our pipeline of opportunities remains robust, and the pricing environment continues to be favorable for underwriting new business. Net investment income saw a substantial increase this quarter. As our portfolio expands and investments mature, we are finding attractive opportunities to add high-quality bonds that enhance our overall book yield and future earnings profile. As always, we remain committed to growing long-term shareholder value and will continue to seek constructive ways to more fully reflect the intrinsic value of Tiptree’s businesses in our share price.” Three Months Ended March 31, ($ in thousands, except per share information) 2025 2024 Total revenues $ 497,426 $ 498,221 Net income (loss) attributable to common stockholders $ 5,635 $ 9,050 Diluted earnings per share $ 0.13 $ 0.22 Cash dividends paid per common share $ 0.06 $ 0.06 Return on average equity 4.8 % 8.6 % Non-GAAP:(1) Adjusted net income $ 23,332 $ 20,533 Adjusted return on average equity 20.0 % 19.5 % (1) See “—Non-GAAP Reconciliations” for a discussion of non-GAAP financial measures. Adjusted net income is presented after the impacts of non-controlling interests. First Quarter 2025 Summary Revenues of $497.4 million for the quarter, a decrease of 0.2% from Q1'24, driven by growth in Fortegra’s specialty insurance lines, more than offset by lower service and administrative revenues and lower net realized and unrealized gains compared to the prior year. Excluding investment gains and losses, revenues increased 1.8%.Net income of $5.6 million compared to $9.1 million in Q1'24, driven by growth in our insurance business, more than offset by lower net realized and unrealized investments gains, and incremental interest expense on borrowings at the holding company level.Adjusted net income of $23.3 million increased by 13.6% from $20.5 million in Q1'24, driven by growth in our insurance business. Annualized adjusted return on average equity was 20.0% for the quarter, as compared to 19.5% in Q1'24.Declared a dividend of $0.06 per share to stockholders of record on May 12, 2025 with a payment date of May 19, 2025. Segment Financial Highlights - First Quarter 2025 Insurance (The Fortegra Group): Three Months Ended March 31, ($ in thousands) 2025 2024 Gross written premiums and premium equivalents $ 753,175 $ 663,417 Net written premiums $ 357,689 $ 318,151 Total revenues $ 480,581 $ 478,756 Income before taxes $ 38,054 $ 36,811 Return on average equity 17.7 % 22.3 % Combined ratio 89.9 % 90.3 % Non-GAAP: (1) Adjusted net income (before NCI) $ 40,476 $ 34,133 Adjusted return on average equity 25.0 % 28.3 % (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. Gross written premiums and premium equivalents of $753.2 million for the quarter, an increase of 13.5%, driven by growth in specialty E&S insurance lines.Net written premiums were $357.7 million for the quarter, an increase of 12.4% consistent with the growth in gross written premiums and premium equivalents.Revenues increased 0.4% for the quarter driven by premium growth in specialty E&S and admitted lines. Excluding the impact of investment gains and losses, revenues increased by 1.7% for the quarter.The combined ratio for the quarter was 89.9%, an improvement of 0.4 percentage points, reflecting the consistent underwriting performance and scalability of the Company’s operations. Included in the Q1’25 combined ratio was 6.7 percentage points related to net catastrophe losses of $30.3 million primarily from the California wildfires as compared to 0.3 percentage points in Q1’24.Income before taxes was $38.1 million for the quarter, an increase of 3.4%. Annualized after-tax return on average equity for the quarter was 17.7%, compared to 22.3% in Q1’24.Adjusted net income for the quarter of $40.5 million, up 18.6% from Q1'24. Annualized adjusted return on average equity for the quarter was 25.0%, compared to 28.3% in Q1’24.Fortegra’s total stockholders’ equity was $667.9 million as of March 31, 2025, compared to $625.5 million as of December 31, 2024, with the increase driven by growth in retained earnings and a decrease in the accumulated other comprehensive loss position. Tiptree Capital: Three Months Ended March 31, ($ in thousands) 2025 2024 Total revenues $ 16,845 $ 19,465 Income before taxes $ (26 ) $ 3,746 Return on average equity (0.4 )% 7.7 % Non-GAAP: (1) Adjusted net income $ 163 $ 344 Adjusted return on average equity 0.6 % 0.9 % (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. Mortgage loss before taxes was $0.2 million for the quarter, as compared to income of $0.8 million in Q1'24, driven by lower origination volumes and unrealized losses on our mortgage servicing asset, partially offset by higher loan servicing fees. Corporate: Corporate includes expenses of the holding company for employee compensation and benefits, audit and professional fees, interest expense, and public company and other expenses. For the quarter, corporate expenses were $12.7 million compared to $10.9 million in Q1'24 driven by an increase in accrued incentive compensation expense and interest expense. As of March 31, 2025, outstanding borrowings at the holding company were $74.8 million. 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, all of which is reduced for non-controlling interests. 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. 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, Tiptree has a significant track record investing across a variety of industries and asset types, including the insurance, asset management, specialty finance, real estate and shipping sectors. With proprietary access and a flexible capital base, Tiptree seeks 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. In addition, we make certain forward-looking statements regarding the Company’s plans to take Fortegra public. Any initial public offering by Fortegra would be subject to a variety of factors, including market conditions, and may not be consummated. 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. Tiptree Inc. Condensed Consolidated Balance Sheets (Unaudited) ($ in thousands, except share data) As of March 31, 2025 December 31, 2024 Assets: Investments: Available for sale securities, at fair value, net of allowance for credit losses $ 1,156,801 $ 1,107,929 Loans, at fair value 89,691 81,330 Equity securities 135,156 108,620 Other investments 52,413 53,084 Total investments 1,434,061 1,350,963 Cash and cash equivalents 342,282 320,067 Restricted cash 85,676 96,197 Notes and accounts receivable, net 798,438 799,131 Reinsurance recoverable 1,121,010 992,883 Prepaid reinsurance premiums 969,012 1,046,253 Deferred acquisition costs 554,386 565,872 Goodwill 206,496 206,706 Intangible assets, net 100,232 102,859 Other assets 207,899 213,858 Total assets $ 5,819,492 $ 5,694,789 Liabilities and Stockholders’ Equity Liabilities: Debt, net $ 495,269 $ 427,089 Unearned premiums 1,732,009 1,766,068 Policy liabilities and unpaid claims 1,421,537 1,298,081 Deferred revenue 678,617 695,772 Reinsurance payable 361,711 443,083 Other liabilities and accrued expenses 446,887 407,925 Total liabilities $ 5,136,030 $ 5,038,018 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, 37,493,883 and 37,255,838 shares issued and outstanding, respectively 37 37 Additional paid-in capital 394,149 389,693 Accumulated other comprehensive income (loss), net of tax (19,557 ) (27,750 ) Retained earnings 99,090 95,718 Total Tiptree Inc. stockholders’ equity 473,719 457,698 Non-controlling interests: Fortegra preferred interests 77,679 77,679 Common interests 132,064 121,394 Total non-controlling interests 209,743 199,073 Total stockholders’ equity 683,462 656,771 Total liabilities and stockholders’ equity $ 5,819,492 $ 5,694,789 Tiptree Inc. Condensed Consolidated Statements of Operations (Unaudited) ($ in thousands, except share data) Three Months Ended March 31, 2025 2024 Revenues: Earned premiums, net $ 363,437 $ 347,310 Service and administrative fees 97,298 110,487 Ceding commissions 3,633 2,744 Net investment income 11,729 6,758 Net realized and unrealized gains (losses) 6,831 15,624 Other revenue 14,498 15,298 Total revenues 497,426 498,221 Expenses: Policy and contract benefits 209,313 207,664 Commission expense 151,600 156,948 Employee compensation and benefits 55,084 49,186 Interest expense 10,360 8,290 Depreciation and amortization 4,881 5,568 Other expenses 40,838 40,866 Total expenses 472,076 468,522 Income (loss) before taxes 25,350 29,699 Less: provision (benefit) for income taxes 12,382 13,818 Net income (loss) 12,968 15,881 Less: net income (loss) attributable to non-controlling interests 7,333 6,831 Net income (loss) attributable to common stockholders $ 5,635 $ 9,050 Net income (loss) per common share: Basic earnings per share $ 0.15 $ 0.24 Diluted earnings per share $ 0.13 $ 0.22 Weighted average number of common shares: Basic 37,348,219 36,769,810 Diluted 38,447,518 37,779,412 Dividends declared per common share $ 0.06 $ 0.06 Tiptree Inc. Non-GAAP Reconciliations (Unaudited) Non-GAAP Financial Measures — Adjusted net income and Adjusted return on average equity Adjusted net income is defined 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, all of which is reduced for non-controlling interests. The calculation of adjusted net income excludes net realized and unrealized gains (losses) that relate to investments or assets rather than business operations. Adjusted net income is presented before the impacts of non-controlling interests. Adjusted return on average equity represents adjusted net income expressed on an annualized basis as a percentage of average beginning and ending stockholders’ equity during the period. 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. We believe adjusted net income provides additional clarity on the results of the Company’s underlying business operations as a whole for the periods presented by excluding distortions created by the unpredictability and volatility of realized and unrealized gains (losses). We also 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. Three Months Ended March 31, 2025 Tiptree Capital ($ in thousands) Insurance Mortgage Other Corporate Total Income (loss) before taxes $ 38,054 $ (210 ) $ 184 $ (12,678 ) $ 25,350 Less: Income tax (benefit) expense (9,504 ) 71 (158 ) (2,791 ) (12,382 ) Less: Net realized and unrealized gains (losses)(1) 3,419 1,013 (740 ) — 3,692 Plus: Intangibles amortization(2) 3,334 — — — 3,334 Plus: Stock-based compensation expense 2,323 — — 2,269 4,592 Plus: Non-recurring expenses (3) 3,417 — — — 3,417 Plus: Non-cash fair value adjustments (4) 2,019 — — — 2,019 Plus: Impact of tax deconsolidation of Fortegra(5) — — — 4,723 4,723 Less: Tax on adjustments (6) (2,586 ) (264 ) 267 (371 ) (2,954 ) Adjusted net income (before NCI) $ 40,476 $ 610 $ (447 ) $ (8,848 ) $ 31,791 Less: Impact of non-controlling interests (8,459 ) — — — (8,459 ) Adjusted net income $ 32,017 $ 610 $ (447 ) $ (8,848 ) $ 23,332 Adjusted net income (before NCI) $ 40,476 $ 610 $ (447 ) $ (8,848 ) $ 31,791 Average stockholders’ equity $ 646,704 $ 55,859 $ 62,652 $ (95,098 ) $ 670,117 Adjusted return on average equity(7) 25.0 % 4.4 % (2.9 )% NM% 19.0 % Three Months Ended March 31, 2024 Tiptree Capital ($ in thousands) Insurance Mortgage Other Corporate Total Income (loss) before taxes $ 36,811 $ 753 $ 2,993 $ (10,858 ) $ 29,699 Less: Income tax (benefit) expense (9,922 ) (163 ) (692 ) (3,041 ) (13,818 ) Less: Net realized and unrealized gains (losses)(1) (2,819 ) (1,160 ) (2,141 ) — (6,120 ) Plus: Intangibles amortization(2) 3,971 — — — 3,971 Plus: Stock-based compensation expense 782 — — 3,053 3,835 Plus: Non-recurring expenses (3) 3,170 — — — 3,170 Plus: Non-cash fair value adjustments (4) 4,211 — — — 4,211 Plus: Impact of tax deconsolidation of Fortegra(5) — — — 4,465 4,465 Less: Tax on adjustments (6) (2,071 ) 261 493 (487 ) (1,804 ) Adjusted net income (before NCI) $ 34,133 $ (309 ) $ 653 $ (6,868 ) $ 27,609 Less: Impact of non-controlling interests (7,076 ) — — — (7,076 ) Adjusted net income $ 27,057 $ (309 ) $ 653 $ (6,868 ) $ 20,533 Adjusted net income (before NCI) $ 34,133 $ (309 ) $ 653 $ (6,868 ) $ 27,609 Average stockholders’ equity $ 483,158 $ 52,591 $ 97,899 $ (46,047 ) $ 587,601 Adjusted return on average equity (7) 28.3 % (2.4 )% 2.7 % NM% 18.8 % Notes (1) Net realized and unrealized gains (losses) added back in Adjusted net income excludes net realized and unrealized gains (losses) from the mortgage segment and unrealized gains (losses) on mortgage servicing rights. (2) Specifically associated with acquisition purchase accounting. See Note (7) Goodwill and Intangible Assets, net, of the Company’s Form 10-Q for the period ended March 31, 2025. (3) For the three months ended March 31, 2025 and 2024, included in other expenses were expenses related to legal, banker, and other expenses including expenses associated with preparation of the registration statement for the withdrawn Fortegra initial public offering in 2024. (4) For the three months ended March 31, 2025 and 2024, non-cash fair-value adjustments represent a change in fair value of the Fortegra Additional Warrant liability. (5) For the three months ended March 31, 2025 and 2024, included in the adjustment is an add-back of $4.7 million and $4.5 million, respectively, related to deferred tax expense from the WP Transaction. (6) Tax on adjustments represents the tax applied to the total non-GAAP adjustments and includes adjustments for non-recurring or discrete tax impacts. (7) Total Adjusted return on average equity after non-controlling interests was 20.0% and 19.5% for the three months ended March 31, 2025 and 2024, respectively, based on $23.3 million and $20.5 million of Adjusted net income over $465.7 million and $420.8 million of average Tiptree Inc. stockholders’ equity. Source: Tiptree Inc.