EX-99.1 2 ex991er-12312023.htm EX-99.1 Document

Exhibit 99.1

tiptree_logoxupdated.jpg
TIPTREE ANNOUNCES FOURTH QUARTER 2023 RESULTS
Greenwich, Connecticut - February 28, 2024 - Tiptree Inc. (NASDAQ:TIPT) (“Tiptree” or the “Company”), today announced its financial results for the fourth quarter 2023.

“We are extremely pleased with our performance in the fourth quarter and full-year 2023. Our operating businesses demonstrated strong performance, resulting in an increase of revenues to $1.6 billion for the year, accompanied by an adjusted return on equity of 15.2%. Notably, Fortegra, our specialty insurance business, achieved record results, with premium and premium equivalent growth of 21%, and an adjusted return on equity of 29%. We firmly believe Fortegra is strategically positioned to maintain a trajectory of consistent top-line growth and sustained underwriting profitability over the long-term. Looking ahead, we see significant opportunities to expand our businesses and remain confident in the long-term outlook for the company”, said Tiptree’s Executive Chairman, Michael Barnes.

Financial results for the quarter and year ended December 31, 2023 and 2022 are as follows:
Three Months Ended December 31, Year Ended December 31,
($ in thousands, except per share information)2023202220232022
Total revenues$446,374 $369,528 $1,649,031 $1,397,752 
Net income (loss) attributable to common stockholders$6,871 $871 $13,951 $(8,274)
Diluted earnings per share$0.15 $0.02 $0.33 $(0.23)
Cash dividends paid per common share$0.05 $0.04 $0.20 $0.16 
Return on average equity6.8 %0.9 %3.4 %(2.1)%
Non-GAAP: (1)
Adjusted net income
$13,854 $9,684 $61,917 $53,034 
Adjusted return on average equity13.6 %9.9 %15.2 %13.6 %
(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.

Fourth Quarter 2023 Summary

•Revenues of $446.4 million for the quarter, an increase of 20.8% from Q4'22, driven by growth in Fortegra’s specialty insurance lines. Excluding investment gains and losses, revenues increased 23.8%.

•Net income of $6.9 million compared to $0.9 million in Q4'22, driven by growth in our insurance business, partially offset by lower shipping income as a result of the sale of our vessels in 2022.

•Adjusted net income of $13.9 million increased by 43.1% from $9.7 million in Q4'22, driven by growth in our insurance operations. Annualized Adjusted return on average equity was 13.6% for the quarter, as compared to 9.9% in Q4'22.

•Declared a dividend of $0.06 per share (an increase of 20%) to stockholders of record on March 11, 2024 with a payment date of March 18, 2024.

Full Year 2023 Summary

•Revenues of $1.6 billion, an increase of 18.0% from 2022, driven by growth in Fortegra’s specialty insurance lines. Excluding investment gains and losses, revenues increased 19.3%.

•Net income of $14.0 million compared to net loss of $8.3 million in 2022, driven by growth in insurance operations and the decrease in tax expense related to the tax deconsolidation of Fortegra from $33.1 million in 2022 to $19.1 million in 2023, partially offset by lower mortgage and the sale of our vessels in 2022.

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•Adjusted net income of $61.9 million increased by 16.7% from $53.0 million in 2022, driven by revenue growth in our insurance operations while maintaining a consistent combined ratio. Adjusted return on average equity was 15.2% for the year, as compared to 13.6% in 2022.


Segment Financial Highlights - Fourth Quarter 2023

Insurance (The Fortegra Group):
Three Months Ended December 31, Year Ended December 31,
($ in thousands)2023202220232022
Gross written premiums and premium equivalents$724,124 $526,557 $2,747,854 $2,263,128 
Net written premiums$384,309 $245,178 $1,319,948 $1,089,390 
Revenues$433,170 $345,408 $1,593,070 $1,248,796 
Income before taxes$44,232 $29,093 $129,816 $68,150 
Return on average equity36.9 %23.2 %25.7 %14.6 %
Combined ratio89.8 %89.8 %90.3 %90.4 %
Non-GAAP: (1)
Adjusted net income$32,604 $23,939 $115,705 $83,832 
Adjusted return on average equity30.9 %29.3 %29.2 %26.1 %
(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 grew 37.5% for the quarter and 21.4% for the year, driven by growth in specialty E&S and admitted insurance lines in the U.S. and Europe, along with benefits from a book-roll transaction with one of Fortegra’s MGA partners.

•Net written premiums were $384.3 million for the quarter, an increase of 56.7%, and $1,319.9 million for the year, an increase of 21.2%. The increases in both periods were consistent with the growth in gross written premiums and premium equivalents and increased retention on Fortegra’s whole account quota share reinsurance agreement from 30% to 40%, effective April 1, 2023.

•Record revenues increased 25.4% for the quarter and 27.6% for the year driven by premium growth in specialty E&S and admitted lines, and services businesses in the U.S. and Europe, along with growth in net investment income. Excluding the impact of investment gains and losses, revenues increased by 24.6% for the quarter and 25.9% for the year.

•The combined ratio for the quarter was 89.8%, in-line with the prior year’s period. Total year 2023 combined ratio was 90.3%, as compared to 90.4% in 2022, reflecting the consistent underwriting performance and scalability of the Company’s operating platform.

•Record income before taxes for the quarter of $44.2 million, up $15.1 million. Total year 2023 income before the taxes was $129.8 million, up $61.7 million. After-tax return on equity for the year was 25.7%, compared to 14.6% in 2022. The increases were driven by growth in underwriting and fee revenues, the consistent combined ratio and improved contributions from the investment portfolio.

•Adjusted net income for the quarter of $32.6 million, up 36.2% from Q4'22. Total year 2023 adjusted net income was $115.7 million, up 38.0% from prior year. Adjusted return on average equity for the year was 29.2%, compared to 26.1% in 2022. The increases in both periods were driven by growth in underwriting and fee income and increased net investment income.

•As of December 31, 2023, Fortegra held an outstanding balance of $130.0 million on its revolving line of credit, as compared to a balance of $46.0 million as of September 30, 2023. The increase in borrowings was primarily to fund statutory capital requirements and general corporate purposes.

•In December 2023, Fortegra entered into a commutation agreement with a partner resulting in a reduction of policy liabilities and unpaid claims of $75.6 million relating to policies written in the 2020 and 2021 treaty years.


Tiptree Capital:
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Three Months Ended December 31, Year Ended December 31,
($ in thousands)2023202220232022
Revenues$13,204 $24,120 $55,961 $148,956 
Income before taxes$(2,058)$8,459 $(6,549)$32,277 
Return on average equity(3.8)%21.8 %(3.6)%16.9 %
Non-GAAP: (1)
Adjusted net income$(407)$(787)$(159)$8,969 
Adjusted return on average equity(0.9)%(2.5)%(0.1)%5.8 %
(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 loss before taxes was $2.1 million for the quarter, compared to income of $8.5 million in Q4’22, driven by lower mortgage revenues and the sale of vessels in 2022.

•Loss before taxes was $6.5 million for the year, down from the prior year driven by the sale of five vessels in 2022, losses on Invesque and lower mortgage revenues, partially offset by improved performance in the Company’s other investment holdings.

•Total Tiptree Capital book value was $178.1 million as of Q4’23.

Corporate:

Corporate includes expenses of the holding company for employee compensation and benefits, audit and professional fees, and public company and other expenses. For the quarter, corporate expenses were $12.1 million compared to $12.5 million in Q4'22. For the year, the corporate expenses were $40.2 million compared to $46.4 million in the prior year. The decrease was primarily driven by lower 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, 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.

Earnings Conference Call
Tiptree will host a conference call on Thursday, February 29, 2024 at 10:30 a.m. Eastern Time to discuss its Q4 2023 financial results. A copy of our investor presentation, to be used during the conference call, as well as this press release, will be available in the Investor Relations section of the Company’s website, located at www.tiptreeinc.com.

The conference call will be available via live or archived webcast at http://www.investors.tiptreeinc.com. To listen to a live broadcast, go to the site at least 15 minutes prior to the scheduled start time in order to register, download and install any necessary audio software. To participate in the telephone conference call, please dial 1-877-407-4018 (domestic) or 1-201-689-8471 (international). Please dial in at least five minutes prior to the start time.

A replay of the call will be available from Thursday, February 29, 2024 at 01:30 p.m. Eastern Time, until midnight Eastern on Thursday, March 7, 2024. To listen to the replay, please dial 1-844-512-2921 (domestic) or 1-412-317-6671 (international), Passcode: 13743665.
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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.
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Tiptree Inc.
Condensed Consolidated Balance Sheets
($ in thousands, except share data)
As of December 31,
20232022
Assets:
Investments:
Available for sale securities, at fair value, net of allowance for credit losses$802,609 $611,980 
Loans, at fair value69,556 64,843 
Equity securities68,308 85,776 
Other investments111,088 73,025 
Total investments1,051,561 835,624 
Cash and cash equivalents 468,711 538,065 
Restricted cash23,850 12,782 
Notes and accounts receivable, net684,608 502,311 
Reinsurance recoverable
953,886 450,620 
Prepaid reinsurance premiums
900,524 725,470 
Deferred acquisition costs565,746 498,925 
Goodwill206,155 186,608 
Intangible assets, net118,757 117,015 
Other assets165,515 172,143 
Total assets$5,139,313 $4,039,563 
Liabilities and Stockholders’ Equity
Liabilities:
Debt, net$402,411 $259,366 
Unearned premiums1,695,058 1,357,436 
Policy liabilities and unpaid claims844,848 567,193 
Deferred revenue673,085 649,150 
Reinsurance payable543,602 305,097 
Other liabilities and accrued expenses403,744 367,748 
Total liabilities$4,562,748 $3,505,990 
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, 36,756,187 and 36,385,299 shares issued and outstanding, respectively37 36 
Additional paid-in capital382,239 382,645 
Accumulated other comprehensive income (loss), net of tax(26,073)(39,429)
Retained earnings60,663 54,113 
Total Tiptree Inc. stockholders’ equity416,866 397,365 
Non-controlling interests:
Fortegra preferred interests77,679 77,679 
Common interests82,020 58,529 
Total non-controlling interests159,699 136,208 
Total stockholders’ equity576,565 533,573 
Total liabilities and stockholders’ equity$5,139,313 $4,039,563 

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Tiptree Inc.
Condensed Consolidated Statements of Operations
($ in thousands, except share data)
Three Months Ended
December 31, 		Year Ended
December 31,
2023202220232022
Revenues:
Earned premiums, net$301,416 $242,531 $1,127,834 $904,765 
Service and administrative fees105,678 87,837 395,969 320,720 
Ceding commissions4,154 3,994 14,915 13,880 
Net investment income7,061 2,055 26,674 12,219 
Net realized and unrealized gains (losses)12,277 19,933 24,736 69,983 
Other revenue15,788 13,178 58,903 76,185 
Total revenues446,374 369,528 1,649,031 1,397,752 
Expenses:
Policy and contract benefits158,419 122,252 601,794 452,605 
Commission expense160,140 140,251 603,033 522,686 
Employee compensation and benefits48,231 39,730 179,075 182,657 
Interest expense7,467 5,403 27,692 30,240 
Depreciation and amortization5,991 5,259 23,466 22,973 
Other expenses36,061 31,602 130,918 132,580 
Total expenses416,309 344,497 1,565,978 1,343,741 
Income (loss) before taxes30,065 25,031 83,053 54,011 
Less: provision (benefit) for income taxes13,937 18,913 43,056 50,450 
Net income (loss)16,128 6,118 39,997 3,561 
Less: net income (loss) attributable to non-controlling interests9,257 5,247 26,046 11,835 
Net income (loss) attributable to common stockholders$6,871 $871 $13,951 $(8,274)
Net income (loss) per common share:
Basic earnings per share$0.19 $0.02 $0.38 $(0.23)
Diluted earnings per share$0.15 $0.02 $0.33 $(0.23)
Weighted average number of common shares:
Basic36,755,768 36,330,653 36,693,204 35,531,149 
Diluted37,744,257 37,161,862 37,619,095 35,531,149 
Dividends declared per common share$0.05 $0.04 $0.20 $0.16 
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Tiptree Inc.
Non-GAAP Reconciliations (Unaudited)

Non-GAAP Financial Measures — Adjusted net income and Adjusted return on average equity

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 December 31, 2023
Tiptree Capital
($ in thousands)InsuranceMortgageOtherCorporateTotal
Income (loss) before taxes$44,232 $(2,391)$333 $(12,109)$30,065 
Less: Income tax (benefit) expense(5,288)606 (266)(8,989)(13,937)
Less: Net realized and unrealized gains (losses) (1)
(6,395)2,794 (596)— (4,197)
Plus: Intangibles amortization (2)
4,252 — — — 4,252 
Plus: Stock-based compensation expense780 — — 1,219 1,999 
Plus: Non-recurring expenses (3)
348 — — — 348 
Plus: Non-cash fair value adjustments (4)
842 — — — 842 
Plus: Impact of tax deconsolidation of Fortegra(5)
— — — 8,891 8,891 
Less: Tax on adjustments (6)
(6,167)(702)(185)(671)(7,725)
Adjusted net income (before NCI)
$32,604 $307 $(714)$(11,659)$20,538 
Less: Impact of non-controlling interests
(6,684)— — — (6,684)
Adjusted net income
$25,920 $307 $(714)$(11,659)$13,854 
Adjusted net income (before NCI)$32,604 $307 $(714)$(11,659)$20,538 
Average stockholders’ equity$422,327 $53,188 $128,827 $(44,272)$560,070 
Adjusted return on average equity (7)
30.9 %2.3 %(2.2)%NM%14.7 %
Three Months Ended December 31, 2022
($ in thousands)Tiptree Capital
InsuranceMortgageOtherCorporateTotal
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) (1)
(2,804)973 (10,495)— (12,326)
Plus: Intangibles amortization (2)
4,083 — — — 4,083 
Plus: Stock-based compensation expense47 — (98)1,656 1,605 
Plus: Non-recurring expenses (3)
1,813 — 140 — 1,953 
Plus: Non-cash fair value adjustments (4)
(939)— 1 — (938)
Plus: Impact of tax deconsolidation of Fortegra (5)
— — — 9,029 9,029 
Less: Tax on adjustments (6)
2,798 (150)1,948 448 5,044 
Adjusted net income (before NCI)
$23,939 $(1,142)$355 $(8,584)$14,568 
Less: Impact of non-controlling interests
(4,884)— — — (4,884)
Adjusted net income
$19,055 $(1,142)$355 $(8,584)$9,684 
Adjusted net income (before NCI)$23,939 $(1,142)$355 $(8,584)$14,568 
Average stockholders’ equity$326,431 $55,726 $70,628 $73,789 $526,574 
Adjusted return on average equity (7)
29.3 %(8.2)%2.0 %NM%11.1 %
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Year Ended December 31, 2023
Tiptree Capital
($ in thousands)InsuranceMortgageOtherCorporateTotal
Income (loss) before taxes$129,816 $(3,285)$(3,264)$(40,214)$83,053 
Less: Income tax (benefit) expense(28,224)837 153 (15,822)(43,056)
Less: Net realized and unrealized gains (losses) (1)
4,207 1,861 5,289 — 11,357 
Plus: Intangibles amortization (2)
16,919 — — — 16,919 
Plus: Stock-based compensation expense2,018 — — 6,251 8,269 
Plus: Non-recurring expenses (3)
2,824 — — — 2,824 
Plus: Non-cash fair value adjustments (4)
(1,769)— — — (1,769)
Plus: Impact of tax deconsolidation of Fortegra (5)
— — — 19,101 19,101 
Less: Tax on adjustments (6)
(10,086)(495)(1,255)797 (11,039)
Adjusted net income (before NCI)
$115,705 $(1,082)$923 $(29,887)$85,659 
Less: Impact of non-controlling interests(23,742)— — — (23,742)
Adjusted net income
$91,963 $(1,082)$923 $(29,887)$61,917 
Adjusted net income (before NCI)$115,705 $(1,082)$923 $(29,887)$85,659 
Average stockholders’ equity$395,661 $53,520 $100,325 $5,564 $555,070 
Adjusted return on average equity (7)
29.2 %(2.0)%0.9 %NM%15.4 %
Year Ended December 31, 2022
Tiptree Capital
($ in thousands)InsuranceMortgageOtherCorporateTotal
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) (1)
20,347 (7,003)(18,788)— (5,444)
Plus: Intangibles amortization (2)
16,229 — — — 16,229 
Plus: Stock-based compensation expense2,423 — — 7,093 9,516 
Plus: Non-recurring expenses (3)
3,374 — (729)2,108 4,753 
Plus: Non-cash fair value adjustments (4)
(939)— 3,555 — 2,616 
Plus: Impact of tax deconsolidation of Fortegra (5)
1,560 — — 31,573 33,133 
Less: Tax on adjustments (6)
(6,061)1,834 3,731 (467)(963)
Adjusted net income (before NCI)
$83,832 $(4,658)$13,627 $(29,400)$63,401 
Less: Impact of non-controlling interests(10,367)— — — (10,367)
Adjusted net income$73,465 $(4,658)$13,627 $(29,400)$53,034 
Adjusted net income (before NCI)$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 (7)
26.1 %(8.1)%13.9 %NM%13.6 %
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, those relating to our held-for-sale mortgage originator (Luxury), and unrealized gains (losses) on mortgage servicing rights.
(2)
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, 2023.
(3)
For the three months and year ended December 31, 2023, included in other expenses were expenses related to banker and legal fees associated with the acquisitions of Premia and ITC.
(4)
For the three months and year ended December 31, 2023, non-cash fair-value adjustments represent a change in fair value of the Fortegra Additional Warrant liability which are added-back to adjusted net income. For the 2022 periods, maritime transportation depreciation and amortization was deducted as a reduction in the value of the vessel.
(5)
For the three months and year ended December 31, 2023, included in the adjustment is an add-back of $8.9 million and $19.1 million, respectively, related to deferred tax expense from the WP Transaction. 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.
(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 13.6% and 9.9% for the three months ended December 31, 2023 and 2022, respectively, based on $13.9 million and $9.7 million of Adjusted net income over $406.5 million and $392.3 million of average Tiptree Inc. stockholders’ equity, and 15.2% and 13.6% for the years ended December 31, 2023 and 2022, respectively, based on $61.9 million and $53.0 million of Adjusted net income over $407.1 million and $390.2 million of average Tiptree Inc. stockholders’ equity.
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