U.S. Markets closed
  • S&P 500

    3,693.23
    -64.76 (-1.72%)
     
  • Dow 30

    29,590.41
    -486.27 (-1.62%)
     
  • Nasdaq

    10,867.93
    -198.88 (-1.80%)
     
  • Russell 2000

    1,679.59
    -42.72 (-2.48%)
     
  • Crude Oil

    79.43
    -4.06 (-4.86%)
     
  • Gold

    1,651.70
    -29.40 (-1.75%)
     
  • Silver

    18.83
    -0.78 (-3.99%)
     
  • EUR/USD

    0.9693
    -0.0145 (-1.4733%)
     
  • 10-Yr Bond

    3.6970
    -0.0110 (-0.30%)
     
  • Vix

    29.92
    +2.57 (+9.40%)
     
  • GBP/USD

    1.0857
    -0.0398 (-3.5360%)
     
  • USD/JPY

    143.3300
    +0.9950 (+0.6991%)
     
  • BTC-USD

    19,075.36
    +49.67 (+0.26%)
     
  • CMC Crypto 200

    434.61
    -9.92 (-2.23%)
     
  • FTSE 100

    7,018.60
    -140.92 (-1.97%)
     
  • Nikkei 225

    27,153.83
    -159.30 (-0.58%)
     

Tiptree Reports Second Quarter 2022 Results

·14 min read

NEW YORK, August 08, 2022--(BUSINESS WIRE)--Tiptree Inc. (NASDAQ:TIPT) ("Tiptree" or the "Company"), today announced its financial results for the three and six months ended June 30, 2022.

Second Quarter 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.

  • Tiptree recognized a $63.2 million pre-tax gain in stockholders’ equity from the investment in Fortegra, which was partially offset by $39.6 million of tax expense associated with the tax deconsolidation of Fortegra. Of the total deferred tax liability, $25.5 million impacted net income with the remainder impacting stockholders’ equity directly.

  • In the second quarter, we sold one dry bulk vessel for $21.5 million and signed definitive agreements to sell the remaining two dry bulk vessels for an aggregate of $46.2 million, representing an approximate 45% gain as compared to Q2’22 book value. The two dry bulk vessels under contract to sell are expected to close in Q3’22.

  • Revenues for the quarter of $339.8 million, an increase of 13.4% from Q2'21 driven by growth in Fortegra’s specialty insurance lines and increased vessel revenues, partially offset by investment losses in 2022 compared to gains in 2021. Excluding investment gains and losses, revenues were up 16.1%.

  • Net loss of $22.4 million compared to net income of $8.0 million in Q2'21, driven by the deferred tax liability associated with the Warburg Pincus investment and unrealized losses on investments as compared to gains in the prior year period, partially offset by growth in insurance and shipping operations.

  • Adjusted net income of $14.0 million increased by 6.6% from $13.1 million in Q2'21, driven by growth in specialty insurance and shipping operations. Adjusted return on average equity was 12.3% for the quarter.

  • The Company repurchased 89,543 shares in the quarter at an average price of $10.45 per share.

  • Declared a dividend of $0.04 per share to stockholders of record on August 22, 2022 with a payment date of August 29, 2022.

Three Months Ended June 30,

Six Months Ended June 30,

($ in thousands, except per share information)

2022

2021

2022

2021

Total revenues

$

339,843

$

299,687

$

664,746

$

594,375

Net income (loss) attributable to common stockholders

$

(22,408

)

$

7,969

$

(23,368

)

$

36,550

Diluted earnings per share

$

(0.64

)

$

0.22

$

(0.67

)

$

1.05

Cash dividends paid per common share

$

0.04

$

0.04

$

0.08

$

0.08

Return on average equity

(19.2

) %

9.0

%

(9.8

) %

20.4

%

Non-GAAP: (1)

Adjusted net income

$

13,986

$

13,125

$

29,438

$

26,280

Adjusted return on average equity

12.3

%

13.1

%

12.7

%

13.5

%

Book value per share

$

10.75

$

11.59

$

10.75

$

11.59

(1)

See "—Non-GAAP Reconciliations" for a discussion of non-GAAP financial measures.

Year-to-date 2022 Summary

  • Year-to-date revenues of $664.7 million, an increase of 11.8% from 2021 driven by similar factors impacting the quarter. Excluding investment gains and losses, revenues were up 20.2%.

  • Net loss of $23.4 million compared to net income of $36.6 million in 2021, driven by the deferred tax liability associated with the tax deconsolidation of Fortegra and unrealized losses on investments as compared to gains in the prior year period, partially offset by growth in insurance and shipping operations.

  • Adjusted net income of $29.4 million increased by 12.0% from prior year, driven by growth in specialty insurance and shipping operations. Adjusted return on average equity was 12.7%.

Segment Financial Highlights - Second Quarter 2022

Insurance (The Fortegra Group):

Three Months Ended June 30,

Six Months Ended June 30,

($ in thousands)

2022

2021

2022

2021

Gross written premiums and premium equivalents

$

594,696

$

552,780

$

1,195,551

$

1,030,013

Revenues

$

293,831

$

252,255

$

576,360

$

474,818

Income before taxes

$

9,071

$

14,704

$

23,753

$

36,232

Return on average equity

7.0

%

16.2

%

10.4

%

19.4

%

Combined ratio

90.9

%

92.1

%

90.7

%

91.8

%

Non-GAAP: (1)

Adjusted net income

$

18,938

$

14,091

$

40,062

$

26,867

Adjusted return on average equity

24.5

%

20.1

%

25.5

%

18.3

%

(1)

See "—Non-GAAP Reconciliations" for a discussion of non-GAAP financial measures.

  • Fortegra’s gross written premiums and premium equivalents increased 7.6% for the quarter and 16.1% for the year driven by growth in U.S. specialty insurance lines and service contract businesses in U.S. and Europe. As a function of Fortegra’s premium growth, the combination of unearned premiums and deferred revenues on the balance sheet grew to $1.8 billion, up $0.4 billion, or 25.7%, from June 30, 2021.

  • Revenues increased 16.5% for the quarter and 21.4% for the year driven by premium growth in specialty admitted and E&S lines, partially offset by unrealized investment losses. Excluding the impact of investment gains and losses, revenues increased by 21.9% for the quarter and 28.3% for the year.

  • The combined ratio for the quarter was 90.9%, compared to 92.1% in Q2'21. Year-to-date combined ratio was 90.7%, an improvement of 110 basis points from 2021. Operating efficiencies contributed to an improved expense ratio, while the underwriting ratio increased modestly due to changes in business mix.

  • Income before taxes for the quarter was $9.1 million. Year-to-date income before taxes of $23.8 million compared to $36.2 million in the prior year. Return on equity for the year was 10.4%, as compared to 19.4% in 2021.

  • Adjusted net income for the quarter was $18.9 million, up 34.4% from Q2'21. Year-to-date adjusted net income was $40.1 million, up 49.1% from prior year driven by revenue growth and the improved combined ratio. The adjusted return on average equity was 25.5%, as compared to 18.3% in 2021.

  • On April 1, 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.

Tiptree Capital:

Three Months Ended June 30,

Six Months Ended June 30,

($ in thousands)

2022

2021

2022

2021

Revenues

$

46,012

$

47,432

$

88,386

$

119,557

Income before taxes

$

9,065

$

8,395

$

5,680

$

36,466

Return on average equity

18.8

%

15.5

%

6.1

%

32.2

%

Non-GAAP: (1)

Adjusted net income

$

3,904

$

6,123

$

4,877

$

14,155

Adjusted return on average equity

9.4

%

13.6

%

5.7

%

15.7

%

(1)

See "—Non-GAAP Reconciliations" for a discussion of non-GAAP financial measures.

  • Tiptree Capital income before taxes for the quarter was $9.1 million compared to $8.4 million in the prior year driven by improved dry bulk and tanker charter rates and the gain on sale of one of our dry bulk vessels.

  • Income before taxes for the year was $5.7 million, down substantially from the prior year as declines in origination volumes and gain on sale margins in our mortgage business and unrealized losses on Invesque more than offset the improvements in our shipping business.

  • In May 2022, $13.1 million of asset-based debt associated with tanker investments was prepaid at a discount of 10% to the outstanding principal balance.

Corporate:

Corporate includes expenses of the holding company for interest expense, employee compensation and benefits, and public company and other expenses. For the quarter, corporate expenses were $13.3 million compared to $11.6 million in Q2'21 and for the year were $25.6 million compared to $21.8 million. The increase in both periods was primarily the result of increased stock-based compensation expense.

Non-GAAP

Management uses Adjusted net income and Adjusted return on average equity as measurements of operating performance. Management believes these measures provide supplemental information useful to investors as they are frequently used by the financial community to analyze financial performance and comparison among companies. Management uses Adjusted net income and adjusted return on average equity as part of its capital allocation process and to assess comparative returns on invested capital. Adjusted net income represents income before taxes, less provision (benefit) for income taxes, and excluding the after-tax impact of various expenses that we consider to be unique and non-recurring in nature, stock-based compensation, net realized and unrealized gains (losses), and intangibles amortization associated with purchase accounting. Adjusted net income and Adjusted return on average equity are not measurements of financial performance or liquidity under GAAP and should not be considered as an alternative or substitute for GAAP net income. See "Non-GAAP Reconciliations" for a reconciliation of these measures to their GAAP equivalents.

Earnings Conference Call

Tiptree will host a conference call on Tuesday, August 9, 2022 at 9:00 a.m. Eastern Time to discuss its Q2 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.

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 1-866-652-5200 (domestic) or 1-412-317-6060 (international). Please dial in at least five minutes prior to the start time.

A replay of the call will be available from Tuesday, August 9, 2022 at 12:00 p.m. Eastern Time, until midnight Eastern on Tuesday, August 16, 2022. To listen to the replay, please dial 1-844-512-2921 (domestic) or 1-412-317-6671 (international), Passcode: 10168261.

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.

Tiptree Inc.

Condensed Consolidated Balance Sheets

($ in thousands, except share data)

As of

June 30,
2022

December 31,
2021

Assets:

Investments:

Available for sale securities, at fair value, net of allowance for credit losses

$

606,462

$

577,448

Loans, at fair value

91,387

105,583

Equity securities

96,876

138,483

Other investments

81,690

168,656

Total investments

876,415

990,170

Cash and cash equivalents

337,916

175,718

Restricted cash

13,397

19,368

Notes and accounts receivable, net

471,462

454,369

Reinsurance receivables

1,029,924

880,836

Deferred acquisition costs

433,614

379,373

Goodwill

186,567

179,103

Intangible assets, net

125,265

122,758

Other assets

151,867

146,844

Assets held for sale

106,282

250,608

Total assets

$

3,732,709

$

3,599,147

Liabilities and Stockholders’ Equity

Liabilities:

Debt, net

$

261,781

$

393,349

Unearned premiums

1,219,115

1,123,952

Policy liabilities and unpaid claims

441,078

331,703

Deferred revenue

593,235

534,863

Reinsurance payable

292,355

265,569

Other liabilities and accrued expenses

330,659

306,536

Liabilities held for sale

69,146

242,994

Total liabilities

$

3,207,369

$

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, 36,305,016 and 34,124,153 shares issued and outstanding, respectively

36

34

Additional paid-in capital

379,371

317,459

Accumulated other comprehensive income (loss), net of tax

(30,966

)

(2,685

)

Retained earnings

41,964

68,146

Total Tiptree Inc. stockholders’ equity

390,405

382,954

Non-controlling interests:

Fortegra preferred interests

77,679

Common interests

57,256

17,227

Total non-controlling interests

134,935

17,227

Total stockholders’ equity

525,340

400,181

Total liabilities and stockholders’ equity

$

3,732,709

$

3,599,147

Tiptree Inc.

Condensed Consolidated Statements of Operations

($ in thousands, except share data)

Three Months Ended
June 30,

Six Months Ended
June 30,

2022

2021

2022

2021

Revenues:

Earned premiums, net

$

215,941

$

176,958

$

424,357

$

323,877

Service and administrative fees

77,625

63,700

149,460

121,750

Ceding commissions

3,326

3,080

5,863

6,105

Net investment income

3,365

3,234

6,532

6,001

Net realized and unrealized gains (losses)

15,687

36,092

32,891

105,463

Other revenue

23,899

16,623

45,643

31,179

Total revenues

339,843

299,687

664,746

594,375

Expenses:

Policy and contract benefits

104,665

89,193

209,111

156,367

Commission expense

127,453

99,543

244,876

188,188

Employee compensation and benefits

48,262

45,693

104,717

98,617

Interest expense

9,135

8,981

19,334

18,233

Depreciation and amortization

6,009

6,208

12,165

12,142

Other expenses

39,512

38,594

70,688

69,961

Total expenses

335,036

288,212

660,891

543,508

Income (loss) before taxes

4,807

11,475

3,855

50,867

Less: provision (benefit) for income taxes

26,555

2,427

26,469

11,179

Net income (loss)

(21,748

)

9,048

(22,614

)

39,688

Less: net income (loss) attributable to non-controlling interests

660

1,079

754

3,138

Net income (loss) attributable to common stockholders

$

(22,408

)

$

7,969

$

(23,368

)

$

36,550

Net income (loss) per common share:

Basic earnings per share

$

(0.64

)

$

0.24

$

(0.67

)

$

1.10

Diluted earnings per share

$

(0.64

)

$

0.22

$

(0.67

)

$

1.05

Weighted average number of common shares:

Basic

35,228,775

32,898,769

34,731,655

32,661,195

Diluted

35,228,775