Tiptree Inc. (NASDAQ:TIPT) (“Tiptree” or the “Company”), today
announced its financial results for the three and six months ended
June 30, 2023.
Three Months Ended June
30,
Six Months Ended June
30,
($ in thousands, except per share
information)
2023
2022
2023
2022
Total revenues
$
404,518
$
339,843
$
786,143
$
664,746
Net income (loss) attributable to common
stockholders
$
5,989
$
(22,408
)
$
4,927
$
(23,368
)
Diluted earnings per share
$
0.16
$
(0.64
)
$
0.13
$
(0.67
)
Cash dividends paid per common share
$
0.05
$
0.04
$
0.10
$
0.08
Return on average equity
8.7
%
(19.2
)%
5.6
%
(9.8
)%
Non-GAAP: (1)
Adjusted net income
$
23,804
$
13,986
$
41,088
$
29,438
Adjusted return on average equity
17.5
%
12.3
%
15.2
%
12.7
%
Book value per share
$
10.94
$
10.75
$
10.94
$
10.75
(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.
Second Quarter 2023 Summary
- Record revenues of $404.5 million for the quarter, an increase
of 19.0% from Q2'22, driven by growth in Fortegra’s specialty
insurance lines. Excluding investment gains and losses, revenues
were up 18.1%.
- Net income of $6.0 million compared to net loss of $22.4
million in Q2'22, driven by growth in our insurance business, and
the non-repeat of a $25.5 million deferred tax charge associated
with the investment in Fortegra by Warburg Pincus in the prior year
period, partially offset by lower shipping income.
- Adjusted net income of $23.8 million increased by 70.2% from
$14.0 million in Q2'22, driven by growth in our insurance
operations. Adjusted return on average equity was 17.5% for the
quarter, as compared to 12.3% in Q2'22.
- Declared a dividend of $0.05 per share to stockholders of
record on August 21, 2023 with a payment date of August 28,
2023.
Year-to-date 2023 Summary
- Year-to-date revenues of $786.1 million, an increase of 18.3%
from 2022, driven by growth in Fortegra’s specialty insurance
lines. Excluding investment gains and losses, revenues were up
17.1%.
- Net income of $4.9 million compared to net loss of $23.4
million in 2022, driven by growth in our insurance business, and
the non-repeat of a $25.5 million deferred tax charge associated
with the investment in Fortegra by Warburg Pincus in the prior year
period, partially offset by lower shipping income.
- Adjusted net income of $41.1 million increased by 39.6% from
$29.4 million in 2022, driven by growth in our insurance operations
while maintaining a consistent combined ratio. Adjusted return on
average equity was 15.2% for the year, as compared to 12.7% in
2022.
Segment Financial Highlights - Second Quarter 2023
Insurance (The Fortegra Group):
Three Months Ended June
30,
Six Months Ended June
30,
($ in thousands)
2023
2022
2023
2022
Gross written premiums and premium
equivalents
$
855,023
$
594,696
$
1,605,352
$
1,195,551
Revenues
$
384,677
$
293,831
$
753,121
$
576,360
Income before taxes
$
30,417
$
9,071
$
49,862
$
23,753
Return on average equity
23.1
%
7.0
%
20.2
%
10.4
%
Combined ratio
90.5
%
90.9
%
91.2
%
90.7
%
Non-GAAP: (1)
Adjusted net income
$
30,119
$
18,938
$
53,058
$
40,062
Adjusted return on average equity
32.4
%
24.5
%
29.6
%
25.5
%
(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.
- Record gross written premiums and premium equivalents grew
43.8% for the quarter and 34.3% for the year, driven by specialty
insurance lines and services businesses in U.S. and Europe.
Unearned premiums and deferred revenues grew to $2.2 billion, up
$390.6 million, or 21.6%, from Q2’22.
- Record revenues increased 30.9% for the quarter and 30.7% for
the year driven by premium growth in specialty E&S and admitted
lines, and services businesses in the U.S. and Europe. Excluding
the impact of investment gains and losses, revenues increased by
28.0% for the quarter and 28.5% for the year.
- The combined ratio for the quarter was 90.5%, compared to 90.9%
in Q2'22. Year-to-date combined ratio was 91.2%, as compared to
90.7% in 2022.
- Income before taxes for the quarter was $30.4 million, up $21.3
million. Year-to-date income before the taxes was $49.9 million, up
$26.1 million. Return on equity for the year was 20.2%, compared to
10.4% in 2022. The increases were driven by growth in underwriting
and fee revenues, consistency of the combined ratio and increased
net investment income.
- Record adjusted net income for the quarter of $30.1 million, up
59.0% from Q2'22. Year-to-date adjusted net income was $53.1
million, up 32.4% from prior year. Adjusted return on average
equity for the year was 29.6%, compared to 25.5% in 2022.
Tiptree Capital:
Three Months Ended June
30,
Six Months Ended June
30,
($ in thousands)
2023
2022
2023
2022
Revenues
$
19,841
$
46,012
$
33,022
$
88,386
Income before taxes
$
2,767
$
9,065
$
1,644
$
5,680
Return on average equity
3.9
%
18.8
%
1.4
%
6.1
%
Non-GAAP:
(1)
Adjusted net income
$
10
$
3,904
$
570
$
4,877
Adjusted return on average equity
—
%
9.4
%
0.7
%
5.7
%
(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 was $2.8 million for the
quarter, compared to income of $9.1 million in Q2’22, driven by
improvement in mortgage operations, offset by declines in shipping
operations as a result of the sale of five vessels in 2022.
- Income before taxes was $1.6 million for the year, down from
the prior year driven by declines in our mortgage business and
shipping operations as a result of the sale of five vessels in
2022, partially offset by improved performance in the Company’s
other investment holdings.
- Total Tiptree Capital book value was $201.5 million as of
Q2’23.
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 $9.5 million compared to $13.3 million in
Q2'22. The decrease was driven by reduced consulting expenses and
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.
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, August 3, 2023
at 10:30 a.m. Eastern Time to discuss its Q2 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 https://investors.tiptreeinc.com/Investor-Resources. To
listen to a live broadcast, go to the site at least 15 minutes
prior to the scheduled start time in order to register, download
and install any necessary audio software. To participate in the
telephone conference call, please dial 1-877-407-4018 (domestic) or
1-201-689-8471 (international). Please dial in at least five
minutes prior to the start time.
A replay of the call will be available from Thursday, August 3,
2023 at 12:00 p.m. Eastern Time, until midnight Eastern on
Thursday, August 10, 2023. To listen to the replay, please dial
1-844-512-2921 (domestic) or 1-412-317-6671 (international),
Passcode: 13739057.
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, 2023
December 31,
2022
Assets:
Investments:
Available for sale securities, at fair
value, net of allowance for credit losses
$
795,556
$
611,980
Loans, at fair value
78,853
64,843
Equity securities
130,881
85,776
Other investments
85,939
73,025
Total investments
1,091,229
835,624
Cash and cash equivalents
372,410
538,065
Restricted cash
25,589
12,782
Notes and accounts receivable, net
687,825
502,311
Reinsurance receivables
1,444,795
1,176,090
Deferred acquisition costs
520,925
498,925
Goodwill
205,674
186,608
Intangible assets, net
128,107
117,015
Other assets
157,895
172,143
Total assets
$
4,634,449
$
4,039,563
Liabilities and Stockholders’
Equity
Liabilities:
Debt, net
$
361,211
$
259,366
Unearned premiums
1,521,320
1,357,436
Policy liabilities and unpaid claims
722,469
567,193
Deferred revenue
681,263
649,150
Reinsurance payable
443,698
305,097
Other liabilities and accrued expenses
358,420
367,748
Total liabilities
$
4,088,381
$
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, 36,742,295 and 36,385,299 shares
issued and outstanding, respectively
37
36
Additional paid-in capital
379,741
382,645
Accumulated other comprehensive income
(loss), net of tax
(33,226
)
(39,429
)
Retained earnings
55,340
54,113
Total Tiptree Inc. stockholders’
equity
401,892
397,365
Non-controlling interests:
Fortegra preferred interests
77,679
77,679
Common interests
66,497
58,529
Total non-controlling interests
144,176
136,208
Total stockholders’ equity
546,068
533,573
Total liabilities and stockholders’
equity
$
4,634,449
$
4,039,563
Tiptree Inc.
Condensed Consolidated Statements of
Operations
($ in thousands, except share data)
Three Months Ended
June 30,
2023
2022
Revenues:
Earned premiums, net
$
269,795
$
215,941
Service and administrative fees
98,113
77,625
Ceding commissions
4,676
3,326
Net investment income
9,088
3,365
Net realized and unrealized gains
(losses)
8,825
15,687
Other revenue
14,021
23,899
Total revenues
404,518
339,843
Expenses:
Policy and contract benefits
147,734
104,665
Commission expense
142,699
127,453
Employee compensation and benefits
44,383
48,262
Interest expense
7,044
9,135
Depreciation and amortization
5,875
6,009
Other expenses
33,109
39,512
Total expenses
380,844
335,036
Income (loss) before taxes
23,674
4,807
Less: provision (benefit) for income
taxes
11,824
26,555
Net income (loss)
11,850
(21,748
)
Less: net income (loss) attributable to
non-controlling interests
5,861
660
Net income (loss) attributable to
common stockholders
$
5,989
$
(22,408
)
Net income (loss) per common
share:
Basic earnings per share
$
0.16
$
(0.64
)
Diluted earnings per share
$
0.16
$
(0.64
)
Weighted average number of common
shares:
Basic
36,742,295
35,228,775
Diluted
37,585,811
35,228,775
Dividends declared per common share
$
0.05
$
0.04
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 June 30,
2023
Tiptree Capital
($ in thousands)
Insurance
Mortgage
Other
Corporate
Total
Income (loss) before taxes
$
30,417
$
1,312
$
1,455
$
(9,510
)
$
23,674
Less: Income tax (benefit) expense
(8,928
)
(306
)
(497
)
(2,093
)
(11,824
)
Less: Net realized and unrealized gains
(losses)
4,379
(1,588
)
(1,063
)
—
1,728
Plus: Intangibles amortization (1)
3,895
—
—
—
3,895
Plus: Stock-based compensation expense
488
—
—
1,504
1,992
Plus: Non-recurring expenses
238
—
—
—
238
Plus: Non-cash fair value adjustments
(46
)
—
—
—
(46
)
Less: Tax on adjustments (2)
(324
)
373
324
3,774
4,147
Adjusted net income
$
30,119
$
(209
)
$
219
$
(6,325
)
$
23,804
Adjusted net income
$
30,119
$
(209
)
$
219
$
(6,325
)
$
23,804
Average stockholders’ equity
$
371,843
$
53,297
$
150,672
$
(31,999
)
$
543,813
Adjusted return on average equity
32.4
%
(1.6
)%
0.6
%
NM%
17.5
%
Three Months Ended June 30,
2022
Tiptree Capital
($ in thousands)
Insurance
Mortgage
Other
Corporate
Total
Income (loss) before taxes
$
9,071
$
24
$
9,042
$
(13,330
)
$
4,807
Less: Income tax (benefit) expense
(3,670
)
12
(1,300
)
(21,597
)
(26,555
)
Less: Net realized and unrealized gains
(losses)
10,126
(1,580
)
(4,450
)
—
4,096
Plus: Intangibles amortization (1)
4,085
—
—
—
4,085
Plus: Stock-based compensation expense
24
—
23
10
57
Plus: Non-recurring expenses
1,449
—
(1,055
)
2,108
2,502
Plus: Non-cash fair value adjustments
—
—
2,170
—
2,170
Less: Tax on adjustments (2)
(2,147
)
361
658
23,952
22,824
Adjusted net income
$
18,938
$
(1,183
)
$
5,088
$
(8,857
)
$
13,986
Adjusted net income
$
18,938
$
(1,183
)
$
5,088
$
(8,857
)
$
13,986
Average stockholders’ equity
$
309,774
$
57,537
$
108,019
$
(21,082
)
$
454,248
Adjusted return on average equity
24.5
%
(8.2
)%
18.8
%
NM%
12.3
%
Six Months Ended June 30,
2023
Tiptree Capital
($ in thousands)
Insurance
Mortgage
Other
Corporate
Total
Income (loss) before taxes
$
49,862
$
(1,253
)
$
2,897
$
(19,659
)
$
31,847
Less: Income tax (benefit) expense
(13,675
)
307
(760
)
(2,718
)
(16,846
)
Less: Net realized and unrealized gains
(losses)
8,986
(145
)
(740
)
—
8,101
Plus: Intangibles amortization (1)
7,789
—
—
—
7,789
Plus: Stock-based compensation expense
521
—
—
3,786
4,307
Plus: Non-recurring expenses
2,363
—
—
—
2,363
Plus: Non-cash fair value adjustments
(164
)
—
—
—
(164
)
Less: Tax on adjustments (2)
(2,624
)
29
235
6,051
3,691
Adjusted net income
$
53,058
$
(1,062
)
$
1,632
$
(12,540
)
$
41,088
Adjusted net income
$
53,058
$
(1,062
)
$
1,632
$
(12,540
)
41,088
Average stockholders’ equity
$
358,600
$
54,272
$
111,285
$
15,665
539,822
Adjusted return on average equity
29.6
%
(3.9
)%
2.9
%
NM%
15.2
%
Six Months Ended June 30,
2022
Tiptree Capital
($ in thousands)
Insurance
Mortgage
Other
Corporate
Total
Income (loss) before taxes
$
23,753
$
4,290
$
1,391
$
(25,579
)
$
3,855
Less: Income tax (benefit) expense
(7,334
)
(966
)
494
(18,663
)
(26,469
)
Less: Net realized and unrealized gains
(losses)
16,769
(7,894
)
4,401
—
13,276
Plus: Intangibles amortization (1)
8,031
—
8,031
Plus: Stock-based compensation expense
2,343
23
3,849
6,215
Plus: Non-recurring expenses
1,472
(922
)
2,108
2,658
Plus: Non-cash fair value adjustments
3,684
3,684
Less: Tax on adjustments (2)
(4,972
)
1,831
(1,455
)
22,784
18,188
Adjusted net income
$
40,062
$
(2,739
)
$
7,616
$
(15,501
)
$
29,438
Adjusted net income
$
40,062
$
(2,739
)
$
7,616
$
(15,501
)
$
29,438
Average stockholders’ equity
$
314,592
$
58,981
$
112,190
$
(23,001
)
$
462,762
Adjusted return on average equity
25.5
%
(9.3
)%
13.6
%
NM%
12.7
%
Notes
(1)
Specifically associated with acquisition
purchase accounting. See Note (8) Goodwill and Intangible Assets,
net, of the Company’s Form 10-Q for the period ended June 30,
2023.
(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 and six
months ended June 30, 2023, included in the adjustment is an
add-back of $3.5 million and $5.8 million, respectively, related to
deferred tax expense from the WP Transaction. For the three and six
months ended June 30, 2022, included in the adjustment is an
add-back of $25.5 million related to deferred tax expense from the
WP Transaction.
Non-GAAP Financial Measures — Book
value per share
Management believes the use of this financial measure provides
supplemental information useful to investors as book value is
frequently used by the financial community to analyze company
growth on a relative per share basis. The following table provides
a reconciliation between total stockholders’ equity and total
shares outstanding, net of treasury shares.
($ in thousands, except per share
information)
As of June 30,
2023
2022
Total stockholders’ equity
$
546,068
$
525,340
Less: Non-controlling interests
144,176
134,935
Total stockholders’ equity, net of
non-controlling interests
$
401,892
$
390,405
Total common shares outstanding
36,742
36,305
Book value per share
$
10.94
$
10.75
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230801970668/en/
Tiptree Inc. Investor Relations, 212-446-1400
ir@tiptreeinc.com
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