- Revenues of $294.7 million, up 127.3% from Q1’20,
driven by growth in insurance and mortgage operations and net
realized and unrealized gains in Q1’21 compared to losses in Q1’20.
Excluding realized and unrealized gains and losses, revenues
increased 25.6% versus prior year.
- Net income of $28.6 million for the first quarter
2021.
- Adjusted net income of $13.2 million, up 90.5% from Q1’20,
driven by improvement in insurance and mortgage operations.
Annualized Adjusted ROAE of 13.7%, compared to 7.3% in the prior
year period.
- Book value per share of $11.63 as of March 31, 2021, when
combined with dividends paid of $0.16 per share, increased 21.2%
from the prior year, driven by a combination of net income and 2.3
million of share repurchases over the past four quarters at an
average 49% discount to book value per share.
- Declared a dividend of $0.04 per share to stockholders of
record on May 24, 2021 with a payment date of June 1,
2021.
Tiptree Inc. (NASDAQ:TIPT) (“Tiptree” or the “Company”), a
holding company that combines specialty insurance operations with
investment management, today announced its financial results for
the three months ended March 31, 2021.
($ in thousands, except per share
information)
Three Months Ended March
31,
GAAP:
2021
2020
Total revenues
$
294,688
$
129,671
Net income (loss) attributable to common
stockholders
$
28,581
$
(60,007
)
Diluted earnings per share
$
0.81
$
(1.74
)
Cash dividends paid per common share
$
0.04
$
0.04
Return on average equity
31.8
%
(64.1
)%
Non-GAAP: (1)
Adjusted net income
$
13,155
$
6,907
Adjusted return on average equity
13.7
%
7.3
%
Book value per share
$
11.63
$
9.73
(1) For information relating to Adjusted net income, Adjusted
return on average equity and book value per share, including a
reconciliation to GAAP financials, see “—Non-GAAP Reconciliations”
below.
Earnings Conference Call
Tiptree will host a conference call on Thursday, May 6, 2021 at
9:00 a.m. Eastern Time to discuss its Q1 2021 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, May 6,
2021 at 1:00 p.m. Eastern Time, until midnight Eastern on Thursday,
May 13, 2021. To listen to the replay, please dial 1-844-512-2921
(domestic) or 1-412-317-6671 (international), Passcode:
13717974.
Financial Highlights
Overall:
- Net income for Q1’21 of $28.6 million, up from a net loss of
$60.0 million in Q1’20 driven by improved performance in insurance
and mortgage operations, in addition to realized and unrealized
gains on investments in Q1’21 as compared to unrealized losses in
Q1’20.
- Adjusted net income increased 90.5% to $13.2 million, from $6.9
million in Q1’20, driven by growth and improved margins in
insurance and mortgage operations.
- Adjusted return on average equity was 13.7% in Q1’21, as
compared to 7.3% in Q1’20.
- Book value per share of $11.63 as of March 31, 2021, when
combined with dividends paid, increased 21.2% from the prior year,
driven by a combination of net income and share repurchases at
discounts to book value per share.
- In Q1’21, Tiptree purchased and retired 488,662 shares of
common stock for $2.5 million in aggregate, at an average 57%
discount to book value. Over the past four quarters, $17.8 million
of capital returned to shareholders including 2,289,817 share
repurchases at an average 49% discount to book value per
share.
Insurance (Fortegra Group):
- Gross written premiums and premium equivalents of $505.0
million, up 28.7% versus prior year driven by robust 27.9% organic
growth with all lines of business and regions contributing.
- Total revenues increased 55.3% to $222.6 million, from $143.3
million in Q1’20, driven by increases in earned premiums, net,
service and administrative fees, and net realized and unrealized
gains in Q1’21 as compared to losses in Q1’20. Excluding the impact
of realized and unrealized gains and losses, revenues increased by
20.3% over the prior year period.
- The combined ratio improved to 91.5%, as compared to 93.6% in
the prior year period driven by the shift in business mix toward
warranty and commercial programs improving the underwriting ratio
along with continued scalability of the technology and shared
service platform improving the expense ratio.
- Income before taxes of $21.5 million in Q1’21, increased $48.6
million as compared to a loss before taxes of $27.1 million in
2020. Return on average equity was 23.9% in Q1’21 as compared to
(28.3)% in Q1’20.
- Adjusted net income increased 46.3% to $12.8 million, as
compared to $8.7 million in Q1’20. Adjusted return on average
equity was 17.9%, as compared to 12.7% in Q1’20. The increase in
both metrics was driven by growth in revenues and the improved
combined ratio.
Mortgage:
- Income before taxes of $13.1 million compared to loss before
taxes of $1.1 million in prior year period. Return on average
equity of 60.9%, compared to (6.8)%.
- Adjusted net income of $7.5 million in Q1’21, an increase of
$7.3 million from Q1’20. Adjusted return on average equity of 45.6%
compared to 2.3% in Q1’20. The increase in both metrics was driven
by growth in volumes and margins resulting from reduced interest
rates and home price appreciation.
Results of Operations
Revenues
For the three months ended March 31, 2021, revenues were $294.7
million, which increased $165.0 million or 127.3% compared to the
prior year period, primarily due to net realized and unrealized
gains in the 2021 period compared to losses in the 2020 period.
Additionally, growth in Fortegra’s commercial, credit and warranty
programs resulted in increases to earned premiums, net, and service
and administrative fees, and improvements in mortgage volumes and
margins led to increased realized gains.
The combination of unearned premiums and deferred revenues of
$1,316.6 million on the balance sheet grew by $283.5 million, or
27.4%, from March 31, 2020 to March 31, 2021 as a result of
Fortegra’s growth in gross written premiums and premium
equivalents, primarily related to commercial, credit and warranty
programs.
The table below provides a breakdown between net realized and
unrealized gains and losses from Invesque and other securities,
which impacted our consolidated results on a pre-tax basis. Many of
our investments are carried at fair value and marked to market
through unrealized gains and losses. As a result, we expect our
earnings relating to these investments to be relatively volatile
between periods. Our fixed income securities are primarily marked
to market through accumulated other comprehensive income (AOCI) in
stockholders’ equity and do not impact net realized and unrealized
gains and losses until they are sold.
($ in thousands)
Three Months Ended March
31,
2021
2020
Net realized and unrealized gains
(losses)(1)
$
10,215
$
(24,791
)
Net realized and unrealized gains (losses)
- Invesque
$
16,643
$
(58,713
)
(1) Excludes Invesque and Mortgage realized and unrealized gains
and losses.
Net Income (Loss) Attributable to Common Stockholders
For the three months ended March 31, 2021, net income
attributable to common stockholders was $28.6 million, an increase
of $88.6 million from a net loss of $60.0 million for the three
months ended March 31, 2020. The increase for the three months
ended March 31, 2021 was primarily driven by the same factors that
impacted revenues in the respective periods.
Non-GAAP
Management uses Adjusted net income and book value per share 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.
Adjusted net income for the three months ended March 31, 2021
was $13.2 million, an increase of $6.2 million from the prior year
period. For March 31, 2021, adjusted return on average equity was
13.7%, as compared to 7.3% at March 31, 2020, with the increase in
both metrics driven by improved performance in our insurance and
mortgage operations.
Total stockholders’ equity was $397.4 million as of March 31,
2021 compared to $344.3 million as of March 31, 2020. In the four
quarters ended March 31, 2021, Tiptree returned $17.8 million to
shareholders through share repurchases and dividends paid. Book
value per share for the period ended March 31, 2021 was $11.63, an
increase from book value per share of $9.73 as of March 31, 2020.
The key drivers of the increase from the prior year were income per
share and the purchase of 2.3 million shares at an average 49%
discount to book value over the past four quarters. The increase
was partially offset by dividends paid of $0.16 per share.
Results by Segment
We classify our business into two reportable segments, Insurance
and Mortgage, with the remainder of our operations aggregated into
Tiptree Capital - Other. Corporate activities include holding
company interest expense, corporate employee compensation and
benefits, and other expenses, including, but not limited to, public
company expenses.
Pre-tax Income
($ in thousands)
Three Months Ended March
31,
2021
2020
Insurance
$
21,528
$
(27,117)
Mortgage
13,077
(1,090)
Tiptree Capital - other
14,994
(45,241)
Corporate
(10,207
)
(8,303)
Income (loss) before taxes
$
39,392
$
(81,751)
Adjusted net income - Non-GAAP (1)
The following tables present the components of Adjusted net
income.
($ in thousands)
Three Months Ended March
31,
2021
2020
Insurance
$
12,776
$
8,734
Mortgage
7,465
196
Tiptree Capital - other
567
3,291
Corporate
(7,653)
(5,314
)
Adjusted net income (1)
$
13,155
$
6,907
(1) For further information relating to the Company’s Adjusted
net income, including a reconciliation to GAAP income (loss) before
taxes, see “—Non-GAAP Reconciliations.”
About Tiptree
Tiptree Inc. (NASDAQ: TIPT) is a holding company that allocates
capital across a broad spectrum of businesses, assets and other
investments. Our principal operating business, Fortegra, is a
specialty insurance program underwriter and service provider, which
focuses on niche business lines and fee-oriented services. We also
allocate capital to a diverse group of businesses and investments
that we refer to as Tiptree Capital. For more information, please
visit www.tiptreeinc.com.
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
March 31, 2021
December 31, 2020
Assets:
Investments:
Available for sale securities, at fair
value, net of allowance for credit losses
$
409,947
$
377,133
Loans, at fair value
110,458
90,732
Equity securities
145,022
123,838
Other investments
218,471
219,701
Total investments
883,898
811,404
Cash and cash equivalents
123,879
136,920
Restricted cash
53,294
58,355
Notes and accounts receivable, net
348,314
370,452
Reinsurance receivables
713,730
728,009
Deferred acquisition costs
272,924
229,430
Goodwill
179,236
179,236
Intangible assets, net
134,315
138,215
Other assets
179,688
162,034
Assets held for sale
159,335
181,705
Total assets
$
3,048,613
$
2,995,760
Liabilities and Stockholders’
Equity
Liabilities:
Debt, net
$
393,959
$
366,246
Unearned premiums
892,009
860,690
Policy liabilities and unpaid claims
251,323
233,438
Deferred revenue
424,608
399,211
Reinsurance payable
201,331
224,660
Other liabilities and accrued expenses
335,523
362,865
Liabilities held for sale
152,461
175,112
Total liabilities
$
2,651,214
$
2,622,222
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, 32,538,486 and 32,682,462 shares
issued and outstanding, respectively
33
33
Additional paid-in capital
313,140
315,014
Accumulated other comprehensive income
(loss), net of tax
2,592
5,674
Retained earnings
62,678
35,423
Total Tiptree Inc. stockholders’
equity
378,443
356,144
Non-controlling interests
18,956
17,394
Total stockholders’ equity
397,399
373,538
Total liabilities and stockholders’
equity
$
3,048,613
$
2,995,760
Tiptree Inc.
Condensed Consolidated
Statements of Operations
($ in thousands, except share
data)
Three Months Ended March
31,
2021
2020
Revenues:
Earned premiums, net
$
146,919
$
121,321
Service and administrative fees
58,050
43,724
Ceding commissions
3,025
6,525
Net investment income
2,767
3,488
Net realized and unrealized gains
(losses)
69,371
(62,441
)
Other revenue
14,556
17,054
Total revenues
294,688
129,671
Expenses:
Policy and contract benefits
67,174
60,876
Commission expense
88,645
70,401
Employee compensation and benefits
52,924
38,501
Interest expense
9,252
7,551
Depreciation and amortization
5,934
3,863
Other expenses
31,367
30,230
Total expenses
255,296
211,422
Income (loss) before taxes
39,392
(81,751
)
Less: provision (benefit) for income
taxes
8,752
(21,181
)
Net income (loss)
30,640
(60,570
)
Less: net income (loss) attributable to
non-controlling interests
2,059
(563
)
Net income (loss) attributable to
common stockholders
$
28,581
$
(60,007
)
Net income (loss) per common
share:
Basic earnings per share
$
0.86
$
(1.74
)
Diluted earnings per share
$
0.81
$
(1.74
)
Weighted average number of common
shares:
Basic
32,420,982
34,566,330
Diluted
36,184,019
34,566,330
Dividends declared per common share
$
0.04
$
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.
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 March 31,
2021
Tiptree Capital
($ in thousands)
Insurance
Mortgage
Other
Corporate Expenses
Total
Income (loss) before taxes
$
21,528
$
13,077
$
14,994
$
(10,207)
$
39,392
Less: Income tax (benefit) expense
(4,429
)
(3,096
)
(2,907
)
1,680
(8,752
)
Less: Net realized and unrealized gains
(losses) (1)
(9,624
)
(3,420
)
(13,766
)
—
(26,810
)
Plus: Intangibles amortization (2)
3,834
—
—
—
3,834
Plus: Stock-based compensation expense
372
165
8
520
1,065
Plus: Non-recurring expenses
270
—
—
—
270
Plus: Non-cash fair value adjustments
—
—
(657
)
—
(657
)
Less: Tax on adjustments
825
739
2,895
354
4,813
Adjusted net income
$
12,776
$
7,465
$
567
$
(7,653)
$
13,155
Adjusted net income
$
12,776
$
7,465
$
567
$
(7,653)
$
13,155
Average stockholders’ equity
285,885
65,533
113,218
(79,166)
385,470
Adjusted return on average equity
17.9
%
45.6
%
2.0
%
NM%
13.7
%
Three Months Ended March 31,
2020
Tiptree Capital
($ in thousands)
Insurance
Mortgage
Other
Corporate Expenses
Total
Income (loss) before taxes
$
(27,117
)
$
(1,090)
$
(45,241)
$
(8,303)
$
(81,751
)
Less: Income tax (benefit) expense
7,663
515
9,672
3,331
21,181
Less: Net realized and unrealized gains
(losses)
33,601
1,348
48,555
—
83,504
Plus: Intangibles amortization (2)
2,168
—
—
—
2,168
Plus: Stock-based compensation expense
351
—
151
1,169
1,671
Plus: Non-recurring expenses
2,195
—
—
407
2,602
Plus: Non-cash fair value adjustments
—
—
351
—
351
Less: Tax on adjustments
(10,127
)
(577)
(10,197)
(1,918)
(22,819
)
Adjusted net income
$
8,734
$
196
$
3,291
$
(5,314)
$
6,907
Adjusted net income
$
8,734
$
196
$
3,291
$
(5,314)
$
6,907
Average stockholders’ equity
274,922
33,656
147,480
(78,182)
377,876
Adjusted return on average equity
12.7
%
2.3
%
8.9
%
NM%
7.3
%
(1) Results for the three months ended March 31, 2021 included
$48 of incentive fees paid with respect to specific unrealized and
realized gains that are added-back to Adjusted net income.
(2) Specifically associated with acquisition purchase
accounting.
Non-GAAP Financial Measures — Book
value per share
Management believes the use of this financial measure provides
supplemental information useful to investors as book value is
frequently used by the financial community to analyze company
growth on a relative per share basis. The following table provides
a reconciliation between total stockholders’ equity and total
shares outstanding, net of treasury shares.
($ in thousands, except per share
information)
As of March 31, 2021
2021
2020
Total stockholders’ equity
$
397,399
$
344,336
Less: Non-controlling interests
18,956
10,483
Total stockholders’ equity, net of
non-controlling interests
$
378,443
$
333,853
Total common shares outstanding
32,538
34,302
Book value per share
$
11.63
$
9.73
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210505006143/en/
Tiptree Inc. Investor Relations, 212-446-1400
ir@tiptreeinc.com
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