Toggle SGML Header (+)


Section 1: 8-K (8-K)

Document


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
  
 
FORM 8-K
 
 
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 5, 2018
 
 
 
TIPTREE INC.
(Exact Name of Registrant as Specified in Charter)
 
 
  
 
 
 
 
 
 
Maryland
 
001-33549
 
38-3754322
(State or Other Jurisdiction
of Incorporation)
 
(Commission
File Number)
 
(I.R.S. Employer
Identification No.)
 
 
 
780 Third Avenue, 21st Floor
New York, New York
 
10017
(Address of Principal Executive Offices)
 
(Zip Code)

Registrant’s telephone number, including area code: (212) 446-1400
(Former name or former address, if changed since last report)
 
  
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): 
¨

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
    
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
 





Item 2.02
Results of Operations and Financial Condition.

On November 5, 2018, Tiptree Inc. (the “Company” or “Tiptree”) issued a press release announcing its results of operations for the quarter ended September 30, 2018. A copy of the press release is furnished as Exhibit 99.1 hereto and incorporated herein by reference.

Item 7.01
Regulation FD Disclosure.

Included in the press release furnished as Exhibit 99.1 was an announcement that the board of directors of the Company has declared a cash dividend of $0.035 per share to Tiptree’s stockholders, with a record date of November 19, 2018 and a payment date of November 26, 2018.

On November 5, 2018, the Company posted an investor presentation dated November 2018 on the Investor Resources section of www.tiptreeinc.com. The investor presentation is furnished as Exhibit 99.2 to this Form 8-K and incorporated herein by reference. Tiptree’s website is not intended to function as a hyperlink, and the information contained on such website is not a part of this Form 8-K.

The information in Items 2.02 and 7.01 of this Current Report on Form 8-K, including the information contained in Exhibits 99.1 and 99.2, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities under that Section. Furthermore, the information in Items 2.02 and 7.01 of this Current Report on Form 8-K, including the information contained in Exhibits 99.1 and 99.2, shall not be deemed to be incorporated by reference into the filings of the Company under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01
Financial Statements and Exhibits.

(d) List of Exhibits:

99.1    Tiptree Inc. press release, dated November 5, 2018
99.2    Tiptree Inc. Investor Presentation - November 2018









SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
 
 
TIPTREE INC.
 
 
 
 
Date:
November 5, 2018
By:
/s/ Jonathan Ilany
 
 
 
Name: Jonathan Ilany
 
 
 
Title: Chief Executive Officer



(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit

Exhibit 99.1

395643072_tiptlogoa10.jpg
TIPTREE REPORTS THIRD QUARTER 2018 RESULTS
Revenues of $172.7 million for the quarter, up 19.1% from $144.9 million in the prior year period.

Net loss before non-controlling interests of $0.5 million for the quarter, compared to a loss of $3.4 million from the prior year period, primarily driven by increased income from specialty insurance operations, reduced corporate expenses and lower unrealized losses on fair value investments.

Operating EBITDA(1) of $14.4 million for the quarter, down 7.1% compared to $15.5 million in the prior year period.

Book value per share increased to $10.77, which including dividends paid represents a 12.7%(3) year-over-year return.

Declared a dividend of $0.035 per share to stockholders of record on November 19, 2018 with a payment date of November 26, 2018.

New York, New York - November 5, 2018 - 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 and nine months ended September 30, 2018
Summary Consolidated Statements of Operations
($ in millions, except for per share information)
Three Months Ended September 30,
 
Nine Months Ended September 30,
GAAP:
2018
 
2017
 
2018
 
2017
Total revenues
$
172.7

 
$
144.9

 
$
473.4

 
$
430.4

Net income (loss) before non-controlling interests
$
(0.5
)
 
$
(3.4
)
 
$
29.4

 
$
(7.4
)
Net income (loss) attributable to Common Stockholders
$
(0.6
)
 
$
(3.1
)
 
$
23.8

 
$
(6.5
)
Diluted earnings per share
$
(0.02
)
 
$
(0.11
)
 
$
0.69

 
$
(0.22
)
Cash dividends paid per common share
$
0.035

 
$
0.03

 
$
0.10

 
$
0.09

 
 
 
 
 
 
 
 
Non-GAAP: (1)
 
 
 
 
 
 
 
Operating EBITDA
$
14.4

 
$
15.5

 
$
38.4

 
$
42.2

Adjusted EBITDA
$
7.7

 
$
4.8

 
$
23.2

 
$
23.3

Book value per share (2)
$
10.77

 
$
9.67

 
$
10.77

 
$
9.67

_______________________________
(1)
For further information relating to the Company’s Operating EBITDA, Adjusted EBITDA and Book value per share, including a reconciliation to GAAP financials, see “—Non-GAAP Reconciliations” below.
(2)
For periods prior to April 10, 2018, book value per share assumed full exchange of the limited partners units of TFP for Common Stock.
(3)
Total return per share from September 30, 2017 defined as cumulative dividends paid of $0.13 per share plus book value per share as of September 30, 2018.

Earnings Conference Call
Tiptree will host a conference call on Tuesday, November 6, 2018 at 9:00 a.m. Eastern Time to discuss its third quarter 2018 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 Tuesday, November 6, 2018 at 1:00 p.m. Eastern Time, until midnight Eastern on Tuesday, November 13, 2018. To listen to the replay, please dial 1-844-512-2921 (domestic) or 1-412-317-6671 (international), Passcode: 13682856.


Page 1



Q3’18 Year-To-Date Financial Overview

Insurance:
Gross written premiums were $619.5 million, up 10.5%, driven by growth in credit and other specialty programs.
Net written premiums were $336.5 million, up 11.3%, driven by growth in credit and warranty products.
Stable combined ratio demonstrates continued underwriting profitability.

Tiptree Capital:
Continues to generate stable, cash earnings from Invesque dividends and asset management fees.
Consistent with our total return objectives, we invested $35 million in shipping sector at what we believe is a favorable point in the cycle.

Corporate:
On March 23, 2018, we initiated an up to $20 million share buy-back plan split evenly between open market and opportunistic large block purchases. As of September 30, 2018, we repurchased 2,110,577 shares at an average price of $6.51.
On April 10, 2018, we completed a corporate reorganization that eliminated Tiptree’s dual class stock structure.
On May 4, 2018, we extended our Fortress credit agreement to September 2020 and up-sized our borrowings under that facility to $75 million while reducing the interest rate by 100 basis points.

Consolidated Results of Operations
Revenues

For the three months ended September 30, 2018, revenues were $172.7 million, which increased $27.7 million, or 19.1%, over the prior year period. For the nine months ended September 30, 2018, revenues were $473.4 million, which increased $43.1 million, or 10.0%, over the prior year period. The increase for both periods was driven by growth in earned premiums and service and administrative fees. Earned premiums were $317.8 million for the nine months ended September 30, 2018, up from $272.8 million in the comparable 2017 period driven by growth in net written premiums. The combination of unearned premiums and deferred revenues on the balance sheet grew by $98.4 million, or 18.6%, from September 30, 2017 to September 30, 2018 as a result of an increase in credit protection and other specialty programs written premiums.

Net Income (Loss) before non-controlling interests

For the three months ended September 30, 2018, net loss before non-controlling interests was $0.5 million, compared to a loss of $3.4 million in the prior year period. The decrease in loss was driven by increased income from specialty insurance operations and reduced corporate expenses, and lower unrealized losses on fair value instruments, which was partially offset by lower distributions as we reduced our exposure to asset management related investments. The primary driver of unrealized losses in the three month period was related to the change in fair value of our Invesque common shares.

For the nine months ended September 30, 2018, net income before non-controlling interests was $29.4 million compared to a loss of $7.4 million in the 2017 period, an increase of $36.7 million. In addition to the factors that impacted the three month period, the year-to-date increase was driven by $34.5 million of income from discontinued operations, including the net gain on sale of Care. This was partially offset by unrealized losses on Invesque common shares of $10.0 million related to the change in fair value of our Invesque common shares.

The table below highlights key drivers impacting 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 in contrast to our fixed income securities, which are marked to market through accumulated other comprehensive income (“AOCI”) in stockholders equity. On February 1, 2018, we sold our senior living operations to Invesque in exchange for net 16.6 million shares of Invesque common stock which resulted in a gain on sale. During 2017, we made a strategic decision to decrease our overall exposure to CLO subordinated notes, which resulted in deconsolidation of the CLOs we manage and decreased our earnings from CLO distributions when comparing the three and nine months ended September 30, 2018 versus the prior year periods.


Page 2



($ in thousands)
Three Months Ended September 30,

Nine Months Ended September 30,

2018

2017

2018

2017
Unrealized and realized gains (losses)(1)
$
(5,101
)

$
(10,613
)

$
(16,635
)

$
(16,779
)
Discontinued operations (Care)(2)
$


$
(1,535
)

$
46,808


$
(5,359
)
Asset management - credit investments
$
204


$
2,134


$
(654
)

$
9,972

_______________________________
(1) Excludes Mortgage realized and unrealized gains and losses - Performing and NPLs. Includes $10.0 million of unrealized losses attributable to Invesque shares from the date of the sale (February 1, 2018).
(2) Includes pre-tax Gain on sale of Discontinued Operations of $46.2 million.

Non-GAAP

Management uses Operating EBITDA, Adjusted EBITDA and book value per share as measurements of operating performance which are non-GAAP measures. Management believes the use of Operating EBITDA and Adjusted EBITDA provides supplemental information useful to investors as they are frequently used by the financial community to analyze financial performance, and to analyze a company’s ability to service its debt and to facilitate comparison among companies. Management uses Operating EBITDA as part of its capital allocation process and to assess comparative returns on invested capital amongst our businesses and investments. Adjusted EBITDA is also used in determining incentive compensation for the Company’s executive officers. Operating EBITDA and Adjusted EBITDA are not measurements of financial performance or liquidity under GAAP and should not be considered as an alternative or substitute for GAAP net income. Management believes the use of book value per share provides supplemental information useful to investors as it is frequently used by the financial community to analyze company growth on a relative per share basis.

For the three months ended September 30, 2018, Operating EBITDA was $14.4 million compared to $15.5 million in the prior year period, a decrease of $1.1 million, or 7.1%. Operating EBITDA for the nine months ended September 30, 2018 was $38.4 million compared to $42.2 million for the 2017 period, a decrease of $3.8 million, or 9.0%. The key drivers of the change in Operating EBITDA were driven by increased income from specialty insurance operations and reduced corporate expenses, which were more than offset by lower distributions on asset management related investments.

Total stockholders’ equity was $396.0 million as of September 30, 2018 compared to $391.1 million as of September 30, 2017, primarily driven by net income over the last four quarters, net of share repurchases and dividends paid.

Book value per share for the period ended September 30, 2018 was $10.77, an increase from book value per share, as exchanged, of $9.67 as of September 30, 2017. The key drivers of the period-over-period impact were earnings per share over the last four quarters and the purchase of 2.1 million shares at an average 39% discount to book value. Those increases were partially offset by dividends paid of $0.13 per share and officer and director compensation share issuances. Over the past twelve months, Tiptree returned $18.7 million to shareholders through share repurchases and dividends paid.

Results by Segment

Tiptree is a holding company that combines insurance operations with investment management expertise. In addition to our specialty insurance operations, we allocate our capital across our investments in other companies and assets which we refer to as Tiptree Capital. As of September 30, 2018, Tiptree Capital consists of asset management operations, mortgage operations and other investments (including Invesque common shares). As such, we classify our business into three reportable segments– specialty insurance, asset management and mortgage. Corporate activities include holding company interest expense, employee compensation and benefits, and other expenses. The following table presents the components of total pre-tax income including continuing and discontinued operations.


Page 3



Pre-tax Income
($ in thousands)
Three Months Ended September 30,
 
Nine Months Ended September 30,

2018

2017
 
2018

2017
Specialty Insurance
$
5,732

 
$
(2,345
)
 
$
15,806


$
1,724

Tiptree Capital:
 
 
 
 



Asset management
1,220

 
2,973

 
1,498


13,083

Mortgage
423

 
1,513

 
930


514

Other
(623
)
 
880

 
(3,585
)

2,190

Corporate
(7,890
)
 
(6,916
)
 
(21,253
)

(22,273
)
Pre-tax income (loss) from continuing operations
$
(1,138
)
 
$
(3,895
)
 
$
(6,604
)

$
(4,762
)
Pre-tax income (loss) from discontinued operations (1)
$

 
$
(1,535
)
 
$
46,808


$
(5,359
)
_______________________________
(1)
Includes Care for 2017 and 2018. Includes $46.2 million pre-tax gain on sale of Care in 2018.

Invested Capital, Total Capital and Operating EBITDA - Non-GAAP (1) 
Management evaluates the return on Invested Capital and Total Capital, which are non-GAAP financial measures, when making capital investment decisions. Invested Capital represents its total equity investment, including any re-investment of earnings, and acquisition costs, net of tax. Total Capital represents Invested Capital plus Corporate Debt. Management believes the use of these financial measures provide supplemental information useful to investors as they are frequently used by the financial community to analyze how the Company has allocated capital over-time and provide a basis for determining the return on capital to shareholders. Management uses both of these measures when making capital investment decisions, including reinvesting cash, and evaluating the relative performance of its businesses and investments.

The following table presents the components of Invested Capital and Total Capital.

As of September 30,
($ in thousands)
Invested Capital

Total Capital

2018

2017

2018

2017
Specialty Insurance
$
292,860


$
265,026


$
454,860


$
410,026

Tiptree Capital
173,338


199,973


173,338


199,973

Asset management
4,070


38,474


4,070


38,474

Mortgage
31,623


28,464


31,623


28,464

Other (2)
137,645


133,035


137,645


133,035

Corporate
(33,789
)

(27,860
)

39,271


29,140

Total Tiptree
$
432,409


$
437,139


$
667,469


$
639,139


The following table presents the components of Operating EBITDA.
($ in thousands)
Three Months Ended September 30,

Nine Months Ended September 30,

2018

2017

2018

2017
Specialty Insurance
$
15,654


$
13,155


$
45,154


$
38,176

Tiptree Capital
4,393


7,330


11,397


22,422

Asset management
1,290


2,962


2,862


9,640

Mortgage
781


1,270


1,383


4,234

Other (2)
2,322


3,098


7,152


8,548

Corporate
(5,632
)

(4,957
)

(18,187
)

(18,398
)
Total Operating EBITDA
$
14,415


$
15,528


$
38,364


$
42,200

______________________________
(1)  
For further information relating to the Company’s Total Capital and Operating EBITDA, including a reconciliation to GAAP total stockholders’ equity and pre-tax income, see “—Non-GAAP Reconciliations.”
(2)
Includes discontinued operations related to Care. As of February 1, 2018, invested capital from Care discontinued operations is represented by our investment in Invesque common shares. For more information, see “Note—(3) Dispositions, Assets Held for Sale & Discontinued Operations.”
(3)
Excludes Mortgage realized and unrealized gains and losses - Performing and NPLs.


Page 4



About Tiptree
Tiptree Inc. (NASDAQ: TIPT) is a holding company that combines insurance operations with investment management expertise. The Company’s principal operating subsidiary is a leading provider of specialty insurance products and related services, including credit protection, warranty, and programs which underwrite niche personal and commercial lines of insurance. The Company also allocates capital across a broad spectrum of investments, which is referred to as Tiptree Capital. Today, Tiptree Capital consists of asset management operations, mortgage operations and other investments. 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 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.

Page 5



Tiptree Inc.
Condensed Consolidated Balance Sheet
($ in thousands, except share data)
 
As of
 
September 30, 2018
 
December 31, 2017
Assets:
 
 
 
Investments:
 
 
 
Available for sale securities, at fair value
$
255,784

 
$
182,448

Loans, at fair value
229,033

 
258,173

Equity securities, at fair value
135,223

 
25,536

Other investments
71,909

 
59,142

Total investments
691,949

 
525,299

Cash and cash equivalents
82,809

 
110,667

Restricted cash
10,704

 
31,570

Notes and accounts receivable, net
225,762

 
186,422

Reinsurance receivables
392,632

 
352,967

Deferred acquisition costs
157,052

 
147,162

Goodwill
91,562

 
91,562

Intangible assets, net
54,521

 
64,017

Other assets
38,955

 
31,584

Assets held for sale
50,663

 
448,492

Total assets
$
1,796,609

 
$
1,989,742


 
 
 
Liabilities and Stockholders’ Equity
 
 
 
Liabilities:
 
 
 
Debt, net
$
365,272

 
$
346,081

Unearned premiums
558,358

 
503,446

Policy liabilities and unpaid claims
124,102

 
112,003

Deferred revenue
69,051

 
56,745

Reinsurance payable
106,486

 
90,554

Other liabilities and accrued expenses
131,950

 
121,321

Liabilities held for sale
45,422

 
362,818

Total liabilities
$
1,400,641

 
$
1,592,968


 
 
 
Stockholders’ Equity: (1)
 
 
 
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, 35,925,530 and 35,003,004 shares issued and outstanding, respectively
36

 
35

Common stock - Class B: $0.001 par value, none and 50,000,000 shares authorized, none and 8,049,029 shares issued and outstanding, respectively

 
8

Additional paid-in capital
331,538

 
295,582

Accumulated other comprehensive income (loss), net of tax
(3,042
)
 
966

Retained earnings
58,346

 
38,079

Common Stock held by subsidiaries, 0 and 5,197,551 shares, respectively

 
(34,585
)
Class B common stock held by subsidiaries, none and 8,049,029 shares, respectively

 
(8
)
Total Tiptree Inc. stockholders’ equity
386,878

 
300,077

Non-controlling interests - TFP

 
77,494

Non-controlling interests - Other
9,090

 
19,203

Total stockholders’ equity
395,968

 
396,774

Total liabilities and stockholders’ equity
$
1,796,609

 
$
1,989,742

_______________________________
(1) For information related to changes in the Company’s equity capitalization, see “Note—(16) Stockholders’ Equity” in the Form 10-Q for the quarter ended September 30, 2018.

Page 6



Tiptree Inc.
Condensed Consolidated Statements of Operations
($ in thousands, except share data)

Three Months Ended September 30,

Nine Months Ended September 30,

2018

2017

2018

2017
Revenues:







Earned premiums, net
$
116,153


$
96,073


$
317,842


$
272,781

Service and administrative fees
26,168


24,018


75,635


70,861

Ceding commissions
2,257


2,513


6,782


6,801

Net investment income
4,810


3,840


13,942


12,032

Net realized and unrealized gains (losses)
11,001


7,526


29,079


35,183

Other revenue
12,279


10,966


30,169


32,712

Total revenues
172,668


144,936


473,449


430,370

Expenses:







Policy and contract benefits
44,491


31,570


115,291


94,364

Commission expense
69,222


63,066


194,417


176,405

Employee compensation and benefits
28,970


28,873


83,946


86,938

Interest expense
7,334


6,752


19,935


19,135

Depreciation and amortization
3,200


3,406


9,110


10,431

Other expenses
20,589


17,747


57,354


57,252

Total expenses
173,806


151,414


480,053


444,525

Other income:







Income attributable to consolidated CLOs


7,216




24,024

Expenses attributable to consolidated CLOs


4,633




14,631

Net income (loss) attributable to consolidated CLOs


2,583




9,393

Total other income


2,583




9,393

Income (loss) before taxes from continuing operations
(1,138
)

(3,895
)

(6,604
)

(4,762
)
Less: provision (benefit) for income taxes
(611
)

(1,541
)

(1,478
)

(1,278
)
Net income (loss) from continuing operations
(527
)

(2,354
)

(5,126
)

(3,484
)
Discontinued operations:







Income (loss) before taxes from discontinued operations


(1,535
)

624


(5,359
)
Gain on sale of discontinued operations, net




46,184



Less: Provision (benefit) for income taxes


(511
)

12,327


(1,483
)
Net income (loss) from discontinued operations


(1,024
)

34,481


(3,876
)
Net income (loss) before non-controlling interests
(527
)

(3,378
)

29,355


(7,360
)
Less: net income (loss) attributable to non-controlling interests - TFP


(595
)

5,500


(1,432
)
Less: net income (loss) attributable to non-controlling interests - Other
91


331


87


529

Net income (loss) attributable to Common Stockholders
$
(618
)

$
(3,114
)

$
23,768


$
(6,457
)








Net income (loss) per Common Share:







Basic, continuing operations, net
$
(0.02
)

$
(0.08
)

$
(0.12
)

$
(0.12
)
Basic, discontinued operations, net


(0.03
)

0.81


(0.10
)
Basic earnings per share
$
(0.02
)

$
(0.11
)

$
0.69


$
(0.22
)








Diluted, continuing operations, net
(0.02
)

(0.08
)

(0.12
)

(0.12
)
Diluted, discontinued operations, net


(0.03
)

0.81


(0.10
)
Diluted earnings per share
$
(0.02
)

$
(0.11
)

$
0.69


$
(0.22
)








Weighted average number of Common Shares:
 
 
 
 
 
 
 
Basic
36,402,129

 
29,455,462

 
34,309,551

 
28,908,195

Diluted
36,402,129

 
29,455,462

 
34,309,551

 
28,908,195

 
 
 
 
 
 
 
 
Dividends declared per Common Share
$
0.035


$
0.030


$
0.105


$
0.090






Page 7



Tiptree Inc.
Non-GAAP Reconciliations (Unaudited)

Non-GAAP Financial Measures — Adjusted EBITDA and Operating EBITDA

The Company defines Adjusted EBITDA as GAAP net income of the Company adjusted to add (i) corporate interest expense, consolidated income taxes and consolidated depreciation and amortization expense, (ii) adjust for the effect of purchase accounting, (iii) adjust for non-cash fair value adjustments, and (iv) any significant non-recurring expenses. Operating EBITDA represents Adjusted EBITDA plus stock based compensation expense, less realized and unrealized gains and losses and less third party non-controlling interests. Operating EBITDA and Adjusted EBITDA are not measurements of financial performance or liquidity under GAAP and should not be considered as an alternative or substitute for GAAP net income.
($ in thousands)
Three Months Ended September 30,

Nine Months Ended September 30,

2018

2017

2018

2017
Net income (loss) attributable to Common Stockholders
$
(618
)

$
(3,114
)

$
23,768


$
(6,457
)
Add: net (loss) income attributable to noncontrolling interests
91


(264
)

5,587


(903
)
Less: net income from discontinued operations


(1,024
)

34,481


(3,876
)
Income (loss) from continuing operations
$
(527
)

$
(2,354
)

$
(5,126
)

$
(3,484
)
Corporate Debt related interest expense (1)
4,959


3,021


13,349


8,934

Consolidated income tax expense (benefit)
(611
)

(1,541
)

(1,478
)

(1,278
)
Depreciation and amortization expense (2)
2,778


3,101


8,236


9,226

Non-cash fair value adjustments (3)


(309
)

66


3,378

Non-recurring expenses (4)
1,125




2,051


(1,736
)
Adjusted EBITDA from continuing operations
$
7,724


$
1,918


$
17,098


$
15,040

Add: Stock-based compensation expense
1,521


1,134


3,804


4,275

Less: Realized and unrealized gain (loss) (5)
(5,101
)

(10,613
)

(16,635
)

(16,779
)
Less: Third party non-controlling interests
(69
)

623


(203
)

1,109

Operating EBITDA from continuing operations
$
14,415


$
13,042


$
37,740


$
34,985









Income (loss) from discontinued operations
$


$
(1,024
)

$
34,481


$
(3,876
)
Consolidated income tax expense (benefit)


(511
)

12,327


(1,483
)
Consolidated depreciation and amortization expense


4,369




13,350

Non-cash fair value adjustments (3)




(40,672
)


Non-recurring expenses (4)


25




302

Adjusted EBITDA from discontinued operations
$


$
2,859


$
6,136


$
8,293

Less: Realized and unrealized gain (loss) (5)


$


$
5,512


$

Less: Third party non-controlling interests


$
372


$


$
1,078

Operating EBITDA from discontinued operations
$


$
2,487


$
624


$
7,215

Total Adjusted EBITDA
$
7,724


$
4,777


$
23,234


$
23,333

Total Operating EBITDA
$
14,415


$
15,529


$
38,364


$
42,200

_______________________________
(1)
Corporate Debt interest expense includes Secured corporate credit agreements, junior subordinated notes and preferred trust securities. Interest expense associated with asset-specific debt in specialty insurance, asset management, mortgage and other operations is not added-back for Adjusted EBITDA and Operating EBITDA.
(2)
Represents total depreciation and amortization expense less purchase accounting amortization related adjustments at the Insurance Company. Following the purchase accounting adjustments, current period expenses associated with deferred costs were more favorably stated and current period income associated with deferred revenues were less favorably stated. Thus, the purchase accounting effect related to our Insurance company increased EBITDA above what the historical basis of accounting would have generated.
(3)
For Reliance, within our mortgage operations, Adjusted EBITDA excludes the impact of changes in contingent earn-outs. For our specialty insurance operations, depreciation and amortization on senior living real estate that is within net investment income is added back to Adjusted EBITDA. For Care (Discontinued Operations), the reduction in EBITDA is related to accumulated depreciation and amortization, and certain operating expenses, which were previously included in Adjusted EBITDA in prior periods.
(4)
Acquisition, start-up and disposition costs including legal, taxes, banker fees and other costs. Includes payments pursuant to a separation agreement, dated November 10, 2015.
(5)
Adjustment excludes Mortgage realized and unrealized gains and losses - Performing and NPLs as those are recurring in nature and align with those business models.


Page 8



Non-GAAP Financial Measures — Adjusted EBITDA and Operating EBITDA

The tables below present Adjusted EBITDA and Operating EBITDA by business component.

Three Months Ended September 30, 2018



Tiptree Capital




($ in thousands)
Specialty Insurance

Asset Management

Mortgage

Other

Discontinued Operations(1)

Tiptree Capital

Corporate Expenses

Total
Pre-tax income/(loss) from continuing ops
$
5,732


$
1,220


$
423


$
(623
)

$


$
1,020


$
(7,890
)

$
(1,138
)
Pre-tax income/(loss) from discontinued ops















Adjustments:















Corporate Debt related interest expense(2)
3,396

 

 

 

 

 

 
1,563

 
4,959

Depreciation and amortization expenses(3)
2,576




133


7




140


62


2,778

Non-cash fair value adjustments(4)















Non-recurring expenses(5)
706






419




419




1,125

Adjusted EBITDA
$
12,410


$
1,220


$
556


$
(197
)

$


$
1,579


$
(6,265
)

$
7,724

Add: Stock-based compensation expense
$
663


$


$
225


$


$


$
225


$
633


$
1,521

Less: Realized and unrealized gain (loss)(6)
(2,581
)

(70
)



(2,450
)



(2,520
)



(5,101
)
Less: Third party non-controlling interests






(69
)



(69
)



(69
)
Operating EBITDA
$
15,654


$
1,290


$
781


$
2,322


$


$
4,393


$
(5,632
)

$
14,415


Nine Months Ended September 30, 2018



Tiptree Capital




($ in thousands)
Specialty Insurance

Asset Management

Mortgage

Other

Discontinued Operations(1)

Tiptree Capital

Corporate Expenses

Total
Pre-tax income/(loss) from continuing ops
$
15,806


$
1,498


$
930


$
(3,585
)

$


$
(1,157
)

$
(21,252
)

$
(6,603
)
Pre-tax income/(loss) from discontinued ops








46,808


46,808




46,808

Adjustments:















Corporate Debt related interest expense(2)
9,976

 










3,373

 
13,349

Depreciation and amortization expenses(3)
7,545

 


404


101




505


186

 
8,236

Non-cash fair value adjustments(4)
66








(40,672
)

(40,672
)



(40,606
)
Non-recurring expenses(5)
2,867






1,514




1,514


(2,331
)

2,050

Adjusted EBITDA
$
36,260


$
1,498


$
1,334


$
(1,970
)

$
6,136


$
6,998


$
(20,024
)

$
23,234

Add: Stock-based compensation expense
1,918




49






$
49


1,837


3,804

Less: Realized and unrealized gain (loss)(6)
(6,976
)

(1,364
)



(8,295
)

5,512


(4,147
)



(11,123
)
Less: Third party non-controlling interests






(203
)



(203
)



(203
)
Operating EBITDA
$
45,154


$
2,862


$
1,383


$
6,528


$
624


$
11,397


$
(18,187
)

$
38,364


Three Months Ended September 30, 2017



Tiptree Capital




($ in thousands)
Specialty Insurance

Asset Management

Mortgage

Other

Discontinued Operations(1)

Tiptree Capital

Corporate Expenses

Total
Pre-tax income/(loss) from continuing ops
$
(2,345
)

$
2,973


$
1,513


$
880


$


$
5,366


$
(6,916
)

$
(3,895
)
Pre-tax income/(loss) from discontinued ops








(1,535
)

(1,535
)



(1,535
)
Adjustments:















Corporate Debt related interest expense(2)
1,722












1,299


3,021

Depreciation and amortization expenses(3)
2,828




138


72


4,369


4,579


62


7,469

Non-cash fair value adjustments(4)
113




(422
)





(422
)



(309
)
Non-recurring expenses(5)








25


25




25

Adjusted EBITDA
$
2,318


$
2,973


$
1,229


$
952


$
2,859


$
8,013


$
(5,555
)

$
4,776

Add: Stock-based compensation expense
495




41






41


598


1,134

Less: Realized and unrealized gain (loss)(6)
(10,342
)

11




(282
)



(271
)



(10,613
)
Less: Third party non-controlling interests






623


372


995




995

Operating EBITDA
$
13,155


$
2,962


$
1,270


$
611


$
2,487


$
7,330


$
(4,957
)

$
15,528




Page 9




Nine Months Ended September 30, 2017



Tiptree Capital




($ in thousands)
Specialty Insurance

Asset Management

Mortgage

Other

Discontinued Operations(1)

Tiptree Capital

Corporate Expenses

Total
Pre-tax income/(loss) from continuing ops
$
1,724


$
13,083


$
514


$
2,190


$


$
15,787


$
(22,273
)

$
(4,762
)
Pre-tax income/(loss) from discontinued ops








(5,359
)

(5,359
)



(5,359
)
Adjustments:















Corporate Debt related interest expense(2)
5,083

 










3,851

 
8,934

Depreciation and amortization expenses(3)
8,420

 


412


208


13,350


13,970


186

 
22,576

Non-cash fair value adjustments(4)
339




3,039






3,039




3,378

Non-recurring expenses(5)








302


302


(1,736
)

(1,434
)
Adjusted EBITDA
$
15,566


$
13,083


$
3,965


$
2,398


$
8,293


$
27,739


$
(19,972
)

$
23,333

Add: Stock-based compensation expense
2,432




269






269


1,574


4,275

Less: Realized and unrealized gain (loss)(6)
(20,178
)

3,443




(44
)



3,399




(16,779
)
Less: Third party non-controlling interests






1,109


1,078


2,187




2,187

Operating EBITDA
$
38,176


$
9,640


$
4,234


$
1,333


$
7,215


$
22,422


$
(18,398
)

$
42,200

_______________________________
The footnotes below correspond to the four tables above, under “—Non-GAAP Financial Measures — Adjusted EBITDA and Operating EBITDA”.
(1)
Includes discontinued operations related to Care. For more information, see “Note—(3) Dispositions, Assets Held for Sale & Discontinued Operations” in the Form 10-Q for the quarter ended September 30, 2018.
(2)
Corporate Debt interest expense includes Secured corporate credit agreements, junior subordinated notes and preferred trust securities. Interest expense associated with asset-specific debt in specialty insurance, asset management, mortgage and other operations is not added-back for Adjusted EBITDA and Operating EBITDA.
(3)
Represents total depreciation and amortization expense less purchase accounting amortization related adjustments at the Insurance Company. Following the purchase accounting adjustments, current period expenses associated with deferred costs were more favorably stated and current period income associated with deferred revenues were less favorably stated. Thus, the purchase accounting effect related to our Insurance company increased EBITDA above what the historical basis of accounting would have generated.
(4)
For Reliance, within our mortgage operations, Adjusted EBITDA excludes the impact of changes in contingent earn-outs. For our specialty insurance operations, depreciation and amortization on senior living real estate that is within net investment income is added back to Adjusted EBITDA. For Care (Discontinued Operations), the reduction in EBITDA is related to accumulated depreciation and amortization, and certain operating expenses, which were previously included in Adjusted EBITDA in prior periods.
(5)
Acquisition, start-up and disposition costs including legal, taxes, banker fees and other costs. Includes payments pursuant to a separation agreement, dated November 10, 2015.
(6)
Adjustment excludes Mortgage realized and unrealized gains and losses - Performing and NPLs as those are recurring in nature and align with those business models.

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 September 30,

2018

2017
Total stockholders’ equity
$
395,968

 
$
391,138

Less non-controlling interest - other
9,090

 
25,081

Total stockholders’ equity, net of non-controlling interests - other
$
386,878

 
$
366,057

Total Common shares outstanding
35,926

 
29,793

Total Class B shares outstanding

 
8,049

Total shares outstanding
35,926

 
37,842

Book value per share(1)
$
10.77

 
$
9.67

_______________________________
(1) For periods prior to April 10, 2018, book value per share assumes full exchange of the limited partners units of TFP for Common Stock.

Non-GAAP Financial Measures — Invested & Total Capital

Invested Capital represents its total cash investment, including any re-investment of earnings, and acquisition costs, net of tax. Total Capital represents Invested Capital plus Corporate Debt.


Page 10



($ in thousands)
As of September 30,
 
2018

2017
Total stockholders’ equity
$
395,973

 
$
391,138

Less non-controlling interest - other
9,090

 
25,081

Total stockholders’ equity, net of non-controlling interests - other
$
386,883

 
$
366,057

Plus Specialty Insurance accumulated depreciation and amortization, net of tax
41,365

 
34,272

Plus Care accumulated depreciation and amortization - discontinued operations, net of tax and NCI

 
28,990

Plus acquisition costs
4,161

 
7,820

Invested Capital
$
432,409

 
$
437,139

Plus corporate debt
$
235,060

 
$
202,000

Total Capital
$
667,469

 
$
639,139


Page 11

(Back To Top)

Section 3: EX-99.2 (EXHIBIT 99.2)

ex9923q18investorpresent
Exhibit 99.2 NASDAQ: TIPT INVESTOR PRESENTATION - THIRD QUARTER 2018 November 2018 Financial information for nine months ended September 30, 2018


 
DISCLAIMERS LIMITATIONS ON THE USE OF INFORMATION This presentation has been prepared by Tiptree Inc. and its consolidated subsidiaries (“Tiptree", "the Company" or "we”) solely for informational purposes, and not for the purpose of updating any information or forecast with respect to Tiptree, its subsidiaries or any of its affiliates or any other purpose. Tiptree reports a non-controlling interest in TFP that is not owned by Tiptree and certain other operating subsidiaries that are not wholly owned. Unless otherwise noted, all information is of Tiptree on a consolidated basis before non-controlling interest. Neither Tiptree nor any of its affiliates makes any representation or warranty, express or implied, as to the accuracy or completeness of the information contained herein and no such party shall have any liability for such information. These materials and any related oral statements are not all-inclusive and shall not be construed as legal, tax, investment or any other advice. You should consult your own counsel, accountant or business advisors. Performance information is historical and is not indicative of, nor does it guarantee future results. There can be no assurance that similar performance may be experienced in the future. SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS This document contains "forward-looking statements" which involve risks, uncertainties and contingencies, many of which are beyond Tiptree's control, which may cause actual results, performance, or achievements to differ materially from anticipated results, performance, or achievements. All statements contained herein 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 Tiptree's plans, objectives, expectations 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 Tiptree’s Annual Report on Form 10-K, and as described in the Tiptree’s other filings with the SEC. 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. MARKET AND INDUSTRY DATA Certain market data and industry data used in this presentation were obtained from reports of governmental agencies and industry publications and surveys. We believe the data from third-party sources to be reliable based upon our management’s knowledge of the industry, but have not independently verified such data and as such, make no guarantees as to its accuracy, completeness or timeliness. NOT AN OFFER OR A SOLICIATION This document does not constitute an offer or invitation for the sale or purchase of securities or to engage in any other transaction with Tiptree, its subsidiaries or its affiliates. The information in this document is not targeted at the residents of any particular country or jurisdiction and is not intended for distribution to, or use by, any person in any jurisdiction or country where such distribution or use would be contrary to local law or regulation. NON-GAAP MEASURES In this document, we sometimes use financial measures derived from consolidated financial data but not presented in our financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP). Certain of these data are considered “non-GAAP financial measures” under the SEC rules. These non-GAAP financial measures supplement our GAAP disclosures and should not be considered an alternative to the GAAP measure. Management's reasons for using these non-GAAP financial measures and the reconciliations to their most directly comparable GAAP financial measures are posted in the Appendix. 1


 
OVERVIEW & FINANCIAL RESULTS Key Highlights


 
OVERVIEW Nine Month Financials Key highlights Revenue Specialty Insurance: þ $473.4 million Continuing to grow profitably • Gross written premiums year-to-date were $619.5 million, up 10.5%, driven by vs. prior year 10.0% growth in credit and other specialty programs • Net written premiums were $336.5 million, up 11.3%, driven by growth in credit Net income1 and warranty products • Stable combined ratio demonstrates continued underwriting profitability $29.4 million vs. prior year loss of $7.4 Tiptree Capital: million þ Continues to generate stable, cash earnings from Invesque dividends and asset management fees Operating EBITDA2 þ Consistent with our total return objectives, invested $35 million in shipping sector at $38.4 million what we believe is a favorable point in the cycle vs. prior year of $42.2 million Corporate: þ Eliminated dual class stock structure Book Value þ 3 per share2 Total year-over-year return of 12.7% , including $18.6 million returned to shareholders through buy-backs and dividends $10.77 • Repurchased 2,110,577 shares for $13.7 million in 2018 11.4% vs. 9/30/17 • Year-to-date dividends paid of $0.10, an increase of 11.1% from 2017 1 Net income before non-controlling interests which Includes continuing and discontinued operations. 2 For a reconciliation of Non-GAAP metrics Operating EBITDA and book value per share to GAAP financials, see the Appendix. 3 Total return per share from September 30, 2017 defined as cumulative dividends paid of $0.13 per share plus book value per share as of September 30, 2018. 3


 
FINANCIAL RESULTS ($ in millions, except per share information) Consolidated financial metrics Key drivers Q3'17 Q3'18 Q3'17 Q3'18 Positives: YTD YTD Total Revenues $ 144.9 $ 172.7 $ 430.4 $ 473.4 • Accounting pre-tax gain of $46.2 million from sale of Care for the nine month period Net income (loss) before NCI $ (3.4) $ (0.5) $ (7.4) $ 29.4 • Growth in insurance underwriting profitability Diluted EPS $ (0.11) $ (0.02) $ (0.22) $ 0.69 Operating EBITDA1 $ 15.5 $ 14.4 $ 42.2 $ 38.4 • Consistent earnings from Invesque and asset management fees Adjusted EBITDA1 $ 4.8 $ 7.7 $ 23.3 $ 23.2 Negatives: Total shares outstanding 37.8 35.9 • Year-to-date unrealized investment losses (incl. Invesque) Book Value per share1 $ 9.67 $ 10.77 • Reduced earnings from decreased investments in credit related Dividends paid $ 0.030 $ 0.035 $ 0.09 $ 0.10 assets 2018 Operating EBITDA to Pre-tax Income Bridge Q3'18 $14.4 $ — $(5.1) $(2.8) $(5.0) $(1.5) $(1.1) $(1.1) $46.2 $(16.6) $(8.2) $38.4 $40.2 Q3'18 $(13.3) YTD $(3.8) $(2.5) Operating Care Gain Unrealized & Depreciation & Corporate Stock Based Transaction Total Pre-tax EBITDA (DiscOps) Realized Losses2 Amortization Interest Expense Compensation Costs/other Income (Loss)3 1 See the appendix for a reconciliation of Non-GAAP metrics including Invested Capital, Total Capital, Operating EBITDA, Adjusted EBITDA and Book Value per share. 2 Excludes Care Gain, and excludes Mortgage realized and unrealized gains and losses - Performing and NPLs. 3 Includes continuing and discontinued operations. 4


 
TIPTREE CAPITAL ALLOCATION ($ in millions, except per share information) Q3'18 Operating EBITDA Total Q3'17 Q3'18 1 Business Lines Capital LTM LTM Key drivers of LTM performance Operating EBITDA return on total capital of 8.7%, Specialty Insurance $ 454.9 $ 51.6 $ 60.3 down 0.2% from prior year primarily driven by: - Underwriting 35.0 44.2 • Insurance Operating EBITDA of $60.3m, up Adds-back $162m Corporate Debt w/LTM 16.8% from growth across all product lines - Investments interest expense of $12.9m 16.6 16.1 • Continued efforts to reduce corporate expenses, down 12.7% Tiptree Capital $ 173.3 $ 34.4 $ 18.8 - Asset mgmt fees, net ($1.6B AUM) 2.3 3.6 2.6 More than offset by: - Invesque / Seniors Housing 102.4 10.1 9.3 • Operating EBITDA associated with divested - Other investments 68.6 6.1 3.5 assets (primarily distributions from credit investments) - Other investments - divested3 — 14.6 3.4 • Lower year-over-year Seniors Housing performance driven by higher Care G&A Corporate2 $ 39.3 $ (25.2) $ (22.0) expenses in Q4'17 - Corporate expenses (19.6) (16.4) • Declines in mortgage origination volumes and Adds-back $73m Corporate margins as interest rates rise - Corporate incentive comp expense Debt w/LTM interest (5.6) (5.6) expense of $4.3m • Delayed reinvestment of ~$45m of cash Total Tiptree $ 667.5 $ 60.8 $ 57.1 - Total shares outstanding 37.8 35.9 1 See the appendix for a reconciliation of Non-GAAP metrics including Total Capital and Operating EBITDA. 2 Primarily Cash at HoldCo which does not include available liquidity at subsidiaries. 3 Includes Operating EBITDA from Siena Capital, Luxury Mortgage and CLO subordinated note investments which were sold in 2017. 5


 
SPECIALTY INSURANCE


 
FINANCIAL PERFORMANCE HIGHLIGHTS ($ in millions) Financial metrics Q3'18 highlights & outlook Q3'17 Q3'18 Continuing to expand insurance and consumer program Q3'17 Q3'18 YTD YTD 1 product offerings with a focus on growth in written premiums Gross Written Premiums $209.2 $225.4 $560.6 $619.5 and stable profitability Revenue $118.7 $148.6 $351.7 $412.7 • $627m of unearned premiums and deferred revenue, Pre-tax income $(2.3) $5.7 $1.7 $15.8 representing 18.6% year-over-year growth 1 Operating EBITDA $13.2 $15.7 $38.2 $45.2 • Net written premiums grew year-to-date by $34.2m, or Net portfolio income1 $(6.4) $2.2 $(6.7) $7.0 11.3% driven by growth in credit and specialty programs Combined ratio1 92.6% 93.2% 93.2% 93.1% • Combined ratio on a YTD basis flat to prior period Unearned premiums & Deferred revenue $529.0 $627.4 2 Produced stable underwriting results which were partially Insurance products offset by investments in growth initiatives • Underwriting margin of $92.5m, up $9.9m driven by Operating Net Written Underwriting strong performance in our credit protection products EBITDA1 Premiums Margin1 $336.5 • Other expenses increased by $4.0m (transaction expenses $45.2 $92.5 $302.3 40.0 $82.6 6.5 Services/other & premium taxes) as we make additional investments in $38.2 19.0 9.5 Programs our product offerings 14.0 41.4 7.7 44.6 7.0 Investments 20.3 Warranty 13.5 18.6 3 Improvements in net portfolio income impacted by: 238.7 255.1 Insurance 31.2 56.2 Credit • Year-to-date net investment income of $13.7 million underwriting 24.7 49.3 protection • Partially offset by mark-to-market losses on equity investments and consolidated loan funds Q3'17 Q3'18 Q3'17 Q3'18 Q3'17 Q3'18 YTD YTD YTD YTD YTD YTD 1 See the appendix for a reconciliation of Non-GAAP measures underwriting margin, combined ratio, Operating EBITDA and Investment Net portfolio income to GAAP financials. 7


 
INVESTMENT PORTFOLIO ($ in millions) Net Investments1 Investment approach $438.4 17.3 We actively manage our investment portfolio to achieve a balance of: 11.6 Other 32.8 $364.0 • Short-term liquidity to cover current claims obligations 4.0 Real Estate 23.1 84.9 • Enhanced risk-adjusted returns through selective alternative 28.1 $301.9 Equities investments with a focus on longer-term higher yielding assets 140.0.2 36.0 44.7 84.5 Loans2 Cash & cash equivalents3 101.4 60.2 Highlights Available for sale 4.4 Securities 255.8 • Net investment portfolio grew $74.4 million, or 20.4% from Q3'17 164.1 137.2 • Floating rate investments have performed well as interest rates have risen • Under-performing equity investments have led to a decrease in Q3'16 Q3'17 Q3'18 Year-to-date financials dividend income and an unrealized loss year-to-date $ 8.6 $ (20.0) $ (8.3) Unrealized gains (losses) 4.2 6.4 5.2 Realized gains (losses) 8.4 12.0 13.7 Net investment income (1.7) (5.1) (3.6) Interest expense $ 19.5 $ (6.7) $ 7.0 Net Portfolio Income 8.5% (2.5)% 2.3% Average Annualized Yield4 $6.4 $(21.2) $(6.0) Equity realized and unrealized gains (losses) 1 See the appendix for a reconciliation of Non-GAAP measures Net Investments and Net Portfolio Income to GAAP financials. 2 Net of non-recourse asset based financing. 3 Cash and cash equivalents, plus restricted cash, net of due to/due from brokers. See appendix for reconciliation to GAAP financials. 4 Average Annualized Yield % represents the ratio of annualized net investment income, realized and unrealized gains (losses) less investment portfolio interest expense to the average of the prior five quarters total investments less investment portfolio debt plus cash. 8


 
TIPTREE CAPITAL


 
FINANCIAL PERFORMANCE HIGHLIGHTS ($ in millions) Invested Capital1 Recent developments & outlook + Corporate • Reduced exposure to credit market in 2017 $210.1 Cash of $45m 15.2 $193.6 • New investments of $35 million deployed into shipping, which we 16.1 $173.3 Marine/Other believe is at a more favorable point in the cycle 74.6 35.2 Care3 116.9 21.5 Invesque4 102.4 Mortgage Q3'18 financial highlights 98.8 22.1 CLOs & credit Asset Management: AUM remains stable at $1.6B 38.5 31.6 investments 4.1 • In late 2017 and Q1'18, we extended and re-priced three CLOs Q4'15 Q3'17 Q3'18 • Reduced incentive fees on older vintage CLOs have driven $1.9 $1.6 $1.6 Fee-earning decline in pre-tax income AUM ($B)2 Return on Invested Capital1 Credit Investments: Distributions and investment gains decreased as Pre-tax income Operating EBITDA we actively reduced our exposure to certain credit investments Q3'17 Q3'18 Q3'17 Q3'18 YTD YTD YTD YTD Asset mgmt fees, net $3.1 $2.2 $3.1 $2.2 Mortgage: Margin compression from recent interest rate increases Credit investments 10.0 (0.7) 6.5 0.7 had a negative impact on year-over-year Operating EBITDA Mortgage 0.5 0.9 4.2 1.4 Other 2.2 (3.6) 1.4 6.5 Other: increase in Operating EBITDA driven by eight months of 4 Care/DiscOps (5.4) 46.8 7.2 0.6 Invesque dividends Total $10.4 $45.6 $22.4 $11.4 • Unrealized losses on shares, net of discount accretion, drove pre-tax losses 1 See the appendix for a reconciliation of Operating EBITDA and Invested Capital to GAAP financials. 2 AUM is estimated and unaudited. Consists of NOPCB for CLOs, excludes Credit Opportunities Fund as it was not earning third party fees as of 9/30/2018. 3 Includes discontinued operations related to Care. For more information, see “—FN 4 Dispositions, Assets Held for Sale and Discontinued Operations.” 4 16.6m of Invesque common shares, 2.9m shares held in the insurance company investment portfolio. On balance sheet at fair value less restriction discount - $123.8 million, $102.4 million in Tiptree Capital. 10


 
OUTLOOK ($ in millions) 2018 Highlights Book value per share1 ü Continue to execute on our growth initiatives while maintaining strong $10.77 underwriting standards $9.67 ü Finalized sale of Care to Invesque ü Simplified corporate structure eliminating two class share structure ü Returned $17.5 million to shareholders through share buy-backs and dividends Q3'17 Q3'18 Looking ahead Operating EBITDA1 • Continue to focus on growth in specialty insurance operations $42.2 $38.4 – Growth in gross and net written premiums – Actively seeking acquisition opportunities • Focused on growing and improving in long-term, net investment income Q3'17 YTD Q3'18 YTD 1 See the appendix for a reconciliation of Book value per share and Operating EBITDA to GAAP financials. 11


 
APPENDIX


 
NON-GAAP RECONCILIATIONS Operating EBITDA and Adjusted EBITDA Management uses Operating EBITDA, Adjusted EBITDA and book value per share as measurements of operating performance which are non-GAAP measures. Management believes the use of Operating EBITDA and Adjusted EBITDA provides supplemental information useful to investors as it is frequently used by the financial community to analyze financial performance, and to analyze a company’s ability to service its debt and to facilitate comparison among companies. Management uses Operating EBITDA as part of its capital allocation process and to assess comparative returns on invested capital amongst our businesses and investments. Adjusted EBITDA is also used in determining incentive compensation for the Company’s executive officers. The Company defines EBITDA as GAAP net income of the Company adjusted to add consolidated interest expense, consolidated income taxes and consolidated depreciation and amortization expense as presented in its financial statements. Adjusted EBITDA represents EBITDA adjusted to (i) subtract interest expense on asset-specific debt incurred in the ordinary course of its subsidiaries’ business operations, (ii) adjust for the effect of purchase accounting, (iii) adjust for certain non-cash fair value adjustments, and (iv) any significant non-recurring expenses. Operating EBITDA represents Adjusted EBITDA plus stock based compensation expense, less realized and unrealized gains and losses and less third party non-controlling interests. Operating EBITDA and Adjusted EBITDA are not measurements of financial performance or liquidity under GAAP and should not be considered as an alternative or substitute for GAAP net income. Book value per share Management believes the use of book value per share provides supplemental information useful to investors as it is frequently used by the financial community to analyze company growth on a relative per share basis. Invested Capital and Total Capital Management evaluates the return on Invested Capital and Total Capital, which are non-GAAP financial measures, when making capital investment decisions. Invested Capital represents its total equity investment, including any re-investment of earnings, and acquisition costs, net of tax. Total Capital represents Invested Capital plus Corporate Debt. Management believes the use of these financial measures provide supplemental information useful to investors as they are frequently used by the financial community to analyze how the Company has allocated capital over-time and provide a basis for determining the return on capital to shareholders. Management uses both of these measures when making capital investment decisions, including reinvesting cash, and evaluating the relative performance of its businesses and investments. Insurance - Underwriting Margin We generally limit the underwriting risk we assume through the use of both reinsurance (e.g., quota share and excess of loss) and retrospective commission agreements with our partners (e.g., commissions paid adjust based on the actual underlying losses incurred), which manage and mitigate our risk. Period-over-period comparisons of revenues are often impacted by the PORCs and clients’ choice as to whether to retain risk, specifically with respect to the relationship between service and administration expenses and ceding commissions, both components of revenue, and the offsetting policy and contract benefits and commissions paid to our partners and reinsurers. Generally, when losses are incurred, the risk which is retained by our partners and reinsurers is reflected in a reduction in commissions paid. In order to better explain to investors the net financial impact of the risk retained by the Company of the insurance contracts written and the impact on profitability, we use the Non-GAAP metric - Underwriting Margin. Insurance - Combined Ratio Expressed as a percentage, the combined ratio represents the relationship of policy and contract benefits, commission expense (net of ceding commissions), employee compensation and benefits, and other expenses to net earned premiums, service and administrative fees, and other income. Investors use this ratio to evaluate our ability to profitably underwrite the risks we assume over time and manage our operating costs. As such, we believe that presenting underwriting margin and the combined ratio provides useful information to investors and aligns more closely to how management measures the underwriting performance of the business. Insurance Investment Portfolio - Net Investments and Net Portfolio Income In managing our investment portfolio we analyze net investments and net portfolio income, which are non-GAAP measures. Our presentation of net investments equals total investments plus cash and cash equivalents minus asset based financing of investments. Our presentation of net portfolio income equals net investment income plus realized and unrealized gains and losses and minus interest expense associated with asset based financing of investments. Net investments and net portfolio income are used to calculate average annualized yield, which management uses to analyze the profitability of our investment portfolio. Management believes this information is useful since it allows investors to evaluate the performance of our investment portfolio based on the capital at risk and on a non-consolidated basis. Our calculation of net investments and net portfolio income may differ from similarly titled non-GAAP financial measures used by other companies. Net investments and net portfolio income are not measures of financial performance or liquidity under GAAP and should not be considered a substitute for total investments or net investment income. 13


 
NON-GAAP RECONCILIATIONS - EBITDA, ADJUSTED & OPERATING EBITDA ($ in thousands) Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Net income (loss) attributable to Common Stockholders $ (618) $ (3,114) $ 23,768 $ (6,457) Add: net (loss) income attributable to noncontrolling interests 91 (264) 5,587 (903) Less: net income from discontinued operations — (1,024) 34,481 (3,876) Income (loss) from continuing operations $ (527) $ (2,354) $ (5,126) $ (3,484) Corporate Debt related interest expense (1) 4,538 2,998 8,390 5,913 Consolidated income tax expense (benefit) (611) (1,541) (1,478) (1,278) Depreciation and amortization expense (2) 2,751 3,035 5,460 6,125 Non-cash fair value adjustments (3) — (309) 66 3,378 Non-recurring expenses (4) 1,125 — 2,051 (1,736) Adjusted EBITDA from continuing operations $ 7,724 $ 1,918 $ 17,098 $ 15,040 Add: Stock-based compensation expense 1,521 1,134 3,804 4,275 Less: Realized and unrealized gain (loss) (5) (5,101) (10,613) (16,635) (16,779) Less: Third party non-controlling interests (69) 623 (203) 1,109 Operating EBITDA from continuing operations $ 14,415 $ 13,042 $ 37,740 $ 34,985 Income (loss) from discontinued operations $ — $ (1,024) $ 34,481 $ (3,876) Consolidated income tax expense (benefit) — (511) 12,327 (1,483) Consolidated depreciation and amortization expense — 4,369 — 13,350 Non-cash fair value adjustments (3) — — (40,672) — Non-recurring expenses (4) — 25 — 302 Adjusted EBITDA from discontinued operations $ — $ 2,859 $ 6,136 $ 8,293 Less: Realized and unrealized gain (loss) (5) — $ — $ 5,512 $ — Less: Third party non-controlling interests — $ 372 $ — $ 1,078 Operating EBITDA from discontinued operations $ — $ 2,487 $ 624 $ 7,215 Total Adjusted EBITDA $ 7,724 $ 4,777 $ 23,234 $ 23,333 Total Operating EBITDA $ 14,415 $ 15,529 $ 38,364 $ 42,200 (1) Corporate Debt interest expense includes Secured corporate credit agreements, junior subordinated notes and preferred trust securities. Interest expense associated with asset-specific debt in specialty insurance, asset management, mortgage and other operations is not added-back for Adjusted EBITDA and Operating EBITDA. (2) Represents total depreciation and amortization expense less purchase accounting amortization related adjustments at the Insurance Company. Following the purchase accounting adjustments, current period expenses associated with deferred costs were more favorably stated and current period income associated with deferred revenues were less favorably stated. Thus, the purchase accounting effect related to our Insurance company increased EBITDA above what the historical basis of accounting would have generated. (3) For Reliance, within our mortgage operations, Adjusted EBITDA excludes the impact of changes in contingent earn-outs. For our specialty insurance operations, depreciation and amortization on senior living real estate that is within net investment income is added back to Adjusted EBITDA. For Care (Discontinued Operations), the reduction in EBITDA is related to accumulated depreciation and amortization, and certain operating expenses, which were previously included in Adjusted EBITDA in prior periods. (4) Acquisition, start-up and disposition costs including legal, taxes, banker fees and other costs. Includes payments pursuant to a separation agreement, dated November 10, 2015. (5) Adjustment excludes Mortgage realized and unrealized gains and losses - Performing and NPLs as those are recurring in nature and align with those business models. 14


 
NON-GAAP RECONCILIATIONS - ADJUSTED AND OPERATING EBITDA Three Months Ended September 30, 2018 Tiptree Capital Specialty Asset Discontinued Corporate ($ in thousands) Insurance Management Mortgage Other Operations(1) Tiptree Capital Expenses Total Pre-tax income/(loss) from continuing ops $ 5,732 $ 1,220 $ 423 $ (623) $ — $ 1,020 $ (7,890) $ (1,138) Pre-tax income/(loss) from discontinued ops — — — — — — — — Adjustments: Corporate Debt related interest expense(2) 3,396 — — — — — 1,563 4,959 Depreciation and amortization expenses(3) 2,576 — 133 7 140 62 2,778 Non-cash fair value adjustments(4) — — — — — — — Non-recurring expenses(5) 706 — — 419 — 419 1,125 Adjusted EBITDA $ 12,410 $ 1,220 $ 556 $ (197) $ — $ 1,579 $ (6,265) $ 7,724 Add: Stock-based compensation expense $ 663 $ — $ 225 $ — $ — $ 225 $ 633 $ 1,521 Less: Realized and unrealized gain (loss)(6) (2,581) (70) — (2,450) — (2,520) — (5,101) Less: Third party non-controlling interests — — — (69) — (69) — (69) Operating EBITDA $ 15,654 $ 1,290 $ 781 $ 2,322 $ — $ 4,393 $ (5,632) $ 14,415 Three Months Ended September 30, 2017 Tiptree Capital Specialty Asset Discontinued Corporate ($ in thousands) Insurance Management Mortgage Other Operations(1) Tiptree Capital Expenses Total Pre-tax income/(loss) from continuing ops $ (2,345) $ 2,973 $ 1,513 $ 880 $ — $ 5,366 $ (6,916) $ (3,895) Pre-tax income/(loss) from discontinued ops — — — — (1,535) (1,535) — (1,535) Adjustments: — Corporate Debt related interest expense(2) 1,722 — — — — — 1,299 3,021 Depreciation and amortization expenses(3) 2,828 — 138 72 4,369 4,579 62 7,469 Non-cash fair value adjustments(4) 113 — (422) — — (422) — (309) Non-recurring expenses(5) — — — — 25 25 — 25 Adjusted EBITDA $ 2,318 $ 2,973 $ 1,229 $ 952 $ 2,859 $ 8,013 $ (5,555) $ 4,776 Add: Stock-based compensation expense 495 — 41 — — 41 598 1,134 Less: Realized and unrealized gain (loss)(6) (10,342) 11 — (282) — (271) — (10,613) Less: Third party non-controlling interests — — — 623 372 995 — 995 Operating EBITDA $ 13,155 $ 2,962 $ 1,270 $ 611 $ 2,487 $ 7,330 $ (4,957) $ 15,528 (1) Includes discontinued operations related to Care. For more information, see “Note—(3) Dispositions, Assets Held for Sale & Discontinued Operations” in the Company's Form 10-Q. (2) Corporate Debt interest expense includes Secured corporate credit agreements, junior subordinated notes and preferred trust securities. Interest expense associated with asset-specific debt in specialty insurance, asset management, mortgage and other operations is not added-back for Adjusted EBITDA and Operating EBITDA. (3) Represents total depreciation and amortization expense less purchase accounting amortization related adjustments at the Insurance Company. Following the purchase accounting adjustments, current period expenses associated with deferred costs were more favorably stated and current period income associated with deferred revenues were less favorably stated. Thus, the purchase accounting effect related to our Insurance company increased EBITDA above what the historical basis of accounting would have generated. (4) For Reliance, within our mortgage operations, Adjusted EBITDA excludes the impact of changes in contingent earn-outs. For our specialty insurance operations, depreciation and amortization on senior living real estate that is within net investment income is added back to Adjusted EBITDA. For Care (Discontinued Operations), the reduction in EBITDA is related to accumulated depreciation and amortization, and certain operating expenses, which were previously included in Adjusted EBITDA in prior periods. (5) Acquisition, start-up and disposition costs including legal, taxes, banker fees and other costs. Includes payments pursuant to a separation agreement, dated November 10, 2015. (6) Adjustment excludes Mortgage realized and unrealized gains and losses - Performing and NPLs as those are recurring in nature and align with those business models. 15


 
NON-GAAP RECONCILIATIONS - ADJUSTED AND OPERATING EBITDA Nine Months Ended September 30, 2018 Tiptree Capital Specialty Asset Discontinued Corporate ($ in thousands) Insurance Management Mortgage Other Operations(1) Tiptree Capital Expenses Total Pre-tax income/(loss) from continuing ops $ 15,806 $ 1,498 $ 930 $ (3,585) $ — $ (1,157) $ (21,252) $ (6,603) Pre-tax income/(loss) from discontinued ops — — — — 46,808 46,808 — 46,808 Adjustments: Corporate Debt related interest expense(2) 9,976 — — — — — 3,373 13,349 Depreciation and amortization expenses(3) 7,545 — 404 101 — 505 186 8,236 Non-cash fair value adjustments(4) 66 — — — (40,672) (40,672) — (40,606) Non-recurring expenses(5) 2,867 — — 1,514 — 1,514 (2,331) 2,050 Adjusted EBITDA $ 36,260 $ 1,498 $ 1,334 $ (1,970) $ 6,136 $ 6,998 $ (20,024) $ 23,234 Add: Stock-based compensation expense 1,918 — 49 — — 49 1,837 3,804 Less: Realized and unrealized gain (loss)(6) (6,976) (1,364) — (8,295) 5,512 (4,147) — (11,123) Less: Third party non-controlling interests — — (203) — (203) — (203) Operating EBITDA $ 45,154 $ 2,862 $ 1,383 $ 6,528 $ 624 $ 11,397 $ (18,187) $ 38,364 Nine Months Ended September 30, 2017 Tiptree Capital Specialty Asset Discontinued Corporate ($ in thousands) Insurance Management Mortgage Other Operations(1) Tiptree Capital Expenses Total Pre-tax income/(loss) from continuing ops $ 1,724 $ 13,083 $ 514 $ 2,190 $ — $ 15,787 $ (22,273) $ (4,762) Pre-tax income/(loss) from discontinued ops — — — — (5,359) (5,359) — (5,359) Adjustments: 0 — Corporate Debt related interest expense(2) 5,083 — — — — — 3,851 8,934 Depreciation and amortization expenses(3) 8,420 — 412 208 13,350 13,970 186 22,576 Non-cash fair value adjustments(4) 339 — 3,039 — — 3,039 — 3,378 Non-recurring expenses(5) — — — — 302 302 (1,736) (1,434) Adjusted EBITDA $ 15,566 $ 13,083 $ 3,965 $ 2,398 $ 8,293 $ 27,739 $ (19,972) $ 23,333 Add: Stock-based compensation expense 2,432 — 269 — — 269 1,574 4,275 Less: Realized and unrealized gain (loss)(6) (20,178) 3,443 — (44) — 3,399 — (16,779) Less: Third party non-controlling interests — — — 1,109 1,078 2,187 — 2,187 Operating EBITDA $ 38,176 $ 9,640 $ 4,234 $ 1,333 $ 7,215 $ 22,422 $ (18,398) $ 42,200 (1) Includes discontinued operations related to Care. For more information, see “Note—(3) Dispositions, Assets Held for Sale & Discontinued Operations” in the Company's Form 10-Q. (2) Corporate Debt interest expense includes Secured corporate credit agreements, junior subordinated notes and preferred trust securities. Interest expense associated with asset-specific debt in specialty insurance, asset management, mortgage and other operations is not added-back for Adjusted EBITDA and Operating EBITDA. (3) Represents total depreciation and amortization expense less purchase accounting amortization related adjustments at the Insurance Company. Following the purchase accounting adjustments, current period expenses associated with deferred costs were more favorably stated and current period income associated with deferred revenues were less favorably stated. Thus, the purchase accounting effect related to our Insurance company increased EBITDA above what the historical basis of accounting would have generated. (4) For Reliance, within our mortgage operations, Adjusted EBITDA excludes the impact of changes in contingent earn-outs. For our specialty insurance operations, depreciation and amortization on senior living real estate that is within net investment income is added back to Adjusted EBITDA. For Care (Discontinued Operations), the reduction in EBITDA is related to accumulated depreciation and amortization, and certain operating expenses, which were previously included in Adjusted EBITDA in prior periods. (5) Acquisition, start-up and disposition costs including legal, taxes, banker fees and other costs. Includes payments pursuant to a separation agreement, dated November 10, 2015. (6) Adjustment excludes Mortgage realized and unrealized gains and losses - Performing and NPLs as those are recurring in nature and align with those business models. 16


 
NON-GAAP RECONCILIATIONS - ADJUSTED AND OPERATING EBITDA Last Twelve Months Ended September 30, 2018 Tiptree Capital Specialty Asset Discontinued Corporate ($ in thousands) insurance Management Mortgage Other Operations(1) Tiptree Capital Expenses Total Pre-tax income/(loss) from continuing ops $ 19,486 $ 2,660 $ 2,506 $ (1,774) $ — $ 3,392 $ (28,050) $ (5,172) Pre-tax income/(loss) from discontinued ops — — — — 45,945 45,945 — 45,945 Adjustments: Corporate Debt related interest expense(2) 12,919 — — — — — 4,334 17,253 Depreciation and amortization expenses(3) 10,492 — 540 139 2,295 2,974 248 13,714 Non-cash fair value adjustments(4) 235 — — — (40,672) (40,672) — (40,437) Non-recurring expenses(5) 4,524 — — 2,193 856 3,049 (986) 6,587 Adjusted EBITDA $ 47,656 $ 2,660 $ 3,046 $ 558 $ 8,424 $ 14,688 $ (24,454) $ 37,890 Add: Stock-based compensation expense 3,420 — 234 — — 234 2,435 6,089 Less: Realized and unrealized gain (loss)(6) (9,213) (941) — (8,294) 5,512 (3,723) — (12,936) Less: Third party non-controlling interests — — — (461) 337 (124) — (124) Operating EBITDA $ 60,289 $ 3,601 $ 3,280 $ 9,313 $ 2,575 $ 18,769 $ (22,019) $ 57,039 Last Twelve Months Ended September 30, 2017 Tiptree Capital Specialty Asset Discontinued Corporate ($ in thousands) insurance Management Mortgage Other Operations(1) Tiptree Capital Expenses Total Pre-tax income/(loss) from continuing ops $ 12,901 $ 23,675 $ 2,190 $ 3,314 $ — $ 29,179 $ (30,760) $ 11,320 Pre-tax income/(loss) from discontinued ops — — — — (5,696) (5,696) — (5,696) Adjustments: Corporate Debt related interest expense(2) 6,714 — — 44 — 44 5,147 11,905 Depreciation and amortization expenses(3) 10,582 — 550 274 16,883 17,707 248 28,537 Non-cash fair value adjustments(4) 339 — 4,316 — — 4,316 — 4,655 Non-recurring expenses(5) — — — — 382 382 (1,736) (1,354) Adjusted EBITDA $ 30,536 $ 23,675 $ 7,056 $ 3,632 $ 11,569 $ 45,932 $ (27,101) $ 49,367 Add: Stock-based compensation expense 2,922 — 374 — — 374 1,866 5,162 Less: Realized and unrealized gain (loss)(6) (18,177) 8,843 — 42 — 8,885 — (9,292) Less: Third party non-controlling interests — — — 1,530 1,516 3,046 — 3,046 Operating EBITDA $ 51,635 $ 14,832 $ 7,430 $ 2,060 $ 10,053 $ 34,375 $ (25,235) $ 60,775 (1) Includes discontinued operations related to Care. For more information, see “Note—(3) Dispositions, Assets Held for Sale & Discontinued Operations” in the Company's Form 10-Q. (2) Corporate Debt interest expense includes Secured corporate credit agreements, junior subordinated notes and preferred trust securities. Interest expense associated with asset-specific debt in specialty insurance, asset management, mortgage and other operations is not added-back for Adjusted EBITDA and Operating EBITDA. (3) Represents total depreciation and amortization expense less purchase accounting amortization related adjustments at the Insurance Company. Following the purchase accounting adjustments, current period expenses associated with deferred costs were more favorably stated and current period income associated with deferred revenues were less favorably stated. Thus, the purchase accounting effect related to our Insurance company increased EBITDA above what the historical basis of accounting would have generated. (4) For Reliance, within our mortgage operations, Adjusted EBITDA excludes the impact of changes in contingent earn-outs. For our specialty insurance operations, depreciation and amortization on senior living real estate that is within net investment income is added back to Adjusted EBITDA. For Care (Discontinued Operations), the reduction in EBITDA is related to accumulated depreciation and amortization, and certain operating expenses, which were previously included in Adjusted EBITDA in prior periods. (5) Acquisition, start-up and disposition costs including legal, taxes, banker fees and other costs. Includes payments pursuant to a separation agreement, dated November 10, 2015. (6) Adjustment excludes Mortgage realized and unrealized gains and losses - Performing and NPLs as those are recurring in nature and align with those business models. 17


 
NON-GAAP RECONCILIATIONS - BVPS, INVESTED AND TOTAL CAPITAL Management uses Book value per share, which is a non-GAAP financial measure. Prior to April 10, 2018, book value per share assumes full exchange of the limited partners units of TFP for Common Stock. Management believes the use of this financial measure provides supplemental information useful to investors as it is frequently used by the financial community to analyze company growth on a relative per share basis. Tiptree’s book value per share was $10.77 as of September 30, 2018 compared with book value per share, as exchanged, of $9.67 as of September 30, 2017. Total stockholders’ equity, net of other non-controlling interests for the Company was $386.9 million as of September 30, 2018, which comprised total stockholders’ equity of $396.0 million adjusted for $19.2 million attributable to non-controlling interest at certain operating subsidiaries that are not wholly owned by the Company, such as Luxury and management interests in subsidiaries. Total stockholders’ equity, net of other non-controlling interests for the Company was $366.1 million as of September 30, 2017, which comprised total stockholders’ equity of $391.1 million adjusted for $25.1 million attributable to non-controlling interest at subsidiaries that are not wholly owned by the Company. ($ in thousands, except per share information) As of September 30, 2018 2017 Total stockholders’ equity $ 395,968 $ 391,138 Less non-controlling interest - other 9,090 25,081 Total stockholders’ equity, net of non-controlling interests - other $ 386,878 $ 366,057 Total Common shares outstanding 35,926 29,793 Total Class B shares outstanding — 8,049 Total shares outstanding 35,926 37,842 Book value per share(1) $ 10.77 $ 9.67 (1) For periods prior to April 10, 2018, book value per share assumes full exchange of the limited partners units of TFP for Common Stock. Management evaluates the return on Invested Capital and Total Capital, which are non-GAAP financial measures, when making capital investment decisions. Invested capital represents its total cash investment, including any re-investment of earnings, and acquisition costs, net of tax. Total Capital represents Invested Capital plus Corporate Debt. Management believes the use of these financial measures provide supplemental information useful to investors as they are frequently used by the financial community to analyze how the Company has allocated capital over-time and provide a basis for determining the return on capital to shareholders. Management uses both of these measures when making capital investment decisions, including reinvesting distributable cash flow, and evaluating the relative performance of its businesses and investments. ($ in thousands) As of September 30, 2018 2017 Total stockholders’ equity $ 395,973 $ 391,138 Less non-controlling interest - other 9,090 25,081 Total stockholders’ equity, net of non-controlling interests - other $ 386,883 $ 366,057 Plus Specialty Insurance accumulated depreciation and amortization, net of tax(1) 41,365 34,272 Plus Care accumulated depreciation and amortization - discontinued operations, net of tax and NCI(1) — 28,990 Plus acquisition costs(2) 4,161 7,820 Invested Capital $ 432,409 $ 437,139 Plus corporate debt(3) $ 235,060 $ 202,000 Total Capital $ 667,469 $ 639,139 (1) As of September 30, 2018, add-back of $62.1 million of accumulated intangible amortization at Fortegra. On as exchanged basis, assumes 35% tax rate on total accumulated amortization before 2018 and 21% post 2018. (2) Add-back acquisition costs associated with acquiring Fortegra, Care senior living properties and Reliance net of Care NCI (86.6% ownership) and 35% tax rate. (3) Corporate debt consists of Secured Corporate Credit Agreements, plus preferred trust securities. 18


 
NON-GAAP RECONCILIATIONS - SPECIALTY INSURANCE The following table provides a reconciliation between underwriting margin and pre-tax income. We generally limit the underwriting risk we assume through the use of both reinsurance (e.g., quota share and excess of loss) and retrospective commission agreements with our partners (e.g., commissions paid adjust based on the actual underlying losses incurred), which manage and mitigate our risk. Period-over-period comparisons of revenues are often impacted by the PORCs and clients’ choice as to whether to retain risk, specifically with respect to the relationship between service and administration expenses and ceding commissions, both components of revenue, and the offsetting policy and contract benefits and commissions paid to our partners and reinsurers. Generally, when losses are incurred, the risk which is retained by our partners and reinsurers is reflected in a reduction in commissions paid. In order to better explain to investors the net financial impact of the risk retained by the Company of the insurance contracts written and the impact on profitability, we use the Non-GAAP metric - Underwriting Margin. Expressed as a percentage, the combined ratio represents the relationship of policy and contract benefits, commission expense (net of ceding commissions), employee compensation and benefits, and other expenses to net earned premiums, service and administrative fees, and other income. Investors use this ratio to evaluate our ability to profitably underwrite the risks we assume over time and manage our operating costs. As such, we believe that presenting underwriting margin and the combined ratio provides useful information to investors and aligns more closely to how management measures the underwriting performance of the business. ($ in thousands) Three Months Ended September 30, Nine Months Ended September 30, Revenues: 2018 2017 2018 2017 Net earned premiums $ 116,153 $ 96,073 $ 317,842 $ 272,781 Service and administrative fees 26,168 24,018 75,635 70,861 Ceding commissions 2,257 2,513 6,782 6,801 Other income 659 824 1,945 2,874 Underwriting Revenues - Non-GAAP $ 145,237 $ 123,428 $ 402,204 $ 353,317 Less underwriting expenses: Policy and contract benefits 44,491 31,570 115,291 94,364 Commission expense 69,222 63,066 194,417 176,405 Underwriting Margin - Non-GAAP $ 31,524 $ 28,792 $ 92,496 $ 82,548 Less operating expenses: Employee compensation and benefits 11,093 10,073 33,097 30,800 Other expenses 10,720 9,717 32,204 28,279 Combined Ratio 93.2% 92.6% 93.1% 93.2% Plus investment revenues: Net investment income 4,536 3,840 13,668 12,032 Net realized and unrealized gains (1,133) (8,554) (3,123) (13,618) Less other expenses: Interest expense 4,684 3,499 13,817 10,534 Depreciation and amortization expenses 2,698 3,134 8,117 9,625 Pre-tax income (loss) $ 5,732 $ (2,345) $ 15,806 $ 1,724 19


 
NON-GAAP RECONCILIATIONS - SPECIALTY INSURANCE The investment portfolio consists of assets contributed by Tiptree, cash generated from operations, and from insurance premiums written. The investment portfolio of our regulated insurance companies, captive reinsurance company and warranty business are subject to different regulatory considerations, including with respect to types of assets, concentration limits, affiliate transactions and the use of leverage. Our investment strategy is designed to achieve attractive risk-adjusted returns across select asset classes, sectors and geographies while maintaining adequate liquidity to meet our claims payment obligations. In managing our investment portfolio we analyze net investments and net portfolio income, which are non-GAAP measures. Our presentation of net investments equals total investments plus cash and cash equivalents minus asset based financing of investments. Our presentation of net portfolio income equals net investment income plus realized and unrealized gains and losses and minus interest expense associated with asset based financing of investments. Net investments and net portfolio income are used to calculate average annualized yield, which management uses to analyze the profitability of our investment portfolio. Management believes this information is useful since it allows investors to evaluate the performance of our investment portfolio based on the capital at risk and on a non-consolidated basis. Our calculation of net investments and net portfolio income may differ from similarly titled non-GAAP financial measures used by other companies. Net investments and net portfolio income are not measures of financial performance or liquidity under GAAP and should not be considered a substitute for total investments or net investment income. ($ in thousands) Nine Months Ended September 30, 2018 2017 2016 Total Investments $ 495,714 $ 426,753 $ 398,505 Investment portfolio debt (1) (93,353) (122,999) (101,012) Cash and cash equivalents 31,121 62,790 16,555 Restricted cash (2) 2,983 3,637 6,683 Receivable due from brokers (3) 2,343 1,505 — Liability due to brokers (3) (487) (7,733) (18,836) Net investments - Non-GAAP $ 438,321 $ 363,953 $ 301,895 ($ in thousands) Nine Months Ended September 30, 2018 2017 2016 Net investment income $ 13,668 $ 12,032 $ 8,409 Realized gains (losses) 5,188 6,425 4,187 Unrealized gains (losses) (8,311) (20,042) 8,580 Interest expense (3,571) (5,143) (1,708) Net portfolio income (loss) $ 6,974 $ (6,728) $ 19,468 Average Annualized Yield % (4) 2.2% (2.5)% 8.5% (1) Consists of asset-based financing on loans, at fair value including certain credit investments and NPLs, net of deferred financing costs, see Note 11 - Debt, net for further details. (2) Restricted cash available to invest within certain credit investment funds which are consolidated under GAAP. (3) Receivable due from and Liability due to brokers for unsettled trades within certain credit investment funds which are consolidated under GAAP. (4) Average Annualized Yield % represents the ratio of annualized net investment income, realized and unrealized gains (losses) less investment portfolio interest expense to the average of the prior two quarters (five quarters for trailing twelve months) total investments less investment portfolio debt plus cash. 20


 
(Back To Top)