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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): March 13, 2019
 
 
 
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 March 13, 2019, Tiptree Inc. (the “Company” or “Tiptree”) issued a press release announcing its results of operations for the full year ended December 31, 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 March 25, 2019 and a payment date of April 1, 2019.

On March 13, 2019, the Company posted an investor presentation dated March 2019 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 March 13, 2019
99.2    Tiptree Inc. Investor Presentation - March 2019









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:
March 13, 2019
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

397106593_tiptlogoa12.jpg
TIPTREE REPORTS 2018 RESULTS
Revenues of $625.8 million for 2018, up 7.6% from 2017.

Net income before non-controlling interests of $29.9 million for 2018, an increase of $24.7 million. The increase was primarily driven by improved insurance operating performance and $43.8 million of income from discontinued operations, including the net gain on sale of Care.

Operating EBITDA(1) of $54.9 million for the year ended 2018, down 9.7% from the prior year period.

Book value per share(2) as of December 31, 2018 was $10.79, which including dividends paid represents a 9.6%(3) year over year return.

Declared a dividend of $0.035 per share to stockholders of record on March 25, 2019 with a payment date of April 1, 2019.

New York, New York - March 13, 2019 - 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 year ended December 31, 2018
Summary Consolidated Statements of Operations
($ in thousands)
Year Ended December 31,
 
GAAP:
2018

2017

2016
 
Total revenues
$
625,826

 
$
581,798

 
$
506,423

 
Net income before non-controlling interests
29,883

 
5,234

 
32,338

 
Net income attributable to Common Stockholders
23,933

 
3,604

 
25,320

 
Diluted earnings per share
0.69

 
0.11

 
0.78

 
Cash dividends paid per common share
0.135

 
0.12

 
0.10

 
 
 
 
 
 
 
 
Non-GAAP: (1)
 
 
 
 
 
 
Operating EBITDA
54,943

 
60,872

 
60,547

 
Adjusted EBITDA
28,759

 
37,988

 
78,916

 
Book value per share (2)
10.79

 
9.97

 
10.14

 
_______________________________
(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 legacy limited partnership units of Tiptree Financial Partners, L.P. (“TFP”) for common stock.
(3)
Total return per share for the year ended December 31, 2018 defined as cumulative dividends paid of $0.135 per share plus growth in book value per share from December 31, 2017.

Earnings Conference Call
Tiptree will host a conference call on Thursday, March 14, 2019 at 9:00 a.m. Eastern Time to discuss its full year 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 Thursday, March 14, 2019 at 1:00 p.m. Eastern Time, until midnight Eastern on Thursday, March 21, 2019. To listen to the replay, please dial 1-844-512-2921 (domestic) or 1-412-317-6671 (international), Passcode: 13686612.


Page 1



2018 Financial Overview

Overall:
Delivered total annual return of 9.6% for 2018, as measured by growth in book value per share plus dividends paid.
On April 10, 2018, we completed a corporate reorganization that eliminated Tiptree’s dual class stock structure.
In 2018, we returned $19.2 million to investors through $14.2 million of share buy-backs and $5.0 million of dividends paid.
As of March 11, 2019, the Company purchased and retired 1,472,730 shares of its common stock for $9.1 million through open market purchases and block purchases.

Insurance:
Gross written premiums for 2018 were $868.1 million, up 13.0%. Net written premiums were $466.8 million, up 11.7%, driven by growth in credit protection and other specialty products.
Operating EBITDA of $64.5m, up 21.0% from prior year.
In 2018, we expanded into Europe with the creation of Fortegra Europe Insurance Company Limited.

Tiptree Capital:
On February 1, 2018, we sold our real estate investments to Invesque in exchange for a net 16.6 million shares of common stock, which resulted in an increase to book value of $1.16 per share.
Increased exposure to Real Assets sector with $50m investment in shipping.
In 2019, began re-positioning our asset management platform, by agreeing to invest $75 million to seed new investment funds in exchange for management control of and a profit participation in Tricadia.

Consolidated Results of Operations
Revenues

For the year ended December 31, 2018, revenues were $625.8 million, which increased $44.0 million, or 7.6%, over the prior year period. The increase was driven by growth in earned premiums and service and administrative fees. Earned premiums were $427.8 million for the year ended December 31, 2018, up from $371.7 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 $115.0 million, or 20.5%, from December 31, 2017 to December 31, 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 year ended December 31, 2018, net income before non-controlling interests was $29.9 million compared to income of $5.2 million in the 2017 period, an increase of $24.7 million. The increase was primarily driven by improved insurance operating performance and $43.8 million of income from discontinued operations, including the net gain on sale of Care. These factors were partially offset by unrealized mark-to-market losses on Invesque common shares of $20.7 million and lack of a one-time net tax benefit of $15.2 million from remeasurement of our net deferred tax liabilities as a result of the Tax Act’s change in federal income tax rate from 35% to 21%.

Net Income (Loss) Available to Common Stockholders

For the year ended December 31, 2018, net income available to common stockholders was $23.9 million, an increase of $20.3 million from the prior year period. The key drivers of net income available to common stockholders were the same factors which impacted the net income before non-controlling interests.

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 in stockholders equity. On February 1, 2018, we sold our senior living operations to Invesque in exchange for a net of 16.6 million shares of Invesque common stock which resulted in a pretax gain on sale of $56.9 million. 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 year ended December 31, 2018 versus the prior year periods.

Page 2



($ in thousands)
Year Ended December 31,

2018

2017

2016
Net realized and unrealized gains (losses)(1)
$
(34,817
)

$
(18,592
)

$
18,133

Discontinued operations (Care)(2)
$
57,484


$
(6,222
)

$
(5,824
)
Tiptree Capital - credit investments
$
(628
)

$
10,731


$
20,470

_______________________________
(1) Excludes Mortgage realized and unrealized gains and losses - Performing and NPLs. Includes $20.7 million of unrealized losses attributable to Invesque shares for the year ended December 31, 2018 from the date of the sale (February 1, 2018).
(2) Includes Care for the year ended December 31, 2018, 2017 and 2016. Includes $56.9 million pre-tax gain on sale of Care in 2018.

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.

Operating EBITDA for the year ended December 31, 2018 was $54.9 million compared to $60.9 million for the 2017 period, a decrease of $6.0 million, or 9.7%. The key drivers were increased Operating EBITDA from specialty insurance operations, which were more than offset by lower distributions on credit investments within Tiptree Capital.

Total stockholders’ equity was $399.3 million as of December 31, 2018 compared to $396.8 million as of December 31, 2017, primarily driven by 2018 net income, net of share repurchases and dividends paid. Book value per share for the period ended December 31, 2018 was $10.79, an increase from book value per share, as exchanged, of $9.97 as of December 31, 2017. The key drivers of the period-over-period impact were 2018 earnings per share and the purchase of 2.2 million shares at an average 39% discount to book value. Those increases were partially offset by dividends paid of $0.135 per share and officer compensation share issuances. In 2018, Tiptree returned $19.2 million to shareholders through share repurchases and dividends paid.

Results by Segment

Tiptree is a holding company that combines insurance operations with investment management capabilities. Our principal operating subsidiary is a leading provider of specialty insurance products and related services. We also allocate capital across a broad spectrum of businesses, assets and other investments, which we refer to as Tiptree Capital. As such, we classify our business into one reportable segment, specialty insurance, with the remainder of our non-insurance operations aggregated into Tiptree Capital. 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.

Pre-tax Income
($ in thousands)
Year Ended December 31,

2018

2017

2016
Specialty Insurance
$
18,560


$
5,404


$
46,804

Tiptree Capital
(7,805
)

20,336


37,142

Corporate
(30,551
)

(29,070
)

(34,806
)
Pre-tax income (loss) from continuing operations
$
(19,796
)

$
(3,330
)

$
49,140

Pre-tax income (loss) from discontinued operations (1)
$
57,484


$
(6,222
)

$
(5,824
)
(1)
Includes Care for the year ended December 31, 2018, 2017 and 2016. Includes $56.9 million pre-tax gain on sale of Care in 2018.

Operating EBITDA - Non-GAAP (1) 
The following tables present the components of Operating EBITDA.

Page 3



($ in thousands)
Year Ended December 31,

2018

2017

2016
Specialty Insurance
$
64,536


$
53,310


$
49,334

Tiptree Capital (2)
13,726


29,792


41,509

Corporate
(23,319
)

(22,230
)

(30,296
)
Operating EBITDA
$
54,943


$
60,872


$
60,547

(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 and Discontinued Operations.”

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 4



Tiptree Inc.
Condensed Consolidated Balance Sheet
($ in thousands, except share data)
 
As of December 31,
 
2018
 
2017
Assets:
 
 
 
Investments:
 
 
 
Available for sale securities, at fair value
$
283,563

 
$
182,448

Loans, at fair value
215,383

 
258,173

Equity securities
122,979

 
25,536

Other investments
75,002

 
59,142

Total investments
696,927

 
525,299

Cash and cash equivalents
86,003

 
110,667

Restricted cash
10,521

 
31,570

Notes and accounts receivable, net
223,105

 
186,422

Reinsurance receivables
420,351

 
352,967

Deferred acquisition costs
170,063

 
147,162

Goodwill
91,562

 
91,562

Intangible assets, net
52,121

 
64,017

Other assets
46,034

 
31,584

Assets held for sale
68,231

 
448,492

Total assets
$
1,864,918

 
$
1,989,742


 
 
 
Liabilities and Stockholders’ Equity
 
 
 
Liabilities:
 
 
 
Debt, net
$
354,083

 
$
346,081

Unearned premiums
599,444

 
503,446

Policy liabilities and unpaid claims
131,611

 
112,003

Deferred revenue
75,754

 
56,745

Reinsurance payable
117,597

 
90,554

Other liabilities and accrued expenses
124,190

 
121,321

Liabilities held for sale
62,980

 
362,818

Total liabilities
$
1,465,659

 
$
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, 35,870,348 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
331,892

 
295,582

Accumulated other comprehensive income (loss), net of tax
(2,058
)
 
966

Retained earnings
57,231

 
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
387,101

 
300,077

Non-controlling interests - TFP

 
77,494

Non-controlling interests - Other
12,158

 
19,203

Total stockholders’ equity
399,259

 
396,774

Total liabilities and stockholders’ equity
$
1,864,918

 
$
1,989,742

(1) See Note (1) Organization and Note (16) Stockholders’ Equity in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 for information related to changes in the Company’s equity capitalization.


Page 5



Tiptree Inc.
Condensed Consolidated Statements of Operations
($ in thousands, except share data)
 
Year Ended December 31,
 
2018
 
2017
 
2016
Revenues:
 
 
 
 
 
Earned premiums, net
$
427,837

 
$
371,700

 
$
229,436

Service and administrative fees
102,315

 
95,160

 
109,348

Ceding commissions
9,651

 
8,770

 
24,784

Net investment income
19,179

 
16,286

 
12,981

Net realized and unrealized gains (losses)
28,782

 
47,607

 
87,300

Other revenue
38,062

 
42,275

 
42,574

Total revenues
625,826

 
581,798

 
506,423

Expenses:
 
 
 
 
 
Policy and contract benefits
152,095

 
123,959

 
106,784

Commission expense
262,460

 
241,835

 
147,253

Employee compensation and benefits
113,557

 
115,949

 
115,612

Interest expense
27,013

 
25,562

 
21,010

Depreciation and amortization
12,596

 
13,841

 
14,302

Other expenses
77,901

 
74,439

 
72,576

Total expenses
645,622

 
595,585

 
477,537

Other income:
 
 
 
 
 
Income attributable to consolidated CLOs

 
24,903

 
53,577

Expenses attributable to consolidated CLOs

 
14,446

 
33,323

Net income (loss) attributable to consolidated CLOs

 
10,457

 
20,254

Total other income

 
10,457

 
20,254

Income (loss) before taxes from continuing operations
(19,796
)
 
(3,330
)
 
49,140

Less: provision (benefit) for income taxes
(5,909
)
 
(12,562
)
 
12,515

Net income (loss) from continuing operations
(13,887
)
 
9,232

 
36,625

Discontinued operations:
 
 
 
 
 
Income (loss) before taxes from discontinued operations
624

 
(6,222
)
 
(5,824
)
Gain on sale of discontinued operations
56,860

 

 

Less: Provision (benefit) for income taxes
13,714

 
(2,224
)
 
(1,537
)
Net income (loss) from discontinued operations
43,770

 
(3,998
)
 
(4,287
)
Net income (loss) before non-controlling interests
29,883

 
5,234

 
32,338

Less: net income (loss) attributable to non-controlling interests - TFP
5,500

 
748

 
6,432

Less: net income (loss) attributable to non-controlling interests - Other
450

 
882

 
586

Net income (loss) attributable to Common Stockholders
$
23,933

 
$
3,604

 
$
25,320

 
 
 
 
 
 
Net income (loss) per Common Share:
 
 
 
 
 
Basic, continuing operations, net
$
(0.38
)
 
$
0.22

 
$
0.88

Basic, discontinued operations, net
1.07

 
(0.10
)
 
(0.09
)
Basic earnings per share
$
0.69

 
$
0.12

 
$
0.79

 
 
 
 
 
 
Diluted, continuing operations, net
(0.38
)
 
0.21

 
0.86

Diluted, discontinued operations, net
1.07

 
(0.10
)
 
(0.08
)
Diluted earnings per share
$
0.69

 
$
0.11

 
$
0.78

 
 
 
 
 
 
Weighted average number of Common Shares:
 
 
 
 
 
Basic
34,715,852

 
29,134,190

 
31,721,449

Diluted
34,715,852

 
37,306,632

 
31,766,674

 
 
 
 
 
 
Dividends declared per Common Share
$
0.14

 
$
0.12

 
$
0.10





Page 6



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)
Year Ended December 31,

2018

2017

2016
Net income (loss) attributable to Common Stockholders
$
23,933


$
3,604


$
25,320

Add: net (loss) income attributable to noncontrolling interests
5,950


1,630


7,018

Less: net income from discontinued operations
43,770


(3,998
)

(4,287
)
Income (loss) from continuing operations
$
(13,887
)

$
9,232


$
36,625

Corporate Debt related interest expense(1)
18,162


12,838


10,518

Consolidated income tax expense (benefit)
(5,909
)

(12,562
)

12,515

Depreciation and amortization expense(2)
11,614


12,408


9,248

Non-cash fair value adjustments(3)
(391
)

3,547


1,277

Non-recurring expenses(4)
2,358


1,944


(1,736
)
Adjusted EBITDA from continuing operations
$
11,947


$
27,407


$
68,447

Add: Stock-based compensation expense
6,657


6,559


2,584

Add: Vessel depreciation, net of capital expenditures
898

 

 

Less: Realized and unrealized gain (loss)(5)
(34,817
)

(18,591
)

18,133

Less: Third party non-controlling interests(6)


851


1,420

Operating EBITDA from continuing operations
$
54,319


$
51,706


$
51,478







Income (loss) from discontinued operations
$
43,770


$
(3,998
)

$
(4,287
)
Consolidated income tax expense (benefit)
13,714


(2,224
)

(1,537
)
Consolidated depreciation and amortization expense


15,645


14,166

Non-cash fair value adjustments (3)
(40,672
)




Non-recurring expenses (4)


1,158


2,127

Adjusted EBITDA from discontinued operations
$
16,812


$
10,581


$
10,469

Less: Realized and unrealized gain (loss) (5)
16,188





Less: Third party non-controlling interests(6)


1,415


1,400

Operating EBITDA from discontinued operations
$
624


$
9,166


$
9,069

Total Adjusted EBITDA
$
28,759


$
37,988


$
78,916

Total Operating EBITDA
$
54,943


$
60,872


$
60,547

_______________________________
(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.
(6)
Removes the Operating EBITDA associated with third party non-controlling interests. Does not remove the non-controlling interests related to employee based shares.




Page 7



Non-GAAP Financial Measures — Adjusted EBITDA and Operating EBITDA

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

Year Ended December 31, 2018
($ in thousands)
Specialty Insurance

Tiptree Capital (1)

Corporate Expenses

Total
Pre-tax income/(loss) from continuing ops
$
18,560


$
(7,805
)

$
(30,551
)

$
(19,796
)
Pre-tax income/(loss) from discontinued ops


57,484




57,484

Adjustments:







Corporate Debt related interest expense(2)
13,149

 

 
5,013

 
18,162

Depreciation and amortization expenses(3)
9,796


1,570


248


11,614

Non-cash fair value adjustments(4)
66


(41,129
)



(41,063
)
Non-recurring expenses(5)
3,159




(801
)

2,358

Adjusted EBITDA
$
44,730


$
10,120


$
(26,091
)

$
28,759

Add: Stock-based compensation expense
3,759


126


2,772


6,657

Add: Vessel depreciation, net of capital expenditures


898




898

Less: Realized and unrealized gain (loss)(6)
(16,047
)

(2,582
)



(18,629
)
Less: Third party non-controlling interests(7)







Operating EBITDA
$
64,536


$
13,726


$
(23,319
)

$
54,943


Year Ended December 31, 2017
($ in thousands)
Specialty Insurance

Tiptree Capital (1)

Corporate Expenses

Total
Pre-tax income/(loss) from continuing ops
$
5,404


$
20,336


$
(29,070
)

$
(3,330
)
Pre-tax income/(loss) from discontinued ops


(6,222
)



(6,222
)
Adjustments:







Corporate Debt related interest expense(2)
8,026

 


4,812

 
12,838

Depreciation and amortization expenses(3)
11,366

 
16,439


248

 
28,053

Non-cash fair value adjustments(4)
508


3,039




3,547

Non-recurring expenses(5)
1,657


1,837


(392
)

3,102

Adjusted EBITDA
$
26,961


$
35,429


$
(24,402
)

$
37,988

Add: Stock-based compensation expense
3,934


$
453


2,172


6,559

Less: Realized and unrealized gain (loss)(6)
(22,415
)

3,824




(18,591
)
Less: Third party non-controlling interests(7)


2,266




2,266

Operating EBITDA
$
53,310


$
29,792


$
(22,230
)

$
60,872


Year Ended December 31, 2016
($ in thousands)
Specialty Insurance

Tiptree Capital (1)

Corporate Expenses

Total
Pre-tax income/(loss) from continuing ops
$
46,804


$
37,142


$
(34,806
)

$
49,140

Pre-tax income/(loss) from discontinued ops


(5,824
)



(5,824
)
Adjustments:







Corporate Debt related interest expense(2)
5,592


196


4,730


10,518

Depreciation and amortization expenses(3)
8,130


15,036


248


23,414

Non-cash fair value adjustments(4)


2,693




2,693

Non-recurring expenses(5)


711


(1,736
)

(1,025
)
Adjusted EBITDA
$
60,526


$
49,954


$
(31,564
)

$
78,916

Add: Stock-based compensation expense
1,108


208


1,268


2,584

Less: Realized and unrealized gain (loss)(6)
12,300


5,833




18,133

Less: Third party non-controlling interests(7)


2,820




2,820

Operating EBITDA
$
49,334


$
41,509


$
(30,296
)

$
60,547

_______________________________
The footnotes below correspond to the tables above, under “—Adjusted EBITDA and Operating EBITDA - Non-GAAP”
(1)
Includes discontinued operations related to Care. For more information, see “Note—(3) Dispositions, Assets Held for Sale & Discontinued Operations” in the Company’s Annual Report on Form 10-K for the year ended December 31, 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.
(7)
Removes the Operating EBITDA associated with third party non-controlling interests. Does not remove the non-controlling interests related to employee based shares.

Page 8





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 December 31,

2018

2017
 
2016
Total stockholders’ equity
$
399,259

 
$
396,774

 
$
390,144

Less non-controlling interest - other
12,158

 
19,203

 
20,636

Total stockholders’ equity, net of non-controlling interests - other
$
387,101

 
$
377,571

 
$
369,508

Total Common shares outstanding
35,870

 
29,805

 
28,388

Total Class B shares outstanding

 
8,049

 
8,049

Total shares outstanding
35,870

 
37,854

 
36,437

Book value per share(1)
$
10.79

 
$
9.97


$
10.14

(1) For periods prior to April 10, 2018, book value per share assumes full exchange of legacy limited partnership units of TFP for common stock.

Page 9

(Back To Top)

Section 3: EX-99.2 (EXHIBIT 99.2)

ex9924q18investorpresent
Exhibit 99.2 NASDAQ: TIPT INVESTOR PRESENTATION - 2018 March 2019 Financial information for year ended December 31, 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 certain 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 2018 Financials 2018 performance objectives Revenue Grow insurance business while maintaining strong underwriting performance þ Gross written premiums of $868.1m, up 13.0%, with net written premiums of $466.8m, million $625.8 up 11.7%, driven by growth in credit and other specialty products 7.6% vs. prior year þ Insurance Operating EBITDA of $64.5m, up 21.0% from prior year þ Stable combined ratio of 92.5% demonstrates our continued focus on underwriting profitability Net income1 Re-positioned investments within Tiptree Capital $29.9 million þ Sold our real estate investments to Invesque in exchange for a net 16.6m shares of vs. prior year of $5.2 million common stock, which resulted in an increase to book value of $1.16 per share þ Increased exposure to real assets sector with $50m investment in shipping þ In 2019, began re-positioning our asset management platform by agreeing to invest $75m to seed 2 Operating EBITDA new investment funds in exchange for management control and a profit participation in Tricadia $54.9 million Generate enhanced risk-adjusted long-term returns for shareholders vs. prior year of $60.9 million þ Total year-over-year return of 9.6%3, including $19.2m returned to shareholders through buy-backs and dividends Book Value • Repurchased 2,177,235 shares for $14.2m in 2018 and 1,472,730 shares for 2 per share $9.1m in year-to-date 2019 at an average 40% discount to book $10.79 • 2018 dividends paid of $0.135 per share, an increase of 12.5% from 2017 8.2% vs. 12/31/17 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 for the year ended December 31, 2018 defined as cumulative dividends paid of $0.135 per share plus growth in book value per share from December 31, 2017. 3


 
FINANCIAL RESULTS ($ in millions, except per share information) Consolidated financial metrics Key drivers 2017 2018 V% Highlights: Total Revenues $ 581.8 $ 625.8 7.6 % • Pre-tax gain of $57.5 million from sale of Care Net income (loss) before NCI $ 5.2 $ 29.9 475.0 % • Growth in insurance underwriting results Diluted EPS $ 0.11 $ 0.69 527.3 % • Consistent earnings from dividends and management fees Operating EBITDA1 $ 60.9 $ 54.9 (9.9)% Challenges: Adjusted EBITDA1 $ 38.0 $ 28.8 (24.2)% • Unrealized mark-to-market investment losses (incl. Invesque) Total shares outstanding 37.9 35.9 (5.3)% 1 • Reduced earnings from decreased exposure to investments Book Value per share $ 9.97 $ 10.79 8.2 % in credit related assets Dividends paid $ 0.12 $ 0.135 12.5 % 2018 Operating EBITDA to Pre-tax Income Bridge $(20.7) - Invesque unrealized marks $(5.9) - Equities (non-Invesque) $(6.9) - Loan unrealized marks $57.5 $(1.3) - Other $54.9 $(34.8) $(12.5) $37.7 $(18.2) $(6.7) $(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 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


 
CAPITAL ALLOCATION ($ in millions, except per share information) Tiptree 1 Total Operating Equity BVPS Capital1 EBITDA1 2018 Highlights Business Lines 2018 2018 2018 2018 Operating EBITDA return on avg total capital of 8.4% • Specialty Insurance: 14.4% • Tiptree Capital: 8.0% Specialty Insurance2 $ 249.1 $ 6.94 $ 456.3 $ 64.5 Reduced by $64.5m of acquisition Specialty Insurance: - Underwriting purchase price amortization 45.9 (or $1.21 per share after-tax) - Investments 18.6 • Insurance Operating EBITDA of $64.5m, up 21.0% from growth across all product lines • Improved net investment income as the Tiptree Capital $ 182.0 $ 5.07 $ 182.0 $ 13.7 Insurance portfolio grows - Asset mgmt fees, net ($1.5B AUM) — — — 2.1 Tiptree Capital: - Real Assets (incl. Invesque) 154.0 4.29 154.0 9.0 • Reduced Operating EBITDA associated with - Other investments 28.0 0.78 28.0 2.6 divested assets (primarily distributions from credit investments) Corporate2,4 $ (44.1) $ (1.23) $ 28.2 $ (23.3) • Declines in mortgage origination volumes and margins as interest rates rise - Corporate expenses (16.6) • Investment of $50m into vessels in the second 5 - Corporate incentive comp expense (6.7) half of 2018 Corporate: Total Tiptree $ 387.1 $ 10.79 $ 666.5 $ 54.9 • Expenses flat as infrastructure stabilized - Total shares outstanding 35.9 1 See the appendix for a reconciliation of Non-GAAP metrics including Book value per share (BVPS), Total Capital and Operating EBITDA. 2 Total Capital adds-back $160m Corporate Debt at Insurance Company ($13.1m interest expense in 2018) and $72m Corporate Debt at Corporate ($5.0m interest expense in 2018) 3 Includes Operating EBITDA from Siena Capital, Luxury Mortgage and CLO subordinated note investments which were sold in 2017. 4 Includes $27.7m cash at HoldCo which does not include available liquidity at subsidiaries. 5 Corporate incentive compensation expense includes final payment of $1.7m pursuant to a separation agreement dated November 10, 2015 5


 
SPECIALTY INSURANCE


 
FINANCIAL PERFORMANCE HIGHLIGHTS ($ in millions) Financial metrics 2018 highlights & outlook 2017 2018 Variance 1 Continuing to expand product offerings with a focus on Gross Written Premiums $ 768.3 $ 868.1 $ 99.8 growth in written premiums and stable profitability Revenue $ 479.0 $ 549.9 $ 70.9 • $675m of unearned premiums and deferred revenue, Pre-tax income $ 5.4 $ 18.6 $ 13.2 representing 20.5% year-over-year growth Operating EBITDA1 $ 53.3 $ 64.5 $ 11.2 1 • Net written premiums grew year-to-date by $48.8m, or Net portfolio income $ (6.8) $ 2.8 $ 9.6 11.7% driven by growth in credit and specialty programs Combined ratio1 92.9% 92.5% (0.4)% • Improved our combined ratio by 40 basis points Total Capital1 $ 441.3 $ 456.3 $ 15.0 Unearned premiums & Deferred revenue $ 560.2 $ 675.2 $ 115.0 2 Produced stable underwriting results which were partially offset by continued investments in strategic growth initiatives Insurance products • Underwriting margin of $127.8m, up 12.7%, driven by Operating Net Written Underwriting strong performance across all products EBITDA1 Premiums Margin1 • Other expenses increased by $3.3m as we make $466.8 $64.5 $127.8 additional investments in our product offerings $418.0 51.0 $113.4 9.1 Services/other 13.1 Programs $53.3 18.6 28.8 61.0 10.5 60.3 9.8 28.6 Warranty 15.6 Improvements in investment portfolio impacted by: Investments 25.7 3 • Year-to-date net investment income of $19.2 million 45.9 328.9 354.8 Insurance • Partially offset by unrealized mark-to-market losses 37.7 67.4 77.0 Credit underwriting protection 2017 2018 2017 2018 2017 2018 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 $463.2 180.5.0 We actively manage our investment portfolio to achieve a balance of: 29.4 Other $396.4 • Short-term liquidity to cover current claims obligations 15.4 $358.0 78.4 Real Estate 4.0 35.3 • Enhanced risk-adjusted returns through selective alternative 23.6 25.5 Equities investments with a focus on longer-term higher yielding assets 48.6 53.3 83.9 Loans2 103.9 Cash & cash 53.9 equivalents3 Highlights Available for sale 31.7 Securities 283.6 • Net investment portfolio grew $66.8 million, or 16.9% from 2017 182.4 • Rising interest rates have contributed increased interest income 146.2 • Volatile equity markets led to unrealized losses in our equity positions 2016 2017 2018 Financials • $6.9m of unrealized losses on credit investments, primarily a $ 10.0 $ (22.3) $ (17.7) Unrealized gains (losses) result of the December 2018 market decline 4.7 5.8 5.6 Realized gains (losses) 13.0 16.3 19.2 Net investment income (3.1) (6.6) (4.7) Interest expense $ 24.6 $ (6.8) $ 2.4 Net Portfolio Income 8.0% (1.9)% 0.6% Average Annualized Yield4 Equity realized & unrealized $7.3 $(23.8) $(9.4) 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 • Continued reducing our exposure to credit markets which we $210.1 began in 2017 36.7 $182.0 $161.8 27.1 Specialty finance • Increased our exposure to real assets with $50 million & Other 37.3 deployed into shipping sector 74.6 Invesque/Care3,4 105.3 Dry-bulk shipping 2018 financial highlights 119.5 98.8 CLOs & credit Asset Management: AUM remains stable at $1.5B investments 48.7 • In late 2017 and Q1'18, we extended and re-priced three CLOs 5.0 0.9 • Reduced incentive fees on older vintage CLOs have driven Q4'15 2017 2018 decline in pre-tax income $1.9 $1.6 $1.5 Fee-earning AUM ($B)2 Credit Investments: Distributions and investment gains decreased as we actively reduced our exposure to certain credit investments Return on Invested Capital1 Real Assets (Invesque): Operating EBITDA flat to prior year driven by Pre-tax income Operating EBITDA dividends from Invesque 2017 2018 2017 2018 • Care gain (including $10.7m contingent gain in Dec'18), Asset mgmt fees, net $3.5 $2.1 $3.5 $2.1 partially offset by unrealized losses on Invesque shares drove Credit investments 10.7 (0.6) 6.9 0.8 pre-tax income Real assets3,4 (6.2) 47.9 9.2 9.0 Specialty finance/other: Margin compression from recent interest Specialty finance/other 6.1 0.3 10.2 1.8 rate increases had a negative impact on year-over-year Operating Total $14.1 $49.7 $29.8 $13.7 EBITDA at our mortgage operations 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 12/31/2018. 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 - $113.1 million, $93.6 million in Tiptree Capital plus $10.7m receivable for contingent asset sales. 10


 
OUTLOOK ($ in millions) 2018 Highlights Book value per share1 ü 2018 total shareholder return of 9.6%2, including $19.2 million returned through buy-backs and dividends $9.97 $10.79 ü Continued execution on our growth initiatives in our insurance operations ü Re-positioned investments within Tiptree Capital ü Simplified corporate structure 2017 2018 Looking ahead 1 Operating EBITDA •1 Continue to focus on organic growth initiatives $60.9 – Growth in written premiums while maintaining underwriting standards $54.9 •2 Actively seek acquisition opportunities •3 Focus on growing and improving long-term, net investment income •4 Continue to broaden investor awareness of Tiptree 2017 2018 1 See the appendix for a reconciliation of Book value per share and Operating EBITDA to GAAP financials. 2 Total return per share for the year ended December 31, 2018 defined as cumulative dividends paid of $0.135 per share plus growth in book value per share from December 31, 2017. 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) Year Ended December 31, 2018 2017 2016 Net income (loss) attributable to Common Stockholders $ 23,933 $ 3,604 $ 25,320 Add: net (loss) income attributable to noncontrolling interests 5,950 1,630 7,018 Less: net income from discontinued operations 43,770 (3,998) (4,287) Income (loss) from continuing operations $ (13,887) $ 9,232 $ 36,625 Corporate Debt related interest expense(1) 18,162 12,838 10,518 Consolidated income tax expense (benefit) (5,909) (12,562) 12,515 Depreciation and amortization expense(2) 11,614 12,408 9,248 Non-cash fair value adjustments(3) (391) 3,547 1,277 Non-recurring expenses(4) 2,358 1,944 (1,736) Adjusted EBITDA from continuing operations $ 11,947 $ 27,407 $ 68,447 Add: Stock-based compensation expense 6,657 6,559 2,584 Add: Vessel depreciation, net of capital expenditures 898 — — Less: Realized and unrealized gain (loss)(5) (34,817) (18,591) 18,133 Less: Third party non-controlling interests(6) — 851 1,420 Operating EBITDA from continuing operations $ 54,319 $ 51,706 $ 51,478 Income (loss) from discontinued operations $ 43,770 $ (3,998) $ (4,287) Consolidated income tax expense (benefit) 13,714 (2,224) (1,537) Consolidated depreciation and amortization expense — 15,645 14,166 Non-cash fair value adjustments (3) (40,672) — — Non-recurring expenses (4) — 1,158 2,127 Adjusted EBITDA from discontinued operations $ 16,812 $ 10,581 $ 10,469 Less: Realized and unrealized gain (loss) (5) 16,188 — — Less: Third party non-controlling interests(6) — 1,415 1,400 Operating EBITDA from discontinued operations $ 624 $ 9,166 $ 9,069 Total Adjusted EBITDA $ 28,759 $ 37,988 $ 78,916 Total Operating EBITDA $ 54,943 $ 60,872 $ 60,547 (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. (6) Removes the Operating EBITDA associated with third party non-controlling interests. Does not remove the non-controlling interests related to employee based shares. 14


 
NON-GAAP RECONCILIATIONS - ADJUSTED AND OPERATING EBITDA Year Ended December 31, 2018 Specialty Tiptree Corporate ($ in thousands) Insurance Capital (1) Expenses Total Pre-tax income/(loss) from continuing ops $ 18,560 $ (7,805) $ (30,551) $ (19,796) Pre-tax income/(loss) from discontinued ops — 57,484 — 57,484 Adjustments: Corporate Debt related interest expense(2) 13,149 — 5,013 18,162 Depreciation and amortization expenses(3) 9,796 1,570 248 11,614 Non-cash fair value adjustments(4) 66 (41,129) — (41,063) Non-recurring expenses(5) 3,159 — (801) 2,358 Adjusted EBITDA $ 44,730 $ 10,120 $ (26,091) $ 28,759 Add: Stock-based compensation expense 3,759 126 2,772 6,657 Add: Vessel depreciation, net of capital expenditures — 898 898 Less: Realized and unrealized gain (loss)(6) (16,047) (2,582) — (18,629) Less: Third party non-controlling interests(7) — — — — Operating EBITDA $ 64,536 $ 13,726 $ (23,319) $ 54,943 Year Ended December 31, 2017 Specialty Tiptree Corporate ($ in thousands) Insurance Capital (1) Expenses Total Pre-tax income/(loss) from continuing ops $ 5,404 $ 20,336 $ (29,070) $ (3,330) Pre-tax income/(loss) from discontinued ops — (6,222) — (6,222) Adjustments: Corporate Debt related interest expense(2) 8,026 — 4,812 12,838 Depreciation and amortization expenses(3) 11,366 16,439 248 28,053 Non-cash fair value adjustments(4) 508 3,039 — 3,547 Non-recurring expenses(5) 1,657 1,837 (392) 3,102 Adjusted EBITDA $ 26,961 $ 35,429 $ (24,402) $ 37,988 Add: Stock-based compensation expense 3,934 $ 453 2,172 6,559 Less: Realized and unrealized gain (loss)(6) (22,415) 3,824 — (18,591) Less: Third party non-controlling interests(7) — 2,266 — 2,266 Operating EBITDA $ 53,310 $ 29,792 $ (22,230) $ 60,872 (1) Includes discontinued operations related to Care. For more information, see “Note—(3) Dispositions, Assets Held for Sale & Discontinued Operations.” (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. (7) Removes the Operating EBITDA associated with third party non-controlling interests. Does not remove the non-controlling interests related to employee based shares. 15


 
NON-GAAP RECONCILIATIONS - ADJUSTED AND OPERATING EBITDA Year Ended December 31, 2016 Specialty Tiptree Corporate ($ in thousands) Insurance Capital (1) Expenses Total Pre-tax income/(loss) from continuing ops $ 46,804 $ 37,142 $ (34,806) $ 49,140 Pre-tax income/(loss) from discontinued ops — (5,824) — (5,824) Adjustments: — Corporate Debt related interest expense(2) 5,592 196 4,730 10,518 Depreciation and amortization expenses(3) 8,130 15,036 248 23,414 Non-cash fair value adjustments(4) — 2,693 — 2,693 Non-recurring expenses(5) — 711 (1,736) (1,025) Adjusted EBITDA $ 60,526 $ 49,954 $ (31,564) $ 78,916 Add: Stock-based compensation expense 1,108 208 1,268 2,584 Less: Realized and unrealized gain (loss)(6) 12,300 5,833 — 18,133 Less: Third party non-controlling interests(7) — 2,820 — 2,820 Operating EBITDA $ 49,334 $ 41,509 $ (30,296) $ 60,547 (1) Includes discontinued operations related to Care. For more information, see “Note—(3) Dispositions, Assets Held for Sale & Discontinued Operations.” (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. (7) Removes the Operating EBITDA associated with third party non-controlling interests. Does not remove the non-controlling interests related to employee based shares. 16


 
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 $10.79 as of December 31, 2018 compared with book value per share, as exchanged, of $9.97 as of December 31, 2017. Total stockholders’ equity, net of other non-controlling interests for the Company was $387.1 million as of December 31, 2018, which comprised total stockholders’ equity of $399.3 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 $377.6 million as of December 31, 2017, which comprised total stockholders’ equity of $396.8 million adjusted for $19.2 million attributable to non-controlling interest at subsidiaries that are not wholly owned by the Company. ($ in thousands, except per share information) As of December 31, 2018 2017 2016 Total stockholders’ equity $ 399,259 $ 396,774 $ 390,144 Less non-controlling interest - other 12,158 19,203 20,636 Total stockholders’ equity, net of non-controlling interests - other $ 387,101 $ 377,571 $ 369,508 Total Common shares outstanding 35,870 29,805 28,388 Total Class B shares outstanding — 8,049 8,049 Total shares outstanding 35,870 37,854 36,437 Book value per share(1) $ 10.79 $ 9.97 $ 10.14 (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 December 31, 2018 2017 2016 Total stockholders’ equity $ 399,259 $ 396,774 $ 390,144 Less non-controlling interest - other 12,158 19,203 20,636 Total stockholders’ equity, net of non-controlling interests - other $ 387,101 $ 377,571 $ 369,508 Plus Specialty Insurance accumulated depreciation and amortization, net of tax 43,228 36,088 28,497 Plus Care accumulated depreciation and amortization - discontinued operations, net of tax and NCI — 30,521 21,528 Plus acquisition costs 4,161 8,427 7,311 Invested Capital $ 434,490 $ 452,607 $ 426,844 Plus corporate debt 232,090 188,500 199,000 Total Capital $ 666,580 $ 641,107 $ 625,844 (1) As of December 31, 2018, add-back of $64.5 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. 17


 
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) Year Ended December 31, Revenues: 2018 2017 2016 Net earned premiums $ 427,837 $ 371,700 $ 229,436 Service and administrative fees 102,315 95,160 109,348 Ceding commissions 9,651 8,770 24,784 Other income 2,554 3,552 2,859 Underwriting Revenues - Non-GAAP $ 542,357 $ 479,182 $ 366,427 Less underwriting expenses: Policy and contract benefits 152,095 123,959 106,784 Commission expense 262,460 241,835 147,253 Underwriting Margin - Non-GAAP $ 127,802 $ 113,388 $ 112,390 Less operating expenses: Employee compensation and benefits 45,838 41,300 37,937 Other expenses 41,940 38,596 32,964 Combined Ratio 92.5% 92.9% 87.9% Plus investment revenues: Net investment income 19,179 16,286 12,981 Net realized and unrealized gains (11,664) (16,503) 14,762 Less other expenses: Interest expense 18,201 15,072 9,244 Depreciation and amortization expenses 10,778 12,799 13,184 Pre-tax income (loss) $ 18,560 $ 5,404 $ 46,804 18


 
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) As of December 31, 2018 2017 2016 Total Investments $ 489,980 $ 454,032 $ 472,800 Investment portfolio debt (1) (80,026) (111,459) (146,544) Cash and cash equivalents 50,647 38,095 26,020 Restricted cash (2) 2,873 24,219 12,133 Receivable due from brokers (3) 299 259 2,027 Liability due to brokers (3) (486) (8,669) (8,457) Net investments - Non-GAAP $ 463,287 $ 396,477 $ 357,979 ($ in thousands) Year Ended December 31, 2018 2017 2016 Net investment income $ 19,179 $ 16,286 $ 12,981 Realized gains (losses) 5,600 5,815 4,720 Unrealized gains (losses) (17,264) (22,318) 10,042 Interest expense (4,696) (6,625) (3,155) Net portfolio income (loss) $ 2,819 $ (6,842) $ 24,588 Average Annualized Yield % (4) 0.7% (1.9)% 8.0% (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. 19


 
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