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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): November 6, 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.)
299 Park Avenue, 13th Floor
New York, New York
 
10171
(Address of Principal Executive Offices)
 
(Zip Code)
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, par value $0.001 per share
TIPT
Nasdaq Capital Market

Registrant’s telephone number, including area code: (212) 446-1400
 
Former Address: 780 Third Avenue, 21st Floor, New York, New York, 10017
 
  
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 6, 2019, Tiptree Inc. (the “Company” or “Tiptree”) issued a press release announcing its results of operations for the quarter ended September 30, 2019. 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 $0.04 per share to Tiptree’s stockholders, with a record date of November 18, 2019 and a payment date of November 25, 2019.

On November 6, 2019, the Company posted an investor presentation dated November 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 November 6, 2019
99.2    Tiptree Inc. Investor Presentation - November 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:
November 6, 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

400862611_tiptlogoa16.jpg
TIPTREE REPORTS THIRD QUARTER 2019 RESULTS
Revenues of $189.2 million for the quarter, up 9.6% from the prior year period.

Net loss before non-controlling interests of $0.9 million for the quarter compared to $0.5 million in the prior year period, driven primarily by higher unrealized losses on investments.

Operating EBITDA(1) of $17.3 million for the quarter, an increase of 20.1% from the prior year period, driven by growth in insurance operations and contributions from our shipping and mortgage operations within Tiptree Capital.

Book value per share as of September 30, 2019 was $11.43, which including dividends paid represents a 7.5%(2) year over year return.

Declared a dividend of $0.04 per share to stockholders of record on November 18, 2019 with a payment date of November 25, 2019.

New York, New York - November 6, 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 nine months ended September 30, 2019
Summary Consolidated Statements of Operations
($ in millions, except per share information)
Three Months Ended  
 September 30,
 
Nine Months Ended 
 September 30,
GAAP:
2019
 
2018
 
2019
 
2018
Total revenues
$
189.2

 
$
172.6

 
$
564.2

 
$
473.4

Net income (loss) before non-controlling interests
(0.9
)
 
(0.5
)
 
15.6

 
29.4

Net income (loss) attributable to Common Stockholders
(1.5
)
 
(0.6
)
 
14.2

 
23.8

Diluted earnings per share
(0.04
)
 
(0.02
)
 
0.39

 
0.69

Cash dividends paid per common share
0.040

 
0.035

 
0.115

 
0.100

 
 
 
 
 
 
 
 
Non-GAAP: (1)
 
 
 
 
 
 
 
Operating EBITDA
17.3

 
14.4

 
42.6

 
38.3

Adjusted EBITDA
6.2

 
7.7

 
43.7

 
23.2

Book value per share
11.43

 
10.77

 
11.43

 
10.77


(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) Total return per share as of September 30, 2019 defined as cumulative dividends paid of $0.15 per share plus growth in book value per share from September 30, 2018.

Earnings Conference Call
Tiptree will host a conference call on Thursday, November 7, 2019 at 9:00 a.m. Eastern Time to discuss its third quarter 2019 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, November 7, 2019 at 1:00 p.m. Eastern Time, until midnight Eastern on Thursday, November 14, 2019. To listen to the replay, please dial 1-844-512-2921 (domestic) or 1-412-317-6671 (international), Passcode: 13694922.

Page 1



Q3’19 Financial Overview

Overall:
Delivered a year-to-date return of 7.0%, as measured by growth in book value per share plus dividends paid.
Year-to-date 2019, we purchased and retired 1,472,730 shares of our Common Stock for $9.1 million through open market purchases and block purchases.
Increased our quarterly dividend for the third consecutive year to $0.04 per share, a 14.3% increase.

Insurance:
Gross written premiums for the quarter were $275.1 million, up 22.0%, with net written premiums of $160.1 million, up 21.7%, both driven primarily by growth in credit protection and warranty products. Year-to-date 2019 gross written premiums were $736.1 million, up 18.8%, with net written premiums of $434.8 million, up 29.2%, driven by growth in all product lines.
Combined ratio of 92.1% for the quarter, and 92.8% for the year-to-date, both improvements from prior year as a result of increased underwriting margins.
Within our insurance investment portfolio, we earned an average annualized yield of 4.1%, up from 2.2% from the prior year period, driven primarily by lower unrealized losses and lower investment portfolio interest expense.
As part of our strategy to grow our specialty insurance operations in Europe, we acquired a majority interest in Defend, an automotive finance and insurance provider and insurance administrator operating in the Czech Republic, Poland, Hungary, Slovakia, and the UK.

Tiptree Capital:
Operating EBITDA grew year over year, driven primarily by the inclusion of our shipping operations and improvements in specialty finance.
Increased invested capital, primarily due to additional investments in shipping operations.

Consolidated Results of Operations
Revenues

For the three months ended September 30, 2019, revenues were $189.2 million, which increased $16.6 million, or 9.6%, over the prior year period. For the nine months ended September 30, 2019, revenues were $564.2 million, which increased $90.8 million, or 19.2%, over the prior year period. The increase for both periods was primarily driven by growth in earned premiums, lower unrealized losses on Invesque, improvements in specialty finance results, the inclusion of revenue from shipping operations and the gain on sale of our CLO management business. Earned premiums were $364.7 million for the nine months ended September 30, 2019, up from $317.8 million in the comparable 2018 period driven by growth in net written premiums. The combination of unearned premiums and deferred revenues on the balance sheet grew by $162.4 million, or 25.9%, from September 30, 2018 to September 30, 2019 as a result of increased written premiums primarily in credit protection and warranty programs.

Net Income before non-controlling interests

For the three months ended September 30, 2019, net loss before non-controlling interests was $0.9 million compared to $0.5 million in the 2018 period. The higher loss was driven primarily by higher unrealized losses on Invesque, partially offset by improved specialty insurance results.

For the nine months ended September 30, 2019, net income before non-controlling interests was $15.6 million compared to $29.4 million in the 2018 period, a decrease of $13.8 million. The decrease was primarily driven by the non-recurring gain on sale of Care, which occurred in 2018 partially offset by improved insurance operating performance, the realized gain on the sale of our Telos asset management business, and realized and unrealized gains on investments in our insurance investment portfolio.

Net Income Available to Common Stockholders

For the three months ended September 30, 2019, net loss available to Common Stockholders was $1.5 million, an increase of $0.9 million from the prior year period. For the nine months ended September 30, 2019, net income available to Common Stockholders was $14.2 million, a decrease of $9.6 million from the prior year period. The key drivers of net income (loss) available to Common Stockholders were the same factors which impacted the net income before non-controlling interests.



Page 2



Income before taxes (from continuing and discontinued operations)

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 AOCI 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 pre-tax gain on sale of $56.9 million in 2018, of which $46.2 million was recorded in the nine months ended September 30, 2018.
($ in millions)
Three Months Ended  
 September 30,
 
Nine Months Ended 
 September 30,

2019
 
2018
 
2019
 
2018
Net realized and unrealized gains (losses)(1)
$
(8.9
)
 
$
(5.1
)
 
$
7.5

 
$
(11.1
)
Discontinued operations (Care)(2)
$

 
$

 
$

 
$
46.8

(1) Excludes Mortgage realized and unrealized gains and losses - Performing and NPLs. Nine months ended September 30, 2019 includes $7.6 million gain on sale of our CLO business.
(2) Represents Care for the nine months ended September 30, 2018 including a $46.2 million pre-tax gain on sale.

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 three months ended September 30, 2019 was $17.3 million compared to $14.4 million for the 2018 period, an increase of $2.9 million, or 20.1%. For the three month period, the increase was driven by growth in insurance operations and contributions from our shipping and mortgage operations within Tiptree Capital. Operating EBITDA for the nine months ended September 30, 2019 was $42.6 million compared to $38.3 million for the 2018 period, an increase of $4.3 million, or 11.2%. For the nine month period, the key drivers of the increase were driven by improved performance in Tiptree Capital.

Total stockholders’ equity was $407.4 million as of September 30, 2019 compared to $396 million as of September 30, 2018, primarily driven by net income, partially offset by share repurchases and dividends paid. Over the past twelve months, Tiptree returned $14.7 million to shareholders through share repurchases and dividends paid. Book value per share for the period ended September 30, 2019 was $11.43, an increase from book value per share of $10.77 as of September 30, 2018. The key drivers of the period-over-period impact were earnings per share and the purchase of 1.5 million shares at an average 40% discount to book value. Those increases were partially offset by dividends paid of $0.15 per share and officer compensation share issuances.

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.


Page 3



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

2019
 
2018
 
2019
 
2018
Specialty Insurance
$
8.3

 
$
5.7

 
$
28.4

 
$
15.8

Tiptree Capital
(1.4
)
 
1.0

 
16.2

 
(1.2
)
Corporate
(8.6
)
 
(7.8
)
 
(25.4
)
 
(21.2
)
Pre-tax income (loss) from continuing operations
$
(1.7
)
 
$
(1.1
)
 
$
19.2

 
$
(6.6
)
Pre-tax income (loss) from discontinued operations (1)
$

 
$

 
$

 
$
46.8

(1)
Represents Care for the nine months ended September 30, 2018 which includes $46.2 million pre-tax gain on sale.

Operating EBITDA - Non-GAAP (1) 
The following tables present the components of Operating EBITDA.
($ in millions)
Three Months Ended  
 September 30,
 
Nine Months Ended 
 September 30,

2019
 
2018
 
2019
 
2018
Specialty Insurance
$
16.0

 
$
15.6

 
$
44.5

 
$
45.1

Tiptree Capital (2)
7.0

 
4.5

 
15.3

 
11.4

Corporate
(5.7
)
 
(5.7
)
 
(17.2
)
 
(18.2
)
Operating EBITDA
$
17.3

 
$
14.4

 
$
42.6

 
$
38.3

(1)  
For further information relating to the Company’s Operating EBITDA, including a reconciliation to GAAP 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” in our Form 10-Q for the quarter ended September 30, 2019.

About Tiptree
Tiptree Inc. (NASDAQ: TIPT) is a holding company that combines insurance operations with investment management capabilities. 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
 
September 30, 2019
 
December 31, 2018
Assets:
 
 
 
Investments:
 
 
 
Available for sale securities, at fair value
$
315,204

 
$
283,563

Loans, at fair value
111,758

 
215,383

Equity securities
147,446

 
122,979

Other investments
104,553

 
75,002

Total investments
678,961

 
696,927

Cash and cash equivalents
136,134

 
86,003

Restricted cash
17,823

 
10,521

Notes and accounts receivable, net
260,031

 
223,105

Reinsurance receivables
452,882

 
420,351

Deferred acquisition costs
201,803

 
170,063

Goodwill
99,147

 
91,562

Intangible assets, net
49,830

 
52,121

Other assets
74,550

 
46,034

Assets held for sale
85,332

 
68,231

Total assets
$
2,056,493

 
$
1,864,918


 
 
 
Liabilities and Stockholders’ Equity
 
 
 
Liabilities:
 
 
 
Debt, net
$
329,496

 
$
354,083

Unearned premiums
703,121

 
599,444

Policy liabilities and unpaid claims
134,501

 
131,611

Deferred revenue
86,692

 
75,754

Reinsurance payable
131,434

 
117,597

Other liabilities and accrued expenses
184,172

 
124,190

Liabilities held for sale
79,665

 
62,980

Total liabilities
$
1,649,081

 
$
1,465,659


 
 
 
Stockholders’ Equity:
 
 
 
Preferred stock: $0.001 par value, 100,000,000 shares authorized, none issued or outstanding
$

 
$

Common Stock: $0.001 par value, 200,000,000 shares authorized, 34,552,301 and 35,870,348 shares issued and outstanding, respectively
35

 
36

Additional paid-in capital
325,359

 
331,892

Accumulated other comprehensive income (loss), net of tax
1,916

 
(2,058
)
Retained earnings
67,465

 
57,231

Total Tiptree Inc. stockholders’ equity
394,775

 
387,101

Non-controlling interests - Other
12,637

 
12,158

Total stockholders’ equity
407,412

 
399,259

Total liabilities and stockholders’ equity
$
2,056,493

 
$
1,864,918






Page 5



Tiptree Inc.
Condensed Consolidated Statements of Operations
($ in thousands, except share data)
 
Three Months Ended September 30,
 
Nine Months Ended 
 September 30,
 
2019
 
2018
 
2019
 
2018
Revenues:

 

 
 
 
 
Earned premiums, net
$
129,163

 
$
116,153

 
$
364,712

 
$
317,842

Service and administrative fees
26,058

 
26,168

 
78,681

 
75,635

Ceding commissions
1,598

 
2,257

 
7,150

 
6,782

Net investment income
2,984

 
4,810

 
10,713

 
13,942

Net realized and unrealized gains (losses)
16,594

 
12,211

 
61,620

 
31,912

Other revenue
12,788

 
11,069

 
41,284

 
27,336

Total revenues
189,185

 
172,668

 
564,160

 
473,449

Expenses:

 

 
 
 
 
Policy and contract benefits
43,993

 
44,491

 
124,256

 
115,291

Commission expense
77,430

 
69,222

 
225,070

 
194,417

Employee compensation and benefits
34,176

 
28,970

 
94,298

 
83,946

Interest expense
6,731

 
7,334

 
20,183

 
19,935

Depreciation and amortization
3,523

 
3,200

 
9,908

 
9,110

Other expenses
24,930

 
20,589

 
71,183

 
57,354

Total expenses
190,783

 
173,806

 
544,898

 
480,053

Income (loss) before taxes from continuing operations
(1,598
)
 
(1,138
)
 
19,262

 
(6,604
)
Less: provision (benefit) for income taxes
(649
)
 
(611
)
 
3,706

 
(1,478
)
Net income (loss) from continuing operations
(949
)
 
(527
)
 
15,556

 
(5,126
)
Discontinued operations:

 

 
 
 
 
Income (loss) before taxes from discontinued operations

 

 

 
624

Gain on sale of discontinued operations

 

 

 
46,184

Less: Provision (benefit) for income taxes

 

 

 
12,327

Net income (loss) from discontinued operations

 

 

 
34,481

Net income (loss) before non-controlling interests
(949
)
 
(527
)
 
15,556

 
29,355

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

 

 

 
5,500

Less: net income (loss) attributable to non-controlling interests - Other
508

 
91

 
1,342

 
87

Net income (loss) attributable to Common Stockholders
$
(1,457
)
 
$
(618
)
 
$
14,214

 
$
23,768

 

 

 
 
 
 
Net income (loss) per Common Share:

 

 
 
 
 
Basic, continuing operations, net
$
(0.04
)
 
$
(0.02
)
 
$
0.40

 
$
(0.12
)
Basic, discontinued operations, net

 

 

 
0.81

Basic earnings per share
$
(0.04
)
 
$
(0.02
)
 
$
0.40

 
$
0.69

 

 

 
 
 
 
Diluted, continuing operations, net
(0.04
)
 
(0.02
)
 
0.39

 
(0.12
)
Diluted, discontinued operations, net

 

 

 
0.81

Diluted earnings per share
$
(0.04
)
 
$
(0.02
)
 
$
0.39

 
$
0.69

 

 

 
 
 
 
Weighted average number of Common Shares:
 
 
 
 
 
 
 
Basic
34,552,171

 
36,402,129

 
34,583,709

 
34,309,551

Diluted
34,552,171

 
36,402,129

 
34,583,709

 
34,309,551

 
 
 
 
 
 
 
 
Dividends declared per Common Share
$
0.040

 
$
0.035

 
$
0.120

 
$
0.105




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 millions)
Three Months Ended  
 September 30,
 
Nine Months Ended 
 September 30,

2019
 
2018
 
2019
 
2018
Net income (loss) attributable to Common Stockholders
$
(1.5
)
 
$
(0.6
)
 
$
14.2

 
$
23.8

Add: net (loss) income attributable to noncontrolling interests
0.5

 
0.1

 
1.3

 
5.6

Less: net income from discontinued operations

 

 

 
34.5

Income (loss) from continuing operations
$
(1.0
)
 
$
(0.5
)
 
$
15.5

 
$
(5.1
)
Corporate debt related interest expense(1)
5.0

 
4.9

 
14.9

 
13.3

Consolidated income tax expense (benefit)
(0.7
)
 
(0.6
)
 
3.7

 
(1.5
)
Depreciation and amortization expense(2)
3.4

 
2.7

 
9.5

 
8.2

Non-cash fair value adjustments(3)
(1.0
)
 

 
(2.4
)
 
0.1

Non-recurring expenses(4)
0.5

 
1.2

 
2.5

 
2.1

Adjusted EBITDA from continuing operations
$
6.2

 
$
7.7

 
$
43.7

 
$
17.1

Add: Stock-based compensation expense
1.5

 
1.5

 
4.5

 
3.8

Add: Vessel depreciation, net of capital expenditures
0.7

 

 
1.9

 

Less: Realized and unrealized gain (loss)(5)
(8.9
)
 
(5.1
)
 
7.5

 
(16.6
)
Less: Third party non-controlling interests(6)

 
(0.1
)
 

 
(0.2
)
Operating EBITDA from continuing operations
$
17.3

 
$
14.4

 
$
42.6

 
$
37.7


 
 
 
 
 
 
 
Income (loss) from discontinued operations
$

 
$

 
$

 
$
34.5

Consolidated income tax expense (benefit)

 

 

 
12.3

Non-cash fair value adjustments (3)

 

 

 
(40.7
)
Adjusted EBITDA from discontinued operations
$

 
$

 
$

 
$
6.1

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

 

 

 
5.5

Operating EBITDA from discontinued operations
$

 
$

 
$

 
$
0.6

Total Adjusted EBITDA
$
6.2

 
$
7.7

 
$
43.7

 
$
23.2

Total Operating EBITDA
$
17.3

 
$
14.4

 
$
42.6

 
$
38.3

_______________________________
(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 and 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 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 debt extinguishment, legal, taxes, banker fees and other costs. In 2018, 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.
 
Three Months Ended September 30, 2019
($ in millions)
Specialty Insurance
 
Tiptree Capital
 
Corporate Expenses
 
Total
Pre-tax income/(loss) from continuing operations
$
8.3

 
$
(1.4
)
 
$
(8.6
)
 
$
(1.7
)
Adjustments:
 
 
 
 
 
 
 
Corporate debt related interest expense(2)
3.4

 

 
1.6

 
5.0

Depreciation and amortization expenses(3)
2.2

 
0.9

 
0.3

 
3.4

Non-cash fair value adjustments(4)

 
(1.0
)
 

 
(1.0
)
Non-recurring expenses(5)
0.3

 

 
0.2

 
0.5

Adjusted EBITDA
$
14.2

 
$
(1.5
)
 
$
(6.5
)
 
$
6.2

Add: Stock-based compensation expense
0.7

 

 
0.8

 
1.5

Add: Vessel depreciation, net of capital expenditures

 
0.7

 

 
0.7

Less: Realized and unrealized gain (loss)(6)
(1.1
)
 
(7.8
)
 

 
(8.9
)
Operating EBITDA
$
16.0

 
$
7.0

 
$
(5.7
)
 
$
17.3


Nine Months Ended September 30, 2019
($ in millions)
Specialty Insurance
 
Tiptree Capital
 
Corporate Expenses
 
Total
Pre-tax income/(loss) from continuing operations
$
28.4

 
$
16.2

 
$
(25.4
)
 
$
19.2

Adjustments:
 
 
 
 
 
 
 
Corporate debt related interest expense(2)
10.1

 

 
4.8

 
14.9

Depreciation and amortization expenses(3)
6.5

 
2.5

 
0.5

 
9.5

Non-cash fair value adjustments(4)

 
(2.4
)
 

 
(2.4
)
Non-recurring expenses(5)
1.7

 
0.2

 
0.6

 
2.5

Adjusted EBITDA
$
46.7

 
$
16.5

 
$
(19.5
)
 
$
43.7

Add: Stock-based compensation expense
2.0

 
0.2

 
2.3

 
4.5

Add: Vessel depreciation, net of capital expenditures

 
1.9

 

 
1.9

Less: Realized and unrealized gain (loss)(6)
4.2

 
3.3

 

 
7.5

Operating EBITDA
$
44.5

 
$
15.3

 
$
(17.2
)
 
$
42.6

 
Three Months Ended September 30, 2018
($ in millions)
Specialty Insurance
 
Tiptree Capital
 
Corporate Expenses
 
Total
Pre-tax income/(loss) from continuing operations
$
5.7

 
$
1.0

 
$
(7.8
)
 
$
(1.1
)
Adjustments:
 
 
 
 
 
 
 
Corporate debt related interest expense(2)
3.4

 

 
1.5

 
4.9

Depreciation and amortization expenses(3)
2.6

 
0.1

 

 
2.7

Non-cash fair value adjustments(4)

 

 

 

Non-recurring expenses(5)
0.6

 
0.5

 
0.1

 
1.2

Adjusted EBITDA
$
12.3

 
$
1.6

 
$
(6.2
)
 
$
7.7

Add: Stock-based compensation expense
0.7

 
0.3

 
0.5

 
1.5

Less: Realized and unrealized gain (loss)(6)
(2.6
)
 
(2.5
)
 

 
(5.1
)
Operating EBITDA
$
15.6

 
$
4.4

 
$
(5.7
)
 
$
14.3



Page 8




Nine Months Ended September 30, 2018
($ in millions)
Specialty Insurance
 
Tiptree Capital
 
Corporate Expenses
 
Total
Pre-tax income/(loss) from continuing operations
$
15.8

 
$
(1.2
)
 
$
(21.2
)
 
$
(6.6
)
Pre-tax income/(loss) from discontinued operations(1)

 
46.8

 

 
46.8

Adjustments:
 
 
 
 
 
 
 
Corporate debt related interest expense(2)
10.0

 

 
3.3

 
13.3

Depreciation and amortization expenses(3)
7.6

 
0.5

 
0.1

 
8.2

Non-cash fair value adjustments(4)

 
(40.6
)
 

 
(40.6
)
Non-recurring expenses(5)
2.8

 
1.5

 
(2.2
)
 
2.1

Adjusted EBITDA
$
36.2

 
$
7.0

 
$
(20.0
)
 
$
23.2

Add: Stock-based compensation expense
1.9

 
0.1

 
1.8

 
3.8

Less: Realized and unrealized gain (loss)(6)
(7.0
)
 
(4.1
)
 

 
(11.1
)
Less: Third party non-controlling interests(7)

 
(0.2
)
 

 
(0.2
)
Operating EBITDA
$
45.1

 
$
11.4

 
$
(18.2
)
 
$
38.3

_______________________________
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 our Form 10-Q for the quarter ended September 30, 2019.
(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 and 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 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 debt extinguishment, legal, taxes, banker fees and other costs. In 2018, 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.

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 millions, except per share information)
As of September 30,

2019
 
2018
Total stockholders’ equity
$
407.4

 
$
396.0

Less non-controlling interests - other
12.6

 
9.1

Total stockholders’ equity, net of non-controlling interests - other
$
394.8

 
$
386.9

Total Common shares outstanding
34.6

 
35.9

Book value per share
$
11.43

 
$
10.77




Page 9

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Section 3: EX-99.2 (EXHIBIT 99.2)

ex9929302019investorpres
Exhibit 99.2 NASDAQ: TIPT INVESTOR PRESENTATION - THIRD QUARTER 2019 November 2019 Financial information for the three and nine months ended September 30, 2019


 
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 Year-to-date Financials Key highlights Revenue Specialty Insurance $564.2 million þ Year-to-date gross written premiums of $736.1m, up 18.8%, with net written premiums of 19.2% vs. prior year $434.8m, up 29.2%, driven by growth in credit protection and warranty programs þ Insurance investment portfolio earned an average annualized yield of 4.1%, up from 2.2% in the prior year period, driven primarily by lower unrealized losses and lower investment Net income1 portfolio interest expense $15.6 million þ Acquired Defend, a European automotive specialty insurance provider and claims administrator, as part of our strategy to grow our European specialty insurance operations vs. prior year of $29.4 million Tiptree Capital Operating EBITDA2 þ Operating EBITDA grew year over year, with the inclusion of shipping operations and $42.6 million improvements in specialty finance þ vs. prior year of $38.3 million Increased invested capital primarily due to additional investments in shipping Book Value Overall per share2 þ Delivered year-to-date return of 7.0%3, driven by earnings and share buy-backs $11.43 5.9% vs. 12/31/18 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 year-to-date 2019 defined as cumulative dividends paid of $0.115 per share plus book value per share as of September 30, 2019 3


 
FINANCIAL RESULTS ($ in millions, except per share information) Consolidated financial metrics Key drivers Highlights: Q3'18 Q3'19 Q3'18 Q3'19 YTD YTD • Continued, stable growth in insurance underwriting results Total Revenues $172.6 $189.2 $473.4 $564.2 • Consistent earnings from Invesque dividends Net income (loss) before NCI $(0.5) $(0.9) $29.4 $15.6 • Pre-tax gains of $7.5m in 2019 driven by sale of CLO manager, Diluted EPS $(0.02) $(0.04) $0.69 $0.39 compared to $46.2m gain on sale of Care in 2018 1 Operating EBITDA $14.4 $17.3 $38.3 $42.6 Challenges: 1 Adjusted EBITDA $7.7 $6.2 $23.2 $43.7 • Volatility in earnings from unrealized mark to market on our Total shares outstanding 35.9 34.6 Invesque shares Book Value per share1 $10.77 $11.43 Q3'19 Operating EBITDA to Pre-tax Income Bridge Q3'19 $17.3 $(8.9) $(3.4) $(5.0) $(1.5) $(0.2) $(1.7) QTD $7.5 $42.6 $(9.5) QTD YTD $ — $ 7.6 Gain on sale of CLO manager Q3'19 $(7.8) $(1.7) Invesque unrealized marks $19.2 YTD $ 0.2 $ 4.5 Equities (non-Invesque) $(14.9) $(1.3) $(2.9) Mark-to-market loss on MSR portfolio $(4.5) $(2.0) Operating Unrealized & Depreciation & Corporate Stock Based Transaction Costs & Total Pre-tax EBITDA Realized Gains2 Amortization Interest Expense Compensation Debt Extinguishment Income3 1 See the appendix for a reconciliation of Non-GAAP metrics including Operating EBITDA, Adjusted EBITDA and Book Value per share. expense 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 Q3'19 LTM Highlights Equity BVPS Capital1 EBITDA1 Operating EBITDA of $59.2 up 3.7% from Q3 2018 LTM Q3'19 • Return on average total capital of 8.8% Business Lines Q3'19 Q3'19 Q3'19 LTM • Specialty Insurance: 13.8% • Tiptree Capital: 9.8% Specialty Insurance2 $252.2 $7.30 $464.1 $63.9 Specialty Insurance: - Underwriting Reduced by $70.4m of acquisition 48.7 purchase price amortization • Insurance Operating EBITDA of $63.9m, up 6.0% - Investments (or $1.39 per share after-tax) 15.2 from growth in credit and warranty product lines • Continued growth of our investment portfolio Tiptree Capital $198.3 $5.74 $198.3 $17.7 - Real Assets (incl. Invesque) 167.7 4.85 167.7 12.4 Tiptree Capital: - Other investments 30.6 0.89 30.6 5.3 • $10.1m of dividends received from Invesque • Profitable mortgage operations • Positive contribution from investment of $70m into Corporate2,3 '$(55.7) '$(1.61) $13.7 '$(22.4) vessels - Corporate expenses (16.4) • Offset by reduced CLO management fees - Corporate incentive comp expense (6.0) Corporate: Total Tiptree $394.8 $11.43 $676.1 $59.2 • Expenses flat as infrastructure stabilized - Total shares outstanding 34.6 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 ($13.3m interest expense over LTM) and $69m Corporate Debt at Corporate ($6.4m interest expense over LTM) 3 Includes $7.7m cash at HoldCo which does not include available liquidity at subsidiaries. 5


 
SPECIALTY INSURANCE


 
FINANCIAL PERFORMANCE HIGHLIGHTS ($ in millions) Financial metrics Q3'19 year-to-date highlights & outlook Q3'18 Q3'19 Q3'18 Q3'19 Continuing to expand product offerings with a focus on YTD YTD 1 growth in written premiums and stable profitability Gross Written Premiums $225.4 $275.1 $619.5 $736.1 Revenue $148.6 $160.1 $412.7 $469.1 • $790m of unearned premiums and deferred revenue, representing 25.9% year-over-year growth Pre-tax income $5.7 $8.3 $15.8 $28.4 Net portfolio income1 $2.3 $1.9 $7.0 $14.8 • Net written premiums grew by $98.3m, or 29.2% driven 1 by growth in credit protection and warranty businesses Combined ratio 93.2% 92.1% 93.1% 92.8% Total Capital1 $454.9 $464.1 • Consistent combined ratio of 92.8% Unearned premiums & Deferred revenue $627.4 $789.8 2 Produced stable underwriting results which were partially offset by continued investments in strategic growth initiatives Insurance products • Underwriting margin of $104.3m, up 12.9%, driven by strong performance across all products Operating Net Written Underwriting EBITDA1 Premiums Margin1 $434.8 $104.3 3 Net portfolio income of $14.8 million, up $7.8 million $45.1 $44.5 43.9 $92.4 7.7 Services/other 6.5 $336.5 6.4 Other Specialty • Improvement driven by realized and unrealized gains of 13.9 10.6 87.8 9.5 40.0 25.1 Warranty $4.7m, versus loss of $3.1m in the prior year Investments 41.4 20.3 • Offset by declines in net investment income of $10.7m, given higher cash balances as we reduced exposure to 303.1 31.2 33.9 65.0 loans Insurance 255.1 56.2 Credit underwriting protection Q3'18 Q3'19 Q3'18 Q3'19 Q3'18 Q3'19 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 $513.7 23.0 We actively manage our investment portfolio to achieve a balance of: 4.3 30.3 Other $438.3 16.5 • Short-term liquidity to cover current claims obligations 17.2 11.6 Real Estate • Enhanced risk-adjusted returns through selective alternative $364.0 32.8 99.4 4.0 Equities investments with a focus on longer-term higher yielding assets 23.1 84.9 25.0 28.1 Loans2 36.0 84.5 Cash & cash equivalents3 Financial highlights 60.2 Fixed income ETFs 315.2 • Net investment portfolio grew $75.4 million, or 17.2% from Available for sale 255.8 Q3'18 Securities 164.1 • $99.4m of cash and cash equivalents available to invest • Positive marks of $4.2 million on equities year-to-date Q3'17 Q3'18 Q3'19 Year-to-date financials $12.0 $13.7 $10.7 Net investment income 6.4 5.2 5.8 Realized gains (losses) (20.0) (8.3) (1.1) Unrealized gains (losses) (5.1) (3.6) (0.6) Interest expense $(6.7) $7.0 $14.8 Net Portfolio Income (2.5)% 2.2% 4.1% Average Annualized Yield4 Equity realized & unrealized $(21.2) $(6.0) $4.2 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 for 2018 and 2017 periods. 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 two quarters total investments less investment portfolio debt plus cash. 8


 
TIPTREE CAPITAL


 
FINANCIAL PERFORMANCE HIGHLIGHTS ($ in millions) Invested Capital1 Recent developments & outlook • Repositioned our asset management operations by selling our $193.6 $198.3 CLO management business $173.3 29.4 38.2 • Increased our exposure to real assets with $73.9 million 31.6 Specialty finance deployed into shipping sector 93.8 & Other 116.9 Seniors Housing 102.4 (Invesque/Care)3,4 Q3'19 year-to-date financial highlights Shipping Asset Management: 73.9 CLOs & credit • Sold CLO asset manager for $7.6m gain on sale plus a 38.5 35.2 investments contingent earn-out 4.1 1.2 Q3'17 Q3'18 Q3'19 Real Assets: • Operating EBITDA driven by Invesque dividends and inclusion Return on Invested Capital1 of shipping operations • Q3'18 year-to-date pre-tax income driven by $46.2m gain on Pre-tax income Operating EBITDA sale of Care (discontinued operation) Q3'18 Q3'19 Q3'18 Q3'19 YTD YTD YTD YTD Specialty finance/other: Asset management $1.5 $8.0 $2.9 $0.5 • Mortgage Operating EBITDA driven by strong origination Real assets2,3 43.4 7.2 7.1 10.5 volumes Specialty finance/other 0.7 1.0 1.4 4.3 • Mortgage pre-tax income impacted by $2.9m of mark to Total $45.6 $16.2 $11.4 $15.3 market losses on MSR portfolio as rates declined 1 See the appendix for a reconciliation of Operating EBITDA and Invested Capital to GAAP financials. 2 Includes discontinued operations related to Care. For more information, see “—FN 3 Dispositions, Assets Held for Sale and Discontinued Operations.” 3 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 - $111.4 million, $92.1 million in Tiptree Capital. 10


 
OUTLOOK ($ in millions) Q3'19 Highlights Book value per share1 ü Year-to-date shareholder return of 7.0%2, including $13.1 million returned $10.77 $11.43 to shareholders through buy-backs and dividends ü Strong execution on growth initiatives in our insurance operations ü Continued repositioning of investments in Tiptree Capital Q3'18 Q3'19 Looking ahead 1 Operating EBITDA •1 Continue growth in specialty insurance $42.6 – Growth in written premiums while maintaining underwriting standards $38.3 •2 Actively seek acquisition opportunities •3 Focus on growing and improving long-term, net investment income •4 Continue to broaden investor awareness of Tiptree Q3'18 YTD Q3'19 YTD 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 quarter ended September 30, 2019 defined as growth in book value per share from December 31, 2018. 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 - ADJUSTED & OPERATING EBITDA ($ in millions) Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Net income (loss) attributable to Common Stockholders $ (1.5) $ (0.6) $ 14.2 $ 23.8 Add: net (loss) income attributable to noncontrolling interests 0.5 0.1 1.3 5.6 Less: net income from discontinued operations — — — 34.5 Income (loss) from continuing operations $ (1.0) $ (0.5) $ 15.5 $ (5.1) Corporate debt related interest expense(1) 5.0 4.9 14.9 13.3 Consolidated income tax expense (benefit) (0.7) (0.6) 3.7 (1.5) Depreciation and amortization expense(2) 3.4 2.7 9.5 8.2 Non-cash fair value adjustments(3) (1.0) — (2.4) 0.1 Non-recurring expenses(4) 0.5 1.2 2.5 2.1 Adjusted EBITDA from continuing operations $ 6.2 $ 7.7 $ 43.7 $ 17.1 Add: Stock-based compensation expense 1.5 1.5 4.5 3.8 Add: Vessel depreciation, net of capital expenditures 0.7 — 1.9 — Less: Realized and unrealized gain (loss)(5) (8.9) (5.1) 7.5 (16.6) Less: Third party non-controlling interests(6) — (0.1) — (0.2) Operating EBITDA from continuing operations $ 17.3 $ 14.4 $ 42.6 $ 37.7 Income (loss) from discontinued operations — — — 34.5 Consolidated income tax expense (benefit) — — — 12.3 Non-cash fair value adjustments (3) — — — (40.7) Adjusted EBITDA from discontinued operations $ — $ — $ — $ 6.1 Less: Realized and unrealized gain (loss) (5) — $ — — 5.5 Operating EBITDA from discontinued operations $ — $ — $ — $ 0.6 Total Adjusted EBITDA $ 6.2 $ 7.7 $ 43.7 $ 23.2 Total Operating EBITDA $ 17.3 $ 14.4 $ 42.6 $ 38.3 (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 and 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 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 debt extinguishment, legal, taxes, banker fees and other costs. In 2018, 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 Three Months Ended September 30, 2019 Three Months Ended September 30, 2018 Specialty Tiptree Corporate Specialty Tiptree Corporate ($ in millions) Insurance Capital Expenses Total Insurance Capital Expenses Total Pre-tax income/(loss) from continuing operations $ 8.3 $ (1.4) $ (8.6) $ (1.7) $ 5.7 $ 1.0 $ (7.8) $ (1.1) Adjustments: Corporate Debt related interest expense(2) 3.4 — 1.6 5.0 3.4 — 1.5 4.9 Depreciation and amortization expenses(3) 2.2 0.9 0.3 3.4 2.6 0.1 — 2.7 Non-cash fair value adjustments(4) — (1.0) — (1.0) — — — — Non-recurring expenses(5) 0.3 — 0.2 0.5 0.6 0.5 0.1 1.2 Adjusted EBITDA $ 14.2 $ (1.5) $ (6.5) $ 6.2 $ 12.3 $ 1.6 $ (6.2) $ 7.7 Add: Stock-based compensation expense 0.7 — 0.8 1.5 0.7 0.3 0.5 1.5 Add: Vessel depreciation, net of capital expenditures — 0.7 — 0.7 — — — — Less: Realized and unrealized gain (loss)(6) (1.1) (7.8) — (8.9) (2.6) (2.5) — (5.1) Operating EBITDA $ 16.0 $ 7.0 $ (5.7) $ 17.3 $ 15.6 $ 4.4 $ (5.7) $ 14.3 Nine Months Ended September 30, 2019 Nine Months Ended September 30, 2018 Specialty Tiptree Corporate Specialty Tiptree Corporate ($ in millions) Insurance Capital Expenses Total Insurance Capital Expenses Total Pre-tax income/(loss) from continuing operations $ 28.4 $ 16.2 $ (25.4) $ 19.2 $ 15.8 $ (1.2) $ (21.2) $ (6.6) Pre-tax income/(loss) from discontinued ops(1) — — — — — 46.8 — 46.8 Adjustments: Corporate Debt related interest expense(2) 10.1 — 4.8 14.9 10.0 — 3.3 13.3 Depreciation and amortization expenses(3) 6.5 2.5 0.5 9.5 7.6 0.5 0.1 8.2 Non-cash fair value adjustments(4) — (2.4) — (2.4) — (40.6) — (40.6) Non-recurring expenses(5) 1.7 0.2 0.6 2.5 2.8 1.5 (2.2) 2.1 Adjusted EBITDA $ 46.7 $ 16.5 $ (19.5) $ 43.7 $ 36.2 $ 7.0 $ (20.0) $ 23.2 Add: Stock-based compensation expense 2.0 0.2 2.3 4.5 1.9 0.1 1.8 3.8 Add: Vessel depreciation, net of capital expenditures — 1.9 — 1.9 — — — — Less: Realized and unrealized gain (loss)(6) 4.2 3.3 — 7.5 (7.0) (4.1) — (11.1) Less: Third party non-controlling interests(7) — — — — — (0.2) — (0.2) Operating EBITDA $ 44.5 $ 15.3 $ (17.2) $ 42.6 $ 45.1 $ 11.4 $ (18.2) $ 38.3 (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 and 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 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 debt extinguishment, legal, taxes, banker fees and other costs. In 2018, 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 Trailing Twelve Months Ended September 30, 2019 Trailing Twelve Months Ended September 30, 2018 Specialty Tiptree Corporate Specialty Tiptree Corporate ($ in millions) Insurance Capital Expenses Total Insurance Capital Expenses Total Pre-tax income/(loss) from continuing operations $ 31.2 $ 9.6 $ (34.8) $ 6.0 $ 19.5 $ 3.4 $ (28.0) $ (5.1) Pre-tax income/(loss) from discontinued ops(1) — 10.7 — 10.7 — 45.9 — 45.9 Adjustments: Corporate Debt related interest expense(2) 13.3 — 6.5 19.8 12.9 — 4.3 17.2 Depreciation and amortization expenses(3) 8.7 3.6 0.6 12.9 10.5 3.0 0.2 13.7 Non-cash fair value adjustments(4) — (2.9) — (2.9) 0.2 (40.6) — (40.4) Non-recurring expenses(5) 2.1 (1.3) 2.0 2.8 4.6 3.0 (1.0) 6.6 Adjusted EBITDA $ 55.3 $ 19.7 $ (25.7) $ 49.3 $ 47.7 $ 14.7 $ (24.5) $ 37.9 Add: Stock-based compensation expense 3.8 0.2 3.3 7.3 3.4 0.3 2.4 6.1 Add: Vessel depreciation, net of capital expenditures — 2.8 — 2.8 — — — — Less: Realized and unrealized gain (loss)(6) (4.8) 4.8 — — (9.2) (3.7) — (12.9) Less: Third party non-controlling interests(7) — 0.2 — 0.2 — (0.1) — (0.1) Operating EBITDA $ 63.9 $ 17.7 $ (22.4) $ 59.2 $ 60.3 $ 18.8 $ (22.0) $ 57.1 (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 and 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 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 debt extinguishment, legal, taxes, banker fees and other costs. In 2018, 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 $11.43 as of September 30, 2019 compared with book value per share, as exchanged, of $10.77 as of September 30, 2018. Total stockholders’ equity, net of other non-controlling interests for the Company was $394.8 million as of September 30, 2019, which comprised total stockholders’ equity of $407.4 million adjusted for $12.6 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 $386.9 million as of September 30, 2018, which comprised total stockholders’ equity of $396.0 million adjusted for $9.1 million attributable to non-controlling interest at subsidiaries that are not wholly owned by the Company. ($ in millions, except per share information) As of September 30, 2019 2018 Total stockholders’ equity $ 407.4 $ 396.0 Less non-controlling interests - other 12.6 9.1 Total stockholders’ equity, net of non-controlling interests - other $ 394.8 $ 386.9 Total shares outstanding 34.6 35.9 Book value per share $ 11.43 $ 10.77 (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 millions) As of September 30, 2019 2018 Total stockholders’ equity $ 407.4 $ 396.0 Less non-controlling interest - other 12.6 9.1 Total stockholders’ equity, net of non-controlling interests - other $ 394.8 $ 386.9 Plus Specialty Insurance accumulated depreciation and amortization, net of tax(1) 47.9 41.4 Plus acquisition costs 4.2 4.1 Invested Capital $ 446.9 $ 432.4 Plus corporate debt(2) 229.2 235.1 Total Capital $ 676.1 $ 667.5 (1) As of September 30, 2019, add-back of $70.4 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) 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 millions) Three Months Ended September 30, Nine Months Ended September 30, Revenues: 2019 2018 2019 2018 Net earned premiums $ 129.2 $ 116.1 $ 364.7 $ 317.8 Service and administrative fees 26.1 26.1 78.7 75.6 Ceding commissions 1.6 2.3 7.2 6.8 Other income 1.3 0.6 3.1 1.9 Underwriting Revenues - Non-GAAP $ 158.2 $ 145.1 $ 453.7 $ 402.1 Less underwriting expenses: Policy and contract benefits 44.0 44.5 124.3 115.3 Commission expense 77.5 69.2 225.1 194.4 Underwriting Margin - Non-GAAP $ 36.7 $ 31.4 $ 104.3 $ 92.4 Less operating expenses: Employee compensation and benefits 12.6 11.1 36.7 33.1 Other expenses (excluding debt extinguishment expenses) 11.8 10.7 35.3 31.8 Combined Ratio 92.1% 93.2% 92.8% 93.1% Plus investment revenues: Net investment income 3.0 4.6 10.7 13.7 Net realized and unrealized gains (1.1) (1.1) 4.7 (3.1) Less other expenses: Interest expense 3.6 4.7 11.2 13.8 Debt extinguishment expenses — — 1.2 0.4 Depreciation and amortization expenses 2.3 2.7 6.9 8.1 Pre-tax income (loss) $ 8.3 $ 5.7 $ 28.4 $ 15.8 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 September 30, 2019 2018 2017 Total Investments $ 414.3 $ 495.7 $ 426.8 Investment portfolio debt (1) — (93.4) (123.0) Cash and cash equivalents 117.8 31.1 62.8 Restricted cash (2) — 3.0 3.6 Receivable due from brokers (3) 3.1 2.3 1.5 Liability due to brokers (3) (21.5) (0.4) (7.7) Net investments - Non-GAAP $ 513.7 $ 438.3 $ 364.0 ($ in thousands) Three Months Ended September 30, 2019 2018 2017 Net investment income $ 3.0 $ 4.6 $ 3.8 Realized gains (losses) 2.2 (0.4) 1.5 Unrealized gains (losses) (3.3) (0.7) (10.0) Interest expense — (1.2) (1.7) Net portfolio income (loss) $ 1.9 $ 2.3 $ (6.4) Average Annualized Yield % (4) 1.5% 2.1% (7.2)% (1) For the 2018 and 2017 periods, consists of asset-based financing on loans, at fair value including certain credit investments, net of deferred financing costs, see Note 10 - 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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