Business Wire | Nov 4, 2020 04:01PM EST

Tiptree Reports Q3 2020 Results

Nov. 04, 2020

NEW YORK--(BUSINESS WIRE)--Nov. 04, 2020--Tiptree Inc. (NASDAQ:TIPT) ("Tiptree" or the "Company"), a holding company that combines specialty insurance operations with investment management, today announced its financial results for the three and nine months ended September 30, 2020.

($ in millions, except per Three Months Ended Nine Months Endedshare information) September 30, September 30,

GAAP: 2020 2019 2020 2019

Total revenues $ 224.0 $ 189.2 $ 552.9 $ 564.2

Net income (loss) attributable $ 12.8 $ (1.5) $ (43.4) $ 14.2 to common stockholders

Diluted earnings per share $ 0.35 $ (0.04) $ (1.27) $ 0.39

Cash dividends paid per common $ 0.04 $ 0.04 $ 0.12 $ 0.115 share



Non-GAAP: ^(1)

Operating EBITDA $ 31.9 $ 17.3 $ 69.9 $ 42.6

Book value per share $ 10.36 $ 11.43 $ 10.36 $ 11.43

____________________________

(1) For further information relating to the Company's Operating EBITDA and Book value per share, including a reconciliation to GAAP financials, see "-Non-GAAP Reconciliations" below.

Earnings Conference Call

Tiptree will host a conference call on Thursday, November 5, 2020 at 9:00 a.m. Eastern Time to discuss its Q3 2020 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 5, 2020 at 1:00 p.m. Eastern Time, until midnight Eastern on Thursday, November 12, 2020. To listen to the replay, please dial 1-844-512-2921 (domestic) or 1-412-317-6671 (international), Passcode: 13708726.

Financial Overview

Overall:

* Net income was $12.8 million for the quarter, an increase of $14.3 million over prior year driven by increases in operational performance. * Operating EBITDA of $31.9 million for the quarter, up $14.6 million, from growth in insurance and mortgage operations. * Book value per share of $10.36 as of September 30, 2020, when combined with dividends paid, increased 4.3% from the prior quarter, driven by a combination of earnings and share repurchases in the quarter. Book value per share as of September 30, 2020, when combined with dividends paid, represents a decrease of 8.0% from September 30, 2019, primarily driven by unrealized mark-to-market losses on our investment in Invesque. * Year-to-date, we purchased and retired 1,477,302 shares of our common stock for $9.2 million, at an average 37% discount to book. * Cash and cash equivalents of $103.5 million as of September 30, 2020, of which $72.4 million resides outside our statutory insurance subsidiaries.

Insurance:

* Gross written premiums and premium equivalents for the quarter were $464.6 million, up 25.0% versus the prior year period, driven by growth in warranty service contracts and specialty programs. Year-to-date premiums and equivalents of $1,175.6 million, up 25.5% from prior year driven by growth in warranty and specialty programs, and premium finance volumes. Excluding the incremental premium equivalents from our acquisition of Smart AutoCare, premiums and equivalents increased 7.4% for the quarter and 9.7% for the year-to-date period. * Operating EBITDA was $19.1 million for the quarter, up $3.1 million, or 19.4%, from growth in warranty and specialty programs and improved margins. Year-to-date Operating EBITDA of $48.1 million, up 8.0% from increases in premium and equivalents. * Quarterly combined ratio of 90.4% declined from 92.1% in the prior year period driven by improved underwriting performance and the overall shift in product mix. * In September 2020, we announced the formation of a new excess and surplus lines subsidiary, Fortegra Specialty Insurance Company, which we expect will broaden our product reach and scope within the U.S. * In October 2020, we refinanced and increased our premium finance asset-based facility as we continue to expand our vertically integrated product offerings.

Tiptree Capital:

* For the quarter, Operating EBITDA improved year over year by $11.2 million. Year-to-date Operating EBITDA was $36.1 million, up from $15.3 million in the prior year period driven by higher loan origination volume and margins in our mortgage business. * Low mortgage rates due to the Federal Reserve intervention in mortgage markets, combined with limitations on operating capacity driven by COVID-19, and rising home prices in certain markets has resulted in higher refinance mortgage volumes and margins.

Consolidated Results of Operations

Revenues

For the three months ended September 30, 2020, revenues were $224.0 million, which increased $34.8 million, or 18.4% compared to the prior year period primarily due to a combination of growth in service and administrative fees related to our warranty programs and gains on mortgage loans sold in our mortgage business. For the nine months ended September 30, 2020, revenues were $552.9 million, which decreased $11.3 million, or 2.0% compared to the prior year period, primarily due to net realized and unrealized losses on Invesque and other securities held at fair value. Earned premiums and service and administrative fees were $164.1 million for the three months ended September 30, 2020, up $8.8 million, or 5.7%, and $479.3 million for the nine months ended September 30, 2020, up $35.9 million, or 8.1%, driven by growth in warranty service contracts from our acquisition of Smart AutoCare and light commercial specialty programs. Also contributing to higher revenues in the quarter and the year to date were increases in net realized and unrealized gains on mortgage loans, which were up $21.7 million and $41.6 million, respectively. Offsetting all of these increases were net realized and unrealized losses of $7.7 million and $97.9 million for the three and nine month periods ended September 30, 2020, on Invesque and other equity holdings.

The combination of unearned premiums and deferred revenues on the balance sheet grew by $361.5 million, or 45.8%, from September 30, 2019 to September 30, 2020 as a result of increased written premiums and premium equivalents, primarily in warranty programs, including the acquisition of Smart AutoCare, which contributed $205.9 million of growth in deferred revenues, and in light commercial specialty programs.

The table below provides a break down between net realized and unrealized gains and losses from Invesque and from other securities which impacted our consolidated results on a pre-tax basis. Many of our investments are carried at fair value and marked to market through unrealized gains and losses. As a result, we expect our earnings relating to these investments to be relatively volatile between periods, which was highlighted by the market volatility in the first half of the year caused by uncertainly regarding the impact of COVID-19. Our fixed income securities are primarily marked to market through accumulated other comprehensive income (AOCI) in stockholders' equity and do not impact net realized and unrealized gains and losses until they are sold.

($ in millions) Three Months Ended Nine Months Ended September 30, September 30,

2020 2019 2020 2019

Net realized and unrealized gains $ 1.5 $ (8.9) $ (18.1) $ 1.3 (losses)^(1)

Net realized and unrealized gains $ (9.2) $ - $ (79.8) $ 6.2 (losses) - Invesque

____________________________

(1) Excludes Invesque, Mortgage realized and unrealized gains and losses and NPLs.

Net Income (Loss) Attributable to Common Stockholders

For the three months ended September 30, 2020, net income available to common stockholders was $12.8 million, an increase of $14.3 million. For the nine months ended September 30, 2020, net loss available to common stockholders was $43.4 million, a decrease of $57.6 million. The increase in the quarter and the decrease year to date were primarily driven by the same factors that impacted revenues in the respective periods.

Non-GAAP

Management uses Operating EBITDA and book value per share as measurements of operating performance which are non-GAAP measures. Management believes the use of Operating 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. Operating EBITDA is not a measurement 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, 2020 was $31.9 million, an increase of $14.6 million, or 84.4% from the prior year period, and $69.9 million for the nine months ended September 30, 2020, an increase of $27.3 million, or 64.1%. For the three and nine months ended September 30, 2020, the key drivers of the increases were growth in warranty and specialty programs in our insurance business, and increases in volumes and margins in our mortgage business in Tiptree Capital.

Total stockholders' equity was $361.7 million as of September 30, 2020 compared to $407.4 million as of September 30, 2019. Over the past twelve months, Tiptree returned $14.6 million to shareholders through share repurchases and dividends paid. Book value per share for the period ended September 30, 2020 was $10.36, a decrease from book value per share of $11.43 as of September 30, 2019, but up $0.39 per share versus the second quarter. The key drivers of the reduction from the year earlier period were losses per share and dividends paid of $0.16 per share. The decrease was partially offset by the purchase of 1.477 million shares at an average 37% discount to book value. The key driver of the improvement versus the prior quarter was positive net income, as our business operations showed positive momentum relative to the impact from COVID-19 in the first half of 2020.

Results by Segment

We classify our business into one reportable segment, Tiptree Insurance, with the remainder of our non-insurance operations aggregated into Tiptree Capital. Corporate activities include holding company interest expense, corporate employee compensation and benefits, and other expenses, including, but not limited to, public company expenses. The following table presents the components of total pre-tax income.

Pre-tax Income

($ in millions) Three Months Ended Nine Months Ended September 30, September 30,

2020 2019 2020 2019

Tiptree Insurance $ 13.4 $ 8.3 $ 0.4 $ 28.4

Tiptree Capital 9.5 (1.4) (38.6) 16.2

Corporate (9.0) (8.6) (25.2) (25.4)

Pre-tax income (loss) $ 13.9 $ (1.7) $ (63.4) $ 19.2

Operating EBITDA - Non-GAAP (1)

The following tables present the components of Operating EBITDA.

($ in millions) Three Months Ended Nine Months Ended September 30, September 30,

2020 2019 2020 2019

Tiptree Insurance $ 19.1 $ 16.0 $ 48.1 $ 44.5

Tiptree Capital 18.2 7.0 36.1 15.3

Corporate (5.4) (5.7) (14.3) (17.2)

Operating EBITDA^ (1) $ 31.9 $ 17.3 $ 69.9 $ 42.6

____________________________

(1)For further information relating to the Company's Operating EBITDA, including a reconciliation to pre-tax income, see "-Non-GAAP Reconciliations."

About Tiptree

Tiptree Inc. (NASDAQ: TIPT) is a holding company that allocates capital across a broad spectrum of businesses, assets and other investments. Our principal operating business, Fortegra Financial, along with its subsidiaries, is a leading provider of specialty insurance, warranty products and related administration services. We also allocate capital to a diverse group of select investments that we refer to as Tiptree Capital. For more information, please visit www.tiptreeinc.com.

Forward-Looking Statements

This release contains "forward-looking statements" which involve risks, uncertainties and contingencies, many of which are beyond the Company's control, which may cause actual results, performance, or achievements to differ materially from anticipated results, performance, or achievements. All statements contained in this release that are not clearly historical in nature are forward-looking, and the words "anticipate," "believe," "estimate," "expect," "intend," "may," "might," "plan," "project," "should," "target," "will," or similar expressions are intended to identify forward-looking statements. Such forward-looking statements include, but are not limited to, statements about the Company's plans, objectives, expectations and intentions. The forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, many of which are beyond our control, are difficult to predict and could cause actual results to differ materially from those expressed or forecast in the forward-looking statements. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including, but not limited to those described in the section entitled "Risk Factors" in the Company's Annual Report on Form 10-K, and as described in the Company's other filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as to the date of this release. The factors described therein are not necessarily all of the important factors that could cause actual results or developments to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors also could affect our forward-looking statements. Consequently, our actual performance could be materially different from the results described or anticipated by our forward-looking statements. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Except as required by the federal securities laws, we undertake no obligation to update any forward-looking statements.

Tiptree Inc.Condensed Consolidated Balance Sheet($ in thousands, except share data)

As of

September 30, December 31, 2020 2019

Assets:

Investments:

Available for sale securities, at fair value, net $ 369,914 $ 335,192 of allowance for credit losses

Loans, at fair value 115,472 108,894

Equity securities 111,659 155,378

Other investments 214,192 137,472

Total investments 811,237 736,936

Cash and cash equivalents 103,502 133,117

Restricted cash 78,095 11,473

Notes and accounts receivable, net 361,747 286,968

Reinsurance receivables 646,571 539,833

Deferred acquisition costs 204,396 166,493

Goodwill 163,366 99,147

Intangible assets, net 134,199 47,974

Other assets 151,175 68,510

Assets held for sale 140,578 107,835

Total assets $ 2,794,866 $ 2,198,286



Liabilities and Stockholders' Equity

Liabilities:

Debt, net $ 397,764 $ 374,454

Unearned premiums 792,533 754,993

Policy liabilities and unpaid claims 211,198 144,384

Deferred revenue 358,734 94,601

Reinsurance payable 189,500 143,869

Other liabilities and accrued expenses 351,234 172,140

Liabilities held for sale 132,212 102,430

Total liabilities $ 2,433,175 $ 1,786,871



Stockholders' Equity:

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

Common stock: $0.001 par value, 200,000,000shares authorized, 33,563,019 and 34,562,553 34 35 shares issued and outstanding, respectively

Additional paid-in capital 319,522 326,140

Accumulated other comprehensive income (loss), 5,662 1,698 net of tax

Retained earnings 22,520 70,189

Total Tiptree Inc. stockholders' equity 347,738 398,062

Non-controlling interests 13,953 13,353

Total stockholders' equity 361,691 411,415

Total liabilities and stockholders' equity $ 2,794,866 $ 2,198,286

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

Three Months Ended September 30,

Nine Months EndedSeptember 30,

2020

2019

2020

2019

Revenues:

Earned premiums, net

$

116,418

$

129,163

$

344,994

$

364,712

Service and administrative fees

47,701

26,058

134,290

78,681

Ceding commissions

5,157

1,598

16,217

7,150

Net investment income

3,023

2,984

8,803

10,713

Net realized and unrealized gains (losses)

38,959

15,302

6,628

58,746

Other revenue

12,783

14,080

41,974

44,158

Total revenues

224,041

189,185

552,906

564,160

Expenses:

Policy and contract benefits

57,738

43,993

167,761

124,256

Commission expense

68,868

77,430

207,172

225,070

Employee compensation and benefits

45,715

34,176

124,894

94,298

Interest expense

8,321

6,731

23,518

20,183

Depreciation and amortization

4,010

3,523

12,244

9,908

Other expenses

25,492

24,930

80,737

71,183

Total expenses

210,144

190,783

616,326

544,898

Income (loss) before taxes

13,897

(1,598)

(63,420)

19,262

Less: provision (benefit) for income taxes

(844)

(649)

(22,030)

3,706

Net income (loss) before non-controlling interests

14,741

(949)

(41,390)

15,556

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

1,978

508

2,038

1,342

Net income (loss) attributable to common stockholders

$

12,763

$

(1,457)

$

(43,428)

$

14,214

Net income (loss) per common share:

Basic earnings per share

$

0.37

$

(0.04)

$

(1.27)

$

0.40

Diluted earnings per share

$

0.35

$

(0.04)

$

(1.27)

$

0.39

Weighted average number of common shares:

Basic

33,684,301

34,552,171

34,076,837

34,583,709

Diluted

33,684,301

34,552,171

34,076,837

34,583,709

Dividends declared per common share

$

0.04

$

0.04

$

0.12

$

0.12

Tiptree Inc.Non-GAAP Reconciliations (Unaudited)

Non-GAAP Financial Measures - Operating EBITDA

The Company defines Operating 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, (iv) any significant non-recurring expenses, (v) stock based compensation expense, (vi) less realized and unrealized gains and losses, and (vii) less third party non-controlling interests. Operating EBITDA is not a measurement of financial performance or liquidity under GAAP and should not be considered as an alternative or substitute for GAAP net income.

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

Three Months Ended Nine Months Ended September 30, September 30,

2020 2019 2020 2019

Revenues:

Earned premiums, net $ 116,418 $ 129,163 $ 344,994 $ 364,712

Service and 47,701 26,058 134,290 78,681 administrative fees

Ceding commissions 5,157 1,598 16,217 7,150

Net investment income 3,023 2,984 8,803 10,713

Net realized andunrealized gains 38,959 15,302 6,628 58,746 (losses)

Other revenue 12,783 14,080 41,974 44,158

Total revenues 224,041 189,185 552,906 564,160

Expenses:

Policy and contract 57,738 43,993 167,761 124,256 benefits

Commission expense 68,868 77,430 207,172 225,070

Employee compensation 45,715 34,176 124,894 94,298 and benefits

Interest expense 8,321 6,731 23,518 20,183

Depreciation and 4,010 3,523 12,244 9,908 amortization

Other expenses 25,492 24,930 80,737 71,183

Total expenses 210,144 190,783 616,326 544,898

Income (loss) before 13,897 (1,598) (63,420) 19,262 taxes

Less: provision(benefit) for income (844) (649) (22,030) 3,706 taxes

Net income (loss)before 14,741 (949) (41,390) 15,556 non-controllinginterests

Less: net income(loss) attributable 1,978 508 2,038 1,342 to non-controllinginterests

Net income (loss)attributable to $ 12,763 $ (1,457) $ (43,428) $ 14,214 common stockholders



Net income (loss) per common share:

Basic earnings per $ 0.37 $ (0.04) $ (1.27) $ 0.40 share

Diluted earnings per $ 0.35 $ (0.04) $ (1.27) $ 0.39 share



Weighted averagenumber of common shares:

Basic 33,684,301 34,552,171 34,076,837 34,583,709

Diluted 33,684,301 34,552,171 34,076,837 34,583,709



Dividends declared $ 0.04 $ 0.04 $ 0.12 $ 0.12 per common share

Tiptree Inc.Non-GAAP Reconciliations (Unaudited)

Non-GAAP Financial Measures - Operating EBITDA

The Company defines Operating 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, (iv) any significant non-recurring expenses, (v) stock based compensation expense, (vi) less realized and unrealized gains and losses, and (vii) less third party non-controlling interests. Operating EBITDA is not a measurement 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 Nine Months Ended September 30, September 30,

2020 2019 2020 2019

Net income (loss) attributable to $ 12.8 $ (1.5) $ (43.4) $ 14.2 common stockholders

Add: net (loss) incomeattributable to non-controlling 1.9 0.5 2.0 1.3 interests

Income (loss) $ 14.7 $ (1.0) $ (41.4) $ 15.5

Corporate debt related interest 6.1 5.0 17.3 14.9 expense^(1)

Consolidated income tax expense (0.8) (0.7) (22.0) 3.7 (benefit)

Depreciation and amortization 3.9 3.4 12.0 9.5 expense^(2)

Non-cash fair value adjustments (2.5) (0.3) (3.1) (0.5)

Non-recurring expenses^(3) 0.2 0.5 2.9 2.5

Stock based compensation expense 2.6 1.5 6.2 4.5

Realized and unrealized (gain) 7.7 8.9 97.9 (7.5) loss^(4)

Third party non-controlling - - 0.1 - interests^(5)

Operating EBITDA $ 31.9 $ 17.3 $ 69.9 $ 42.6

_______________________________

Corporate debt interest expense includes interest expense from secured corporate credit agreements, junior subordinated notes and preferred(1) trust securities. Interest expense associated with asset-specific debt in Tiptree Insurance and Tiptree Capital is not added-back for Operating EBITDA.

Represents total depreciation and amortization expense less purchase accounting amortization related adjustments at our insurance companies. Following the purchase accounting adjustments, current period expenses(2) 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 companies increased EBITDA above what the historical basis of accounting would have generated.

(3) Acquisition, start-up and disposition costs, including debt extinguishment, legal, taxes, banker fees and other costs.

Adjustment excludes Mortgage realized and unrealized gains and losses -(4) Performing and NPLs, as those are recurring in nature and align with those business models.

Removes the Operating EBITDA associated with third party non-controlling(5) interests. Does not remove the non-controlling interests related to employee-based shares.

Non-GAAP Financial Measures - Operating EBITDA

The tables below present Operating EBITDA by business component.

Three Months Ended September 30, 2020

($ in millions) Specialty Tiptree Corporate Total Insurance Capital Expenses

Pre-tax income/(loss) from continuing $ 13.4 $ 9.5 $ (9.0) $ 13.9 operations

Adjustments:

Corporate debt related interest 3.4 - 2.7 6.1 expense^(1)

Depreciation and amortization 2.2 1.5 0.2 3.9 expenses^(2)

Non-cash fair value adjustments - (2.5) - (2.5)

Non-recurring expenses^(3) (0.1) 0.3 - 0.2

Stock-based compensation expense 0.6 1.3 0.7 2.6

Realized and unrealized (gain) loss^ (0.4) 8.1 - 7.7 (4)

Third party non-controlling interests - - - - ^(5)

Operating EBITDA $ 19.1 $ 18.2 $ (5.4) $ 31.9

Nine Months Ended September 30, 2020

($ in millions)

Tiptree Insurance

Tiptree Capital

Corporate Expenses

Total

Pre-tax income/(loss) from continuing operations

$

0.4

$

(38.6)

$

(25.2)

$

(63.4)

Adjustments:

Corporate debt related interest expense(1)

9.9

-

7.4

17.3

Depreciation and amortization expenses(2)

7.0

4.4

0.6

12.0

Non-cash fair value adjustments

-

(3.1)

-

(3.1)

Non-recurring expenses(3)

2.2

0.3

0.4

2.9

Stock-based compensation expense

1.4

2.3

2.5

6.2

Realized and unrealized (gain) loss(4)

27.2

70.7

-

97.9

Third party non-controlling interests(5)

-

0.1

-

0.1

Operating EBITDA

$

48.1

$

36.1

$

(14.3)

$

69.9

Nine Months Ended September 30, 2020

($ in millions) Tiptree Tiptree Corporate Total Insurance Capital Expenses

Pre-tax income/(loss) from $ 0.4 $ (38.6) $ (25.2) $ (63.4) continuing operations

Adjustments:

Corporate debt related interest 9.9 - 7.4 17.3 expense^(1)

Depreciation and amortization 7.0 4.4 0.6 12.0 expenses^(2)

Non-cash fair value adjustments - (3.1) - (3.1)

Non-recurring expenses^(3) 2.2 0.3 0.4 2.9

Stock-based compensation expense 1.4 2.3 2.5 6.2

Realized and unrealized (gain) 27.2 70.7 - 97.9 loss^(4)

Third party non-controlling - 0.1 - 0.1 interests^(5)

Operating EBITDA $ 48.1 $ 36.1 $ (14.3) $ 69.9



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(1)

3.4

-

1.6

5.0

Depreciation and amortization expenses(2)

2.2

0.9

0.3

3.4

Non-cash fair value adjustments

-

(0.3)

-

(0.3)

Non-recurring expenses(3)

0.3

-

0.2

0.5

Stock-based compensation expense

0.7

-

0.8

1.5

Realized and unrealized (gain) loss(4)

1.1

7.8

-

8.9

Third party non-controlling interests(5)

-

-

-

-

Operating EBITDA

$

16.0

$

7.0

$

(5.7)

$

17.3

Three Months Ended September 30, 2019

($ in millions) Specialty Tiptree Corporate Total Insurance Capital Expenses

Pre-tax income/(loss) from $ 8.3 $ (1.4) $ (8.6) $ (1.7) continuing operations

Adjustments:

Corporate debt related interest 3.4 - 1.6 5.0 expense^(1)

Depreciation and amortization 2.2 0.9 0.3 3.4 expenses^(2)

Non-cash fair value adjustments - (0.3) - (0.3)

Non-recurring expenses^(3) 0.3 - 0.2 0.5

Stock-based compensation expense 0.7 - 0.8 1.5

Realized and unrealized (gain) loss 1.1 7.8 - 8.9 ^(4)

Third party non-controlling - - - - interests^(5)

Operating EBITDA $ 16.0 $ 7.0 $ (5.7) $ 17.3

Nine Months Ended September 30, 2019

($ in millions)

Tiptree 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(1)

10.1

-

4.8

14.9

Depreciation and amortization expenses(2)

6.5

2.5

0.5

9.5

Non-cash fair value adjustments

-

(0.5)

-

(0.5)

Non-recurring expenses(3)

1.7

0.2

0.6

2.5

Stock-based compensation expense

2.0

0.2

2.3

4.5

Realized and unrealized (gain) loss(4)

(4.2)

(3.3)

-

(7.5)

Third party non-controlling interests(5)

-

-

-

-

Operating EBITDA

$

44.5

$

15.3

$

(17.2)

$

42.6

_______________________________

The footnotes below correspond to the tables above, under "Non-GAAP Financial Measures - Operating EBITDA"

Nine Months Ended September 30, 2019

($ in millions) Tiptree Tiptree Corporate Total Insurance Capital Expenses

Pre-tax income/(loss) from continuing $ 28.4 $ 16.2 $ (25.4) $ 19.2 operations

Adjustments:

Corporate debt related interest 10.1 - 4.8 14.9 expense^(1)

Depreciation and amortization 6.5 2.5 0.5 9.5 expenses^(2)

Non-cash fair value adjustments - (0.5) - (0.5)

Non-recurring expenses^(3) 1.7 0.2 0.6 2.5

Stock-based compensation expense 2.0 0.2 2.3 4.5

Realized and unrealized (gain) loss^ (4.2) (3.3) - (7.5) (4)

Third party non-controlling interests - - - - ^(5)

Operating EBITDA $ 44.5 $ 15.3 $ (17.2) $ 42.6

_______________________________

The footnotes below correspond to the tables above, under "Non-GAAP Financial Measures - Operating EBITDA"

Corporate debt interest expense includes interest expense from secured corporate credit agreements, junior subordinated notes and preferred(1) trust securities. Interest expense associated with asset-specific debt in Tiptree Insurance and Tiptree Capital is not added-back for Operating EBITDA.

Represents total depreciation and amortization expense less purchase accounting amortization related adjustments at our insurance companies. Following the purchase accounting adjustments, current period expenses(2) 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 companies increased EBITDA above what the historical basis of accounting would have generated.

(3) Acquisition, start-up and disposition costs, including debt extinguishment, legal, taxes, banker fees and other costs.

Adjustment excludes Mortgage realized and unrealized gains and losses -(4) Performing and NPLs, as those are recurring in nature and align with those business models.

Removes the Operating EBITDA associated with third party non-controlling(5) 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, 2020

2020 2019

Total stockholders' equity $ 361.7 $ 407.4

Less: Non-controlling interests 14.0 12.6

Total stockholders' equity, net of non-controlling $ 347.7 $ 394.8 interests



Total common shares outstanding 33.6 34.6



Book value per share $ 10.36 $ 11.43

View source version on businesswire.com: https://www.businesswire.com/news/home/20201104005657/en/

CONTACT: Tiptree Inc. Investor Relations, 212-446-1400 ir@tiptreeinc.com