Fortegra Group Inc., a global specialty insurer and subsidiary of Tiptree Inc., announced it has secured a box in the underwriting room at Lloyd’s.Effective immediately, Fortegra will operate from Box 388 on the third gallery in the Lloyd’s underwriting room, which represents a significant milestone in the company’s strategic commitment to the London insurance market. In addition to the Lloyd’s box, the company has network of more than 20 locations — including its London office at 20 Fenchurch Street’s so-c ...

Fortegra Group, a global specialty insurer and subsidiary of Tiptree Inc., has secured a box in the underwriting room at Lloyd’s.Fortegra will operate from Box 388 on the third gallery in the Lloyd’s underwriting room, effective immediately.This marks a major milestone in the company’s strategic commitment to the London insurance market and positions it as a key player in developing reliable insurance solutions for complex and evolving risks.Fortegra adds the Lloyd’s box to its network of more than 20 locat ...

Core Viewpoint - DB Insurance is set to acquire Fortegra, a U.S.-based specialty insurer, for approximately $1.65 billion, marking a significant entry into the U.S. market for a Korean non-life insurer [1][5][6]. Company Overview - DB Insurance, established in 1962, is the second largest non-life insurer in South Korea, servicing over 11 million customers with a diversified portfolio [8]. - Fortegra, founded in 1978 and headquartered in Jacksonville, Florida, has a strong presence in specialty insurance across the U.S. and Europe, with gross written premiums of $3.07 billion for 2024 [3][4]. Strategic Rationale - The acquisition aims to enhance DB Insurance's global growth, particularly in the property and casualty markets, and to enter profitable sectors such as surety and warranty [5][6]. - Fortegra's projected annual premiums of KRW 4.4 trillion for 2024 reflect its significant market position, which DB Insurance seeks to leverage for scale and capabilities [2][4]. Financial Strength - Fortegra has maintained a long-term combined ratio of approximately 90% and holds an A- financial strength rating from A.M. Best, indicating strong underwriting discipline and risk management [3][4]. - The acquisition will provide Fortegra with a robust capital base, enhancing its growth potential as part of a financially strong insurance group rated A+ by AM Best and S&P [5][6]. Market Impact - This transaction represents the first acquisition of a U.S. insurer by a Korean non-life insurer, marking a pivotal moment for DB Insurance in its ambition to become a global insurer [6]. - The deal is expected to close in mid-2026, pending stockholder and regulatory approvals [8].

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PART I. FINANCIAL INFORMATION [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) Forward-looking statements are not guarantees of future performance and are subject to risks causing actual results to differ - Forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors beyond the company's control[6](index=6&type=chunk) - Actual results could differ materially due to factors described in the 'Risk Factors' section of the Annual Report on Form 10-K and this 10-Q[6](index=6&type=chunk) - The company undertakes no obligation to update any forward-looking statements, except as required by applicable law[7](index=7&type=chunk) [Market and Industry Data](index=3&type=section&id=Market%20and%20Industry%20Data) Market and industry data are from third-party sources, believed reliable but not independently verified - Market and industry data are sourced from governmental agencies and industry publications[8](index=8&type=chunk) - The company believes third-party data to be reliable based on management's industry knowledge but has not independently verified it[8](index=8&type=chunk) [Note to Reader](index=3&type=section&id=Note%20to%20Reader) This section defines key terms and acronyms used in the Quarterly Report on Form 10-Q for reader clarity - Key terms such as '2017 Notes', '2024 Notes', 'Fortegra', 'GAAP', and 'Tiptree' are defined for clarity[9](index=9&type=chunk)[10](index=10&type=chunk)[11](index=11&type=chunk)[12](index=12&type=chunk)[13](index=13&type=chunk) [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Unaudited condensed consolidated financial statements for Tiptree Inc. and subsidiaries for Q2 2025, covering balance sheets, operations, comprehensive income, equity, and cash flows [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20as%20of%20June%2030,%202025%20and%20December%2031,%202024) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | % Change | |:---|:---|:---|:---|:---| | Total assets | $6,147,892 | $5,694,789 | $453,103 | 7.96% | | Total liabilities | $5,424,524 | $5,038,018 | $386,506 | 7.67% | | Total stockholders' equity | $723,368 | $656,771 | $66,597 | 10.14% | - Investments increased by **$89.6 million**, primarily in available for sale securities and equity securities[17](index=17&type=chunk) - Cash and cash equivalents increased by **$63.8 million**, while restricted cash slightly decreased[17](index=17&type=chunk) [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20for%20the%20three%20and%20six%20months%20ended%20June%2030,%202025%20and%202024) | Metric | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | % Change | |:---|:---|:---|:---|:---| | Total revenues | $528,750 | $546,673 | $(17,923) | -3.28% | | Total expenses | $476,038 | $506,027 | $(29,989) | -5.93% | | Net income (loss) attributable to common stockholders | $18,960 | $12,851 | $6,109 | 47.54% | | Basic earnings per share | $0.50 | $0.35 | $0.15 | 42.86% | | Diluted earnings per share | $0.37 | $0.31 | $0.06 | 19.35% | | Dividends declared per common share | $0.06 | $0.06 | $0.00 | 0.00% | | Metric | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | % Change | |:---|:---|:---|:---|:---| | Total revenues | $1,026,176 | $1,044,894 | $(18,718) | -1.79% | | Total expenses | $948,114 | $974,549 | $(26,435) | -2.71% | | Net income (loss) attributable to common stockholders | $24,595 | $21,901 | $2,694 | 12.30% | | Basic earnings per share | $0.65 | $0.59 | $0.06 | 10.17% | | Diluted earnings per share | $0.53 | $0.54 | $(0.01) | -1.85% | | Dividends declared per common share | $0.12 | $0.12 | $0.00 | 0.00% | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)%20for%20the%20three%20and%20six%20months%20ended%20June%2030,%202025%20and%202024) | Metric | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | |:---|:---|:---|:---| | Net income (loss) | $31,104 | $21,973 | $9,131 | | Other comprehensive income (loss), net of tax | $10,853 | $(1,818) | $12,671 | | Comprehensive income (loss) attributable to common stockholders | $26,894 | $11,563 | $15,331 | | Metric | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | |:---|:---|:---|:---|\ | Net income (loss) | $44,072 | $37,854 | $6,218 | | Other comprehensive income (loss), net of tax | $22,057 | $(4,358) | $26,415 | | Comprehensive income (loss) attributable to common stockholders | $40,722 | $18,758 | $21,964 | - Other comprehensive income (loss) significantly improved, primarily due to positive changes in unrealized gains on available-for-sale securities and currency translation adjustments[22](index=22&type=chunk) [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity%20for%20the%20periods%20ended%20June%2030,%202025%20and%202024) | Metric | Balance at Dec 31, 2024 (in thousands) | Balance at June 30, 2025 (in thousands) | Change (in thousands) | |:---|:---|:---|:---| | Total Tiptree Inc. stockholders' equity | $457,698 | $499,838 | $42,140 | | Total non-controlling interests | $199,073 | $223,530 | $24,457 | | Total stockholders' equity | $656,771 | $723,368 | $66,597 | - Increases in stockholders' equity were driven by amortization of share-based incentive compensation, other comprehensive income, and net income, partially offset by common stock and subsidiary preferred dividends[24](index=24&type=chunk)[25](index=25&type=chunk) - Common shares outstanding increased from **37,255,838** at December 31, 2024, to **37,496,977** at June 30, 2025, due to vesting of share-based incentive compensation[24](index=24&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20six%20months%20ended%20June%2030,%202025%20and%202024) | Activity | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | |:---|:---|:---|:---|\ | Net cash provided by (used in) operating activities | $(12,068) | $109,582 | $(121,650) | | Net cash provided by (used in) investing activities | $10,068 | $18,564 | $(8,496) | | Net cash provided by (used in) financing activities

[Company Commentary and Overall Financial Performance](index=1&type=section&id=Company%20Commentary%20and%20Overall%20Financial%20Performance) Tiptree Inc. achieved strong results in Q2 2025, with an annualized adjusted average return on equity of 22%, robust Fortegra business performance, 17.0% premium growth, and an improved combined ratio of 88.5%; total revenue slightly decreased, but net income and adjusted net income grew, maintaining a cash dividend of $0.06 per share - The company achieved an **annualized adjusted average return on equity of 22%** in Q2 2025, with strong Fortegra business performance, **17.0% premium growth**, and an improved **combined ratio of 88.5%**[2](index=2&type=chunk) Key Financial Data for Q2 and H1 2025 | Indicator | Q2 2025 (USD thousands) | Q2 2024 (USD thousands) | Change (%) | H1 2025 (USD thousands) | H1 2024 (USD thousands) | Change (%) | | :--------------------------------- | :----------------------- | :----------------------- | :------- | :----------------------- | :----------------------- | :------- | | **Total Revenue** | 528,750 | 546,673 | -3.3% | 1,026,176 | 1,044,894 | -1.8% | | **Net Income Attributable to Common Stockholders** | 18,960 | 12,851 | 47.5% | 24,595 | 21,901 | 12.3% | | **Diluted Earnings Per Share** | 0.37 | 0.31 | 19.4% | 0.53 | 0.54 | -1.9% | | **Cash Dividend Per Share** | 0.06 | 0.06 | 0.0% | 0.12 | 0.12 | 0.0% | | **Average Return on Equity** | 15.6% | 11.9% | 3.7 pp | 10.3% | 10.3% | 0.0 pp | | **Adjusted Net Income** | 27,128 | 24,422 | 11.1% | 50,460 | 44,955 | 12.2% | | **Adjusted Average Return on Equity** | 22.3% | 22.7% | -0.4 pp | 21.1% | 21.1% | 0.0 pp | - The decrease in total revenue was primarily due to lower net earned premiums, service, and management fees, partially offset by higher net investment income and investment gains; excluding the one-time premium assumption in December 2023, revenue grew **4.1%** and **8.0%** for the comparable periods[3](index=3&type=chunk) [Segment Financial Highlights - Second Quarter 2025](index=2&type=section&id=Segment%20Financial%20Highlights%20-%20Second%20Quarter%202025) The company's business segments showed varied performance in Q2 2025, with Fortegra's insurance business achieving significant premium and pre-tax income growth and improved combined ratio, while Tiptree Capital's revenue and pre-tax income declined due to negative fair value adjustments in mortgage operations, and corporate-level expenses slightly increased due to higher interest expenses [Insurance (The Fortegra Group)](index=2&type=section&id=Insurance%20(The%20Fortegra%20Group)) Fortegra's insurance business achieved strong growth in both Q2 and H1 2025, with record-high gross and net written premiums, significant increases in pre-tax income and adjusted net income, an improved combined ratio, but a slight decrease in annualized adjusted average return on equity Fortegra Insurance Business Key Financial Data | Indicator | Q2 2025 (USD thousands) | Q2 2024 (USD thousands) | Change (%) | H1 2025 (USD thousands) | H1 2024 (USD thousands) | Change (%) | | :--------------------------------- | :----------------------- | :----------------------- | :------- | :----------------------- | :----------------------- | :------- | | **Gross Written Premiums & Premium Equivalents** | 907,624 | 776,059 | 17.0% | 1,660,799 | 1,439,476 | 15.4% | | **Net Written Premiums** | 428,806 | 365,897 | 17.2% | 786,495 | 684,048 | 15.0% | | **Total Revenue** | 513,017 | 529,942 | -3.2% | 993,598 | 1,008,698 | -1.5% | | **Pre-Tax Income** | 67,144 | 51,250 | 31.0% | 105,198 | 88,061 | 19.5% | | **Average Return on Equity** | 29.3% | 28.4% | 0.9 pp | 23.5% | 25.8% | -2.3 pp | | **Combined Ratio** | 88.5% | 89.9% | -1.4 pp | 89.2% | 90.0% | -0.8 pp | | **Adjusted Net Income (Pre-NCI)** | 45,172 | 40,316 | 12.0% | 85,648 | 74,449 | 15.0% | | **Adjusted Average Return on Equity** | 25.8% | 30.3% | -4.5 pp | 25.3% | 29.7% | -4.4 pp | - The growth in gross and net written premiums was primarily driven by the professional E&S insurance business line, with E&S premiums increasing by **23.8%** year-over-year[6](index=6&type=chunk) - The combined ratio improved by **1.4 percentage points**, mainly due to a decrease in the underwriting ratio; the H1 combined ratio included **3.3%** in net catastrophe losses (**$30.1 million**), primarily from California wildfires[6](index=6&type=chunk) - Fortegra's shareholders' equity as of June 30, 2025, was **$730.9 million**, an increase of **16.9%** from year-end 2024, primarily driven by growth in retained earnings and a reduction in accumulated other comprehensive losses[6](index=6&type=chunk) [Tiptree Capital](index=2&type=section&id=Tiptree%20Capital) Tiptree Capital experienced declines in both total revenue and pre-tax income in Q2 and H1 2025, primarily due to negative fair value adjustments in its mortgage business, resulting in negative average return on equity and adjusted net income Tiptree Capital Key Financial Data | Indicator | Q2 2025 (USD thousands) | Q2 2024 (USD thousands) | Change (%) | H1 2025 (USD thousands) | H1 2024 (USD thousands) | Change (%) | | :--------------------------------- | :----------------------- | :----------------------- | :------- | :----------------------- | :----------------------- | :------- | | **Total Revenue** | 15,733 | 16,731 | -6.0% | 32,578 | 36,196 | -10.0% | | **Pre-Tax Income** | (3,067) | 740 | -514.5% | (3,093) | 4,486 | -169.0% | | **Average Return on Equity** | (9.3)% | 1.7% | -11.0 pp | (5.9)% | 4.6% | -10.5 pp | | **Adjusted Net Income** | (392) | 356 | -210.1% | (229) | 700 | -132.7% | | **Adjusted Average Return on Equity** | (1.1)% | 1.2% | -2.3 pp | (0.4)% | 1.0% | -1.4 pp | - Mortgage business pre-tax income in Q2 was **$0.2 million**, down from **$0.5 million** in the prior-year period, primarily due to negative fair value adjustments on mortgage servicing rights, partially offset by higher loan servicing fees[7](index=7&type=chunk) [Corporate](index=3&type=section&id=Corporate) Corporate-level expenses slightly increased in Q2 2025, primarily due to higher interest expenses, with outstanding holding company borrowings totaling **$74.6 million** as of June 30, 2025 - Corporate-level expenses were **$11.4 million**, a slight increase from **$11.3 million** in Q2 2024, primarily driven by higher interest expenses[8](index=8&type=chunk) - Outstanding holding company borrowings totaled **$74.6 million** as of June 30, 2025[8](index=8&type=chunk) [Consolidated Financial Statements](index=5&type=section&id=Consolidated%20Financial%20Statements) Tiptree Inc.'s consolidated financial statements as of June 30, 2025, show increases in total assets, total liabilities, and shareholders' equity, while the statements of operations reflect a slight decrease in total revenue but growth in net income [Condensed Consolidated Balance Sheets (Unaudited)](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(Unaudited)) As of June 30, 2025, the company's total assets increased to **$6.148 billion**, total liabilities to **$5.425 billion**, and total shareholders' equity to **$723 million**, primarily driven by growth in investments, receivables, and reinsurance recoverables, alongside increases in debt and policy liabilities Condensed Consolidated Balance Sheets Key Data | Indicator | June 30, 2025 (USD thousands) | December 31, 2024 (USD thousands) | Change (%) | | :----------------------- | :----------------------- | :----------------------- | :------- | | **Total Assets** | 6,147,892 | 5,694,789 | 8.0% | | **Total Liabilities** | 5,424,524 | 5,038,018 | 7.7% | | **Total Shareholders' Equity** | 723,368 | 656,771 | 10.1% | | **Total Investments** | 1,440,598 | 1,350,963 | 6.6% | | **Cash and Cash Equivalents** | 383,828 | 320,067 | 19.9% | | **Net Debt** | 493,029 | 427,089 | 15.4% | | **Unearned Premiums** | 1,859,638 | 1,766,068 | 5.3% | | **Policy Liabilities and Unpaid Losses** | 1,503,493 | 1,298,081 | 15.8% | [Condensed Consolidated Statements of Operations (Unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20(Unaudited)) In Q2 2025, total company revenue was **$529 million**, a **3.3%** year-over-year decrease, but net income increased to **$19.0 million**, up **47.5%**; for H1, total revenue was **$1.026 billion**, down **1.8%**, with net income rising to **$24.6 million**, up **12.3%** Condensed Consolidated Statements of Operations Key Data | Indicator | Q2 2025 (USD thousands) | Q2 2024 (USD thousands) | Change (%) | H1 2025 (USD thousands) | H1 2024 (USD thousands) | Change (%) | | :--------------------------------- | :----------------------- | :----------------------- | :------- | :----------------------- | :----------------------- | :------- | | **Net Earned Premiums** | 381,941 | 398,467 | -4.1% | 745,378 | 745,777 | -0.1% | | **Service and Management Fees** | 96,847 | 105,847 | -8.5% | 194,145 | 216,334 | -10.3% | | **Net Investment Income** | 10,505 | 6,381 | 64.6% | 22,234 | 13,139 | 69.2% | | **Net Realized and Unrealized Gains (Losses)** | 20,644 | 12,578 | 64.1% | 27,475 | 28,202 | -2.5% | | **Total Revenue** | 528,750 | 546,673 | -3.3% | 1,026,176 | 1,044,894 | -1.8% | | **Policy and Contract Benefits** | 226,472 | 233,975 | -3.2% | 435,785 | 441,639 | -1.3% | | **Commission Expenses** | 140,486 | 173,279 | -18.9% | 292,086 | 330,227 | -11.5% | | **Interest Expense** | 10,862 | 8,015 | 35.5% | 21,222 | 16,305 | 30.2% | | **Total Expenses** | 476,038 | 506,027 | -5.9% | 948,114 | 974,549 | -2.7% | | **Income Before Income Tax Expense** | 52,712 | 40,646 | 29.7% | 78,062 | 70,345 | 11.0% | | **Net Income** | 31,104 | 21,973 | 41.6% | 44,072 | 37,854 | 16.4% | | **Net Income Attributable to Common Stockholders** | 18,960 | 12,851 | 47.5% | 24,595 | 21,901 | 12.3% | | **Diluted Earnings Per Share** | 0.37 | 0.31 | 19.4% | 0.53 | 0.54 | -1.9% | [Non-GAAP Financial Measures](index=3&type=section&id=Non-GAAP%20Financial%20Measures) Tiptree Inc. utilizes adjusted net income and adjusted average return on equity as non-GAAP financial measures to provide clearer insights into business operations, excluding the impact of investment gains/losses, share-based compensation, and other non-recurring or non-cash items, with detailed reconciliation tables provided [Definition and Purpose](index=3&type=section&id=Non-GAAP%20Definition%20and%20Purpose) Adjusted net income and adjusted average return on equity are non-GAAP metrics used by management to assess operating performance and capital allocation, aiming to provide clearer business operational results by excluding non-recurring expenses, share-based compensation, investment gains/losses, and acquisition accounting-related intangible asset amortization - Adjusted net income is defined as income (loss) before income tax expense (benefit) less income tax expense (benefit), excluding the after-tax impact of merger and acquisition-related expenses, share-based compensation, net realized and unrealized gains (losses), and amortization of intangible assets related to purchase accounting, all net of non-controlling interests[9](index=9&type=chunk)[16](index=16&type=chunk) - Adjusted average return on equity is adjusted net income annualized and expressed as a percentage of average shareholders' equity at the beginning and end of the period[16](index=16&type=chunk) - Management uses these metrics as part of the capital allocation process and to evaluate comparative returns on invested capital, believing they provide additional clarity into the company's overall underlying business operating results by removing distortions from the unpredictability and volatility of realized and unrealized gains and losses[9](index=9&type=chunk)[16](index=16&type=chunk) [Non-GAAP Reconciliations - Three Months Ended June 30](index=7&type=section&id=Non-GAAP%20Reconciliations%20-%20Three%20Months%20Ended%20June%2030) In Q2 2025, the company's adjusted net income (pre-NCI) was **$36.59 million**, with an adjusted average return on equity of **20.8%**, where the insurance business contributed the primary adjusted net income, while Tiptree Capital and corporate segments were negative Non-GAAP Reconciliations for Q2 2025 (Pre-NCI) | Indicator | Insurance (USD thousands) | Mortgage (USD thousands) | Other (USD thousands) | Corporate (USD thousands) | Total (USD thousands) | | :--------------------------------- | :-------------- | :---------------- | :------------ | :---------------- | :------------ | | **Q2 2025** | | | | | | | Income (Loss) Before Income Tax Expense | 67,144 | 238 | (3,305) | (11,365) | 52,712 | | Adjusted Net Income (Pre-NCI) | 45,172 | 17 | (409) | (8,191) | 36,589 | | Adjusted Average Return on Equity | 25.8% | 0.1% | (1.9)% | NM% | 20.8% | | **Q2 2024** | | | | | | | Income (Loss) Before Income Tax Expense | 51,250 | 528 | 212 | (11,344) | 40,646 | | Adjusted Net Income (Pre-NCI) | 40,316 | 181 | 175 | (7,893) | 32,779 | | Adjusted Average Return on Equity | 30.3% | 1.4% | 1.1% | NM% | 21.6% | [Non-GAAP Reconciliations - Six Months Ended June 30](index=9&type=section&id=Non-GAAP%20Reconciliations%20-%20Six%20Months%20Ended%20June%2030) For H1 2025, the company's adjusted net income (pre-NCI) was **$68.38 million**, with an adjusted average return on equity of **19.8%**, where the insurance business was the primary profit contributor, while Tiptree Capital and corporate segments remained negative Non-GAAP Reconciliations for H1 2025 (Pre-NCI) | Indicator | Insurance (USD thousands) | Mortgage (USD thousands) | Other (USD thousands) | Corporate (USD thousands) | Total (USD thousands) | | :--------------------------------- | :-------------- | :---------------- | :------------ | :---------------- | :------------ | | **H1 2025** | | | | | | | Income (Loss) Before Income Tax Expense | 105,198 | 28 | (3,121) | (24,043) | 78,062 | | Adjusted Net Income (Pre-NCI) | 85,648 | 627 | (856) | (17,039) | 68,380 | | Adjusted Average Return on Equity | 25.3% | 2.2% | (2.9)% | NM% | 19.8% | | **H1 2024** | | | | | | | Income (Loss) Before Income Tax Expense | 88,061 | 1,281 | 3,205 | (22,202) | 70,345 | | Adjusted Net Income (Pre-NCI) | 74,449 | (128) | 828 | (14,761) | 60,388 | | Adjusted Average Return on Equity | 29.7% | (0.5)% | 1.8% | NM% | 20.2% | [Company Information](index=3&type=section&id=Company%20Information) This section provides an overview of Tiptree Inc., including its capital allocation strategy and investment areas, and contains standard cautionary statements regarding forward-looking statements, emphasizing potential risks and uncertainties [About Tiptree](index=3&type=section&id=About%20Tiptree) Founded in 2007, Tiptree Inc. is dedicated to allocating capital to small and medium-sized businesses to build long-term value, with investment areas spanning multiple industries and asset types including insurance, asset management, specialty finance, real estate, and shipping - Tiptree Inc. (NASDAQ: TIPT), founded in 2007, is dedicated to allocating capital to small and medium-sized businesses to build long-term value[10](index=10&type=chunk) - The company possesses extensive investment experience across various industries and asset types, including insurance, asset management, specialty finance, real estate, and shipping[10](index=10&type=chunk) [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) This report contains forward-looking statements involving risks, uncertainties, and contingent events that could cause actual results to differ materially from expectations, cautioning readers not to place undue reliance on these statements and to refer to the 'Risk Factors' section in the company's Form 10-K report filed with the SEC - This press release contains 'forward-looking statements' involving risks, uncertainties, and contingent events, many of which are beyond the company's control, that could cause actual results, performance, or achievements to differ materially from those anticipated[12](index=12&type=chunk) - Forward-looking statements are not guarantees of future performance and are subject to various factors, including market conditions and those described in the 'Risk Factors' section of the company's Annual Report on Form 10-K filed with the SEC[12](index=12&type=chunk) - The company undertakes no obligation to update any forward-looking statements, except as required by federal securities laws[12](index=12&type=chunk)

Group 1 - Tiptree (NASDAQ: TIPT) reported a strong quarterly performance on April 30th, with a focus on its subsidiary Fortegra [1] - The article highlights the investment strategies of Catalyst Hedge Investing, which seeks asymmetric risk/reward opportunities with clear catalysts [2] - The leader of Catalyst Hedge Investing has over 25 years of market experience, including nearly 20 years as a hedge fund portfolio manager, and has successfully predicted significant market events [2] Group 2 - The article emphasizes the exclusive access that members of Catalyst Hedge Investing have to various articles and an active chat board for investment ideas [1] - The analyst has a beneficial long position in TIPT shares, indicating confidence in the company's future performance [3]

[PART I. Financial Information](index=3&type=section&id=PART%20I.%20Financial%20Information) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This section cautions that forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties that may cause actual results to differ materially - Forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors beyond the company's control[6](index=6&type=chunk)[7](index=7&type=chunk) - Actual results could differ materially from those anticipated due to various factors, including those described in the 'Risk Factors' section of the Annual Report on Form 10-K[6](index=6&type=chunk) [Market and Industry Data](index=3&type=section&id=Market%20and%20Industry%20Data) Market and industry data in this report are from third-party sources, believed reliable by management, but not independently verified for accuracy, completeness, or timeliness - Market and industry data are obtained from third-party sources, believed reliable by management, but not independently verified for accuracy, completeness, or timeliness[8](index=8&type=chunk) [Note to Reader (Definitions)](index=3&type=section&id=Note%20to%20Reader) This section defines key terms and acronyms like 'Fortegra,' 'Warburg,' 'GAAP,' and 'Tiptree' for consistent understanding throughout the report - Provides definitions for key terms and acronyms used in the report, including **Fortegra** (The Fortegra Group, Inc. and its subsidiaries), **Warburg** (WP Falcon Aggregator, L.P.), and **GAAP** (U.S. generally accepted accounting principles)[9](index=9&type=chunk)[10](index=10&type=chunk)[12](index=12&type=chunk)[13](index=13&type=chunk)[14](index=14&type=chunk)[15](index=15&type=chunk) [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents Tiptree Inc.'s unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive income, equity changes, and cash flows for Q1 2025 and Q4 2024 [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | March 31, 2025 | December 31, 2024 | Change | | :--------------------------------- | :--------------- | :---------------- | :----- | | Total assets | $5,819,492 | $5,694,789 | +$124,703 | | Total liabilities | $5,136,030 | $5,038,018 | +$98,012 | | Total stockholders' equity | $683,462 | $656,771 | +$26,691 | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Condensed Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :----------------------------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Total revenues | $497,426 | $498,221 | -$795 | | Total expenses | $472,076 | $468,522 | +$3,554 | | Net income (loss) | $12,968 | $15,881 | -$2,913 | | Net income (loss) attributable to common stockholders | $5,635 | $9,050 | -$3,415 | | Basic earnings per share | $0.15 | $0.24 | -$0.09 | | Diluted earnings per share | $0.13 | $0.22 | -$0.09 | | Dividends declared per common share | $0.06 | $0.06 | $0.00 | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Condensed Consolidated Statements of Comprehensive Income (Loss) Highlights (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :------------------------------------------------ | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net income (loss) | $12,968 | $15,881 | -$2,913 | | Other comprehensive income (loss), net of tax | $11,204 | -$2,540 | +$13,744 | | Comprehensive income (loss) | $24,172 | $13,341 | +$10,831 | | Comprehensive income (loss) attributable to common stockholders | $13,828 | $7,195 | +$6,633 | [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) Condensed Consolidated Statements of Changes in Stockholders' Equity Highlights (in thousands) | Metric | Balance at Dec 31, 2024 | Balance at Mar 31, 2025 | Change | | :--------------------------------- | :---------------------- | :---------------------- | :------- | | Total Tiptree Inc. stockholders' equity | $457,698 | $473,719 | +$16,021 | | Total non-controlling interests | $199,073 | $209,743 | +$10,670 | | Total stockholders' equity | $656,771 | $683,462 | +$26,691 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash provided by (used in) operating activities | -$33,321 | $62,704 | -$96,025 | | Net cash provided by (used in) investing activities | -$18,072 | $40,469 | -$58,541 | | Net cash provided by (used in) financing activities | $61,300 | $7,977 | +$53,323 | | Net increase (decrease) in cash, cash equivalents and restricted cash | $11,694 | $110,396 | -$98,702 | | Cash, cash equivalents and restricted cash – end of period | $427,958 | $602,957 | -$174,999 | [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [(1) Organization](index=12&type=section&id=(1)%20Organization) - Tiptree Inc. is a Maryland holding company, incorporated in 2007, trading on Nasdaq (TIPT), allocating capital across businesses, primarily Insurance (Fortegra) and Mortgage segments[30](index=30&type=chunk) - As of March 31, 2025, **Fortegra** was owned approximately **79.1%** by Tiptree Holdings, **17.7%** by Warburg, and **3.2%** by management and directors[31](index=31&type=chunk) [(2) Summary of Significant Accounting Policies](index=12&type=section&id=(2)%20Summary%20of%20Significant%20Accounting%20Policies) - Unaudited condensed consolidated financial statements are prepared in accordance with **GAAP** and presented in U.S. dollars[32](index=32&type=chunk) - No new accounting standards were adopted in the three months ended March 31, 2025[34](index=34&type=chunk) - New accounting pronouncements (2023-09 on Income Taxes and 2024-03 on Expense Disaggregation) are expected to enhance disclosures and have minimal financial impact upon adoption in future periods[35](index=35&type=chunk) [(3) Operating Segment Data](index=13&type=section&id=(3)%20Operating%20Segment%20Data) - Tiptree's reportable segments are **Insurance** (Fortegra) and **Mortgage** (Reliance), with other non-insurance operations as Tiptree Capital[36](index=36&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk) - The Executive Committee, as Chief Operating Decision Maker (CODM), uses 'Income (loss) before taxes' to allocate resources and assess segment performance[37](index=37&type=chunk) Segment Income (Loss) Before Taxes (in thousands) | Segment | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :-------------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Insurance | $38,054 | $36,811 | +$1,243 | | Mortgage | -$210 | $753 | -$963 | | Tiptree Capital - Other | $184 | $2,993 | -$2,809 | | Corporate | -$12,678 | -$10,858 | -$1,820 | | Total | $25,350 | $29,699 | -$4,349 | [(4) Investments](index=16&type=section&id=(4)%20Investments) Total Investments (in thousands) | Investment Type | March 31, 2025 | December 31, 2024 | Change | | :------------------------------------------------- | :--------------- | :---------------- | :------- | | Available for sale securities, at fair value | $1,156,801 | $1,107,929 | +$48,872 | | Loans, at fair value | $89,691 | $81,330 | +$8,361 | | Equity securities | $135,156 | $108,620 | +$26,536 | | Other investments | $52,413 | $53,084 | -$671 | | **Total investments** | **$1,434,061** | **$1,350,963** | **+$83,098** | Net Investment Income - Insurance (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :-------------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net investment income | $11,729 | $6,758 | +$4,971 | Net Realized and Unrealized Gains (Losses) (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :------------------------------------ | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Total net realized and unrealized gains (losses) | $6,831 | $15,624 | -$8,793 | [(5) Notes and Accounts Receivable, net](index=23&type=section&id=(5)%20Notes%20and%20Accounts%20Receivable,%20net) Notes and Accounts Receivable, net (in thousands) | Metric | March 31, 2025 | December 31, 2024 | Change | | :--------------------------------- | :--------------- | :---------------- | :------- | | Total notes and accounts receivable, net | $798,438 | $799,131 | -$693 | Bad Debt Expense (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Bad Debt Expense | $18 | $217 | -$199 | [(6) Reinsurance Recoverable and Prepaid Reinsurance Premiums](index=25&type=section&id=(6)%20Reinsurance%20Recoverable%20and%20Prepaid%20Reinsurance%20Premiums) Reinsurance Recoverable and Prepaid Reinsurance Premiums (in thousands) | Metric | March 31, 2025 | December 31, 2024 | Change | | :--------------------------------- | :--------------- | :---------------- | :------- | | Total reinsurance recoverable | $1,121,010 | $992,883 | +$128,127 | | Total prepaid reinsurance premiums | $969,012 | $1,046,253 | -$77,241 | Total Premiums Earned (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :----------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Total premiums earned | $363,437 | $347,310 | +$16,127 | - Assumed premiums from other companies represented **38.8%** of total premiums earned in Q1 2025, compared to **40.7%** in Q1 2024[69](index=69&type=chunk) [(7) Goodwill and Intangible Assets, net](index=27&type=section&id=(7)%20Goodwill%20and%20Intangible%20Assets,%20net) Goodwill and Intangible Assets, net (in thousands) | Metric | March 31, 2025 | December 31, 2024 | Change | | :--------------------------------- | :--------------- | :---------------- | :------- | | Total intangible assets, net | $100,232 | $102,859 | -$2,627 | | Goodwill | $206,496 | $206,706 | -$210 | | **Total goodwill and intangible assets, net** | **$306,728** | **$309,565** | **-$2,837** | Amortization Expense on Intangible Assets (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Amortization expense on intangible assets | $3,354 | $3,991 | -$637 | - No impairments were recorded on goodwill or intangible assets for the three months ended March 31, 2025, or 2024[72](index=72&type=chunk)[75](index=75&type=chunk) [(8) Derivative Financial Instruments and Hedging](index=29&type=section&id=(8)%20Derivative%20Financial%20Instruments%20and%20Hedging) - Company uses derivatives (Interest Rate Lock Commitments (IRLCs), forward delivery contracts, and TBA mortgage-backed securities) to manage credit, market, interest rate, and currency risks[77](index=77&type=chunk)[79](index=79&type=chunk) Derivative Financial Instruments (in thousands) | Metric | March 31, 2025 | December 31, 2024 | Change | | :-------------------- | :--------------- | :---------------- | :------- | | Asset derivatives | $4,356 | $3,101 | +$1,255 | | Liability derivatives | $13,590 | $11,127 | +$2,463 | - **Fortegra Additional Warrants (Warburg)** are classified as a Level 3 derivative liability, increasing to **$12,977 thousand** from **$10,958 thousand**[80](index=80&type=chunk)[81](index=81&type=chunk) [(9) Debt, net](index=31&type=section&id=(9)%20Debt,%20net) Total Debt, net (in thousands) | Metric | March 31, 2025 | December 31, 2024 | Change | | :------------ | :--------------- | :---------------- | :------- | | Total debt, net | $495,269 | $427,089 | +$68,180 | Interest Expense on Debt (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :----------------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Total interest expense on debt | $10,360 | $8,290 | +$2,070 | - New corporate debt includes a **$75,000 thousand** secured term credit facility due February 2028 and increased outstanding amounts under secured revolving credit agreements[88](index=88&type=chunk)[89](index=89&type=chunk) - The Company redeemed **$35,000 thousand** of preferred trust securities on March 17, 2025[90](index=90&type=chunk) [(10) Fair Value of Financial Instruments](index=35&type=section&id=(10)%20Fair%20Value%20of%20Financial%20Instruments) - Fair value measurements prioritize observable inputs (Level 1, 2) and minimize unobservable inputs (Level 3)[97](index=97&type=chunk)[99](index=99&type=chunk) Fair Value of Financial Assets and Liabilities (in thousands) | Metric | March 31, 2025 | December 31, 2024 | Change | | :------------------------------------ | :--------------- | :---------------- | :------- | | Total financial assets at fair value | $1,452,663 | $1,368,254 | +$84,409 | | Level 3 assets | $62,991 | $63,335 | -$344 | | Total financial liabilities at fair value | $15,422 | $12,906 | +$2,516 | | Level 3 liabilities | $14,830 | $12,763 | +$2,067 | - Level 3 liabilities are primarily driven by **Fortegra Additional Warrants (Warburg)** and contingent consideration payable[113](index=113&type=chunk)[115](index=115&type=chunk) [(11) Liability for Unpaid Claims and Claim Adjustment Expenses](index=42&type=section&id=(11)%20Liability%20for%20Unpaid%20Claims%20and%20Claim%20Adjustment%20Expenses) Net Liability for Unpaid Losses and Loss Adjustment Expenses (in thousands) | Metric | March 31, 2025 | January 1, 2025 | Change | | :---------------------------------------------------- | :--------------- | :-------------- | :------- | | Net balance as of period end, short duration | $707,122 | $658,210 | +$48,912 | - Experienced favorable prior year development of **$4,031 thousand** in Q1 2025, primarily from lower-than-expected commercial line losses[125](index=125&type=chunk)[129](index=129&type=chunk) - Current year incurred losses in Q1 2025 included **$27.1 million** related to the January 2025 California wildfires[130](index=130&type=chunk) [(12) Revenue from Contracts with Customers](index=43&type=section&id=(12)%20Revenue%20from%20Contracts%20with%20Customers) Revenue from Contracts with Customers (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Service contract revenue | $71,749 | $80,823 | -$9,074 | | Motor club revenue | $9,728 | $11,521 | -$1,793 | | **Total revenue from contracts with customers** | **$82,383** | **$93,302** | **-$10,919** | Deferred Assets and Liabilities Related to Revenue from Contracts with Customers (in thousands) | Metric | March 31, 2025 | January 1, 2025 | Change | | :----------------------- | :--------------- | :-------------- | :------- | | Deferred acquisition costs | $221,860 | $224,310 | -$2,450 | | Deferred revenue | $638,563 | $634,379 | +$4,184 | [(13) Other Assets and Other Liabilities and Accrued Expenses](index=45&type=section&id=(13)%20Other%20Assets%20and%20Other%20Liabilities%20and%20Accrued%20Expenses) Other Assets (in thousands) | Metric | March 31, 2025 | December 31, 2024 | Change | | :-------------------- | :--------------- | :---------------- | :------- | | Total other assets | $207,899 | $213,858 | -$5,959 | Other Liabilities and Accrued Expenses (in thousands) | Metric | March 31, 2025 | December 31, 2024 | Change | | :------------------------------------ | :--------------- | :---------------- | :------- | | Total other liabilities and accrued expenses | $446,887 | $407,925 | +$38,962 | - Depreciation expense related to furniture, fixtures, and equipment was **$1,527 thousand** in Q1 2025, a slight decrease from **$1,577 thousand** in Q1 2024[140](index=140&type=chunk) [(14) Other Revenue and Other Expenses](index=46&type=section&id=(14)%20Other%20Revenue%20and%20Other%20Expenses) Total Other Revenue (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :---------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Total other revenue | $14,498 | $15,298 | -$800 | Total Other Expenses (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :--------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Total other expenses | $40,838 | $40,866 | -$28 | [(15) Stockholders' Equity](index=47&type=section&id=(15)%20Stockholders'%20Equity) - No shares repurchased in Q1 2025; **$11,945 thousand** repurchase authorization remains[145](index=145&type=chunk) Dividends Declared Per Common Share | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :-------------------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Total cash dividends declared | $0.06 | $0.06 | $0.00 | - As of March 31, 2025, **Fortegra** was owned approximately **79.1%** by Tiptree Holdings, **17.7%** by Warburg, and **3.2%** by management and directors[148](index=148&type=chunk) - Insurance company subsidiaries exceeded minimum statutory capital and surplus requirements, with **$78,614 thousand** available for ordinary dividends without regulatory approval[155](index=155&type=chunk)[160](index=160&type=chunk) [(16) Accumulated Other Comprehensive Income (Loss) (AOCI)](index=49&type=section&id=(16)%20Accumulated%20Other%20Comprehensive%20Income%20(Loss)%20(AOCI)) Accumulated Other Comprehensive Income (Loss) (AOCI) Attributable to Tiptree Inc. (in thousands) | Metric | March 31, 2025 | December 31, 2024 | Change | | :------------------------------------------ | :--------------- | :---------------- | :------- | | Total AOCI to Tiptree Inc. | -$19,557 | -$27,750 | +$8,193 | - Other comprehensive income (losses) before reclassifications for Q1 2025 was **$10,726 thousand**, including **$4,816 thousand** from unrealized gains on AFS securities and **$5,910 thousand** from foreign currency translation adjustments[161](index=161&type=chunk) [(17) Stock Based Compensation](index=50&type=section&id=(17)%20Stock%20Based%20Compensation) RSU and Stock Award Activity (Number of shares issuable) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Granted | 286,144 | 83,379 | | Vested | (355,810) | (36,489) | - As of March 31, 2025, **4,520,833 Performance Restricted Stock Units (PRSUs)** were unvested, with vesting tied to Tiptree share price targets ranging from **$30 to $70**[168](index=168&type=chunk)[169](index=169&type=chunk) Stock Based Compensation Expense (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Employee compensation and benefits | $9,139 | $3,776 | +$5,363 | | Net stock based compensation expense | $8,159 | $3,037 | +$5,122 | [(18) Income Taxes](index=54&type=section&id=(18)%20Income%20Taxes) Total Income Tax Expense and Effective Tax Rate | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :-------------------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Total income tax expense (benefit) | $12,382 | $13,818 | -$1,436 | | Effective tax rate (ETR) | 48.8% | 46.5% | +2.3 pp | - **ETR** is higher than the U.S. federal statutory rate of **21%** primarily due to deferred taxes on Tiptree's investment in Fortegra (less than **80%** ownership); excluding this impact, ETRs were **30.2%** (2025) and **31.5%** (2024)[181](index=181&type=chunk)[182](index=182&type=chunk) - The deferred tax liability relating to **Fortegra** increased by **$7,072 thousand** in Q1 2025[182](index=182&type=chunk) [(19) Commitments and Contingencies](index=55&type=section&id=(19)%20Commitments%20and%20Contingencies) Rent Expense for Office Leases (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :-------------------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Rent expense for office leases | $1,838 | $1,990 | -$152 | - Company is a defendant in **Mullins v. Southern Financial Life Insurance Co.** class action lawsuit, with the Kentucky Supreme Court denying discretionary review in February 2025[185](index=185&type=chunk)[190](index=190&type=chunk) - Management believes the ultimate resolution of the litigation will not be materially adverse to the Company's financial position, though a range of loss cannot be estimated[191](index=191&type=chunk) [(20) Earnings Per Share](index=57&type=section&id=(20)%20Earnings%20Per%20Share) Earnings Per Share (EPS) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Basic net income (loss) attributable to common shares | $0.15 | $0.24 | -$0.09 | | Diluted net income (loss) attributable to common shares | $0.13 | $0.22 | -$0.09 | | Weighted average number of common shares outstanding - diluted | 38,447,518 | 37,779,412 | +668,106 | [(21) Related Party Transactions](index=57&type=section&id=(21)%20Related%20Party%20Transactions) - **Tiptree Advisors**, a related party controlled by Executive Chairman Michael Barnes, manages investment portfolios for **Fortegra** and its subsidiaries[198](index=198&type=chunk) Management and Incentive Fees Paid to Tiptree Advisors (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Management and incentive fees | $1,946 | $1,421 | +$525 | [(22) Subsequent Events](index=58&type=section&id=(22)%20Subsequent%20Events) - On April 29, 2025, the Board of Directors declared a quarterly cash dividend of **$0.06 per share**, payable on May 19, 2025, to common stockholders of record as of May 12, 2025[201](index=201&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=59&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes Tiptree Inc.'s business, key trends, and financial performance for Q1 2025 versus prior year, covering consolidated results, segment performance, non-GAAP measures, liquidity, and accounting policies [OVERVIEW](index=59&type=section&id=OVERVIEW) - Tiptree allocates capital to small and middle-market companies, with **Fortegra** (specialty insurance) as its largest operating subsidiary and Tiptree Capital (including Mortgage) for other investments[203](index=203&type=chunk) Q1 2025 Overall Financial Highlights (in millions) | Metric | Q1 2025 | Q1 2024 | Change | | :------------------------------------------ | :------ | :------ | :----- | | Net income attributable to common stockholders | $5.6 | $9.1 | -$3.5 | | Adjusted net income (Non-GAAP) | $23.3 | $20.5 | +$2.8 | | Return on average equity | 4.8% | 8.6% | -3.8 pp | | Adjusted return on average equity (Non-GAAP) | 20.0% | 19.5% | +0.5 pp | - Insurance segment highlights include gross written premiums and premium equivalents of **$753.2 million** (up **13.5% YoY**) and a combined ratio of **89.9%**[207](index=207&type=chunk) - Mortgage segment reported a loss before taxes of **$0.2 million** in Q1 2025, down from income of **$0.8 million** in Q1 2024, due to negative fair value adjustments in mortgage servicing rights and lower origination volumes[205](index=205&type=chunk) [Key Trends](index=60&type=section&id=Key%20Trends) - Operations are affected by general economic conditions, market liquidity, interest rates, inflation, and the regulatory environment[208](index=208&type=chunk) - Insurance results are driven by pricing, underwriting, risk retention, reinsurance, investment returns, and policy renewals; inflation impacts claims costs, and exchange rates affect book value[209](index=209&type=chunk) - Elevated mortgage interest rates negatively impact origination volumes but increase the fair value of mortgage servicing portfolios by slowing prepayment speeds[211](index=211&type=chunk) - Rising interest rates increase the cost of floating interest rate debt obligations (secured revolving and term credit agreements, preferred trust securities, asset-based revolving financing)[212](index=212&type=chunk) [RESULTS OF OPERATIONS (Overall)](index=60&type=section&id=RESULTS%20OF%20OPERATIONS%20(Overall)) Consolidated Financial Results (in thousands, except per share data) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Total revenues | $497,426 | $498,221 | -$795 | | Net income (loss) attributable to common stockholders | $5,635 | $9,050 | -$3,415 | | Diluted earnings per share | $0.13 | $0.22 | -$0.09 | | Adjusted net income (Non-GAAP) | $23,332 | $20,533 | +$2,799 | | Adjusted return on average equity (Non-GAAP) | 20.0% | 19.5% | +0.5 pp | - Total revenues slightly decreased by **0.2%** due to declines in service and administrative fees and lower net realized/unrealized gains, partially offset by growth in earned premiums and investment income[218](index=218&type=chunk) - Book value per share increased to **$12.63** as of March 31, 2025, from **$11.55** as of March 31, 2024, driven by comprehensive income[224](index=224&type=chunk) [Results by Segment (Insurance)](index=64&type=section&id=Results%20by%20Segment%20(Insurance)) Insurance Segment Revenues (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Total revenues | $480,581 | $478,756 | +$1,825 | | Earned premiums, net | $363,437 | $347,310 | +$16,127 | | Net investment income | $11,729 | $6,758 | +$4,971 | Insurance Segment Key Performance Metrics | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Gross written premiums and premium equivalents | $753,175 | $663,417 | +$89,758 | | Net written premiums | $357,689 | $318,151 | +$39,538 | | Combined ratio | 89.9% | 90.3% | -0.4 pp | | Adjusted net income (before NCI) | $40,476 | $34,133 | +$6,343 | - Favorable prior year development of **$4.0 million** in Q1 2025 due to lower-than-expected commercial line claims, compared to unfavorable development of **$0.8 million** in Q1 2024[257](index=257&type=chunk) - Net losses and adjustment expenses in Q1 2025 included **$30.3 million** of net catastrophe losses, primarily from California wildfires, compared to **$1.1 million** in Q1 2024[257](index=257&type=chunk) [Results by Segment (Mortgage)](index=71&type=section&id=Results%20by%20Segment%20(Mortgage)) Mortgage Segment Results (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Total revenues | $15,179 | $15,891 | -$712 | | Income (loss) before taxes | -$210 | $753 | -$963 | | Origination volumes | $209,142 | $210,402 | -$1,260 | | Gain on sale margins | 4.8% | 5.0% | -0.2 pp | | Adjusted net income (Non-GAAP) | $610 | -$309 | +$919 | - The decrease in income before taxes was driven by lower mortgage volumes and a negative fair value adjustment in mortgage servicing rights, partially offset by higher loan servicing income[281](index=281&type=chunk)[282](index=282&type=chunk)[285](index=285&type=chunk) [Results by Segment (Tiptree Capital - Other)](index=73&type=section&id=Results%20by%20Segment%20(Tiptree%20Capital%20-%20Other)) Tiptree Capital - Other Segment Results (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Total revenue | $1,666 | $3,574 | -$1,908 | | Income (loss) before taxes | $184 | $2,993 | -$2,809 | | Adjusted net income (loss) (Non-GAAP) | -$447 | $653 | -$1,100 | - Revenue decrease driven by lower realized investment gains on securities and reduced interest income on cash and cash equivalents[288](index=288&type=chunk) [Results by Segment (Corporate)](index=74&type=section&id=Results%20by%20Segment%20(Corporate)) Corporate Expenses (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Total expenses | $12,678 | $10,858 | +$1,820 | | Employee compensation and benefits (incl. incentive) | $9,231 | $8,390 | +$841 | | Stock-based compensation expense | $6,900 | $3,100 | +$3,800 | | Interest expense | $1,172 | $0 | +$1,172 | - Interest expense of **$1.2 million** in Q1 2025 is due to **$74.8 million** outstanding borrowing on a new senior secured credit facility[292](index=292&type=chunk) [Provision for Income Taxes](index=74&type=section&id=Provision%20for%20Income%20Taxes) Income Tax Expense and Effective Tax Rate | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :-------------------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Total income tax expense | $12,382 | $13,818 | -$1,436 | | Effective tax rate | 48.8% | 46.5% | +2.3 pp | - High **ETR** is primarily due to deferred taxes on Tiptree's investment in **Fortegra** (less than **80%** ownership); excluding this, ETRs were **30.2%** (2025) and **31.5%** (2024)[293](index=293&type=chunk)[295](index=295&type=chunk)[296](index=296&type=chunk) - The deferred tax liability related to **Fortegra** increased by **$7.1 million** in Q1 2025[296](index=296&type=chunk) [Balance Sheet Information](index=74&type=section&id=Balance%20Sheet%20Information) Balance Sheet Highlights (in thousands) | Metric | March 31, 2025 | December 31, 2024 | Change | | :--------------------------------- | :--------------- | :---------------- | :------- | | Total assets | $5,819,492 | $5,694,789 | +$124,703 | | Total stockholders' equity | $683,462 | $656,771 | +$26,691 | | Common shares outstanding | 37,493,883 | 37,255,838 | +238,045 | - Increase in assets primarily attributable to growth in the Insurance segment[297](index=297&type=chunk) - Increase in common shares outstanding driven by vesting of share-based incentive compensation[298](index=298&type=chunk) [NON-GAAP MEASURES AND RECONCILIATIONS](index=76&type=section&id=NON-GAAP%20MEASURES%20AND%20RECONCILIATIONS) - Non-GAAP measures (underwriting and fee revenues/margin, adjusted net income/return on average equity, book value per share) provide supplemental information on operating performance and capital allocation[301](index=301&type=chunk) - Adjusted net income excludes after-tax impact of M&A expenses, stock-based compensation, net realized/unrealized gains (losses), and intangibles amortization[305](index=305&type=chunk) Book Value Per Share (in thousands, except per share information) | Metric | As of March 31, 2025 | As of March 31, 2024 | Change | | :------------------------------------------ | :------------------- | :------------------- | :------- | | Total stockholders' equity, net of non-controlling interests | $473,719 | $424,735 | +$48,984 | | Total common shares outstanding | 37,494 | 36,781 | +713 | | Book value per share | $12.63 | $11.55 | +$1.08 | [LIQUIDITY AND CAPITAL RESOURCES](index=79&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) - Primary liquidity sources include unrestricted cash, liquid investments, the Tiptree Credit Agreement, and distributions from operating subsidiaries[312](index=312&type=chunk) Cash and Cash Equivalents (in thousands) | Metric | March 31, 2025 | December 31, 2024 | Change | | :------------------------------------------ | :--------------- | :---------------- | :------- | | Cash and cash equivalents (excluding restricted cash) | $342,282 | $320,067 | +$22,215 | Consolidated Cash Flows (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Operating activities | -$33,321 | $62,704 | -$96,025 | | Investing activities | -$18,072 | $40,469 | -$58,541 | | Financing activities | $61,300 | $7,977 | +$53,323 | - Financing activities in Q1 2025 were primarily driven by a new **$75.0 million** senior secured credit facility at Tiptree Holdings LLC[325](index=325&type=chunk) [CRITICAL ACCOUNTING POLICIES AND ESTIMATES](index=81&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES%20AND%20ESTIMATES) - No material changes to critical accounting policies and estimates since the December 31, 2024, Annual Report on Form 10-K[327](index=327&type=chunk) [Recently Adopted and Issued Accounting Standards](index=81&type=section&id=Recently%20Adopted%20and%20Issued%20Accounting%20Standards) - Refer to Note (2) Summary of Significant Accounting Policies for details on recently adopted and issued accounting standards[328](index=328&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=81&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes occurred in market risk disclosures or assumptions during Q1 2025, as previously detailed in the December 31, 2024, Annual Report on Form 10-K - No material changes to market risk disclosures or assumptions during Q1 2025[329](index=329&type=chunk) [Item 4. Controls and Procedures](index=81&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes in internal control over financial reporting during the quarter - Disclosure controls and procedures were effective as of March 31, 2025[330](index=330&type=chunk) - No material changes in internal control over financial reporting during the quarter[331](index=331&type=chunk) [PART II. Other Information](index=82&type=section&id=PART%20II.%20Other%20Information) [Item 1. Legal Proceedings](index=82&type=section&id=Item%201.%20Legal%20Proceedings) Legal proceedings are detailed in Note (19) Commitments and Contingencies within the condensed consolidated financial statements - Legal proceedings are detailed in Note (19) Commitments and Contingencies[332](index=332&type=chunk) [Item 1A. Risk Factors](index=82&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors have occurred since the December 31, 2024, Annual Report on Form 10-K - No material changes to risk factors since the December 31, 2024, Annual Report on Form 10-K[333](index=333&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=82&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Tiptree Inc. conducted no share repurchases during Q1 2025, with **$11,945 thousand** remaining in repurchase authorization as of March 31, 2025 - No share repurchases occurred during Q1 2025[334](index=334&type=chunk) - Remaining share repurchase authorization as of March 31, 2025, was **$11,945 thousand**[334](index=334&type=chunk) [Item 3. Defaults Upon Senior Securities](index=82&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities occurred during the reporting period - No defaults upon senior securities[335](index=335&type=chunk) [Item 4. Mine Safety Disclosures](index=82&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the Company - Not Applicable[336](index=336&type=chunk) [Item 5. Other Information](index=82&type=section&id=Item%205.%20Other%20Information) No other information is reported under this item - No other information[337](index=337&type=chunk) [Item 6. Exhibits, Financial Statement Schedules](index=83&type=section&id=Item%206.%20Exhibits,%20Financial%20Statement%20Schedules) This section lists all financial statements and exhibits filed as part of the Form 10-Q, including Sarbanes-Oxley Act certifications and XBRL instance documents, providing a comprehensive overview of supporting documentation - Lists all financial statements and exhibits, including certifications and XBRL documents, filed as part of the Form 10-Q[338](index=338&type=chunk)[339](index=339&type=chunk)[346](index=346&type=chunk)

[First Quarter 2025 Financial Results Overview](index=1&type=section&id=First%20Quarter%202025%20Financial%20Results%20Overview) Tiptree Inc. presents its first quarter 2025 financial results, detailing key performance indicators and overall financial position [Company Commentary and Key Financial Highlights](index=1&type=section&id=Company%20Commentary%20and%20Key%20Financial%20Highlights) Tiptree Inc. announced strong first quarter 2025 results, highlighted by a 20% adjusted return on average equity, robust Fortegra growth, and increased net investment income - Adjusted return on average equity was **20%** for Q1 2025[3](index=3&type=chunk) - Fortegra achieved **13.5% growth** in premium and premium equivalents[3](index=3&type=chunk) - Fortegra delivered a combined ratio of **89.9%**, despite substantial industry-wide catastrophic losses[3](index=3&type=chunk) Consolidated Financial Highlights | Metric | 2025 ($ in thousands) | 2024 ($ in thousands) | | :----------------------------------- | :-------------------- | :-------------------- | | Total revenues | 497,426 | 498,221 | | Net income (loss) attributable to common stockholders | 5,635 | 9,050 | | Diluted earnings per share | 0.13 | 0.22 | | Cash dividends paid per common share | 0.06 | 0.06 | | Return on average equity | 4.8 % | 8.6 % | | Adjusted net income (Non-GAAP) | 23,332 | 20,533 | | Adjusted return on average equity (Non-GAAP) | 20.0 % | 19.5 % | [First Quarter 2025 Summary](index=1&type=section&id=First%20Quarter%202025%20Summary) Tiptree reported Q1 2025 revenues of **$497.4 million**, a slight decrease, with net income at **$5.6 million** and adjusted net income increasing to **$23.3 million** - Revenues of **$497.4 million** for the quarter, a decrease of **0.2%** from Q1'24, primarily due to lower service and administrative revenues and lower net realized and unrealized gains[4](index=4&type=chunk) - Net income of **$5.6 million** compared to **$9.1 million** in Q1'24, driven by growth in the insurance business, offset by lower net realized and unrealized investment gains and incremental interest expense[4](index=4&type=chunk) - Adjusted net income of **$23.3 million** increased by **13.6%** from **$20.5 million** in Q1'24, driven by growth in the insurance business. Annualized adjusted return on average equity was **20.0%** for the quarter, compared to **19.5%** in Q1'24[4](index=4&type=chunk) - Declared a dividend of **$0.06 per share** to stockholders[4](index=4&type=chunk) [Segment Financial Highlights](index=2&type=section&id=Segment%20Financial%20Highlights) This section details the financial performance of Tiptree Inc.'s key operating segments, including Insurance, Tiptree Capital, Mortgage, and Corporate [Insurance (The Fortegra Group)](index=2&type=section&id=Insurance%20%28The%20Fortegra%20Group%29) Fortegra reported robust Q1 2025 growth, with gross written premiums up **13.5%** to **$753.2 million** and an improved combined ratio of **89.9%** despite catastrophe losses Insurance Segment Financials | Metric | 2025 ($ in thousands) | 2024 ($ in thousands) | | :----------------------------------- | :-------------------- | :-------------------- | | Gross written premiums and premium equivalents | 753,175 | 663,417 | | Net written premiums | 357,689 | 318,151 | | Total revenues | 480,581 | 478,756 | | Income before taxes | 38,054 | 36,811 | | Return on average equity | 17.7 % | 22.3 % | | Combined ratio | 89.9 % | 90.3 % | | Adjusted net income (before NCI) (Non-GAAP) | 40,476 | 34,133 | | Adjusted return on average equity (Non-GAAP) | 25.0 % | 28.3 % | - Gross written premiums and premium equivalents increased by **13.5%** to **$753.2 million**, driven by growth in specialty E&S insurance lines[7](index=7&type=chunk) - The combined ratio for the quarter was **89.9%**, an improvement of **0.4 percentage points**, reflecting consistent underwriting performance, including **6.7 percentage points** related to net catastrophe losses of **$30.3 million**[7](index=7&type=chunk) - Adjusted net income for the quarter was **$40.5 million**, up **18.6%** from Q1'24[7](index=7&type=chunk) [Tiptree Capital](index=2&type=section&id=Tiptree%20Capital) Tiptree Capital experienced a decline in Q1 2025, with total revenues decreasing to **$16.8 million** and income before taxes dropping significantly to **$(26) thousand** Tiptree Capital Segment Financials | Metric | 2025 ($ in thousands) | 2024 ($ in thousands) | | :----------------------------------- | :-------------------- | :-------------------- | | Total revenues | 16,845 | 19,465 | | Income before taxes | (26) | 3,746 | | Return on average equity | (0.4)% | 7.7 % | | Adjusted net income (Non-GAAP) | 163 | 344 | | Adjusted return on average equity (Non-GAAP) | 0.6 % | 0.9 % | [Mortgage](index=3&type=section&id=Mortgage) The Mortgage segment reported a **$0.2 million** loss before taxes in Q1 2025, primarily due to lower origination volumes and unrealized losses on mortgage servicing assets - Mortgage loss before taxes was **$0.2 million** for the quarter, compared to income of **$0.8 million** in Q1'24[8](index=8&type=chunk) - The loss was driven by lower origination volumes and unrealized losses on the mortgage servicing asset, partially offset by higher loan servicing fees[8](index=8&type=chunk) [Corporate](index=3&type=section&id=Corporate) Corporate expenses increased to **$12.7 million** in Q1 2025, mainly due to higher incentive compensation and interest expense, with outstanding borrowings at **$74.8 million** - Corporate expenses were **$12.7 million**, compared to **$10.9 million** in Q1'24, driven by an increase in accrued incentive compensation expense and interest expense[9](index=9&type=chunk) - Outstanding borrowings at the holding company were **$74.8 million** as of March 31, 2025[9](index=9&type=chunk) [Company Information](index=3&type=section&id=Company%20Information) This section provides background on Tiptree Inc.'s mission and investment strategy, along with cautionary statements regarding forward-looking information [About Tiptree](index=3&type=section&id=About%20Tiptree) Tiptree Inc. (NASDAQ: TIPT) allocates capital to small and middle-market companies, building long-term value across diverse industries and asset types - Tiptree Inc. allocates capital to select small and middle market companies with the mission of building long-term value[11](index=11&type=chunk) - The company has a significant track record investing across various industries and asset types, including insurance, asset management, specialty finance, real estate, and shipping sectors[11](index=11&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This section cautions that actual results may differ from forward-looking statements due to various risks, and any Fortegra IPO is subject to market conditions - The release contains "forward-looking statements" which involve risks, uncertainties and contingencies that may cause actual results to differ materially from anticipated results[12](index=12&type=chunk) - Any initial public offering by Fortegra would be subject to a variety of factors, including market conditions, and may not be consummated[12](index=12&type=chunk) - Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as to the date of this release[12](index=12&type=chunk) [Consolidated Financial Statements](index=4&type=section&id=Consolidated%20Financial%20Statements) This section presents Tiptree Inc.'s unaudited condensed consolidated balance sheets and statements of operations for the first quarter 2025 [Condensed Consolidated Balance Sheets (Unaudited)](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20%28Unaudited%29) As of March 31, 2025, total assets increased to **$5,819.5 million**, driven by investments and cash, with total stockholders' equity rising to **$683.5 million** Condensed Consolidated Balance Sheets | Metric | March 31, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | | :----------------------------------- | :------------------------------ | :------------------------------- | | Total investments | 1,434,061 | 1,350,963 | | Cash and cash equivalents | 342,282 | 320,067 | | Total assets | 5,819,492 | 5,694,789 | | Debt, net | 495,269 | 427,089 | | Total liabilities | 5,136,030 | 5,038,018 | | Total Tiptree Inc. stockholders' equity | 473,719 | 457,698 | | Total non-controlling interests | 209,743 | 199,073 | | Total stockholders' equity | 683,462 | 656,771 | [Condensed Consolidated Statements of Operations (Unaudited)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20%28Unaudited%29) For Q1 2025, total revenues were **$497.4 million**, with net income attributable to common stockholders decreasing to **$5.6 million** and diluted EPS at **$0.13** Condensed Consolidated Statements of Operations | Metric | Three Months Ended March 31, 2025 ($ in thousands) | Three Months Ended March 31, 2024 ($ in thousands) | | :----------------------------------- | :----------------------------------------------- | :----------------------------------------------- | | Earned premiums, net | 363,437 | 347,310 | | Service and administrative fees | 97,298 | 110,487 | | Net investment income | 11,729 | 6,758 | | Net realized and unrealized gains (losses) | 6,831 | 15,624 | | Total revenues | 497,426 | 498,221 | | Total expenses | 472,076 | 468,522 | | Income (loss) before taxes | 25,350 | 29,699 | | Net income (loss) attributable to common stockholders | 5,635 | 9,050 | | Diluted earnings per share | 0.13 | 0.22 | | Dividends declared per common share | 0.06 | 0.06 | [Non-GAAP Financial Measures and Reconciliations](index=3&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) This section defines and reconciles Tiptree Inc.'s non-GAAP financial measures, providing clarity on underlying business operations by excluding volatile items [Definition of Non-GAAP Measures](index=3&type=section&id=Definition%20of%20Non-GAAP%20Measures) Tiptree uses Adjusted net income and Adjusted return on average equity as non-GAAP measures to assess operating performance, excluding non-recurring and volatile items - Management uses Adjusted net income and Adjusted return on average equity as measurements of operating performance and for capital allocation[10](index=10&type=chunk)[15](index=15&type=chunk) - Adjusted net income excludes the after-tax impact of unique and non-recurring expenses, stock-based compensation, net realized and unrealized gains (losses), and intangibles amortization associated with purchase accounting, reduced for non-controlling interests[10](index=10&type=chunk)[15](index=15&type=chunk) - These non-GAAP measures are believed to provide additional clarity on underlying business operations by excluding distortions from the unpredictability and volatility of realized and unrealized gains (losses)[15](index=15&type=chunk) [Non-GAAP Reconciliations by Segment](index=6&type=section&id=Non-GAAP%20Reconciliations%20by%20Segment) This section provides detailed reconciliations of GAAP income to Adjusted net income for each segment, including adjustments for taxes, gains/losses, and non-recurring items Non-GAAP Reconciliations by Segment - Q1 2025 | Metric | Insurance | Mortgage | Tiptree Capital Other | Corporate | Total | | :----------------------------------- | :-------- | :------- | :-------------------- | :-------- | :---- | | Income (loss) before taxes | 38,054 | (210) | 184 | (12,678) | 25,350 | | Adjusted net income (before NCI) | 40,476 | 610 | (447) | (8,848) | 31,791 | | Adjusted net income | 32,017 | 610 | (447) | (8,848) | 23,332 | | Adjusted return on average equity | 25.0 % | 4.4 % | (2.9)% | NM% | 19.0 %| Non-GAAP Reconciliations by Segment - Q1 2024 | Metric | Insurance | Mortgage | Tiptree Capital Other | Corporate | Total | | :----------------------------------- | :-------- | :------- | :-------------------- | :-------- | :---- | | Income (loss) before taxes | 36,811 | 753 | 2,993 | (10,858) | 29,699 | | Adjusted net income (before NCI) | 34,133 | (309) | 653 | (6,868) | 27,609 | | Adjusted net income | 27,057 | (309) | 653 | (6,868) | 20,533 | | Adjusted return on average equity | 28.3 % | (2.4)% | 2.7 % | NM% | 18.8 %| - Total Adjusted return on average equity after non-controlling interests was **20.0%** for Q1 2025, compared to **19.5%** for Q1 2024[18](index=18&type=chunk) [Notes to Non-GAAP Reconciliations](index=8&type=section&id=Notes%20to%20Non-GAAP%20Reconciliations) This section clarifies specific adjustments in non-GAAP reconciliations, including exclusions for mortgage-related gains/losses and definitions of non-recurring expenses and fair value adjustments - Net realized and unrealized gains (losses) added back in Adjusted net income excludes net realized and unrealized gains (losses) from the mortgage segment and unrealized gains (losses) on mortgage servicing rights[18](index=18&type=chunk) - Non-recurring expenses for Q1 2025 and 2024 included legal, banker, and other expenses associated with the preparation of the registration statement for the withdrawn Fortegra initial public offering in 2024[18](index=18&type=chunk) - Non-cash fair-value adjustments represent a change in fair value of the Fortegra Additional Warrant liability[18](index=18&type=chunk)

Market and Economic Risks - The company operates in highly competitive markets, which could impede growth and negatively impact results[15] - Adverse economic factors, such as recession and inflation, could lead to fewer policy sales and increased claims, negatively impacting growth and profitability[188] - The performance of the insurance subsidiaries' investment portfolio is subject to various investment risks, including interest rate changes[150] - From 2022 to 2024, interest rates increased rapidly, significantly decreasing the value of fixed income securities held by the company[150] - The mortgage segment's performance is heavily influenced by the U.S. residential real estate market, which is affected by economic conditions like interest rates and unemployment[189] - The mortgage business is significantly impacted by interest rates, with a rapid series of interest rate increases from 2022 to 2024 resulting in lower revenue and profitability[217] - The majority of mortgage loan originations have historically been refinancing existing loans, which may decline as interest rates rise, reducing growth potential in the mortgage business[218] - The value of mortgage servicing rights (MSRs) is highly sensitive to interest rate changes, with values increasing when rates rise and decreasing when rates fall[219] - Changes in interest rates and market conditions could lead to increased marketing expenditures to maintain mortgage volume, impacting overall profitability[218] - Recent sharply rising interest rates have resulted in unrealized losses on certain investments, negatively impacting business results and increasing borrowing costs[237] Regulatory and Compliance Risks - The company is subject to extensive regulations, including the Gramm-Leach-Bliley Act and GDPR, which may increase compliance costs and limit business opportunities[273] - The company's insurance subsidiaries must comply with Statutory Accounting Principles (SAP), which are subject to constant review and may impact financial reporting[245] - Increasing regulatory focus on privacy and data protection could expose the company's subsidiaries to greater liability and compliance costs[268] - The evolving regulatory environment may complicate compliance efforts and increase operational risks for the company's subsidiaries[271] - The CFPB's increased regulatory scrutiny may raise compliance costs and affect the availability and cost of residential mortgage credit[279] - The company faces potential penalties for non-compliance with privacy laws, which could adversely affect its business and financial condition[270] - The insurance subsidiaries face risks related to compliance with guidelines, policies, and legal standards, which could lead to financial loss or reputational damage if controls are ineffective[281] - Increasing regulatory scrutiny and litigation in the financial services industry may materially and adversely affect the company due to potential judgments, settlements, and fines[282] - The company is involved in ongoing litigation, including a class action lawsuit alleging violations of the Consumer Protection Act, which could divert management's attention and incur significant expenses[283] - International operations expose the company to compliance risks associated with economic and trade sanctions, potentially leading to increased compliance costs and penalties[284] Operational and Strategic Risks - The company may need to raise additional capital in the future, but there is no assurance that such capital will be available on acceptable terms[15] - The company is investing in new lines of business and geographic markets, but faces substantial risks and uncertainties in achieving market acceptance and profitability[172] - The company's ability to grow its customer base depends on effective sales and marketing activities, which may be hindered by challenges in recruiting qualified personnel[180] - The insurance business relies on independent distributors for product sales, and loss of these relationships could materially impact sales and revenues[162] - The insurance subsidiaries have significantly expanded operations and anticipate further growth, requiring additional capital, systems development, and skilled personnel[173] - The company's ability to service its debt obligations is contingent on its financial condition and operating performance, which are influenced by external factors[195] - Insufficient cash flows could lead to liquidity problems, forcing the company to delay investments or alter its dividend policy[196] - The restrictive covenants in debt agreements may limit the company's operational flexibility and ability to pursue growth strategies[198] - The company's charter includes provisions that may delay or prevent takeovers, potentially affecting stockholder interests[256] - Analysts and investors may find it challenging to analyze the company due to its multiple lines of business, which could adversely impact stock price and capital raising efforts[260] Investment and Financial Risks - A portion of the company's assets are illiquid, creating uncertainty in valuing such assets[15] - The company's insurance subsidiaries' actual claims losses may exceed their reserves, requiring additional reserves[15] - Increased costs or unavailability of reinsurance could force the insurance subsidiaries to bear higher risks or reduce underwriting commitments, adversely affecting financial performance[168] - The inability of reinsurers to meet obligations could expose the insurance subsidiaries to credit risk, particularly during economic downturns, affecting overall financial health[170] - The fair value of certain investments and liabilities is based on management's estimates, which may cause operating results to fluctuate and may not reflect realizable values upon sale[242] - The company funds loans primarily through warehouse financing and may face challenges in obtaining sufficient capital to meet financing requirements as operations expand[226] - A decline in the fair value of leveraged assets could adversely affect financial condition, potentially requiring additional collateral or rapid liquidation of assets[234] - The company is exposed to credit risk from independent agents and program partners, which could affect its financial condition[204] - The insurance subsidiaries face risks related to brand reputation, which could adversely affect customer acquisition and retention, potentially leading to decreased revenue[190] - Negative publicity could result in a decline in customer visits to platforms and an increase in customer acquisition costs[191] Cybersecurity Risks - The company is exposed to risks related to cybersecurity attacks and information system failures[15] - Cybersecurity threats pose risks to business operations, potentially resulting in loss of critical information and damage to reputation, which could adversely affect financial condition and cash flows[157] - The use of AI and machine learning in decision-making processes presents risks, including model inaccuracies that could adversely impact pricing and loss estimations[177] Catastrophic and External Risks - Catastrophic events, such as natural disasters and pandemics, could significantly disrupt the company's operations and adversely affect financial results[246] - The exit of the United Kingdom from the European Union could adversely affect the company's business[15] - The exit of the UK from the EU (Brexit) poses risks related to regulatory changes and could adversely affect the company's European growth plans[202] - International operations expose the company to investment, political, and economic risks, including foreign currency exchange rate risk[175] - Consolidation in the financial services industry may lead to loss of significant distributors, impacting business operations and revenue generation[163] - Proposed industry developments may increase competition, negatively impacting premiums and underwriting results[204] - Emerging claim and coverage issues may adversely affect the business, potentially extending coverage beyond underwriting intent or increasing claims size[174] - The operation of dry bulk vessels and product tankers is subject to complex regulations, and violations could result in substantial fines and costs to the company[289]