Tiptree (TIPT) - 2025 Q1 - Quarterly Report

PART I. Financial Information Forward-Looking Statements 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][7] - 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] Market and Industry Data 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] Note to Reader (Definitions) 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][10][12][13][14][15] Item 1. Financial Statements (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 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 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) 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 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 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 (1) Organization - 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] - 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] (2) Summary of Significant Accounting Policies - Unaudited condensed consolidated financial statements are prepared in accordance with GAAP and presented in U.S. dollars[32] - No new accounting standards were adopted in the three months ended March 31, 2025[34] - 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] (3) Operating Segment Data - Tiptree's reportable segments are Insurance (Fortegra) and Mortgage (Reliance), with other non-insurance operations as Tiptree Capital[36][38][39] - The Executive Committee, as Chief Operating Decision Maker (CODM), uses 'Income (loss) before taxes' to allocate resources and assess segment performance[37] 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 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 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 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] (7) Goodwill and Intangible Assets, net 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][75] (8) Derivative Financial Instruments and Hedging - 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][79] 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][81] (9) Debt, net 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][89] - The Company redeemed $35,000 thousand of preferred trust securities on March 17, 2025[90] (10) Fair Value of Financial Instruments - Fair value measurements prioritize observable inputs (Level 1, 2) and minimize unobservable inputs (Level 3)[97][99] 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][115] (11) Liability for Unpaid Claims and Claim Adjustment Expenses 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][129] - Current year incurred losses in Q1 2025 included $27.1 million related to the January 2025 California wildfires[130] (12) Revenue from Contracts with Customers 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 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] (14) Other Revenue and Other Expenses 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 - No shares repurchased in Q1 2025; $11,945 thousand repurchase authorization remains[145] 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] - Insurance company subsidiaries exceeded minimum statutory capital and surplus requirements, with $78,614 thousand available for ordinary dividends without regulatory approval[155][160] (16) Accumulated Other Comprehensive Income (Loss) (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] (17) Stock Based Compensation 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][169] 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 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][182] - The deferred tax liability relating to Fortegra increased by $7,072 thousand in Q1 2025[182] (19) Commitments and Contingencies 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][190] - 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] (20) Earnings Per Share 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 - Tiptree Advisors, a related party controlled by Executive Chairman Michael Barnes, manages investment portfolios for Fortegra and its subsidiaries[198] 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 - 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] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 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 - 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] 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] - 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] Key Trends - Operations are affected by general economic conditions, market liquidity, interest rates, inflation, and the regulatory environment[208] - 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] - Elevated mortgage interest rates negatively impact origination volumes but increase the fair value of mortgage servicing portfolios by slowing prepayment speeds[211] - 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] RESULTS OF OPERATIONS (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] - 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] Results by Segment (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] - 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] Results by Segment (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][282][285] Results by Segment (Tiptree Capital - Other) 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] Results by Segment (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] Provision for Income Taxes 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][295][296] - The deferred tax liability related to Fortegra increased by $7.1 million in Q1 2025[296] Balance Sheet Information 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] - Increase in common shares outstanding driven by vesting of share-based incentive compensation[298] NON-GAAP MEASURES AND RECONCILIATIONS - 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] - Adjusted net income excludes after-tax impact of M&A expenses, stock-based compensation, net realized/unrealized gains (losses), and intangibles amortization[305] 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 - Primary liquidity sources include unrestricted cash, liquid investments, the Tiptree Credit Agreement, and distributions from operating subsidiaries[312] 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] CRITICAL ACCOUNTING POLICIES AND ESTIMATES - No material changes to critical accounting policies and estimates since the December 31, 2024, Annual Report on Form 10-K[327] Recently Adopted and Issued Accounting Standards - Refer to Note (2) Summary of Significant Accounting Policies for details on recently adopted and issued accounting standards[328] Item 3. Quantitative and Qualitative Disclosures About Market Risk 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] Item 4. Controls and Procedures 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] - No material changes in internal control over financial reporting during the quarter[331] PART II. Other Information Item 1. Legal Proceedings 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] Item 1A. Risk Factors 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] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 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] - Remaining share repurchase authorization as of March 31, 2025, was $11,945 thousand[334] Item 3. Defaults Upon Senior Securities No defaults upon senior securities occurred during the reporting period - No defaults upon senior securities[335] Item 4. Mine Safety Disclosures This item is not applicable to the Company - Not Applicable[336] Item 5. Other Information No other information is reported under this item - No other information[337] Item 6. Exhibits, Financial Statement Schedules 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][339][346]