Tiptree (TIPT) - 2025 Q1 - Quarterly Results

First Quarter 2025 Financial Results Overview Tiptree Inc. presents its first quarter 2025 financial results, detailing key performance indicators and overall financial position Company Commentary and Key Financial Highlights 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] - Fortegra achieved 13.5% growth in premium and premium equivalents[3] - Fortegra delivered a combined ratio of 89.9%, despite substantial industry-wide catastrophic losses[3] 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 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] - 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] - 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] - Declared a dividend of $0.06 per share to stockholders[4] Segment Financial Highlights This section details the financial performance of Tiptree Inc.'s key operating segments, including Insurance, Tiptree Capital, Mortgage, and Corporate Insurance (The Fortegra Group) 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] - 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] - Adjusted net income for the quarter was $40.5 million, up 18.6% from Q1'24[7] Tiptree Capital 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 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] - The loss was driven by lower origination volumes and unrealized losses on the mortgage servicing asset, partially offset by higher loan servicing fees[8] 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] - Outstanding borrowings at the holding company were $74.8 million as of March 31, 2025[9] Company Information This section provides background on Tiptree Inc.'s mission and investment strategy, along with cautionary statements regarding forward-looking information About Tiptree 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] - 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] Forward-Looking Statements 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] - Any initial public offering by Fortegra would be subject to a variety of factors, including market conditions, and may not be consummated[12] - Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as to the date of this release[12] Consolidated Financial Statements 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) 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) 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 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 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][15] - 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][15] - 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] Non-GAAP Reconciliations by Segment 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] Notes to Non-GAAP Reconciliations 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] - 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] - Non-cash fair-value adjustments represent a change in fair value of the Fortegra Additional Warrant liability[18]