Tiptree (TIPT) - 2025 Q2 - Quarterly Results

Company Commentary and Overall Financial Performance 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] 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] Segment Financial Highlights - Second Quarter 2025 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) 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] - 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] - 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] Tiptree Capital 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] 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] - Outstanding holding company borrowings totaled $74.6 million as of June 30, 2025[8] Consolidated Financial Statements 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) 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) 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 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 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][16] - 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] - 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][16] Non-GAAP Reconciliations - Three Months Ended June 30 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 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 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 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] - The company possesses extensive investment experience across various industries and asset types, including insurance, asset management, specialty finance, real estate, and shipping[10] Forward-Looking Statements 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] - 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] - The company undertakes no obligation to update any forward-looking statements, except as required by federal securities laws[12]