Tiptree (US:TIPT)2023-05-03 20:21Financial Performance - Tiptree reported a net loss of $1.1 million for Q1 2023, compared to a net loss of $1.0 million in Q1 2022, primarily due to lower mortgage and shipping revenues [199]. - Adjusted net income for Q1 2023 was $17.3 million, an increase of $1.8 million or 11.9% from $15.5 million in Q1 2022, driven by growth in insurance operations [213]. - Total revenues for Q1 2023 increased by $56.7 million, or 17.5%, to $381.6 million, primarily due to growth in earned premiums and service fees [209]. - Adjusted net income for the three months ended March 31, 2023, was $22.9 million, an increase of 8.6% from $21.1 million in the prior year [222]. - Total revenues for the three months ended March 31, 2023, increased by 30.4% to $368.4 million, compared to $282.5 million for the same period in 2022 [228]. - Adjusted net income for Q1 2023 was $22.9 million, with an adjusted return on average equity of 26.1%, compared to $21.1 million and 28.2% in Q1 2022 [262]. - Adjusted net income decreased to $1.4 million for the three months ended March 31, 2023, compared to $2.5 million in 2022, influenced by the sale of five vessels [284]. Insurance Operations - Gross written premiums and premium equivalents reached $750.3 million in Q1 2023, up from $600.9 million in Q1 2022, reflecting growth in specialty insurance lines [199]. - The combined ratio improved to 91.3% in Q1 2023, indicating consistent underwriting performance and scalability of Fortegra's operating platform [199]. - Earned premiums, net rose by $56.9 million, or 27.3%, to $265.3 million, driven by growth in specialty admitted and E&S insurance lines [228]. - The combined ratio for the insurance segment was 91.3%, compared to 90.5% in the previous year, indicating a slight increase in underwriting expenses relative to premiums [222]. - The combined ratio for Q1 2023 was 91.3%, consisting of an underwriting ratio of 78.3% and an expense ratio of 13.0%, compared to 90.5% in Q1 2022 [252]. - U.S. Insurance segment increased by $96.0 million, or 23.6%, while U.S. Warranty Solutions grew by $49.3 million, or 30.3% in Q1 2023 [248]. Investment and Assets - Net investment income grew to $5.1 million, up from $3.2 million, reflecting an increase in investment yields [230]. - Total assets increased to $4,308.0 million as of March 31, 2023, up $268.4 million from $4,039.6 million as of December 31, 2022, primarily due to growth in the Insurance segment [290]. - Total stockholders' equity rose to $541.6 million as of March 31, 2023, compared to $533.6 million as of December 31, 2022, driven by other comprehensive income on AFS securities [291]. - Cash and cash equivalents as of March 31, 2023, were $412.0 million, a decrease of $126.1 million from $538.1 million at December 31, 2022 [311]. Mortgage Segment - The mortgage segment reported a loss before taxes of $2.6 million in Q1 2023, compared to income of $4.3 million in Q1 2022, due to declines in origination volumes [199]. - The Mortgage segment reported total revenues of $11.6 million for Q1 2023, down from $25.4 million in Q1 2022, with origination volumes of $202.8 million [269]. - For the three months ended March 31, 2023, loans funded were $202.8 million, a decrease of $151.6 million or 42.8% compared to $354.4 million in 2022, primarily due to increased mortgage interest rates [272]. - Gain on sale margins in the Mortgage segment improved to 4.8% in Q1 2023, compared to 4.3% in Q1 2022 [269]. Cash Flow and Financing - Cash provided by operating activities for the three months ended March 31, 2023, was $43.05 million, significantly lower than $149.07 million in 2022 [318]. - Cash used in investing activities was $247.5 million for the three months ended March 31, 2023, compared to $18.7 million in 2022 [321]. - Cash provided by financing activities was $78.3 million for the three months ended March 31, 2023, down from $124.7 million in 2022 [323]. - The increase in corporate debt as of March 31, 2023, was due to a $75 million draw on Fortegra's revolving credit facility for the acquisition of Premia [317]. - The primary sources of cash from operating activities in 2023 included growth in insurance premiums written, leading to increases in unearned premiums and policy liabilities [319]. Acquisitions and Growth - Fortegra acquired Premia Solutions Limited for approximately $22.5 million in February 2023, expanding its automotive protection product offerings in the UK [199]. - The company plans to use cash resources to fund operations and growth, potentially seeking additional cash sources for acquisitions [309]. - The mortgage business relies on short-term uncommitted financing, with ongoing efforts to renew credit facilities [312]. - The company expects cash flow from operations to be sufficient for growth and to cover interest on outstanding debt in the coming years [313]. Tax and Deferred Liabilities - The effective tax rate for the three months ended March 31, 2023, was 61.5%, significantly higher than the U.S. statutory income tax rate of 21.0% due to deferred taxes on investments [287]. - As of March 31, 2023, the deferred tax liability related to Fortegra was $44.1 million, an increase of $4.1 million from December 31, 2022 [288].