Tiptree Inc. (NASDAQ:TIPT) (“Tiptree” or the “Company”), today
announced its financial results for the quarter and year ended
December 31, 2022.
“2022 was a strong year for Tiptree, with our operating
businesses performing well. Revenues for the year increased to a
record $1.4 billion, while contributing an adjusted return on
equity of 13.6%. As we look forward, we see significant
opportunities to grow our businesses and are confident in the
long-term outlook for the company”, said Tiptree’s Executive
Chairman, Michael Barnes.
Fourth Quarter
Year Ended
($ in thousands, except per share
information)
2022
2021
2022
2021
Total revenues
$
369,528
$
319,534
$
1,397,752
$
1,200,514
Net income (loss) attributable to common
stockholders
$
871
$
(426
)
$
(8,274
)
$
38,132
Diluted earnings per share
$
0.02
$
(0.01
)
$
(0.23
)
$
1.09
Cash dividends paid per common share
$
0.04
$
0.04
$
0.16
$
0.16
Return on average equity
0.9
%
(0.4
) %
(2.1
) %
11.4
%
Non-GAAP:
(1)
Adjusted net income
$
14,568
$
16,859
$
63,401
$
63,869
Adjusted return on average equity
11.1
%
16.8
%
13.6
%
16.5
%
Book value per share
$
10.92
$
11.22
$
10.92
$
11.22
(1)
See “—Non-GAAP Reconciliations” for a
discussion of non-GAAP financial measures. Adjusted net income is
presented before the impacts of non-controlling interests.
Fourth Quarter 2022 Summary
- Revenues for the quarter of $369.5 million, an increase of
15.6% from Q4'21, driven by growth in Fortegra’s specialty
insurance lines and the gain on sale of two product tankers.
Excluding investment gains and losses, revenues were up 11.5%.
- Net income of $0.9 million compared to net loss of $0.4 million
in Q4'21, driven by the gain on sale of two product tankers and
growth in our insurance business, partially offset by unrealized
losses on Invesque shares and declines in our mortgage
business.
- Adjusted net income of $14.6 million decreased by 13.6% from
$16.9 million in Q4'21, driven by declines in our mortgage
business. Adjusted return on average equity was 11.1% for the
quarter.
- Completed the sale of two remaining product tankers for $49.0
million, representing a gain of $13.6 million, or 44% as compared
to Q3’22 book value. Total proceeds from dry-bulk vessel and
product tanker sales in 2022 were $116.7 million, or a net gain of
$34.8 million.
- Declared a dividend of $0.05 per share (an increase of 25%) to
stockholders of record on March 20, 2023 with a payment date of
March 27, 2023.
Full-Year 2022 Summary
- In June 2022, Tiptree closed the previously announced $200
million strategic investment in Fortegra by Warburg Pincus. As part
of the closing, $113 million of Tiptree’s corporate debt was repaid
in full. In the year ended December 31, 2022, Tiptree recognized a
$63.2 million pre-tax gain in stockholders’ equity from the
investment in Fortegra, which was partially offset by an increase
in deferred tax liability associated with the tax deconsolidation
of Fortegra. Of the total deferred tax liability of $44.8 million,
$33.1 million impacted net income with the remainder impacting
stockholders’ equity directly.
- Revenues of $1.4 billion, an increase of 16.4% from 2021,
driven by growth in our insurance business, increases in charter
rates and the gain on sale of five vessels in our maritime
operations, and increased revenues from our mortgage servicing
portfolio, partially offset by lower mortgage volume and margins
and investment losses in 2022 compared to gains in 2021. Excluding
investment gains and losses, revenues were up 17.2%.
- Net loss of $8.3 million compared to net income of $38.1
million in 2021, driven primarily by the deferred tax liability
associated with the tax deconsolidation of Fortegra and unrealized
losses on investments, partially offset by gain on sale of five
vessels and growth in insurance operations.
- Adjusted net income of $63.4 million decreased by 0.7% from
prior year, driven by growth in specialty insurance and shipping
operations, more than offset by declines in mortgage volumes and
margins. Adjusted return on average equity was 13.6%.
- The Company repurchased 165,040 shares for the year ended
December 31, 2022 at an average price of $10.44 per share.
Segment Financial Highlights - Fourth Quarter 2022 and Total
Year 2022
Insurance (The Fortegra Group):
Fourth Quarter
Year Ended
($ in thousands)
2022
2021
2022
2021
Gross written premiums and premium
equivalents
$
723,773
$
575,948
$
2,680,771
$
2,194,024
Revenues
$
345,408
$
262,606
$
1,248,796
$
984,130
Income before taxes
$
29,093
$
20,288
$
68,150
$
69,857
Return on average equity
23.2
%
17.4
%
14.6
%
17.1
%
Combined ratio
89.8
%
89.4
%
90.7
%
90.6
%
Non-GAAP:
(1)
Adjusted net income
$
23,939
$
20,382
$
83,832
$
66,782
Adjusted return on average equity
29.3
%
27.2
%
26.1
%
22.2
%
(1)
See “—Non-GAAP Reconciliations” for a
discussion of non-GAAP financial measures. Adjusted net income is
presented before the impacts of non-controlling interests.
- Fortegra’s gross written premiums and premium equivalents
increased 25.7% for the quarter and 22.2% for the year driven by
growth in U.S. specialty insurance lines and service contract
businesses in U.S. and Europe. As a function of Fortegra’s premium
growth, the combination of unearned premiums and deferred revenues
on the balance sheet grew to $2.0 billion, up $348 million, or
21.0%, from December 31, 2021.
- Revenues increased 31.5% for the quarter and 26.9% for the year
driven by premium growth in specialty admitted and E&S lines,
and service contract businesses in U.S. and Europe. Excluding the
impact of investment gains and losses, revenues increased by 27.1%
for the quarter and 28.7% for the year.
- The combined ratio for the quarter was 89.8%, compared to 89.4%
in Q4'21 driven by consistent underwriting performance and
scalability of the operating platform. Total year 2022 combined
ratio of 90.7%, consistent with prior year.
- Income before taxes for the quarter was $29.1 million. Total
year 2022 income before taxes of $68.2 million compared to $69.9
million in the prior year. Return on equity for 2022 was 14.6%, as
compared to 17.1% in 2021, impacted by unrealized investment
losses.
- Adjusted net income for the quarter was $23.9 million, up 17.4%
from Q4'21. Adjusted net income for 2022 was $83.8 million, up
25.5% from prior year driven by revenue growth and consistent
combined ratio. The adjusted return on average equity was 26.1% for
2022, as compared to 22.2% in 2021, with the improvement driven by
strong underwriting and fee income.
- In April 2022, Fortegra acquired ITC Compliance GRP Limited for
net cash consideration of $15.0 million, which further establishes
Fortegra's footprint in Europe and provides a wholly vertical
compliance solution for the U.K. automotive market.
- In February 2023, Fortegra acquired Premia Solutions Limited,
one of the largest providers of automotive protection products in
the United Kingdom, for net cash consideration of approximately
$20.8 million.
Tiptree Capital:
Fourth Quarter
Year Ended
($ in thousands)
2022
2021
2022
2021
Revenues
$
24,120
$
56,928
$
148,956
$
216,384
Income before taxes
$
8,459
$
7,584
$
32,277
$
45,617
Return on average equity
21.8
%
14.4
%
16.9
%
22.2
%
Non-GAAP:
(1)
Adjusted net income
$
(787
)
$
4,559
$
8,969
$
28,197
Adjusted return on average equity
(2.5
) %
10.1
%
5.8
%
16.2
%
(1)
See “—Non-GAAP Reconciliations” for a
discussion of non-GAAP financial measures. Adjusted net income is
presented before the impacts of non-controlling interests.
- Tiptree Capital income before taxes for the quarter was $8.5
million compared to $7.6 million in the prior year driven by the
gain on sale of two tankers.
- Tiptree Capital Income before taxes for the year was $32.3
million, down from the prior year as contributions from our
maritime transportation business were more than offset by declines
in origination volumes and gain on sale margins in our mortgage
business.
- Maritime transportation income before taxes was $49.8 million
in 2022, as compared to $11.6 million in 2021, with the increase
driven by the gain on sale of five vessels and cyclically high
dry-bulk and product tanker charter rates.
- Mortgage income before taxes was $0.9 million in 2022, as
compared to $28.4 million in 2021, with the decrease driven by a
decline in gain on sale margins, partially offset by higher
servicing fees and positive fair value adjustments on the mortgage
servicing portfolio.
Corporate:
Corporate includes expenses of the holding company for interest
expense, employee compensation and benefits, audit and professional
fees, and public company and other expenses. For the quarter,
corporate expenses were $12.5 million compared to $17.0 million in
Q4'21 and for the year were $46.4 million compared to $50.1
million. The decrease for each respective period was driven by
lower incentive compensation expense and interest expense as we
repaid our corporate holding company borrowings in June 2022.
Non-GAAP
Management uses Adjusted net income and Adjusted return on
average equity as measurements of operating performance. Management
believes these measures provide supplemental information useful to
investors as they are frequently used by the financial community to
analyze financial performance and comparison among companies.
Management uses Adjusted net income and adjusted return on average
equity as part of its capital allocation process and to assess
comparative returns on invested capital. Adjusted net income
represents income before taxes, less provision (benefit) for income
taxes, and excluding the after-tax impact of various expenses that
we consider to be unique and non-recurring in nature, stock-based
compensation, net realized and unrealized gains (losses), and
intangibles amortization associated with purchase accounting.
Adjusted net income and Adjusted return on average equity are
presented before the impacts of non-controlling interests. Adjusted
net income and Adjusted return on average equity are not
measurements of financial performance or liquidity under GAAP and
should not be considered as an alternative or substitute for GAAP
net income. See “Non-GAAP Reconciliations” for a reconciliation of
these measures to their GAAP equivalents.
Earnings Conference Call
Tiptree will host a conference call on Thursday, March 9, 2023
at 9:00 a.m. Eastern Time to discuss its Q4 and full year 2022
financial results. A copy of our investor presentation, to be used
during the conference call, as well as this press release, will be
available in the Investor Relations section of the Company’s
website, located at investors.tiptreeinc.com.
The conference call will be available via live or archived
webcast at investors.tiptreeinc.com. To listen to a live broadcast,
go to the site at least 15 minutes prior to the scheduled start
time in order to register, download and install any necessary audio
software. To participate in the telephone conference call, please
dial 1-877-407-4018 (domestic) or 1-201-689-8471 (international).
Please dial in at least five minutes prior to the start time.
A replay of the call will be available from Thursday, March 9,
2023 at 12:00 p.m. Eastern Time, until midnight Eastern on
Thursday, March 16, 2023. To listen to the replay, please dial
1-844-512-2921 (domestic) or 1-412-317-6671 (international),
Passcode: 13734675.
About Tiptree
Tiptree Inc. (NASDAQ: TIPT) allocates capital to select small
and middle market companies with the mission of building long-term
value. Established in 2007, we have a significant track record
investing in the insurance sector and across a variety of other
industries, including mortgage origination, specialty finance and
shipping. With proprietary access and a flexible capital base, we
seek to uncover compelling investment opportunities and support
management teams in unlocking the full value potential of their
businesses. For more information, please visit tiptreeinc.com and
follow us on LinkedIn.
Forward-Looking
Statements
This release contains “forward-looking statements” which involve
risks, uncertainties and contingencies, many of which are beyond
the Company’s control, which may cause actual results, performance,
or achievements to differ materially from anticipated results,
performance, or achievements. All statements contained in this
release that are not clearly historical in nature are
forward-looking, and the words “anticipate,” “believe,” “estimate,”
“expect,” “intend,” “may,” “might,” “plan,” “project,” “should,”
“target,” “will,” or similar expressions are intended to identify
forward-looking statements. Such forward-looking statements
include, but are not limited to, statements about the Company’s
plans, objectives, expectations for our businesses and intentions.
The forward-looking statements are not guarantees of future
performance and are subject to risks, uncertainties and other
factors, many of which are beyond our control, are difficult to
predict and could cause actual results to differ materially from
those expressed or forecast in the forward-looking statements. Our
actual results could differ materially from those anticipated in
these forward-looking statements as a result of various factors,
including, but not limited to those described in the section
entitled “Risk Factors” in the Company’s Annual Report on Form
10-K, and as described in the Company’s other filings with the
Securities and Exchange Commission. Readers are cautioned not to
place undue reliance on these forward-looking statements, which
speak only as to the date of this release. The factors described
therein are not necessarily all of the important factors that could
cause actual results or developments to differ materially from
those expressed in any of our forward-looking statements. Other
unknown or unpredictable factors also could affect our
forward-looking statements. Consequently, our actual performance
could be materially different from the results described or
anticipated by our forward-looking statements. Given these
uncertainties, you should not place undue reliance on these
forward-looking statements. Except as required by the federal
securities laws, we undertake no obligation to update any
forward-looking statements.
Tiptree Inc.
Condensed Consolidated Balance
Sheets
($ in thousands, except share data)
As of
December 31,
2022
December 31,
2021
Assets:
Investments:
Available for sale securities, at fair
value, net of allowance for credit losses
$
611,980
$
577,448
Loans, at fair value
64,843
105,583
Equity securities
85,776
138,483
Other investments
73,025
168,656
Total investments
835,624
990,170
Cash and cash equivalents
538,065
175,718
Restricted cash
12,782
19,368
Notes and accounts receivable, net
502,311
454,369
Reinsurance receivables
1,176,090
880,836
Deferred acquisition costs
498,925
379,373
Goodwill
186,608
179,103
Intangible assets, net
117,015
122,758
Other assets
172,143
146,844
Assets held for sale
—
250,608
Total assets
$
4,039,563
$
3,599,147
Liabilities and Stockholders’
Equity
Liabilities:
Debt, net
$
259,366
$
393,349
Unearned premiums
1,357,436
1,123,952
Policy liabilities and unpaid claims
567,193
331,703
Deferred revenue
649,150
534,863
Reinsurance payable
305,097
265,569
Other liabilities and accrued expenses
367,748
306,536
Liabilities held for sale
—
242,994
Total liabilities
$
3,505,990
$
3,198,966
Stockholders’ Equity:
Preferred stock: $0.001 par value,
100,000,000 shares authorized, none issued or outstanding
$
—
$
—
Common stock: $0.001 par value,
200,000,000 shares authorized, 36,385,299 and 34,124,153 shares
issued and outstanding, respectively
36
34
Additional paid-in capital
382,645
317,459
Accumulated other comprehensive income
(loss), net of tax
(39,429
)
(2,685
)
Retained earnings
54,113
68,146
Total Tiptree Inc. stockholders’
equity
397,365
382,954
Non-controlling interests:
Fortegra preferred interests
77,679
—
Common interests
58,529
17,227
Total non-controlling interests
136,208
17,227
Total stockholders’ equity
533,573
400,181
Total liabilities and stockholders’
equity
$
4,039,563
$
3,599,147
Tiptree Inc.
Condensed Consolidated Statements of
Operations
($ in thousands, except share data)
Three Months Ended
December 31,
Year Ended
December 31,
2022
2021
2022
2021
Revenues:
Earned premiums, net
$
242,531
$
186,649
$
904,765
$
685,552
Service and administrative fees
87,837
69,111
320,720
260,525
Ceding commissions
3,994
2,957
13,880
11,784
Net investment income
2,055
8,565
12,219
17,896
Net realized and unrealized gains
(losses)
19,933
31,082
69,983
151,350
Other revenue
13,178
21,170
76,185
73,407
Total revenues
369,528
319,534
1,397,752
1,200,514
Expenses:
Policy and contract benefits
122,252
89,814
452,605
327,012
Commission expense
140,251
104,103
522,686
396,683
Employee compensation and benefits
39,730
60,062
182,657
207,322
Interest expense
5,403
10,784
30,240
37,674
Depreciation and amortization
5,259
6,176
22,973
24,437
Other expenses
31,602
37,704
132,580
142,044
Total expenses
344,497
308,643
1,343,741
1,135,172
Income (loss) before taxes
25,031
10,891
54,011
65,342
Less: provision (benefit) for income
taxes
18,913
9,875
50,450
21,291
Net income (loss)
6,118
1,016
3,561
44,051
Less: net income (loss) attributable to
non-controlling interests
5,247
1,442
11,835
5,919
Net income (loss) attributable to
common stockholders
$
871
$
(426
)
$
(8,274
)
$
38,132
Net income (loss) per common
share:
Basic earnings per share
$
0.02
$
(0.01
)
$
(0.23
)
$
1.13
Diluted earnings per share
$
0.02
$
(0.01
)
$
(0.23
)
$
1.09
Weighted average number of common
shares:
Basic
36,330,653
33,996,324
35,531,149
33,223,792
Diluted
37,161,862
33,996,324
35,531,149
33,688,256
Dividends declared per common share
$
0.04
$
0.04
$
0.16
$
0.16
Tiptree Inc. Non-GAAP Reconciliations
(Unaudited)
Non-GAAP Financial Measures — Adjusted
net income and Adjusted return on average equity
The Company defines Adjusted net income as income before taxes,
less provision (benefit) for income taxes, and excluding the
after-tax impact of various expenses that we consider to be unique
and non-recurring in nature, including merger and acquisition
related expenses, stock-based compensation, net realized and
unrealized gains (losses) and intangibles amortization associated
with purchase accounting. We use adjusted net income as an internal
operating performance measure in the management of business as part
of our capital allocation process. We believe adjusted net income
provides useful supplemental information to investors as it is
frequently used by the financial community to analyze financial
performance between periods and for comparison among companies.
Adjusted net income should not be viewed as a substitute for income
before taxes calculated in accordance with GAAP, and other
companies may define adjusted net income differently. Adjusted net
income is presented before the impacts of non-controlling
interests.
We define Adjusted return on average equity as Adjusted net
income expressed on an annualized basis as a percentage of average
beginning and ending stockholder’s equity during the period. We use
Adjusted return on average equity as an internal performance
measure in the management of our operations because we believe it
gives our management and other users of our financial information
useful insight into our results of operations and our underlying
business performance. Adjusted return on average equity should not
be viewed as a substitute for return on average equity calculated
in accordance with GAAP, and other companies may define adjusted
return on average equity differently.
Three Months Ended December
31, 2022
Tiptree Capital
($ in thousands)
Insurance
Mortgage
Other
Corporate
Total
Income (loss) before taxes
$
29,093
$
(2,476
)
$
10,935
$
(12,521
)
$
25,031
Less: Income tax (benefit) expense
(10,152
)
511
(2,076
)
(7,196
)
(18,913
)
Less: Net realized and unrealized gains
(losses)
(2,804
)
973
(10,495
)
—
(12,326
)
Plus: Intangibles amortization (1)
4,083
—
—
—
4,083
Plus: Stock-based compensation expense
47
—
(98
)
1,656
1,605
Plus: Non-recurring expenses
1,813
—
140
—
1,953
Plus: Non-cash fair value adjustments
(939
)
—
1
—
(938
)
Less: Tax on adjustments (2)
2,798
(150
)
1,948
9,477
14,073
Adjusted net income
$
23,939
$
(1,142
)
$
355
$
(8,584
)
$
14,568
Adjusted net income
$
23,939
$
(1,142
)
$
355
$
(8,584
)
$
14,568
Average stockholders’ equity
$
326,431
$
55,726
$
70,628
$
73,789
$
526,574
Adjusted return on average equity
29.3
%
(8.2
) %
2.0
%
NM%
11.1
%
Three Months Ended December
31, 2021
Tiptree Capital
($ in thousands)
Insurance
Mortgage
Other
Corporate
Total
Income (loss) before taxes
$
20,288
$
3,288
$
4,296
$
(16,981
)
$
10,891
Less: Income tax (benefit) expense
(7,281
)
(434
)
(642
)
(1,518
)
(9,875
)
Less: Net realized and unrealized gains
(losses)
1,272
(723
)
421
—
970
Plus: Intangibles amortization (1)
3,830
—
—
—
3,830
Plus: Stock-based compensation expense
659
—
4
6,750
7,413
Plus: Non-recurring expenses
82
—
209
—
291
Plus: Non-cash fair value adjustments
—
—
(1,003
)
—
(1,003
)
Less: Tax on adjustments (2)
1,532
(182
)
(675
)
3,667
4,342
Adjusted net income
$
20,382
$
1,949
$
2,610
$
(8,082
)
$
16,859
Adjusted net income
$
20,382
$
1,949
$
2,610
$
(8,082
)
$
16,859
Average stockholders’ equity
$
299,236
$
62,065
$
119,016
$
(79,155
)
$
401,162
Adjusted return on average equity
27.2
%
12.6
%
8.8
%
NM%
16.8
%
Year Ended December 31,
2022
Tiptree Capital
($ in thousands)
Insurance
Mortgage
Other
Corporate
Total
Income (loss) before taxes
$
68,150
$
874
$
31,403
$
(46,416
)
$
54,011
Less: Income tax (benefit) expense
(21,251
)
(363
)
(5,545
)
(23,291
)
(50,450
)
Less: Net realized and unrealized gains
(losses)
20,347
(7,003
)
(18,788
)
—
(5,444
)
Plus: Intangibles amortization (1)
16,229
—
—
—
16,229
Plus: Stock-based compensation expense
2,423
—
—
7,093
9,516
Plus: Non-recurring expenses
3,374
—
(729
)
2,108
4,753
Plus: Non-cash fair value adjustments
(939
)
—
3,555
—
2,616
Less: Tax on adjustments (2)
(4,501
)
1,834
3,731
31,106
32,170
Adjusted net income
$
83,832
$
(4,658
)
$
13,627
$
(29,400
)
$
63,401
Adjusted net income
$
83,832
$
(4,658
)
$
13,627
$
(29,400
)
$
63,401
Average stockholders’ equity
$
321,320
$
57,575
$
98,373
$
(10,390
)
$
466,878
Adjusted return on average equity
26.1
%
(8.1
) %
13.9
%
NM %
13.6
%
Year Ended December 31,
2021
Tiptree Capital
($ in thousands)
Insurance
Mortgage
Other
Corporate
Total
Income (loss) before taxes
$
69,857
$
28,407
$
17,210
$
(50,132
)
$
65,342
Less: Income tax (benefit) expense
(18,438
)
(4,882
)
(1,992
)
4,021
(21,291
)
Less: Net realized and unrealized gains
(losses)
(3,732
)
(5,798
)
(3,091
)
—
(12,621
)
Plus: Intangibles amortization (1)
15,329
—
—
—
15,329
Plus: Stock-based compensation expense
2,006
331
213
8,581
11,131
Plus: Non-recurring expenses
2,158
—
938
2,171
5,267
Plus: Non-cash fair value adjustments
—
—
(3,170
)
—
(3,170
)
Less: Tax on adjustments (2)
(398
)
(624
)
655
4,249
3,882
Adjusted net income
$
66,782
$
17,434
$
10,763
$
(31,110
)
$
63,869
Adjusted net income
$
66,782
$
17,434
$
10,763
$
(31,110
)
$
63,869
Average stockholders’ equity
$
300,820
$
60,433
$
113,717
$
(88,111
)
$
386,859
Adjusted return on average equity
22.2
%
28.8
%
9.5
%
NM%
16.5
%
Notes
(1)
Specifically associated with acquisition
purchase accounting. See Note (9) Goodwill and Intangible Assets,
net, of the Company’s Form 10-K for the period ended December 31,
2022.
(2)
Tax on adjustments represents the tax
applied to the total non-GAAP adjustments and includes adjustments
for non-recurring or discrete tax impacts. For the three months and
year ended December 31, 2022, included in the adjustment is an
add-back of $9.0 million and $33.1 million, respectively, related
to deferred tax expense from the WP Transaction.
Non-GAAP Financial Measures — Book
value per share
Management believes the use of this financial measure provides
supplemental information useful to investors as book value is
frequently used by the financial community to analyze company
growth on a relative per share basis. The following table provides
a reconciliation between total stockholders’ equity and total
shares outstanding, net of treasury shares.
($ in thousands, except per share
information)
As of December 31,
2022
2021
Total stockholders’ equity
$
533,573
$
400,181
Less: Non-controlling interests
136,208
17,227
Total stockholders’ equity, net of
non-controlling interests
$
397,365
$
382,954
Total common shares outstanding
36,385
34,124
Book value per share
$
10.92
$
11.22
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230308005160/en/
Tiptree Inc. Investor Relations, 212-446-1400
ir@tiptreeinc.com
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