NEW YORK--(BUSINESS WIRE)--Aug 6, 2018--Tiptree Inc. (NASDAQ:TIPT) (“Tiptree” or the “Company”), a holding company that combines specialty insurance operations with investment management today announced its financial results for the three and six months ended June 30, 2018.

Earnings Conference Call

Tiptree will host a conference call on Tuesday, August 7, 2018 at 9:00 a.m. Eastern Time to discuss its second quarter 2018 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 www.tiptreeinc.com.

The conference call will be available via live or archived webcast at http://www.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 Tuesday, August 7, 2018 at 1:00 p.m. Eastern Time, until midnight Eastern on Tuesday, August 14, 2018. To listen to the replay, please dial 1-844-512-2921 (domestic) or 1-412-317-6671 (international), Passcode: 13681062.

Q2’18 Year-To-Date Financial Overview

Insurance:

Gross written premiums were $393.7 million, up 12.0%, driven by growth in credit and other specialty programs. Net written premiums were $205.0 million, up 11.8%, driven by growth in credit and warranty products. On March 28, 2018, we expanded our insurance operations into Europe with the creation of Fortegra Europe Insurance Company Limited.

Tiptree Capital:

On February 1, 2018, we sold our senior living operations to Invesque in exchange for a net 16.4 million shares, which was $0.91 accretive to our book value per share, as exchanged, or a 9.1% increase over our December 31, 2017 book value per share, as exchanged.

Corporate:

On March 23, 2018, we initiated an up to $20 million share buy-back plan split evenly between open market and opportunistic large block purchases. As of June 30, 2018, we repurchased 1,372,739 shares at an average price of $6.45. On April 10, 2018, we completed a corporate reorganization that eliminated Tiptree’s dual class stock structure. On May 4, 2018, we extended our Fortress credit agreement to September 2020 and up-sized our borrowings under that facility to $75 million while reducing the interest rate by 100 basis points.

Consolidated Results of Operations

Revenues

For the three months ended June 30, 2018, revenues were $152.7 million, which increased $13.5 million, or 9.7%, over prior year period. For the six months ended June 30, 2018, revenues were $300.8 million, which increased $15.3 million, or 5.4%, over prior year period. The increase for both periods was driven by growth in earned premiums and service and administrative fees, partially offset by reduced other income and unrealized losses on investments. Earned premiums were $201.7 million for the six months ended June 30, 2018, up from $176.7 million in the comparable 2017 period. This was consistent with our strategy of growing written premiums to increase investable assets and investment income. The combination of unearned premiums and deferred revenues on the balance sheet grew by $94.7 million or 19.1%, from June 30, 2017 to June 30, 2018 as we continue to grow credit protection and warranty written premiums.

Net Income (Loss) before non-controlling interests

For the three months ended June 30, 2018, net income before non-controlling interests was $0.9 million, compared to a loss of $5.3 million in the prior year period. The increase was driven by increased income from specialty insurance operations and reduced corporate expenses, which was partially offset by unrealized losses on Invesque common shares and lower distributions as we reduced our exposure to asset management related investments.

For the six months ended June 30, 2018, net income before non-controlling interests was $29.9 million compared to a loss of $4.0 million in the 2017 period, an increase of $33.9 million. In addition to the factors that impacted the three month period, the year-to-date increase was driven by $34.5 million of income from discontinued operations including the net gain on sale of Care.

The table below highlights key drivers impacting our consolidated results on a pre-tax basis. Many of our investments are carried at fair value and marked to market through unrealized gains and losses. As a result, we expect our earnings relating to these investments to be relatively volatile between periods in contrast to our fixed income securities, which are marked to market through accumulated other comprehensive income (“AOCI”) in stockholders equity. For the six months ended June 30, 2018, we incurred $7.2 million of unrealized losses on our Invesque common shares, all of which was the result of mark to market movement from the date of the Care sale (February 1, 2018). During 2017, we made a strategic decision to decrease our overall exposure to CLO subordinated notes, which resulted in deconsolidation and decreased our earnings from CLO distributions and gains on sales of investments when comparing 2018 versus 2017 periods.

Non-GAAP

Management uses Operating EBITDA, Adjusted EBITDA and book value per share as measurements of operating performance which are non-GAAP measures. Management believes the use of Operating EBITDA and Adjusted EBITDA provides supplemental information useful to investors as they are frequently used by the financial community to analyze financial performance, and to analyze a company’s ability to service its debt and to facilitate comparison among companies. Management uses Operating EBITDA as part of its capital allocation process and to assess comparative returns on invested capital amongst our businesses and investments. Adjusted EBITDA is also used in determining incentive compensation for the Company’s executive officers. Operating EBITDA and Adjusted EBITDA are not measurements of financial performance or liquidity under GAAP and should not be considered as an alternative or substitute for GAAP net income. Management believes the use of book value per share provides supplemental information useful to investors as it is frequently used by the financial community to analyze company growth on a relative per share basis.

For the three months ended June 30, 2018, Operating EBITDA was $15.1 million compared to $14.3 million in the prior year period, an increase of $0.8 million, or 5.6%. Operating EBITDA for the six months ended June 30, 2018 was $24.0 million compared to $26.7 million for the 2017 period, a decrease of $2.7 million, or 10.1%. The key drivers of the change in Operating EBITDA were increased income from specialty insurance operations and reduced corporate expenses, which were more than offset by lower distributions on asset management related investments.

Total stockholders’ equity was $400.8 million as of June 30, 2018 compared to $390.7 million as of June 30, 2017. Book value per share for the period ended June 30, 2018 was $10.74, an increase from book value per share, as exchanged, of $9.87 as of June 30, 2017. The key drivers of the period-over-period impact were basic earnings per share of $1.04 over the last four quarters and the purchase of 1.4 million shares at an average 39% discount to book value. Those increases were partially offset by dividends paid of $0.125 per share and officer and director compensation share issuances. Over the past twelve months, Tiptree returned $13.7 million to shareholders through share repurchases and dividends paid.

Results by Segment

Tiptree is a holding company that combines insurance operations with investment management expertise. In addition to our specialty insurance operations, we allocate our capital across our investments in other companies and assets which we refer to as Tiptree Capital. As of June 30, 2018, Tiptree Capital consists of asset management operations, mortgage operations and other investments (including Invesque common shares). As such, we classify our business into three reportable segments– specialty insurance, asset management and mortgage. Corporate activities include holding company interest expense, employee compensation and benefits, and other expenses. The following table presents the components of total pre-tax income including continuing and discontinued operations.

Pre-tax Income

Operating EBITDA and Invested Capital - Non-GAAP (1)

Management evaluates the return on Invested Capital and Total Capital, which are non-GAAP financial measures, when making capital investment decisions. Invested Capital represents its total cash investment, including any re-investment of earnings, and acquisition costs, net of tax. Total Capital represents Invested Capital plus Corporate Debt. Management believes the use of these financial measures provide supplemental information useful to investors as they are frequently used by the financial community to analyze how the Company has allocated capital over-time and provide a basis for determining the return on capital to shareholders.

About Tiptree

Tiptree Inc. (NASDAQ: TIPT) is a holding company that combines insurance operations with investment management expertise. The Company’s principal operating subsidiary is a leading provider of specialty insurance products and related services, including credit protection, warranty, and programs which underwrite niche personal and commercial lines of insurance. The Company also allocates capital across a broad spectrum of investments, which is referred to as Tiptree Capital. Today, Tiptree Capital consists of asset management operations, mortgage operations and other investments. For more information, please visit www.tiptreeinc.com.

Forward-Looking Statements

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