Tiptree Inc. Q3 FY2023 earnings call

Management Statement and Operational Highlights:

• Announced intention to take Fortegra Group public as a primary offering, with proceeds to support Fortegra's growth and expect to maintain majority ownership.
• Strong quarter led by Fortegra with record growth; Tiptree’s revenues year-to-date increased to 1.2 billion, up 17% from prior year, contributing adjusted net income of 65 million. Fortegra's gross written premiums and equivalence grew 25% to 2.4 billion, combined ratio improved to 90.5%, adjusted return on equity topped 30%. Excess and surplus lines and services offerings were largest growth contributors.
• Insurance related investment portfolio of 1.2 billion, AA rated, 2.4 year duration, over one third in cash or money market fund; near-term opportunities to deploy cash into higher yielding investments.
• Tiptree Capital had over 185 million of capital deployed; mortgage business had positive returns in third quarter, near breakeven for year, with expectation of normalization of origination volumes and margins.

Segment Performance:

• Fortegra: Gross written premiums and equivalence grew 25% to 2.4 billion. Revenues year-to-date for Tiptree was 1.2 billion, with Fortegra contributing. Fortegra's gross written premiums and equivalence in the quarter increased 10% year-over-year to 835 million. Revenues grew by 24% to 407 million, combined ratio improved to 90.2%, and adjusted return on equity for the quarter was approximately 31% annualized. Excess and surplus lines represented 27% of Fortegra's 2.4 billion of written premiums and equivalents for the year-to-date 2023.
• Tiptree Capital: Pretax loss for the quarter was 6.1 million, driven primarily by unrealized losses on investment in Invesc [ph]. Reliance delivered 400,000 of pretax income despite mortgage volumes being down 17% in the quarter. The mortgage servicing asset ended the quarter at 43.5 million on the balance sheet, a 2.1 million increase in 2023.

Guidance:

• Expect Fortegra IPO to be primary offering with proceeds for Fortegra's growth and maintain majority ownership.
• Anticipate continued hard market environment in specialty E&S risk to extend Fortegra's growth with adding new agents and distribution partners.
• Near-term opportunities to deploy cash from insurance related investment portfolio into higher yielding investments.
• Expect origination volumes and margins of mortgage business to normalize.

Risks:

• Limitations on discussing Fortegra IPO until registration statement is filed.
• Potential differences between forward-looking statements and actual future results as per SEC filings.

Question and Answer: Q: None A: None