Tiptree Inc.

Good day and welcome to the TipTree Incorporated second quarter 2022 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. And to withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Mr. Scott McKinney, Deputy CFO. Please go ahead, sir.

Good morning, and welcome to our second quarter 2022 earnings call. We are joined today by our Executive Chairman, Michael Barnes, CEO, Jonathan Alani, and CFO, Sandra Bell. A copy of our earnings release and investor presentation are on our website, tiptreeinc.com. Please note that some of our comments today will contain forward-looking statements that based on our current view of our business, and actual future results may differ materially. Please see our most recent SEC filings, which identify the principal risks and uncertainties that could affect future performance. During the call today, we will discuss non-GAAP financial measures, which are described in more detail in our presentation. Reconciliations of non-GAAP financial measures and other associated disclosures are contained in our SEC filings, the appendix to our presentation, and posted on our website. With that, I'll turn the call over to Michael.

Thank you, Scott, and good morning to everyone. TipTree is off to a solid first half of 2022 with each of our operating businesses producing positive results. Protegra had another excellent quarter of premium growth and underwriting results. Our marine business had its best quarter yet from strong charter rates and the gain on sale of one dry bulk vessel. And our mortgage business was profitable despite the headwinds from rising interest rates. Revenues for the first six months increased 12% versus last year to $665 million, and adjusted net income improved 12% to $29 million. In June, we closed on the $200 million investment in Protegra by Warburg Pincus. As I have stated before, we are extremely bullish on Protegra's growth prospects and believe the partnership among Tiptree, Protegra and Warburg Pincus will lead to fruitful results for years to come. Protegra posted premiums and equivalents of $1.2 billion, up 16% from the prior year, led by strengths in the specialty admitted and E&S insurance lines. Protegra's adjusted net income was $40 million, up 49% from 2021, which represented an adjusted return on equity of 26%. specialty markets remain favorable, and we continue to see improvement in the combined ratio from operating efficiencies. We remain focused on growing both the specialty insurance and warranty service contract businesses. While we expect most of the growth to be organic through product and distribution expansion, we are always looking for complementary bolt-on acquisitions. Our most recent acquisition, ITC Compliance, further establishes Protegra's footprint in the UK auto warranty sector. During the first half of this year, several market factors impacted our book value. Interest rates rose dramatically, risk assets dropped significantly, and in the last quarter, the US dollar also significantly appreciated against major foreign currencies. As a result, Protegra's fixed income portfolio, like many insurance companies, incurred a pre-tax unrealized mark-to-market loss of $45 million through the first half, in addition to other unrealized losses on Invesc and other securities. Our investment approach is geared towards the long term, and thus, Protegra's fixed income portfolio remains conservatively positioned with a AA plus rating and a relatively short duration. Additionally, we expect to recover most of the unrealized marks over the coming years as the bonds mature. As I said on our last earnings call, over the long term, higher interest rates will benefit Fortegra. As of the end of the quarter, the investment portfolio stood at just over $1 billion. We expect the rising interest rate environment will be a net positive as Fortegra's growing portfolio can be invested at higher yields. In a marine business, we had an active first half with both dry bulk and tanker investments producing solid returns. Given the elevated valuations for dry bulk vessels, we decided to exit our dry bulk positions, which will ultimately lead to gains of approximately $21 million, or 45% above our carrying costs. One of our three dry bulk vessels closed in the second quarter, with the remaining two dry bulk vessels under contract expected to close in the third quarter of this year. As we look forward, we believe there will be additional sale and purchase opportunities within the shipping sector. Invesc, our largest publicly traded equity position, continues to execute on its strategic initiatives to streamline its portfolio of senior care real estate. Over the past 12 months, the company has sold just under $300 million of non-core assets with most of the proceeds used to reduce its overall debt profile. Finally, our mortgage business produced positive returns in the first half, driven by mortgage servicing fees and value appreciation on our MSR asset. While volumes and margins have compressed in the beginning of 2022, over the past two years, the business has grown retained earnings substantially. and we now hold an MSR asset worth $41 million on our balance sheet. In summary, we believe Tiptree is well-positioned for the future. Our capital position is strong. We are now debt-free as a holding company after paying off $113 million in June, and we continue to selectively buy back shares as opportunities present themselves. With that, I'll pass it to Sandra, who will take you through the financial results in more detail.