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.

Thank you, Michael. On page three of the presentation, we highlight Tiptree's key financial metrics compared to the prior year period. In the second quarter, our results were impacted in several ways by the closing of the investment in Fortegra by Warburg Pincus. In total, the transaction resulted in a $63 million pre-tax gain to Tiptree's equity. This book gain was offset by $39.6 million of tax expense related to the tax deconsolidation of Fortegra, split between the income statement and equity. GAAP accounting does not require an entity to record a deferred tax liability for differences in book and tax basis related to a subsidiary which is consolidated with its parent for tax. Once a subsidiary is no longer consolidated for tax, the deferred tax liability is recorded in the parent's books. For that reason, we recorded $25.5 million of deferred tax in the income statement related to the cumulative impact of our growth in book value since we acquired Fortegra. The remaining amounts offset the pre-tax gain from the transaction and was recorded directly to equity. This deferred tax liability is only due if and when we decide to sell any of our Fortegra shares. Future primary issuances by Fortegra would not trigger any tax liability. For the quarter, we incurred a net loss of $22 million, driven primarily by the previously mentioned tax expense, along with unrealized losses on investments as compared to gains in the prior year period. partially offset by growth in insurance and shipping. Excluding investment gains and losses, revenues were up 16% for the quarter, driven by growth in insurance operations and increases in vessel charter rates. Adjusted net income for the quarter was $14 million, representing a 12.3% annualized adjusted return on average equity. Book value per share of $10.75 increased by 2.7% compared to the prior quarter, primarily as a result of the gain on investment in Fortegra, which was partially offset by unrealized losses on our fixed income securities driven by the higher interest rate environment and the strengthening U.S. dollar. Our business's strong operating cash flows provided the ability to hold these securities to maturity. Turning to page five, we highlight Fortegra's results for the quarter, where we continue to see strong momentum. In the second quarter, premiums and equivalents of $595 million increased by 8% year-over-year, driven by growth in specialty commercial and warranty lines. Deferred revenues and unearned premiums which represent future earnings potential, stood at $1.8 billion, up 26% year-over-year. The combined ratio improved by 120 basis points year-over-year to 90.9%. Operating efficiencies contributed to an improved expense ratio despite continued investment in people and technologies to fund our growth. while the underwriting ratio increased modestly due to changes in business mix. Fortegra's 13.7% expense ratio for the quarter continues to benefit from economies of scale, with underwriting and fee revenues growing faster than operating expenses. Adjusted return on equity was approximately 26% on an annualized basis. Going forward, Fortegra's scalable, efficient platform remains positioned for growth and consistent returns on equity. On page six, you can see the insurance company financial trends over time. Gross written premiums and equivalents have increased 28% over this period with a 22% organic growth rate. Specialty commercial lines have grown 46% per annum through the addition of new agents and programs and the expansion of ENS offerings. Personal lines have grown at a steadier 5% and benefited from increased consumer spending in 2021 and early 2022. Lastly, warranty lines have tripled through increased market penetration and geographic expansion. The combined ratio is not only stable, but has shown consistent improvement over time, moving from 93.3% in 2019 to 90.7% in 2022. Adjusted net income increased to $40 million for the first half, representing a 42% growth rate over the past three years. Adjusted return on equity has improved from 11% to 26% over the respective periods. Of note, this puts Fortegra at just above $80 million of trailing 12-month adjusted net income, a new milestone, and one we expect to continue to improve upon in future periods. Turning to the insurance investment portfolio on page 7, total investments and cash and cash equivalents ended the quarter at just above $1 billion, up 24% year-over-year in line with the underlying premium growth. 92% of the portfolio is invested in high credit quality and liquid securities with an average rating of AA+. The fixed income portfolio has a relatively short duration at 2.6 years. As we mentioned earlier, while unrealized marks have impacted book value, We generally have the ability to hold these securities to maturity. We view reinvestment as an opportunity for improvement in investment income, with rising rates a positive for Fortegra's investment portfolio in the long run. Fortegra's capital and liquidity remain strong, with $325 million of stockholders' equity, strong cash flow from operations, and a debt capacity of nearly $200 million, all of which put the business in a solid position for future growth. On page 9, we present the results of Tiptree Capital, which consists of our mortgage and shipping operations, as well as our invest shares. Pre-tax income for the quarter was $9.1 million, compared to $8.4 million in the prior year, driven by the performance of our shipping investments. Our shipping investments contributed 13.8 million of pre-tax income, as both dry bulk and tanker charter rates remain at robust levels. As Michael mentioned, we expect to recognize a gain of 21 million on the sale of our three dry bulk vessels, only 7 million of which impacted the second quarter. with the remaining $14 million expected in the third quarter. Given elevated charter rates and strong demand for shipping assets, we believe the fair value of our remaining two vessels is in excess of our second quarter net book value of $34.5 million. In the past two years, our mortgage business benefited from several tailwinds, including higher refinance volumes supported by both low rates and rising home prices, as well as the growing servicing book. These tailwinds drove significant returns on our investment in this business, which as of June 30, 2022, had grown to $58 million. Rising mortgage rates and declining affordability has impacted originations across the industry. As a result, we have seen our mortgage origination volumes decline 17% from the prior year and margins compressed to pre-COVID levels. While we believe our mortgage servicing portfolio will offset some of the impact on originations as rates rise, we expect to continue to face headwinds in volumes and margins for at least the remainder of this year. Turning to page 11, we highlight tip trees, some of the parts valued, reflecting the impact of the investment in Fortegra. Based on the transaction multiple of trailing 12 months adjusted net income implicit in Warburg's investment, Tiptree's retained ownership of Fortegra on an as-converted basis represents approximately $744 million, or $19.85 per diluted Tiptree share. As you can see, including our remaining assets, we believe TipTree's sum of the parts value to be $26.12 per diluted share. Now I will turn the call back to Michael to conclude our prepared remarks.

Thanks, Sandra. We were pleased with the performance of our subsidiary's operations through the first half of the year. Protegra continues to post record premiums adjusted net income, and return on equity. Market conditions remain favorable, and the pipeline for new business is as strong as it has ever been. As we look forward, we see significant opportunities to create value with our investment in Protegra. Within the shipping sector, charter rates remain at above average levels, which through the sale of our dry bulk vessels and continued ownership of our tankers provides us the opportunity to drive near-term returns. And we remain focused on deploying capital with the objective of long-term shareholder value appreciation. With that, we will open the line for questions.

Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. And to withdraw your question, please press star then 2.

And at this time, we'll pause momentarily to assemble our roster. And the first question will come from Walter Schenker with MAZ Partners.

Please go ahead.

Actually, it's two questions, but the sale of the three bulk ships will result in approximately how much net cash to Tiptree, assuming they close? I realize they're under contract and haven't closed yet.

Right. Walter, thank you for the question. Did you want to ask a second question also?

The second question is, with the sale of the ships, with the shrinkage somewhat, just nature of the time, in the mortgage business, with the fact that Portegra, going back to the underwriting, has its own full in-place management team, is not, maybe it's a double negative, doesn't Tiptree have overweighted in management and management expense, given that Portegra has its own management team.

We spend a lot of money on corporate beyond interest.

Got it. I understand the question. So let me start with the dry ball question. So gain on sale relative to our depreciated carrying book value is anticipated to be, once we have the settlement of the dry bulk, about $21 million over our GAAP carrying book value. Total proceeds on a gross basis is expected to be about $69 million from the ultimate sale of all three. On a net basis, after fees and expenses, as well as some of that is invested by a partner, we would expect that to be less. Sandra and or Scott, I don't know if you have an estimate of on a net basis what you expect that to be.

Roughly $60 million.

Okay.

Thank you. And since you're basically debt-free because of the Warburg Pincus thing, there will be $60 million of cash on the balance sheet at least.

That's correct. That's right. That's what we would expect. With respect to the question of Protegra or mortgage business, et cetera, and the management, look, we have for the last 15 plus years, we've invested in operating businesses. One of the things we prioritize is having great management on those businesses in which we invest. We like taking control interest in businesses. And so with regard to both Reliance as well as Protegra, we did exactly that. With respect to Reliance, we purchased that from a private equity firm, and with respect to Fortegra, we did it take private, actually, in terms of when we purchased Fortegra. It had been a public company. The management of both, I'd say, is as good as it gets. It is rare to find management of the quality, of the extraordinary high quality in both of those businesses, and I could not say enough for the performance of both. It is true that on a look-through basis, when you look at what I refer to as home office of TipTree and the core group of management that allocates capital and deals with public company administration on both legal, accounting, tax, et cetera, which we expect the number of individuals to stay relatively stable as we go forward, that number we think will ultimately achieve economies of scale as we grow. As we invest and divest the businesses based upon where we see opportunity, the management expense is embedded in the returns we're experiencing from those investments as we report them. So we are always looking to cut costs. We are always looking to run efficient businesses. But what we prioritize above all else is having competent management for the capital that we allocate. I don't know if that answers your question, but we are always going to look to try to run a tight ship. Paying down our debt is going to reduce, if I recall correctly, approximately $7 million of interest expense. That will reduce holding company ongoing expense. And we're always going to look to try to cut back where we can. And I'll just mention, as an incentive program, we're extremely aligned with investors. in terms of how we get paid relative to price performance on our incentive program. So I'll stop there. Walter, any other questions?

I'll just make a statement. Over the last two years, we've had share creep of a couple of million shares, actually about two and a half million shares, which is tied to management being incentivized with shareholders and part of the compensation, all of which is generally good, albeit we're issuing shares at 40% of what you believe It is what it is, good. I would strongly suggest since the stock is 40% roughly of give or take, where the value per share is as you lay it out, and I think that's a pretty reasonable methodology, that a significant portion of that $60 million could be redeployed increasing value by buying back shares. I know you brought back a few in the quarter, but you're now surely in a position to be more aggressive. That's my comment. It's not a question.

I appreciate the comment. And as we've said in the past, we will always look to buy back our shares and we think it presents opportunity. There are constraints in how we buy back shares and how we want to do so in a safe harbor situation. So there are constraints on volume constraints, et cetera. So it's harder than it sometimes looks to buy back shares. But as you noted, We bought back, if I remember correctly, 89,000 shares plus, which frankly was toward the end of the quarter after we saw a line of sight to a clear settlement of the Warburg transaction. So we didn't want to be too aggressive until we knew that was closing. But yeah, we're always going to look for that. And I agree with you. That's going to be a great use of capital if we can buy back our shares at a significant discount to Intrinsic. That is correct.

Okay. Thank you very much.

Thank you. The next question will come from Chris Colvin with Breach Inlet Capital. Please go ahead.

Thanks for taking my question. I guess echoing Walter's comments to start with is, just given the big discount between fair value and your trading price, we're also very supportive and would like to see more aggressive buybacks. And, you know, I'd suggest considering a large Dutch tender to buy back a and I think that'll be helpful. But the reality is the liquidity of your stock is low. I suspect some shareholders on the call don't want to see a large buyback because of that liquidity. And although that should help close the gap, I don't think that's really the answer. So since you wisely pulled the Protegra IPO last April, you look, your Protegra earnings are up, I think, like 150%. Warburg is invested in a value that's as you state, conservatively implies that tip tree shares are worth over 25 a share, yet your share price remains, like Walter said, 40% of that fair value and your trading price isn't up much from when you pull the IPO. So we would strongly encourage the board to look at spinning off for Tegra into a standalone public company. That seems like one, the best path to crystallize and highlight the value of the asset. It would be far more cost and tax efficient than an IPO and something that I think Warburg Pincus seems like they could get on board with. So I guess I proposed that and wanted to hear, Michael, your perspective on that idea.

Sure, and thank you, Chris, and I appreciate your comments. I'll start with the Dutch tender and share buyback. And I would just say that, look, when we... There are a couple of criteria I look at before we want to buy back shares. And one of them is that we are cash flush, that we have no covenants that may be breached, which having paid off our holding company debt eliminates many of the questions that would be raised with respect to covenants, et cetera. And you're shrinking. So we need to value the... the distribution of that capital and share buyback versus the objectives of growing and achieving economies of scale and expenses, as well as other investment opportunities, particularly what opportunities may exist that continuing to support our existing businesses, Protegra being the largest. So we try to evaluate all of this coupled with the acknowledged constraints that I mentioned and that you just paid reference to, low active trading, low float, as well as constraints on any safe harbor program that one might put in place other than block sales, which frankly are relatively infrequent. So we are always going to look at that opportunity. We have a dynamic conversation, I'd say, if not every day, certainly every week and certainly every quarter at our board meetings as to what the right objectives are. And we carry forth these ideas to our board and discuss them actively. And Jonathan and I with the With Randy and Sandra and Scott and others, we debate this all the time. So we're always going to consider that as an objective if we meet the criteria that we've set for ourselves to manage the company properly in light of other opportunities. With respect to the spinoff of Fortegra, look, we just closed on Warburg. Fortegra's now got capital to grow. It's hitting its numbers and exceeding its numbers that have been targeted. We see a great path of growth for Fortegra We have a private equity partner, so we acknowledge by taking on a private equity partner, there's going to be an objective from them to see a monetization at some point. That can come in a couple different forms. It can come in an IPO potentially. It could come in a sale of the business. But a spinoff, frankly, may be complicated. There's a lot of considerations that go into that, and frankly, all opportunities, all scenarios will be considered. But we just settled. The dust is just settling. We have capital at Fortegra to continue the growth trajectory. And so we're very happy with our investment of Fortegra. We want to see continued value to TipTree shareholders. We have a long term view and we're going to manage that how we see best. And right now we're going down that path. But I agree with you at some point it will make sense to potentially if achieving its objectives and the market conditions are right, seek a modernization event. Certainly, as I said, we have a partner that's going to want to do that, and we acknowledge that.

Thank you. Thank you, Chris. The next question will come from Joe Salerno, investor. Please go ahead.

Hey, guys.

Hi, Joe.

Hey, so...

Let me ask one question and then I'll ask another. And if we can, if you guys could take them in order, that would be great. On the SOTP value, you know, one thing that's obvious just is while the SOT value in dollars is going up on a per share basis, it hasn't as much, right? So just to illustrate that, September 30, 21, pro forma SOTP was 887 million. The quarter just ended. It's 979 million. So an increase of $92 million. Awesome. Great job. But from a tip tree shareholder perspective per share, it's flat. It's $26, you know, from, from September 30 to June 30. Um, an element of that is share creep, right? There's, uh, more shares outstanding, but, uh, Is there also something else going on in the sense that the SOTP value used to assume $140 million of proceeds from the Warburg Pincus transaction, but now that the deal closed, according to your cash flow statements, $200 million came in? Did that, am I correct on that? Did the $60 million go somewhere?

No, I think you are confused on that. The investment was always a $200 million investment. A certain portion was used to pay down Tiptree's holding company debt, as well as for us to take some additional cash out in the form of a dividend. And then capital was left with Fortegra as growth capital. And so in the aggregate, though, it adds up to $200 million of investment that was always the target investment from Warburg Pincus, just to be clear.

Okay, so the dilution, again, the SOTP value being up nearly 100 million over nine months, but the per share SOTP is flat, is pretty much solely just there's more shares outstanding in the denominator. Okay.

I believe that case. I know that in the last quarter, a warrant that had been issued 10 years ago to, when we did an internalization, a management structure came due and that warrant, the holders of that warrant, primarily myself and other partners of mine at the time, exercised that warrant, writing a check and in cash. So it certainly speaks to our confidence of the value of the chairs. But there's certainly that, an increase in shares to the excess of that warrant, and a few shares, I think, as incentive compensation, which is normal. Sandra and Scott, anything you'd add to that?

No, Michael. The warrants were a big driver of the change in dilutive shares period over period.

Okay. All right. And then second question, thank you for allowing that. You guys know that if there is a vote of shareholders and we get, this is illustrated every conference call, we shareholders want action now. We want the value inherently, apparently inherently in the company to be, you know, better shown in the stock price and our vote all, the vast majority of folks want action now, right, whether it be a spin-out, sale of the company, or whatever. This isn't that atypical. You guys, the management team, are saying, hey, be patient. We'll get to where we want to get to. Just hold on tight. While I respect that, one of my biggest pet peeves here is while we wait, while public shareholders wait, there's a lot of lost leakage of value in the sense that, one, $25 million of annualized corporate expense, that excludes interest expense. That's pure corporate expense. That's a lot of money that's on an after-tax basis. You're talking something like $0.50 a share. basically in earnings. Not only that, you guys are issuing stock to employees at a 40, 50% discount of what you claim or I think believe is the value of the company. So again, not to beat a dead horse, but Michael, you're a smart guy. You've been doing this a long time. You get the markets. Where is your conviction that we're all wrong, in a sense, and it pays year after year to leak this value from public shareholders to basically corporate insiders? Thank you very much for addressing that question.

I appreciate it, Joe. And I do appreciate your comment. And let's talk about the shared leak, as you referred to it.

It's interesting because one of the things- And value, and dollars leak, right? And the corporate expense is $25 million a year.

Sure, sure.

I realize some of that. Some of that is public cost for Tegra, which is generating 90% of profits or more of the company. So it's basically for Tegra. Okay, okay. Go ahead. Sorry.

Yeah. No, that's fine. I was going to just say that, yeah, let's just address corporate expenses first. I think to your point, there is a set amount of corporate expenses that are fixed. And particularly as a public company, those will not change. The way that I would like to see that diminish as a percentage of the business is to grow the business. And that, again, is a counterbalance to our other objectives of potentially buying back shares or any consideration of other dividends, et cetera. So there's always that tension is my desire to grow the business versus using that capital in other ways that would potentially shrink or keep the business as current size. So that's one consideration. Incentive compensation is another component of the corporate expenses, and that's based upon performance. To that end, we did make a significant adjustment last year that was voted on in our proxy earlier this year. where we changed the senior management incentive from RSUs, which were issued, to your point, at a discount to fair value, and we felt that that program, as related to senior executives, was really not applicable. It was not the right program. What was the right program was to achieve higher and higher share price out of the money from where we're currently trading, out of the money from either our book value or where we've traded historically. where increased amounts are awarded for increased price appreciation. So to that end, there were shares that were issued when we hit the price of 15, the first target. The next target is 20. And you should feel confident that senior management is extremely focused on that $20 price. We would love to see us get that. And I think shareholders, we would be rewarded and shareholders would be rewarded. So that's the current primary incentive program that exists. So it's not leaking out shares at a discount. It's incentivizing management to achieve higher and higher share price. There is still an RSU program for other executives. It's relatively small as in the restructured incentive program. And so to that end, there is still for other participants in the home office, as I call it, that will participate in RSUs, but it's relatively small. So as it relates to expenses and incentives, that is how I would respond. As it relates to the objectives of the business, as you said, TIP3 just passed its 15th anniversary in June. We have always looked at allocating capital with the objective of achieving best-in-class returns for every industry, every business, every allocation, and to be competitive with other investments available in the A few pages in, you'll see our one-year, three-year, five-year, ten-year relative to the S&P, relative to the Russell. And quite frankly, I would argue strongly that we've achieved our objective over that period. Certainly, our shares have traded off as inflation has hit, as certainly it's taken a hit to our float. It certainly impacts other businesses. But quite frankly, I feel extremely bullish about our businesses. With regard to Fortegra, particularly, look, we've invested in multiple insurance businesses over the years. One of the first primary investments we made in Tiptree was an insurance company. And so we've done other add-on acquisitions of insurance businesses over the years. Fortegra has been a great investment. Fortegra started as approximately $100 million allocation and has grown dramatically from our initial allocation. It's great to have a winning investment. My Certainly growing up, my objective is to keep your winners, sell your losers, or wind them down. Or if you find the opportunity to sell something at a price at which you value it less than others may value it, or you see greater downside than others see, sell it. So we stick to that discipline, and we take a very long-term view. Clearly, our objective is to create a platform or a monetization potentially for investment, in particular when we've achieved our objectives. We went down that path as recently as 18 months ago and decided it wasn't ready. Decided we weren't getting the right price, that the market or bankers were not valuing what we saw properly. And we decided to pull it. And I think it was the right decision. We brought in an outside capital partner, Warburg Pincus, a great partner. And as I said, as a private equity partner, we have the objective that we share with them of seeking a monetization event. when the markets are there, and when we feel that the valuation is appropriate. And so like all of our investments, we are going to nurture that until we see the right point of exit, but it just isn't ready yet. And having just closed in that capital, and it took a long time, I acknowledge longer than I had hoped, we are flush with capital ready to grow, and I see a great runway for Protegra to continue its growth trajectory. So we're We're extremely pleased with our investments right now. All of our businesses, as I noted at the beginning of the call, were profitable in the last quarter. And frankly, I give kudos to all of our management teams. They've done a great job.

Okay.

We're going to talk in circles, so I'll just make it brief. In Q2, employee comp and employee incentive comp combined to $6 million in Q2. So I don't see how that has gone down with the new plan. Maybe I'm missing something, but that's what the Q says. It's a lot of money. Again, $25 million in corporate expense, where Fortegra is generating 90, maybe it's 100% of the profit, but actually 90% plus profit. And we, as shareholders, wait. We, public shareholders, are paying a very large price to wait. It's money that's going out the door and not coming back. And, you know, folks, good folks are getting it, you guys, but it just seems like not a fair deal. So, anyway, thank you very much. Not every management team would be open to having this critique in public forum. So I do appreciate that. But, you know, just hearing us and nodding and saying we're doing our best is only, you know, it's just only so gratifying. It doesn't solve what I deem to be an unfair formula here. Or a formula that is not aimed particularly with public shareholders' interests foremost in mind. Again, Michael, I do sincerely appreciate you letting me ask these type of questions and voicing these thoughts. Thank you.

Got it. Thank you, Joe. And I appreciate the comments. We hear from a lot of our investors. Everyone has some great ideas. We try to certainly hear them, internalize it, try to do better. But with regard to our investments, We'll sell them when we feel that the right, when the markets are there and when it's at the right price. But I appreciate your comment, Joe.

Thank you. This concludes our question and answer session.

I would like to turn the conference back over to Ms. Sandra Bale for any closing remarks. Please go ahead.

Thank you, Chuck. And thank you, everyone, for joining us for our second quarter 2022 conference call. As always, we are available to take your calls and questions. Please feel free to reach out to me or Scott at any time. Thank you again.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.