Tiptree Inc.

Greetings and welcome to the TipTree third quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Scott McKinney, Chief Financial Officer. Please go ahead.

Good morning and welcome to our third quarter 2023 earnings call. Joining me today are Michael Barnes, our Executive Chairman, and Jonathan Alani, CEO. A copy of our earnings release, investor presentation, and 10Q are on our website, tiptreeinc.com. Some of our comments today will contain forward-looking statements, 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 this morning, we will discuss non-GAAP financial measures, which are described in more detail in our presentation. Reconciliations of these measures and other associated disclosures are contained in our SEC filings, the appendix to our presentation, and posted on our website. One final note, given our announcement yesterday evening, we will not be holding a question and answer session after our prepared remarks this morning. Until the FORTEGRA registration statement is filed, there are limitations on what we can say about the potential offering. With that, I will turn the call over to Michael.

Thanks, Scott, and good morning to everyone. Yesterday, after markets, we announced that we intend to take our specialty insurance subsidiary, the Protegra Group, public. We expect the Protegra IPO to be a primary offering with the proceeds used to support Protegra's growth. We also expect to maintain a majority ownership of Protegra. and believe the IPO will create a platform to serve the future capital needs of the business. Turning to our operational results, we had a strong quarter led by Fortegra, which once again posted record growth in financial results. TipTree's revenues year-to-date increased to $1.2 billion, up 17% from the prior year, while contributing adjusted net income of $65 million. Protegra's gross written premiums and equivalents grew 25% to $2.4 billion. The combined ratio improved to 90.5%, and when paired with higher investment yields, the adjusted return and equity of the business topped 30%. These results continue to demonstrate the company's strategy of discipline, specialty underwriting, while maintaining a lean yet scalable infrastructure. Excess and surplus lines and services offerings were the largest growth contributors and the pipeline of future opportunities remain strong in those sectors of the insurance market. The markets for specialty P&C risk remain healthy as we continue to see a hard pricing environment as well as favorable terms and conditions on renewal business. We anticipate this continued hard market environment in tandem with adding new agents and distribution partners will continue to extend for Tegra's growth profile. As stated in the past, we take a conservative approach with a $1.2 billion insurance-related investment portfolio, or FLOAT. At quarter end, the fixed-income portfolio was AA-rated with a 2.4-year duration, and notably over one-third was held in cash or money market funds. We believe there will be near-term opportunities to deploy a significant amount of this cash into higher yielding investments while continuing to maintain our long-term conservative view. In TipTree Capital, we have over 185 million of capital deployed across our mortgage operations, cash, and publicly traded equities for which we take a long-term view. The management team at our mortgage business has executed well in a tough operating environment. The servicing side of the business and proactive cost reductions led to positive returns in the third quarter and have kept the business near break-even for the year. We maintain a positive outlook for the business as mortgage rates appear to be stabilizing and we will continue to pursue avenues to increase profitability. At Tiptree, we continue to look for opportunities to generate long-term absolute return. Our balance sheet remains well capitalized with no holding company debt, and substantial cash for future deployment. With strong performance in 2023, we are well positioned for growth, and we maintain a positive outlook for the company. With that, I'll let Scott take you through the financial update.