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TI

TIPTREE INC. (TIPT)·Q3 2024 Earnings Summary

Executive Summary

  • Q3 2024 delivered strong insurance-driven growth: revenue rose 18.7% YoY to $494.4M, net income increased to $11.9M, and adjusted net income climbed 55.9% to $27.9M, supported by Fortegra’s consistent underwriting and higher investment income .
  • Fortegra’s combined ratio held flat at 90.2% despite elevated catastrophe activity, with E&S submission growth and positive rate movement driving premiums and revenues; property lines mix rose to 33% of net written premiums vs. 20% prior year .
  • Investment portfolio book yield increased to 4.1% and the fixed-income book registered a ~$22M positive pre-tax equity impact from rate moves, providing an earnings tailwind into 2025 .
  • Corporate declared a $0.06 dividend for November 25, 2024; no formal quantitative guidance was issued beyond management’s constructive outlook for continued top-line growth and underwriting profitability .

What Went Well and What Went Wrong

  • What Went Well

    • Fortegra maintained underwriting discipline (combined ratio 90.2%) while scaling premiums and revenues; management emphasized robust E&S submission growth and positive rate trends on both property and casualty lines .
    • Investment portfolio yields improved (book yield 4.1%, AA-/AA rated, ~2.7-year duration), and rates produced a ~$22M positive OCI impact on bonds; management expects further earnings contribution as cash is deployed and maturities roll .
    • Mortgage business remained profitable despite higher rates, aided by servicing revenue and proactive cost management; origination volumes increased YTD to $693M .

  • What Went Wrong

    • Tiptree Capital posted a pre-tax loss of $2.7M in Q3 (vs. $6.1M loss YoY), with mortgage pre-tax slightly negative amid unrealized losses on the MSR; Other investments were a modest net positive .
    • GAAP tax rate was elevated at 44% due to Fortegra tax deconsolidation; adjusted effective tax rate was ~28% (mostly deferred), which can mask underlying earnings progress on a GAAP basis .
    • Service and administrative fees decreased YoY in Q3 (to $95.4M from $100.1M), partly reflecting program mix shifts and reinsurance partner retention choices .

Financial Results

Sequential results (oldest → newest)

MetricQ1 2024Q2 2024Q3 2024
Revenue ($USD Thousands)$479,000 $546,673 $494,362
Net Income ($USD Thousands)$9,100 $12,851 $11,915
Diluted EPS ($USD)N/A (not disclosed in materials) $0.31 $0.29
Adjusted Net Income ($USD Thousands)$20,500 $24,422 $27,872
Combined Ratio (Fortegra)90.3% 89.9% 90.2%

YoY comparison

MetricQ3 2023Q3 2024
Revenue ($USD Thousands)$416,514 $494,362
Net Income ($USD Thousands)$2,153 $11,915
Diluted EPS ($USD)$0.04 $0.29
Adjusted Net Income ($USD Thousands)$17,874 $27,872
Combined Ratio (Fortegra)90.2% 90.2%

Segment breakdown (Q3 2024 vs. Q3 2023)

Segment MetricQ3 2023Q3 2024
Fortegra: GWP & Premium Equivalents ($USD Thousands)$686,509 $776,847
Fortegra: Net Written Premiums ($USD Thousands)$333,921 $389,273
Fortegra: Revenue ($USD Thousands)$406,779 $481,013
Fortegra: Income Before Taxes ($USD Thousands)$35,722 $47,209
Fortegra: Adjusted Net Income (before NCI) ($USD Thousands)$30,043 $40,042
Fortegra: Combined Ratio90.2% 90.2%
Tiptree Capital: Revenue ($USD Thousands)$9,735 $13,349
Tiptree Capital: Income Before Taxes ($USD Thousands)$(6,135) $(2,692)
Tiptree Capital: Adjusted Net Income ($USD Thousands)$(322) $1,401

KPIs

KPIQ3 2023Q3 2024
Underwriting & Fee Revenues (Fortegra, $USD Millions)$387 $451
Underwriting & Fee Margin (Fortegra, $USD Millions)$92 $107
Investable Assets (Fortegra, $USD Millions)$1,239 (fixed income & cash) $1,497 (fixed income & cash)
Book Yield3.2% 4.1%
Net Investment Income – P&L ($USD Millions)$5.4 $9.1
Cash & Equivalents (% of portfolio)27% 24%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Dividend per shareQ4 2024 (Nov)$0.05 (Q3 record date prior) $0.06 (record Nov 18; pay Nov 25) Raised
Effective tax rate (qualitative)OngoingN/A~28% excluding Fortegra tax deconsolidation (GAAP 44% in Q3) Maintained qualitative commentary
Insurance underwriting profitabilityOngoingN/AManagement aims to maintain sustained underwriting profitability over the long term Maintained qualitative outlook
Formal revenue/EPS guidanceOngoingN/ANone provided; management constructive on growth N/A

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2024)Previous Mentions (Q2 2024)Current Period (Q3 2024)Trend
Specialty E&S growthE&S ~34% of premiums; strong submission activity; favorable rates E&S ~42% of premiums; record premiums; favorable pricing E&S growth +34% in quarter; submissions and rates positive Strengthening
Combined ratio discipline90.3% 89.9% 90.2% (flat YoY despite CATs) Stable low-90s
Investment portfolio yield and OCIBook yield 3.7%; 33% cash; AA-rated Book yield 4.1%; AA; 33% cash; duration 2.7y Book yield 4.1%; AA-; 24% cash; ~$22M positive OCI Improving yield; deploying cash
Mortgage origination/servicing$210M originations; profitable via servicing $437M originations; profitability sustained $693M YTD originations; profitable; expect volume improvement as rates decline Gradual recovery
European expansionGeneral platform strength; capital support to Fortegra Continued expansion (services, U.S. & Europe) Fortegra Europe CFO appointed; ongoing expansion Expanding
Fortegra IPO referenceForward-looking statements acknowledge IPO plans subject to markets Same Same Unchanged (conditional)

Management Commentary

  • “Despite [catastrophic events], Fortegra's combined ratio improved to 90%, demonstrating underwriting discipline and diversification of risk” — Michael Barnes .
  • “E&S lines represented 40%… grew at 34% in the quarter. We continue to see submission growth and positive rate movement on both property and casualty lines” — Scott McKinney .
  • “Book yield was 4.1%… we saw a substantial recovery on the bond portfolio, registering a $22 million positive pretax impact to equity” — Scott McKinney .
  • “Reliance remains profitable… focused on opportunities to increase volume and profitability” — Michael Barnes .
  • Strategic focus: “Maintain consistent top-line growth and sustained underwriting profitability… continue to look for opportunities to allocate capital for long-term value creation” — Investor presentation .

Q&A Highlights

  • The available transcript content focused on prepared remarks and did not include a distinct Q&A section; key clarifications were embedded in management’s commentary on tax rate (GAAP 44%; adjusted ~28%), portfolio yield trajectory, and mortgage outlook .

Estimates Context

  • Wall Street consensus (S&P Global) for Q3 2024 EPS and revenue was unavailable at time of request due to SPGI rate limits; therefore, no beat/miss assessment vs. consensus could be made. Values retrieved from S&P Global were unavailable at run time.*

Key Takeaways for Investors

  • Fortegra’s underwriting platform continues to scale with disciplined combined ratios in the low 90s, supporting durable earnings growth across cycles .
  • The investment portfolio is an increasing earnings lever: higher book yields and bond OCI recovery position TIPT for incremental net investment income as cash deploys and maturities roll .
  • Mix shift toward property lines (33% of NWP) and robust E&S submissions/rates underpin near-term premium growth; watch catastrophe frequency/seasonality against loss reserves .
  • Tiptree Capital is stabilizing; while Q3 pre-tax was negative, mortgage servicing and cost actions support profitability with volumes poised to benefit from easing rates .
  • Book value per share rose 18.6% YoY (incl. dividends), reflecting earnings growth and AFS recovery; ongoing capital contributions and Fortegra equity growth are accretive .
  • The $0.06 dividend provides incremental shareholder return while maintaining balance sheet flexibility for insurance growth initiatives .
  • Keep an eye on European expansion and financing moves at Fortegra (e.g., later-announced $150M junior notes) as potential enablers of growth and ROAE durability .