Tiptree (TIPT) 2024 Southwest IDEAS Conference summary

Business overview and strategy

• Focuses on acquiring and growing small to mid-market companies with strong management, primarily through long-term capital allocation and operational support.

• Largest holding is Fortegra, a specialty insurer acquired in 2014, which has shown significant growth and consistent earnings.

• Asset management arm prioritizes capital preservation and yield, with current opportunities to increase investment earnings due to rate environment.

• Insiders own 34%, and the company has a 17-year track record of investing across insurance, asset management, specialty finance, real estate, and infrastructure.

• Shareholder returns have outperformed benchmarks, with 36% of shares repurchased since 2014 at discounts to book value.

Financial performance and capital allocation

• Achieved IRRs above 20% on realized investments since inception.

• Adjusted net income for the last 12 months was $87 million, representing a 20% return on equity.

• Raised $200 million from Warburg Pincus in 2022 for 25% of Fortegra, and an additional $40 million in March 2023 to support growth.

• Recently raised $150 million through a junior subordinated note at Fortegra to fund future growth.

• Fortegra's trailing 12-month adjusted net income increased 37% year-over-year to $147 million.

Specialty insurance operations (Fortegra)

• Retains just under 50% of underwritten risk, maintaining a combined ratio in the low 90s, equating to a 10% margin.

• Differentiators include underwriting expertise, technology-driven efficiencies, and agent alignment through variable commissions and reinsurance.

• Premiums and equivalents have grown at a 22% CAGR since 2018, with 20% organic growth and four bolt-on acquisitions.

• Specialty insurance lines make up 88% of premiums, with E&S lines representing over $1 billion and driving growth.

• Service contracts (12% of business) provide extended protection for consumer goods.