[August 12, 2014] |
|
Tiptree Financial Inc. Reports Financial Results for the Second Quarter Ended June 30, 2014
NEW YORK --(Business Wire)--
Tiptree Financial Inc. ("Tiptree" or the "Company") (NASDAQ:TIPT), a
diversified holding company which operates in four segments: insurance
and insurance services, specialty finance (including corporate, consumer
and tax-exempt credit), asset management and real estate, today
announced its financial results for the second quarter ended June 30,
2014.
Highlights
-
Economic Net Income of Tiptree Operating Company, LLC ("Operating
Company"), was $3.9 million; Economic Net Income available to Class A
common stockholders was $1.3 million, or $0.12 per diluted Class A
share.
-
GAAP Net Loss of Operating Company was $0.8 million; GAAP Net Income
available to Tiptree Class A common stockholders was $1.1 million, or
$0.10 per diluted Class A share.
-
Economic Book Value Per Share (including Tiptree level net assets) was
$10.69 at June 30, 2014.
-
Total annualized economic return since inception as of June 30, 2014
was 12.7%.1
-
Total Economic Book Value Per Share annual growth rate since inception
as of June 30, 2014 is 11.0%.2
-
Issued Telos CLO 2014-5, Ltd. on May 1, 2014, a $412 million CLO.
-
Entered into a $125 million warehouse facility for the Company's sixth
CLO. The warehouse facility was increased to $225 million after the
quarter end.
-
Earlier today, Tiptree announced the signing of a merger agreement to
acquire Fortegra Financial Corporation, a specialty insurance company,
in an all cash transaction valued at approximately $218 million.
"We are pleased that we were able to produce sequential quarterly growth
in our Economic Book Value per Share, despite reduced unrealized gains
and management fee income in the second quarter and continued high cash
balances," said Geoffrey Kauffman, President and Chief Executive Officer
of Tiptree. "In addition, today's announcement of the Fortegra
acquisition is a prime example of the type of long-term value-added
opportunities we are looking for to grow our business. We are excited to
add this valuable franchise to the Tiptree family, and will continue to
look for additional long-term value-added growth opportunities while
maintaining our disciplined and focused investment approach."
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|
(1)
|
|
This is the total Economic Return to original investors of Tiptree
Financial Partners L.P. ("TFP") since inception, which is calculated
by taking the total life-to-date dividends received plus the
Economic Book Value as of June 30, 2014.
|
|
|
|
|
|
|
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(2)
|
|
This is calculated based upon the initial purchase price per share,
net of fees and expenses, and Economic Book Value Per Share
(including Tiptree level net assets) as of June 30, 2014.
|
|
|
|
|
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Second Quarter 2014 Financial Overview
Economic Net Income of Operating Company
Economic Net Income of Operating Company for the quarter ended June 30,
2014 was $3.9 million compared to $6.3 million for the quarter ended
June 30, 2013. Relative to the corresponding quarter in the prior year,
Economic Net Income for the quarter ended June 30, 2014 was impacted by
reductions in unrealized gains and management fee income of $1.7 million
and $1.8 million, respectively. Economic unrealized gains and management
fee income were directly affected by a sale of the Company's Bickford
portfolio in the second quarter of 2013, which resulted in a higher
valuation for Tiptree's investment in Care and corresponding higher
management fees earned in the prior-year period. The economic unrealized
gain relating to Tiptree's investment in Care was partially offset by
unrealized gains recognized during the quarter in the Company's
tax-exempt portfolio held at MFCA and warehouse positions.
In the second quarter of 2014 the Company experienced an increase in
interest expense of $1.5 million relative to the prior year period,
which was partially offset by $1.4 million in lower compensation expense
and a reduction in distribution expense (convertible preferred) of $0.9
million. The increase in interest expense was due to additional
borrowing on the Company's credit facility which was closed in the third
quarter of 2013. The $1.4 million decline in compensation expense was
the direct result of a lower bonus accrual for the quarter ended June
30, 2014, due to lower Economic Net Income.
GAAP Net Income Available to Class A Common Stockholders
Net income available to Class A common stockholders for the quarter
ended June 30, 2014 was $1.1 million compared to net income of $3.4
million for the same period in 2013. This was largely due to a reduction
of $16.3 million from discontinued operations, partially offset by a
$2.8 million increase in net income before taxes and income attributable
to the CLOs and a $3.6 million increase in net income attributable to
consolidated CLOs.
In addition, the Company experienced a $4.6 million net loss
attributable to VIE subordinated noteholders, along with beneficial
impact of reductions of $1.3 million and $10.8 million in the provision
for income taxes and net income attributable to the noncontrolling
interest, respectively. This resulted in income available to Class A
common stockholders, of $1.1 million.
Year to Date Financial Overview
Economic Net Income of Operating Company
Economic Net Income of Operating Company for the year ended June 30,
2014 was $8.6 million compared to $18.5 million for the year ended June
30, 2013. Economic Net Income for the year was primarily due to lower:
year over year economic unrealized gains of $10.3 million, management
fee income of $1.9 million and an increase in interest expense of $3.1
million. This was partially offset by a reduction of $2.5 million in
compensation expense and in distribution expense of $1.7 million.
GAAP Net Income Available to Class A Common Stockholders
Net income available to Class A common stockholders for the six month
period ended June 30, 2014 was $2.1 million compared to net income of
$4.7 million for the same period in 2013. This was largely due to lower
contributions from discontinued operations of $17.1 million and income
attributable to the CLOs of $5.1 million. These declines were offset, in
part, by an increase of $3.4 million in net income before taxes and
income attributable to CLOs and a reduction in tax expense of $2.2
million. This resulted in income available to Class A common
stockholders, of $2.1 million.
Exchange of TFP Units for Tiptree Shares
On August 5, 2014, Tiptree issued an aggregate of 11,096,938 shares of
Class A common stock to limited partners of TFP in exchange for an
aggregate of 3,966,025 TFP partnership units in transactions exempt from
registration under the Securities Act of 1933, as amended, pursuant to
Section 4(a)(2) thereunder. TFP delivered to Tiptree for cancellation
one share of Class B common stock of Tiptree for each share of Class A
common stock issued. As of August 5, 2014, there are 21,720,761 shares
of Class A common stock of Tiptree outstanding and 19,871,939 shares of
Class B common stock of Tiptree outstanding. As of August 5, 2014, there
are 11,068,219 limited partnership units of TFP outstanding, of which
Tiptree owns 3,966,025. Tiptree operates its business through Operating
Company, which directly or indirectly owns all of Tiptree's assets.
Tiptree's direct and indirect ownership of Operating Company is
approximately 52% as of August 5, 2014. Tiptree's percentage of
Operating Company may increase in the future to the extent TFP limited
partners exchange their limited partnership units of TFP for Class A
common stock of Tiptree.
About Tiptree Financial Inc.
Tiptree is a diversified holding company engaged through its
consolidated subsidiaries in a number of businesses and is an active
acquirer of new businesses. Tiptree, whose operations date back to 2007,
currently has subsidiaries that operate in four industry segments:
insurance and insurance services, specialty finance, asset management
and real estate.
Forward-Looking Statements
This release contains "forward-looking statements" which involve risks,
uncertainties and contingencies, many of which are beyond the Company's
control, which may cause actual results, performance, or achievements to
differ materially from anticipated results, performance, or
achievements. All statements contained in this release that are not
clearly historical in nature are forward-looking, and the words
"anticipate," "believe," "estimate," "expect," "intend," "may," "might,"
"plan," "project," "should," "target," "will," or similar expressions
are intended to identify forward-looking statements. Such
forward-looking statements include, but are not limited to, statements
about the Company's plans, objectives, expectations and intentions. The
forward-looking statements are not guarantees of future performance and
are subject to risks, uncertainties and other factors, many of which are
beyond the Company's control, are difficult to predict and could cause
actual results to differ materially from those expressed or forecast in
the forward-looking statements. The Company's actual results could
differ materially from those anticipated in these forward-looking
statements as a result of various factors, including, but not limited to
those described in the section entitled "Risk Factors" in the Company's
Annual Report on Form 10-K, and as described in the Company's other
filings with the Securities and Exchange Commission. Readers are
cautioned not to place undue reliance on these forward-looking
statements, which speak only as to the date of this release. The factors
described therein are not necessarily all of the important factors that
could cause actual results or developments to differ materially from
those expressed in any of the Company's forward-looking
statements. Other unknown or unpredictable factors also could affect our
forward-looking statements. Consequently, the Company's actual
performance could be materially different from the results described or
anticipated by its forward-looking statements. Given these
uncertainties, you should not place undue reliance on these
forward-looking statements. Except as required by the federal securities
laws, we undertake no obligation to update any forward-looking
statements.
Economic Net Income
Economic Net Income ("ENI") is a non-GAAP financial measure of
profitability which Tiptree uses to measure the performance of its core
business. Management believes that ENI reflects the nature and substance
of the economic results of Tiptree's businesses. Management also uses
ENI as a measurement for determining incentive compensation. ENI as used
by Tiptree may not be comparable to similar measures presented by other
companies as it is a non-GAAP financial measure that is not based on a
comprehensive set of accounting rules or principles and therefore may be
defined differently by other companies. ENI should be considered in
addition to, not as a substitute for, financial measures determined in
accordance with GAAP.
Economic Net Income Components
The following table details the individual revenue and expense
components of the non-GAAP measure ENI for the periods indicated (in
thousands):
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|
Three Months Ended
|
|
|
|
|
June 30,
|
|
Year to Date
|
|
|
2014
|
|
2013
|
|
$ Change
|
|
2014
|
|
2013
|
|
$ Change
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
$
|
1,731
|
|
|
$
|
1,575
|
|
|
$
|
156
|
|
|
$
|
4,140
|
|
|
$
|
1,792
|
|
|
$
|
2,348
|
|
Dividend/distribution income
|
|
4,031
|
|
|
3,689
|
|
|
342
|
|
|
8,174
|
|
|
8,964
|
|
|
(790
|
)
|
Realized gains (losses)
|
|
(1,055
|
)
|
|
(1,130
|
)
|
|
75
|
|
|
(752
|
)
|
|
(1,008
|
)
|
|
256
|
|
Unrealized gains
|
|
1,874
|
|
|
3,620
|
|
|
(1,746
|
)
|
|
2,333
|
|
|
12,674
|
|
|
(10,341
|
)
|
Management fee income
|
|
3,303
|
|
|
5,138
|
|
|
(1,835
|
)
|
|
6,649
|
|
|
8,587
|
|
|
(1,938
|
)
|
Total revenues
|
|
9,884
|
|
|
12,892
|
|
|
(3,008
|
)
|
|
20,544
|
|
|
31,009
|
|
|
(10,465
|
)
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation expense
|
|
2,032
|
|
|
3,456
|
|
|
(1,424
|
)
|
|
4,356
|
|
|
6,904
|
|
|
(2,548
|
)
|
Distribution expense (convertible preferred)
|
|
-
|
|
|
933
|
|
|
(933
|
)
|
|
-
|
|
|
1,747
|
|
|
(1,747
|
)
|
Interest expense
|
|
2,035
|
|
|
528
|
|
|
1,507
|
|
|
4,000
|
|
|
900
|
|
|
3,100
|
|
Professional fees and other
|
|
1,964
|
|
|
1,651
|
|
|
313
|
|
|
3,620
|
|
|
2,939
|
|
|
681
|
|
Total expense
|
|
6,031
|
|
|
6,568
|
|
|
(537
|
)
|
|
11,976
|
|
|
12,490
|
|
|
(514
|
)
|
Economic Net Income of Operating Company
|
|
3,853
|
|
|
6,324
|
|
|
(2,471
|
)
|
|
8,568
|
|
|
18,519
|
|
|
(9,951
|
)
|
Less: Economic Net Income attributable to TFP
|
|
2,869
|
|
|
4,749
|
|
|
(1,880
|
)
|
|
6,380
|
|
|
13,906
|
|
|
(7,526
|
)
|
Economic Net Income of Tiptree before tax provision
|
|
984
|
|
|
1,575
|
|
|
(591
|
)
|
|
2,188
|
|
|
4,613
|
|
|
(2,425
|
)
|
Less: Tax adjustment attributable to Tiptree
|
|
(324
|
)
|
|
(327
|
)
|
|
3
|
|
|
(537
|
)
|
|
(327
|
)
|
|
(210
|
)
|
Economic Net Income of Tiptree
|
|
$
|
1,308
|
|
|
$
|
1,902
|
|
|
$
|
(594
|
)
|
|
$
|
2,725
|
|
|
$
|
4,940
|
|
|
$
|
(2,215
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP Net Income to Economic Net Income
In addition to the other adjustments indicated in the table below, ENI
includes the following adjustments: (i) adjustment to results from real
estate to eliminate non-cash items similar to adjusted funds from
operations ("AFFO"), which is a non-GAAP financial measure widely used
in the real estate industry, (ii) in our insurance segment, adjustment
for fair value on available for sale securities, which is a non-GAAP
measure frequently used throughout the insurance industry, and (iii) in
our specialty finance segment, VIEs are shown as if not consolidated.
The following is a reconciliation of GAAP Net Income attributable to
Tiptree to ENI for the periods ended June 30, 2014 and 2013 (in
thousands):
|
|
|
Three Months Ended
|
|
Year to Date
|
|
|
|
June 30, 2014
|
|
June 30, 2013
|
|
June 30, 2014
|
|
June 30, 2013
|
GAAP Net Income of Tiptree
|
|
|
$
|
1,071
|
|
|
$
|
3,415
|
|
|
$
|
2,096
|
|
|
$
|
4,733
|
|
Plus: Tax adjustment attributable to Tiptree companies (1)
|
|
|
(1,271
|
)
|
|
(1,314
|
)
|
|
(2,106
|
)
|
|
(1,314
|
)
|
Plus: Portion of NCI held by TFP
|
|
|
(561
|
)
|
|
10,325
|
|
|
(9
|
)
|
|
14,329
|
|
GAAP Net (Loss)/Income of Operating Company
|
|
|
(761
|
)
|
|
12,426
|
|
|
(19
|
)
|
|
17,748
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to results from real estate operations (2)
|
|
|
398
|
|
|
(4,737
|
)
|
|
1,092
|
|
|
(3,402
|
)
|
Effect of change in majority ownership of subsidiaries (3)
|
|
|
(57
|
)
|
|
(234
|
)
|
|
(67
|
)
|
|
(376
|
)
|
Fair value adjustments to carrying value (4)
|
|
|
(301
|
)
|
|
(3,784
|
)
|
|
(2,842
|
)
|
|
989
|
|
Reversal of VIEs net losses (gains) attributable to TFI (5)
|
|
|
4,573
|
|
|
3,567
|
|
|
10,403
|
|
|
4,191
|
|
Reversal of TAMCO net gains for periods prior to acquisition of
TAMCO (6)
|
|
|
-
|
|
|
21
|
|
|
-
|
|
|
(57
|
)
|
TFP convertible preferred reclass of distributions to expense (7)
|
|
|
1
|
|
|
(935
|
)
|
|
1
|
|
|
(1,748
|
)
|
Foreign exchange reserve (8)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,174
|
|
Economic Net Income of Operating Company
|
|
|
3,853
|
|
|
6,324
|
|
|
8,568
|
|
|
18,519
|
|
Less: Economic Net Income attributable to TFP
|
|
|
2,869
|
|
|
4,749
|
|
|
6,380
|
|
|
13,906
|
|
Economic Net Income of Tiptree before tax provision
|
|
|
984
|
|
|
1,575
|
|
|
2,188
|
|
|
4,613
|
|
Less: Tax adjustment attributable to Tiptree (9)
|
|
|
(324
|
)
|
|
(327
|
)
|
|
(537
|
)
|
|
(327
|
)
|
Economic Net Income of Tiptree
|
|
|
$
|
1,308
|
|
|
$
|
1,902
|
|
|
$
|
2,725
|
|
|
$
|
4,940
|
|
(1)
|
|
Tax provision adjustment for Tiptree to reflect tax benefits at
certain entities which reduces the tax expense at Operating Company.
|
|
|
|
(2)
|
|
Adjustments to results from real estate operations includes the
effects of straight lining lease revenue, expenses associated with
depreciation and amortization, certain transaction expenses,
non-cash equity compensation expenses, other non-cash charges, and
incentive compensation adjustments for unconsolidated partnerships
and joint ventures.
|
|
|
|
(3)
|
|
Effect of change in majority ownership of subsidiaries is the
dilutive effect of Care Inc.'s issuance of shares related to the
Contribution Transactions and stock-based compensation and the
effect of Tiptree's increased ownership of PFG due to the accretion
of preferred shares.
|
|
|
|
(4)
|
|
Adjustment is to account at fair value for the CLO subordinated
notes held by Tiptree and PFG's available-for-sale securities. Fair
values are obtained from independent third party pricing sources.
|
|
|
|
(5)
|
|
Reversal of VIEs net losses/(gains) attributable to Tiptree (see
reconciliation table below in thousands):
|
|
|
Three months ended June 30, 2014
|
|
|
Tiptree pro rata portion of Net Income
|
|
Net Income (net of 1% NCI)
|
Telos 1
|
|
$
|
(382
|
)
|
|
$
|
(5,376
|
)
|
Telos 2
|
|
(6,210
|
)
|
|
(6,507
|
)
|
Telos 3 (a)
|
|
(14
|
)
|
|
(239
|
)
|
Telos 4
|
|
367
|
|
|
516
|
|
Telos 5
|
|
1,666
|
|
|
2,363
|
|
Total
|
|
$
|
(4,573
|
)
|
|
$
|
(9,243
|
)
|
|
|
|
|
|
|
|
|
|
Three months ended June 30, 2013
|
|
|
Tiptree pro rata portion of Net Income
|
|
Net Income (net of 1% NCI)
|
Telos 1
|
|
$
|
(653
|
)
|
|
$
|
(9,181
|
)
|
Telos 2
|
|
(2,521
|
)
|
|
(2,641
|
)
|
Telos 3
|
|
(393
|
)
|
|
(994
|
)
|
Total
|
|
$
|
(3,567
|
)
|
|
$
|
(12,816
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 30, 2014
|
|
|
Tiptree pro rata portion of Net Income
|
|
Net Income (net of 1% NCI)
|
|
Tiptree's ownership %
|
Telos 1
|
|
$
|
(648
|
)
|
|
$
|
(9,120
|
)
|
|
7.11
|
%
|
Telos 2
|
|
(12,212
|
)
|
|
(12,794
|
)
|
|
95.45
|
|
Telos 3 (a)
|
|
(7
|
)
|
|
(162
|
)
|
|
4.3
|
|
Telos 4
|
|
798
|
|
|
1,123
|
|
|
71.08
|
|
Telos 5
|
|
1,666
|
|
|
2,363
|
|
|
70.51
|
%
|
Total
|
|
$
|
(10,403
|
)
|
|
$
|
(18,590
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 30, 2013
|
|
|
Tiptree pro rata portion of Net Income
|
|
Net Income (net of 1% NCI)
|
|
Tiptree's ownership %
|
Telos 1
|
|
$
|
(750
|
)
|
|
$
|
(10,544
|
)
|
|
7.11
|
%
|
Telos 2
|
|
(3,806
|
)
|
|
(3,987
|
)
|
|
95.45
|
|
Telos 3
|
|
365
|
|
|
1,520
|
|
|
24.05
|
%
|
Total
|
|
$
|
(4,191
|
)
|
|
$
|
(13,011
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
During 2014, Tiptree sold its ownership interest in Telos 3. This
percentage reflects its ownership during the period a portion of
the CLO was still owned.
|
|
|
|
(6)
|
|
The purchase of TAMCO on June 30, 2012 was accounted for as a
combination of entities under common control. As a result, the
assets and liabilities of TAMCO were presented as if TAMCO had been
consolidated by Tiptree on January 1, 2010. For non-controlling
interest, we reversed the effect of this recasting of financial
information for prior periods.
|
|
|
|
(7)
|
|
Convertible preferred distribution reclassified as expense for
purposes of ENI so as to reflect a cost of capital charge for
outstanding convertible preferred. This class automatically
converted to common shares effective July 1, 2013.
|
|
|
|
(8)
|
|
Reflects the timing difference on the recognition of yen exposure
GAAP versus ENI.
|
|
|
|
(9)
|
|
Tax adjustment for Tiptree Financial Inc. only and not its
consolidated subsidiaries.
|
Reconciliation of GAAP Book Value to Economic Book Value
Economic Book Value ("EBV") is a non-GAAP financial measure which
Tiptree uses to evaluate the performance of its core business.
Management believes that EBV provides greater transparency and enhanced
visibility into the underlying profitability drivers of our business and
provides a useful, alternative view of the economic results of Tiptree's
businesses. EBV includes the following adjustments: (i) reversal of GAAP
value for TAMCO and CLO VIEs and replacement with fair value, (ii)
addition of life to date AFFO adjustments for real estate operations,
(iii) reclassification of convertible preferred distributions to expense
and (iv) foreign exchange timing adjustment.
EBV as used by Tiptree may not be comparable to similar measures
presented by other companies as it is a non-GAAP financial measure that
is not based on a comprehensive set of accounting rules or principles
and therefore may be defined differently by other companies. EBV should
be considered in addition to, not as a substitute for, financial
measures determined in accordance with GAAP. The following is a
reconciliation of GAAP book value attributable to Tiptree to EBV as of
June 30, 2014 and December 31, 2013 (in thousands except share data):
|
|
June 30, 2014
|
|
|
December 31, 2013
|
Economic Book Value
|
|
|
|
|
|
|
|
GAAP TFI Total Capital
|
|
$
|
561,279
|
|
|
|
$
|
565,856
|
|
Less: Non-controlling interest in TFI
|
|
362,046
|
|
|
|
361,354
|
|
Less: Retained Earnings of consolidated TAMCO
|
|
76,404
|
|
|
|
84,591
|
|
GAAP Net Assets to Tiptree Class A Stockholders
|
|
122,829
|
|
|
|
119,911
|
|
Less: Net assets held directly at Tiptree
|
|
6,455
|
|
|
|
4,259
|
|
Plus: Portion of NCI held by TFP
|
|
339,436
|
|
|
|
339,283
|
|
GAAP Net Assets of Operating Company
|
|
455,810
|
|
|
|
454,935
|
|
Reversal of consolidation of TAMCO (including VIEs) (1)
|
|
(154,830
|
)
|
|
|
(144,817
|
)
|
Fair values of CLOs (2)
|
|
74,666
|
|
|
|
61,145
|
|
Value of TAMCO (3)
|
|
57,661
|
|
|
|
57,661
|
|
Adjustments to results from real estate operations (4)
|
|
4,772
|
|
|
|
3,711
|
|
Total Adjustments
|
|
(17,731
|
)
|
|
|
(22,300
|
)
|
Economic Operating Company Net Assets
|
|
$
|
438,079
|
|
|
|
$
|
432,635
|
|
Units outstanding (5)
|
|
41,587
|
|
|
|
41,525
|
|
Economic Tiptree Book Value Per Class A Share (6)
|
|
$
|
10.53
|
|
|
|
$
|
10.42
|
|
Net assets held directly at Tiptree
|
|
6,455
|
|
|
|
4,259
|
|
Economic Operating Company Net Assets (including Tiptree level
net assets)
|
|
444,534
|
|
|
|
436,894
|
|
Economic Book Value Per Share (including Tiptree level net assets)
|
|
$
|
10.69
|
|
|
|
$
|
10.52
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Under GAAP, Tiptree is required to consolidate all of the assets and
liabilities of the VIEs managed by TAMCO on Tiptree's balance sheet
regardless of Tiptree's economic interest. See Note 2(c) to the
consolidated financial statements included in the 2013 Annual Report
on Form 10-K. Adjustment is reversal of consolidation of TAMCO and
VIEs.
|
|
|
|
(2)
|
|
Adjustment includes the fair value of our ownership position in the
VIEs, which has been reversed as described in note (1) above.
|
|
|
|
(3)
|
|
Values TAMCO at the lower of cost or market, and reflects the
valuation of the purchase price based on the value of the
partnership units issued in consideration for TAMCO.
|
|
|
|
(4)
|
|
Adjustments to results from real estate operations reverses the
amounts, since inception, related to the effects of straight
lining lease revenue, expenses associated with depreciation and
amortization, certain transaction expenses, non-cash transaction
expenses, non-cash equity compensation expenses, other non-cash
charges, and incentive compensation adjustment for unconsolidated
partnerships and joint ventures.
|
|
|
|
(5)
|
|
Assumes full redemption of Operating Company units for Class A
common stock or exchange by TFP limited partners of their limited
partnership units for shares of Class A common stock. Operating
Company is owned approximately 25% by Tiptree and approximately 75%
by TFP. Tiptree's ownership is equal to the number of shares of
Class A common stock and, pursuant to Operating Company's limited
liability agreement, this ratio will remain 1:1. TFP's ownership is
equal to 2.798 times the number of TFP partnership units outstanding
and this ratio is expected to remain 2.798:1. There were 11,068 and
11,068 partnership units outstanding as of June 30, 2014 and
December 31, 2013, respectively. The basic EBV per partnership unit
was $29.46 and $29.16 as of June 30, 2014 and December 31, 2013,
respectively. The basic EBV (including Tiptree level net assets) per
partnership unit was $29.91 and $29.43 as of June 30, 2014 and
December 31, 2013, respectively. As of August 5. 2014, Tiptree owned
36% of the limited partnership units of TFP.
|
|
|
|
(6)
|
|
As of March 31, 2014 was $10.50.
|
|
|
|
TIPTREE FINANCIAL INC.
AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands, except share and per share data)
(Unaudited)
|
|
|
|
|
|
|
|
June 30, 2014
|
|
December 31, 2013
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents - unrestricted
|
|
$
|
122,050
|
|
|
$
|
120,557
|
Cash and cash equivalents - restricted
|
|
22,796
|
|
|
26,395
|
Trading investments, at fair value
|
|
34,129
|
|
|
35,991
|
Investments in available for sale securities, at fair value
(amortized cost: $17,669 and $17,708 in 2014 and 2013,
respectively)
|
|
17,952
|
|
|
17,763
|
Loans held for sale, at fair value ($24,833 pledged as collateral
at June 30, 2014)
|
|
25,104
|
|
|
-
|
Investments in loans, at fair value
|
|
122,138
|
|
|
171,087
|
Loans owned, at amortized cost - net of allowance
|
|
55,003
|
|
|
40,260
|
Investments in partially-owned entities
|
|
8,691
|
|
|
9,972
|
Real estate
|
|
105,224
|
|
|
105,061
|
Policy loans
|
|
92,711
|
|
|
102,147
|
Deferred tax assets
|
|
5,327
|
|
|
3,310
|
Intangible assets
|
|
153,246
|
|
|
154,695
|
Goodwill
|
|
4,617
|
|
|
4,294
|
Other assets
|
|
51,166
|
|
|
49,201
|
Separate account assets
|
|
4,799,568
|
|
|
4,625,099
|
Assets of consolidated CLOs
|
|
1,758,909
|
|
|
1,414,616
|
Total assets
|
|
$
|
7,378,631
|
|
|
$
|
6,880,448
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
Derivative financial instruments, at fair value
|
|
$
|
1,517
|
|
|
$
|
598
|
U.S. Treasuries, short position
|
|
19,254
|
|
|
18,493
|
Debt
|
|
285,706
|
|
|
360,609
|
Policy liabilities
|
|
102,882
|
|
|
112,358
|
Due to brokers, dealers and trustees
|
|
71,068
|
|
|
8,193
|
Other liabilities and accrued expenses
|
|
15,264
|
|
|
13,636
|
Separate account liabilities
|
|
4,799,568
|
|
|
4,625,099
|
Liabilities of consolidated CLOs
|
|
1,522,093
|
|
|
1,175,606
|
Total liabilities
|
|
6,817,352
|
|
|
6,314,592
|
Stockholders' Equity:
|
|
|
|
|
|
Preferred stock: $0.001 par value, 100,000,000 shares authorized,
none issued or outstanding
|
|
-
|
|
|
-
|
Common stock - Class A: $0.001 par value, 200,000,000 shares
authorized, 10,617,947 and 10,556,390 shares issued and outstanding,
respectively
|
|
11
|
|
|
11
|
Common stock - Class B: $0.001 par value, 50,000,000 shares
authorized, 30,968,877 and 30,968,877 shares issued and outstanding,
respectively
|
|
31
|
|
|
31
|
Additional paid-in capital
|
|
101,586
|
|
|
100,903
|
Accumulated other comprehensive income
|
|
172
|
|
|
33
|
Retained earnings
|
|
21,029
|
|
|
18,933
|
Total stockholders' equity of Tiptree Financial Inc.
|
|
122,829
|
|
|
119,911
|
Non-controlling interest
|
|
362,046
|
|
|
361,354
|
Appropriated retained earnings of consolidated TAMCO
|
|
76,404
|
|
|
84,591
|
Total stockholders' equity
|
|
561,279
|
|
|
565,856
|
Total liabilities and stockholders' equity
|
|
$
|
7,378,631
|
|
|
$
|
6,880,448
|
|
|
|
|
|
|
|
|
TIPTREE FINANCIAL INC.
AND SUBSIDIARIES
Consolidated Statements of Operations
(in thousands, except share and per share data)
(Unaudited)
|
|
|
|
|
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Realized and unrealized gains:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net realized (loss) gain on investments
|
|
$
|
(1,044
|
)
|
|
$
|
(1,593
|
)
|
|
$
|
(902
|
)
|
|
$
|
(1,439
|
)
|
Change in unrealized (depreciation) appreciation on investments
|
|
(227
|
)
|
|
(3,058
|
)
|
|
289
|
|
|
(2,500
|
)
|
Income from investments in partially owned entities
|
|
336
|
|
|
1,324
|
|
|
680
|
|
|
1,413
|
|
Net realized and unrealized (loss) gain
|
|
(935
|
)
|
|
(3,327
|
)
|
|
67
|
|
|
(2,526
|
)
|
Investment income:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
4,938
|
|
|
4,188
|
|
|
10,301
|
|
|
7,215
|
|
Separate account fees
|
|
5,525
|
|
|
5,504
|
|
|
11,012
|
|
|
10,810
|
|
Administrative service fees
|
|
12,589
|
|
|
12,165
|
|
|
24,941
|
|
|
24,096
|
|
Rental revenue
|
|
4,393
|
|
|
1,094
|
|
|
8,839
|
|
|
1,916
|
|
Gain on sale of loans held for sale, net
|
|
1,782
|
|
|
-
|
|
|
2,734
|
|
|
-
|
|
Other income
|
|
1,137
|
|
|
158
|
|
|
1,867
|
|
|
376
|
|
Total investment income
|
|
30,364
|
|
|
23,109
|
|
|
59,694
|
|
|
44,413
|
|
Total net realized and unrealized gains and investment income
|
|
$
|
29,429
|
|
|
$
|
19,782
|
|
|
$
|
59,761
|
|
|
$
|
41,887
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
$
|
6,259
|
|
|
$
|
4,063
|
|
|
$
|
12,221
|
|
|
$
|
7,898
|
|
Payroll expense
|
|
12,513
|
|
|
8,896
|
|
|
23,083
|
|
|
17,524
|
|
Professional fees
|
|
2,824
|
|
|
2,580
|
|
|
3,914
|
|
|
3,952
|
|
Change in future policy benefits
|
|
1,072
|
|
|
1,196
|
|
|
2,197
|
|
|
2,313
|
|
Mortality expenses
|
|
2,583
|
|
|
2,638
|
|
|
5,225
|
|
|
5,252
|
|
Commission expense
|
|
174
|
|
|
619
|
|
|
1,158
|
|
|
1,174
|
|
Depreciation and amortization expenses
|
|
1,803
|
|
|
1,223
|
|
|
3,366
|
|
|
2,166
|
|
Other expenses
|
|
3,901
|
|
|
3,021
|
|
|
10,057
|
|
|
6,495
|
|
Total expenses
|
|
31,129
|
|
|
24,236
|
|
|
61,221
|
|
|
46,774
|
|
Net (loss) income before taxes and income attributable to
consolidated CLOs from continuing operations
|
|
(1,700
|
)
|
|
(4,454
|
)
|
|
(1,460
|
)
|
|
(4,887
|
)
|
Results of consolidated CLOs:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income attributable to consolidated CLOs
|
|
12,849
|
|
|
5,655
|
|
|
24,835
|
|
|
22,219
|
|
Expenses attributable to consolidated CLOs
|
|
14,997
|
|
|
11,417
|
|
|
28,989
|
|
|
21,238
|
|
Net (loss) income attributable to consolidated CLOs
|
|
(2,148
|
)
|
|
(5,762
|
)
|
|
(4,154
|
)
|
|
981
|
|
Income before taxes from continuing operations
|
|
(3,848
|
)
|
|
(10,216
|
)
|
|
(5,614
|
)
|
|
(3,906
|
)
|
Provision for income taxes
|
|
497
|
|
|
1,816
|
|
|
926
|
|
|
3,115
|
|
(Loss) income from continuing operations
|
|
(4,345
|
)
|
|
(12,032
|
)
|
|
(6,540
|
)
|
|
(7,021
|
)
|
Discontinued operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of Bickford portfolio, net
|
|
-
|
|
|
15,463
|
|
|
-
|
|
|
15,463
|
|
Income from discontinued operations, net
|
|
-
|
|
|
806
|
|
|
-
|
|
|
1,647
|
|
Provision for income taxes
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Discontinued operations, net
|
|
-
|
|
|
16,269
|
|
|
-
|
|
|
17,110
|
|
Net (loss) income
|
|
(4,345
|
)
|
|
4,237
|
|
|
(6,540
|
)
|
|
10,089
|
|
Less: Net (loss) income attributable to noncontrolling interest
|
|
(747
|
)
|
|
10,072
|
|
|
(449
|
)
|
|
14,177
|
|
Less: Net (loss) income attributable to VIE subordinated noteholders
|
|
(4,669
|
)
|
|
(9,250
|
)
|
|
(8,187
|
)
|
|
(8,821
|
)
|
Net income available to common stockholders
|
|
$
|
1,071
|
|
|
$
|
3,415
|
|
|
$
|
2,096
|
|
|
$
|
4,733
|
|
Net income (loss) per Class A common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic, continuing operations, net
|
|
$
|
0.10
|
|
|
$
|
(1.26
|
)
|
|
$
|
0.20
|
|
|
$
|
(1.21
|
)
|
Basic, discontinued operations, net
|
|
-
|
|
|
1.59
|
|
|
-
|
|
|
1.67
|
|
Net income basic
|
|
0.10
|
|
|
0.33
|
|
|
0.20
|
|
|
0.46
|
|
Diluted, continuing operations, net
|
|
0.10
|
|
|
(1.26
|
)
|
|
0.20
|
|
|
(1.21
|
)
|
Diluted, discontinued operations, net
|
|
-
|
|
|
1.59
|
|
|
-
|
|
|
1.67
|
|
Net income dilutive
|
|
$
|
0.10
|
|
|
$
|
0.33
|
|
|
$
|
0.20
|
|
|
$
|
0.46
|
|
Weighted average number of Class A common shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
10,617,863
|
|
|
10,243,951
|
|
|
10,602,311
|
|
|
10,242,733
|
|
Diluted
|
|
10,617,863
|
|
|
10,243,951
|
|
|
10,602,311
|
|
|
10,242,733
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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