TIPTREE INC
For the period ended Sep 30, 2024. Filed Oct 30, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Oct 30, 2024
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(5) Investments
The following table presents the Company’s investments related to insurance operations and other Tiptree investing activities, measured at fair value as of the following periods:
| As of September 30, 2024 | ||||
|---|---|---|---|---|
| Tiptree Capital | ||||
| Insurance | Mortgage | Other | Total | |
| Available for sale securities, at fair value, net of allowance for credit losses | $978,979 | $— | $31,088 | $1,010,067 |
| Loans, at fair value | 8,976 | 72,840 | — | 81,816 |
| Equity securities | 90,999 | — | 4,331 | 95,330 |
| Other investments | 55,137 | 3,717 | 396 | 59,250 |
| Total investments | $1,134,091 | $76,557 | $35,815 | $1,246,463 |
| As of December 31, 2023 | ||||
|---|---|---|---|---|
| Tiptree Capital | ||||
| Insurance | Mortgage | Other | Total | |
| Available for sale securities, at fair value, net of allowance for credit losses | $772,135 | $— | $30,474 | $802,609 |
| Loans, at fair value | 11,218 | 58,338 | — | 69,556 |
| Equity securities | 27,113 | — | 41,195 | 68,308 |
| Other investments | 106,760 | 3,931 | 397 | 111,088 |
| Total investments | $917,226 | $62,269 | $72,066 | $1,051,561 |
Available for Sale Securities, at fair value
A majority of the Company’s investments in Available for Sale Securities, at fair value, net of allowance for credit losses (AFS securities) as of September 30, 2024 and December 31, 2023 are held by subsidiaries in the insurance segment. The following tables present the Company’s investments in AFS securities:
| As of September 30, 2024 | |||||
|---|---|---|---|---|---|
| Amortized cost | Allowance for credit losses(1) | Grossunrealized gains | Grossunrealized losses | Fair value | |
| U.S. Treasury securities and obligations of U.S. government authorities and agencies | $454,042 | $— | $1,791 | $(20,745) | $435,088 |
| Obligations of state and political subdivisions | 43,886 | (1) | 66 | (2,414) | 41,537 |
| Corporate securities | 507,055 | (478) | 6,714 | (6,103) | 507,188 |
| Asset backed securities | 26,298 | (131) | 2 | (2,349) | 23,820 |
| Certificates of deposit | 1,145 | — | — | — | 1,145 |
| Obligations of foreign governments | 1,393 | — | — | (104) | 1,289 |
| Total | $1,033,819 | $(610) | $8,573 | $(31,715) | $1,010,067 |
| As of December 31, 2023 | |||||
| Amortized cost | Allowance for credit losses(1) | Grossunrealized gains | Grossunrealized losses | Fair value | |
| U.S. Treasury securities and obligations of U.S. government authorities and agencies | $496,731 | $— | $515 | $(27,161) | $470,085 |
| Obligations of state and political subdivisions | 48,762 | (1) | 51 | (3,353) | 45,459 |
| Corporate securities | 260,961 | (73) | 2,445 | (8,735) | 254,598 |
| Asset backed securities | 29,275 | (10) | 3 | (3,082) | 26,186 |
| Certificates of deposit | 1,724 | — | — | — | 1,724 |
| Obligations of foreign governments | 4,705 | — | — | (148) | 4,557 |
| Total | $842,158 | $(84) | $3,014 | $(42,479) | $802,609 |
|---|
(1) Represents the amount of impairment that has resulted from credit-related factors, and therefore was recognized in net realized and unrealized gains (losses) as a credit loss on AFS securities. Amount excludes unrealized losses relating to non-credit factors.
The amortized cost and fair values of AFS securities, by contractual maturity date, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
| As of | ||||
|---|---|---|---|---|
| September 30, 2024 | December 31, 2023 | |||
| Amortized cost | Fair value | Amortized cost | Fair value | |
| Due in one year or less | $258,395 | $258,260 | $247,613 | $246,489 |
| Due after one year through five years | 381,211 | 377,227 | 318,763 | 307,423 |
| Due after five years through ten years | 139,225 | 126,312 | 46,377 | 39,221 |
| Due after ten years | 228,690 | 224,448 | 200,130 | 183,290 |
| Asset backed securities | 26,298 | 23,820 | 29,275 | 26,186 |
| Total | $1,033,819 | $1,010,067 | $842,158 | $802,609 |
The following tables present the gross unrealized losses on AFS securities by length of time that individual AFS securities have been in a continuous unrealized loss position for less than twelve months, and twelve months or greater and do not have an allowance for credit losses:
| As of September 30, 2024 | ||||||
|---|---|---|---|---|---|---|
| Less Than or Equal to One Year · More Than One Year | ||||||
| Fair value | Grossunrealized losses | # of Securities(1) | Fair value | Gross unrealized losses | # of Securities(1) | |
| U.S. Treasury securities and obligations of U.S. government authorities and agencies | $24,763 | $(376) | 513 | $190,130 | $(20,369) | 584 |
| Obligations of state and political subdivisions | 2,296 | (16) | 130 | 34,491 | (2,398) | 105 |
| Corporate securities | 140,907 | (1,137) | 482 | 106,354 | (4,966) | 396 |
| Asset backed securities | — | — | — | 23,009 | (2,349) | 133 |
| Obligations of foreign governments | — | — | 6 | 1,289 | (104) | 6 |
| Total | $167,966 | $(1,529) | 1,131 | $355,273 | $(30,186) | 1,224 |
| As of December 31, 2023 | ||||||
| Less Than or Equal to One Year · More Than One Year | ||||||
| Fair value | Grossunrealized losses | # of Securities(1) | Fair value | Gross unrealized losses | # of Securities(1) | |
| U.S. Treasury securities and obligations of U.S. government authorities and agencies | $109,011 | $(6,522) | 459 | $185,950 | $(20,639) | 480 |
| Obligations of state and political subdivisions | 537 | (53) | 43 | 39,319 | (3,300) | 131 |
| Corporate securities | 83,747 | (4,881) | 868 | 57,679 | (3,854) | 148 |
| Asset backed securities | 2,187 | (259) | 54 | 23,999 | (2,823) | 129 |
| Obligations of foreign governments | 2,904 | — | 3 | 1,653 | (148) | 7 |
| Total | $198,386 | $(11,715) | 1,427 | $308,600 | $(30,764) | 895 |
(1) Presented in whole numbers.
Management believes that it is more likely than not that the Company will be able to hold the fixed maturity AFS securities that were in an unrealized loss position as of September 30, 2024 until full recovery of their amortized cost basis.
The table below presents a roll-forward of the activity in the allowance for credit losses on AFS securities by type as of September 30, 2024:
| Obligations of state and political subdivisions | Corporate securities | Asset backed securities | Obligations of foreign governments | Total | |
|---|---|---|---|---|---|
| Balance at December 31, 2022 | $(3) | $(183) | $(1) | $(3) | $(190) |
| (Increase) in allowance for credit losses | — | (287) | (14) | — | (301) |
| Gains from recoveries of amounts previously written off | 2 | 139 | 1 | 3 | 145 |
| Balance at September 30, 2023 | $(1) | $(331) | $(14) | $— | $(346) |
| Balance at December 31, 2023 | $(1) | $(73) | $(10) | $— | $(84) |
| (Increase) in allowance for credit losses | — | (47) | (122) | — | (169) |
| Additions for AFS securities purchased with credit deterioration during the year | — | (380) | — | — | (380) |
| Reduction in credit losses due to AFS securities sold during the year | — | 2 | — | — | 2 |
| Gains from recoveries of amounts previously written off | — | 20 | 1 | — | 21 |
| Balance at September 30, 2024 | $(1) | $(478) | $(131) | $— | $(610) |
The Company applies a discounted cash flow model, based on assumptions and model outputs provided by an investment management company, in determining its lifetime expected credit losses on AFS securities. This includes determining the present value of expected future cash flows discounted at the book yield of the security.
The table below presents the amount of gains from recoveries (credit losses) on AFS securities recorded by the Company for the following period:
| Three Months Ended September 30, | Nine Months EndedSeptember 30, | |||
|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |
| Net gains from recoveries (credit losses) on AFS securities | $316 | $(50) | $(526) | $(156) |
Pursuant to certain reinsurance agreements and statutory licensing requirements, the Company has deposited invested assets in custody accounts or insurance department safekeeping accounts. The Company cannot remove or replace investments in regulatory deposit accounts without prior approval of the contractual party or regulatory authority, as applicable. The following table presents the Company’s restricted investments included in the Company’s AFS securities:
| As of | ||
|---|---|---|
| September 30,2024 | December 31, 2023 | |
| Fair value of restricted investments in trust pursuant to reinsurance agreements | $14,844 | $49,735 |
| Fair value of restricted investments for special deposits required by state insurance departments | 30,234 | 16,694 |
| Total fair value of restricted investments | $45,078 | $66,429 |
The following table presents additional information on the Company’s AFS securities:
| Three Months Ended September 30, | Nine Months EndedSeptember 30, | |||
|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |
| Purchases of AFS securities | $182,430 | $146,512 | $471,202 | $449,165 |
| Proceeds from maturities, calls and prepayments of AFS securities | $21,911 | $231,101 | $263,990 | $319,100 |
| Gross proceeds from sales of AFS securities | $4,425 | $2,578 | $24,264 | $42,536 |
The following table presents the gross realized gains and gross realized losses from sales and redemptions of AFS securities:
| Three Months Ended September 30, | Nine Months EndedSeptember 30, | |||
|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |
| Gross realized gains | $220 | $80 | $360 | $80 |
| Gross realized (losses) | (277) | (78) | (510) | (3,034) |
| Total net realized gains (losses) from investment sales and redemptions | $(57) | $2 | $(150) | $(2,954) |
Loans, at fair value
The following table presents the Company’s investments in loans measured at fair value and the Company’s investments in loans measured at fair value pledged as collateral:
| As of September 30, 2024 | As of December 31, 2023 | |||||||
|---|---|---|---|---|---|---|---|---|
| Fair value | Unpaid principal balance (UPB) | Fair value exceeds / (below) UPB | Pledged as collateral | Fair value | Unpaid principal balance (UPB) | Fair value exceeds / (below) UPB | Pledged as collateral | |
| Insurance: | ||||||||
| Corporate loans (1) | $8,976 | $12,676 | $(3,700) | $— | $11,218 | $14,671 | $(3,453) | $— |
| Mortgage: | ||||||||
| Mortgage loans held for sale (2) | 72,840 | 71,086 | 1,754 | 71,906 | 58,338 | 56,481 | 1,857 | 57,248 |
| Total loans, at fair value | $81,816 | $83,762 | $(1,946) | $71,906 | $69,556 | $71,152 | $(1,596) | $57,248 |
(1)The cost basis of Corporate loans was approximately $12,676 and $14,671 at September 30, 2024 and December 31, 2023, respectively.
(2)As of September 30, 2024, there were three mortgage loans held for sale that were 90 days or more past due. As of December 31, 2023, there were three mortgage loans held for sale that were 90 days or more past due.
Equity Securities
Equity securities consist mainly of publicly traded common and preferred stocks and exchange traded funds. As of December 31, 2023,16.98 million shares of Invesque were included within the equity securities balance, for which the Company elected to apply the fair value option. On April 15, 2024, the Company sold its 16.98 million shares of Invesque for $625 of proceeds resulting in a realized loss of $134,204. The following table presents information on the cost and fair value of the Company’s equity securities related to Insurance and Tiptree Capital as of the following periods:
| As of September 30, 2024 | ||||||
|---|---|---|---|---|---|---|
| Insurance | Tiptree Capital - Other | Total | ||||
| Cost | Fair Value | Cost | Fair Value | Cost | Fair Value | |
| Exchange traded funds | $5,387 | $5,336 | $— | $— | $5,387 | $5,336 |
| Other equity securities | 75,607 | 85,663 | 4,967 | 4,331 | 80,574 | 89,994 |
| Total equity securities | $80,994 | $90,999 | $4,967 | $4,331 | $85,961 | $95,330 |
| As of December 31, 2023 | ||||||
|---|---|---|---|---|---|---|
| Insurance | Tiptree Capital - Other | Total | ||||
| Cost | Fair Value | Cost | Fair Value | Cost | Fair Value | |
| Invesque | $23,339 | $719 | $111,490 | $3,442 | $134,829 | $4,161 |
| Exchange traded funds | 1,339 | 1,349 | — | — | 1,339 | 1,349 |
| Other equity securities | 22,741 | 25,045 | 29,942 | 37,753 | 52,683 | 62,798 |
| Total equity securities | $47,419 | $27,113 | $141,432 | $41,195 | $188,851 | $68,308 |
Other Investments
The following table contains information regarding the Company’s other investments as of the following periods:
| As of September 30, 2024 | ||||
|---|---|---|---|---|
| Tiptree Capital | ||||
| Insurance | Mortgage | Other | Total | |
| Corporate bonds, at fair value (1) | $9,560 | $— | $— | $9,560 |
| Debentures | 25,754 | — | — | 25,754 |
| Investment in credit fund | 19,823 | — | — | 19,823 |
| Other | — | 3,717 | 396 | 4,113 |
| Total other investments | $55,137 | $3,717 | $396 | $59,250 |
| As of December 31, 2023 | ||||
|---|---|---|---|---|
| Tiptree Capital | ||||
| Insurance | Mortgage | Other | Total | |
| Corporate bonds, at fair value (1) | $62,081 | $— | $— | $62,081 |
| Debentures | 25,648 | — | — | 25,648 |
| Investment in credit fund | 11,830 | — | — | 11,830 |
| Other | 7,201 | 3,931 | 397 | 11,529 |
| Total other investments | $106,760 | $3,931 | $397 | $111,088 |
(1)The cost basis of corporate bonds was $8,927 and $59,315 as of September 30, 2024 and December 31, 2023, respectively.
Net Investment Income - Insurance
Net investment income represents investment income and expense from investments related to insurance operations as disclosed within net investment income on the condensed consolidated statements of operations. The following table presents the components of net investment income by source of income:
| Three Months Ended September 30, | Nine Months EndedSeptember 30, | |||
|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |
| Interest: | ||||
| AFS securities | $8,431 | $5,255 | $21,894 | $16,863 |
| Loans, at fair value | 22 | 168 | 77 | 422 |
| Other investments | 2,035 | 1,758 | 5,157 | 5,837 |
| Dividends from equity securities | 412 | 39 | 684 | 1,339 |
| Subtotal | 10,900 | 7,220 | 27,812 | 24,461 |
| Less: investment expenses | 1,789 | 1,804 | 5,562 | 4,848 |
| Net investment income | $9,111 | $5,416 | $22,250 | $19,613 |
Other Investment Income - Tiptree Capital
Other investment income represents revenue from non-insurance activities as disclosed within other revenue on the condensed consolidated statements of operations, see Note (15) Other Revenue and Other Expenses. The following tables present the components of other investment income by type:
| Three Months Ended September 30, | Nine Months EndedSeptember 30, | |||
|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |
| Interest income from Loans, at fair value | $1,061 | $826 | $2,819 | $2,213 |
| Loan fee income | 4,877 | 4,193 | 14,017 | 12,186 |
| Other | 947 | 1,072 | 2,553 | 2,458 |
| Other investment income | $6,885 | $6,091 | $19,389 | $16,857 |
Net Realized and Unrealized Gains (Losses)
The following table presents the components of net realized and unrealized gains (losses) recorded on the condensed consolidated statements of operations. Net unrealized gains (losses) on AFS securities are included within other comprehensive income (loss) (OCI), net of tax, and, as such, are not included in this table. Net realized and unrealized gains (losses) on non-investment related financial assets and liabilities are included below:
| Three Months Ended September 30, | Nine Months EndedSeptember 30, | |||
|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |
| Net realized gains (losses) | ||||
| Insurance: | ||||
| Reclass of unrealized gains (losses) on AFS securities from OCI | $(58) | $2 | $(151) | $(2,954) |
| Net gains from recoveries (credit losses) on AFS securities | — | (50) | — | (156) |
| Net realized gains (losses) on loans | — | (2,902) | 58 | (2,900) |
|---|---|---|---|---|
| Net realized gains (losses) on equity securities (1) | 20 | (1,076) | (22,023) | (1,923) |
| Net realized gains (losses) on corporate bonds | 70 | (695) | 2,870 | (1,919) |
| Other | 89 | 1,089 | (872) | 335 |
| Tiptree Capital | ||||
| Mortgage: | ||||
| Net realized gains (losses) on loans | 13,553 | 8,848 | 35,305 | 29,680 |
| Other | (1,048) | 1,971 | (1,294) | 2,107 |
| Other: | ||||
| Net realized gains (losses) on equity securities (1) | — | — | (98,529) | — |
| Total net realized gains (losses) | $12,626 | $7,187 | $(84,636) | $22,270 |
| Net unrealized gains (losses) | ||||
| Insurance: | ||||
| Net change in unrealized gains (losses) on loans | $(123) | $2,563 | $(247) | $(1,510) |
| Net gains from recoveries (credit losses) on AFS securities | 316 | — | (526) | — |
| Net unrealized gains (losses) on equity securities held at period end | 1,287 | (3,844) | 7,436 | (2,537) |
| Reclass of unrealized (gains) losses from prior periods for equity securities sold (1) | — | 410 | 22,567 | (7) |
| Other | 617 | 2,887 | (1,530) | 2,969 |
| Tiptree Capital | ||||
| Mortgage: | ||||
| Net change in unrealized gains (losses) on loans | 332 | (287) | (103) | (476) |
| Other | (3,975) | (834) | (4,246) | (2,365) |
| Other: | ||||
| Net unrealized gains (losses) on equity securities held at period end | (965) | (6,624) | (687) | (5,561) |
| Reclass of unrealized (gains) losses from prior periods for equity securities sold (1) | — | — | 100,289 | — |
| Other | (1,799) | (1) | (1,799) | (324) |
| Total net unrealized gains (losses) | (4,310) | (5,730) | 121,154 | (9,811) |
| Total net realized and unrealized gains (losses) | $8,316 | $1,457 | $36,518 | $12,459 |
(1) On April 15, 2024, the Company sold its 16.98 million shares of Invesque for $625 of proceeds resulting in a realized loss of $134,204.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.