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What changed in TIPTREE INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of TIPTREE INC.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+332 added−350 removedSource: 10-K (2025-03-03) vs 10-K (2024-02-29)

Top changes in TIPTREE INC.'s 2024 10-K

332 paragraphs added · 350 removed · 299 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

61 edited+2 added−3 removed154 unchanged
Biggest changeThe following table reflects Fortegra’s key reinsurance treaties: Treaty Description Net Retention Reinsurance Coverage Whole Account Quota Share Covers general liability, professional liability, property and short-tail lines accounting for 40% of commercial P&C insurance gross written premiums 40%, $5 million per aggregate 60% Placed Property Catastrophe Excess of Loss Protection in excess of a 1:200-year catastrophic event $8 million, 50% co-participation on $4 million excess of $8 million $40 million excess of $8 million per event, $80 million in aggregate For the limited amount of gross property exposures that are in excess of desired retentions, Fortegra works with its distribution partners to purchase facultative reinsurance to cover those individual risks.
Biggest changeThe following table reflects Fortegra’s key reinsurance treaties: Treaty Description Net Retention Reinsurance Coverage WAQS (2023 - 2024) Covers general liability, professional liability, property and short-tail lines 40%, $5 million per aggregate 60% Placed WAQS (2024 - 2025) Covers general liability, professional liability, property and short-tail lines 45%, $5 million per aggregate 55% Placed WAQS - Specific GL (2024 - 2025) Covers select general liability programs 43%, $5 million per aggregate 57% Placed Property Catastrophe Excess of Loss (2023 - 2024) Protection in excess of a 1:200 year catastrophic event; a 1:250 event results in approximately 1% impact to loss / combined ratio $8 Million, 50% co-participation on $4 million excess of $8 million $40 Million excess of $8 Million per event, $80 million in aggregate Property Catastrophe Excess of Loss (2024 - 2025) Protection in excess of a 1:200 year catastrophic event; a 1:250 event results in approximately 1% impact to loss / combined ratio $14 Million, 22% co-participation on $14 million excess of $14 million $48 Million excess of $14 Million per event, $130 million in aggregate For the limited amount of gross property exposures that are in excess of desired retentions, Fortegra works with its distribution partners to purchase facultative reinsurance to cover those individual risks.
The business takes a disciplined approach to program selection, due diligence, pricing and structuring led by long-tenured, specialty insurance underwriting and actuarial experts, with active input from compliance, information technology and legal teams. Fortegra does not write commoditized, longer-tail classes of business which can experience periods of volatility such as workers compensation or commercial auto.
The business takes a disciplined approach to program selection, due diligence, pricing and structuring led by long-tenured, specialty insurance underwriting and actuarial experts, with active input from compliance, information technology and legal teams. Fortegra generally does not write commoditized, longer-tail classes of business which can experience periods of volatility such as workers compensation or commercial auto.
This strategy is further augmented by Fortegra’s conservative balance sheet and highly liquid fixed income investment portfolio which has an average S&P rating of AA. Visionary, proven, and deep leadership team with a collaborative culture. Fortegra’s executive management team is comprised of highly experienced professionals with an average of over 25 years of industry experience.
This strategy is further augmented by Fortegra’s conservative balance sheet and highly liquid fixed income investment portfolio which has an average S&P rating of A+. Visionary, proven, and deep leadership team with a collaborative culture. Fortegra’s executive management team is comprised of highly experienced professionals with an average of over 25 years of industry experience.
Actual claim costs are dependent upon a number of complex factors such as changes in doctrines of legal liabilities and damage awards. These factors are not directly quantifiable, particularly on a prospective basis. Fortegra regularly reviews and updates its method of estimating such unpaid claims reserves based on actual claims experience.
Actual claim costs are dependent 17 upon a number of complex factors such as changes in doctrines of legal liabilities and damage awards. These factors are not directly quantifiable, particularly on a prospective basis. Fortegra regularly reviews and updates its method of estimating such unpaid claims reserves based on actual claims experience.
In accordance with applicable statutory insurance company regulations, Fortegra’s recorded unpaid claims reserves are evaluated by 18 appointed independent third-party actuaries, who perform this function in compliance with the Standards of Practice and Codes of Conduct of the American Academy of Actuaries.
In accordance with applicable statutory insurance company regulations, Fortegra’s recorded unpaid claims reserves are evaluated by appointed independent third-party actuaries, who perform this function in compliance with the Standards of Practice and Codes of Conduct of the American Academy of Actuaries.
Fortegra primarily competes by leveraging its 20 proprietary technological innovations, decades of underwriting expertise, robust distribution relationships, data-driven marketing initiatives, its “agent-centric” mentality, and best-in-class reputation. Ratings Fortegra currently has a rating of “A-” (Excellent) (Outlook Stable) from A.M. Best, which rates insurance companies based on factors of concern to policyholders. A.M.
Fortegra primarily competes by leveraging its 19 proprietary technological innovations, decades of underwriting expertise, robust distribution relationships, data-driven marketing initiatives, its “agent-centric” mentality, and best-in-class reputation. Ratings Fortegra currently has a rating of “A-” (Excellent) (Outlook Stable) from A.M. Best, which rates insurance companies based on factors of concern to policyholders. A.M.
The information on our website is not, and shall not be deemed to be, a part hereof or incorporated into this or any of our other filings with the SEC. Our Investor Relations Department can be contacted at Tiptree Inc., 660 Steamboat Road, 2nd Floor, Greenwich, Connecticut 06830, Attn: Investor Relations, telephone: (212) 446-1400, email: IR@tiptreeinc.com . 25
The information on our website is not, and shall not be deemed to be, a part hereof or incorporated into this or any of our other filings with the SEC. Our Investor Relations Department can be contacted at Tiptree Inc., 660 Steamboat Road, 2nd Floor, Greenwich, Connecticut 06830, Attn: Investor Relations, telephone: (212) 446-1400, email: IR@tiptreeinc.com . 24
The interests of Fortegra’s executive management team are closely aligned with investors through a combination of a long-term incentive plan and management bonus pool tied to operating results. 13 Our Insurance Strategy We will seek to continue to execute upon our strategy, which focuses on providing specialty lines to underserved markets where Fortegra has significant expertise.
The interests of Fortegra’s executive management team are closely aligned with investors through a combination of a long-term incentive plan and management bonus pool tied to operating results. 12 Our Insurance Strategy We will seek to continue to execute upon our strategy, which focuses on providing specialty lines to underserved markets where Fortegra has significant expertise.
Founded in 1978, the business has a long-standing track record of disciplined and stable underwriting results while generating strong growth and attractive returns on capital. Fortegra is an underwriting-focused company, 10 with deep expertise within the admitted and E&S insurance lines and capital light fee-based services markets.
Founded in 1978, the business has a long-standing track record of disciplined and stable underwriting results while generating strong growth and attractive returns on capital. Fortegra is an underwriting-focused company, with deep expertise 9 within the admitted and E&S insurance lines and capital light fee-based services markets.
This benefits underwriting results, and also earns its partners additional economic benefits through its variable commission structures. 15 Fortegra’s partners are compensated through variable or sliding-scale commission agreements, which allows the business to adjust commissions based upon underlying underwriting performance. Under these types of arrangements, its partners are paid an upfront provisional commission based on volumes.
This benefits underwriting results, and also earns its partners additional economic benefits through its variable commission structures. 14 Fortegra’s partners are compensated through variable or sliding-scale commission agreements, which allows the business to adjust commissions based upon underlying underwriting performance. Under these types of arrangements, its partners are paid an upfront provisional commission based on volumes.
As of December 31, 2023, Fortegra’s reserves were found to be consistent with reserves computed in accordance with actuarial standards of practice and make a reasonable provision for all of its unpaid loss and loss adjustment expense obligations, as well as its unearned premium reserves for long duration contracts, by the appointed independent third-party actuaries.
As of December 31, 2024, Fortegra’s reserves were found to be consistent with reserves computed in accordance with actuarial standards of practice and make a reasonable provision for all of its unpaid loss and loss adjustment expense obligations, as well as its unearned premium reserves for long duration contracts, by the appointed independent third-party actuaries.
Of those amounts, $871 million and $603 million, respectively, related to contracts with third-party captives in which Fortegra holds collateral or receives letters of credit in excess of the reinsurance receivables and prepaid reinsurance premiums. The remainder relates to receivables held with high quality professional reinsurers. Additionally, any receivable held with unrated professional reinsurers is fully collateralized.
Of those amounts, $835 million and $871 million, respectively, related to contracts with third-party captives in which Fortegra holds collateral or receives letters of credit in excess of the reinsurance receivables and prepaid reinsurance premiums. The remainder relates to receivables held with high quality professional reinsurers. Additionally, any receivable held with unrated professional reinsurers is fully collateralized.
Our Insurance Competitive Strengths We believe that Fortegra’s competitive strengths include: Highly diversified and complementary business mix with an exclusive focus on underserved specialty insurance markets requiring distinct industry expertise. Fortegra has a highly diverse set of specialty programs, focused on classes of business where its underwriters have extensive experience.
Our Insurance Competitive Strengths We believe that Fortegra’s competitive strengths include: Highly diversified and complementary business mix with a focus on underserved specialty insurance markets requiring distinct industry expertise. Fortegra has a highly diverse set of specialty programs, focused on classes of business where its underwriters have extensive experience.
These value-added services deepen its relationships and contribute to the high persistency rate with Fortegra’s distribution partners; and • Providing a scalable platform to grow the business and add new product lines with minimal incremental expense. Fortegra’s technology infrastructure is scalable and affords it the opportunity to add new partners and services without significant 16 additional expense.
These value-added services deepen its relationships and contribute to the high persistency rate with Fortegra’s distribution partners; and • Providing a scalable platform to grow the business and add new product lines with minimal incremental expense. Fortegra’s technology infrastructure is scalable and affords it the opportunity to add new partners and services without significant 15 additional expense.
Distribution & Marketing Fortegra distributes its products through MGAs, retail agents, and other distributors, collectively referred to as distribution partners. The business generally targets markets that are niche and specialty in nature, which it believes are underserved by 14 competitors and have high barriers to entry.
Distribution & Marketing Fortegra distributes its products through MGAs, retail agents, and other distributors, collectively referred to as distribution partners. The business generally targets markets that are niche and specialty in nature, which it believes are underserved by 13 competitors and have high barriers to entry.
A portion of its foreign business is conducted via our insurance company in Malta. Malta is a member country of the EU, and as of December 31, 2023, Fortegra is active in eighteen countries in the EU . The EU’s executive body, the European Commission, implemented insurance directives and capital adequacy and risk management regulations.
A portion of its foreign business is conducted via our insurance company in Malta. Malta is a member country of the EU, and as of December 31, 2024, Fortegra is active in eighteen countries in the EU. The EU’s executive body, the European Commission, implemented insurance directives and capital adequacy and risk management regulations.
Each 21 insurance company is therefore limited by the investment laws of its state of domicile from making excessive investments in any given security (such as single issuer limitations) or in certain classes or riskier investments (such as aggregate limitation in non-investment grade bonds) or in its affiliates.
Each 20 insurance company is therefore limited by the investment laws of its state of domicile from making excessive investments in any given security (such as single issuer limitations) or in certain classes or riskier investments (such as aggregate limitation in non-investment grade bonds) or in its affiliates.
Its dedicated underwriters have specific expertise in their given specialty markets, and will only enter a new market segment after extensive analysis and assessment. 12 Track record of profitable growth driven by disciplined strategic action s.
Its dedicated underwriters have specific expertise in their given specialty markets, and will only enter a new market segment after extensive analysis and assessment. 11 Track record of profitable growth driven by disciplined strategic action s.
Collateral protection products are designed to primarily protect the commercial entity from losses to collateral pledged to secure an installment loan. In most instances, these products offer lenders the option to protect collateral from a comprehensive loss due to fire, wind, flood and theft.
Collateral protection products are designed to primarily protect the commercial entity from losses to collateral pledged to secure a loan. In most instances, these products offer lenders the option to protect collateral from a comprehensive loss due to fire, wind, flood and theft.
The following table sets forth the percentage of Fortegra’s reinsurance receivables broken out by the A.M. Best financial strength rating of those professional reinsurers, excluding gross-up adjustments, as of December 31, 2023 and 2022.
The following table sets forth the percentage of Fortegra’s reinsurance receivables broken out by the A.M. Best financial strength rating of those professional reinsurers, excluding gross-up adjustments, as of December 31, 2024 and 2023.
Fortegra’s Turks and Caicos company is subject to Solvency II type of regulation by the domestic regulator. 22 Fortegra is also subject to federal and state laws and regulations related to the administration of insurance products on behalf of other insurers.
Fortegra’s Turks and Caicos company is subject to Solvency II type of regulation by the domestic regulator. 21 Fortegra is also subject to federal and state laws and regulations related to the administration of insurance products on behalf of other insurers.
Additionally, while the business has strategically and intentionally deemphasized non-standard auto coverage, it offers these products on a limited basis through select partners. Services: Includes lines of business that generate service fees and other sources of income through non-insurance services entities. Services lines of business are further presented as those servicing auto warranty contracts and all other services.
Additionally, while the business has strategically and intentionally de-emphasized non-standard auto coverage, it offers these products on a limited basis through select partners. Services: Includes lines of business that generate service fees and other sources of income through non-insurance services entities. Services lines of business are further presented as those servicing auto warranty contracts and all other services.
Fortegra has a highly diverse set of programs designed to limit concentration risk to its distribution partners, with its largest distribution partners each representing less than 6% of GWPPE for the year ended December 31, 2023.
Fortegra has a highly diverse set of programs designed to limit concentration risk to its distribution partners, with its largest distribution partners each representing less than 6% of GWPPE for the year ended December 31, 2024.
We aim to find the best use of capital to create long-term value for our stockholders. We hope to achieve this through a combination of investments in our existing businesses, select acquisitions and monetization opportunities, opportunistic share repurchases and paying a consistent dividend. As of December 31, 2023, directors, officers, employees and related trusts owned 33% of the Company.
We aim to find the best use of capital to create long-term value for our stockholders. We hope to achieve this through a combination of investments in our existing businesses, select acquisitions and monetization opportunities, opportunistic share repurchases and paying a consistent dividend. As of December 31, 2024, directors, officers, employees and related trusts owned 34% of the Company.
In our international activities, we are subject to anti-corruption, anti-bribery, anti-money laundering and similar laws and regulations in various jurisdictions in which we conduct business, including the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act 2010. Employees As of December 31, 2023, Tiptree Capital - Other’s combined operations had 13 employees.
In our international activities, we are subject to anti-corruption, anti-bribery, anti-money laundering and similar laws and regulations in various jurisdictions in which we conduct business, including the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act 2010. Employees As of December 31, 2024, Tiptree Capital - Other’s combined operations had 32 employees.
Fortegra has a short duration, liquid and high-quality investment portfolio, with 90% invested in cash and investment grade fixed income securities, which have an average S&P rating of AA, as of December 31, 2023. Fortegra has highly rated and well capitalized reinsurance partners and retains excess collateral where applicable to support its outstanding reinsurance recoverable.
Fortegra has a short duration, liquid and high-quality investment portfolio, with 89% invested in cash and investment grade fixed income securities, which have an average S&P rating of A+, as of December 31, 2024. Fortegra has highly rated and well capitalized reinsurance partners and retains excess collateral where applicable to support its outstanding reinsurance recoverable.
Fortegra has a long-standing track record of consistent underwriting results that have experienced limited volatility, which is the result of a deliberate organizational design. Its underwriting track record is demonstrated through its average combined ratio of 90.9% from 2019 through the year ended December 31, 2023.
Fortegra has a long-standing track record of consistent underwriting results that have experienced limited volatility, which is the result of a deliberate organizational design. Its underwriting track record is demonstrated through its average combined ratio of 90.7% from 2019 through the year ended December 31, 2024.
Corvid Peak Capital Management, a credit oriented asset manager owned by the Company, manages Fortegra’s investment portfolio consistent with its internally prescribed guidelines and with oversight from Tiptree. Fortegra’s investments are subject to general economic conditions and market risks in addition to risks inherent to particular securities and risks relating to the performance of its investment advisers.
Tiptree Advisors, a credit oriented asset manager owned by the Company, manages Fortegra’s investment portfolio consistent with its internally prescribed guidelines and with oversight from Tiptree. Fortegra’s investments are subject to general economic conditions and market risks in addition to risks inherent to particular securities and risks relating to the performance of its investment advisers.
The exclusive focus on programs that we believe are frequently underserved in the market provides Fortegra a distinct competitive advantage. For example, Fortegra often targets smaller limit lines of business that it believes are consistently profitable with significant growth potential but have been overlooked by traditional insurance carriers.
The focus on programs that we believe are frequently underserved in the market provides Fortegra a distinct competitive advantage. For example, Fortegra often targets smaller limit lines of business that it believes has significant growth potential but have been overlooked by traditional insurance carriers.
Fortegra believes its approach to partner and program diligence, underwriting (including risk selection and pricing), and claims management, combined with its alignment and ability to improve its partner’s performance, has contributed to a superior combined ratio, which averaged 90.9% from 2019 through December 31, 2023. Fortegra’s underwriting team consisted of over 90 professionals as of December 31, 2023.
Fortegra believes its approach to partner and program diligence, underwriting (including risk selection and pricing), and claims management, combined with its alignment and ability to improve its partner’s performance, has contributed to a superior combined ratio, which averaged 90.7% from 2019 through December 31, 2024. Fortegra’s underwriting team consisted of 104 professionals as of December 31, 2024.
Fortegra delivered GWPPE CAGR of 26%, net income CAGR of 39% and an adjusted net income CAGR of 37%, each measured from January 1, 2019 through December 31, 2023, while increasing its return on equity over that time, highlighted by its 2023 ROAE of 26% and adjusted ROAE of 29%.
Fortegra delivered GWPPE CAGR of 23%, net income CAGR of 38% and an adjusted net income CAGR of 37%, each measured from January 1, 2019 through December 31, 2024, while increasing its return on equity over that time, highlighted by its 2024 ROAE of 26% and adjusted ROAE of 29%.
This alignment underpins all of Fortegra’s partnerships; it fosters collaboration, lasting relationships and consistent profitability. Claims Fortegra’s claims department consisted of over 300 claims professionals as of December 31, 2023. Fortegra organizes its claims department by product and geography, with specialized teams aligned by area of expertise.
This alignment underpins all of Fortegra’s partnerships; it fosters collaboration, lasting relationships and consistent profitability. Claims Fortegra’s claims department consisted of 349 claims professionals as of December 31, 2024. Fortegra organizes its claims department by product and geography, with specialized teams aligned by area of expertise.
As part of the expansion into Europe, Fortegra also provides regulatory support and compliance services to the retail automotive sector in the U.K. Included in Fortegra’s vertically integrated insurance and services offerings, the business generates additional sources of fee income through value-add services, including but not limited to, premium or warranty contract financing, lead generation support, and business process outsourcing.
As part of its European operations, Fortegra provides regulatory support and compliance services to the retail automotive sector in the U.K. Included in Fortegra’s vertically integrated insurance and services offerings, the business generates additional sources of fee income through value-add services, including but not limited to, premium or warranty contract financing, lead generation support, and business process outsourcing.
As of December 31, 2023, Tiptree and its consolidated subsidiaries had 1,504 employees, 21 of whom were at our corporate headquarters. Corporate employees are responsible for overall strategy, capital allocation and investment decisions, as well as public company reporting and compliance. Our businesses are subject to regulation as described below.
As of December 31, 2024, Tiptree and its consolidated subsidiaries had 1,496 employees, 18 of whom were at our corporate headquarters. Corporate employees are responsible for overall strategy, capital allocation and investment decisions, as well as public company reporting and compliance. Our businesses are subject to regulation as described below.
Its investment portfolio, including cash and cash equivalents and total investments, were $1,327 million as of December 31, 2023. Fortegra’s investment policy establishes the investment parameters, such as maximum percentage of investment in a certain type of security and minimum levels of credit quality and is designed to manage investment risk.
Its investment portfolio, including cash and cash equivalents and total investments, were $1.5 billion as of December 31, 2024. Fortegra’s investment policy establishes the investment parameters, such as maximum percentage of investment in a certain type of security and minimum levels of credit quality and is designed to manage investment risk.
The E&S insurance business launched in 2020 and has grown to more than $820 million of GWPPE for the year ended December 31, 2023. By scaling operations to support international growth, Fortegra is able to capitalize on 11 commonalities across geographies and leverage its shared service platform to drive cost efficiencies.
The E&S insurance business launched in 2020 and has grown to more than $1,164.5 million of GWPPE for the year ended December 31, 2024. By scaling operations to support international growth, Fortegra is able to capitalize on 10 commonalities across geographies and leverage its shared service platform to drive cost efficiencies.
We strive to: • Provide employee wages that are competitive and consistent with employee positions, skill levels, experience, knowledge and geographic location. • Align executives’ long-term equity compensation with stockholders’ interests by linking realizable pay with earnings and total stockholder return. • Ensure that annual increases and incentive compensation are based on merit, which is communicated to employees at the time of hiring and documented through their talent management process as part of the annual review procedures and upon internal transfer and/or promotion. 24 • Ensure that all employees are eligible for health insurance, paid and unpaid leaves, and life and disability/accident coverage as well as access to wellness programs.
We strive to: • Provide employee wages that are competitive and consistent with employee positions, skill levels, experience, knowledge and geographic location. • Align executives’ long-term equity compensation with stockholders’ interests by linking realizable pay with earnings and total stockholder return. • Ensure that annual increases and incentive compensation are based on merit, which is communicated to employees at the time of hiring and documented through their talent management process as part of the annual review procedures and upon internal transfer and/or promotion. • Ensure that all employees are eligible for health insurance, paid and unpaid leaves, and life and disability/accident coverage as well as access to wellness programs. 23 The Fortegra Foundation (the “Foundation”), a non-profit corporation chaired by Fortegra’s Chief Executive Officer, Mr.
For example, some states require that forms be filed for prior review or require that its distributors hold a license to sell. Employees As of December 31, 2023, Fortegra had 1,132 employees across 25 offices in nine countries.
For example, some states require that forms be filed for prior review or require that its distributors hold a license to sell. Employees As of December 31, 2024, Fortegra had 1,144 employees across 24 offices in nine countries.
Fixed maturity securities represented 90% of total investments. 19 The following table provides a summary of Fortegra’s amortized cost and fair value on available for sale securities as of December 31, 2023 and December 31, 2022: As of ($ in millions) December 31, 2023 December 31, 2022 Fixed Maturity Securities: Amortized Cost Fair Value % of Total Fair Value Amortized Cost Fair Value % of Total Fair Value Obligations of the U.S.
The fixed maturity securities portfolio represented 89% of total investments. 18 The following table provides a summary of Fortegra’s amortized cost and fair value on available for sale securities as of December 31, 2024 and 2023: As of ($ in millions) December 31, 2024 December 31, 2023 Fixed Maturity Securities: Amortized Cost Fair Value % of Total Fair Value Amortized Cost Fair Value % of Total Fair Value Obligations of the U.S.
As of December 31, 2023, the majority of its investments, $772 million or 58.2%, of total cash and invested assets, was comprised of fixed maturity securities that are classified as available for sale and carried at fair value with unrealized gains and losses on these securities, net of applicable taxes, reported as a separate component of AOCI.
As of December 31, 2024, the majority of its investments, $1.1 billion or 70.9%, of total cash and invested assets, was comprised of fixed maturity securities that are classified as available for sale and carried at fair value with unrealized gains and losses on these securities, net of applicable taxes, reported as a separate component of AOCI.
Competition In the sectors in which Tiptree Capital participates, the markets are highly competitive. There are a large number of competitors offering similar products and services, including many that operate on an international scale, and which are often affiliated with major multi-national companies. Many of these organizations have substantially more personnel and greater financial and commercial resources than we do.
There are a large number of competitors offering similar products and services, including many that operate on an international scale, and which are often affiliated with major multi-national companies. Many of these organizations have substantially more personnel and greater financial and commercial resources than we do.
Percentage as of December 31, Rating: 2023 2022 A++ 1 % 1 % A+ 19 % 33 % A 26 % 13 % A- 28 % 30 % Unrated 26 % 23 % Reserves Fortegra establishes loss reserves to cover its estimated ultimate losses under all insurance policies that it underwrites, and loss adjustment expenses relating to the investigation and settlement of policy claims.
Percentage as of December 31, Rating: 2024 2023 A++ 1 % 1 % A+ 9 % 19 % A 28 % 26 % A- 56 % 28 % B++ 1 % — % Unrated 5 % 26 % Reserves Fortegra establishes loss reserves to cover its estimated ultimate losses under all insurance policies that it underwrites, and loss adjustment expenses relating to the investigation and settlement of policy claims.
Fortegra has various quota share contracts that cover its insurance programs. Fortegra’s whole account quota share reinsurance agreement, which covers a portion of its commercial P&C insurance gross written premium (including general liability, professional liability, property and short-tail), provides a 60% quota share of losses and significant ceding fees to offset administrative, underwriting and acquisition expenses.
Fortegra has various quota share contracts that cover its insurance programs. Fortegra’s whole account quota share reinsurance agreements (“WAQS”), which cover portions of its commercial P&C insurance gross written premiums (including general liability, professional liability, property and short-tail), provide between 55% and 60% quota share of losses and significant ceding fees to offset administrative, underwriting and acquisition expenses.
Fortegra’s financial success is demonstrated through its GWPPE CAGR of 26%, average combined ratio of 91%, average ROAE of 15% and average adjusted ROAE of 21%, each measured since January 1, 2019 through December 31, 2023.
Fortegra’s financial success is demonstrated through its GWPPE CAGR of 23%, average combined ratio of 91%, average ROAE of 17% and average adjusted ROAE of 22%, each measured since January 1, 2019 through December 31, 2024.
(2) “Professional reinsurers” include all reinsurers except for third-party captives. Total reinsurance receivables and prepaid reinsurance premiums were $1,854 million and $1,176 million as of December 31, 2023 and 2022, respectively.
(2) “Professional reinsurers” include all reinsurers except for third-party captives. Total reinsurance receivables and prepaid reinsurance premiums were $2.0 billion and $1.9 billion as of December 31, 2024 and 2023, respectively.
In Fortegra’s commercial insurance lines, its reinsurers tend to be highly rated, well-capitalized, professional third-party reinsurers. Fortegra typically contracts with third-party reinsurers that have attained an “A-” or better financial strength rating from A.M. Best. Those reinsurers that fall below this threshold are required to post collateral on a funds held basis or with letters of credit.
Fortegra typically contracts with third-party reinsurers that have attained an “A-” or better financial strength rating from A.M. Best. Those reinsurers that fall below this threshold are required to post collateral on a funds held basis or with letters of credit.
Tiptree’s seven person senior management team includes two women and one underrepresented minority. Our talent strategy is focused on employee engagement and investments in programs to support career development, as well as recognizing and rewarding performance. An important element of our talent strategy is succession planning and building leadership at various levels across the organization.
Our talent strategy is focused on employee engagement and investments in programs to support career development, as well as recognizing and rewarding performance. An important element of our talent strategy is succession planning and building leadership at various levels across the organization.
See “Risk Factors-Risks Related to Regulatory and Legal Matters-Maintenance of our 1940 Act exemption will impose limits on our operations.” Insurance Fortegra is a growing, consistently profitable, and multinational specialty insurance company focused on underwriting complex and niche risks in underserved markets.
The 1940 Act may limit the types and nature of businesses that we engage in and assets that we may acquire. See “Risk Factors-Risks Related to Regulatory and Legal Matters-Maintenance of our 1940 Act exemption will impose limits on our operations.” Insurance Fortegra is a growing multinational specialty insurance company focused on underwriting complex and niche risks in underserved markets.
It had a weighted-average effective duration of 2.5 years, an average S&P rating of AA, and a book yield of 3.3%.
It had a weighted-average effective duration of 2.8 years, an average S&P rating of A+, and a book yield of 4.0%.
In addition to the purchase of property catastrophe reinsurance, Fortegra also manages its property exposures by leveraging catastrophe models to monitor risk aggregations that are measured in terms of probable maximum loss (“PML”) and Tail Value-at-Risk (“TVAR”), both of which estimate the amount of loss it would expect in extreme loss scenarios.
In addition to the purchase of property catastrophe reinsurance, Fortegra also manages its property exposures by leveraging catastrophe models to monitor risk aggregations that are measured in terms of probable maximum loss (“PML”) and Tail Value-at-Risk (“TVAR”), both of which estimate the amount of loss it would expect in extreme loss scenarios. 16 In Fortegra’s commercial insurance lines, its reinsurers tend to be highly rated, well-capitalized, professional third-party reinsurers.
Employees As of December 31, 2023, our Mortgage operations had 338 employees.
Employees As of December 31, 2024, our Mortgage operations had 332 employees.
Our Insurance Products and Services Business and Product Mix by Gross Written Premiums and Premium Equivalents ($ in thousands) Year Ended December 31, 2023 2022 2021 Property and short-tail $ 548,984 $ 263,933 $ 100,462 Contractual liability 396,861 351,869 347,776 General liability 353,011 305,325 182,336 Alternative risks 330,171 363,362 409,807 Professional liability 232,944 82,340 32,028 Europe 141,208 125,150 95,917 Commercial lines $ 2,003,179 $ 1,491,979 $ 1,168,326 Personal lines $ 382,397 $ 397,423 $ 432,522 Insurance $ 2,385,576 $ 1,889,402 $ 1,600,848 Auto and consumer goods warranty 302,746 318,550 285,591 Other services 59,532 55,176 49,535 Services $ 362,278 $ 373,726 $ 335,126 Total $ 2,747,854 $ 2,263,128 $ 1,935,974 Insurance: Includes lines of business that pertain to coverages written or reinsured, on an admitted or E&S basis, through one of Fortegra’s licensed and regulated insurance entities.
Our Insurance Products and Services Business and Product Mix by Gross Written Premiums and Premium Equivalents ($ in thousands) For the Year Ended December 31, 2024 2023 2022 Property and short-tail $ 845,721 $ 548,984 $ 263,933 Contractual liability 347,510 396,861 351,869 General liability 389,162 353,011 305,325 Alternative risks 362,153 330,171 363,362 Professional liability 276,390 232,944 82,340 Europe 163,292 141,208 125,150 Commercial lines $ 2,384,228 $ 2,003,179 $ 1,491,979 Personal lines $ 335,236 $ 382,397 $ 397,423 Insurance $ 2,719,464 $ 2,385,576 $ 1,889,402 Auto and consumer goods warranty 303,195 302,746 318,550 Other services 45,540 59,532 55,176 Services $ 348,735 $ 362,278 $ 373,726 Total $ 3,068,199 $ 2,747,854 $ 2,263,128 Insurance: Includes lines of business that pertain to coverages written or reinsured, on an admitted or E&S basis, through one of Fortegra’s licensed and regulated insurance entities.
Competitive Strengths The depth and breadth of experience of our management team enables us to source, structure, execute and manage the capital allocated to Tiptree Capital. In addition, in each of our investments, we benefit by partnering with experienced management teams and third-party managers, which we have hired or chosen based on their depth of experience in their respective sectors.
In addition, in each of our investments, we benefit by partnering with experienced management teams and third-party managers, which we have hired or chosen based on their depth of experience in their respective sectors. Competition In the sectors in which Tiptree Capital participates, the markets are highly competitive.
Government agencies $ 467 $ 441 57.1 % $ 417 $ 382 62.4 % Obligations of state and political subdivisions 49 45 5.8 % 54 49 8.0 % Corporate securities 261 255 33.0 % 176 162 26.5 % Asset-backed securities 29 26 3.4 % 20 15 2.5 % Certificate of deposits 1 1 0.1 % 1 1 0.2 % Obligations of foreign governments 5 5 0.6 % 3 2 0.3 % Total available for sale investments $ 812 $772 100 % $ 671 $612 100 % The following table provides the credit quality of Fortegra’s available for sale investments as of December 31, 2023 and December 31, 2022: As of ($ in millions) December 31, 2023 December 31, 2022 Rating: Amortized Cost Fair Value % of Total Fair Value Amortized Cost Fair Value % of Total Fair Value AAA $ 29 $ 27 3.5 % $ 21 $ 19 3.1 % AA 540 509 65.9 % 480 440 72.0 % A 162 154 19.9 % 164 150 24.5 % BBB 64 65 8.4 % — — — % BB 12 12 1.6 % 1 1 0.2 % B or unrated 5 5 0.6 % 4 1 0.2 % Total available for sale investments $ 812 $ 772 100 % $ 670 $ 611 100 % The amortized cost and fair value of Fortegra’s available for sale investments is summarized by contractual maturity as of December 31, 2023 in the table below.
Government agencies $ 416 $ 385 35.1 % $ 467 $ 441 57.1 % Obligations of state and political subdivisions 42 39 3.6 % 49 45 5.8 % Corporate securities 606 598 54.5 % 261 255 33.0 % Asset-backed securities 25 23 2.1 % 29 26 3.4 % Certificate of deposits 1 1 0.1 % 1 1 0.1 % Obligations of foreign governments 52 51 4.6 % 5 5 0.6 % Total available for sale investments $ 1,141 $ 1,097 100 % $ 812 $ 773 100 % The following table provides the credit quality of Fortegra’s available for sale investments as of December 31, 2024 and 2023: As of ($ in millions) December 31, 2024 December 31, 2023 Rating: Amortized Cost Fair Value % of Total Fair Value Amortized Cost Fair Value % of Total Fair Value AAA $ 41 $ 39 3.6 % $ 29 $ 27 3.5 % AA 524 489 44.6 % 540 509 65.9 % A 173 169 15.4 % 162 154 19.9 % BBB 337 335 30.5 % 64 65 8.4 % BB 36 35 3.2 % 12 12 1.6 % B or unrated 31 31 2.8 % 5 5 0.6 % Total available for sale investments $ 1,141 $ 1,097 100 % $ 812 $ 772 100 % The amortized cost and fair value of Fortegra’s available for sale investments is summarized by contractual maturity as of December 31, 2024 in the table below.
The following table provides a summary of Fortegra’s investments and cash and cash equivalents as of December 31, 2023 and December 31, 2022: As of ($ in millions) December 31, 2023 December 31, 2022 Investments: Fair Value % of Total Fair Value Fair Value % of Total Fair Value Cash and cash equivalents $ 410 30.9 % $ 388 33.7 % Available for sale securities, at fair value 772 58.2 % 612 53.0 % Loans, at fair value 11 0.8 % 14 1.2 % Common and preferred equity securities 26 1.9 % 17 1.5 % Exchange traded funds 1 0.1 % 56 4.9 % Other investments 107 8.0 % 66 5.7 % Total cash and invested assets $ 1,327 100.0 % $ 1,154 100.0 % Fixed Maturity Securities As of December 31, 2023, Fortegra’s fixed maturity securities totaled $1,191.5 million and included cash and cash equivalents, available for sale securities, at fair value and investment grade securities classified in other investments.
The following table provides a summary of Fortegra’s investments and cash and cash equivalents as of December 31, 2024 and 2023: As of ($ in millions) December 31, 2024 December 31, 2023 Investments: Fair Value % of Total Fair Value Fair Value % of Total Fair Value Cash and cash equivalents $ 286 18.5 % $ 410 30.9 % Available for sale securities, at fair value 1,097 70.9 % 772 58.2 % Loans, at fair value 10 0.7 % 11 0.8 % Common and preferred equity securities 99 6.4 % 26 2.0 % Exchange traded funds 5 0.3 % 1 0.1 % Other investments 50 3.2 % 107 8.1 % Total cash and invested assets $ 1,548 100.0 % $ 1,327 100.0 % Fixed Maturity Securities As of December 31, 2024, Fortegra’s fixed maturity securities portfolio totaled $1.4 billion, including cash and cash equivalents and available for sale securities, at fair value.
($ in millions) As of December 31, 2023 Amortized Cost Fair Value % of Total Fair Value Due in one year or less $ 217 $ 216 28 % Due after one year through five years 319 307 40 % Due after five years through ten years 46 39 5 % Due after ten years 200 183 24 % Asset-backed securities 29 26 3 % Total available for sale investments $ 812 $ 772 100 % Competition Fortegra operates in several niche markets and believes that no single company competes against it in all of its business lines.
($ in millions) As of December 31, 2024 Amortized Cost Fair Value % of Total Fair Value Due in one year or less $ 239 $ 239 22 % Due after one year through five years 438 431 39 % Due after five years through ten years 224 202 18 % Due after ten years 214 203 19 % Asset-backed securities 25 23 2 % Total available for sale investments $ 1,141 $ 1,097 100 % Competition Fortegra operates in several niche markets and believes that no single company competes against it in all of its business lines.
Fortegra has developed program that assists employees in developing key skills that enable them to perform their jobs and to advance their careers. For example, Fortegra has a Leadership Development Program (“LDP”), an early career program designed to attract and develop talent.
For example, Fortegra has a Leadership Development Program (“LDP”), an early career program designed to attract and develop talent.
Also included in its investments were $26 million of equity securities, $11 million of loans, at fair value, $1 million of exchange traded fixed income funds, at fair value, and $107 million of other investments.
Cash & cash equivalents were $286 million, or approximately 18.5% of total cash and invested assets as of December 31, 2024. Also included in its investments were $99 million of equity securities, $10 million of loans, at fair value, $5 million of exchange traded fixed income funds, at fair value, and $50 million of other investments.
Counterparty Risk Fortegra monitors its counterparty risk monthly through both adjustments to the sliding scale commission arrangements and a thorough evaluation of its reinsurance receivables and prepaid insurance premiums, and associated collateral. 17 ($ in millions) As of December 31, 2023 2022 Third-party captives (1) Reinsurance receivables and prepaid reinsurance premiums $ 871 $ 603 Collateral $ 1,036 $ 700 % Collateralized 119 % 116 % Professional Reinsurers (2) Reinsurance receivables and prepaid reinsurance premiums $ 984 $ 573 Collateral $ 644 $ 611 % Collateralized 65 % 107 % Total Reinsurance receivables and prepaid reinsurance premiums $ 1,854 $ 1,176 Collateral $ 1,680 $ 1,311 % Collateralized 91 % 112 % __________________ (1) Includes domestic insurance companies owned by distribution partners.
($ in millions) As of December 31, 2024 2023 Third-party captives (1) Reinsurance receivables and prepaid reinsurance premiums $ 835 $ 871 Collateral $ 1,105 $ 1,036 % Collateralized 132 % 119 % Professional Reinsurers (2) Reinsurance receivables and prepaid reinsurance premiums $ 1,204 $ 984 Collateral $ 351 $ 644 % Collateralized 29 % 65 % Total Reinsurance receivables and prepaid reinsurance premiums $ 2,039 $ 1,854 Collateral $ 1,456 $ 1,680 % Collateralized 71 % 91 % _________________ (1) Includes domestic insurance companies owned by distribution partners.
The Foundation accomplishes this objective through monetary donations to local, national, and global organizations providing support to military families and improving the health and welfare of children and families— two primary areas of focus. For example, the Foundation has supported clean water initiatives in Africa and, in 2022 alone, helped build three life-changing water wells in The Republic of Zambia.
Richard S. Kahlbaugh, is a 501(c)(3) tax-exempt charity committed to giving back to its communities in which we live and work. The Foundation accomplishes this objective through monetary donations to local, national, and global organizations providing support to military families and improving the health and welfare of children and families— two primary areas of focus.
Tiptree Capital - Other Tiptree Capital - Other currently includes: • Our principal investments which include cash and cash equivalents, government bonds and select equity securities, including Invesque, a publicly traded real estate investment company that specializes in health care and senior living property investment throughout North America. 23 • Our ownership of a credit oriented, special situations asset manager, Corvid Peak. • Our remaining assets in the maritime transportation sector.
Tiptree Capital - Other Tiptree Capital - Other currently includes: • Our principal investments which include cash and cash equivalents, government bonds and select equity securities. • Our ownership of a credit oriented asset manager, Tiptree Advisors. 22 Competitive Strengths The depth and breadth of experience of our management team enables us to source, structure, execute and manage the capital allocated to Tiptree Capital.
Removed
The 1940 Act may limit the types and nature of businesses that we engage in and assets that we may acquire.
Added
Counterparty Risk Fortegra monitors its counterparty risk monthly through both adjustments to the sliding scale commission arrangements and a thorough evaluation of its reinsurance receivables and prepaid insurance premiums, and associated collateral.
Removed
Cash & cash equivalents were $410 million, or approximately 30.9% of total cash and invested assets as of December 31, 2023, as Fortegra has intentionally maintained a larger cash portion in its portfolio to capitalize on current short-term yields and maintain liquidity.
Added
For example, the Foundation has supported clean water initiatives in Africa and, in 2022 alone, helped build three life-changing water wells in The Republic of Zambia. Fortegra has programs that assist employees in developing key skills that enable them to perform their jobs and to advance their careers.
Removed
The Fortegra Foundation (the “Foundation”), a non-profit corporation chaired by Fortegra’s Chief Executive Officer, Mr. Richard S. Kahlbaugh, is a 501(c)(3) tax-exempt charity committed to giving back to its communities in which we live and work.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeSimilarly, when conditions begin to soften, many customers that were previously driven into the E&S market may return to the admitted carrier market, exacerbating the effects of rate decreases. Some of our insurance subsidiaries’ specialty programs are exposed to these hard and soft market cycles.
Biggest changeWhen the standard insurance market hardens, the E&S market typically hardens, and growth in the E&S market can be significantly more rapid than growth in the standard insurance market. Similarly, when conditions begin to soften, many customers that were previously driven into the E&S market may return to the admitted carrier market, exacerbating the effects of rate decreases.
Our insurance subsidiaries are subject to regulation by state and, in some cases, foreign insurance authorities with respect to statutory capital, reserve and other requirements, including statutory capital and reserve requirements established by applicable insurance regulators based on RBC and Solvency II formulas.
Our insurance subsidiaries are subject to regulation by state and, in some cases, foreign insurance authorities with respect to statutory capital, reserve and other requirements, including statutory capital and reserve requirements established by applicable insurance regulators based on RBC and Solvency II formulas.
The interruption or loss of their information processing capabilities, or those of their third-party service providers, through cybersecurity attacks, computer hacks, theft, malicious software, phishing, employee error, ransomware, malware, denial-of-service attacks, social engineering, viruses, worms, other malicious software programs, the loss of stored data, programming errors, the breakdown or malfunctioning of computer equipment or software systems, telecommunications and electrical failure or damage caused by weather or natural disasters, war, catastrophes, terrorist attacks, industrial accidents or any other significant disruptions or security breaches could harm our businesses by hampering their ability to generate revenues and could negatively affect their partner relationships, competitive position and reputation.
The interruption or loss of their information processing capabilities, or those of their third-party service providers, through cybersecurity attacks, computer hacks, theft, malicious software, phishing, employee error, ransomware, malware, denial-of-service attacks, social engineering, viruses, worms, other malicious software programs, the loss of stored data, programming errors, the breakdown or malfunctioning of computer equipment or software systems, telecommunications and electrical failure or damage caused by weather or natural disasters, war, catastrophes, terrorist attacks, industrial accidents or any 28 other significant disruptions or security breaches could harm our businesses by hampering their ability to generate revenues and could negatively affect their partner relationships, competitive position and reputation.
Whether or to what extent damage that may be caused by natural events, such as wildfires, severe tropical storms and hurricanes, will affect our insurance subsidiaries’ ability to write new insurance policies and reinsurance contracts is unknown, but, 45 to the extent our insurance subsidiaries’ policies are concentrated in the specific geographic areas in which these events occur, any increase in frequency and severity of such events and the total amount of our loss exposure in the impacted areas of such events may adversely affect their business, financial condition and results of operations.
Whether or to what extent damage that may be caused by natural events, such as wildfires, severe tropical storms and hurricanes, will affect our insurance subsidiaries’ ability to write new insurance policies and reinsurance contracts is unknown, but, to the extent our insurance subsidiaries’ policies are concentrated in the specific geographic areas in which these events occur, any increase in frequency and severity of such events and the total amount of our loss exposure in the impacted areas of such events may adversely affect their business, financial condition and results of operations.
Any failure or perceived failure by our insurance subsidiaries, or any third parties with which they do business, to comply with their posted privacy policies, changing consumer expectations, evolving laws, rules and regulations, industry standards, or contractual obligations to which they or such third parties are or may become subject, may result in actions or other claims against our 49 insurance subsidiaries by governmental entities or private actors, the expenditure of substantial costs, time and other resources or the incurrence of significant fines, penalties or other liabilities.
Any failure or perceived failure by our insurance subsidiaries, or any third parties with which they do business, to comply with their posted privacy policies, changing consumer expectations, evolving laws, rules and regulations, industry standards, or contractual obligations to which they or such third parties are or may become subject, may result in actions or other claims against our insurance subsidiaries by governmental entities or private actors, the expenditure of substantial costs, time and other resources or the incurrence of significant fines, penalties or other liabilities.
While our businesses take steps to monitor the use of all software covered by open source licenses in our technology systems to ensure that no such software is used in such a way as to require us to disclose the source code to the related technology when they do not wish to do so, such use could inadvertently occur 40 and could harm our businesses, results of operations, financial condition and cash flows.
While our businesses take steps to monitor the use of all software covered by open source licenses in our technology systems to ensure that no such software is used in such a way as to require us to disclose the source code to the related technology when they do not wish to do so, such use could inadvertently occur and could harm our businesses, results of operations, financial condition and cash flows.
In the event that portions of their proprietary software are determined to be subject to an open source license, they could be required to publicly release the affected portions of their source code, which could allow our business’s clients and competitors to freely use such source code without compensation to us, or re-engineer all or a portion of their technology systems, each of which could reduce or eliminate the value of their technology systems.
In the event that portions of their proprietary software are determined to be subject to an open source license, they could 39 be required to publicly release the affected portions of their source code, which could allow our business’s clients and competitors to freely use such source code without compensation to us, or re-engineer all or a portion of their technology systems, each of which could reduce or eliminate the value of their technology systems.
In addition, the Treasury Regulations under Section 382 of the Code contain additional rules the effect of which is to make it more likely that an ownership change could be deemed to occur. Accordingly, our ability to use prior net operating losses to offset future taxable income would be subject to a limitation if we experience an ownership change.
In addition, the Treasury Regulations under Section 382 of the Code contain additional rules the effect of which is to make it more likely that an ownership change could be deemed to 42 occur. Accordingly, our ability to use prior net operating losses to offset future taxable income would be subject to a limitation if we experience an ownership change.
Our insurance subsidiaries may not be able to continue to compete successfully in one or more insurance markets. Increased competition in these markets could result in a change in the supply and demand for insurance, affect our insurance 26 subsidiaries’ ability to price their products at risk-adequate rates and retain existing business, or underwrite new business on favorable terms.
Our insurance subsidiaries may not be able to continue to compete successfully in one or more insurance markets. Increased competition in these markets could result in a change in the supply and demand for insurance, affect our insurance subsidiaries’ ability to price their products at risk-adequate rates and retain existing business, or underwrite new business on favorable terms.
Our insurance subsidiaries primarily rely on a combination of intellectual property rights, such as copyrights, trade secrets and trademarks, in addition to confidentiality agreements, procedures and contractual provisions with their employees, clients, service providers, partners and other third parties to establish, maintain, protect and enforce their proprietary or confidential 39 information and intellectual property rights.
Our insurance subsidiaries primarily rely on a combination of intellectual property rights, such as copyrights, trade secrets and trademarks, in addition to confidentiality agreements, procedures and contractual provisions with their employees, clients, service providers, partners and other third parties to establish, maintain, protect and enforce their proprietary or confidential information and intellectual property rights.
An event 42 of default, an adverse action by a regulatory authority or a general deterioration in the economy that constricts the availability of credit-similar to the market conditions experienced in recent years-may increase our cost of funds and make it difficult for us to obtain new, or retain existing, warehouse financing facilities.
An event of default, an adverse action by a regulatory authority or a general deterioration in the economy that constricts the availability of credit-similar to the market conditions experienced in recent years-may increase our cost of funds and make it difficult for us to obtain new, or retain existing, warehouse financing facilities.
Best’s or KBRA’s ratings; • if unfavorable financial, regulatory or market trends affect our insurance subsidiaries , including excess market capacity; • if our insurance subsidiaries’ losses exceed their loss reserves; • if our insurance subsidiaries have unresolved issues with government regulators; • if our insurance subsidiaries are unable to retain their senior management or other key personnel; • if our insurance subsidiaries’ investment portfolio incurs significant losses; or • if A.M.
Best’s or KBRA’s ratings; • if unfavorable financial, regulatory or market trends affect our insurance subsidiaries , including excess market capacity; • if our insurance subsidiaries’ losses exceed their loss reserves; • if our insurance subsidiaries have unresolved issues with government regulators; • if our insurance subsidiaries are unable to retain their senior management or other key personnel; • if our insurance subsidiaries’ investment portfolio incurs significant losses; or 30 • if A.M.
Under economic and trade sanctions laws, governments may seek to impose modifications to, prohibitions/restrictions on business practices and activities, and modifications to compliance programs, which may increase compliance costs, and, in the event of a violation, may subject us to fines and other penalties. We could be materially adversely affected by violations of the U.S.
Under economic and trade sanctions laws, governments may seek to impose modifications to, prohibitions/restrictions on business practices and activities, and modifications to compliance programs, which may increase compliance costs, and, in the event of a violation, may subject us to fines and other penalties. 50 We could be materially adversely affected by violations of the U.S.
Additionally, the costs related to significant security breaches or disruptions could be material and cause our businesses to incur significant expenses, and any cybersecurity insurance that our businesses may have in place may not cover such expenses. 30 In some cases, our businesses rely on the safeguards put in place by third parties to protect against security threats.
Additionally, the costs related to significant security breaches or disruptions could be material and cause our businesses to incur significant expenses, and any cybersecurity insurance that our businesses may have in place may not cover such expenses. In some cases, our businesses rely on the safeguards put in place by third parties to protect against security threats.
Other independent ratings agencies may also assign our insurance subsidiaries’ financial strength ratings in the future, and these ratings may be below expectations. Factors that could affect such analyses include: 31 • if our insurance subsidiaries change their business practices from their organizational business plan in a manner that no longer supports A.M.
Other independent ratings agencies may also assign our insurance subsidiaries’ financial strength ratings in the future, and these ratings may be below expectations. Factors that could affect such analyses include: • if our insurance subsidiaries change their business practices from their organizational business plan in a manner that no longer supports A.M.
Our insurance subsidiaries use reinsurance to reduce the severity and incidence of claims costs, and to provide relief with 32 regard to certain reserves. Under these reinsurance arrangements, other insurers assume a portion of our losses and related expenses; however, we remain liable as the direct insurer on all risks reinsured.
Our insurance subsidiaries use reinsurance to reduce the severity and incidence of claims costs, and to provide relief with regard to certain reserves. Under these reinsurance arrangements, other insurers assume a portion of our losses and related expenses; however, we remain liable as the direct insurer on all risks reinsured.
If they do not successfully maintain and enhance their brand, their business may not grow and they could lose their relationships with customers or partners, which would harm their business, results of operations, financial condition and cash flows. 36 Our insurance subsidiaries may be adversely affected by negative publicity relating to brand and activities.
If they do not successfully maintain and enhance their brand, their business may not grow and they could lose their relationships with customers or partners, which would harm their business, results of operations, financial condition and cash flows. Our insurance subsidiaries may be adversely affected by negative publicity relating to brand and activities.
Our business’s risk management policies and procedures may prove to be ineffective and leave them exposed to unidentified or unanticipated risk, which could adversely affect their business, results of operations, financial condition or cash flows. Our businesses have developed and continue to develop enterprise-wide risk management policies and procedures to mitigate risk and loss to which they are exposed.
Our business’s risk management policies and procedures may prove to be ineffective and leave them exposed to unidentified or unanticipated risk, which could adversely affect their business, results of operations, financial condition or cash flows. 35 Our businesses have developed and continue to develop enterprise-wide risk management policies and procedures to mitigate risk and loss to which they are exposed.
Additionally, our regulated insurance company subsidiaries are required to satisfy minimum capital and surplus requirements according to the laws and regulations of the states in which they operate, which regulate the amount of dividends and distributions we receive from them. In general, dividends in 46 excess of prescribed limits are deemed “extraordinary” and require insurance regulatory approval.
Additionally, our regulated insurance company subsidiaries are required to satisfy minimum capital and surplus requirements according to the laws and regulations of the states in which they operate, which regulate the amount of dividends and distributions we receive from them. In general, dividends in excess of prescribed limits are deemed “extraordinary” and require insurance regulatory approval.
We may pursue risk mitigation and hedging strategies to seek to reduce our exposure to losses from adverse credit events, interest rate changes, market risk and other risks. These strategies may include short Treasury positions, interest rate swaps, foreign 44 exchange derivatives, credit derivatives, freight forward agreements, fuel oil swaps and other derivative hedging instruments.
We may pursue risk mitigation and hedging strategies to seek to reduce our exposure to losses from adverse credit events, interest rate changes, market risk and other risks. These strategies may include short Treasury positions, interest rate swaps, foreign exchange derivatives, credit derivatives, freight forward agreements, fuel oil swaps and other derivative hedging instruments.
Assessing the risk of loss and damage associated with natural and catastrophic events remains a challenge and might adversely affect their business, results of operations, financial condition and cash flows. Our business, particularly our insurance subsidiaries’ business, is exposed to risks associated with severe weather conditions and other catastrophes.
Assessing the risk of loss and 44 damage associated with natural and catastrophic events remains a challenge and might adversely affect their business, results of operations, financial condition and cash flows. Our business, particularly our insurance subsidiaries’ business, is exposed to risks associated with severe weather conditions and other catastrophes.
If insurance regulators determine that payment of an ordinary dividend or any other payments by our insurance company subsidiaries to us or our other subsidiaries (such as payments for employee or other services) would be adverse to policyholders or creditors, the regulators may block or otherwise restrict such payments that would otherwise be permitted without prior approval.
If insurance regulators determine that payment of 45 an ordinary dividend or any other payments by our insurance company subsidiaries to us or our other subsidiaries (such as payments for employee or other services) would be adverse to policyholders or creditors, the regulators may block or otherwise restrict such payments that would otherwise be permitted without prior approval.
The laws of the various states in which our insurance subsidiaries operate establish insurance departments and other regulatory agencies with broad powers to preclude or temporarily suspend our insurance subsidiaries from carrying on some or all of these activities or otherwise fine or penalize our insurance subsidiaries in any jurisdiction in which we operate.
The laws of the various states in which our insurance subsidiaries operate establish insurance departments and 26 other regulatory agencies with broad powers to preclude or temporarily suspend our insurance subsidiaries from carrying on some or all of these activities or otherwise fine or penalize our insurance subsidiaries in any jurisdiction in which we operate.
The value of our insurance subsidiaries’ investment portfolio is also subject to the risk that certain investments may default or become impaired due to deterioration in the financial condition of one or more issuers of the securities our insurance subsidiaries’ hold, or due to deterioration in the financial condition of an insurer that guarantees an issuer’s payments on such 28 investments.
The value of our insurance subsidiaries’ investment portfolio is also subject to the risk that certain investments may default or become impaired due to deterioration in the financial condition of one or more issuers of the securities our insurance subsidiaries’ hold, or due to deterioration in the financial condition of an insurer that guarantees an issuer’s payments on such investments.
In addition, they may be sued by third parties for alleged infringement of their proprietary rights. Our insurance subsidiaries’ success and ability to compete depend in part on their ability to establish, maintain, protect and enforce their intellectual property and proprietary rights, which includes their rights in their technology platform and their brand.
In addition, they may be sued by third parties for alleged infringement of their proprietary rights. 38 Our insurance subsidiaries’ success and ability to compete depend in part on their ability to establish, maintain, protect and enforce their intellectual property and proprietary rights, which includes their rights in their technology platform and their brand.
Tiptree’s businesses are highly dependent upon the effective operation of their information systems and those of their third-party service providers and their ability to collect, use, store, transmit, retrieve and otherwise process personally identifiable 29 information and other data, manage significant databases and expand and upgrade their information systems.
Tiptree’s businesses are highly dependent upon the effective operation of their information systems and those of their third-party service providers and their ability to collect, use, store, transmit, retrieve and otherwise process personally identifiable information and other data, manage significant databases and expand and upgrade their information systems.
New program launches as well as resources to integrate business acquisitions are subject to many obstacles, including ensuring they have sufficient business and systems processes, determining appropriate pricing, obtaining reinsurance, assessing opportunity costs and regulatory burdens and planning for internal infrastructure needs.
New program launches as well as 33 resources to integrate business acquisitions are subject to many obstacles, including ensuring they have sufficient business and systems processes, determining appropriate pricing, obtaining reinsurance, assessing opportunity costs and regulatory burdens and planning for internal infrastructure needs.
Changes in the value of the U.S. dollar relative to the value of the British Pound Sterling, Euro and other currencies in the jurisdictions in which they operate could have a material adverse effect on their business, results of operations, financial condition and cash flows.
Changes in the value of the U.S. dollar relative to the value of the British Pound Sterling, Euro and other currencies in the jurisdictions in which they operate could have a material adverse effect on their business, 32 results of operations, financial condition and cash flows.
Currently, our insurance subsidiaries believe the following specialty programs and lines of business are in, to varying degrees, a hard market: programs in the property and short-tail lines; within general liability line of business, contractors, excess liability and manufactured home parks programs; and programs in the professional liability line of business.
Currently, our insurance subsidiaries believe the following specialty programs and lines of business are in, to varying degrees, a 34 hard market: programs in the property and short-tail lines; within general liability line of business, contractors, excess liability and manufactured home parks programs; and programs in the professional liability line of business.
Even if our businesses are not determined to have violated these laws, government investigations into these issues typically require the expenditure of significant resources and generate negative publicity, which could harm our businesses, financial condition, and results of operations.
Even if our businesses are not determined to have violated these 48 laws, government investigations into these issues typically require the expenditure of significant resources and generate negative publicity, which could harm our businesses, financial condition, and results of operations.
In addition, the potential passage of new legislation designed to expand the right to sue, to remove limitations on recovery, to extend the statutes of limitations or otherwise to repeal or weaken tort reforms could have an adverse impact on their 33 business.
In addition, the potential passage of new legislation designed to expand the right to sue, to remove limitations on recovery, to extend the statutes of limitations or otherwise to repeal or weaken tort reforms could have an adverse impact on their business.
We may leverage certain of our assets and a decline in the fair value of such assets may adversely affect our financial condition and results of operations. 43 We leverage certain of our assets, including through borrowings, generally through warehouse credit facilities, secured loans, securitizations and other borrowings.
We may leverage certain of our assets and a decline in the fair value of such assets may adversely affect our financial condition and results of operations. We leverage certain of our assets, including through borrowings, generally through warehouse credit facilities, secured loans, securitizations and other borrowings.
The CFPB has rulemaking authority with respect to many of the federal consumer protection laws applicable to mortgage lenders and servicers, including the Truth in Lending Act, the Real Estate Settlement Procedures Act and the Fair Debt Collections Practices Act.
The CFPB has rulemaking authority with respect to many of the federal consumer protection laws applicable to mortgage lenders and servicers, including the Truth in Lending Act, the Real Estate Settlement Procedures Act and the Fair Debt Collections 49 Practices Act.
In cases where our insurance subsidiaries receive letters of credit from banks as collateral and one of their counterparties is unable to honor its obligations, our insurance subsidiaries are exposed to the credit risk of the banks that issued the letters of credit.
In cases where our insurance subsidiaries receive letters of credit from banks as collateral and one of their 31 counterparties is unable to honor its obligations, our insurance subsidiaries are exposed to the credit risk of the banks that issued the letters of credit.
They 34 may not be able to recruit qualified sales and marketing personnel, train them to perform and achieve an acceptable level of sales production from them on a timely basis or at all.
They may not be able to recruit qualified sales and marketing personnel, train them to perform and achieve an acceptable level of sales production from them on a timely basis or at all.
We may be unable to obtain sufficient capital to meet the financing requirements of our mortgage business. We fund substantially all of the loans which we originate through borrowings under warehouse financing and repurchase facilities.
We may be unable to obtain sufficient capital to meet the financing requirements of our mortgage business. 41 We fund substantially all of the loans which we originate through borrowings under warehouse financing and repurchase facilities.
The amount of statutory capital and reserve requirements applicable to our insurance subsidiaries can increase due to 27 factors outside of our control.
The amount of statutory capital and reserve requirements applicable to our insurance subsidiaries can increase due to factors outside of our control.
Our businesses could be adversely affected by the loss of one or more key executives or by an inability to attract and retain qualified personnel. The success of our businesses depend on their ability to attract and retain experienced personnel and seasoned key executives who are knowledgeable about their industry and business.
Our businesses could be adversely affected by the loss of one or more key executives or by an inability to attract and retain qualified personnel. The success of our businesses depends on their ability to attract and retain experienced personnel and seasoned key executives who are knowledgeable about their industry and business.
Warburg would also have pro rata representation on the Fortegra board of directors. As a result of their substantial ownership in Fortegra, Warburg may exert a substantial influence on Fortegra, potentially in a manner that is not in Tiptree’s shareholder’s interests. We are exposed to risks associated with acquiring or divesting businesses or business operations.
Warburg also has pro rata representation on the Fortegra board of directors. As a result of their substantial ownership in Fortegra, Warburg may exert a substantial influence on Fortegra, potentially in a manner that is not in Tiptree’s shareholder’s interests. We are exposed to risks associated with acquiring or divesting businesses or business operations.
The historically low interest rate environment over the last several years created strong demand for mortgages. While long-term residential mortgage interest rates were at or near record lows for an extended period, in 2022 and 2023, the Federal Reserve initiated a rapid series of interest rate increases that resulted in lower revenue and profitability in our mortgage business.
The historically low interest rate environment over the last several years created strong demand for mortgages. While long-term residential mortgage interest rates were at or near record lows for an extended period, from 2022 to 2024, the Federal Reserve initiated a rapid series of interest rate increases that resulted in lower revenue and profitability in our mortgage business.
The agreements governing their indebtedness include covenants restricting, among other things, their ability to: 37 • incur or guarantee additional debt; • incur liens; • complete mergers, consolidations and dissolutions; • enter into transactions with affiliates; • pay dividends or other distributions; • sell certain of their assets that have been pledged as collateral; and • undergo a change in control.
The agreements governing our insurance subsidiaries’ indebtedness include covenants restricting, among other things, their ability to: • incur or guarantee additional debt; • incur liens; • complete mergers, consolidations and dissolutions; • enter into transactions with affiliates; • pay dividends or other distributions; • sell certain of their assets that have been pledged as collateral; and • undergo a change in control.
(“APPS”), implements MARPOL in the United States. The U.S. Coast Guard (“USCG”) is the responsible regulatory and enforcement agency and has promulgated regulations implementing APPS at 33 C.F.R. Part 151. Civil and administrative violations of APPS and the implementing USCG regulations may be enforced by the USCG, whereas criminal violations are enforced by the U.S.
(“APPS”), implements MARPOL in the United States. The U.S. Coast Guard (“USCG”) is the responsible regulatory and enforcement agency and has promulgated regulations implementing APPS at 33 C.F.R. Part 151. Civil and administrative violations of APPS and the implementing USCG regulations may be enforced by the USCG, whereas criminal violations are enforced by the U.S. Department of Justice. Item 1B.
Such restrictions would also affect our ability to pay dividends to stockholders, if and when we choose to do so. Our insurance business’s Junior Subordinated Notes due 2057 and $200 million revolving credit facility restrict dividends to us based on the leverage ratio of our insurance business and its subsidiaries.
Such restrictions would also affect our ability to pay dividends to stockholders, if and when we choose to do so. Our insurance business’s Notes and $200 million revolving credit facility restrict dividends to us based on the leverage ratio of our insurance business and its subsidiaries.
A protracted low interest rate environment places pressure on our insurance subsidiaries’ net investment income, which, in turn, would have a material adverse effect on our profitability. During 2022 and 2023, interest rates increased rapidly and significantly, which caused a significant decrease in the value of our fixed income securities, the majority of which were unrealized and recorded in equity.
A protracted low interest rate environment places pressure on our insurance subsidiaries’ net investment income, which, in turn, would have a material adverse effect on our profitability. From 2022 to 2024, interest rates increased rapidly and significantly, which caused a significant decrease in the value of our fixed income securities, the majority of which were unrealized and recorded in equity.
Accounting rules for consolidations, income taxes, business acquisitions, transfers of financial assets and other aspects of our operations are highly complex and require the application of judgment and assumptions by our management. In addition, changes in accounting rules, interpretations or assumptions could materially impact the presentation, disclosure and usability of our financial statements. For more information see Item 7.
Accounting rules for consolidations, income taxes, business acquisitions, transfers of financial assets and other aspects of our operations are highly complex and require the application of judgment and assumptions by our management. In addition, changes in accounting rules, interpretations or assumptions could materially impact the presentation, disclosure and usability of our financial statements.
Our international activities increase the compliance risks associated with economic and trade sanctions imposed by the United States, the EU and other jurisdictions. 51 Our international operations and activities expose us to risks associated with trade and economic sanctions, prohibitions or other restrictions imposed by the United States or other governments or organizations, including the United Nations, the EU and its member countries.
Our international operations and activities expose us to risks associated with trade and economic sanctions, prohibitions or other restrictions imposed by the United States or other governments or organizations, including the United Nations, the EU and its member countries.
Proposed or potential industry or legislative developments in the E&S market could further increase competition in our insurance subsidiaries’ industry and have a material adverse effect on their premiums, underwriting results and profits.
Proposed or potential industry or legislative developments in the E&S market could further increase competition in our insurance subsidiaries’ industry and have a material adverse effect on their premiums, underwriting results and profits. 37 A number of new, proposed or potential industry or legislative developments could further increase competition in the E&S market and have a material adverse effect on our insurance subsidiaries’ premiums, underwriting results and profits.
The agreements governing our insurance subsidiaries’ indebtedness contain a number of restrictive covenants that impose significant operating and financial restrictions on them and may limit their ability to pursue their business strategies or undertake actions that may be in their best interests.
The agreements governing our and our insurance subsidiaries’ indebtedness contain a number of restrictive covenants that impose significant operating and financial restrictions and may limit our ability to operate and our insurance subsidiaries’ ability to pursue their business strategies or undertake actions that may be in our or their best interests, as applicable.
Our insurance subsidiaries’ business generally impacted by P&C commercial market cycles is primarily reported in their property and short-tail, general liability and professional liability lines. Across these lines, they manage various multiline and monoline programs that are impacted in different ways by market cycles.
Some of our insurance subsidiaries’ specialty programs are exposed to these hard and soft market cycles. Our insurance subsidiaries’ business generally impacted by P&C commercial market cycles is primarily reported in their property and short-tail, general liability and professional liability lines. Across these lines, they manage various multiline and monoline programs that are impacted in different ways by market cycles.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Estimates”. Changes in accounting practices and future pronouncements may materially affect our reported financial results.
For more information see Item 7 — “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Estimates”. Changes in accounting practices and future pronouncements may materially affect our reported financial results.
The determination to reduce the amount of reinsurance they purchase, or not to purchase reinsurance for a particular risk, customer segment or category is based on a variety of factors, including market conditions, pricing, availability of reinsurance, their capital levels and their loss history.
Our insurance subsidiaries retain risk for their own account on business underwritten by their insurance subsidiaries. The determination to reduce the amount of reinsurance they purchase, or not to purchase reinsurance for a particular risk, customer segment or category is based on a variety of factors, including market conditions, pricing, availability of reinsurance, their capital levels and their loss history.
Our insurance subsidiaries’ inability to generate sufficient cash flows to satisfy their debt obligations, or to refinance their indebtedness on commercially reasonable terms or at all, may materially adversely affect their business, results of operations, financial condition and cash flows. Restrictive covenants in the agreements governing our insurance subsidiaries’ indebtedness may restrict their ability to pursue their business strategies.
Our insurance subsidiaries’ inability to generate sufficient cash flows to satisfy their debt obligations, or to refinance their indebtedness on commercially reasonable terms or at all, may materially adversely affect their business, results of operations, financial condition and cash flows.
We conduct our operations so that we are not required to register as an investment company under the 1940 Act. Therefore, we must limit the types and nature of businesses in which we engage and assets that we acquire.
Risks Related to Regulatory and Legal Matters Maintenance of our 1940 Act exemption imposes limits on our operations. 46 We conduct our operations so that we are not required to register as an investment company under the 1940 Act. Therefore, we must limit the types and nature of businesses in which we engage and assets that we acquire.
Our insurance business is dependent on independent financial institutions, lenders, distribution partners, agents, brokers and retailers for distribution of its products and services, and the loss of these distribution sources, or their failure to sell our insurance business’s products and services could materially and adversely affect its business, results of operations and financial condition and cash flows.
Our businesses do not review the software code included in third-party integrations in all instances. 29 Our insurance business is dependent on independent financial institutions, lenders, distribution partners, agents, brokers and retailers for distribution of its products and services, and the loss of these distribution sources, or their failure to sell our insurance business’s products and services could materially and adversely affect its business, results of operations and financial condition and cash flows.
Some of our subsidiaries collect, use, store, transmit, retrieve, retain and otherwise process confidential and personally identifiable information in their information systems in and across multiple jurisdictions, and they are subject to a variety of confidentiality obligations and privacy, data protection and information security laws, regulations, orders and industry standards in the jurisdictions in which they do business.
Increasing regulatory focus on privacy issues and expanding laws could affect our various subsidiaries’ business model and expose them to increased liability. 47 Some of our subsidiaries collect, use, store, transmit, retrieve, retain and otherwise process confidential and personally identifiable information in their information systems in and across multiple jurisdictions, and they are subject to a variety of confidentiality obligations and privacy, data protection and information security laws, regulations, orders and industry standards in the jurisdictions in which they do business.
The valuation of investments is more subjective when markets are illiquid, thereby increasing the risk that the estimated fair value (i.e., the carrying amount) of the securities our insurance subsidiaries’ hold in their portfolio does not reflect prices at which actual transactions would occur.
The valuation of investments is more subjective when markets are illiquid, thereby increasing the risk that the estimated fair value (i.e., the carrying amount) of the securities our insurance subsidiaries’ hold in their portfolio does not reflect prices at which actual transactions would occur. 27 The performance of our insurance subsidiaries’ investments also depends heavily on our skills and those of our insurance subsidiaries’ other investment advisers, in analyzing, selecting and managing the investments.
As a result, the discontinuation of LIBOR or LIBOR–based rates will present risks to our business. Market risk is the risk that one or more markets to which the assets relate will decline in value, including the possibility that such markets will deteriorate sharply and unpredictably, which will likely impair the market value of the related instruments.
Market risk is the risk that one or more markets to which the assets relate will decline in value, including the possibility that such markets will deteriorate sharply and unpredictably, which will likely impair the market value of the related instruments.
Our business’s network of ecosystem partners could also be a source of vulnerability to the extent their applications interface with our businesses, whether unintentionally or through a malicious backdoor. Our businesses do not review the software code included in third-party integrations in all instances.
Our business’s network of ecosystem partners could also be a source of vulnerability to the extent their applications interface with our businesses, whether unintentionally or through a malicious backdoor.
As a result of these restrictions, they may be: • unable to raise additional debt or equity financing to operate during general economic or business downturns; or • unable to compete effectively or to take advantage of new business opportunities. These restrictions may affect their ability to grow in accordance with their strategy.
As a result of these restrictions, we and our insurance subsidiaries may be: • unable to raise additional debt or equity financing to operate during general economic or business downturns; or • unable to operate or compete effectively or to take advantage of new business opportunities.
Such default may result in the acceleration of any other debt to which a cross-acceleration or cross-default provision applies. In the event our insurance subsidiaries’ lenders or noteholders accelerate the repayment of their indebtedness, they and their subsidiaries may not have sufficient assets to repay that indebtedness.
In the event our lenders or our insurance subsidiaries’ lenders or noteholders accelerate the repayment of their indebtedness, we or they and their subsidiaries may not have sufficient assets to repay that indebtedness.
As a result, decreases in interest rates could have a detrimental effect on our mortgage business. 41 Borrowings under some of our mortgage business’s finance and warehouse facilities are at variable rates of interest, which also expose us to interest rate risk.
Borrowings under some of our mortgage business’s finance and warehouse facilities are at variable rates of interest, which also expose us to interest rate risk.
The values we record for certain investments and liabilities are based on estimates of fair value made by our management, which may cause our operating results to fluctuate and may not be indicative of the value we can realize on a sale.
Some of these strategies could result in our experiencing significant losses that may materially adversely affect our business, financial condition and results of operations. 43 The values we record for certain investments and liabilities are based on estimates of fair value made by our management, which may cause our operating results to fluctuate and may not be indicative of the value we can realize on a sale.
Moreover, our management is required to make decisions regarding the allocation of capital among the different lines of business, and such decisions could materially and adversely affect our business or one or more of our lines of business. 47 Risks Related to Regulatory and Legal Matters Maintenance of our 1940 Act exemption imposes limits on our operations.
Moreover, our management is required to make decisions regarding the allocation of capital among the different lines of business, and such decisions could materially and adversely affect our business or one or more of our lines of business.
As a result, E&S risks do not often fit the underwriting criteria of standard insurance carriers, and are generally considered higher risk than those covered in the standard market. If our underwriting staff inadequately judges and prices the risks associated with the business underwritten in the E&S market, our financial results could be adversely impacted.
As a result, E&S risks do not often fit the underwriting criteria of standard insurance carriers, and are generally considered higher risk than those covered in the standard market.
The CFPB continues to be active in its monitoring of the loan origination and servicing sectors, and its recently issued rules increase our regulatory compliance burden and associated costs. 50 Our mortgage business is subject to the regulatory, supervisory and examination authority of the CFPB, which has oversight of federal and state non-depository lending and servicing institutions, including residential mortgage originators and loan servicers.
Our mortgage business is subject to the regulatory, supervisory and examination authority of the CFPB, which has oversight of federal and state non-depository lending and servicing institutions, including residential mortgage originators and loan servicers.
Historically, the value of MSRs has increased when interest rates rise as higher interest rates lead to decreased prepayment rates, and has decreased when interest rates decline as lower interest rates lead to increased prepayment rates.
Historically, the value of MSRs has increased when interest rates rise as higher interest rates lead to decreased prepayment rates, and has decreased when interest rates decline as lower interest rates lead to increased prepayment rates. As a result, decreases in interest rates could have a detrimental effect on our mortgage business.
Changes in interest rates are also a key driver of the performance of our servicing business, particularly because our mortgage business’s portfolio is composed primarily of MSRs related to high-quality loans, the values of which are highly sensitive to changes in interest rates.
Even in sustained low interest rate environments, refinancing transactions decline over time, as many clients and potential clients have already taken advantage of the low interest rates. 40 Changes in interest rates are also a key driver of the performance of our servicing business, particularly because our mortgage business’s portfolio is composed primarily of MSRs related to high-quality loans, the values of which are highly sensitive to changes in interest rates.
In addition, their financial results, substantial indebtedness and credit ratings could materially adversely affect the availability and terms of future financing. Retentions in various lines of business expose our insurance subsidiaries to potential losses. Our insurance subsidiaries retain risk for their own account on business underwritten by their insurance subsidiaries.
These restrictions may affect our and our insurance subsidiaries’ ability to grow in accordance with our or their respective strategies. In addition, our or their respective financial results, substantial indebtedness and credit ratings could materially adversely affect the availability and terms of future financing. Retentions in various lines of business expose our insurance subsidiaries to potential losses.
With respect to the P&C insurance policies our insurance business underwrites, federal legislative proposals regarding national catastrophe insurance, if adopted, could reduce the business need for some of the related products that our insurance business provides. 48 Increasing regulatory focus on privacy issues and expanding laws could affect our various subsidiaries’ business model and expose them to increased liability.
With respect to the P&C insurance policies our insurance business underwrites, federal legislative proposals regarding national catastrophe insurance, if adopted, could reduce the business need for some of the related products that our insurance business provides.
Conversely, hard markets occur when there is not enough insurance capital capacity in the market to meet the needs of potential insureds, causing insurance prices to generally rise and policy terms and conditions to become more favorable to insurers. 35 Although an individual insurance company’s financial performance depends on its own specific business characteristics, the profitability of most P&C insurance companies tends to follow this cyclical market pattern.
Conversely, hard markets occur when there is not enough insurance capital capacity in the market to meet the needs of potential insureds, causing insurance prices to generally rise and policy terms and conditions to become more favorable to insurers.
Our results of operations and cash flows may be materially and adversely affected if our determinations regarding the fair value of our illiquid assets are materially higher than the values ultimately realized upon their disposal. Our investment in Invesque shares is subject to market volatility.
Our results of operations and cash flows may be materially and adversely affected if our determinations regarding the fair value of our illiquid assets are materially higher than the values ultimately realized upon their disposal. We operate in highly competitive markets for business opportunities and personnel, which could impede our growth and negatively impact our results of operations.
Since we account for derivatives at fair market value, changes in fair market value are reflected in net income other than derivative hedging instruments which are reflected in accumulated other comprehensive income in stockholders’ equity. Some of these strategies could result in our experiencing significant losses that may materially adversely affect our business, financial condition and results of operations.
Since we account for derivatives at fair market value, changes in fair market value are reflected in net income other than derivative hedging instruments which are reflected in accumulated other comprehensive income in stockholders’ equity.
Our insurance subsidiaries currently depend largely on distribution through third-party agents and brokers.
These developments include: • Changing distribution practices caused by the internet, including shifts in the way in which E&S insurance is purchased by consumers. Our insurance subsidiaries currently depend largely on distribution through third-party agents and brokers.
Warburg exerts substantial influence on Fortegra, potentially in a manner that is not in Tiptree’s shareholders’ interests.
If our underwriting staff inadequately judges and prices the risks associated with the business underwritten in the E&S market, our financial results could be adversely impacted. 25 Warburg exerts substantial influence on Fortegra, potentially in a manner that is not in Tiptree’s shareholders’ interests.
Further, this cyclical market pattern can be more pronounced in the E&S market than in the standard insurance market. When the standard insurance market hardens, the E&S market typically hardens, and growth in the E&S market can be significantly more rapid than growth in the standard insurance market.
Although an individual insurance company’s financial performance depends on its own specific business characteristics, the profitability of most P&C insurance companies tends to follow this cyclical market pattern. Further, this cyclical market pattern can be more pronounced in the E&S market than in the standard insurance market.
Removed
As of December 31, 2023, we owned 16.98 million shares, or approximately 30%, of Invesque, a real estate investment company that specializes in health care real estate and senior living property investment throughout North America. The value of our Invesque shares is reported at fair market value on a quarterly basis and fluctuates.
Added
Restrictive covenants in the agreements governing our indebtedness may restrict our ability to operate our business and may restrict our insurance subsidiaries’ ability to pursue our business strategies.
Removed
A loss in the fair market value of our Invesque shares could have a material adverse effect on our financial condition and results of operations.
Added
The Tiptree Credit Agreement includes covenants restricting, among other things, our ability to: • pledge Fortegra common stock; • incur or guarantee additional debt; • incur liens; • make negative pledges; • make junior payments; • make investments or complete acquisitions or dispositions of assets; • complete mergers, consolidations and dissolutions; • enter into transactions with affiliates; • prepay certain debt; and 36 • otherwise conduct our business.
Removed
To the extent we determine to sell all or a portion of our Invesque shares, there can be no assurance that we will be able to do so on a timely basis or at acceptable prices. We operate in highly competitive markets for business opportunities and personnel, which could impede our growth and negatively impact our results of operations.

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Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings Our legal proceedings are discussed under the heading “Litigation” in Note (21) — Commitments and Contingencies in the Notes to the consolidated financial statements in this report. Item 4. Mine Safety Disclosures Not applicable. PART II 53
Biggest changeItem 3. Legal Proceedings Our legal proceedings are discussed under the heading “Litigation” in Note (21) — Commitments and Contingencies in the Notes to the consolidated financial statements in this report. Item 4. Mine Safety Disclosures Not applicable. PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Tiptree’s common stock is traded on the Nasdaq Capital Market under the ticker symbol “TIPT”. Holders As of December 31, 2023, there were 46 common stockholders of record.
Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information 52 Tiptree’s common stock is traded on the Nasdaq Capital Market under the ticker symbol “TIPT.” Holders As of December 31, 2024, there were 38 common stockholders of record.
This number does not include beneficial owners whose shares are held by nominees in street name. Item 6. Reserved. 54
This number does not include beneficial owners whose shares are held by nominees in street name. Item 6. Reserved. 53

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeItem 6. Reserved. 54 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 55 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 81 Item 8.
Biggest changeItem 6. Reserved. 53 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 54 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 79 Item 8.
Removed
Financial Statements and Supplementary Data F- 1 Report of Independent Registered Public Accounting Firm F- 2 Consolidated Balance Sheets for December 31, 2023 and 2022 F- 5 Consolidated Statements of Operations for the three years ended December 31, 2023, 2022, and 2021 F- 6 Consolidated Statements of Comprehensive Income (Loss) for the three years ended December 31, 2023, 2022, and 2021 F- 7 Consolidated Statement of Changes in Stockholders’ Equity for the three years ended December 31, 2023, 2022, and 2021 F- 8 Consolidated Statements of Cash Flows for the three years ended December 31, 2023, 2022, and 2021 F- 10 Notes to Consolidated Financial Statements F- 12 (1) Organization F- 12 (2) Summary of Significant Accounting Policies F- 12 (3) Acquisitions F- 23 (4) Dispositions and Assets and Liabilities Held for Sale F- 24 (5) Operating Segment Data F- 24 (6) Investments F- 26 (7) Notes and Accounts Receivable, net F- 32 (8) Reinsurance Receivables F- 32 (9) Goodwill and Intangible Assets, net F- 35 (10) Derivative Financial Instruments and Hedging F- 36 (11) Debt, net F- 38 (12) Fair Value of Financial Instruments F- 40 (13) Liability for Unpaid Claims and Claim Adjustment Expenses F- 47 (14) Revenue from Contracts with Customers F- 50 (15) Other Assets and Other Liabilities and Accrued Expenses F- 51 (16) Other Revenue and Other Expenses F- 52 ( 17) Stockholders’ Equity F- 53 (18) Accumulated Other Comprehensive Income (Loss) F- 56 (19) Stock Based Compensation F- 56 (20) Income Taxes F- 60 (21) Commitments and Contingencies F- 63 (22) Earnings Per Share F- 65 (23) Related Party Transactions F- 65 (24) Subsequent Events F- 66
Added
Financial Statements and Supplementary Data F- 1 Report of Independent Registered Public Accounting Firm F- 2 Consolidated Balance Sheets for December 31, 2024 and 2023 F- 5 Consolidated Statements of Operations for the three years ended December 31, 2024, 2023 and 2022 F- 6 Consolidated Statements of Comprehensive Income (Loss) for the three years ended December 31, 2024, 2023 and 2022 F- 7 Consolidated Statement of Changes in Stockholders’ Equity for the three years ended December 31, 2024, 2023 and 2022 F- 8 Consolidated Statements of Cash Flows for the three years ended December 31, 2024, 2023 and 2022 F- 10 Notes to Consolidated Financial Statements F- 12

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeAdjusted return on average equity should not be viewed as a substitute for return on average equity calculated in accordance with GAAP, and other companies may define adjusted return on average equity differently. 73 Year Ended December 31, 2023 ($ in thousands) Tiptree Capital Insurance Mortgage Other Corporate Total Income (loss) before taxes $ 129,816 $ (3,285) $ (3,264) $ (40,214) $ 83,053 Less: Income tax (benefit) expense (28,224) 837 153 (15,822) (43,056) Less: Net realized and unrealized gains (losses) (1) 4,207 1,861 5,289 — 11,357 Plus: Intangibles amortization (2) 16,919 — — — 16,919 Plus: Stock-based compensation expense 2,018 — — 6,251 8,269 Plus: Non-recurring expenses (3) 2,824 — — — 2,824 Plus: Non-cash fair value adjustments (4) (1,769) — — — (1,769) Plus: Impact of tax deconsolidation of Fortegra (5) — — — 19,101 19,101 Less: Tax on adjustments (6) (10,086) (495) (1,255) 797 (11,039) Adjusted net income (before NCI) $ 115,705 $ (1,082) $ 923 $ (29,887) $ 85,659 Less: Impact of non-controlling interests (23,742) — — — (23,742) Adjusted net income $ 91,963 $ (1,082) $ 923 $ (29,887) $ 61,917 Adjusted net income (before NCI) $ 115,705 $ (1,082) $ 923 $ (29,887) $ 85,659 Average stockholders’ equity $ 395,661 $ 53,520 $ 100,325 $ 5,564 $ 555,070 Adjusted return on average equity (7) 29.2 % (2.0) % 0.9 % NM% 15.4 % Year Ended December 31, 2022 ($ in thousands) Tiptree Capital Insurance Mortgage Other Corporate Total Income (loss) before taxes $ 68,150 $ 874 $ 31,403 $ (46,416) $ 54,011 Less: Income tax (benefit) expense (21,251) (363) (5,545) (23,291) (50,450) Less: Net realized and unrealized gains (losses) (1) 20,347 (7,003) (18,788) — (5,444) Plus: Intangibles amortization (2) 16,229 — — — 16,229 Plus: Stock-based compensation expense 2,423 — — 7,093 9,516 Plus: Non-recurring expenses (3) 3,374 — (729) 2,108 4,753 Plus: Non-cash fair value adjustments (4) (939) — 3,555 — 2,616 Plus: Impact of tax deconsolidation of Fortegra (5) 1,560 — — 31,573 33,133 Less: Tax on adjustments (6) (6,061) 1,834 3,731 (467) (963) Adjusted net income (before NCI) $ 83,832 $ (4,658) $ 13,627 $ (29,400) $ 63,401 Less: Impact of non-controlling interests (10,367) $ — $ — $ — (10,367) Adjusted net income $ 73,465 $ (4,658) $ 13,627 $ (29,400) $ 53,034 Adjusted net income (before NCI) $ 83,832 $ (4,658) $ 13,627 $ (29,400) $ 63,401 Average stockholders’ equity $ 321,320 $ 57,575 $ 98,373 $ (10,390) $ 466,878 Adjusted return on average equity (7) 26.1 % (8.1) % 13.9 % NM% 13.6 % The footnotes below correspond to the tables above, under “—Adjusted Net Income - Non-GAAP” and “—Adjusted Return on Average Equity - Non-GAAP”.
Biggest changeAdjusted return on average equity should not be viewed as a substitute for return on average equity calculated in accordance with GAAP, and other companies may define adjusted return on average equity differently. 71 Year Ended December 31, 2024 ($ in thousands) Tiptree Capital Insurance Mortgage Other Corporate Total Income (loss) before taxes $ 183,158 $ 4,725 $ (163) $ (38,401) $ 149,319 Less: Income tax (benefit) expense (43,260) (1,091) (540) (16,761) (61,652) Less: Net realized and unrealized gains (losses) (1) (8,496) (2,711) 905 — (10,302) Plus: Intangibles amortization (2) 15,413 — — — 15,413 Plus: Stock-based compensation expense 8,998 — — 8,682 17,680 Plus: Non-recurring expenses (3) 3,455 — — — 3,455 Plus: Non-cash fair value adjustments (4) 7,436 — — — 7,436 Plus: Impact of tax deconsolidation of Fortegra (5) — — — 23,495 23,495 Less: Tax on adjustments (6) (9,673) 608 87 (3,168) (12,146) Adjusted net income (before NCI) $ 157,031 $ 1,531 $ 289 $ (26,153) $ 132,698 Less: Impact of non-controlling interests (32,638) — — — (32,638) Adjusted net income $ 124,393 $ 1,531 $ 289 $ (26,153) $ 100,060 Adjusted net income (before NCI) $ 157,031 $ 1,531 $ 289 $ (26,153) $ 132,698 Average stockholders’ equity $ 539,049 $ 54,113 $ 80,856 $ (57,350) $ 616,668 Adjusted return on average equity (7) 29.1 % 2.8 % 0.4 % NM% 21.5 % Year Ended December 31, 2023 ($ in thousands) Tiptree Capital Insurance Mortgage Other Corporate Total Income (loss) before taxes $ 129,816 $ (3,285) $ (3,264) $ (40,214) $ 83,053 Less: Income tax (benefit) expense (28,224) 837 153 (15,822) (43,056) Less: Net realized and unrealized gains (losses) (1) 4,207 1,861 5,289 — 11,357 Plus: Intangibles amortization (2) 16,919 — — — 16,919 Plus: Stock-based compensation expense 2,018 — — 6,251 8,269 Plus: Non-recurring expenses (3) 2,824 — — — 2,824 Plus: Non-cash fair value adjustments (4) (1,769) — — — (1,769) Plus: Impact of tax deconsolidation of Fortegra (5) — — — 19,101 19,101 Less: Tax on adjustments (6) (10,086) (495) (1,255) 797 (11,039) Adjusted net income (before NCI) $ 115,705 $ (1,082) $ 923 $ (29,887) $ 85,659 Less: Impact of non-controlling interests (23,742) — — — (23,742) Adjusted net income $ 91,963 $ (1,082) $ 923 $ (29,887) $ 61,917 Adjusted net income (before NCI) $ 115,705 $ (1,082) $ 923 $ (29,887) $ 85,659 Average stockholders’ equity $ 395,661 $ 53,520 $ 100,325 $ 5,564 $ 555,070 Adjusted return on average equity (7) 29.2 % (2.0) % 0.9 % NM% 15.4 % (1) Net realized and unrealized gains (losses) added back in Adjusted net income excludes net realized and unrealized gains (losses) from the mortgage segment and unrealized gains (losses) on mortgage servicing rights.
Additionally, taxing jurisdictions could retroactively disagree with our tax treatment of certain items, and some historical transactions have income tax effects going forward. Accounting guidance requires these future effects to be evaluated using current laws, rules and regulations, each of which can change at any time and in an 79 unpredictable manner.
Additionally, taxing jurisdictions could retroactively disagree with our tax treatment of certain items, and some historical transactions have income tax effects going forward. Accounting guidance requires these future effects to be evaluated using current laws, rules and regulations, each of which can change at any time and in an unpredictable manner.
In particular, rising inflation can have an impact on replacement costs associated with claims from our customers to the extent we are unable to pass the higher costs of claims through higher premiums. In addition, fluctuations of the U.S. dollar relative to other currencies, including the British pound and Euro, would have an impact on book value between periods.
In particular, inflation can have an impact on replacement costs associated with claims from our customers to the extent we are unable to pass the higher costs of claims through higher premiums. In addition, fluctuations of the U.S. dollar relative to other currencies, including the British pound and Euro, would have an impact on book value between periods.
Management selects the appropriate method based on available information, and periodically reviews the selections as additional information becomes available. In addition, we also record on an earned basis a ceding fee paid by our reinsurers on ceded insurance premiums. This fee reimburses us for administrative, underwriting, and acquisition expenses.
Management selects the appropriate method based on available information, and periodically reviews the selections as additional information becomes available. In addition, we also record on an earned basis a ceding fee paid by our reinsurers 77 on ceded insurance premiums. This fee reimburses us for administrative, underwriting, and acquisition expenses.
Offsetting the impact of a rising interest rate environment, new investments in fixed rate instruments from both maturities and portfolio growth have and could continue to result in higher interest income on investments. The weighted average duration of our fixed income available for sale securities is less than three years.
Offsetting the impact of a rising interest rate environment, new investments in fixed rate instruments from both maturities and portfolio growth have and could continue to result in higher net interest income on investments. The weighted average duration of our fixed income available for sale securities is less than three years.
Interest Expense consists primarily of interest expense on corporate revolving debt, notes, preferred trust securities due June 15, 2037 (Preferred Trust Securities) and asset based debt for premium finance and warranty service contract financing, which is non-recourse to Fortegra. 60 Depreciation Expense is primarily associated with furniture, fixtures and equipment.
Interest Expense consists primarily of interest expense on corporate revolving debt, notes, preferred trust securities due June 15, 2037 (Preferred Trust Securities) and asset based debt for premium finance and warranty service contract financing, which is non-recourse to Fortegra. Depreciation Expense is primarily associated with furniture, fixtures and equipment.
We generally manage our exposure to the risks we underwrite using both reinsurance (e.g., quota share and excess of loss) and sliding scale commission agreements with our agents (e.g., 61 commissions paid are adjusted based on the actual underlying losses incurred), which mitigates our risk.
We generally manage our exposure to the risks we underwrite using both reinsurance (e.g., quota share and excess of loss) and sliding scale commission agreements with our agents (e.g., commissions paid are adjusted based on the actual underlying losses incurred), which mitigates our risk.
These capitalized costs are amortized as the related premium is earned. 78 Other deferred acquisition costs are limited to prepaid direct costs, typically commissions and contract transaction fees, that resulted from successful contract transactions and would not have been incurred by the Company had the transactions not occurred.
These capitalized costs are amortized as the related premium is earned. Other deferred acquisition costs are limited to prepaid direct costs, typically commissions and contract transaction fees, that resulted from successful contract transactions and would not have been incurred by the Company had the transactions not occurred.
General equity market trends, along with company and industry specific factors, can impact the fair value which can result in unrealized gains and losses affecting our results. Rising 10-year treasury yields, and the tapering of the Federal Reserve’s purchases of mortgage-backed securities, has resulted in substantial increases in mortgage interest rates.
General equity market trends, along with company and industry specific factors, can impact the fair value which can result in unrealized gains and losses affecting our results. Elevated 10-year treasury yields, and the tapering of the Federal Reserve’s purchases of mortgage-backed securities, has resulted in substantial increases in mortgage interest rates.
As of December 31, 2023, the net loss to the Company in a 1-in-250 year catastrophe event represented approximately 2.4% of Fortegra’s stockholders’ equity. This reported loss includes the impact of incurred losses based on the estimated frequency and severity of potential events, reinstatements premiums, reinsurance recoveries and taxes.
As of December 31, 2024, the net loss to the Company in a 1-in-250 year catastrophe event represented approximately 4.2% of Fortegra’s stockholders’ equity. This reported loss includes the impact of incurred losses based on the estimated frequency and severity of potential events, reinstatements premiums, reinsurance recoveries and taxes.
In addition, the Company experienced favorable prior year development of $11.2 million for the year ended December 31, 2023, primarily by a commutation agreement with a partner resulting in a reduction of policy liabilities and unpaid claims of $75.6 million relating to policies written in the 2020 and 2021 treaty years.
For the year ended December 31, 2023, the Company experienced favorable prior year development of $11.2 million, primarily driven by a commutation agreement with a partner resulting in a reduction of policy liabilities and unpaid claims of $75.6 million relating to policies written in the 2020 and 2021 treaty years.
Low mortgage interest rates driven by the Federal Reserve intervention in mortgage markets, and rising home prices in certain markets, provided tailwinds to the mortgage markets in 2020 and 2021, which benefited our mortgage operations and margins. The substantial rise in rates in recent periods resulted in a sharp reversal of those trends, with volumes and margins declining significantly.
Low mortgage interest rates driven by the Federal Reserve intervention in mortgage markets, and rising home prices in certain markets, provided tailwinds to the mortgage markets in 2020 and 2021, which benefited our mortgage operations and margins. The substantial rise in rates resulted in a sharp reversal of those trends, with volumes and margins declining significantly.
Continued rising or elevated mortgage rates could have a materially negative impact on our mortgage operations, and is likely to be only partially mitigated by the improvement in mortgage servicing revenues. A sustained period of negative profitability in the mortgage industry could also impact the availability of funding sources for our mortgage business.
Continued elevated mortgage rates could have a negative impact on our mortgage operations, and is likely to be only partially mitigated by the improvement in mortgage servicing revenues. A sustained period of negative profitability in the mortgage industry could also impact the availability of funding sources for our mortgage business.
Finite-lived intangible assets are subject to impairment if events or circumstances indicate a possible inability to realize the carrying amount. At both December 31, 2023 and 2022, we had two reporting units for goodwill impairment testing, of which the fair value substantially exceeded carrying value as of that date. See Note (9) Goodwill and Intangible Assets, net.
Finite-lived intangible assets are subject to impairment if events or circumstances indicate a possible inability to realize the carrying amount. At both December 31, 2024 and 2023, we had two reporting units for goodwill impairment testing, of which the fair value significantly exceeded carrying value as of that date. See Note (9) Goodwill and Intangible Assets, net.
The following tables and discussion present the Insurance segment results, including non-controlling interests, for the year ended December 31, 2023 and 2022. Components of our Results of Operations Revenues Earned Premiums, net represents the earned portion of gross written and assumed premiums, less the earned portion that is ceded to third-party reinsurers under reinsurance agreements.
The following tables and discussion present the Insurance segment results, including non-controlling interests, for the years ended December 31, 2024 and 2023. Components of our Results of Operations Revenues Earned Premiums, net represents the earned portion of gross written and assumed premiums, less the earned portion that is ceded to third-party reinsurers under reinsurance agreements.
Recently Issued Accounting Standards For a discussion of recently issued accounting standards, see Note (2) Summary of Significant Accounting Policies, in the accompanying consolidated financial statements. 80
Recently Issued Accounting Standards For a discussion of recently issued accounting standards, see Note (2) Summary of Significant Accounting Policies, in the accompanying consolidated financial statements. 78
Revenues from contracts with customers were $341.4 million and $300.2 million for the years ended December 31, 2023 and 2022, respectively, and include auto and consumer goods service contracts, motor clubs, other service and administrative fees, vessel related revenue and management fee income. See Note (14) Revenue from Contracts with Customers for more detailed disclosure regarding these revenues.
Revenues from contracts with customers were $341.5 million and $341.4 million for the years ended December 31, 2024 and 2023, respectively, and include auto and consumer goods service contracts, motor clubs, other service and administrative fees, vessel related revenue and management fee income. See Note (14) Revenue from Contracts with Customers for more detailed disclosure regarding these revenues.
As a result of the Company’s evaluations, no write-offs for unrecoverable deferred acquisition costs were recognized during the years ended December 31, 2023 and 2022. Amortization of deferred acquisition costs was $583.6 million, $479.1 million and $375.1 million for the years ended December 31, 2023, 2022, and 2021, respectively.
As a result of the Company’s evaluations, no write-offs for unrecoverable deferred acquisition costs were recognized during the years ended December 31, 2024 and 2023. Amortization of deferred acquisition costs was $657.6 million, $583.6 million and $479.1 million for the years ended December 31, 2024, 2023, and 2022, respectively.
Book Value per share - Non-GAAP Total stockholders’ equity was $576.6 million as of December 31, 2023 compared to $533.6 million as of December 31, 2022, with the increase driven by comprehensive income, partially offset by net changes in non-controlling interests and dividends paid.
Book Value per share - Non-GAAP Total stockholders’ equity was $656.8 million as of December 31, 2024 compared to $576.6 million as of December 31, 2023, with the increase driven by comprehensive income, partially offset by net changes in non-controlling interests and dividends paid.
Combined Ratio The combined ratio was 90.3% for the year ended December 31, 2023, compared to 90.4% for the prior year period, reflecting the consistent underwriting performance and scalability of the Company’s operating platform.
Combined Ratio The combined ratio was 90.0% for the year ended December 31, 2024, compared to 90.3% for the prior year period, reflecting the consistent underwriting performance and scalability of the Company’s operating platform.
Other revenues increased by $14.3 million, or 81.6%, driven by growth in premium finance product offerings and interest income on cash and cash equivalents. For the year ended December 31, 2023, 27.8% of revenues were derived from fees that were not solely dependent upon the underwriting performance of Fortegra’s insurance products, resulting in more diversified earnings.
Other revenues increased by $7.8 million, or 24.6%, driven by growth in premium finance product offerings and interest income on cash and cash equivalents. For the year ended December 31, 2024, 23.3% of revenues were derived from fees that were not solely dependent upon the underwriting performance of Fortegra’s insurance products, resulting in more diversified earnings.
Fortegra’s investment portfolio includes fixed maturity securities, loans, credit investment funds, and equity securities. Many of those investments are held at fair value. In recent periods, the U.S. fixed income markets experienced a significant rise in interest rates.
Fortegra’s investment portfolio includes fixed maturity securities, loans, credit investment funds, and equity securities. Many of those investments are held at fair value. From 2021 to 2024, the U.S. fixed income markets experienced a significant rise in interest rates.
We are an approved seller/servicer for Fannie Mae and Freddie Mac. We are also an approved issuer and servicer for Ginnie Mae. We originate residential mortgage loans through our retail distribution channel (directly to consumers) in 39 states and the District of Columbia as of December 31, 2023.
We are also an approved issuer and servicer for Ginnie Mae. We originate residential mortgage loans through our retail distribution channel (directly to consumers) in 39 states and the District of Columbia as of December 31, 2024.
The Company has not made any changes to its methodologies for determining unpaid claims reserves in the periods presented. During the year ended December 31, 2023 and 2022, the Company experienced favorable prior year development of $11.2 million and $0.9 million, respectively, compared to unfavorable prior year development of $1.2 million for the year ended December 31, 2021.
The Company has not made any changes to its methodologies for determining unpaid claims reserves in the periods presented. During the years ended December 31, 2024, 2023 and 2022, the Company experienced favorable prior year development of $0.6 million, $11.2 million and $0.9 million, respectively.
The increase in net losses and loss adjustment expenses of $120.9 million, or 33.4%, was driven by growth in U.S. and European insurance lines and the shift in business mix toward commercial lines, which tend to have higher loss ratios and lower commission and expense ratios.
The increase in net losses and loss adjustment expenses of $239.7 million, or 49.7%, was driven by growth in U.S. and European insurance lines and the shift in business mix toward commercial lines, which tend to have higher loss ratios and lower commission and expense ratios.
The Company believes that the following discussion addresses the Company’s most critical accounting policies, which are those that are most important to the portrayal of the Company’s financial condition and results of operations and require management’s most difficult, subjective and complex judgments.
Actual results could differ significantly from those estimates. The Company believes that the following discussion addresses the Company’s most critical accounting policies, which are those that are most important to the portrayal of the Company’s financial condition and results of operations and require management’s most difficult, subjective and complex judgments.
Book value per share for the period ended December 31, 2023 was $11.34, an increase from book value per share of $10.92 as of December 31, 2022, driven by comprehensive income per share, partially offset by dividends paid of $0.20 per share, net changes in non-controlling interests and preferred dividends paid at Fortegra.
Book value per share for the period ended December 31, 2024 was $12.29, an increase from book value per share of $11.34 as of December 31, 2023, driven by comprehensive income per share, partially offset by dividends paid of $0.49 per share, net changes in non-controlling interests and preferred dividends paid at Fortegra.
For the year ended December 31, 2023, net losses and loss adjustment expenses were $482.5 million, which resulted to a loss ratio of 40.1%. Without the $11.2 million of favorable prior year development, the 2023 loss ratio would have been approximately 0.8% higher. For comparison, the 2022 and 2021 loss ratios were 37.7% and 35.1%, respectively.
For the year ended December 31, 2024, net losses and loss adjustment expenses were $722.2 million, which resulted to a loss ratio of 45.5%. Without the $0.6 million of favorable prior year development, the 2024 loss ratio would have been approximately 0.1% higher. For comparison, the 2023 and 2022 loss ratios were 40.1% and 37.7%, respectively.
Income (loss) before taxes The loss before taxes from Tiptree Capital - Other for the year ended December 31, 2023 was $3.3 million, compared to the income before taxes of $31.4 million in the prior year period. The decrease was driven by the same factors that impacted revenues.
Income (loss) before taxes The loss before taxes from Tiptree Capital - Other for the year ended December 31, 2024 was $0.2 million, compared to the loss before taxes of $3.3 million in the prior year period. The improvement was driven by the same factors that impacted revenues.
Property and short-tail lines represented $411.7 million, or 31.2%, of the total net written premiums for the year ended December 31, 2023 compared to $188.1 million, or 17.3%, for the prior year period. Property and short-tail net written premiums were diversified by geographic location, exposure and risk type with substantial reinsurance protection.
Property and short-tail lines represented $488.7 million, or 34.0%, of the total net written premiums for the year ended December 31, 2024 compared to $411.7 million, or 31.2%, for the prior year period. Property and short-tail net written premiums were diversified by geographic location, exposure and risk type with substantial reinsurance protection.
For the year ended December 31, 2023, adjusted return on average equity was 15.2%, as compared to 13.6% for the year ended December 31, 2022, driven by the increase in adjusted net income.
For the year ended December 31, 2024, adjusted return on average equity was 22.9%, as compared to 15.2% for the year ended December 31, 2023, driven by the increase in adjusted net income.
In the year ended December 31, 2023, Tiptree returned $7.3 million to common stockholders through dividends paid.
In the year ended December 31, 2024, Tiptree returned $18.3 million to common stockholders through dividends paid.
As of December 31, 2023, Fortegra was owned approximately 79.5% by Tiptree, 17.5% by Warburg and 3.0% by management and directors of Fortegra, before giving effect to the exercise of outstanding warrants and the conversion of outstanding preferred stock.
As of December 31, 2024, Fortegra was owned approximately 79.1% by Tiptree, 17.7% by Warburg and 3.2% by management and directors of Fortegra, before giving effect to the exercise of outstanding warrants and the conversion of outstanding preferred stock.
Investing Activities Cash used in investing activities was $244.7 million for the year ended December 31, 2023. In 2023, the primary uses of cash were the purchases of investments outpacing the proceeds from the sale of investments, as well as the acquisition of Premia. Cash provided by investing activities was $9.5 million for the year ended December 31, 2022.
Cash used in investing activities was $244.7 million for the year ended December 31, 2023. In 2023, the primary uses of cash were the purchases of investments outpacing the proceeds from the sale of investments, as well as the acquisition of Premia. 74 Financing Activities Cash provided by financing activities was $6.3 million for the year ended December 31, 2024.
(2) Commission expense in this table is presented net of ceding fees and ceding commissions of $44.6 million and $14.9 million, respectively, for the year ended December 31, 2023, and $40.2 million and $13.9 million, respectively, for the year ended December 31, 2022.
(2) Commission expense in this table is presented net of ceding fees and ceding commissions of $51.2 million and $15.4 million, respectively, for the year ended December 31, 2024, and $44.6 million and $14.9 million, respectively, for the year ended December 31, 2023.
The primary driver of decreased gain on sale revenues was the decline in volumes and negative fair value adjustment in mortgage servicing rights of $1.9 million in 2023 compared to a positive fair value adjustment of $7.0 million in the prior year period.
The primary driver of increased gain on sale revenues was the increase in volumes and positive fair value adjustment in mortgage servicing rights of $2.7 million in 2024 compared to a negative fair value adjustment of $1.9 million in the prior year period.
The $1,099.8 million increase in assets is primarily attributable to the growth in the Insurance segment. 70 Total stockholders’ equity was $576.6 million as of December 31, 2023, compared to $533.6 million as of December 31, 2022, with the increase primarily driven by comprehensive income for the year ended December 31, 2023.
The $555.5 million increase in assets is primarily attributable to the growth in the Insurance segment. Total stockholders’ equity was $656.8 million as of December 31, 2024, compared to $576.6 million as of December 31, 2023, with the increase primarily driven by comprehensive income for the year ended December 31, 2024.
For the year ended December 31, 2023, 81.1% of fee-based revenues were generated in non-regulated service companies, with the remainder in regulated insurance companies. 63 For the year ended December 31, 2023, net investment income was $26.7 million as compared to $12.2 million in the prior year period, primarily driven by growth in investments and the increase in yields.
For the year ended December 31, 2024, 79.9% of fee-based revenues were generated in non-regulated service companies, with the remainder in regulated insurance companies. For the year ended December 31, 2024, net investment income was $33.0 million as compared to $26.7 million in the prior year period, primarily driven by growth in investments and the increase in yields.
In 2023, the cash provided was primarily proceeds from corporate borrowings at Fortegra and mortgage warehouse facilities which exceeded repayments, partially offset by non-controlling interests distributions and the payment of common and preferred dividends. Cash used in financing activities was $115.2 million for the year ended December 31, 2022.
Cash provided by financing activities was $113.4 million for the year ended December 31, 2023. In 2023, the cash provided was primarily proceeds from corporate borrowings and mortgage warehouse facilities which exceeded repayments, partially offset by non-controlling interests distributions and the payment of dividends.
Net realized and unrealized losses were $4.2 million, an improvement of $16.1 million, as compared to net realized and unrealized losses of $20.3 million in the prior year period, primarily driven by the change in fair value of certain equity and other investments carried at fair value.
Net realized and unrealized gains were $8.5 million, an improvement of $12.7 million, as compared to net realized and unrealized losses of $4.2 million in the prior year period, primarily driven by the change in fair value of certain equity and other investments carried at fair value.
For the year ended December 31, 2022, the Company’s effective tax rate was equal to 93.4%. The effective rates for the year ended December 31, 2023 and 2022 were significantly higher than the U.S. statutory income tax rate of 21.0%, primarily due to the impact of outside basis deferred taxes on Tiptree’s investment in Fortegra.
For the years ended December 31, 2024 and 2023, the Company’s effective tax rate was equal to 41.3% and 51.8%, respectively. The effective rates for the years ended December 31, 2024 and 2023 were significantly higher than the U.S. statutory income tax rate of 21.0%, primarily due to the impact of outside basis deferred taxes on Tiptree’s investment in Fortegra.
Unrealized gains on AFS securities impacting OCI for the year ended December 31, 2023 were $19.0 million, driven by positive fair value adjustments on mortgage-backed securities and corporate bonds and other investments.
Unrealized losses on AFS securities impacting OCI for the year ended December 31, 2024 were $1.0 million, driven by negative fair value adjustments on mortgage-backed securities and corporate bonds and other investments.
(7) Total Adjusted return on average equity after non-controlling interests was 15.2% and 13.6% for the years ended December 31, 2023 and 2022, respectively, based on $61.9 million and $53.0 million of Adjusted net income over $407.1 million and $390.2 million of average Tiptree Inc. stockholders’ equity.
(7) Total Adjusted return on average equity after non-controlling interests was 22.9% and 15.2% for the years ended December 31, 2024 and 2023, respectively, based on $100.1 million and $61.9 million of Adjusted net income over $437.3 million and $407.1 million of average Tiptree Inc. stockholders’ equity.
The effect of higher and lower levels of loss frequency and severity on our ultimate costs for claims occurring in 2023 would be as follows: Accident Year 2023 Sensitivity Test Change in Loss & Frequency & Severity on Ultimate ($ in millions) Scenario Ultimate Cost Change 5% higher $ 518 $ 25 3% higher $ 508 $ 15 1% higher $ 498 $ 5 Base scenario $ 493 $ — 1% lower $ 488 $ (5) 3% lower $ 478 $ (15) 5% lower $ 468 $ (25) Based upon our internal analysis and our review of the statement of actuarial opinions provided by our actuarial consultants, we believe that the amounts recorded for policy liabilities and unpaid claims reasonably represents the amount necessary to pay all claims and related expenses which may arise from incidents that have occurred as of the balance sheet date.
The effect of higher and lower levels of loss frequency and severity on our ultimate costs for claims occurring in 2024 would be as follows: Accident Year 2024 Sensitivity Test Change in Loss & Frequency & Severity on Ultimate ($ in millions) Scenario Ultimate Cost Change 5% higher $ 757 $ 36 3% higher $ 743 $ 22 1% higher $ 728 $ 7 Base scenario $ 721 $ — 1% lower $ 714 $ (7) 76 3% lower $ 699 $ (22) 5% lower $ 685 $ (36) Based upon our internal analysis and our review of the statement of actuarial opinions provided by our actuarial consultants, we believe that the amounts recorded for policy liabilities and unpaid claims reasonably represents the amount necessary to pay all claims and related expenses which may arise from incidents that have occurred as of the balance sheet date.
Commission expenses increased by $80.3 million, or 15.4%, generally in line with the growth in earned premiums, net and service and administrative fees, partially offset by the impacts from sliding scale commission structures.
Commission expenses increased by $45.8 million, or 7.6%, generally in line with the growth in earned premiums, net and service and administrative fees, partially offset by the impacts from sliding scale commission structures.
Insurance: • Gross written premiums and premium equivalents were $2.7 billion for the year ended December 31, 2023, an increase of $484.7 million, or 21.4%, from the prior year period as a result of growth in specialty E&S and admitted insurance lines in the U.S. and Europe, along with benefits from a book-roll transaction with one of Fortegra’s MGA partners. • Net written premiums were $1.3 billion for the year ended December 31, 2023, an increase of 21.2%, consistent with growth in gross written premiums, and as a result of increased retention on Fortegra’s whole account quota share reinsurance arrangement from 30% to 40%, effective April 1, 2023. • Total revenues were $1.6 billion, an increase of $344.3 million, or 27.6%, from 2022, driven by premium growth in specialty E&S and admitted insurance lines in the U.S. and Europe, along with growth in net investment income. • Combined ratio of 90.3%, driven by consistent underwriting performance and the scalability of Fortegra’s operating platform. • Income before taxes of $129.8 million as compared to $68.2 million in 2022.
Insurance: • Gross written premiums and premium equivalents were $3.1 billion for the year ended December 31, 2024, an increase of $320.3 million, or 11.7%, from the prior year period as a result of growth in E&S insurance lines in the U.S. and Europe. • Net written premiums were $1.4 billion for the year ended December 31, 2024, an increase of 9.0%, driven by growth in gross written premiums and increased retention on Fortegra’s whole account quota share reinsurance arrangement from 30% to 40%, effective April 1, 2023. • Total revenues were $2.0 billion, an increase of $380.6 million, or 23.9%, from 2023, driven by premium growth in specialty E&S and admitted insurance lines in the U.S. and Europe. • Combined ratio of 90.0%, driven by consistent underwriting performance and the scalability of Fortegra’s operating platform. • Income before taxes of $183.2 million as compared to $129.8 million in 2023.
Adjusted net income & Adjusted return on average equity - Non-GAAP Adjusted net income for the year ended December 31, 2023 was $61.9 million, an increase of $8.9 million, or 16.7%, from the year ended December 31, 2022, driven by growth in our insurance operations.
Adjusted net income & Adjusted return on average equity - Non-GAAP Adjusted net income for the year ended December 31, 2024 was $100.1 million, an increase of $38.1 million, or 61.6%, from the year ended December 31, 2023, driven by growth in our insurance operations.
In 2023, the $11.2 million favorable prior year development was primarily driven by lower than expected claims paid development in our commercial lines of business for the 2018 and 2020 accident years. In 2022, the $0.9 million favorable prior year development is primarily due to lower-than-expected claim severity in our commercial lines business.
In 2024, the $0.6 million favorable prior year development was 75 primarily driven by lower than expected claims paid development in our commercial lines of business. In 2023, the $11.2 million favorable prior year development was primarily driven by lower than expected claims paid development in our commercial lines of business for the 2018 and 2020 accident years.
For the year ended December 31, 2023, interest expense was at $1.9 million, an increase of $0.2 million, or 13.8%, with the increase driven by higher interest rates.
For the year ended December 31, 2024, interest expense was at $2.0 million, an increase of from the prior year period of $0.1 million, or 7.8%, with the increase driven by higher interest rates.
The variability in these estimates can, and have in the past, been significant to pretax income. We analyze our development on a quarterly basis and given the short duration nature of our products, favorable or adverse development emerges quickly and allows for timely reserve strengthening, if necessary, or modifications to our product pricing or offerings.
We analyze our development on a quarterly basis and given the short duration nature of our products, favorable or adverse development emerges quickly and allows for timely reserve strengthening, if necessary, or modifications to our product pricing or offerings.
For the year ended December 31, 2023, employee compensation and benefits were $114.3 million and other expenses were $96.8 million, as compared to $87.9 million and $78.8 million, respectively, for the year ended December 31, 2022.
For the year ended December 31, 2024, employee compensation and benefits were $137.7 million and other expenses were $112.7 million, as compared to $114.3 million and $96.8 million, respectively, for the year ended December 31, 2023.
Return on Average Equity Return on average equity was 25.7% for the year ended December 31, 2023, as compared to 14.6% for the year ended December 31, 2022.
Return on Average Equity Return on average equity was 26.0% for the year ended December 31, 2024, as compared to 25.7% for the year ended December 31, 2023.
Expenses - Year Ended December 31, 2023 compared to 2022 For the year ended December 31, 2023, net losses and loss adjustment expenses were $482.5 million, member benefit claims were $119.3 million and commission expense was $603.0 million, as compared to $361.6 million, $91.0 million, and $522.7 million, respectively, for the year ended December 31, 2022.
Expenses - Year Ended December 31, 2024 compared to 2023 For the year ended December 31, 2024, net losses and loss adjustment expenses were $722.2 million, member benefit claims were $119.0 million and commission expense was $648.8 million, as compared to $482.5 million, $119.3 million, and $603.0 million, respectively, for the year ended December 31, 2023.
Return on average equity was 3.4%, compared to (2.1)% in 2022. • Adjusted net income of $61.9 million increased $8.9 million from $53.0 million in 2022, driven by growth in insurance operations. Adjusted return on average equity was 15.2%, as compared to 13.6% in 2022.
Return on average equity was 12.2%, compared to 3.4% in 2023. • Adjusted net income of $100.1 million increased from $61.9 million in 2023, driven by growth in insurance operations. Adjusted return on average equity was 22.9%, as compared to 15.2% in 2023.
Other Expenses include loan origination expenses, namely, leads, appraisals, credit reporting and licensing fees, general and administrative expenses, including office rent, insurance, legal, consulting and payroll processing expenses, and servicing expense. 67 The following tables present the Mortgage segment results for the following periods: Results of Operations ($ in thousands) Year Ended December 31, 2023 2022 Revenues: Net realized and unrealized gains (losses) $ 34,232 $ 51,345 Other revenue 19,632 18,901 Total revenues $ 53,864 $ 70,246 Expenses: Employee compensation and benefits $ 34,040 $ 41,637 Interest expense 1,856 1,631 Depreciation and amortization 617 799 Other expenses 20,636 25,305 Total expenses $ 57,149 $ 69,372 Income (loss) before taxes $ (3,285) $ 874 Key Performance Metrics: Origination volumes $ 876,914 $ 1,134,351 Gain on sale margins 4.7 % 4.7 % Return on average equity (4.6) % 0.9 % Non-GAAP Financial Measures (1) : Adjusted net income (1) $ (1,082) $ (4,658) Adjusted return on average equity (1) (2.0) % (8.1) % (1) See “ — Non-GAAP Reconciliations” for a discussion of non-GAAP financial measures.
Other Expenses include loan origination expenses, namely, leads, appraisals, credit reporting and licensing fees, general and administrative expenses, including office rent, insurance, legal, consulting and payroll processing expenses, and servicing expense. 65 The following tables present the Mortgage segment results for the following periods: Results of Operations ($ in thousands) Year Ended December 31, 2024 2023 Revenues: Net realized and unrealized gains (losses) $ 42,978 $ 34,232 Other revenue 22,936 19,632 Total revenues $ 65,914 $ 53,864 Expenses: Employee compensation and benefits $ 37,452 $ 34,040 Interest expense 2,001 1,856 Depreciation and amortization 343 617 Other expenses 21,393 20,636 Total expenses $ 61,189 $ 57,149 Income (loss) before taxes $ 4,725 $ (3,285) Key Performance Metrics: Origination volumes $ 946,183 $ 876,914 Gain on sale margins 4.8 % 4.7 % Return on average equity 6.7 % (4.6) % Non-GAAP Financial Measures (1) : Adjusted net income $ 1,531 $ (1,082) Adjusted return on average equity 2.8 % (2.0) % (1) See “ — Non-GAAP Reconciliations” for a discussion of non-GAAP financial measures.
Selected Key Metrics ($ in thousands, except per share information) Year Ended December 31, GAAP: 2023 2022 Total revenues $ 1,649,031 $ 1,397,752 Net income (loss) attributable to common stockholders $ 13,951 $ (8,274) Diluted earnings per share $ 0.33 $ (0.23) Cash dividends paid per common share $ 0.20 $ 0.16 Return on average equity 3.4 % (2.1) % Non-GAAP: (1) Adjusted net income $ 61,917 $ 53,034 Adjusted return on average equity 15.2 % 13.6 % Book value per share $ 11.34 $ 10.92 (1) See “—Non-GAAP Reconciliations” for a discussion of non-GAAP financial measures.
Selected Key Metrics ($ in thousands, except per share information) Year Ended December 31, GAAP: 2024 2023 Total revenues $ 2,042,854 $ 1,649,031 Net income (loss) attributable to common stockholders $ 53,367 $ 13,951 Diluted earnings per share $ 1.30 $ 0.33 Cash dividends paid per common share $ 0.49 $ 0.20 Return on average equity 12.2 % 3.4 % Non-GAAP: (1) Adjusted net income $ 100,060 $ 61,917 Adjusted return on average equity 22.9 % 15.2 % Book value per share $ 12.29 $ 11.34 (1) See “—Non-GAAP Reconciliations” for a discussion of non-GAAP financial measures.
Other revenue also includes the interest income earned on the premium finance product offering. Net Investment Income represents earned investment income on our portfolio of invested assets. Our invested assets are primarily comprised of fixed maturity securities, and may also include cash and cash equivalents and equity securities.
Net Investment Income represents earned investment income on our portfolio of invested assets. Our invested assets are primarily comprised of fixed maturity securities, and may also include cash and cash equivalents and equity securities.
Book Value per share - Non-GAAP Management believes the use of this financial measure provides supplemental information useful to investors as book value is frequently used by the financial community to analyze company growth on a relative per share basis.
Book Value per share - Non-GAAP Management believes the use of this financial measure provides supplemental information useful to investors as book value is frequently used by the financial community to analyze company growth on a relative per share basis. The following table 72 provides a reconciliation between total stockholders’ equity and total shares outstanding, net of treasury shares.
Earned premiums, net of $1,127.8 million increased $223.1 million, or 24.7%, driven by growth in specialty E&S and admitted insurance lines. Earned premiums assumed from other insurance companies were $404.7 million, or 35.9% of total earned premiums, net, compared to $310.4 million, or 34.3%, in the prior year period.
Earned premiums, net of $1.5 billion increased $344.1 million, or 30.5%, driven by growth in specialty E&S and admitted insurance lines. Earned premiums assumed from other insurance companies were $586.9 million, or 39.9% of total earned premiums, net, compared to $404.7 million, or 35.9%, in the prior year period.
Service and administrative fees of $396.0 million increased by 23.5% primarily driven by growth in vehicle service contract revenues. Ceding commissions of $14.9 million increased by $1.0 million, or 7.5%, in line with growth in ceded premiums.
Service and administrative fees of $405.2 million increased by 2.3% primarily driven by growth in vehicle service contract revenues. Ceding commissions of $15.4 million increased by $0.5 million, or 3.1%, in line with growth in ceded premiums.
Revenues Tiptree Capital - Other earns revenues from the following sources: net interest income; revenues on our formerly held for sale mortgage originator (Luxury); realized and unrealized gains and losses on the Company’s investment holdings (including Invesque); and charter revenues from vessels within the Company’s maritime transportation operations.
Revenues Tiptree Capital - Other earns revenues from the following sources: net interest income; realized and unrealized gains and losses on the Company’s investment holdings (including Invesque until its sale in April 2024); and charter revenues from vessels within the Company’s maritime transportation operations.
In addition to GAAP results, management uses the Non-GAAP measures Adjusted net income, Adjusted return on average equity and book value per share as measurements of operating performance. Management believes these measures provide supplemental information useful to investors as they are frequently used by the financial community to analyze financial performance and comparison among companies.
Management believes these measures provide supplemental information useful to investors as they are frequently used by the financial community to analyze financial performance and comparison among companies. Adjusted Net Income and Adjusted Return on Average Equity.
Adjusted net income (before NCI) is presented before the impacts of non-controlling interests. We present adjustments for amortization associated with acquired intangible assets. The intangible assets were recorded as part of purchase accounting in connection with Tiptree’s acquisition of Fortegra Financial in 2014, Defend in 2019, Smart AutoCare, Sky Auto in 2020, ITC in 2022 and Premia in 2023.
Adjusted net income (before NCI) is presented before the impacts of non-controlling interests. We present adjustments for amortization associated with acquired intangible assets. The intangible assets were recorded as part of purchase accounting in connection with Tiptree’s acquisition of Fortegra Financial in 2014, and additional services businesses from 2019 to 2024.
Revenues - Year Ended December 31, 2023 compared to 2022 For the year ended December 31, 2023, $876.9 million of loans were funded, compared to $1,134.4 million for the prior year period, a decrease of $257.4 million, or 22.7%, driven by increase in mortgage interest rates compared to the prior year period.
Revenues - Year Ended December 31, 2024 compared to 2023 For the year ended December 31, 2024, $946.2 million of loans were funded, compared to $876.9 million for the prior year period, an increase of $69.3 million, or 7.9%, driven by decrease in mortgage interest rates compared to the prior year period.
Underwriting risk is mitigated through a combination of reinsurance and sliding scale commission structures with agents, distribution partners and/or third-party reinsurers. To mitigate counterparty risk, Fortegra ensures its reinsurance receivables are placed with highly rated and appropriately capitalized counterparties or with our distribution partners’ captive insurance vehicles which are collateralized with highly liquid investments, cash or letters of credit.
To mitigate counterparty risk, Fortegra ensures its reinsurance receivables are placed with highly rated and appropriately capitalized counterparties or with our distribution partners’ captive insurance vehicles which are collateralized with highly liquid investments, cash or letters of credit.
(2) See “—Non-GAAP Reconciliations” for a discussion of non-GAAP financial measures. Revenues - Year Ended December 31, 2023 compared to 2022 For the year ended December 31, 2023, total revenues increased 27.6%, to $1,593.1 million, as compared to $1,248.8 million for the year ended December 31, 2022.
(2) See “—Non-GAAP Reconciliations” for a discussion of non-GAAP financial measures. Revenues - Year Ended December 31, 2024 compared to 2023 61 For the year ended December 31, 2024, total revenues increased 23.9%, to $2.0 billion, as compared to $1.6 billion for the year ended December 31, 2023.
Cash provided by operating activities was $463.1 million for the year ended December 31, 2022.
Cash provided by operating activities was $71.5 million for the year ended December 31, 2023.
Adjusted net income is presented after the impacts of non-controlling interests. Revenues For the year ended December 31, 2023, revenues were $1,649.0 million, which increased $251.3 million, or 18.0%, compared to the prior year period.
Adjusted net income is presented after the impacts of non-controlling interests. Revenues For the year ended December 31, 2024, revenues were $2.0 billion, which increased $393.8 million, or 23.9%, compared to the prior year period.
Consolidated Comparison of Cash Flows ($ in thousands) Year Ended December 31, 2023 2022 Cash and cash equivalents provided by (used in): Operating activities $ 71,452 $ 463,073 Investing activities (244,669) 9,514 Financing activities 113,406 (115,186) Effect of exchange rate changes on cash 1,525 (1,828) Change in cash, cash equivalents and restricted cash $ (58,286) $ 355,573 Operating Activities Cash provided by operating activities was $71.5 million for the year ended December 31, 2023.
Consolidated Comparison of Cash Flows ($ in thousands) Year Ended December 31, 2024 2023 Cash and cash equivalents provided by (used in): Operating activities $ 240,756 $ 71,452 Investing activities (322,985) (244,669) Financing activities 6,287 113,406 Effect of exchange rate changes on cash (355) 1,525 Change in cash, cash equivalents and restricted cash $ (76,297) $ (58,286) Operating Activities Cash provided by operating activities was $240.8 million for the year ended December 31, 2024.
We reconcile underwriting and fee revenues as total revenues excluding net investment income, net realized gains (losses) and net unrealized gains (losses), ceding fees, ceding commissions and cash and cash equivalent interest income as reported in other income. See “—Non-GAAP Reconciliations” for a reconciliation of underwriting and fee revenues to total revenues in accordance with GAAP.
We reconcile underwriting and fee revenues as total revenues excluding net investment income, net realized gains (losses) and net unrealized gains (losses), ceding fees, ceding commissions and cash and cash equivalent interest income as reported in other income.
Management considers the prior year development for all three years to be insignificant when considered in the context of our annual earned premiums, net as well as our net losses and loss adjustment expenses and member benefit claims expenses.
In 2022, the $0.9 million favorable prior year development was primarily due to lower-than-expected claim severity in our commercial lines business. Management considers the prior year development for all three years to be insignificant when considered in the context of our annual earned premiums, net as well as our net losses and loss adjustment expenses and member benefit claims expenses.
Gross Written Premiums and Premium Equivalents (1,2) ($ in thousands) Year Ended December 31, 2023 2022 2021 Property and short-tail $ 548,984 $ 263,933 $ 100,462 Contractual liability 396,861 351,869 347,776 General liability 353,011 305,325 182,336 Alternative risks 330,171 363,362 409,807 Professional liability 232,944 82,340 32,028 Europe 141,208 125,150 95,917 Commercial lines $ 2,003,179 $ 1,491,979 $ 1,168,326 Personal lines $ 382,397 $ 397,423 $ 432,522 Insurance $ 2,385,576 $ 1,889,402 $ 1,600,848 Auto and consumer goods warranty 302,746 318,550 285,591 Other services 59,532 55,176 49,535 Services $ 362,278 $ 373,726 $ 335,126 Total $ 2,747,854 $ 2,263,128 $ 1,935,974 64 (1) The total gross written premiums and premium equivalents of $2,747.9 million, $2,263.1 million and $1,936.0 million for the years ended December 31, 2023, 2022 and 2021, respectively, were comprised of gross written premiums of $1,896.5 million, $1,515.1 million and $1,380.1 million, plus assumed premiums of $489.1 million, $374.3 million and $220.7 million, plus gross service and administrative fee additions of $362.3 million, $373.7 million and $335.1 million.
Gross Written Premiums and Premium Equivalents (1) ($ in thousands) Year Ended December 31, 2024 2023 2022 Property and short-tail $ 845,721 $ 548,984 $ 263,933 Contractual liability 347,510 396,861 351,869 General liability 389,162 353,011 305,325 Alternative risks 362,153 330,171 363,362 Professional liability 276,390 232,944 82,340 Europe 163,292 141,208 125,150 Commercial lines $ 2,384,228 $ 2,003,179 $ 1,491,979 Personal lines $ 335,236 $ 382,397 $ 397,423 Insurance $ 2,719,464 $ 2,385,576 $ 1,889,402 Auto and consumer goods warranty 303,195 302,746 318,550 Other services 45,540 59,532 55,176 Services $ 348,735 $ 362,278 $ 373,726 Total $ 3,068,199 $ 2,747,854 $ 2,263,128 (1) The total gross written premiums and premium equivalents of $3,068.2 million, $2,747.9 million and $2,263.1 million for the years ended December 31, 2024, 2023 and 2022, respectively, were comprised of gross written premiums of $2,194.0 million, $1,896.5 million and $1,515.1 million, plus assumed premiums of $525.5 million, $489.1 million and $374.3 million, plus gross service and administrative fee additions of $348.7 million, $362.3 million and $373.7 million.
For the year ended December 31, 2023, other expenses were $20.6 million, compared to $25.3 million in the prior year period, a decrease of $4.7 million, with the decrease driven by a reduction of mortgage operational expenses, including marketing costs. 68 Income (loss) before taxes The loss before taxes for the year ended December 31, 2023 was $3.3 million, compared to income before taxes of $0.9 million in the prior year period driven by a decline in volumes.
For the year ended December 31, 2024, other expenses were $21.4 million, compared to $20.6 million in the prior year period, an increase of $0.8 million, with the increase driven by a higher mortgage operational expenses. 66 Income (loss) before taxes The income before taxes for the year ended December 31, 2024 was $4.7 million, compared to loss before taxes of $3.3 million in the prior year period driven by higher volumes.
Return on average equity was 25.7% in 2023 as compared to 14.6% in 2022. The increases were driven by growth in underwriting and fee revenues and increased net investment income. • Adjusted net income (before NCI) was $115.7 million, an increase of $31.9 million, or 38.0%, from 2022.
Return on average equity was 26.0% in 2024 as compared to 25.7% in 2023, with the increases driven by growth in underwriting and fee revenues. • Adjusted net income (before NCI) was $157.0 million, an increase of $41.3 million, or 35.7%, from 2023.
Gross written premiums and premium equivalents represent total gross written premiums from insurance policies and warranty service contracts issued during a reporting period. They represent the volume of insurance policies written or assumed and warranty service contracts issued during a specific period of time without reduction for policy acquisition costs, reinsurance costs or other deductions.
They represent the volume of insurance policies written or assumed and warranty service contracts issued during a specific period of time without reduction for policy acquisition costs, reinsurance costs or other deductions. Gross written premiums is a volume measure commonly used in the insurance industry to compare sales performance by period.
Gain on sale margins remained consistent at 4.7% for the year ended December 31, 2023. Net realized and unrealized gains for the year ended December 31, 2023 were $34.2 million, compared to $51.3 million in the prior year period, a decrease of $17.1 million or 33.3%.
Gain on sale margins remained consistent at 4.8% for the year ended December 31, 2024. Net realized and unrealized gains for the year ended December 31, 2024 were $43.0 million, compared to $34.2 million in the prior year period, an increase of $8.7 million or 25.5%.
As disclosed in Note (2), the preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ significantly from those estimates.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES The Company’s significant accounting policies are described in Note (2) Summary of Significant Accounting Policies. As disclosed in Note (2), the preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes.
The underwriting ratio was 76.3%, a decrease of 0.4% from the prior year period, which consists of a loss ratio of 40.1%, compared to 37.7% in the prior year period, and an acquisition ratio of 36.2%, compared to 39.0% in the prior year period.
The underwriting ratio was 77.0%, an increase of 0.7 percentage points from the prior year period, which consists of a loss ratio of 45.5%, compared to 40.1% in the prior year period, and an acquisition ratio of 31.5%, compared to 36.2% in the prior year period.
Underwriting and fee income should not be viewed as a substitute for income before taxes calculated in accordance with GAAP, and other companies may define underwriting and fee margin differently. 72 ($ in thousands) Year Ended December 31, 2023 2022 Income (loss) before income taxes $ 129,816 $ 68,150 Less: Net investment income (26,674) (12,219) Less: Net realized and unrealized gains (losses) 4,207 20,347 Less: Cash and cash equivalent interest income (1) (11,037) (2,505) Plus: Depreciation and amortization 21,425 18,551 Plus: Interest expense 25,836 20,054 Plus: Employee compensation and benefits 114,341 87,918 Plus: Other expenses 96,825 78,832 Underwriting and fee margin (2) $ 354,739 $ 279,128 (1) Cash and cash equivalent interests income were included in other revenue on the statement of operations.
Underwriting and fee income should not be viewed as a substitute for income before taxes calculated in accordance with GAAP, and other companies may define underwriting and fee margin differently. 70 ($ in thousands) Year Ended December 31, 2024 2023 Income (loss) before income taxes $ 183,158 $ 129,816 Less: Net investment income (32,976) (26,674) Less: Net realized and unrealized gains (losses) (8,496) 4,207 Less: Cash and cash equivalent interest income (1) (17,516) (11,037) Plus: Depreciation and amortization 19,860 21,425 Plus: Interest expense 30,247 25,836 Plus: Employee compensation and benefits 137,743 114,341 Plus: Other expenses 112,675 96,825 Underwriting and fee margin (2) $ 424,695 $ 354,739 (1) Cash and cash equivalent interest income was included in other revenue on the statement of operations.
In general, the Company's loss ratio results have been predictable and consistent over time. Actuarial estimates are subject to estimation variability, and while management uses its best judgment in establishing the estimate of required unpaid claims, different 77 assumptions and variables could lead to significantly different unpaid claims estimates.
Actuarial estimates are subject to estimation variability, and while management uses its best judgment in establishing the estimate of required unpaid claims, different assumptions and variables could lead to significantly different unpaid claims estimates. The variability in these estimates can, and have in the past, been significant to pretax income.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeA majority of the related receivables from these reinsurers are collateralized by assets on hand and letters of credit; receivable balances from authorized reinsurers do not require collateral. Allianz Global Corporate & Specialty SE is an authorized reinsurer in the states in which Fortegra’s U.S. based insurance entities are domiciled. The Company monitors authorization status and A.M.
Biggest changeReceivable balances from authorized reinsurers, such as the Allianz companies noted above, do not require collateral based on the authorized status of the parties. Receivable balances from unauthorized reinsurers are collateralized by assets on hand, assets held in trust accounts, and/or letters of credit.
For floating rate risk of other asset based financing such as borrowings to finance acquisitions of real estate, we generally hedge our exposure to the variability of the benchmark index with an interest rate swap. As of December 31, 2023 and 2022, Tiptree’s holding company had no general purpose floating rate debt as it was repaid in June 2022.
For floating rate risk of other asset based financing such as borrowings to finance acquisitions of real estate, we generally hedge our exposure to the variability of the benchmark index with an interest rate swap. As of December 31, 2024 and 2023, Tiptree’s holding company had no general purpose floating rate debt as it was repaid in June 2022.
The risk associated with such arrangements is mitigated by the fact that we have the contractual ability to cancel the insurance policy and have premiums refunded to us by the insurer in the event of a counterparty default. 83
The risk associated with such arrangements is mitigated by the fact that we have the contractual ability to cancel the insurance policy and have premiums refunded to us by the insurer in the event of a counterparty default. 81
Counterparty Risk We are subject to counterparty risk to the extent that we engage in derivative activities for hedging or other purposes. As of December 31, 2023 and 2022, the total fair value of derivative assets subject to counterparty risk, including the effect of any legal right of offset, totaled $4.0 million and $4.3 million, respectively.
Counterparty Risk We are subject to counterparty risk to the extent that we engage in derivative activities for hedging or other purposes. As of December 31, 2024 and 2023, the total fair value of derivative assets subject to counterparty risk, including the effect of any legal right of offset, totaled $3.1 million and $4.0 million, respectively.
Of those amounts, $870.5 million and $603.4 million, respectively, related to contracts with third-party captives in which we hold collateral or receive letters of credit in excess of the reinsurance receivables. The remainder is held with high quality reinsurers, substantially all of which have a rating of A or better by A.M. Best.
Of those amounts, $835.3 million and $870.5 million, respectively, related to contracts with third-party captives in which we hold collateral or receive letters of credit in excess of the reinsurance receivables. The remainder is held with high quality reinsurers, substantially all of which have a rating of A or better by A.M. Best.
As of December 31, 2023, the Company’s insurance subsidiary had $165.0 million of floating rate corporate debt with a weighted average rate of 7.3% compared to $35.0 million of floating rate corporate debt as of December 31, 2022, with a weighted average rate of 5.7%.
As of December 31, 2024, the Company’s insurance subsidiary had $35.0 million of floating rate corporate debt with a weighted average rate of 9.5% compared to $165.0 million of floating rate corporate debt as of December 31, 2023, with a weighted average rate of 7.3%.
Foreign Currency Exchange Rate Ris k We have foreign currency exchange rate risk associated with certain assets and liabilities related to our foreign operations. At December 31, 2023 and 2022, 93% and 93%, respectively of our invested assets were denominated in United States (U.S.) Dollars.
Foreign Currency Exchange Rate Ris k We have foreign currency exchange rate risk associated with certain assets and liabilities related to our foreign operations. At December 31, 2024 and 2023, 88% and 93%, respectively of our invested assets were denominated in United States (U.S.) 80 Dollars.
Treasury securities and obligations of U.S. government authorities and agencies of $470.1 million and $382.1 million as of December 31, 2023 and 2022, respectively. These investments do not represent a credit risk and are excluded.
Treasury securities and obligations of U.S. government authorities and agencies of $395.6 million and $470.1 million as of December 31, 2024 and 2023, respectively. These investments do not represent a credit risk and are excluded.
We generally manage our counterparty risk to derivative counterparties by entering into contracts with counterparties of high credit quality. Total reinsurance receivables and prepaid reinsurance premiums were $1,854.4 million and 1,176.1 million of December 31, 2023 and 2022, respectively.
We generally manage our counterparty risk to derivative counterparties by entering into contracts with counterparties of high credit quality. Total reinsurance recoverables and prepaid reinsurance premiums were $2,039.1 million and $1,854.4 million of December 31, 2024 and 2023, respectively.
In addition, we are exposed to counterparty risk of approximately $134.1 million and $121.4 million as of December 31, 2023 and 2022, respectively, related to our premium financing business.
In addition, we are exposed to counterparty risk of approximately $138.2 million and $134.1 million as of December 31, 2024 and 2023, respectively, related to our premium financing business.
(2) The Company also holds investments in mortgage loans held for sale of $58.3 million and $50.5 million as of December 31, 2023 and 2022, respectively. These investments do not represent a credit risk and are excluded.
(2) The Company also holds investments in mortgage loans held for sale of $71.1 million and $58.3 million as of December 31, 2024 and 2023, respectively. These investments do not represent a credit risk and are excluded. (3) The Company also holds other investments of $3.1 million and $4.3 million as of December 31, 2024 and 2023, respectively.
As of December 31, 2023, we had $879.6 million invested in interest bearing instruments, which represents 66% of the total investment portfolio (including cash and cash equivalents). The estimated effects of a hypothetical increase in interest rates of 100 bps would result in a decrease to the fair value of the portfolio by $26.8 million.
As of December 31, 2024, we had $1,157.3 million invested in interest bearing instruments, which represents 74.8% of the total investment portfolio (including cash and cash equivalents). The estimated effects of a hypothetical increase in interest rates of 100 bps would result in a decrease to the fair value of the portfolio by $38.7 million.
The estimated effects of a hypothetical increase in interest rates of 100 bps would result in a decrease to the fair value of the portfolio by $24.8 million. 81 Credit Risk We are exposed to credit risk in the form of available for sale securities, investments in loans, and other investments as follows: ($ in thousands) As of December 31, 2023 2022 Available for sale securities, at fair value (1) Obligations of state and political subdivisions $ 45,459 $ 49,454 Corporate securities 254,598 161,999 Asset backed securities 26,186 15,349 Certificates of deposit 1,724 756 Obligations of foreign governments 4,557 2,362 Loans, at fair value (2) Corporate loans 11,218 14,312 Other investments (3) Corporate bonds, at fair value 62,081 42,080 Debentures 25,648 23,853 Investment in credit fund 11,830 — Other 7,201 230 Total $ 450,502 $ 310,395 (1) The Company also holds investments in U.S.
The estimated effects of a hypothetical increase in interest rates of 100 bps would result in a decrease to the fair value of the portfolio by $26.8 million. 79 Credit Risk We are exposed to credit risk in the form of available for sale securities, investments in loans, and other investments as follows: ($ in thousands) As of December 31, 2024 2023 Available for sale securities, at fair value (1) Obligations of state and political subdivisions $ 38,675 $ 45,459 Corporate securities 598,134 254,598 Asset backed securities 22,860 26,186 Certificates of deposit 1,145 1,724 Obligations of foreign governments 51,472 4,557 Loans, at fair value (2) Corporate loans 10,272 11,218 Other investments (3) Corporate bonds, at fair value 3,331 62,081 Debentures 25,320 25,648 Investment in credit fund 21,332 11,830 Other — 7,201 Total $ 772,541 $ 450,502 (1) The Company also holds investments in U.S.
As of December 31, 2022, we had $706.4 million invested in interest bearing instruments, which represented 61% of the total investment portfolio.
As of December 31, 2023, we had $879.6 million invested in interest bearing instruments, which represented 66% of the total investment portfolio.
Market Risk We are primarily exposed to market risk related to the following investments: ($ in thousands) As of December 31, 2023 As of December 31, 2022 Insurance Tiptree Capital - Other Total Insurance Tiptree Capital - Other Total Invesque $ 719 $ 3,442 $ 4,161 $ 2,670 $ 12,784 $ 15,454 Fixed income exchange traded fund 1,349 — 1,349 56,256 — 56,256 Other equity securities 25,045 37,753 62,798 14,066 — 14,066 Total equity securities $ 27,113 $ 41,195 $ 68,308 $ 72,992 $ 12,784 $ 85,776 A 10% increase or decrease in the fair value of such investments would result in $6.8 million and $8.6 million of unrealized gains and losses as of December 31, 2023 and 2022, respectively.
Market Risk We are primarily exposed to market risk related to the following investments: ($ in thousands) As of December 31, 2024 As of December 31, 2023 Insurance Tiptree Capital - Other Total Insurance Tiptree Capital - Other Total Invesque $ — $ — $ — $ 719 $ 3,442 $ 4,161 Exchange traded funds 5,075 — 5,075 1,349 — 1,349 Other equity securities 99,393 4,152 103,545 25,045 37,753 62,798 Total equity securities $ 104,468 $ 4,152 $ 108,620 $ 27,113 $ 41,195 $ 68,308 A 10% increase or decrease in the fair value of such investments would result in $10.8 million and $6.8 million of unrealized gains and losses as of December 31, 2024 and 2023, respectively.
At December 31, 2023 and 2022, 92% and 93%, respectively, of our insurance subsidiary’s combined unpaid premiums and deferred revenue were denominated in U.S. Dollars. At that date, the largest foreign currency denominated balance was a fixed income exchange traded fund in British Pound Sterling reported within equity securities.
At that date, the largest foreign currency denominated asset balances were fixed income securities denominated in British Pound Sterling and Euros reported within available for sale securities, at fair value. At December 31, 2024 and 2023, 87% and 92%, respectively, of our insurance subsidiary’s combined unpaid premiums and deferred revenue were denominated in U.S. Dollars.
Best ratings of its reinsurers periodically. As of December 31, 2023, the Company does not believe there is a risk of loss due to the concentration of credit risk in the reinsurance program given the collateralization.
The Company monitors collateral values, authorization status, financial statements and AM Best ratings of its reinsurers periodically. As of December 31, 2024, the Company does not believe there is a risk of loss due to the concentration of credit risk in the reinsurance program given the related collateralization or reinsurer AM Best rating.
As of December 31, 2023, the Company’s insurance subsidiary had $125.0 million of general purpose fixed rate debt outstanding maturing in 2057. For general purpose floating rate debt, interest rate fluctuations primarily affect interest expense and cash flows. If market interest rates rise, our earnings could be adversely affected by an increase in interest expense.
As of December 31, 2024, the Company’s insurance subsidiary had $125.0 million and $150.0 million of general purpose fixed rate debt outstanding maturing in 2057 and 2064, respectively. For general purpose floating rate debt, interest rate fluctuations primarily affect interest expense and cash flows.
($ in thousands) As of December 31, 2023 2022 Third-party captives Reinsurance receivables and prepaid reinsurance premiums $ 870,511 $ 603,428 Collateral $ 1,035,728 $ 700,086 % Collateralized 119 % 116 % Professional Reinsurers Reinsurance receivables and prepaid reinsurance premiums $ 983,900 $ 572,662 Collateral $ 643,853 $ 611,360 % Collateralized 65 % 107 % Total Reinsurance receivables and prepaid reinsurance premiums $ 1,854,410 $ 1,176,090 Collateral $ 1,679,581 $ 1,311,446 % Collateralized 91 % 112 % We were also exposed to counterparty risk of approximately $250.8 million and $191.1 million as of December 31, 2023 and 2022, respectively, related to our retrospective commission arrangements; associated risks are offset by the Company’s contractual ability to withhold future commissions against the retrospective balances.
($ in thousands) As of December 31, 2024 2023 Third-party captives Reinsurance receivables and prepaid reinsurance premiums $ 835,331 $ 870,511 Collateral $ 1,105,124 $ 1,035,728 % Collateralized 132 % 119 % Professional Reinsurers Reinsurance receivables and prepaid reinsurance premiums $ 1,203,805 $ 983,900 Collateral $ 350,871 $ 643,853 % Collateralized 29 % 65 % Total Reinsurance receivables and prepaid reinsurance premiums $ 2,039,136 $ 1,854,410 Collateral $ 1,455,995 $ 1,679,581 % Collateralized 71 % 91 % We were also exposed to counterparty risk of approximately $286.3 million and $265.9 million as of December 31, 2024 and 2023, respectively, related to our retrospective commission arrangements; associated risks are offset by the Company’s contractual ability to withhold future commissions against the retrospective balances.
In contrast, lower interest rates may reduce our interest expense and improve our earnings, except to the extent that our borrowings are subject to interest rate floors. The floating interest rate risk of asset based financing is generally offset as the financing and the purchased financial asset are generally subject to the same interest rate risk.
The floating interest rate risk of asset based financing is generally offset as the financing and the purchased financial asset are generally subject to the same interest rate risk.
As of December 31, 2023, the non-affiliated reinsurers from whom our insurance business has the largest reinsurance receivable balances represented $235.7 million, or 12.7% of the total, and included: Accelerant Specialty Insurance Company (A.M. Best Rating: A- rated), Allianz Global Corporate & Specialty SE (A.M. Best Rating: A+ rated), and Homesite Insurance Company (A.M. Best Rating: A rated).
As of December 31, 2024, the non-affiliated reinsurers from whom our insurance business has the largest reinsurance receivable balances represented $220.4 million, or 10.8% of the total, and included: Allianz Global Risks US Insurance Company (AM Best Rating: A+ rated), Allianz Reinsurance America, Inc. (AM Best Rating: A+ rated), and Ferian Re, LTD (AM Best Rating: Not Rated).
Credit risk within the Company’s investments represents the exposure to the adverse changes in the creditworthiness of individual investment holdings, issuers, groups of issuers, industries, and countries. As of December 31, 2023 and 2022, 72% and 76%, respectively, of the investments subject to credit risk had investment grade ratings.
These investments do not represent a credit risk and are excluded. Credit risk within the Company’s investments represents the exposure to the adverse changes in the creditworthiness of individual investment holdings, issuers, groups of issuers, industries, and countries.
Due to the relatively short holding period, the credit risk associated with mortgage loans held for sale is not expected to be significant. See Note (6) Investments to the consolidated financial statements for more information regarding our investments in loans by type.
See Note (6) Investments to the consolidated financial statements for more information regarding our investments in loans by type.
Removed
(3) The Company also holds other investments of $4.3 million and $6.9 million as of December 31, 2023 and 2022, respectively, primarily comprised of vessels and other investments. These investments do not represent a credit risk and are excluded.
Added
If market interest rates rise, our earnings could be adversely affected by an increase in interest expense. In contrast, lower interest rates may reduce our interest expense and improve our earnings, except to the extent that our borrowings are subject to interest rate floors.
Removed
A widening of credit spreads by 100 bps for the investments subject to credit risk would result in a decrease of $8.2 million and $5.8 million to the fair value of the portfolio as of December 31, 2023 and 2022, respectively. In addition, our mortgage business also underwrites mortgage loans for the purpose of selling them into the secondary market.
Added
Our policy is to invest in high-quality securities and to limit investments in the instruments that are either unrated or rated below investment grade. As of December 31, 2024 and 2023, 84% and 72%, respectively, of the investments subject to credit risk had investment grade ratings.
Removed
As of December 31, 2023 and 2022, the Company owned 16.98 million shares of common stock, respectively, or approximately 30%, of Invesque, a real estate investment company that specializes in health care real estate and senior living property investment throughout North America. The value of our Invesque shares is reported at fair market value on a quarterly basis.
Added
In addition, our mortgage business also underwrites mortgage loans for the purpose of selling them into the secondary market. Due to the relatively short holding period, the credit risk associated with mortgage loans held for sale is not expected to be significant.
Removed
Invesque historically paid monthly dividends until April 2020, when dividends were discontinued. A loss in 82 the fair market value of our Invesque shares or a reduction or discontinuation in the dividends paid on our Invesque shares could have a material adverse effect on our financial condition and results of operations.
Removed
As of December 31, 2023 and 2022, the fair value of the Invesque shares was based on the market price. See “Risk Factors — Risks Related to our Business - Our investment in Invesque shares is subject to market volatility and the risk that Invesque changes its dividend policy”.

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