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Fortegra specialty business drives revenue growth at Tiptree

10th March 2023 - Author: Matt Sheehan

Holding company Tiptree has reported a substantial increase in revenues for 2022, with growth driven to a large degree by the company’s global specialty insurance subsidiary, Fortegra.

Fortegra-logo-bRevenues increased by 16.4% to $1.4 billion thanks to growth in the insurance business, as well as increases in charter rates and a maritime operations sale, and increased revenues from its mortgage servicing portfolio.

This was partially offset by lower mortgage volume and margins and investment losses in 2022 compared to gains in 2021.

Tiptree did, however, return a net loss of $8.3 million for the year, versus net income of $38.1 million in the previous year, despite its Q4 income amounting to a positive result of $0.9 million.

For the Fortegra business specifically, income was roughly stable at $68 million over the year, but with revenues increasing by 26.9% to $1.2 billion driven by premium growth in specialty admitted and E&S lines, and service contract businesses in US and Europe.

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Fortegra’s gross written premiums and premium equivalents similarly increased by 25.7% for the quarter and by 22.2%, and the combination of unearned premiums and deferred revenues on its balance sheet grew to $2.0 billion, up $348 million, or 21.0%, from December 31, 2021.

The combined ratio for Fortegra in Q4was 89.8%, compared to 89.4% for the same period in 2021, driven by consistent underwriting performance and scalability of the operating platform. Total year 2022 combined ratio was 90.7%, consistent with the prior year.

“2022 was a strong year for Tiptree, with our operating businesses performing well,” said Tiptree’s Executive Chairman, Michael Barnes. “As we look forward, we see significant opportunities to grow our businesses and are confident in the long-term outlook for the company.”

In June 2022, Tiptree closed the previously announced $200 million strategic investment in Fortegra by Warburg Pincus. As part of the closing, $113 million of Tiptree’s corporate debt was repaid in full.

Tiptree recognized a $63.2 million pre-tax gain in stockholders’ equity from the investment in Fortegra, which was partially offset by an increase in deferred tax liability associated with the tax deconsolidation of Fortegra. Of the total deferred tax liability of $44.8 million, $33.1 million impacted net income with the remainder impacting stockholders’ equity directly.

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