TIPTREE INC. – 10-Q – Management's Discussion and Analysis of Financial Condition and Results of Operations

Our Management's Discussion and Analysis of Financial Condition and Results of
Operations is presented in this section as follows:

•Overview

•Results of Operations
•Non-GAAP Measures and Reconciliations
•Liquidity and Capital Resources
•Critical Accounting Policies and Estimates

OVERVIEW

Tiptree allocates capital to select small and middle market companies with the
mission of building long-term value. Established in 2007, we have a significant
track record investing in the insurance sector and across a variety of other
industries, including mortgage origination, specialty finance and shipping. Our
largest operating subsidiary, Fortegra, is a leading provider of specialty
insurance products and related services. We also generate earnings from a
diverse group of select investments that we refer to as Tiptree Capital, which
includes our Mortgage segment and other, non-insurance businesses and assets. We
evaluate performance primarily by the comparison of shareholders' long-term
total return on capital, as measured by growth in stock price plus dividends
paid, in addition to Adjusted Net Income and Adjusted EBITDA.

Our first quarter 2022 highlights include:

Overall:

•Net loss of $1.0 million compared to net income of $28.6 million for the three
months ended March 31, 2021, resulting from growth in insurance and shipping
operations, more than offset by declines in mortgage volumes and margins and
realized and unrealized losses on investments as compared to gains in 2021.
•Adjusted net income of $15.5 million increased 17.5% from $13.2 million in
2021, driven by improvement in insurance and shipping operations. Adjusted
return on average equity was 15.8%, as compared to 13.7% in 2021.
•In October 2021, Tiptree announced a $200 million strategic investment in its
insurance subsidiary, Fortegra, by Warburg Pincus, a leading global growth
investor. The investment will give Warburg Pincus an approximate 24% ownership
in Fortegra on an as converted basis and is expected to close in the second
quarter 2022, subject to regulatory approvals.

Insurance:

•Gross written premiums and premium equivalents were $600.9 million for the
three months ended March 31, 2022, as compared to $477.2 million for the three
months ended March 31, 2021, up 25.9% as a result of growth in admitted and E&S
insurance lines as well as growth in fee-based service contract offerings.
•Total revenues increased 26.9% to $282.5 million, from $222.6 million in 2021,
driven by increases in earned premiums, net and service and administrative fees.
•The combined ratio improved to 90.5%, as compared to 91.5% in 2021, driven by
the continued scalability of Fortegra's technology and shared service platform,
which improved the expense ratio, while the underwriting ratio remained
consistent.
•Income before taxes of $14.7 million decreased by $6.8 million as compared to
$21.5 million in 2021. Return on average equity was 14.7% in 2022 as compared to
23.9% in 2021. The decrease in both metrics resulted from a combination of
revenue growth and an improved combined ratio, more than offset by losses on
investments in 2022 compared to gains in 2021.
•Adjusted net income increased 65.3% to $21.1 million, as compared to $12.8
million in 2021. Adjusted return on average equity was 28.2%, as compared to
17.9% in 2021. The increase in both metrics was driven by revenue growth and an
improved combined ratio.
•In April 2022, Fortegra acquired all of the equity interests of ITC Compliance
GRP Limited for net cash consideration of approximately $15.6 million.

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Tiptree Capital:
•Mortgage income before taxes was $4.3 million in 2022, as compared to $13.1
million in 2021, with the decrease driven by declines in origination volumes and
gain on sale margins, partially offset by higher servicing fees and positive
fair value adjustments on the mortgage servicing portfolio. Return on average
equity was 22.3% in 2022.
•Maritime transportation income before taxes was $2.7 million in 2022, as
compared to $0.5 million in 2021, with the increase driven by a rise in both
dry-bulk and tanker charter rates.
•In March 2022, we signed a definitive agreement to sell one of our three
dry-bulk vessels for $21.5 million, representing an approximate 50% gain as
compared to March 31, 2022 book value, which is expected to close in June 2022.
•In May 2022, $13.1 million of asset based debt associated with tanker
investments was prepaid, at a discount of 10% to the outstanding principal
balance.

Key Trends:


Our results of operations are affected by a variety of factors including, but
not limited to, general economic conditions and GDP growth, market liquidity and
volatility, consumer confidence, U.S. demographics, employment and wage growth,
business confidence and investment, inflation, interest rates and spreads, the
impact of the regulatory environment, and the other factors set forth in Part I,
Item 1A in our Annual Report on Form 10-K for the fiscal year ended December 31,
2021. Generally, our businesses are positively affected by a healthy U.S.
consumer, stable to gradually rising interest rates, stable markets and business
conditions, and global growth and trade flows. Conversely, rising unemployment,
volatile markets, rapidly rising interest rates, changing regulatory
requirements and slowing business conditions can have a material adverse effect
on our results of operations or financial condition.

Fortegra generally offers products which have low severity but high frequency
loss experiences and are short duration. As a result, the business has
historically generated significant fee-based revenues. In general, the types of
products Fortegra offers tend to have limited aggregation risk and limited
exposure to catastrophic and residual risk. Underwriting risk is mitigated
through a combination of reinsurance and retrospective commission structures
with agents, distribution partners and/or third-party reinsurers. To mitigate
counterparty risk, Fortegra ensures its distribution partners' captive
reinsurance entities are over-collateralized with highly liquid investments,
primarily cash and cash equivalents. Insurance results primarily depend on
pricing, underwriting, risk retention and the accuracy of reserves, reinsurance
arrangements, returns on invested assets, and policy and contract renewals and
run-off. Factors affecting these items, including conditions in financial
markets, the global economy and the markets in which we operate, fluctuations in
exchange rates, interest rates and inflation, including the current period of
inflationary pressures, may have a material adverse effect on our results of
operations or financial condition. While Fortegra's insurance operations have
historically maintained a relatively stable combined ratio, initiatives to
change the business mix along with these economic factors could generate
different results than the business has historically experienced. We believe
there will continue to be growth opportunities to expand Fortegra's specialty
insurance offerings to other niche products and markets.

Fortegra's investment portfolio includes fixed maturity securities, loans,
credit investment funds, and equity securities. Many of those investments are
held at fair value. During the first quarter of 2022, the U.S. fixed income
markets have experienced a significant rise in interest rates. Rising interest
rates have and could continue to impact the value of Fortegra's fixed maturity
securities, with any unrealized losses recorded in equity, and if realized,
could impact our results of operations. Offsetting the impact of a rising
interest rate environment, new investments in fixed rate instruments from both
maturities and portfolio growth can result in higher interest income on
investments over time. The average duration of our fixed income available for
sale securities is less than three years. During the first quarter of 2022,
2-year treasury yields increased significantly, which resulted in a negative
impact on Fortegra's fixed income portfolio and our book value, as the
substantially majority was unrealized. While our asset and liability mix is
relatively matched, and we generally have the ability to hold these securities
to maturity, should we need to liquidate any of these investments before
maturity to pay claims, any realized losses could materially negatively impact
our results of operations.

Changes in fair value for loans, credit investment funds, and equity securities
in Fortegra's investment portfolio are reported quarterly as unrealized gains or
losses in revenues and can be impacted by changes in interest rates, credit
risk, or market risk, including specific company or industry factors. Our equity
holdings are relatively concentrated. 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 increases in mortgage
interest rates. Low mortgage rates driven by the Federal Reserve intervention in
mortgage
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markets, and rising home prices in certain markets, had provided tailwinds to
the mortgage markets beginning in the second quarter of 2020 and continuing
through 2021, which had benefited our mortgage operations and margins. While
current mortgage rates still remain at relative historic lows, the recent rise
in rates has resulted in a reversal of those trends, with volumes and margins
declining. Offsetting the declines in earnings in our origination business is an
increase in the fair value of our mortgage servicing portfolio as rising rates
slow prepayment speeds, with a resulting increase in servicing income. Continued
rising mortgage rates could have a materially negative impact on our mortgage
business results of operations, and may only be partially mitigated by the
improvement in mortgage servicing revenues.

Rising interest rates can also impact the cost of floating interest rate debt
obligations, while declining rates can decrease the cost of debt. Our secured
revolving and term credit agreements, preferred trust securities and asset based
revolving financing are all floating rate obligations. While the majority of our
floating rate debt has LIBOR floors that are either at or above current LIBOR
rates, a continuation of rising rates could have a material impact on our costs
of floating rate debt.

In addition, authorities that regulate LIBOR have announced plans to phase out
LIBOR, such that LIBOR is expected to cease to exist as a benchmark for floating
interest rates. The Federal Reserve Board and the Federal Reserve Bank of New
York organized the Alternative Reference Rates Committee, which identified the
Secured Overnight Financing Rate (SOFR) as its preferred alternative rate for
USD-LIBOR. We are not able to predict when LIBOR will cease to be available or
when there will be sufficient liquidity in the SOFR or other alternative markets
as replacement reference rates. Such uncertainty may result in a sudden or
prolonged increase or decrease in reported LIBOR and/or its replacement rate. To
address the phase out of LIBOR, the agreements for our debt facilities include a
mechanism to replace LIBOR with an alternative reference rate under specified
circumstances, whether that replacement is SOFR or another benchmark. If future
rates based upon the successor reference rate are higher than LIBOR rates as
currently determined due to illiquidity or other factors, our interest expense
could increase.
Common shares of Invesque represent a significant asset on our condensed
consolidated balance sheets, both as part of insurance investments and
separately in Tiptree Capital. Our investment in Invesque, which operates in the
seniors housing, skilled nursing and medical office industries, is carried on
our condensed consolidated balance sheets at fair value. Any additional declines
in the fair value of Invesque's common stock could continue to have a
significant impact on our results of operations and the value of the investment.

The maritime transportation industry is highly competitive and fragmented.
Demand for shipping capacity is a function of global economic conditions and the
related demand for commodities, production and consumption patterns, and is
affected by events which interrupt production, trade routes, and consumption.
Should rising interest rates and global inflationary factors drive a global
recession, both charter rates and utilization rates could be negatively
impacted. The shipping industry is cyclical with significant volatility in
charter hire rates and profitability, which can change rapidly. General global
economic conditions, along with company and industry specific factors, are
expected to continue to impact the fair value of our vessels and associated
operating results. While there is a current imbalance in supply and demand for
shipping capacity, which led to a cyclical high in dry-bulk charter rates, a
change in those factors and/or changes in global economic conditions could
result in substantially lower charter rates, which could negatively impact our
results of operations and the carrying value of our vessels.

RESULTS OF OPERATIONS

The following is a summary of our consolidated financial results for the three
months ended March 31, 2022 and 2021. In addition to GAAP results, management
uses the Non-GAAP measures Adjusted net income, Adjusted return on average
equity, Adjusted EBITDA 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 uses
Adjusted net income and adjusted return on average equity as part of its capital
allocation process and to assess comparative returns on invested capital.
Adjusted EBITDA is also used in determining incentive compensation for the
Company's executive officers. Adjusted net income represents income before
taxes, less provision (benefit) for income taxes, and excluding the after-tax
impact of various expenses that we consider to be unique and non-recurring in
nature, stock-based compensation, net realized and unrealized gains (losses),
and intangibles amortization associated with purchase accounting. The Company
defines Adjusted EBITDA as GAAP net income of the Company plus corporate
interest expense, plus income taxes, plus depreciation and amortization expense,
less the effects of purchase accounting, plus non-cash fair value adjustments,
plus significant non-recurring expenses, and plus unrealized gains (losses) on
available for sale securities that are reported in other comprehensive income.
Adjusted net income, Adjusted return on average equity and Adjusted EBITDA are
not measurements of financial performance or liquidity under GAAP and should not
be considered as an alternative or substitute for GAAP net income. See "Non-GAAP
Reconciliations" for a reconciliation of these measures to their GAAP
equivalents.
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Selected Key Metrics

                                                                 Three 

Months Ended

   ($ in thousands, except per share information)                    March 31,
   GAAP:                                                        2022            2021
   Total revenues                                           $ 324,903       $ 294,688

Net income (loss) attributable to common stockholders $ (960) $ 28,581

   Diluted earnings per share                               $   (0.03)      

$ 0.81

   Cash dividends paid per common share                     $    0.04       $    0.04
   Return on average equity                                      (0.9) %         31.8  %

   Non-GAAP: (1)
   Adjusted net income                                      $  15,452       $  13,155
   Adjusted return on average equity                             15.8  %         13.7  %
   Adjusted EBITDA                                          $ (14,905)      $  45,683
   Book value per share                                     $   10.51       $   11.63

(1) See "-Non-GAAP Reconciliations" for a discussion of non-GAAP financial
measures.

Revenues

For the three months ended March 31, 2022, revenues were $324.9 million, which
increased $30.2 million, or 10.3%, compared to the prior year period, primarily
driven by growth in earned premiums, net, and service and administrative fees in
the insurance business, increased revenues from vessels and our mortgage
servicing portfolio, partially offset by lower mortgage volumes and margins and
net realized and unrealized losses on Invesque and other investments in 2022
compared to gains in 2021.

The table below provides a break down between net realized and unrealized gains
and losses from Invesque and other securities which impacted our consolidated
results on a pre-tax basis. Many investments are carried at fair value and
marked to market through unrealized gains and losses. As a result, we expect
earnings relating to these investments to be relatively volatile between
periods. Fixed income securities are primarily marked to market through AOCI in
stockholders' equity and do not impact net realized and unrealized gains and
losses until they are sold.

                                                             Three Months Ended
($ in thousands)                                                 March 31,
                                                             2022           2021
Net realized and unrealized gains (losses)(1)            $    1,518      $ 

10,215

Net realized and unrealized gains (losses) - Invesque $ (10,698) $ 16,643

(1) Excludes Invesque and Mortgage realized and unrealized gains and losses.

Net Income (Loss) Attributable to common stockholders

For the three months ended March 31, 2022, net loss attributable to common
stockholders was $1.0 million, a decrease of $29.5 million from net income of
$28.6 million for the three months ended March 31, 2021, primarily driven by net
realized and unrealized losses on Invesque and other investments in 2022
compared to gains in 2021, and lower mortgage origination revenues, partially
offset by growth in Fortegra's underwriting and fee operations, increased
revenues from our mortgage servicing portfolio and improvement in dry-bulk and
tanker shipping rates.

Adjusted net income & Adjusted return on average equity - Non-GAAP

Adjusted net income for the three months ended March 31, 2022 was $15.5 million,
an increase of $2.3 million, or 17.5%, from the three months ended March 31,
2021. For the three months ended March 31, 2022, adjusted return on average
equity was 15.8%, as compared to 13.7% at March 31, 2021, with the increase in
both metrics driven by improved performance in our insurance and shipping
operations.

Adjusted EBITDA - Non-GAAP

Adjusted EBITDA for the three months ended March 31, 2022 was a loss of $14.9
million, a decrease of $60.6 million from 2021, driven by realized and
unrealized losses in 2022 (including impacts to AOCI) compared to gains in 2021,
partially
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offset by the improved operating performance noted above.

Book Value per share - Non-GAAP

Total stockholders' equity was $383.2 million as of March 31, 2022 compared to
$397.4 million as of March 31, 2021. In the three months ended March 31, 2022,
Tiptree returned $1.4 million to stockholders through dividends paid. Book value
per share for the period ended March 31, 2022 was $10.51, a decrease from book
value per share of $11.63 as of March 31, 2021. The key drivers of the decrease
over the past four quarters were income per share, partially offset by other
comprehensive losses, dividends paid of $0.16 per share, and issuance of shares
on exercise of warrants and in exchange for vested subsidiary equity awards.

Results by Segment

We classify our business into two reportable segments, Insurance and Mortgage,
with the remainder of our operations aggregated into Tiptree Capital - Other.
Corporate activities include holding company interest expense, corporate
employee compensation and benefits, and other expenses, including, but not
limited to, public company expenses.

The following tables present the components of Revenue, Income (loss) before
taxes and Adjusted net income for the following periods:

                                          Three Months Ended
($ in thousands)                              March 31,
                                         2022           2021
Revenues:
Insurance                             $ 282,529      $ 222,563
Mortgage                                 25,401         34,494
Tiptree Capital - other                  16,973         37,631
Corporate                                     -              -
Total revenues                        $ 324,903      $ 294,688

Income (loss) before taxes:
Insurance                             $  14,682      $  21,528
Mortgage                                  4,266         13,077
Tiptree Capital - other                  (7,651)        14,994
Corporate                               (12,249)       (10,207)

Total income (loss) before taxes $ (952) $ 39,392

Non-GAAP - Adjusted net income (1):
Insurance                             $  21,124      $  12,776
Mortgage                                 (1,556)         7,465
Tiptree Capital - other                   2,528            567
Corporate                                (6,644)        (7,653)
Total adjusted net income             $  15,452      $  13,155

(1) See "-Non-GAAP Reconciliations" for a discussion of non-GAAP financial
measures.

Insurance

Fortegra is a specialty insurance underwriter and service provider, which
focuses on niche programs and fee-oriented services. The combination of
specialty insurance underwriting, service contract products, and related service
solutions delivered through a vertically integrated business model creates a
blend of traditional underwriting revenues, investment income and unregulated
fee revenues. The business is an agent-driven model, distributing products
through independent insurance agents, consumer finance companies, online
retailers, auto dealers, and regional big box retailers to deliver products that
complement the consumer transaction.

The following tables present the Insurance segment results for the three months
ended March 31, 2022 and 2021.

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Results of Operations - Three Months Ended March 31, 2022 compared to 2021

($ in thousands)                                                      Three Months Ended March 31,
                                                   2022               2021              Change              % Change
Revenues:
Earned premiums, net                           $ 208,416          $ 146,919          $  61,497                    41.9  %
Service and administrative fees                   71,835             58,050             13,785                    23.7  %
Ceding commissions                                 2,537              3,025               (488)                  (16.1) %
Net investment income                              3,167              2,767                400                    14.5  %
Net realized and unrealized gains (losses)        (6,643)             9,672            (16,315)                       NM%
Other revenue                                      3,217              2,130              1,087                    51.0  %
Total revenues                                 $ 282,529          $ 222,563          $  59,966                    26.9  %
Expenses:

Net losses and loss adjustment expenses $ 83,276 $ 50,251

         $  33,025                    65.7  %
Member benefit claims                             21,170             16,923              4,247                    25.1  %
Commission expense                               117,423             88,645             28,778                    32.5  %
Employee compensation and benefits                22,026             19,089              2,937                    15.4  %
Interest expense                                   4,759              4,304                455                    10.6  %
Depreciation and amortization                      4,354              4,191                163                     3.9  %
Other expenses                                    14,839             17,632             (2,793)                  (15.8) %
Total expenses                                 $ 267,847          $ 201,035          $  66,812                    33.2  %
Income (loss) before taxes (1)                 $  14,682          $  21,528          $  (6,846)                  (31.8) %

Key Performance Metrics:
Gross written premiums and premium equivalents $ 600,855          $ 477,233          $ 123,622                    25.9  %
Return on average equity                            14.7  %            23.9  %
Underwriting ratio                                  77.6  %            74.2  %
Expense ratio                                       12.9  %            17.3  %
Combined ratio                                      90.5  %            91.5  %

Non-GAAP Financial Measures (2):
Adjusted net income                            $  21,124          $  12,776          $   8,348                    65.3  %
Adjusted return on average equity                   28.2  %            17.9 

%

(1) Net income was $11,018 for the three months ended March 31, 2022 compared
to $17,099 for the three months ended March 31, 2021.

(2) See "-Non-GAAP Reconciliations" for a discussion of non-GAAP financial
measures.

Revenues

Earned Premiums, net

Earned premiums, net represent the earned portion of gross written and assumed
premiums, less the earned portion that is ceded to third-party reinsurers under
reinsurance agreements. Fortegra's insurance policies generally have a term of
six months to seven years depending on the underlying product and premiums are
earned pro rata over the term of the policy. At the end of each reporting
period, premiums written but not earned are classified as unearned premiums and
are earned in subsequent periods over the remaining term of the policy.

Service and Administrative Fees

Service and administrative fees represent the earned portion of gross written
premiums and premium equivalents, which is generated from non-insurance products
including warranty service contracts, motor club contracts and other services
offered as part of Fortegra's vertically integrated product offerings. Such fees
are typically positively correlated with transaction volume and are recognized
as revenue when realized and earned. At the end of each reporting period, gross
written premiums and premium equivalents written for service contracts not
earned are classified as deferred revenue, which are earned in subsequent
periods over the remaining term of the policy.

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Ceding Commissions and Other Revenue

Ceding commissions and other revenue consists of commissions earned on policies
written on behalf of third-party insurance companies with no exposure to the
insured risk and certain fees earned in conjunction with underwriting policies.
Other revenue also includes the interest income earned on the premium finance
product offering.

Net Investment Income

We earn investment income on the portfolio of invested assets. Invested assets
are primarily comprised of fixed maturity securities and may also include cash
and cash equivalents and equity securities. The principal factors that influence
net investment income are the size of the investment portfolio, the yield on
that portfolio and expenses due to external investment managers.

Net Realized and Unrealized Gains (Losses)

Net realized and unrealized gains (losses) on investments are a function of the
difference between the amount received by us on the sale of a security and the
security's cost-basis, as well as any "other-than-temporary" impairments and
allowances for credit losses which are recognized in earnings. In addition,
equity securities are carried at fair value with unrealized gains and losses
included in this line.

Revenues - Three Months Ended March 31, 2022 compared to 2021

For the three months ended March 31, 2022, total revenues increased 26.9%, to
$282.5 million, as compared to $222.6 million for the three months ended
March 31, 2021. Earned premiums, net of $208.4 million increased $61.5 million,
or 41.9%, driven by growth in commercial, credit and warranty insurance
offerings. Service and administrative fees of $71.8 million increased by 23.7%
driven by growth in warranty and consumer goods service contract revenues.
Ceding commissions of $2.5 million decreased by $0.5 million, or 16.1%, driven
by lower ceding fees as less business was ceded in certain credit insurance and
collateral protection programs. Other revenues increased by $1.1 million, or
51.0%, driven by growth in premium finance product offerings.

For the three months ended March 31, 2022, 27.5% 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. For the
three months ended March 31, 2022, 78.7% of fee-based revenues were generated in
non-regulated service companies, with the remainder in regulated insurance
companies.

For the three months ended March 31, 2022, net investment income was $3.2
million as compared to $2.8 million in the prior year period, primarily driven
by growth in investments. Net realized and unrealized losses were $6.6 million,
a decrease of $16.3 million, as compared to net realized and unrealized gains of
$9.7 million in the prior year period, primarily driven by the change in fair
value of certain equity and fixed income securities carried at fair value.

Expenses

Underwriting and fee expenses under insurance and warranty service contracts
include losses and loss adjustment expenses, member benefit claims and
commissions expense.

Net Losses and Loss Adjustment Expenses

Net losses and loss adjustment expenses represent actual insurance claims paid,
changes in unpaid claim reserves, net of amounts ceded and the costs of
administering claims for insurance lines. Incurred claims are impacted by loss
frequency, which is a measure of the number of claims per unit of insured
exposure, and loss severity, which is based on the average size of claims. Loss
occurrences in insurance products are characterized by low severity and high
frequency. Factors affecting loss frequency and loss severity include the volume
of underwritten contracts, changes in claims reporting patterns, claims
settlement patterns, judicial decisions, economic conditions, morbidity patterns
and the attitudes of claimants towards settlements, and original pricing of the
product for purposes of the loss ratio in relation to loss emergence over time.
Losses and loss adjustment expenses are based on an actuarial analysis of the
estimated losses, including losses incurred during the period and changes in
estimates from prior periods.

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Member Benefit Claims

Member benefit claims represent the costs of services and replacement devices
incurred in warranty and motor club service contracts. Member benefit claims
represent claims paid on behalf of contract holders directly to third-party
providers for roadside assistance and for the repair or replacement of covered
products. Claims can also be paid directly to contract holders as a
reimbursement payment, provided supporting documentation of loss is submitted to
the Company. Claims are recognized as expense when incurred.

Commission Expense

Commission expenses reflect commissions paid to retail agents, program
administrators and managing general underwriters, net of ceding commissions
received on business ceded under certain reinsurance contracts. Commission
expenses are deferred and amortized to expense in proportion to the premium
earned over the policy life. Commission expense is incurred on most product
lines. The majority of commissions are retrospective commissions paid to agents,
distributors and retailers selling the Company's products, including credit
insurance policies, warranty service contracts and motor club memberships. When
claims increase, in most cases distribution partners bear the risk through a
reduction in their retrospective commissions. Commission rates are, in many
cases, set by state regulators, such as in credit and collateral protection
programs and are also impacted by market conditions and the retention levels of
distribution partners.

Operating and Other Expenses

Operating and other expenses represent the general and administrative expenses
of insurance operations including employee compensation and benefits and other
expenses, including, technology costs, office rent, and professional services
fees, such as legal, accounting and actuarial services.

Interest Expense

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 and Amortization

Depreciation expense is primarily associated with furniture, fixtures and
equipment. Amortization expense is primarily associated with purchase accounting
amortization including values associated with acquired customer relationships,
trade names and internally developed software and technology.

Expenses - Three Months Ended March 31, 2022 compared to 2021

For the three months ended March 31, 2022, net losses and loss adjustment
expenses were $83.3 million, member benefit claims were $21.2 million and
commission expense was $117.4 million, as compared to $50.3 million, $16.9
million and $88.6 million, respectively, for the three months ended March 31,
2021. The increase in net losses and loss adjustment expenses of $33.0 million,
or 65.7%, was driven by growth in U.S. and European Insurance lines and the
shift in business mix toward commercial lines, which tend to have a higher loss
ratios and lower commission ratios. In addition, the impact of prior year
development of $1.2 million was a result of higher-than-expected claim severity
from business written by a small group of producers of our personal and
commercial lines of business. The increase in member benefit claims of $4.2
million, or 25.1%, was driven by growth in vehicle service contracts. Commission
expense increased by $28.8 million, or 32.5%, in line with the growth in earned
premiums, net and service and administrative fees.

For the three months ended March 31, 2022, employee compensation and benefits
were $22.0 million and other expenses were $14.8 million, as compared to $19.1
million and $17.6 million, respectively, for the three months ended March 31,
2021. Employee compensation and benefits increased by $2.9 million, or 15.4%,
driven by investments in human capital associated with growth in admitted, E&S
and warranty lines. Other expenses decreased by $2.8 million, or 15.8%, driven
primarily by the deferral of current and certain prior year marketing and
advertising costs aligned with the deferral of revenues from Sky Auto, partially
offset by increases in premium taxes, which grew in line with earned premiums.

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For the three months ended March 31, 2022, interest expense was $4.8 million as
compared to $4.3 million for the three months ended March 31, 2021. The increase
in interest expense of $0.5 million, or 10.6%, was primarily driven by increased
asset based debt for premium finance lines.

For the three months ended March 31, 2022, depreciation and amortization expense
was $4.4 million, including $3.9 million of intangible amortization related to
purchase accounting associated with the acquisitions of Fortegra, Smart AutoCare
and Sky Auto, as compared to $4.2 million, including $3.8 million of intangible
amortization from purchase accounting in 2021.




Key Performance Metrics

We discuss certain key performance metrics, described below, which provide
useful information about our business and the operational factors underlying its
financial performance.

Gross Written Premiums and Premium Equivalents

Gross written premiums and premium equivalents represent total gross written
premiums from insurance policies and warranty service contracts issued, as well
as premium finance volumes 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. Gross written premiums is a volume
measure commonly used in the insurance industry to compare sales performance by
period. Premium equivalents are used to compare sales performance of warranty
service and administrative contract volumes to gross written premiums. Investors
also use these measures to compare sales growth among comparable companies,
while management uses these measures to evaluate the relative performance of
various sales channels.

The below table shows gross written premiums and premium equivalents by business
mix for the three and three months ended March 31, 2022 and 2021.

                                Three Months Ended
($ in thousands)                    March 31,
                               2022           2021
U.S. Insurance              $ 407,020      $ 335,848
U.S. Warranty Solutions       162,683        125,329
Europe Warranty Solutions      31,152         16,056
Total                       $ 600,855      $ 477,233



Total gross written premiums and premium equivalents for the three months ended
March 31, 2022 were $600.9 million as compared to $477.2 million in 2021. The
growth of $123.6 million, or 25.9%, is driven by a combination of factors
including growing Fortegra's distribution partner network, expanding specialty
admitted and E&S insurance lines, and increasing penetration in the auto and
consumer goods service contract sector.

For the three months ended March 31, 2022, U.S. Insurance increased by $71.2
million, or 21.2%, driven by growth in commercial, E&S, and warranty insurance
lines. For the three months ended March 31, 2022, U.S. Warranty Solutions
increased by $37.4 million, or 29.8%, driven by growth in auto and roadside
assistance service contracts. Europe Warranty Solutions increased by $15.1
million, or 94.0%, driven by growth in auto and consumer goods warranty
programs.

The growth in gross written premiums and premium equivalents, combined with
higher retention in select products for the three months ended March 31, 2022,
has resulted in an increase of $432.5 million, or 32.8%, in unearned premiums
and deferred revenue on the condensed consolidated balance sheets as compared to
March 31, 2021. As of March 31, 2022, unearned premiums and deferred revenues
were $1,749.1 million, as compared to $1,316.6 million as of March 31, 2021.

Combined Ratio, Underwriting Ratio and Expense Ratio

Combined ratio is an operating measure, which equals the sum of the underwriting
ratio and the expense ratio. Underwriting ratio is the ratio of the GAAP line
items net losses and loss adjustment expenses, member benefit claims and
commission expense to earned premiums, net, service and administrative fees and
ceding commissions and other revenue. Expense ratio is the ratio of the GAAP
line items employee compensation and benefits and other underwriting, general
and administrative expenses to earned premiums, net, service and administrative
fees and ceding commissions and other revenue.

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A combined ratio under 100% generally indicates an underwriting profit. A
combined ratio over 100% generally indicates an underwriting loss. These ratios
are commonly used in the insurance industry as a measure of underwriting
profitability, excluding earnings on the insurance portfolio. Investors commonly
use these measures to compare underwriting performance among companies separate
from the performance of the investment portfolio. Management uses these measures
to compare the profitability of various products underwritten as well as
profitability among programs between various agents and sales channels.

The combined ratio was 90.5% for the three months ended March 31, 2022, which
consisted of an underwriting ratio of 77.6% and an expense ratio of 12.9%, as
compared to 91.5%, 74.2% and 17.3%, respectively, for the three months ended
March 31, 2021. The improvement in the combined ratio year over year is
primarily driven by the continued scalability of the technology and shared
service platform, decreasing the expense ratio.

Return on Average Equity

Return on average equity is expressed as the ratio of net income to average
stockholders' equity during the period. Management uses this ratio as a measure
of the on-going performance of the totality of the Company's operations.

Return on average equity was 14.7% for the three months ended March 31, 2022, as
compared to 23.9% for the three months ended March 31, 2021, with the decrease
in net income and annualized return on average equity driven by net realized and
unrealized losses in the 2022 period compared to net realized and unrealized
gains in the 2021 period, partially offset by revenue growth and an improved
combined ratio.

Non-GAAP Financial Measures

Underwriting and Fee Revenues and Underwriting and Fee Margin - Non-GAAP(1)

In order to better explain to investors the underwriting performance of the
Company's programs and the respective retentions between the Company and its
agents and reinsurance partners, we use the non-GAAP metrics - underwriting and
fee revenues and underwriting and fee margin. Underwritten exposures are managed
using both reinsurance (e.g., quota share and excess of loss) and retrospective
commission agreements with Fortegra's agents (e.g., commissions paid are
adjusted based on the actual underlying losses incurred). Period-over-period
comparisons of revenues and expenses are often impacted by the agents and their
PORC's choice as to their risk retention appetite, specifically earned premiums,
net, service and administration fees, ceding commissions, and other revenue, all
components of revenue, and losses and loss adjustment expenses, member benefit
claims, and commissions paid to Fortegra's agents and reinsurers. Generally,
when losses are incurred, the risk which is retained by Fortegra's agents and
reinsurers is reflected in a reduction in commissions paid.

Underwriting and fee revenues represents total revenues excluding net investment
income, net realized and unrealized gains (losses). See "-Non-GAAP
Reconciliations" for a reconciliation of underwriting and fee revenues to total
revenues in accordance with GAAP.

Underwriting and fee margin represents income before taxes excluding net
investment income, net realized and unrealized gains (losses), employee
compensation and benefits, other expenses, interest expense and depreciation and
amortization. Fortegra's products and services are delivered on a vertically
integrated basis to its agents. As such, underwriting and fee margin exclude
general and administrative expenses, interest income, depreciation and
amortization and other corporate expenses, including income taxes, as these
corporate expenses support the vertically integrated delivery model and are not
specifically supporting any individual business line. See "-Non-GAAP
Reconciliations" for a reconciliation of underwriting and fee margin to total
revenues in accordance with GAAP.

The below table shows underwriting and fee revenues and underwriting and fee
margin by business mix for the three months ended March 31, 2022 and 2021.

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                                                                Three 

Months Ended March 31,

                                                                                       Underwriting and Fee
($ in thousands)                               Underwriting and Fee Revenues (1)            Margin (1)
                                                    2022                 2021                         2022               2021
U.S. Insurance                                 $    210,988          $ 149,813                    $  39,879          $  30,190
U.S. Warranty Solutions                              61,049             51,119                       19,441             20,638
Europe Warranty Solutions                            13,968              9,192                        4,816              3,477
Total                                          $    286,005          $ 210,124                    $  64,136          $  54,305

(1) See "-Non-GAAP Reconciliations" for a discussion of non-GAAP financial
measures.

Underwriting and fee revenues were $286.0 million for the three months ended
March 31, 2022 as compared to $210.1 million for the three months ended March
31, 2021. Total underwriting and fee revenues increased $75.9 million, or 36.1%,
driven by growth in all business lines. The increase in U.S. Insurance was $61.2
million, or 40.8%, driven by growth in commercial, E&S, and credit insurance
lines. The increase in U.S. Warranty Solutions was $9.9 million, or 19.4%,
driven by growth in auto, roadside assistance, and premium finance offerings.
Europe Warranty Solutions increased by $4.8 million, or 52.0%, driven by growth
in auto and consumer goods service contracts.

Underwriting and fee margin was $64.1 million for the three months ended March
31, 2022 as compared to $54.3 million for the three months ended March 31, 2021.
Total underwriting and fee margin increased $9.8 million, or 18.1%, driven by
growth in U.S. Insurance and Europe Warranty Solutions. U.S. Insurance grew by
$9.7 million, or 32.1%, as the underwriting ratio was consistent year-over-year
at 81.1% while revenues increased from growth in admitted and E&S lines. U.S.
Warranty Solutions decreased by $1.2 million, or 5.8%, primarily driven by the
deferral of revenues associated with contracts acquired by Sky Auto. This
current period revenue deferral for Sky Auto was offset by the deferral of
direct marketing costs in other expenses and therefore had minimal impact on the
combined ratio or income before taxes. Europe Warranty Solutions increased by
$1.3 million, or 38.5%, driven by growth in auto and consumer goods service
contracts in those markets.

Adjusted Net Income and Adjusted Return on Average Equity

Adjusted net income represents income before taxes, less provision (benefit) for
income taxes, and excluding the after-tax impact of various expenses that we
consider to be unique and non-recurring in nature, including merger and
acquisition related expenses, stock-based compensation, net realized and
unrealized gains (losses), and intangibles amortization associated with purchase
accounting.

Adjusted return on average equity represents adjusted net income expressed on an
annualized basis as a percentage of average beginning and ending stockholders'
equity during the period.

Management uses both these measures for executive compensation and as a measure
of the on-going performance of our operations. See "-Non-GAAP Reconciliations"
for a reconciliation of adjusted net income and adjusted return on average
equity to income before taxes and adjusted return on average equity.

For the three months ended March 31, 2022, adjusted net income and adjusted
return on average equity were $21.1 million and 28.2%, respectively, as compared
to $12.8 million and 17.9%, respectively, for the three months ended March 31,
2021. The improvement in both metrics was driven by the growth in underwriting
and fee revenues in addition to a 1.0 percentage point improvement in the
combined ratio.

Net Investment Income and Net Realized and Unrealized Gains (Losses) on
Investments

The insurance investment portfolio includes investments held in statutory
insurance companies and in unregulated entities. The portfolios held in
statutory insurance companies are subject to different regulatory
considerations, including with respect to types of assets, concentration limits,
affiliate transactions and the use of leverage. Fortegra's investment strategy
is designed to achieve attractive risk-adjusted returns across select asset
classes, sectors and geographies while maintaining adequate liquidity to meet
claims payment obligations. As such, volatility from realized and unrealized
gains and losses may impact period-over-period performance. Unrealized gains and
losses on equity securities and loans held at fair value impact current period
net income, while unrealized gains and losses on AFS securities impact AOCI.

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Net investment income includes interest and dividends, net of investment
expenses, on invested assets. Net realized and unrealized gains and losses on
investments are reported separately from net investment income.

For the three months ended March 31, 2022, net investment income was $3.2
million as compared to $2.8 million in the prior year period, driven by growth
in investments. Net realized and unrealized losses were $6.6 million, a decrease
of $16.3 million, driven by realized and unrealized losses on certain equity
securities and other investments, including fixed income securities carried at
fair value, in the 2022 period as compared to gains in the 2021 period.

Unrealized losses impacting OCI for the three months ended March 31, 2022 were
$26.4 million, driven by the rise in interest rates and corresponding impact to
the fair value of investments in U.S. Treasuries, obligations of U.S. government
agencies, corporate securities, obligations of state and political subdivisions,
and asset-backed securities.

Tiptree Capital

Tiptree Capital consists of our Mortgage segment, which includes the operating
results of Reliance, our mortgage business, and Tiptree Capital - Other, which
consists of our other non-insurance operating businesses and investments. As of
March 31, 2022, Tiptree Capital - Other includes our Invesque shares, maritime
transportation operations, and the mortgage operations of Luxury, which is
classified as held for sale on the condensed consolidated balance sheets.

Mortgage

Through our Mortgage operating subsidiary, Reliance, we originate, sell,
securitize and service one-to-four-family, residential mortgage loans, comprised
of conforming mortgage loans, Federal Housing Administration ("FHA"), Veterans
Administration ("VA"), United States Department of Agriculture ("USDA"), and to
a lesser extent, non-agency jumbo prime.

We are an approved seller/servicer for Fannie Mae and Freddie Mac. The Company
is also an approved issuer and servicer for Ginnie Mae. The Company originates
residential mortgage loans through its retail distribution channel (directly to
consumers) in 39 states and the District of Columbia as of March 31, 2022.

The following tables present the Mortgage segment results for the following
periods:

Results of Operations

                                                  Three Months Ended
($ in thousands)                                      March 31,
                                                 2022            2021
Revenues:

Net realized and unrealized gains (losses) $ 20,414 $ 30,077
Other revenue

                                    4,987           4,417
Total revenues                               $  25,401       $  34,494

Expenses:

Employee compensation and benefits           $  14,425       $  15,342
Interest expense                                   326             298
Depreciation and amortization                      214             225
Other expenses                                   6,170           5,552
Total expenses                               $  21,135       $  21,417
Income (loss) before taxes                   $   4,266       $  13,077

Key Performance Metrics:
Origination volumes                          $ 354,413       $ 419,879
Gain on sale margins                               4.3  %          6.0  %
Return on average equity                          22.3  %         60.9  %

Non-GAAP Financial Measures (1):
Adjusted net income                          $  (1,556)      $   7,465
Adjusted return on average equity                (10.6) %         45.6  %

(1) See "Non-GAAP Reconciliations" for a discussion of non-GAAP financial
measures.

Revenues

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Net Realized and Unrealized Gains (Losses)

Net realized and unrealized gains (losses) include gains on sale of mortgage
loans and the fair value adjustment in mortgage servicing rights. Gains on the
sale of mortgage loans represent the difference between the selling price and
carrying value of loans sold and are recognized upon settlement. Such gains also
include the changes in fair value of loans held for sale and loan-related hedges
and derivatives. We transfer the risk of loss or default to the loan purchaser,
however, in some cases we are required to indemnify purchasers for losses
related to non-compliance with borrowers' creditworthiness and collateral
requirements. Because of this, we recognize gains on sale net of required
indemnification and premium recapture reserves. The fair value adjustment on
mortgage servicing rights represents fair value adjustments considering
estimated prepayments and other factors associated with changes in interest
rates, plus actual run-off in the servicing portfolio. We report these
adjustments separate from servicing income and servicing expense.

Other Revenue

Other revenue includes loan origination fees, interest income, and mortgage
servicing income. Loan origination fees are earned as mortgage loans are funded.
Servicing fees are earned over the life of the loan. Interest income includes
interest earned on loans held for sale and interest income on bank balances and
short-term investments.

Revenues - Three Months Ended March 31, 2022 compared to 2021

For the three months ended March 31, 2022, $354.4 million of loans were funded,
compared to $419.9 million for 2021, a decrease of $65.5 million, or 15.6%.
Origination volumes in 2022 declined given the rise in mortgage interest rates,
partially offset by home price appreciation and cash-out refinancing activity in
the United States. Gain on sale margins decreased to 4.3% for the three months
ended March 31, 2022, down approximately 170 basis points from 6.0% for the
three months ended March 31, 2021.

Net realized and unrealized gains for the three months ended March 31, 2022 were
$20.4 million, compared to $30.1 million for 2021, a decrease of $9.7 million or
32.1%. The primary driver of decreased gain on sale revenues was the decline in
volumes and gain on sale margins, partially offset by positive fair value
adjustments in mortgage servicing rights of $6.3 million as interest rates
increased from the year ended December 31, 2021.

Other revenue for the three months ended March 31, 2022 was $5.0 million,
compared to $4.4 million for 2021, an increase of $0.6 million, or 12.9%, driven
primarily by higher servicing fees from an increase in loans serviced. As of
March 31, 2022, the mortgage servicing asset recorded in other assets on the
balance sheet was $37.9 million, an increase from $29.8 million as of December
31, 2021.

Expenses

Employee Compensation and Benefits

Employee compensation and benefits includes salaries, commissions, benefits,
bonuses, other incentive compensation and related taxes for employees.
Commissions expense for sales staff generally varies with loan origination
volumes.

Interest Expense

Interest expense represents borrowing costs under warehouse and other credit
facilities used primarily to fund loan originations. Amortization of deferred
financing costs, including commitment fees, is included in interest expense.

Depreciation and Amortization

Depreciation expense is mainly associated with furniture, fixtures and equipment
while amortization expense is primarily associated with a trade name and
internally developed software.

Other Expenses

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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.

Expenses - Three Months Ended March 31, 2022 compared to 2021

For the three months ended March 31, 2022, employee compensation and benefits
were $14.4 million, compared to $15.3 million in 2021, a decrease of $0.9
million or 6.0%. This decrease was driven primarily by reduced commissions on
lower origination volumes.

For the three months ended March 31, 2022 and 2021, interest expense and
depreciation and amortization expense were both flat, at $0.3 million and $0.2
million, respectively.

For the three months ended March 31, 2022, other expenses were $6.2 million,
compared to $5.6 million in 2021, with the $0.6 million increase driven by
increased loan origination expenses, including marketing costs.

Income (loss) before taxes

Income before taxes for the three months ended March 31, 2022 was $4.3 million,
compared to income before taxes of $13.1 million in 2021. The primary driver of
the decrease was a decline in volumes and margins, partially offset by higher
servicing fees attributable to the larger servicing portfolio, in addition to
positive fair value adjustments on the mortgage servicing rights asset, as
compared to 2021.

Tiptree Capital - Other

The following tables present a summary of Tiptree Capital - Other results for
the following periods:

Results of Operations
                                                                    Three Months Ended March 31,
                                                                                            Income (loss) before
($ in thousands)                                                Total revenue                      taxes
                                                           2022                 2021                    2022              2021
Senior living (Invesque)                             $    (8,851)            $ 13,766                $ (8,851)         $ 13,766
Maritime transportation                                    8,862                5,699                   2,653               513
Other (1)                                                 16,962               18,166                  (1,453)              715
Total                                                $    16,973             $ 37,631                $ (7,651)         $ 14,994

(1) Includes our held for sale mortgage originator (Luxury), asset management,
and certain intercompany elimination transactions.

Revenues

Tiptree Capital - Other earns revenues from the following sources: net interest
income; revenues on our held for sale mortgage originator; realized and
unrealized gains and losses on the Company's investment holdings (primarily
Invesque); and charter revenue from vessels within the Company's maritime
transportation operations.

Revenues for the three months ended March 31, 2022 were $17.0 million compared
to $37.6 million for 2021. The primary driver of the decrease in revenues for
the three months ended March 31, 2022 was unrealized losses on our investment in
Invesque in 2022 compared to unrealized gains in 2021, partially offset by
increased dry-bulk and tanker charter rates earned by the maritime
transportation business.

Income (loss) before taxes

The loss before taxes from Tiptree Capital - Other for the three months ended
March 31, 2022 was $7.7 million, compared to income before taxes of $15.0
million in 2021. The primary driver of the decrease was unrealized losses in
2022 compared to gains in 2021 on our investment in Invesque, partially offset
by increased income before taxes in our maritime transportation business due to
the same factors that had a positive impact on maritime transportation revenues.

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Adjusted net income - Non-GAAP(1)

                                 Three Months Ended
($ in thousands)                     March 31,
                                  2022             2021
Senior living (Invesque)   $         -            $   -
Maritime transportation          2,480              521
Other                               48               46
Total                      $     2,528            $ 567

(1) See "-Non-GAAP Reconciliations" for a discussion of non-GAAP financial
measures.

Adjusted net income increased to $2.5 million for the three months ended March
31, 2022 compared to $0.6 million in 2021. The increase was driven by the
improvement in maritime transportation operations.

Corporate

The following table presents a summary of corporate results for the following
periods:

Results of Operations

                                              Three Months Ended
($ in thousands)                                  March 31,
                                              2022           2021
Employee compensation and benefits        $    2,368      $  2,067
Employee incentive compensation expense        4,663         3,553
Interest expense                               2,243         2,564
Depreciation and amortization                    198           198
Other expenses                                 2,777         1,825
Total expenses                            $   12,249      $ 10,207


Corporate expenses include expenses of the holding company for interest expense,
employee compensation and benefits, and public company and other expenses.
Corporate employee compensation and benefits includes the expense of management,
legal and accounting staff. Other expenses primarily consisted of audit and
professional fees, insurance, office rent and other related expenses.

Employee compensation and benefits, including incentive compensation expense,
was $7.0 million for the three months ended March 31, 2022, compared to $5.6
million for 2021, driven by an increase in performance related employee
incentive compensation. Of the incentive compensation expense in the three
months ended March 31, 2022, $3.8 million was stock-based compensation expense
primarily related to awards tied to the increase in Tiptree's stock price over
the past twelve months. Interest expense for the three months ended March 31,
2022 and 2021 was $2.2 million and $2.6 million, respectively. As of March 31,
2022, the outstanding borrowing on the facility was $112.5 million, compared to
$114.1 million at December 31, 2021. Other expenses of $2.8 million increased by
$1.0 million from the three months ended March 31, 2021, primarily driven by
increased consulting, legal and professional fees.

Provision for Income Taxes

The total income tax benefit of $0.1 million for the three months ended March
31, 2022, and the total income tax expense of $8.8 million for the three months
ended March 31, 2021 are reflected as components of net income (loss).

For the three months ended March 31, 2022, the Company's effective tax rate was
equal to 9.0%. The effective rate for the three months ended March 31, 2022 was
lower than the U.S. statutory income tax rate of 21.0%, primarily from the
impact of non-deductible compensation and other discrete items. For the three
months ended March 31, 2021, the Company's effective tax rate was equal to
22.2%. The effective rate for the three months ended March 31, 2021 was higher
than the U.S. federal statutory income tax rate of 21.0%, primarily from the
impact of state taxes, partially offset by discrete items.

Balance Sheet Information

Tiptree's total assets were $3,600.2 million as of March 31, 2022, compared to
$3,599.1 million as of December 31, 2021. The $1.1 million increase in assets is
primarily attributable to the growth in the Insurance segment, partially offset
by unrealized losses on investments.
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Total stockholders' equity was $383.2 million as of March 31, 2022, compared to
$400.2 million as of December 31, 2021, primarily driven by the comprehensive
loss on available for sale securities attributable to common stockholders for
three months ended March 31, 2022. As of March 31, 2022, there were 34,877,897
shares of common stock outstanding as compared to 34,124,153 as of December 31,
2021, with the increase driven by the exercise of warrants and the vesting of
share-based incentive compensation.

The following table is a summary of certain balance sheet information:

                                                                               As of March 31, 2022
                                                                        Tiptree Capital
($ in thousands)                             Insurance            Mortgage            Other            Corporate             Total
Total assets                               $ 3,168,813          $ 182,828          $ 248,852          $    (295)         $ 3,600,198

Corporate debt                             $   160,000          $       -          $       -          $ 112,500          $   272,500
Asset based debt                                48,551             67,990             13,050                  -              129,591

Tiptree Inc. stockholders' equity $ 282,875 $ 56,431

$ 110,620 $ (83,293) $ 366,633
Non-controlling interests

                       11,419              1,087              2,952              1,062               16,520
Total stockholders' equity                 $   294,294          $  57,518   

$ 113,572 $ (82,231) $ 383,153

NON-GAAP MEASURES AND RECONCILIATIONS

Non-GAAP Reconciliations

In addition to GAAP results, management uses the non-GAAP financial measures
underwriting and fee revenues and underwriting and fee margin in order to better
explain to investors the underwriting performance and the respective retentions
between the Company and its agents and reinsurance partners. We also use the
non-GAAP financial measures adjusted net income, adjusted return on average
equity and Adjusted EBITDA as measures of operating performance and as part of
our resource and capital allocation process, to assess comparative returns on
invested capital. Adjusted EBITDA is also used in determining incentive
compensation for the Company's executive officers. Management believes these
measures provide supplemental information useful to investors as they are
frequently used by the financial community to analyze financial performance and
to compare relative performance among comparable companies. Adjusted net income,
adjusted return on average equity, Adjusted EBITDA, underwriting and fee
revenues and underwriting and fee margin are not measurements of financial
performance or liquidity under GAAP and should not be considered as an
alternative or substitute for earned premiums, net income or any other measure
derived in accordance with GAAP.

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Underwriting and Fee Revenues and Underwriting and Fee Margin - Non-GAAP
(Insurance only)

The following tables present revenue and expenses by business mix. We generally
manage exposure to underwriting risks written by using both reinsurance (e.g.,
quota share and excess of loss) and retrospective commission agreements with our
partners (e.g., commissions paid are adjusted based on the actual underlying
losses incurred), which mitigates Fortegra's risk. Period-over-period
comparisons of revenues and expenses are often impacted by the PORCs and
distribution partners' choice as to whether to retain risk, specifically service
and administration fees and ceding commissions, both components of revenue, and
policy and contract benefits and commissions paid to our partners and
reinsurers. Generally, when losses are incurred, the risk which is retained by
our partners and reinsurers is reflected in a reduction in commissions paid. In
order to better explain to investors the underwriting performance and the
respective retentions between the Company and its agents and reinsurance
partners, we use the non-GAAP metrics underwriting and fee revenues and
underwriting and fee margin.

Underwriting and Fee Revenues - Non-GAAP

We define underwriting and fee revenues as total revenues from the Insurance
segment excluding net investment income and net realized and unrealized gains
(losses). Underwriting and fee revenues represents revenues generated by
underwriting and fee-based operations and allows us to evaluate the Company's
underwriting performance without regard to investment income. We use this metric
as we believe it gives our management and other users of our financial
information useful insight into our underlying business performance.
Underwriting and fee revenues should not be viewed as a substitute for total
revenues calculated in accordance with GAAP, and other companies may define
underwriting and fee revenues differently.

                                                       Three Months Ended
($ in thousands)                                           March 31,
                                                      2022           2021
Total revenues                                     $ 282,529      $ 222,563
Less: Net investment income                           (3,167)        (2,767)

Less: Net realized and unrealized gains (losses) 6,643 (9,672)
Underwriting and fee revenues

                      $ 286,005      $ 210,124

Underwriting and Fee Margin - Non-GAAP

We define underwriting and fee margin as income before taxes from the Insurance
segment, excluding net investment income, net realized and unrealized gains
(losses), employee compensation and benefits, other expenses, interest expense
and depreciation and amortization. Underwriting and fee margin represents the
underwriting performance of our underwriting and fee-based lines. As such,
underwriting and fee margin excludes general administrative expenses, interest
expense, depreciation and amortization and other corporate expenses as those
expenses support the vertically integrated business model and not any individual
component of the Company's business mix. We use this metric as we believe it
gives our management and other users of our financial information useful insight
into the specific performance of our underlying business mix. Underwriting and
fee margin 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.

                                                       Three Months Ended
($ in thousands)                                           March 31,
                                                       2022           2021
Income (loss) before income taxes                  $   14,682      $ 21,528
Less: Net investment income                            (3,167)       

(2,767)

Less: Net realized and unrealized gains (losses) 6,643 (9,672)
Plus: Depreciation and amortization

                     4,354         4,191
Plus: Interest expense                                  4,759         4,304
Plus: Employee compensation and benefits               22,026        19,089
Plus: Other expenses                                   14,839        17,632
Underwriting and fee margin                        $   64,136      $ 54,305

Adjusted Net Income - Non-GAAP

We define adjusted net income as income before taxes, less provision (benefit)
for income taxes, and excluding the after-tax impact of various expenses that we
consider to be unique and non-recurring in nature, including merger and
acquisition
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related expenses, stock-based compensation, net realized and unrealized gains
(losses) and intangibles amortization associated with purchase accounting. We
use adjusted net income as an internal operating performance measure in the
management of business as part of our capital allocation process. We believe
adjusted net income provides useful supplemental information to investors as it
is frequently used by the financial community to analyze financial performance
between periods and for comparison among companies. Adjusted net income should
not be viewed as a substitute for income before taxes calculated in accordance
with GAAP, and other companies may define adjusted net income differently.

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, and Smart AutoCare and Sky Auto in 2020. The intangible assets acquired
contribute to overall revenue generation, and the respective purchase accounting
adjustments will continue to occur in future periods until such intangible
assets are fully amortized in accordance with the respective amortization
periods required by GAAP.

Adjusted Return on Average Equity - Non-GAAP

We define adjusted return on average equity as adjusted net income expressed on
an annualized basis as a percentage of average beginning and ending
stockholders' equity during the period. See "-Adjusted Net Income-Non-GAAP"
above. We use adjusted return on average equity as an internal performance
measure in the management of our operations because we believe it gives our
management and other users of our financial information useful insight into our
results of operations and our underlying business performance. Adjusted 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.
                                                               Three Months Ended March 31, 2022
                                                              Tiptree Capital
($ in thousands)                     Insurance          Mortgage            Other            Corporate            Total

Income (loss) before taxes $ 14,682 $ 4,266 $ (7,651) $ (12,249) $ (952)
Less: Income tax (benefit) expense (3,664)

             (978)             1,794              2,934                 86
Less: Net realized and unrealized
gains (losses)                          6,643            (6,314)             8,851                  -              9,180
Plus: Intangibles amortization (1)      3,946                 -                  -                  -              3,946
Plus: Stock-based compensation
expense                                 2,319                 -                  -              3,839              6,158
Plus: Non-recurring expenses               23                 -                133                  -                156
Plus: Non-cash fair value
adjustments                                 -                 -              1,514                  -              1,514
Less: Tax on adjustments               (2,825)            1,470             (2,113)            (1,168)            (4,636)
Adjusted net income                 $  21,124          $ (1,556)         $   2,528          $  (6,644)         $  15,452

Adjusted net income                 $  21,124          $ (1,556)         $   2,528          $  (6,644)         $  15,452
Average stockholders' equity        $ 299,113          $ 58,962          $ 117,744          $ (84,152)         $ 391,667
Adjusted return on average equity        28.2  %          (10.6) %             8.6  %                NM%            15.8  %



                                                               Three Months Ended March 31, 2021
                                                              Tiptree Capital
($ in thousands)                     Insurance          Mortgage            Other            Corporate            Total

Income (loss) before taxes $ 21,528 $ 13,077 $ 14,994 $ (10,207) $ 39,392
Less: Income tax (benefit) expense (4,429)

           (3,096)            (2,907)             1,680             (8,752)
Less: Net realized and unrealized
gains (losses)                         (9,624)           (3,420)           (13,766)                 -            (26,810)
Plus: Intangibles amortization (1)      3,834                 -                  -                  -              3,834
Plus: Stock-based compensation
expense                                   372               165                  8                520              1,065
Plus: Non-recurring expenses              270                 -                  -                  -                270
Plus: Non-cash fair value
adjustments                                 -                 -               (657)                 -               (657)
Less: Tax on adjustments                  825               739              2,895                354              4,813
Adjusted net income                 $  12,776          $  7,465          $     567          $  (7,653)         $  13,155

Adjusted net income                 $  12,776          $  7,465          $     567          $  (7,653)         $  13,155
Average stockholders' equity        $ 285,885          $ 65,533          $ 113,218          $ (79,166)         $ 385,470
Adjusted return on average equity        17.9  %           45.6  %             2.0  %                NM%            13.7  %


The footnotes below correspond to the tables above, under "-Adjusted Net Income
- Non-GAAP and "-Adjusted Return on Average Equity - Non-GAAP".
(1) Specifically associated with acquisition purchase accounting. See Note (8)
Goodwill and Intangible Assets, net.






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Adjusted EBITDA - Non-GAAP

The Company defines Adjusted EBITDA as GAAP net income of the Company plus
corporate interest expense, plus income taxes, plus depreciation and
amortization expense, less the effects of purchase accounting, plus non-cash
fair value adjustments, plus significant non-recurring expenses, and plus
unrealized gains (losses) on available for sale securities reported in other
comprehensive income. Adjusted EBITDA is used to determine incentive
compensation for the Company's executive officers. Adjusted EBITDA is not a
measurement of financial performance or liquidity under GAAP and should not be
considered as an alternative or substitute for GAAP net income.