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 second quarter year-to-date 2022 highlights include:

Overall:

•In June 2022, Tiptree closed the previously announced $200 million strategic
investment in Fortegra, by Warburg. The investment gives Warburg an approximate
24% ownership in Fortegra on an as converted basis.
•As a result of the WP Transaction, Tiptree recognized a $63.2 million pre-tax
gain in stockholders' equity in the three months ended June 30, 2022, which was
partially offset by increased deferred tax liabilities resulting from the tax
deconsolidation as Tiptree's ownership of Fortegra was reduced to below 80%. The
deferred tax liability was $39.6 million, with $14.1 million impacting
stockholders' equity directly and $25.5 million impacting net income for the
three months ended June 30, 2022.
•Tiptree incurred a net loss of $23.4 million compared to net income of $36.6
million for the six months ended June 30, 2021, primarily driven by the deferred
tax liability associated with the WP Transaction and unrealized losses on
investments as compared to gains in the prior year period, partially offset by
improved performance in insurance and shipping operations.
•Adjusted net income of $29.4 million increased 12.0% from $26.3 million in
2021, driven by improvement in insurance and shipping operations. Adjusted
return on average equity was 12.7%, as compared to 13.5% in 2021.

Insurance:

•Gross written premiums and premium equivalents were $1,195.6 million for the
six months ended June 30, 2022, as compared to $1,030.0 million for the six
months ended June 30, 2021, up 16.1% 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 21.4% to $576.4 million, from $474.8 million in 2021,
driven by increases in earned premiums, net and service and administrative fees.
•The combined ratio improved to 90.7%, as compared to 91.8% 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 $23.8 million decreased by $12.5 million as compared to
$36.2 million in 2021. Return on average equity was 10.4% in 2022 as compared to
19.4% 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 49.1% to $40.1 million, as compared to $26.9
million in 2021. Adjusted return on average equity was 25.5%, as compared to
18.3% in 2021. The increase in both metrics was driven by revenue growth and an
improved combined ratio.
•In April 2022, Fortegra acquired ITC, a provider of regulatory and compliance
services to the retail automotive sector in the United Kingdom, for net cash
consideration of approximately $15.0 million, plus an earn-out.

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Tiptree Capital:
•Maritime transportation income before taxes was $16.4 million in 2022, as
compared to $2.5 million in 2021, with the increase driven by a rise in both dry
bulk and tanker charter rates, and the gain on sale of one dry bulk vessel.
•In the second quarter of 2022, we sold one dry bulk vessel for $21.5 million
and signed definitive agreements to sell the remaining two dry bulk vessels for
an aggregate of $46.2 million, representing an approximate 45% gain as compared
to the June 30, 2022 book value. The two dry bulk vessels under contract to sell
are expected to close in the third quarter 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.
•Mortgage income before taxes was $4.3 million in 2022, as compared to $18.9
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 11.3% in 2022.

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, inflation, 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. In particular,
the current period of 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, lower underwriting margins
could adversely affect our profitability.

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 half 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 half 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 substantial
majority was unrealized. While our asset and liability mix is relatively
matched, 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. In
addition, 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.

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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 interest rates driven by the Federal Reserve
intervention in mortgage markets, and rising home prices in certain markets, had
provided tailwinds to the mortgage markets beginning in the second quarter of
2020 and through 2021, which had benefited our mortgage operations and margins.
The recent rise in rates has resulted in a reversal of those trends, with
volumes and margins declining. Only partially 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. 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 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, such as the war in Ukraine, which interrupt production,
trade routes, and consumption. If 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 in the dry bulk sector, which provided the
opportunity for us to sell our dry bulk vessels at attractive prices, 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 remaining vessels.

RESULTS OF OPERATIONS

The following is a summary of our condensed consolidated financial results for
the three and six months ended June 30, 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
($ in thousands, except per share                  Three Months Ended                     Six Months Ended
information)                                            June 30,                              June 30,
GAAP:                                            2022               2021               2022               2021
Total revenues                               $ 339,843          $ 299,687          $ 664,746          $ 594,375
Net income (loss) attributable to common
stockholders                                 $ (22,408)         $   7,969          $ (23,368)         $  36,550
Diluted earnings per share                   $   (0.64)         $    0.22          $   (0.67)         $    1.05
Cash dividends paid per common share         $    0.04          $    0.04          $    0.08          $    0.08
Return on average equity                         (19.2) %             9.0  %            (9.8) %            20.4  %

Non-GAAP: (1)
Adjusted net income                          $  13,986          $  13,125          $  29,438          $  26,280
Adjusted return on average equity                 12.3  %            13.1  %            12.7  %            13.5  %
Adjusted EBITDA                              $  55,416          $  26,555          $  40,511          $  72,238
Book value per share                         $   10.75          $   11.59          $   10.75          $   11.59

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

Revenues

For the three months ended June 30, 2022, revenues were $339.8 million, which
increased $40.2 million, or 13.4%, compared to the prior year period. For the
six months ended June 30, 2022, revenues were $664.7 million, which increased
$70.4 million, or 11.8%, compared to the prior year period. The changes for both
periods were 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                     Six Months Ended
($ in thousands)                                         June 30,                              June 30,
                                                  2022               2021               2022              2021
Net realized and unrealized gains
(losses)(1)                                  $      (869)         $  3,397          $     649          $ 13,612
Net realized and unrealized gains (losses) -
Invesque                                     $    (3,227)         $    169  

$ (13,925) $ 16,812

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

Net Income (Loss) Attributable to common stockholders

For the three months ended June 30, 2022, net loss attributable to common
stockholders was $22.4 million, a decrease of $30.4 million, primarily driven by
$25.5 million of tax expense associated with the WP Transaction. Tiptree
recognized a $63.2 million pre-tax increase to Tiptree Inc. stockholders' equity
in the three months ended June 30, 2022, which was partially offset by increased
deferred tax liabilities resulting from the tax deconsolidation of Fortegra as
Tiptree's ownership of Fortegra was reduced to below 80%. The deferred tax
liability was $39.6 million, with $14.1 million impacting Tiptree Inc.
stockholders' equity directly and $25.5 million impacting net income for the
three months ended June 30, 2022. See Note (20) Income Taxes for more
information on the tax impacts of the WP Transaction.

For the six months ended June 30, 2022, net loss attributable to common
stockholders was $23.4 million, a decrease of $59.9 million from net income of
$36.6 million for the six months ended June 30, 2021, primarily driven by net
realized and unrealized losses on Invesque and other investments in 2022
compared to gains in 2021, lower mortgage origination revenues and the tax
impacts of the WP Transaction, 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, including the
gain on sale of one dry bulk vessel.

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

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Adjusted net income for the three months ended June 30, 2022 was $14.0 million,
an increase of $0.9 million, or 6.6%, from the three months ended June 30, 2021
driven by improved performance in our insurance and shipping operations,
partially offset by declines in our mortgage business. For the three months
ended June 30, 2022, adjusted return on average equity was 12.3%, as compared to
13.1% at June 30, 2021, with the decrease driven by the higher average equity
balances as a result of the WP Transaction.

Adjusted net income for the six months ended June 30, 2022 was $29.4 million, an
increase of $3.2 million, or 12.0%, from the six months ended June 30, 2021,
with the increase driven by improved performance in our insurance and shipping
operations, partially offset by declines in our mortgage business. For the six
months ended June 30, 2022, adjusted return on average equity was 12.7%, as
compared to 13.5% at June 30, 2021, with the decrease primarily driven by the
higher average equity balances as a result of the WP Transaction.

Adjusted EBITDA - Non-GAAP

Adjusted EBITDA for the three months ended June 30, 2022 was $55.4 million, an
increase of $28.9 million from 2021 driven by the WP Transaction gain that
impacted stockholders' equity, partially offset by realized and unrealized
losses on investments and foreign currency translation in 2022 (including
impacts to AOCI).

Adjusted EBITDA for the six months ended June 30, 2022 was $40.5 million, a
decrease of $31.7 million from 2021, driven by realized and unrealized losses in
2022 (including impacts to AOCI) compared to gains in 2021, partially offset by
the WP Transaction gain and improved operating performance noted above.

Book Value per share - Non-GAAP

Total stockholders' equity was $525.3 million as of June 30, 2022 compared to
$405.0 million as of June 30, 2021, with the increase driven by the WP
Transaction, cash exercise of Tiptree warrants, partially offset by
comprehensive losses over the trailing four quarters primarily resulting from
unrealized losses on AFS securities and negative impacts from foreign currency
translation, and dividends paid. In the six months ended June 30, 2022, Tiptree
returned $3.7 million to stockholders through dividends paid and shares
repurchased.

Book value per share for the period ended June 30, 2022 was $10.75, a decrease
from book value per share of $11.59 as of June 30, 2021. The key drivers of the
decrease over the past four quarters were the comprehensive loss per share
primarily associated with unrealized losses on AFS securities, dividends paid of
$0.16 per share, and issuance of shares on exercise of warrants and in exchange
for vested subsidiary equity awards, partially offset by the net increase to
Tiptree Inc. stockholders' equity from the WP transaction.

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.

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

                                          Three Months Ended             Six Months Ended
($ in thousands)                               June 30,                      June 30,
                                         2022           2021           2022           2021
Revenues:
Insurance                             $ 293,831      $ 252,255      $ 576,360      $ 474,818
Mortgage                                 18,189         25,272         43,590         59,766
Tiptree Capital - other                  27,823         22,160         44,796         59,791
Corporate                                     -              -              -              -
Total revenues                        $ 339,843      $ 299,687      $ 664,746      $ 594,375

Income (loss) before taxes:
Insurance                             $   9,071      $  14,704      $  23,753      $  36,232
Mortgage                                     24          5,775          4,290         18,852
Tiptree Capital - other                   9,042          2,620          1,391         17,614
Corporate                               (13,330)       (11,624)      

(25,579) (21,831)
Total income (loss) before taxes $ 4,807 $ 11,475 $ 3,855 $ 50,867

Non-GAAP - Adjusted net income (1):
Insurance                             $  18,938      $  14,091      $  40,062      $  26,867
Mortgage                                 (1,183)         4,059         (2,739)        11,524
Tiptree Capital - other                   5,088          2,064          7,616          2,631
Corporate                                (8,857)        (7,089)       (15,501)       (14,742)
Total adjusted net income             $  13,986      $  13,125      $  29,438      $  26,280

(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 and discussion present the Insurance segment results for
the three and six months ended June 30, 2022 and 2021.

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Results of Operations - Three Months Ended June 30, 2022 compared to 2021

($ in thousands)                                                      Three Months Ended June 30,
                                                   2022               2021             Change              % Change
Revenues:
Earned premiums, net                           $ 215,941          $ 176,958          $ 38,983                    22.0  %
Service and administrative fees                   77,625             63,700            13,925                    21.9  %
Ceding commissions                                 3,326              3,080               246                     8.0  %
Net investment income                              3,365              3,234               131                     4.1  %
Net realized and unrealized gains (losses)       (10,126)             2,824           (12,950)                       NM%
Other revenue                                      3,700              2,459             1,241                    50.5  %
Total revenues                                 $ 293,831          $ 252,255          $ 41,576                    16.5  %
Expenses:

Net losses and loss adjustment expenses $ 82,953 $ 69,741

         $ 13,212                    18.9  %
Member benefit claims                             21,712             19,452             2,260                    11.6  %
Commission expense                               127,453             99,543            27,910                    28.0  %
Employee compensation and benefits                20,062             18,392             1,670                     9.1  %
Interest expense                                   5,380              4,525               855                    18.9  %
Depreciation and amortization                      4,601              4,407               194                     4.4  %
Other expenses                                    22,599             21,491             1,108                     5.2  %
Total expenses                                 $ 284,760          $ 237,551          $ 47,209                    19.9  %
Income (loss) before taxes (1)                 $   9,071          $  14,704          $ (5,633)                  (38.3) %

Key Performance Metrics:
Gross written premiums and premium equivalents $ 594,696          $ 552,780          $ 41,916                     7.6  %
Return on average equity                             7.0  %            16.2  %
Underwriting ratio                                  77.2  %            76.7  %
Expense ratio                                       13.7  %            15.4  %
Combined ratio                                      90.9  %            92.1  %

Non-GAAP Financial Measures (2):
Adjusted net income                            $  18,938          $  14,091          $  4,847                    34.4  %
Adjusted return on average equity                   24.5  %            20.1 

%

(1) Net income was $5,401 for the three months ended June 30, 2022 compared to
$11,370 for the three months ended June 30, 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 June 30, 2022 compared to 2021

For the three months ended June 30, 2022, total revenues increased 16.5%, to
$293.8 million, as compared to $252.3 million for the three months ended
June 30, 2021. Earned premiums, net of $215.9 million increased $39.0 million,
or 22.0%, driven by growth in commercial, credit and warranty lines. Service and
administrative fees of $77.6 million increased by 21.9% driven by growth in
warranty and consumer goods service contract revenues. Ceding commissions of
$3.3 million increased by $0.2 million, or 8.0% in line with growth in ceded
premiums. Other revenues increased by $1.2 million, or 50.5%, driven by growth
in premium finance product offerings.

For the three months ended June 30, 2022, 28.8% 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. For the
three months ended June 30, 2022, 79.7% of fee-based revenues were generated in
non-regulated service companies, with the remainder in regulated insurance
companies.

For the three months ended June 30, 2022, net investment income was $3.4 million
as compared to $3.2 million in the prior year period, primarily driven by growth
in investments. Net realized and unrealized losses were $10.1 million, a
decrease of $13.0 million, as compared to net realized and unrealized gains of
$2.8 million in the prior year period, primarily driven by the change in fair
value of certain equity and other investments 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 June 30, 2022 compared to 2021

For the three months ended June 30, 2022, net losses and loss adjustment
expenses were $83.0 million, member benefit claims were $21.7 million and
commission expense was $127.5 million, as compared to $69.7 million, $19.5
million and $99.5 million, respectively, for the three months ended June 30,
2021. The increase in net losses and loss adjustment expenses of $13.2 million,
or 18.9%, was driven by growth in U.S. and European Insurance lines. The
increase in member benefit claims of $2.3 million, or 11.6%, was driven by
growth in vehicle service contracts. Commission expense increased by $27.9
million, or 28.0%, generally in line with the growth in earned premiums, net and
service and administrative fees.

For the three months ended June 30, 2022, employee compensation and benefits
were $20.1 million and other expenses were $22.6 million, as compared to $18.4
million and $21.5 million, respectively, for the three months ended June 30,
2021. Employee compensation and benefits increased by $1.7 million, or 9.1%,
driven by investments in human capital associated with growth in admitted, E&S
and warranty lines. Other expenses increased by $1.1 million, or 5.2%, driven
primarily by premium taxes which increase in line with earned premiums, net.

For the three months ended June 30, 2022, interest expense was $5.4 million as
compared to $4.5 million for the three months ended June 30, 2021. The increase
in interest expense of $0.9 million, or 18.9%, was primarily driven by increased
asset based debt for premium finance lines and the rise in short-term interest
rates.

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For the three months ended June 30, 2022, depreciation and amortization expense
was $4.6 million, including $4.1 million of intangible amortization related to
purchase accounting associated with the acquisitions of Fortegra, Smart
AutoCare, Sky Auto and ITC, as compared to $4.4 million, including $3.8 million
of intangible amortization from purchase accounting in 2021.

Results of Operations - Six Months Ended June 30, 2022 compared to 2021

($ in thousands)                                                         Six Months Ended June 30,
                                                    2022                 2021               Change              % Change
Revenues:
Earned premiums, net                           $   424,357          $   323,877          $ 100,480                    31.0  %
Service and administrative fees                    149,460              121,750             27,710                    22.8  %
Ceding commissions                                   5,863                6,105               (242)                   (4.0) %
Net investment income                                6,532                6,001                531                     8.8  %
Net realized and unrealized gains (losses)         (16,769)              12,496            (29,265)                       NM%
Other revenue                                        6,917                4,589              2,328                    50.7  %
Total revenues                                 $   576,360          $   474,818          $ 101,542                    21.4  %
Expenses:
Net losses and loss adjustment expenses        $   166,229          $   119,992          $  46,237                    38.5  %
Member benefit claims                               42,882               36,375              6,507                    17.9  %
Commission expense                                 244,876              188,188             56,688                    30.1  %
Employee compensation and benefits                  42,088               37,481              4,607                    12.3  %
Interest expense                                    10,139                8,829              1,310                    14.8  %
Depreciation and amortization                        8,955                8,598                357                     4.2  %
Other expenses                                      37,438               39,123             (1,685)                   (4.3) %
Total expenses                                 $   552,607          $   438,586          $ 114,021                    26.0  %
Income (loss) before taxes (1)                 $    23,753          $    36,232          $ (12,479)                       NM%

Key Performance Metrics:
Gross written premiums and premium equivalents $ 1,195,551          $ 1,030,013          $ 165,538                    16.1  %
Return on average equity                              10.4  %              19.4  %
Underwriting ratio                                    77.4  %              75.5  %
Expense ratio                                         13.3  %              16.3  %
Combined ratio                                        90.7  %              91.8  %

Non-GAAP Financial Measures (2):
Adjusted net income                            $    40,062          $    26,867          $  13,195                    49.1  %
Adjusted return on average equity                     25.5  %              

18.3 %

(1) Net income was $16,419 for the six months ended June 30, 2022 compared to
$28,469 for the six months ended June 30, 2021.

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

Revenues - Six Months Ended June 30, 2022 compared to 2021

For the six months ended June 30, 2022, total revenues increased 21.4%, to
$576.4 million, as compared to $474.8 million for the six months ended June 30,
2021. Earned premiums, net of $424.4 million increased $100.5 million, or 31.0%,
driven by growth in admitted and E&S commercial lines, and warranty insurance
offerings. Service and administrative fees of $149.5 million increased by 22.8%
driven by growth in warranty and consumer goods service contract revenues.
Ceding commissions of $5.9 million decreased by $0.2 million, or 4.0%, driven by
lower ceding fees as less business was ceded. Other revenues increased by $2.3
million, or 50.7%, driven by growth in premium finance product offerings.

For the six months ended June 30, 2022, 28.1% 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 six months
ended June 30, 2022, 79.2% of fee-based revenues were generated in non-regulated
service companies, with the remainder in regulated insurance companies.

For the six months ended June 30, 2022, net investment income was $6.5 million
as compared to $6.0 million in the prior year period, primarily driven by growth
in investments. Net realized and unrealized losses were $16.8 million, a
decrease of $29.3 million, as compared to net realized and unrealized gains of
$12.5 million in the prior year period, primarily driven by the change in fair
value of certain equity and other investments carried at fair value.
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Expenses - Six Months Ended June 30, 2022 compared to 2021

For the six months ended June 30, 2022, net losses and loss adjustment expenses
were $166.2 million, member benefit claims were $42.9 million and commission
expense was $244.9 million, as compared to $120.0 million, $36.4 million and
$188.2 million, respectively, for the six months ended June 30, 2021. The
increase in net losses and loss adjustment expenses of $46.2 million, or 38.5%,
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. During the six months ended June 30, 2022, and
2021, the Company experienced an increase in prior year development of $0.7
million and $2.6 million, respectively, primarily as 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 $6.5 million, or 17.9%, was driven by growth in vehicle
service contracts. Commission expense increased by $56.7 million, or 30.1%, in
line with the growth in earned premiums, net and service and administrative
fees.

For the six months ended June 30, 2022, employee compensation and benefits were
$42.1 million and other expenses were $37.4 million, as compared to $37.5
million and $39.1 million, respectively, for the three months ended June 30,
2021. Employee compensation and benefits increased by $4.6 million, or 12.3%,
driven by investments in human capital associated with growth in admitted, E&S
and warranty lines. Other expenses decreased by $1.7 million, or 4.3%, 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.

For the six months ended June 30, 2022, interest expense was $10.1 million as
compared to $8.8 million for the six months ended June 30, 2021. The increase in
interest expense of $1.3 million, or 14.8%, was primarily driven by increased
asset based debt for premium finance lines and the rise in short-term interest
rates.

For the six months ended June 30, 2022, depreciation and amortization expense
was $9.0 million, including $8.0 million of intangible amortization related to
purchase accounting associated with the acquisitions of Fortegra, Smart
AutoCare, Sky Auto and ITC, as compared to $8.6 million, including $7.7 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 six months ended June 30, 2022 and 2021.

                                Three Months Ended               Six Months Ended
($ in thousands)                     June 30,                        June 30,
                               2022           2021            2022             2021
U.S. Insurance              $ 376,370      $ 353,450      $   783,390      $   689,298
U.S. Warranty Solutions       182,830        175,618          345,513          300,948
Europe Warranty Solutions      35,496         23,712           66,648           39,767
Total                       $ 594,696      $ 552,780      $ 1,195,551      $ 1,030,013



Total gross written premiums and premium equivalents for the three months ended
June 30, 2022 were $594.7 million, representing an increase of $41.9 million, or
7.6%. Total gross written premiums and premium equivalents for the six months
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ended June 30, 2022 were $1,195.6 million, representing an increase of $165.5
million, or 16.1%. The increase in both periods was 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 June 30, 2022, U.S. Insurance increased by $22.9
million, or 6.5%, driven by growth in commercial and warranty insurance lines.
For the three months ended June 30, 2022, U.S. Warranty Solutions increased by
$7.2 million, or 4.1%, driven by growth in auto and roadside assistance service
contracts. Europe Warranty Solutions increased by $11.8 million, or 49.7%,
driven by growth in auto warranty lines.

For the six months ended June 30, 2022, U.S. Insurance increased by $94.1
million, or 13.7%, driven by growth in commercial, E&S, and warranty insurance
lines. For the six months ended June 30, 2022, U.S. Warranty Solutions increased
by $44.6 million, or 14.8%, driven by growth in auto and roadside assistance
service contracts. Europe Warranty Solutions increased by $26.9 million, or
67.6%, driven by growth in auto warranty lines.

The growth in gross written premiums and premium equivalents, combined with
higher retention in select products as of June 30, 2022, has resulted in an
increase of $370.8 million, or 25.7%, in unearned premiums and deferred revenue
on the condensed consolidated balance sheets as compared to June 30, 2021. As of
June 30, 2022, unearned premiums and deferred revenues were $1,812.0 million, as
compared to $1,441.2 million as of June 30, 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.

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 90.9% for the three months ended June 30, 2022, which
consisted of an underwriting ratio of 77.2% and an expense ratio of 13.7%, as
compared to 92.1%, 76.7% and 15.4%, respectively, for the three months ended
June 30, 2021. The combined ratio was 90.7% for the six months ended June 30,
2022, which consisted of an underwriting ratio of 77.4% and an expense ratio of
13.3%, as compared to 91.8%, 75.5% and 16.3%, respectively, for the six months
ended June 30, 2021. The improvement in the combined ratio for both comparable
periods was driven by the continued scalability of the technology and shared
service platform, decreasing the expense ratio, which was partially offset by an
increase in the underwriting ratio related to changes in product mix.

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 7.0% for the three months ended June 30, 2022, as
compared to 16.2% for the prior year period. Return on average equity was 10.4%
for the six months ended June 30, 2022, as compared to 19.4% for the six months
ended June 30, 2021. The decrease in net income and annualized return on average
equity was driven by net realized and unrealized losses in the 2022 periods
compared to net realized and unrealized gains in the 2021 periods as well as
higher average equity balances, 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)

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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 tables show underwriting and fee revenues and underwriting and fee
margin by business mix for the three and six months ended June 30, 2022 and
2021.

                                                                 Three 

Months Ended June 30,

                                                                                       Underwriting and Fee
($ in thousands)                               Underwriting and Fee Revenues (1)            Margin (1)
                                                    2022                 2021                         2022               2021
U.S. Insurance                                 $    218,457          $ 179,230                    $  40,686          $  34,617
U.S. Warranty Solutions                              67,439             56,015                       22,214             21,360
Europe Warranty Solutions                            14,696             10,952                        5,574              1,484
Total                                          $    300,592          $ 246,197                    $  68,474          $  57,461

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

Underwriting and fee revenues were $300.6 million for the three months ended
June 30, 2022 as compared to $246.2 million for the three months ended June 30,
2021. Total underwriting and fee revenues increased $54.4 million, or 22.1%,
driven by growth in all business lines. The increase in U.S. Insurance was $39.2
million, or 21.9%, driven by growth in commercial, E&S, and credit insurance
lines. The increase in U.S. Warranty Solutions was $11.4 million, or 20.4%,
driven by growth in auto, roadside assistance, and premium finance offerings.
Europe Warranty Solutions increased by $3.7 million, or 34.2%, driven by growth
in auto and consumer goods service contracts.

Underwriting and fee margin was $68.5 million for the three months ended June
30, 2022 as compared to $57.5 million for the three months ended June 30, 2021.
Total underwriting and fee margin increased $11.0 million, or 19.2%, driven by
growth in U.S. Insurance and Europe Warranty Solutions. U.S. Insurance grew by
$6.1 million, or 17.5%, as the underwriting ratio was generally consistent
year-over-year at 81.4% while revenues increased from growth in admitted and E&S
lines. U.S. Warranty Solutions increased by $0.9 million, or 4.0%, 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 $4.1 million, or 275.6%, driven by growth in auto and consumer
goods service contracts in those markets.

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                                                                 Six Months 

Ended June 30,

                                                 Underwriting and Fee Revenues        Underwriting and Fee
($ in thousands)                                              (1)                          Margin (1)
                                                    2022                2021                        2022               2021
U.S. Insurance                                  $  429,445          $ 329,043                   $  80,565          $  64,807
U.S. Warranty Solutions                            128,488            107,134                      41,655             41,998
Europe Warranty Solutions                           28,664             20,144                      10,390              4,961
Total                                           $  586,597          $ 456,321                   $ 132,610          $ 111,766

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

Underwriting and fee revenues were $586.6 million for the six months ended June
30, 2022 as compared to $456.3 million for the six months ended June 30, 2021.
Total underwriting and fee revenues increased $130.3 million, or 29%, driven by
growth in all business lines. The increase in U.S. Insurance was $100.4 million,
or 31%, driven by growth in commercial, E&S, and credit insurance lines. The
increase in U.S. Warranty Solutions was $21.4 million, or 20%, driven by growth
in auto, roadside assistance, and premium finance offerings. Europe Warranty
Solutions increased by $8.5 million, or 42%, driven by growth in auto and
consumer goods service contracts.

Underwriting and fee margin was $132.6 million for the six months ended June 30,
2022 as compared to $111.8 million for the six months ended June 30, 2021. Total
underwriting and fee margin increased $20.8 million, or 19%, driven by growth in
U.S. Insurance and Europe Warranty Solutions. U.S. Insurance grew by $15.8
million, or 24%, from growth in admitted and E&S lines. U.S. Warranty Solutions
decreased by $0.3 million, or 1%, 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 $5.4 million, or 109%,
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 June 30, 2022, adjusted net income and adjusted
return on average equity were $18.9 million and 24.5%, respectively, as compared
to $14.1 million and 20.1%, respectively, for the three months ended June 30,
2021. For the six months ended June 30, 2022, adjusted net income and adjusted
return on average equity were $40.1 million and 25.5%, respectively, as compared
to $26.9 million and 18.3%, respectively, for the six months ended June 30,
2021. The improvement in both periods was driven by the growth in underwriting
and fee revenues in addition to 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 June 30, 2022, net investment income was $3.4 million
as compared to $3.2 million in the prior year period, driven by growth in
investments. Net realized and unrealized losses were $10.1 million, a decrease
of $13.0 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 June 30, 2022 were
$19.2 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.

For the six months ended June 30, 2022, net investment income was $6.5 million
as compared to $6.0 million in the prior year period, driven by growth in
investments. Net realized and unrealized losses were $16.8 million, a decrease
of $29.3 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 six months ended June 30, 2022 were
$45.4 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
June 30, 2022, Tiptree Capital - Other includes our Invesque shares, maritime
transportation operations (including the two dry bulk vessels classified as held
for sale on the condensed consolidated balance sheets), 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 June 30, 2022.

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

Results of Operations

                                                   Three Months Ended                     Six Months Ended
($ in thousands)                                        June 30,                              June 30,
                                                 2022               2021               2022               2021
Revenues:

Net realized and unrealized gains (losses) $ 13,450 $ 20,726

       $  33,864          $  50,803
Other revenue                                    4,739              4,546              9,726              8,963
Total revenues                               $  18,189          $  25,272          $  43,590          $  59,766
Expenses:
Employee compensation and benefits           $  11,195          $  13,125          $  25,620          $  28,467
Interest expense                                   315                263                641                561
Depreciation and amortization                      214                227                428                452
Other expenses                                   6,441              5,882             12,611             11,434
Total expenses                               $  18,165          $  19,497          $  39,300          $  40,914
Income (loss) before taxes                   $      24          $   5,775          $   4,290          $  18,852

Key Performance Metrics:
Origination volumes                          $ 306,752          $ 375,934          $ 661,165          $ 795,813
Gain on sale margins                               4.7  %             5.6  %             4.5  %             5.8  %
Return on average equity                           0.3  %            24.4  %            11.3  %            42.8  %

Non-GAAP Financial Measures (1):
Adjusted net income                          $  (1,183)         $   4,059          $  (2,739)         $  11,524
Adjusted return on average equity                 (8.2) %            22.4  %            (9.3) %            34.3  %

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

Revenues

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 and Six Months Ended June 30, 2022 compared to 2021

For the three months ended June 30, 2022, $306.8 million of loans were funded,
compared to $375.9 million for 2021, a decrease of $69.2 million, or 18.4%. Gain
on sale margins decreased to 4.7% for the three months ended June 30, 2022, down
approximately 90 basis points from 5.6% for the three months ended June 30,
2021. For the six months ended June 30, 2022, $661.2 million of loans were
funded, compared to $795.8 million for 2021, a decrease of $134.6 million, or
16.9%. Origination volumes for both periods in 2022 declined given the rise in
mortgage interest rates. Gain on sale margins decreased to 4.5% for the six
months ended June 30, 2022, down approximately 130 basis points from 5.8% for
the six months ended June 30, 2021.

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Net realized and unrealized gains for the three months ended June 30, 2022 were
$13.5 million, compared to $20.7 million for 2021, a decrease of $7.3 million or
35.1%. The primary drivers 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 $1.6 million as interest rates
increased from December 31, 2021. Net realized and unrealized gains for the six
months ended June 30, 2022 were $33.9 million, compared to $50.8 million for
2021, a decrease of $16.9 million or 33.3%. 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 $7.9
million as interest rates increased from December 31, 2021.

Other revenue for the three months ended June 30, 2022 was $4.7 million,
compared to $4.5 million for 2021, an increase of $0.2 million, or 4%. Other
revenue for the six months ended June 30, 2022 was $9.7 million, compared to
$9.0 million for 2021, an increase of $0.8 million, or 8.5%. The increase in
both periods is driven primarily by higher servicing fees from an increase in
loans serviced. As of June 30, 2022, the mortgage servicing asset was $40.9
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

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 and Six Months Ended June 30, 2022 compared to 2021

For the three months ended June 30, 2022, employee compensation and benefits
were $11.2 million, compared to $13.1 million in 2021, a decrease of $1.9
million or 15%. For the six months ended June 30, 2022, employee compensation
and benefits were $25.6 million, compared to $28.5 million in 2021, a decrease
of $2.8 million or 10.0%. The decrease in both periods was driven primarily by
reduced commissions on lower origination volumes.

For the three months ended June 30, 2022 and 2021, interest expense and
depreciation and amortization expense were both flat, at $0.3 million and $0.2
million, respectively. For the six months ended June 30, 2022 and 2021, interest
expense and depreciation and amortization expense were both flat, at $0.6
million and $0.4 million, respectively.

For the three months ended June 30, 2022, other expenses were $6.4 million,
compared to $5.9 million in 2021, with the $0.6 million increase driven by
increased loan origination expenses, including marketing costs. For the six
months ended June 30, 2022, other expenses were $12.6 million, compared to $11.4
million in 2021, with the $1.2 million increase driven by the same factors that
impacted the three months.

Income (loss) before taxes

Income before taxes for the three months ended June 30, 2022 was $24.0 thousand,
compared to $5.8 million in 2021. Income before taxes for the six months ended
June 30, 2022 was $4.3 million, compared to $18.9 million in 2021. The
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primary drivers of the decrease in both periods 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 June 30,
($ in thousands)                 Total revenue               Income (loss) before taxes
                               2022           2021                                 2022           2021
Senior living (Invesque)   $   (2,668)     $    142                             $  (2,668)     $    142
Maritime transportation        18,764         7,918                                13,760         1,994
Other (1)                      11,727        14,100                                (2,050)          484
Total                      $   27,823      $ 22,160                             $   9,042      $  2,620

                                              Six Months Ended June 30,
($ in thousands)                 Total revenue               Income (loss) before taxes
                               2022           2021                                 2022           2021
Senior living (Invesque)   $  (11,519)     $ 13,908                             $ (11,519)     $ 13,908
Maritime transportation        27,626        13,617                                16,413         2,507
Other (1)                      28,689        32,266                                (3,503)        1,199
Total                      $   44,796      $ 59,791                             $   1,391      $ 17,614

(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 June 30, 2022 were $27.8 million compared to
$22.2 million for 2021. The primary driver of the increase in revenues was the
gain of $7.1 million related to the sale of one dry bulk vessel and increased
dry bulk and tanker charter rates earned by the maritime transportation
business, partially offset by unrealized losses on our investment in Invesque in
2022 compared to unrealized gains in 2021. Revenues for the six months ended
June 30, 2022 were $44.8 million compared to $59.8 million for 2021 with the
decline primarily driven by unrealized losses on our investment in Invesque in
the 2022 period compared to gains in the 2021 period.

Income (loss) before taxes

The income before taxes from Tiptree Capital - Other for the three months ended
June 30, 2022 was $9.0 million, compared to income before taxes of $2.6 million
in 2021. The primary driver of the increase was increased income before taxes in
our maritime transportation business due to the same factors that had a positive
impact on maritime transportation revenues, partially offset by unrealized
losses in 2022 compared to gains in 2021 on our investment in Invesque. The
income before taxes from Tiptree Capital - Other for the six months ended June
30, 2022 was $1.4 million, compared to income before taxes of $17.6 million in
2021, with the decline driven by the same factors that impacted revenues.

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Adjusted net income - Non-GAAP(1)

                                Three Months Ended              Six Months Ended
($ in thousands)                     June 30,                       June 30,
                                 2022            2021          2022          2021
Senior living (Invesque)   $        -          $     -      $       -      $     -
Maritime transportation         4,992            2,050          7,472        2,571
Other                              96               14            144           60
Total                      $    5,088          $ 2,064      $   7,616      $ 2,631

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

Adjusted net income increased to $7.6 million for the six months ended June 30,
2022 compared to $2.6 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            Six Months Ended
($ in thousands)                                   June 30,                     June 30,
                                              2022           2021          2022          2021
Employee compensation and benefits        $    1,576      $  1,769      $  3,944      $  3,836
Employee incentive compensation expense        4,374         2,372         9,037         5,925
Interest expense                               1,981         2,558         4,224         5,122
Depreciation and amortization                    201           201           399           399
Other expenses                                 5,198         4,724         7,975         6,549
Total expenses                            $   13,330      $ 11,624      $ 25,579      $ 21,831


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,
were $13.0 million for the six months ended June 30, 2022, compared to $9.8
million for 2021, driven by an increase in performance related employee
incentive compensation. Of the incentive compensation expense in the six months
ended June 30, 2022, $3.8 million was stock-based compensation expense primarily
related to awards granted in third quarter 2021. Interest expense for the six
months ended June 30, 2022 and 2021 was $4.2 million and $5.1 million,
respectively. As of June 30, 2022, the Company had no outstanding borrowings at
the holding company, compared to $114.1 million at December 31, 2021. Other
expenses of $8.0 million increased by $1.4 million from the six months ended
June 30, 2021, primarily driven by increased consulting, legal and professional
fees.

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Provision for Income Taxes

During the three months ended June 30, 2022, the WP Transaction was completed
whereby Warburg invested $200 million in Tiptree's insurance subsidiary,
Fortegra. The WP Transaction, along with Fortegra management's ownership,
reduced Tiptree's ownership in Fortegra below 80% such that, while still
consolidated for GAAP financial reporting purposes, Fortegra will no longer be
included in the consolidated tax return group with Tiptree. Accordingly, Tiptree
has recorded deferred tax liabilities related to the basis difference in
Tiptree's investment in Fortegra in the three months ended June 30, 2022. This
deferred tax liability represents the tax that would be due, before
consideration of loss carryforwards, if Tiptree were to sell any of its Fortegra
stock at its carrying value on Tiptree's balance sheet. The deferred tax
liability recorded in the three months ended June 30, 2022 relating to the WP
Transaction was $39.6 million, of which $14.1 million was recorded directly in
Tiptree Inc. stockholders' equity with respect to the gain component and $25.5
million was recorded as a provision for income taxes in the condensed
consolidated statements of operations.

The total income tax expense of $26.6 million for the three months ended June
30, 2022 and $2.4 million for the three months ended June 30, 2021 are reflected
as components of net income (loss). For the three months ended June 30, 2022,
the Company's effective tax rate was equal to 552.4%. The effective rate for the
three months ended June 30, 2022 was significantly higher than the U.S.
statutory income tax rate of 21.0%, primarily as a result of recording deferred
taxes relating to the tax deconsolidation of Fortegra. For the three months
ended June 30, 2021, the Company's effective tax rate was equal to 21.2%. The
effective rate for the three months ended June 30, 2021 was slightly higher than
the U.S. federal statutory income tax rate of 21.0%, primarily from the effect
of state taxes, offset by the effects of foreign operations and discrete items.

The total income tax expense of $26.5 million for the six months ended June 30,
2022 and $11.2 million for the six months ended June 30, 2021 are reflected as
components of net income (loss). For the six months ended June 30, 2022, the
Company's effective tax rate was equal to 686.9%. The effective rate for the six
months ended June 30, 2022 was significantly higher than the U.S. statutory
income tax rate of 21.0%, primarily from the impact of recording deferred taxes
relating to the tax deconsolidation of Fortegra. For the six months ended June
30, 2021, the Company's effective tax rate was equal to 22.0%. The effective
rate for the six months ended June 30, 2021 was higher than the U.S. federal
statutory income tax rate of 21.0%, primarily from the effect of state taxes,
offset by the effects of foreign operations and discrete items.

Balance Sheet Information

Tiptree's total assets were $3,732.7 million as of June 30, 2022, compared to
$3,599.1 million as of December 31, 2021. The $133.6 million increase in assets
is primarily attributable to the growth in the Insurance segment, partially
offset by unrealized losses on investments.

Total stockholders' equity was $525.3 million as of June 30, 2022, compared to
$400.2 million as of December 31, 2021, with the increase primarily driven by
the WP Transaction, partially offset by other comprehensive losses on available
for sale securities for six months ended June 30, 2022. As of June 30, 2022,
there were 36,305,016 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 June 30, 2022
                                                                  Tiptree Capital
($ in thousands)                       Insurance            Mortgage            Other            Corporate             Total
Total assets                         $ 3,314,541          $ 166,703          $ 186,251          $  65,214          $ 3,732,709

Corporate debt                       $   160,000          $       -          $       -          $       -          $   160,000
Asset based debt                          54,388             55,284                  -                  -              109,672

Tiptree Inc. stockholders' equity $ 194,712 $ 56,467

 $  99,158          $  40,068          $   390,405
Fortegra preferred interests              77,679                  -                  -                  -          $    77,679
Common interests                          52,862              1,089              3,305                  -               57,256
Total stockholders' equity           $   325,253          $  57,556          $ 102,463          $  40,068          $   525,340

NON-GAAP MEASURES AND RECONCILIATIONS

Non-GAAP Reconciliations

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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.

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                     Six Months Ended
($ in thousands)                                         June 30,                              June 30,
                                                  2022               2021               2022               2021
Total revenues                                $ 293,831          $ 252,255          $ 576,360          $ 474,818
Less: Net investment income                      (3,365)            (3,234)            (6,532)            (6,001)
Less: Net realized and unrealized gains
(losses)                                         10,126             (2,824)            16,769            (12,496)
Underwriting and fee revenues                 $ 300,592          $ 246,197  

$ 586,597 $ 456,321

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.

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                                                    Three Months Ended                     Six Months Ended
($ in thousands)                                         June 30,                              June 30,
                                                  2022               2021               2022               2021
Income (loss) before income taxes             $    9,071          $ 14,704          $  23,753          $  36,232
Less: Net investment income                       (3,365)           (3,234)            (6,532)            (6,001)
Less: Net realized and unrealized gains
(losses)                                          10,126            (2,824)            16,769            (12,496)
Plus: Depreciation and amortization                4,601             4,407              8,955              8,598
Plus: Interest expense                             5,380             4,525             10,139              8,829
Plus: Employee compensation and benefits          20,062            18,392             42,088             37,481
Plus: Other expenses                              22,599            21,491             37,438             39,123
Underwriting and fee margin                   $   68,474          $ 57,461  

$ 132,610 $ 111,766

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 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 June 30, 2022
                                                              Tiptree Capital
($ in thousands)                     Insurance          Mortgage            Other            Corporate            Total
Income (loss) before taxes          $   9,071          $     24          $   9,042          $ (13,330)         $   4,807
Less: Income tax (benefit) expense     (3,670)               12             (1,300)           (21,597)           (26,555)
Less: Net realized and unrealized
gains (losses)                         10,126            (1,580)            (4,450)                 -              4,096
Plus: Intangibles amortization (1)      4,085                 -                  -                  -              4,085
Plus: Stock-based compensation
expense                                    24                 -                 23                 10                 57
Plus: Non-recurring expenses            1,449                 -             (1,055)             2,108              2,502
Plus: Non-cash fair value
adjustments                                 -                 -              2,170                  -              2,170
Less: Tax on adjustments (2)           (2,147)              361                658             23,952             22,824
Adjusted net income                 $  18,938          $ (1,183)         $   5,088          $  (8,857)         $  13,986

Adjusted net income                 $  18,938          $ (1,183)         $   5,088          $  (8,857)         $  13,986
Average stockholders' equity        $ 309,774          $ 57,537          $ 108,019          $ (21,082)         $ 454,248
Adjusted return on average equity        24.5  %           (8.2) %            18.8  %                NM%            12.3  %



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                                                               Three Months Ended June 30, 2021
                                                              Tiptree Capital
($ in thousands)                     Insurance          Mortgage            Other            Corporate            Total
Income (loss) before taxes          $  14,704          $  5,775          $   2,620          $ (11,624)         $  11,475
Less: Income tax (benefit) expense     (3,334)           (1,366)               (34)             2,307             (2,427)
Less: Net realized and unrealized
gains (losses)                         (2,808)             (600)              (142)                 -             (3,550)
Plus: Intangibles amortization (1)      3,835                 -                  -                  -              3,835
Plus: Stock-based compensation
expense                                   500               166                  4                479              1,149
Plus: Non-recurring expenses            1,834                 -                281              2,171              4,286
Plus: Non-cash fair value
adjustments                                 -                 -               (695)                 -               (695)
Less: Tax on adjustments (2)             (640)               84                 30               (422)              (948)
Adjusted net income                 $  14,091          $  4,059          $   2,064          $  (7,089)         $  13,125

Adjusted net income                 $  14,091          $  4,059          $   2,064          $  (7,089)         $  13,125
Average stockholders' equity        $ 281,041          $ 72,364          $ 121,129          $ (73,310)         $ 401,224
Adjusted return on average equity        20.1  %           22.4  %             6.8  %                NM%            13.1  %



                                                                Six Months Ended June 30, 2022
                                                              Tiptree Capital
($ in thousands)                     Insurance          Mortgage            Other            Corporate            Total
Income (loss) before taxes          $  23,753          $  4,290          $   1,391          $ (25,579)         $   3,855
Less: Income tax (benefit) expense     (7,334)             (966)               494            (18,663)           (26,469)
Less: Net realized and unrealized
gains (losses)                         16,769            (7,894)             4,401                  -             13,276
Plus: Intangibles amortization (1)      8,031                 -                  -                  -              8,031
Plus: Stock-based compensation
expense                                 2,343                 -                 23              3,849              6,215
Plus: Non-recurring expenses            1,472                 -               (922)             2,108              2,658
Plus: Non-cash fair value
adjustments                                 -                 -              3,684                  -              3,684
Less: Tax on adjustments (2)           (4,972)            1,831             (1,455)            22,784             18,188
Adjusted net income                 $  40,062          $ (2,739)         $   7,616          $ (15,501)         $  29,438

Adjusted net income                 $  40,062          $ (2,739)         $   7,616          $ (15,501)         $  29,438
Average stockholders' equity        $ 314,592          $ 58,981          $ 112,190          $ (23,001)         $ 462,762
Adjusted return on average equity        25.5  %           (9.3) %            13.6  %                NM%            12.7  %



                                                                Six Months Ended June 30, 2021
                                                              Tiptree Capital
($ in thousands)                     Insurance          Mortgage            Other            Corporate            Total

Income (loss) before taxes $ 36,232 $ 18,852 $ 17,614 $ (21,831) $ 50,867
Less: Income tax (benefit) expense (7,763)

           (4,462)            (2,941)             3,987            (11,179)
Less: Net realized and unrealized
gains (losses)                        (12,432)           (4,020)           (13,908)                 -            (30,360)
Plus: Intangibles amortization (1)      7,669                 -                  -                  -              7,669
Plus: Stock-based compensation
expense                                   872               331                 12                999              2,214
Plus: Non-recurring expenses            2,104                 -                281              2,171              4,556
Plus: Non-cash fair value
adjustments                                 -                 -             (1,352)                 -             (1,352)
Less: Tax on adjustments (2)              185               823              2,925                (68)             3,865
Adjusted net income                 $  26,867          $ 11,524          $   2,631          $ (14,742)         $  26,280

Adjusted net income                 $  26,867          $ 11,524          $   2,631          $ (14,742)         $  26,280
Average stockholders' equity        $ 292,865          $ 67,292          $ 113,430          $ (84,295)         $ 389,292
Adjusted return on average equity        18.3  %           34.3  %             4.6  %                NM%            13.5  %

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 (9)
Goodwill and Intangible Assets, net.
(2) Tax on adjustments represents the tax applied to the total non-GAAP
adjustments and includes adjustments for non-recurring or discrete tax impacts.
For the three and six months ended June 30, 2022, included in the adjustment is
an add-back of $25.5 million related to deferred tax expense from the WP
Transaction.


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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.
                                                      Three Months Ended                     Six Months Ended
($ in thousands)                                           June 30,                              June 30,
                                                    2022               2021               2022              2021
Net income (loss) attributable to common
stockholders                                    $  (22,408)         $  7,969          $ (23,368)         $ 36,550
Add: net (loss) income attributable to
non-controlling interests                              660             1,079                754             3,138

Corporate debt related interest expense(1)           6,090             6,300             11,967            12,364
Consolidated provision (benefit) for income
taxes                                               26,555             2,427             26,469            11,179
Depreciation and amortization                        6,009             6,208             12,165            12,142
Non-cash fair value adjustments(2)                   1,177            (1,836)             1,301            (3,816)
Non-recurring expenses(3)                            2,502             4,286              2,658             4,556
Unrealized gains (losses) on AFS securities        (19,182)              122            (45,448)           (3,875)
Warburg gain to book value(4)                       54,013                 -             54,013                 -
Adjusted EBITDA                                 $   55,416          $ 26,555          $  40,511          $ 72,238

(1) Corporate debt interest expense includes interest expense from secured corporate credit

agreements, junior subordinated notes and preferred trust securities. Interest expense

associated with asset-specific debt is not added-back for Adjusted EBITDA.
(2) For maritime transportation operations, depreciation and amortization is deducted as a

reduction in the value of the vessel.
(3) Acquisition, start-up and disposition costs, including debt extinguishment, legal,

taxes, banker fees and other costs.
(4) The pre-tax gain recorded directly to Tiptree Inc. stockholders' equity was included in

Adjusted EBITDA, net of add-backs included in prior period Adjusted EBITDA.

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 provides a reconciliation between total stockholders' equity and
total shares outstanding, net of treasury shares.

 ($ in thousands, except per share information)                      As of June 30,
                                                                  2022           2021
Total stockholders' equity                                     $ 525,340      $ 405,049
Less: Non-controlling interests                                  134,935    

18,031

Total stockholders' equity, net of non-controlling interests $ 390,405

$ 387,018

Total common shares outstanding                                   36,305         33,395

Book value per share                                           $   10.75      $   11.59

LIQUIDITY AND CAPITAL RESOURCES

Our principal sources of liquidity are unrestricted cash, cash equivalents and
other liquid investments and distributions from operating subsidiaries,
including income from our investment portfolio and sales of assets and
investments. We intend to use our cash resources to continue to fund our
operations and grow our businesses. We may seek additional sources of cash to
fund acquisitions or investments. These additional sources of cash may take the
form of debt or equity and may be at the parent, subsidiary or asset level. We
are a holding company and our liquidity needs are primarily for compensation,
professional fees, office rent and insurance costs.

Our subsidiaries' ability to generate sufficient net income and cash flows to
make cash distributions will be subject to numerous business and other factors,
including restrictions contained in agreements for the strategic investment by
Warburg in Fortegra, our subsidiaries' financing agreements, regulatory
restrictions, availability of sufficient funds at such subsidiaries, general
economic and business conditions, tax considerations, strategic plans, financial
results and other factors such as target capital ratios and ratio levels
anticipated by rating agencies to maintain or improve current ratings. We expect
our cash and cash equivalents and distributions from operating subsidiaries, our
subsidiaries' access to financing, and sales of investments to be adequate to
fund our operations for at least the next 12 months, as well as the long term.
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As of June 30, 2022, cash and cash equivalents, excluding restricted cash, were
$337.9 million, compared to $175.7 million at December 31, 2021, an increase of
$162.2 million primarily as a result of the WP Transaction, the sale of one
vessel and growth in gross written premium and premium equivalents at Fortegra.

Our mortgage business relies on short term uncommitted sources of financing as a
part of their normal course of operations. To date, we have been able to obtain
and renew uncommitted warehouse credit facilities. If we were not able to obtain
financing, then we may need to draw on other sources of liquidity to fund our
mortgage business. See Note (11) Debt, net in the notes to condensed
consolidated financial statements, for additional information regarding our
mortgage warehouse borrowings.

We believe that cash flow from operations will provide sufficient capital to
continue to grow the business and fund interest on the outstanding debt, capital
expenditures and other general corporate needs over the next several years. As
we continue to expand our business, including by any acquisitions we may make,
we may, in the future, require additional working capital for increased costs.

For purposes of determining enterprise value and Adjusted EBITDA, we consider
corporate credit agreements and preferred trust securities, which we refer to as
corporate debt, as corporate financing and associated interest expense is added
back. The below table outlines this amount by debt outstanding and interest
expense at the insurance company and corporate level.

Corporate Debt

                                                                    Interest Expense for
                                 Corporate Debt Outstanding           the three months              Interest Expense for the
($ in thousands)                       as of June 30,                  ended June 30,               six months ended June 30,
                                  2022                  2021                     2022                2021                2022              2021
Insurance                   $      160,000          $ 160,000                 $  3,906          $      3,742          $  7,352          $  7,242
Corporate                                -            117,188                    2,185                 2,559             4,615             5,122
Total                       $      160,000          $ 277,188                 $  6,091          $      6,301          $ 11,967          $ 12,364

The balance of the corporate credit facility was repaid during June 2022 as part
of the WP Transaction. See Note (11) Debt, net in the notes to condensed
consolidated financial statements for details for prior periods.

On August 4, 2020, Fortegra entered into an Amended and Restated Credit
Agreement by and among Fortegra and its wholly-owned subsidiary, LOTS
Intermediate Co., as borrowers, the lenders from time to time party thereto,
certain of Fortegra's subsidiaries, as guarantors, and Fifth Third Bank,
National Association, as the administrative agent and issuing lender (the
"Fortegra Credit Agreement"). The Fortegra Credit Agreement provides for a
$200.0 million revolving credit facility, all of which is available for the
issuance of letters of credit, with a sub-limit of $17.5 million for swing
loans, and matures on August 4, 2023. As of June 30, 2022, we had no outstanding
borrowings under this facility.