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, 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 stockholders' 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 year-to-date 2023 highlights include:

Overall:

•Tiptree reported a net loss of $1.1 million for the first quarter, compared to
a net loss of $1.0 million in the prior year, driven primarily by lower mortgage
and shipping revenues, partially offset by growth in insurance operations.
Return on average equity was (1.1)%, compared to (0.9)% in 2022.
•Adjusted net income of $17.3 million increased $1.8 million from $15.5 million
in 2022, driven by improvement in insurance operations. Adjusted return on
average equity was 12.9%, as compared to 15.8% in 2022.
•Tiptree increased its quarterly dividend to $0.05 per share, representing an
increase of 25%.

Insurance:

•Gross written premiums and premium equivalents were $750.3 million for the
three months ended March 31, 2023, as compared to $600.9 million for the three
months ended March 31, 2022, up $149.5 million as a result of growth in
specialty insurance lines and fee-based service contract offerings.
•Total revenues increased $85.9 million to $368.4 million, from $282.5 million
in 2022, driven by increases in earned premiums, net, service and administrative
fees and net investment income.
•Combined ratio of 91.3%, driven by consistent underwriting performance and the
scalability of Fortegra's operating platform.
•Income before taxes of $19.4 million as compared to $14.7 million in 2022.
Return on average equity was 16.7% in 2023 as compared to 14.7% in 2022. The
increases were driven by growth in underwriting and fee revenues and increased
net investment income.
•Adjusted net income increased $1.8 million to $22.9 million, as compared to
$21.1 million in 2022. Adjusted return on average equity was 26.1%, as compared
to 28.2% in 2022.
•In February 2023, Fortegra acquired Premia Solutions Limited, one of the
largest providers of automotive protection products in the United Kingdom, for
net cash consideration of approximately $22.5 million.

Tiptree Capital:
•Mortgage loss before taxes was $2.6 million in 2023, as compared to income of
$4.3 million in 2022, with the decrease driven by declines in origination
volumes and negative marks on the mortgage servicing rights asset in 2023
compared to positive marks in 2022.
•Maritime transportation income before taxes decreased to $0.2 million in 2023,
as compared to $2.7 million in 2022, as a result of the sale of all three dry
bulk vessels and two product tankers in 2022.

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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,
2022. 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.

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. Fortegra
designs, markets and underwrites specialty property and casualty insurance
products for select target markets or niches. The types of products Fortegra
offers tend to have limited aggregation risk and limited exposure to
catastrophic and residual risk. The business has historically generated
significant fee-based revenues by incorporating value-add coverages and
services. 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 reinsurance receivables are placed with highly rated and appropriately
capitalized counterparties or with our distribution partners' captive insurance
vehicles which are collateralized with highly liquid investments, cash or
letters of credit. 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. In addition, fluctuations of the U.S. dollar
relative to other currencies, including the British pound and Euro, would have
an impact on book value between periods.

Fortegra's investment portfolio includes fixed maturity securities, loans,
credit investment funds, and equity securities. Many of those investments are
held at fair value. In recent periods, the U.S. fixed income markets experienced
a significant rise in interest rates. 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. The weighted average
duration of our fixed income available for sale securities is less than three
years. 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 as unrealized gains or losses in
revenues and can be impacted by changes in interest rates, credit risk, currency
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.

Rising 10-year treasury yields, and the tapering of the Federal Reserve's
purchases of mortgage-backed securities, has resulted in substantial increases
in mortgage interest rates. Low mortgage interest rates driven by the Federal
Reserve intervention in mortgage markets, and rising home prices in certain
markets, provided tailwinds to the mortgage markets in 2020 and 2021, which
benefited our mortgage operations and margins. The substantial rise in rates in
recent periods resulted in a sharp reversal of those trends, with volumes and
margins declining significantly. Only partially offsetting the declines in our
mortgage 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 or elevated mortgage rates could
have a materially negative impact on our mortgage operations, and is likely to
be only partially mitigated by the improvement in mortgage servicing revenues. A
sustained period of negative profitability in the mortgage industry could also
impact the availability of funding sources for our mortgage business.

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.
Common shares of Invesque represent a significant asset on our condensed
consolidated balance sheets. 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. The combination of the
COVID-19 pandemic impacting occupancy rates and other market factors impacting
operating costs has resulted in a significant decline in Invesque's stock price
over the past three
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years. 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.

A discussion of our performance for the three months ended March 31, 2023
compared to the three months ended March 31, 2022 appears below.

RESULTS OF OPERATIONS

The following is a summary of our condensed consolidated financial results for
the three months ended March 31, 2023 and 2022. 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.

Selected Key Metrics

                                                                 Three 

Months Ended

   ($ in thousands, except per share information)                    March 31,
   GAAP:                                                        2023            2022
   Total revenues                                           $ 381,625       $ 324,903

Net income (loss) attributable to common stockholders $ (1,062) $ (960)

   Diluted earnings per share                               $   (0.03)      

$ (0.03)

   Cash dividends paid per common share                     $    0.05       $    0.04
   Return on average equity                                      (1.1) %         (0.9) %

   Non-GAAP: (1)
   Adjusted net income                                      $  17,284       $  15,452
   Adjusted return on average equity                             12.9  %         15.8  %
   Adjusted EBITDA                                          $  23,362       $ (14,905)
   Book value per share                                     $   10.91       $   10.51

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

Revenues

For the three months ended March 31, 2023, revenues were $381.6 million, which
increased $56.7 million, or 17.5%, compared to the prior year period. The
increase was driven by growth in earned premiums, net, and service and
administrative fees in our insurance business, partially offset by lower
mortgage and shipping revenues compared to 2022.

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 related to these investments to be relatively volatile between periods.
Fixed income securities are primarily marked to market through AOCI in
stockholders' equity and do not impact net realized and unrealized gains and
losses until they are sold.

                                                             Three Months Ended
($ in thousands)                                                 March 31,
                                                            2023           2022

Net realized and unrealized gains (losses) - Invesque $ (1,698) $ (10,698)
Net realized and unrealized gains (losses)(1)

            $  (4,675)     $   

1,518

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

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Net Income (Loss) Attributable to common stockholders

For the three months ended March 31, 2023, the net loss attributable to common
stockholders was $1.1 million, compared to a net loss of $1.0 million in the
prior year period, primarily driven by lower mortgage and shipping revenues and
the tax impacts of the WP Transaction, partially offset by growth in Fortegra's
underwriting and fee operations.

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

Adjusted net income for the three months ended March 31, 2023 was $17.3 million,
an increase of $1.8 million, or 11.9%, from the three months ended March 31,
2022, driven by growth in our insurance operations. For the three months ended
March 31, 2023, adjusted return on average equity was 12.9%, as compared to
15.8% at March 31, 2022, with the decrease driven by the higher average equity
balances as a result of the WP Transaction which closed in June 2022.

Adjusted EBITDA - Non-GAAP

Adjusted EBITDA for the three months ended March 31, 2023 was $23.4 million, an
increase of $38.3 million from 2022 driven by improved operating performance in
our insurance business and realized and unrealized gains on investments
(including impacts to AOCI) compared to losses in the prior year period.

Book Value per share - Non-GAAP

Total stockholders' equity was $541.6 million as of March 31, 2023 compared to
$383.2 million as of March 31, 2022, with the increase driven by the WP
Transaction and cash exercise of Tiptree warrants, partially offset by
comprehensive loss in 2022 primarily resulting from unrealized losses on
Available for Sale ("AFS") securities and negative impacts from foreign currency
translation. In the three months ended March 31, 2023, Tiptree returned $1.8
million to stockholders through dividends paid.

Book value per share for the period ended March 31, 2023 was $10.91, an increase
from book value per share of $10.51 as of March 31, 2022 driven by the
comprehensive income per share and the net increase to Tiptree Inc.
stockholders' equity from the WP Transaction, partially offset by dividends paid
of $0.17 per share, and issuance of shares as a result of the exercise of
warrants and vesting of equity awards.

Results by Segment

We classify our business into two reportable segments, Insurance and Mortgage,
with the remainder of our operations aggregated into Tiptree Capital - Other.
Corporate activities include holding company interest expense, corporate
employee compensation and benefits, and other expenses, including 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
($ in thousands)                              March 31,
                                         2023           2022
Revenues:
Insurance                             $ 368,444      $ 282,529
Mortgage                                 11,561         25,401
Tiptree Capital - other                   1,620         16,973
Corporate                                     -              -
Total revenues                        $ 381,625      $ 324,903

Income (loss) before taxes:
Insurance                             $  19,445      $  14,682
Mortgage                                 (2,565)         4,266
Tiptree Capital - other                   1,442         (7,651)
Corporate                               (10,149)       (12,249)

Total income (loss) before taxes $ 8,173 $ (952)

Non-GAAP - Adjusted net income: (1)
Insurance                             $  22,939      $  21,124
Mortgage                                   (853)        (1,556)
Tiptree Capital - other                   1,413          2,528
Corporate                                (6,215)        (6,644)
Total adjusted net income             $  17,284      $  15,452

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

Insurance

Our principal operating subsidiary, Fortegra, is a specialty insurance
underwriter and service provider, which focuses on niche lines 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.

As of March 31, 2023, Fortegra was owned approximately 79.4% by Tiptree, 17.4%
by Warburg and 3.2% by management and directors of Fortegra, before giving
effect to the exercise of outstanding warrants and the conversion of outstanding
preferred stock. The following tables and discussion present the Insurance
segment results, including non-controlling interests, for the three months ended
March 31, 2023 and 2022.

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Results of Operations - Three Months Ended March 31, 2023 compared to 2022

($ in thousands)                                                      Three Months Ended March 31,
                                                   2023               2022              Change              % Change
Revenues:
Earned premiums, net                           $ 265,330          $ 208,416          $  56,914                    27.3  %
Service and administrative fees                   92,032             71,835             20,197                    28.1  %
Ceding commissions                                 3,645              2,537              1,108                    43.7  %
Net investment income                              5,109              3,167              1,942                    61.3  %
Net realized and unrealized gains (losses)        (4,607)            (6,643)             2,036                   (30.6) %
Other revenue                                      6,935              3,217              3,718                   115.6  %
Total revenues                                 $ 368,444          $ 282,529          $  85,915                    30.4  %
Expenses:

Net losses and loss adjustment expenses 114,327 $ 83,276

         $  31,051                    37.3  %
Member benefit claims                             27,348             21,170              6,178                    29.2  %
Commission expense                               146,450            117,423             29,027                    24.7  %
Employee compensation and benefits                24,613             22,026              2,587                    11.7  %
Interest expense                                   6,081              4,759              1,322                    27.8  %
Depreciation and amortization                      4,811              4,354                457                    10.5  %
Other expenses                                    25,369             14,839             10,530                    71.0  %
Total expenses                                 $ 348,999          $ 267,847          $  81,152                    30.3  %
Income (loss) before taxes (1)                 $  19,445          $  14,682          $   4,763                    32.4  %

Key Performance Metrics:
Gross written premiums and premium equivalents $ 750,329          $ 600,855          $ 149,474                    24.9  %
Return on average equity                            16.7  %            14.7  %
Underwriting ratio                                  78.3  %            77.6  %
Expense ratio                                       13.0  %            12.9  %
Combined ratio                                      91.3  %            90.5  %

Non-GAAP Financial Measures (2):
Adjusted net income                            $  22,939          $  21,124          $   1,815                     8.6  %
Adjusted return on average equity                   26.1  %            28.2 

%

(1) Net income was $14,698 for the three months ended March 31, 2023 compared
to $11,018 for the three months ended March 31, 2022.

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

Revenues

Earned Premiums, net represents the earned portion of gross written and assumed
premiums, less the earned portion that is ceded to third-party reinsurers under
reinsurance agreements. 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 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.

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 is earned 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.

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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 and certain other investments are carried at fair value with
unrealized gains and losses included in this line.

Revenues - Three Months Ended March 31, 2023 compared to 2022

For the three months ended March 31, 2023, total revenues increased 30.4%, to
$368.4 million, as compared to $282.5 million for the three months ended
March 31, 2022. Earned premiums, net of $265.3 million increased $56.9 million,
or 27.3%, driven by growth in specialty admitted and E&S insurance lines.
Service and administrative fees of $92.0 million increased by 28.1% driven by
growth in auto and consumer goods service contract revenues. Ceding commissions
of $3.6 million increased by $1.1 million, or 43.7%, in line with growth in
ceded premiums. Other revenues increased by $3.7 million, or 115.6%, driven by
growth in premium finance product offerings and interest income on cash and cash
equivalents.

For the three months ended March 31, 2023, 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
three months ended March 31, 2023, 76.3% of fee-based revenues were generated in
non-regulated service companies, with the remainder in regulated insurance
companies.

For the three months ended March 31, 2023, net investment income was $5.1
million as compared to $3.2 million in the prior year period, primarily driven
by growth in investments and the increase in yields. Net realized and unrealized
losses were $4.6 million, an improvement of $2.0 million, as compared to net
realized and unrealized losses of $6.6 million in the prior year period,
primarily driven by the change in fair value of certain equity and other
investments carried at fair value.

The combination of unearned premiums and deferred revenues on Fortegra's balance
sheet grew to $2.1 billion, representing an increase of $319.6 million, or
18.3%, from March 31, 2022 to March 31, 2023 as a result of growth in gross
written premiums and premium equivalents, primarily related to admitted and E&S
insurance lines as well as auto service contracts.

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 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.
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.

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 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 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.

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Interest Expense consists primarily of interest expense on corporate revolving
debt, notes, preferred trust securities due June 15, 2037 (Preferred Trust
Securities) and asset based debt for premium finance and warranty service
contract financing, which is non-recourse to Fortegra.

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

Expenses - Three Months Ended March 31, 2023 compared to 2022

For the three months ended March 31, 2023, net losses and loss adjustment
expenses were $114.3 million, member benefit claims were $27.3 million and
commission expense was $146.5 million, as compared to $83.3 million, $21.2
million, and $117.4 million, respectively, for the three months ended March 31,
2022. The increase in net losses and loss adjustment expenses of $31.1 million,
or 37.3%, was driven by growth in U.S. and European insurance lines and the
shift in business mix toward commercial lines, which tend to have higher loss
ratios and lower commission and expense ratios. In addition, the unfavorable
prior year development of $0.3 million and $1.2 million for the three months
ended March 31, 2023 and 2022, respectively, was a result of
higher-than-expected claim severity from business written by a small group of
producers of our personal and commercial lines of business. The increase in
member benefit claims of $6.2 million, or 29.2%, was driven by growth in vehicle
service contracts. Commission expense increased by $29.0 million, or 24.7%,
generally in line with the growth in earned premiums, net and service and
administrative fees.

For the three months ended March 31, 2023, employee compensation and benefits
were $24.6 million and other expenses were $25.4 million, as compared to $22.0
million and $14.8 million, respectively, for the three months ended March 31,
2022. Employee compensation and benefits increased by $2.6 million, or 11.7%,
driven by investments in human capital associated with growth in admitted, E&S
and warranty lines. Other expenses increased by $10.5 million, or 71.0%, driven
primarily by premium taxes, marketing expenses and professional fees associated
with the acquisition of Premia.

For the three months ended March 31, 2023, interest expense was $6.1 million as
compared to $4.8 million for the three months ended March 31, 2022. The increase
in interest expense of $1.3 million, or 27.8%, was primarily driven by increased
asset based debt for premium finance lines and the rise in short-term interest
rates.

For the three months ended March 31, 2023, depreciation and amortization expense
was $4.8 million, including $3.9 million of intangible amortization related to
purchase accounting associated with the acquisitions of Fortegra, Smart
AutoCare, Sky Auto, ITC and Premia, as compared to $4.4 million, including $3.9
million of intangible amortization from purchase accounting in 2022.

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 months ended March 31, 2023 and 2022.

                               Three Months Ended
($ in thousands)                   March 31,
                              2023           2022
U.S. Insurance             $ 502,974      $ 407,020
U.S. Warranty Solutions      211,947        162,683
Europe                        35,408         31,152
Total                      $ 750,329      $ 600,855


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Total gross written premiums and premium equivalents for the three months ended
March 31, 2023 were $750.3 million, representing an increase of $149.5 million,
or 24.9%. The increase was driven by a combination of factors including
expanding Fortegra's distribution partner network, growing specialty admitted
and E&S insurance lines, and increasing penetration in the auto and consumer
goods service contract sector.

For the three months ended March 31, 2023, U.S. Insurance increased by $96.0
million, or 23.6%, driven by growth in specialty commercial admitted and E&S
insurance lines. For the three months ended March 31, 2023, U.S. Warranty
Solutions increased by $49.3 million, or 30.3%, driven by growth in auto and
roadside assistance service contracts. Europe increased by $4.3 million, or
13.7%, 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 March 31, 2023, has resulted in an
increase of $319.6 million, or 18.3% in unearned premiums and deferred revenue
on the condensed consolidated balance sheets as compared to March 31, 2022. As
of March 31, 2023, unearned premiums and deferred revenues were $2.1 billion, as
compared to $1.7 billion as of March 31, 2022.

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 91.3% for the three months ended March 31, 2023, which
consisted of an underwriting ratio of 78.3% and an expense ratio of 13.0%, as
compared to 90.5%, 77.6% and 12.9%, respectively, for the three months ended
March 31, 2022. The combined ratio for the three month period increased by 0.8%
as compared to 2022, driven by an increase in the underwriting ratio, related to
changes in product mix toward lines with higher loss ratios and lower expense
ratios.

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 16.7% for the three months ended March 31, 2023, as
compared to 14.7% for the prior year period. The increase in net income and
annualized return on average equity was driven by revenue growth and a
consistent combined ratio.

Non-GAAP Financial Measures

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

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

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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 months ended March 31, 2023 and 2022.

                                                               Three Months 

Ended March 31,

                                                                                      Underwriting and Fee
($ in thousands)                              Underwriting and Fee Revenues (1)            Margin (1)
                                                   2023                 2022                         2023               2022
U.S. Insurance                                $    274,237          $ 210,988                    $  48,985          $  39,879
U.S. Warranty Solutions                             79,128             61,049                       25,974             19,441
Europe                                              14,577             13,968                        4,858              4,816
Total                                         $    367,942          $ 286,005                    $  79,817          $  64,136

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

Underwriting and fee revenues were $367.9 million for the three months ended
March 31, 2023 as compared to $286.0 million for the three months ended March
31, 2022. Total underwriting and fee revenues increased $81.9 million, or 28.6%,
driven by growth in all business lines. The increase in U.S. Insurance was $63.2
million, or 30.0%, driven by growth in specialty commercial insurance lines. The
increase in U.S. Warranty Solutions was $18.1 million, or 29.6%, driven by
growth in auto service contracts and premium finance offerings. Europe increased
by $0.6 million, or 4.4%.

Underwriting and fee margin was $79.8 million for the three months ended March
31, 2023 as compared to $64.1 million for the three months ended March 31, 2022.
Total underwriting and fee margin increased $15.7 million, or 24.4%, driven by
growth in all product lines. U.S. Insurance grew by $9.1 million, or 22.8%,
driven by revenue growth in admitted and E&S lines. U.S. Warranty Solutions
increased by $6.5 million, or 33.6%, driven by growth in auto service contracts.
Europe increased by 0.9%, driven by growth in auto and consumer goods service
contracts.

Adjusted Net Income and Adjusted Return on Average Equity

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

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

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

For the three months ended March 31, 2023, adjusted net income and adjusted
return on average equity were $22.9 million and 26.1%, respectively, as compared
to $21.1 million and 28.2%, respectively, for the three months ended March 31,
2022. The improvement of adjusted net income was driven by the growth in
underwriting and fee revenues and improved net investment income.

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
                                       53
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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. Net investment income
includes interest and dividends, net of investment expenses, on invested assets.
Net realized and unrealized gains and losses on investments are reported
separately from net investment income.

For the three months ended March 31, 2023, net investment income was $5.1
million as compared to $3.2 million in the prior year period, driven by growth
in investments and increasing yields. Net realized and unrealized losses were
$4.6 million, compared to losses of $6.6 million in the prior year period, both
driven by realized and unrealized losses on certain equity securities and other
investments, including fixed income securities carried at fair value. Unrealized
gains on AFS securities impacting OCI for the three months ended March 31, 2023
were $9.5 million, driven by the decline in yields (yields and bonds prices are
inversely related) and corresponding impact to the fair value of investments in
U.S. Treasuries, obligations of U.S. government agencies, corporate securities,
obligations of state and political subdivisions, and asset-backed securities.

Tiptree Capital

Tiptree Capital consists of our Mortgage segment, which includes the operating
results of Reliance, our mortgage business, and Tiptree Capital - Other, which
consists of our other non-insurance operating businesses and investments. As of
March 31, 2023, Tiptree Capital - Other includes our Invesque shares and
maritime transportation operations.

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. We are also
an approved issuer and servicer for Ginnie Mae. We originate residential
mortgage loans through our retail distribution channel (directly to consumers)
in 39 states and the District of Columbia as of March 31, 2023.

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

Results of Operations

                                                  Three Months Ended
($ in thousands)                                      March 31,
                                                 2023            2022
Revenues:

Net realized and unrealized gains (losses) $ 7,107 $ 20,414
Other revenue

                                    4,454           4,987
Total revenues                               $  11,561       $  25,401

Expenses:

Employee compensation and benefits           $   8,220       $  14,425
Interest expense                                   384             326
Depreciation and amortization                      172             214
Other expenses                                   5,350           6,170
Total expenses                               $  14,126       $  21,135
Income (loss) before taxes                   $  (2,565)      $   4,266

Key Performance Metrics:
Origination volumes                          $ 202,835       $ 354,413
Gain on sale margins                               4.8  %          4.3  %
Return on average equity                         (14.5) %         22.3  %

Adjusted net income (1)                      $    (853)      $  (1,556)
Adjusted return on average equity (1)             (6.3) %        (10.6) %

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

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Revenues

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 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 - 2023 compared to 2022

For the three months ended March 31, 2023, $202.8 million of loans were funded,
compared to $354.4 million for 2022, a decrease of $151.6 million, or 42.8%,
driven by increase in mortgage interest rates compared to 2022. Gain on sale
margins increased to 4.8% for the three months ended March 31, 2023, up
approximately 50 basis points from 4.3% for the three months ended March 31,
2022.

Net realized and unrealized gains for the three months ended March 31, 2023 were
$7.1 million, compared to $20.4 million for 2022, a decrease of $13.3 million or
65.2%. The primary driver of decreased gain on sale revenues was the decline in
volumes and negative fair value adjustment in mortgage servicing rights of $1.4
million compared to a positive fair value adjustment of $6.3 million in 2022.

Other revenue for the three months ended March 31, 2023 was $4.5 million,
compared to $5.0 million for 2022, a decrease of $0.5 million, or 10.7%. The
decrease for the three month period was driven primarily by lower loan
origination fees, partially offset by higher mortgage servicing fees. As of
March 31, 2023, the mortgage servicing asset was $39.9 million, a decrease from
$41.4 million as of December 31, 2022.

Expenses

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 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 is mainly associated with furniture, fixtures and equipment.
Amortization is primarily associated with a trade name and internally developed
software.

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 - 2023 compared to 2022

For the three months ended March 31, 2023, employee compensation and benefits
were $8.2 million, compared to $14.4 million in 2022, a decrease of $6.2 million
or 43.0%. The decrease was driven primarily by reduced commissions on lower
origination volumes.

For the three months ended March 31, 2023, interest expense was at $0.4 million,
an increase of $0.1 million or 17.8% driven by higher interest rates.

For the three months ended March 31, 2023, other expenses were $5.4 million,
compared to $6.2 million in 2022, with the $0.8 million decrease driven by
decreased mortgage operational expense, including marketing costs.

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Income (loss) before taxes

The loss before taxes for the three months ended March 31, 2023 was $2.6
million, compared to income before taxes of $4.3 million in 2022. The decrease
was driven by a decline in volumes and negative fair value adjustments on the
mortgage servicing rights asset as compared to 2022, partially offset by higher
mortgage servicing fees attributable to the larger servicing portfolio.

Tiptree Capital - Other

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

Results of Operations

                                                                      

Three Months Ended March 31,

                                                                                               Income (loss) before
($ in thousands)                                                   Total revenue                      taxes
                                                              2023                 2022                    2023              2022
Senior living (Invesque)                                $    (1,405)            $ (8,851)               $ (1,405)         $ (8,851)
Maritime transportation (1)                                     360                8,862                     190             2,653
Other (2)                                                     2,665               16,962                   2,657            (1,453)
Total                                                   $     1,620             $ 16,973                $  1,442          $ (7,651)


(1)  Includes $0.2 million and $6.2 million of expenses related to our Maritime
transportation operations for the three months ended March 31, 2023 and 2022,
respectively.
(2)  Includes our formerly 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 formerly held for sale mortgage originator (Luxury);
realized and unrealized gains and losses on the Company's investment holdings
(primarily Invesque); and charter revenues from vessels within the Company's
maritime transportation operations. Subsequent to the sale of our dry bulk and
tanker vessels, operations include two smaller vessels and other ancillary
assets.

Revenues for the three months ended March 31, 2023 were $1.6 million compared to
$17.0 million for 2022 with the decline primarily driven by the deconsolidation
of Luxury effective July 1, 2022, sale of five vessels, partially offset by
investment gains on securities in the Company's investment holdings and
decreased investment losses on Invesque in 2023 compared to 2022.

Income (loss) before taxes

The income before taxes from Tiptree Capital - Other for the three months ended
March 31, 2023 was $1.4 million, compared to the loss before taxes of $7.7
million in 2022, with the increase driven by the same factors that impacted
revenues.

Adjusted net income - Non-GAAP(1)

                                Three Months Ended
($ in thousands)                     March 31,
                                 2023            2022
Senior living (Invesque)   $        -          $     -
Maritime transportation           169            2,480
Other                           1,244               48
Total                      $    1,413          $ 2,528

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

Adjusted net income decreased to $1.4 million for the three months ended March
31, 2023 compared to $2.5 million in 2022. The decrease was driven from the sale
of five vessels, partially offset by interest income on cash and cash
equivalents recorded in other income.

                                       56
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Corporate

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

Results of Operations

                                                    Three Months Ended
($ in thousands)                                        March 31,
                                                                   2023          2022
Employee compensation and benefits                              $  1,955      $  2,368
Employee incentive compensation expense                            5,834         4,663
Interest expense                                                       -         2,243
Depreciation and amortization                                        251           198
Other expenses                                                     2,109         2,777
Total expenses                                                  $ 10,149      $ 12,249


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 $7.8 million for the three months ended March 31, 2023, compared to $7.0
million for 2022, driven by an increase in accrued bonus expense. Of the
incentive compensation expense in the three months ended March 31, 2023, $2.3
million was stock-based compensation expense compared to $3.8 million in 2022.
As of March 31, 2023, the Company had no outstanding borrowings at the holding
company and therefore incurred no interest expense for the three months ended
March 31, 2023 compared to $2.2 million in 2022. Other expenses of $2.1 million
decreased by $0.7 million from the three months ended March 31, 2022, primarily
driven by decreased consulting and professional fees.

Provision for Income Taxes

The total income tax expense of $5.0 million for the three months ended March
31, 2023 and a benefit of $0.1 million for the three months ended March 31, 2022
is reflected as a component of net income (loss). For the three months ended
March 31, 2023, the Company's effective tax rate was equal to 61.5%. The
effective rate for the three months ended March 31, 2023 was significantly
higher than the U.S. statutory income tax rate of 21.0%, primarily due to the
impact of outside basis deferred taxes on Tiptree's investment in Fortegra. For
the three months ended March 31, 2022, the Company's effective tax rate was
equal to 9.0%. The effective rate for the three months ended March 31, 2022 was
lower than the U.S. statutory income tax rate of 21.0%, primarily due to the
impact of the effect of foreign operations and discrete items, partially offset
by state taxes.

Tiptree owns less than 80% of Fortegra and is required to record deferred taxes
on the outside basis on its investment in Fortegra. This deferred tax liability
represents the tax that would be due, before consideration of loss
carryforwards, if Tiptree were to sell all of its Fortegra stock at its carrying
value on Tiptree's balance sheet. As of March 31, 2023, this deferred tax
liability relating to Fortegra was $44.1 million, which was an increase of $4.1
million from the year ended December 31, 2022, of which $1.8 million was
recorded in OCI and $2.3 million was recorded as a provision for income taxes.
Excluding the impact of these deferred taxes, the effective tax rate for the
quarter ended March 31, 2023 was 32.9%.

On August 16, 2022, the U.S. government enacted Public Law no. 117-169, commonly
referred to as the Inflation Reduction Act, which, among other things,
establishes a corporate minimum tax on book earnings and an excise tax on stock
buybacks. It is not expected that this legislation will have a material
financial impact on the Company or its operations.

Balance Sheet Information

Tiptree's total assets were $4,308.0 million as of March 31, 2023, compared to
$4,039.6 million as of December 31, 2022. The $268.4 million increase in assets
is primarily attributable to the growth in the Insurance segment.

Total stockholders' equity was $541.6 million as of March 31, 2023, compared to
$533.6 million as of December 31, 2022, with the increase primarily driven by
other comprehensive income on AFS securities for the three months ended March
31, 2023. As of March 31, 2023, there were 36,734,948 shares of common stock
outstanding as compared to 36,385,299 shares
                                       57
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as of December 31, 2022, with the increase driven by the exercise of options and
the vesting of share-based incentive compensation.

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

                                                                        As of March 31, 2023
                                                                 Tiptree Capital
($ in thousands)                       Insurance           Mortgage            Other            Corporate             Total
Total assets                          3,982,362          $ 167,038          $ 158,398          $     160          $ 4,307,958

Corporate debt                       $  235,000          $       -          $       -          $       -          $   235,000
Asset based debt                         64,818             56,273                  -                  -              121,091

Tiptree Inc. stockholders' equity
(1)                                  $  224,286          $  52,793          $ 153,606          $ (30,038)         $   400,647
Non-controlling interests:
Fortegra preferred interests             77,679                  -                  -                  -               77,679
Common interests                         63,231                  -                  -                  -               63,231
Total stockholders' equity           $  365,196          $  52,793          $ 153,606          $ (30,038)         $   541,557

(1) Included in Corporate equity is the deferred tax liability on the outside
basis on Tiptree's investment in Fortegra of $44.1 million as of March 31, 2023.

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NON-GAAP MEASURES AND RECONCILIATIONS

Non-GAAP Reconciliations

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

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

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

Underwriting and Fee Revenues - Non-GAAP - We define underwriting and fee
revenues as total revenues from the Insurance segment excluding net investment
income and net realized and unrealized gains (losses). Underwriting and fee
revenues represents revenues generated by underwriting and fee-based operations
and allows us to evaluate the Company's underwriting performance without regard
to investment income. We use this metric as we believe it gives our management
and other users of our financial information useful insight into our underlying
business performance. Underwriting and fee revenues should not be viewed as a
substitute for total revenues calculated in accordance with GAAP, and other
companies may define underwriting and fee revenues differently.
                                                       Three Months Ended
($ in thousands)                                           March 31,
                                                      2023           2022
Total revenues                                     $ 368,444      $ 282,529
Less: Net investment income                           (5,109)        (3,167)

Less: Net realized and unrealized gains (losses) 4,607 6,643
Underwriting and fee revenues

                      $ 367,942      $ 286,005



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.

                                       59
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                                                       Three Months Ended
($ in thousands)                                           March 31,
                                                       2023           2022
Income (loss) before income taxes                  $   19,445      $ 14,682
Less: Net investment income                            (5,109)       

(3,167)

Less: Net realized and unrealized gains (losses) 4,607 6,643
Plus: Depreciation and amortization

                     4,811         4,354
Plus: Interest expense                                  6,081         4,759
Plus: Employee compensation and benefits               24,613        22,026
Plus: Other expenses                                   25,369        14,839
Underwriting and fee margin                        $   79,817      $ 64,136

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. Adjusted net income is presented before the impacts of
non-controlling interests.

We present adjustments for amortization associated with acquired intangible
assets. The intangible assets were recorded as part of purchase accounting in
connection with Tiptree's acquisition of Fortegra Financial in 2014, Defend in
2019, and Smart AutoCare and Sky Auto in 2020. The intangible assets acquired
contribute to overall revenue generation, and the respective purchase accounting
adjustments will continue to occur in future periods until such intangible
assets are fully amortized in accordance with the respective amortization
periods required by GAAP.

Adjusted Return on Average Equity - Non-GAAP

We define adjusted return on average equity as adjusted net income expressed on
an annualized basis as a percentage of average beginning and ending
stockholders' equity during the period. See "-Adjusted Net Income-Non-GAAP"
above. We use adjusted return on average equity as an internal performance
measure in the management of our operations because we believe it gives our
management and other users of our financial information useful insight into our
results of operations and our underlying business performance. Adjusted return
on average equity should not be viewed as a substitute for return on average
equity calculated in accordance with GAAP, and other companies may define
adjusted return on average equity differently.
                                                               Three Months Ended March 31, 2023
                                                              Tiptree Capital
($ in thousands)                     Insurance          Mortgage            Other            Corporate            Total
Income (loss) before taxes             19,445            (2,565)             1,442            (10,149)         $   8,173
Less: Income tax (benefit) expense     (4,747)              613               (263)              (625)            (5,022)
Less: Net realized and unrealized
gains (losses)                          4,607             1,443                323                  -              6,373
Plus: Intangibles amortization (1)      3,894                 -                  -                  -              3,894
Plus: Stock-based compensation
expense                                    33                 -                  -              2,282              2,315
Plus: Non-recurring expenses            2,125                 -                  -                  -              2,125
Plus: Non-cash fair value
adjustments                              (118)                -                  -                  -               (118)
Less: Tax on adjustments (2)           (2,300)             (344)               (89)             2,277               (456)
Adjusted net income                 $  22,939          $   (853)         $   1,413          $  (6,215)         $  17,284

Adjusted net income                 $  22,939          $   (853)         $   1,413          $  (6,215)         $  17,284
Average stockholders' equity        $ 351,953          $ 53,768          $ 114,219          $  17,626          $ 537,566
Adjusted return on average equity        26.1  %           (6.3) %             4.9  %                NM%            12.9  %


                                       60
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                                                               Three Months Ended March 31, 2022
                                                              Tiptree Capital
($ in thousands)                     Insurance          Mortgage            Other            Corporate            Total

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

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

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

The footnotes below correspond to the tables above, under "-Adjusted Net Income
- Non-GAAP" and "-Adjusted Return on Average Equity - Non-GAAP".

(1) Specifically associated with acquisition purchase accounting. See Note (8)
Goodwill and Intangible Assets, net.
(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 months ended March 31, 2023, included in the adjustment is an
add-back of $2.3 million, respectively, related to deferred tax expense from the
WP Transaction.









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.