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Organization | 9 Months Ended
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Sep. 30, 2013
Organization, Consolidation and Presentation of Financial Statements [Abstract] |
Organization | Organization Tiptree Financial Inc. (Tiptree and, together with its consolidated subsidiaries, collectively, the Company) is a Maryland Corporation that was incorporated on March 19, 2007. Until July 1, 2013, Tiptree operated under the name Care Investment Trust Inc. (which, for the period prior to July 1, 2013, we refer to as Care Inc.). Tiptree is a diversified holding company which conducts its operations through its operating subsidiary, Tiptree Operating Company, LLC (Operating Subsidiary). Tiptree’s primary focus is on four sectors of financial services: insurance and insurance services, specialty finance (including corporate, consumer and tax-exempt credit), asset management and real estate. Tiptree's Class A Common Stock is traded on the NASDAQ Capital Market under the symbol “TIPT”. Contribution Transactions On July 1, 2013, Care Inc. completed a transaction with Tiptree Financial Partners, L.P. (TFP) in which Care Inc. contributed substantially all of its assets to Operating Subsidiary in exchange for 10,289,192 common units in Operating Subsidiary (representing an approximately 25% interest in Operating Subsidiary), and TFP contributed substantially all of its assets (excluding shares of Tiptree's Class A Common Stock owned by TFP) to Operating Subsidiary in exchange for 31,147,371 common units in Operating Subsidiary (representing an approximately 75% interest in Operating Subsidiary) and 31,147,371 shares of Tiptree's newly classified Class B Common Stock. These transactions are collectively referred to as the Contribution Transactions. Effective September 30, 2013, each of Tiptree and TFP forfeited and Operating Subsidiary canceled a number of Operating Subsidiary units such that, following the forfeiture and cancellation, (i) the ratio of Operating Subsidiary units owned by Tiptree to Class A common stock outstanding (including for this purpose 6,474 shares issued to directors on October 3, 2013) was 1:1, or 10,266,853 common units and (ii) the ratio of Operating Subsidiary common units owned by TFP to TFP partnership units outstanding was 2.798:1, or 30,968,877 common units. Tiptree also canceled a number of shares of Class B common stock held by TFP to cause the ratio of Operating Subsidiary units owned by TFP to Class B common stock to be 1:1. In addition, Tiptree reserved 3,609,420 shares of Class B common stock for issuance upon exercise of existing warrants held by TFP to acquire an aggregate of 3,609,420 Operating Subsidiary common units. The Contribution Transactions were accounted for as a combination of entities under common control. As a result the comparative financial information has been retrospectively adjusted to furnish comparative combined financial information from August 2010 (the date of common control). The application of this “as-if pooling of interests” required the previously issued consolidated financial statements of Tiptree to be recast to reflect such activity. On July 1, 2013, immediately prior to closing the Contribution Transactions, Care Inc. filed the Fourth Articles of Amendment and Restatement with the Maryland Department of Assessments and Taxation in order to, among other things, (i) change its name from “Care Investment Trust Inc.” to “Tiptree Financial Inc.”, (ii) rename its common stock as “Class A common stock,” with no change to the economic or voting rights of such stock, (iii) reclassify 50,000,000 authorized and unissued shares of its common stock as Class B common stock, and (iv) remove certain provisions related to Care Inc.'s qualification as a real estate investment trust (REIT). Pursuant to Operating Subsidiary's limited liability operating agreement, at any time after July 1, 2014, TFP will have the right to redeem common units of Operating Subsidiary held by it for an equal number of shares of Class A common stock of Tiptree (and an equal number of shares of Class B common stock held by TFP will be canceled). Tiptree may instead, at its election, deliver a cash amount (or combination of cash and Class A common stock) based on the fair market value of the Class A common stock on the redemption date. As a result of the Contribution Transactions, Tiptree will not qualify to be taxed as a REIT for Federal income tax purposes and will become a taxable corporation effective January 1, 2013 due to the nature of the assets and the businesses contributed by TFP. As a REIT, Care Inc. was generally not subject to U.S., federal corporate income tax on its taxable income distributed to stockholders. However, even as a REIT, Care Inc. was subject to U.S. federal income and excise taxes in various situations, such as on Care Inc.’s undistributed income. See Note 14 for a discussion of income taxes. Acquisition of businesses The following discussion summarizes the acquisition of businesses by TFP that were contributed to Operating Subsidiary as part of the Contribution Transactions on July 1, 2013. As explained in Note 1, due to the Contribution Transactions, comparative financial information has been retrospectively adjusted to furnish comparative combined financial information from August 2010 (the date of common control). The application of this “as-if pooling of interests” required the previously issued consolidated financial statements of Tiptree to be recast to reflect such activity. As a result, any capital transaction activity of TFP related to these acquisitions, such as any increases or decreases in noncontrolling interest, was retroactively adjusted as an adjustment to Tiptree’s additional paid-in capital. Also, the results of operations of each of the acquisitions that have occurred after August 2010 are included in the consolidated financial statements from the date of acquisition. TAMCO On June 30, 2012, TFP acquired from Tricadia Holdings, L.P. (Tricadia), a controlling financial interest in Tiptree Asset Management Company, LLC (TAMCO), which managed the assets of the subsidiaries of TFP as well as other entities, such as collateralized loan obligations (CLOs) and trusts. The two CLOs that TAMCO managed as of June 30, 2012 had assets of $810,600 and related note payables of $736,300 at par value. Given Tricadia’s controlling position in relation to both TAMCO and TFP, this combination was accounted for as a combination of entities under common control. As a result, the assets and liabilities of TAMCO, including the CLOs, have been presented as if they had been consolidated by TFP as of January 1, 2010 and their results of operations included in the TFP's results of operations going forward. The application of this “as-if pooling of interests” required the previously issued consolidated financial statements of TFP to be recast to reflect such activity. In conjunction with this combination, TFP issued 2,197,347 common units and 750,000 warrants collectively valued at $57,661 to Tricadia in return for a 99% controlling indirect interest in TAMCO. TFP then contributed its interests in TAMCO to the Operating Subsidiary in connection with the Contribution Transactions. The acquisition of controlling interests in each of TFP's businesses discussed below were accounted for under the purchase method of accounting. The purchase price allocations were based on estimates of fair values of the assets acquired and liabilities assumed at the acquisition date. The fair values of the acquired net assets were determined using observable and unobservable information. MFCA In February 2009, TFP acquired a controlling financial interest (approximately 57%) of the outstanding limited liability company interests of Muni Funding Company of America, LLC (MFCA), a specialty finance holding company that invests directly and indirectly in U.S. federally tax exempt bonds. TFP paid $12,838 for a controlling financial interest with an acquisition date fair value of $20,594, which resulted in a bargain purchase gain of $7,756. As of December 31, 2009, TFP had increased its ownership to approximately 75% of the outstanding limited liability company interests of MFCA as a result of a tender and rights offering. In June 2011, TFP acquired 100% of the outstanding limited liability company interests of MFCA as a result of a tender offer and merger. Philadelphia Financial Group, Inc. On June 23, 2010, TFP acquired all of the outstanding Common Shares of Philadelphia Financial Group, Inc. (PFGI) (formerly known as PFG Holdings, Inc.) and its subsidiaries (collectively, PFG), a provider of private placement life insurance. TFP paid $28,500 for a 100% controlling financial interest. On December 16, 2010, PFG initiated a recapitalization whereby TFP exchanged its 9,098 original PFG Common Shares in return for 2,850,000 shares of Series A participating preferred stock along with 2,850,000 shares of newly issued common stock. In addition, through the issuance of an additional 985,352 shares of Series A participating preferred stock and 985,352 Common Shares, PFG raised an additional $9,854 of which TFP contributed $4,076. This additional capital raised reduced TFP's ownership percentage from 100% to approximately 84.94%. During the first quarter of 2011, PFG issued 148,100 shares each of Common Shares and Series A participating preferred stock to PFG employees. PFG also issued 21,548 shares each of Common Shares and Series A participating preferred stock to an outside investor during the same timeframe. These share issuances reduced TFP's ownership percentage to approximately 81.34%. During the third quarter of 2012, PFG issued 2,000,000 shares each of Common Shares and Series A participating preferred stock as part of a $25,000 capital raise in which TFP was the primary participant. This resulted in an increase in TFP's ownership percentage to approximately 86.0%. On December 28, 2012, Operating Subsidiary issued a note payable in the amount of $2,500 with an annual interest rate of 5%. This note was payment for 6.6% of the issued and outstanding Series A preferred stock and 8.8% of the issued and outstanding Common stock of PFG. This acquisition increased TFP's ownership percentage to 93.58%. On July 13, 2012, PFG purchased certain assets of Hartford Life Private Placement, LLC (HLPP) from affiliates of The Hartford Financial Services Group, Inc. (The Hartford) for a purchase price of $117,500. PFG and certain insurance subsidiaries of The Hartford entered into a long-term servicing agreement whereby PFG administers approximately $35.0 billion in company owned life insurance (COLI) and bank owned life insurance (BOLI) business previously serviced by HLPP in exchange for a fee. We refer to this transaction as the PFAS Transaction. Funding for the acquisition was provided in the form of equity of $23,500 issued by PFG and debt of $100,000 issued by PFG to an affiliate of Hartford. During the measurement period for this acquisition, the total purchase price was adjusted to $116,000. The information presented below reflects the subsequent adjustments to goodwill and the administrative servicing intangible asset to show the final purchase price allocation to assets acquired.
Intangible assets: |
Administrative servicing asset | $ | 111,750 |
Software license | 588 |
Goodwill | 3,088 |
EDP equipment | 424 |
Furniture and equipment | 150 |
Total | $ | 116,000 |
Siena In April 2013, the Company committed $10,000 to purchase a majority of the voting equity interests of Siena Capital Finance LLC (Siena). As of June 30, 2013, $7,310 of the commitment had been funded. This transaction resulted in a 59.38% controlling interest in Siena and generated $1,155 in goodwill, which was recorded on the Company’s consolidated balance sheet. On July 24, 2013, the Company made a subsequent investment of $2,690 in Siena, which has increased its controlling interest to 66.67% as of September 30, 2013.

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