Operating Segment Data

The Company has four reportable operating segments. The Company’s operating segments are organized in a manner that reflects how management views these strategic business units. A description of each of the reportable segments is as follows:

•Insurance and Insurance Services operations are conducted by PFG, a majority owned subsidiary of Tiptree. PFG’s operating subsidiaries consist of Philadelphia Financial Life Assurance Company (PFLAC), Philadelphia Financial Life Assurance Company of New York (PFLACNY), Philadelphia Financial Distribution Company (PFDC), Philadelphia Financial Administrative Services Company (PFASC), and Philadelphia Financial Agency, Inc. (PFA). Philadelphia Financial’s principal insurance activity is the structuring, underwriting, marketing and administration of variable life insurance and variable annuity products to the high net worth market. Total separate account assets for policies written by PFG are $4,799,568. PFASC, acquired certain assets and administration rights from The Hartford on July 13, 2012. PFASC administers approximately $37.4 billion in COLI and BOLI policies for The Hartford.

•Specialty Finance activities are primarily conducted through the Company’s majority-controlled subsidiaries, MFCA, Luxury and Siena. MFCA is a specialty finance company that owns and manages a portfolio of non-investment grade and non-rated direct and indirect debt obligations of middle-market tax-exempt borrowers. Siena’s business consists of structuring asset-based loan facilities across diversified industries which include manufacturing, distribution, wholesale, and service companies. Luxury is a residential mortgage lender that originates loans conforming FHA, prime jumbo and super jumbo mortgages for sale to institutional investors. In addition to MFCA, Luxury, and Siena, Tiptree’s other specialty finance investments include principal investment holdings of CLO subordinated notes and a structured corporate loan portfolio.

•Asset Management activities are conducted through TAMCO, an SEC-registered investment advisor. TAMCO’s operating subsidiaries include: (1) Telos, an asset management company that specializes in investing in middle market corporate credit through managed accounts and structured investment vehicles, such as CLOs; (2) Muni Capital Management, LLC (MCM) which in addition to managing its own portfolio of tax-exempt securities, manages Non-Profit Preferred Funding Trust I (NPPF I), a structured tax-exempt pass-through entity that holds tax-exempt bonds for the benefit of unaffiliated investors; (3) Tiptree Capital Management, LLC, which provides services to Operating Company; and (4) TREIT, a real estate focused service provider.

•Real Estate primarily relates to the activities of 1) Care LLC, a wholly-owned subsidiary of Tiptree which has a geographically diverse portfolio of senior housing assets including senior apartments, assisted-living, independent-living and memory care and 2) Star Asia, which consists of various entities which are all Japan based real estate holding companies formed to invest in Asian properties and real estate debt instruments. Care LLC operates the business operated by Care Inc. prior to the Contribution Transactions ( this business as operated by Care Inc. and Care LLC is collectively referred to as Care). (See Note 13—Stockholder’s Equity—Contribution Transactions for further detail).

On May 21, 2014, Star Asia Opportunity, LLC (SAO) was liquidated and Tiptree received a final distribution of $16. In addition, Tiptree holds a 17% interest in Star Asia Finance, Limited (SAF), and a 50% interest in Star Asia Opportunity II, LLC (SAO II).

The tabular information that follows shows components of revenue, expense, and profit or loss, for each of the operating segments for the periods ended June 30, 2014 and 2013 and total assets as of June 30, 2014 and December 31, 2013.

Revenue is derived from the main income components of each segment. For Insurance and Insurance Services, the main drivers of revenue are fees on separate account assets, and administration service fees. For Specialty Finance, the main sources of revenue are investment interest and realized and unrealized gains/losses on investment securities. For Asset Management, revenue is derived from management fees based on assets under management and, in some cases, incentive fees based on the profits generated. For Real Estate, revenue includes rental revenue and investment interest.

Intersegment revenues refers to those items of revenue which will be eliminated upon consolidation. Included in revenue, expense, interest revenue, interest expense, segment profit/(loss), and segment assets are items which are eliminated upon consolidation as well as adjustments for discontinued operations, reclassifications, assets of consolidated CLOs and non-controlling interest. These items are classified as corporate eliminations and other in the tables below.

Each reportable segment’s measure of profit/(loss) is reported before income taxes and includes discontinued operations and non-controlling interest as this is how management views its segments.



	Three months ended June 30, 2014
	Insurance and insurance services			Specialty finance		Asset management				Real estate		Corporate eliminations and other			Totals
Fee income	$	18,114	⁽¹⁾	$	—	$	—			$	—	$	—		$	18,114
Rental revenue	—			—		—				4,375		18			4,393
Interest income	1,145			6,643		—				682		(3,532		)	4,938
Other revenue	9			1,871		442			⁽²⁾	113		(451		)	1,984
Intersegment revenues	—			110		2,943			⁽²⁾	—		(3,053		)	—
Total revenue	$	19,268		$	8,624	$	3,385			$	5,170	$	(7,018	)	$	29,429

Interest expense	$	2,897		$	2,340	$	—			$	978	$	44		$	6,259
Payroll expense	4,788			3,237		2,772				1,716		—			12,513
Professional fee expense	734			1,329		252				117		392			2,824
Other expense	7,087			898		372				1,952		(776		)	9,533
Total expense	15,506			7,804		3,396				4,763		(340		)	31,129
Segment profit/(loss)	$	3,762		$	820	$	(11	)		$	407	$	(6,678	)	$	(1,700	)
Net loss attributable to consolidated CLOs															(2,148		)
Less: non-controlling interest and net income attributable to the VIE subordinated noteholders															(5,416		)
Discontinued operations															—
Income taxes															497
Net income available to common stockholders															$	1,071

(1) Includes separate account and administrative servicing fees.

(2) Includes management fees which is a component of other income on the Company’s Consolidated Statements of Operations.



	Three months ended June 30, 2013
	Insurance and insurance services			Specialty finance			Asset management				Real estate		Corporate eliminations and other			Totals
Fee income	$	17,669	⁽¹⁾	$	—		$	—			$	—	$	—		$	17,669
Rental revenue	—			—			—				3,995		(2,901		)	1,094
Interest income	1,226			5,720			—				587		(3,345		)	4,188
Other revenue/unrealized (loss)	40			(4,401		)	74		(2	)	17,153		(16,035		)	(3,169		)
Intersegment revenues	—			47			5,141		(2	)	—		(5,188		)	—
Total revenue	$	18,935		$	1,366		$	5,215			$	21,735	$	(27,469	)	$	19,782

Interest expense	$	3,129		$	570		$	—			$	1,711	$	(1,347	)	$	4,063
Payroll expense	4,595			269			3,450				582		—			8,896
Professional fee expense	336			841			216				1,187		—			2,580
Other expense	6,681			672			203				2,981		(1,840		)	8,697
Total expense	14,741			2,352			3,869				6,461		(3,187		)	24,236
Segment profit/(loss)	$	4,194		$	(986	)	$	1,346			$	15,274	$	(24,282	)	$	(4,454	)
Net loss attributable to consolidated CLOs																(5,762		)
Less: non-controlling interest and net income attributable to the VIE subordinated noteholders																822
Discontinued operations																16,269
Income taxes																1,816
Net income available to common stockholders																3,415

(1) Includes separate account and administrative servicing fees.

(2) Includes management fees which is a component of other income on the Company’s Consolidated Statements of Operations.



	Six months ended June 30, 2014
	Insurance and insurance services			Specialty finance		Asset management			Real estate		Corporate eliminations and other			Totals
Fee income	$	35,953	⁽¹⁾	$	—	$	—		$	—	$	—		$	35,953
Rental revenue	—			—		—			8,821		18			8,839
Interest income	2,333			13,959		—			1,365		(7,356		)	10,301
Other revenue	14			4,370		537		⁽²⁾	342		(595		)	4,668
Intersegment revenues	—			187		6,311		⁽²⁾	—		(6,498		)	—
Total revenue	$	38,300		$	18,516	$	6,848		$	10,528	$	(14,431	)	$	59,761

Interest expense	$	5,810		$	4,487	$	—		$	1,956	$	(32	)	$	12,221
Payroll expense	10,070			4,415		5,084			3,514		—			23,083
Professional fee expense	924			2,182		467			172		169			3,914
Other expense	15,361			2,675		703			4,071		(807		)	22,003
Total expense	32,165			13,759		6,254			9,713		(670		)	61,221
Segment profit/(loss)	$	6,135		$	4,757	$	594		$	815	$	(13,761	)	$	(1,460	)
Net loss attributable to consolidated CLOs														(4,154		)
Less: non-controlling interest and net income attributable to the VIE subordinated noteholders														(8,636		)
Discontinued operations														—
Income taxes														926
Net income available to common stockholders														$	2,096
Segment assets as of June 30, 2014	$	5,114,648		$	396,366	$	11,879	⁽³⁾	$	150,844	$	1,704,894		$	7,378,631

(1) Includes separate account and administrative servicing fees.

(2) Includes management fees, which is a component of other income on the Company’s Consolidated Statements of Operations.

(3) Refer to Management’s Discussion and Analysis—Economic Net Income Components for further information on assets under management.



	Six months ended June 30, 2013
	Insurance and insurance services			Specialty finance			Asset management			Real estate		Corporate eliminations and other			Totals
Fee income	$	34,906	⁽¹⁾	$	—		$	—		$	—	$	—		$	34,906
Rental revenue	—			—			—			7,836		(5,920		)	1,916
Interest income	2,407			10,728			—			911		(6,832		)	7,214
Other revenue/ unrealized (loss)	72			(3,836		)	211		⁽²⁾	17,608		(16,204		)	(2,149		)
Intersegment revenues	—			164			8,874		⁽²⁾	—		(9,038		)	—
Total revenue	$	37,385		$	7,056		$	9,085		$	26,355	$	(37,994	)	$	41,887

Interest expense	$	6,263		$	1,064		$	—		$	3,362	$	(2,791	)	$	7,898
Payroll expense	9,611			276			6,669			968		—			17,524
Professional fee expense	659			1,673			431			1,189		—			3,952
Other expense	14,858			1,245			338			5,706		(4,747		)	17,400
Total expense	31,391			4,258			7,438			11,225		(7,538		)	46,774
Segment profit/(loss)	$	5,994		$	2,798		$	1,647		$	15,130	$	(30,456	)	$	(4,887	)
Net income attributable to consolidated CLOs															981
Less: non-controlling interest and net income attributable to the VIE subordinated noteholders															5,356
Discontinued operations															17,110
Income taxes															3,115
Net income available to common stockholders															$	4,733
Segment assets as of December 31, 2013	$	4,949,262		$	385,987		$	7,896	⁽³⁾	$	170,683	$	1,366,620		$	6,880,448

(1) Includes separate account and administrative servicing fees.

(2) Includes management fees, which is a component of other income on the Company’s Consolidated Statements of Operations.

(3) Refer to Management’s Discussion and Analysis—Economic Net Income Components for further information on assets under management.