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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)

☒ | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly period ended September 30, 2022
OR

☐ | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to
Commission File Number: 001-33549
Tiptree Inc.
(Exact name of Registrant as Specified in Its Charter)
Maryland 38-3754322
(State or Other Jurisdiction of Incorporation of Organization (IRS Employer Identification No.)
660 Steamboat Road, 2nd Floor, Greenwich, Connecticut 06830
(Address of Principal Executive Offices) Zip Code
Registrant’s Telephone Number, Including Area Code: (212) 446-1400
Former address: 299 Park Avenue, 13th Floor, New York, New York 10171
Securities registered pursuant to Section 12(b) of the Act:

Title of each class | Trading Symbol(s) | Name of each exchange on which registered
common stock, par value $0.001 per share | TIPT | NASDAQ | Capital Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer ¨ Accelerated filer x
Non-accelerated filer ¨ Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.) Yes ☐ No ☒
As of November 1, 2022, there were 36,252,621 shares, par value $0.001, of the registrant’s common stock outstanding.

Tiptree Inc.
Quarterly Report on Form 10-Q
September 30, 2022
Table of Contents

ITEM |  | Page Number
PART I. Financial Information |  | F- 1
Item 1. Financial Statements (Unaudited) |  | F- 3
Condensed Consolidated Balance Sheets as o f Sept ember 30, 2022 and December 31, 2021 |  | F- 3
C ondensed C onsolidated Statements of Operations for the three and nine months ended September 30, 2022 and 2021 |  | F- 4
C ondensed C onsolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2022 and 2021 |  | F- 5
C ondensed C onsolidated Statements of Changes in Stockholders’ Equity for the periods ended September 30, 2022 and 2021 |  | F- 6
C ondensed C onsolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021 |  | F- 8
Notes to C ondensed C onsolidated Financial Statements |  | F- 9
(1) Organization |  | F- 9
(2) Summary of Significant Accounting Policies |  | F- 9
(3) Acquisitions |  | F- 10
(4) Assets and Liabilities Held for Sale |  | F- 11
(5) Operating Segment Data |  | F- 11
(6) Investments |  | F- 14
(7) Notes and Accounts Receivable, net |  | F- 19
(8) Reinsurance Receivables |  | F- 20
(9) Goodwill and Intangible Assets, net |  | F- 23
(10) Derivative Financial Instruments and Hedging |  | F- 24
(11) Debt, net |  | F- 26
(12) Fair Value of Financial Instruments |  | F- 27
(13) Liability for Unpaid Claims and Claim Adjustment Expenses |  | F- 35
(14) Revenue from Contracts with Customers |  | F- 36
(15) Other Assets and Other Liabilities and Accrued Expenses |  | F- 37
(16) Other Revenue and Other Expenses |  | F- 38
(17) Stockholders’ Equity |  | F- 39
(18) Accumulated Other Comprehensive Income (Loss) |  | F- 41
(19) Stock Based Compensation |  | F- 41
(20) Income Taxes |  | F- 45
(21) Commitments and Contingencies |  | F- 45
(22) Earnings Per Share |  | F- 46
(23) Related Party Transactions |  | F- 47
(24) Subsequent Events |  | F- 47
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |  | 49
Item 3. Quantitative and Qualitative Disclosures About Market Risk |  | 72
Item 4. Controls and Procedures |  | 72
PART II. Other Information |  | 74
Item 1. Legal Proceedings |  | 74
Item 1A. Risk Factors |  | 74
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds |  | 74
Item 3. Defaults Upon Senior Securities |  | 74
Item 4. Mine Safety Disclosures |  | 74
Item 5. Other Information |  | 74
Item 6. Exhibits, Financial Statement Schedules |  | 75
Signatures |  | 76

PART I. FINANCIAL INFORMATION
Forward-Looking Statements
Except for the historical information included and incorporated by reference in this Quarterly Report on Form 10-Q, the information included and incorporated by reference herein are “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Forward-looking statements provide our current expectations or forecasts of future events and are not statements of historical fact. These forward-looking statements include information about possible or assumed future events, including, among other things, discussion and analysis of our future financial condition, results of operations and our strategic plans and objectives. When we use words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “seek,” “may,” “might,” “plan,” “project,” “should,” “target,” “will,” or similar expressions, we intend to identify forward-looking statements.
Forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, many of which are beyond our control, are difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including, but not limited to, those described in the section entitled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, in this Quarterly Report on Form 10-Q and in our other public filings with the SEC.
The factors described herein are not necessarily all of the important factors that could cause actual results or developments to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors also could affect our forward-looking statements. Consequently, our actual performance could be materially different from the results described or anticipated by our forward-looking statements. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Except as required by the applicable law, we undertake no obligation to update any forward-looking statements.
Market and Industry Data
Certain market data and industry data included in this Quarterly Report on Form 10-Q were obtained from reports of governmental agencies and industry publications and surveys. We believe the data from third-party sources to be reliable based upon our management’s knowledge of the industry, but have not independently verified such data and as such, make no guarantees as to its accuracy, completeness or timeliness.
Note to Reader
In reading this Quarterly Report on Form 10-Q, references to:
“A.M. Best” means A.M. Best Company, Inc.
“BSBY” means the Bloomberg Short-Term Bank Yield Index.
“Corvid Peak” means collectively: Corvid Peak Holdings, L.P., Corvid Peak Capital Management, LLC, Corvid Peak GP Holdings, LLC and Corvid Peak Holdings GP, LLC.
“Corvid Peak Funds” means Corvid Peak Restructuring Partners Onshore Fund LLC and Albatross CP LLC.
“EBITDA” means earnings before interest, taxes, depreciation and amortization.
“EBITDAR” means earnings before interest, taxes, depreciation and amortization, and restructuring or rent costs.
“E&S” means excess and surplus.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Fannie Mae” means Federal National Mortgage Association.
“Fortegra” or “The Fortegra Group” means The Fortegra Group, LLC and its subsidiaries prior to June 21, 2022 and to The Fortegra Group, Inc. on or after June 21, 2022.
“Fortegra Additional Warrants” means the additional warrants issued to Warburg and Tiptree Holdings to acquire Fortegra Common Stock.
“Fortegra Additional Warrants (Warburg)” means the Fortegra Additional Warrants issued to Warburg.
“Fortegra Common Stock” means the common stock of Fortegra.
“Fortegra Plan” means the 2022 Equity Incentive Plan of Fortegra.
“Fortegra Preferred Stock” means the 5,333,333 shares of Series A Preferred Stock of Fortegra issued to Warburg.
“Fortegra Warrants” means the warrants to purchase shares of Fortegra Common Stock.
“Freddie Mac” means Federal Home Loan Mortgage Corporation.
“GAAP” means U.S. generally accepted accounting principles.
“Ginnie Mae” means Government National Mortgage Association.
“GSE” means government-sponsored enterprise.
F - 1

“Invesque” means Invesque Inc.
“ITC” means ITC Compliance GRP Limited
“Luxury” means Luxury Mortgage Corp.
“NAIC” means the National Association of Insurance Commissioners.
“Reliance” means Reliance First Capital, LLC.
“SEC” means the U.S. Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933, as amended.
“Sky Auto” means Sky Services LLC.
“Smart AutoCare” means the following entities and their subsidiaries operating under the Smart AutoCare brand: SAC Holdings, Inc., Freedom Insurance Company, Ltd., Dealer Motor Services, Inc., Independent Dealer Group, Inc., Ownershield, Inc. and Accelerated Service Enterprise, LLC.
“SOFR” means the Secured Overnight Financing Rate.
“Tiptree”, the “Company”, “we”, “its”, “us” and “our” means, unless otherwise indicated by the context, Tiptree Inc. and its consolidated subsidiaries.
“Tiptree Holdings” means Tiptree Holdings LLC.
“Transition Services Agreement” means the Amended and Restated Transition Services Agreement between Corvid Peak and Tiptree Inc., effective as of January 1, 2019.
“Warburg” means WP Falcon Aggregator, L.P., a Delaware limited partnership affiliated with funds advised or managed by Warburg Pincus LLC.
“WP Transaction” means the $200 million strategic investment in Fortegra by Warburg.
F - 2

TIPTREE INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands, except share data)

| As of
| September 30, 2022 |  | December 31, 2021
Assets: |  |  |
Investments: |  |  |
Available for sale securities, at fair value, net of allowance for credit losses | $ | 584,081 |  |  | $ | 577,448 |
Loans, at fair value | 70,784 |  |  | 105,583 |
Equity securities | 85,103 |  |  | 138,483 |
Other investments | 76,535 |  |  | 168,656 |
Total investments | 816,503 |  |  | 990,170 |
Cash and cash equivalents | 503,488 |  |  | 175,718 |
Restricted cash | 10,344 |  |  | 19,368 |
Notes and accounts receivable, net | 481,985 |  |  | 454,369 |
Reinsurance receivables | 1,194,327 |  |  | 880,836 |
Deferred acquisition costs | 485,199 |  |  | 379,373 |
Goodwill | 185,944 |  |  | 179,103 |
Intangible assets, net | 120,340 |  |  | 122,758 |
Other assets | 162,118 |  |  | 146,844 |
Assets held for sale | 33,836 |  |  | 250,608 |
Total assets | $ | 3,994,084 |  |  | $ | 3,599,147 |
Liabilities and Stockholders’ Equity |  |  |
Liabilities: |  |  |
Debt, net | $ | 266,255 |  |  | $ | 393,349 |
Unearned premiums | 1,349,357 |  |  | 1,123,952 |
Policy liabilities and unpaid claims | 512,924 |  |  | 331,703 |
Deferred revenue | 628,876 |  |  | 534,863 |
Reinsurance payable | 317,199 |  |  | 265,569 |
Other liabilities and accrued expenses | 399,899 |  |  | 306,536 |
Liabilities held for sale | — |  |  | 242,994 |
Total liabilities | $ | 3,474,510 |  |  | $ | 3,198,966 |
Stockholders’ Equity: |  |  |
Preferred stock: $0.001 par value, 100,000,000 shares authorized, none issued or outstanding | $ | — |  |  | $ | — |
Common stock: $0.001 par value, 200,000,000 shares authorized, 36,247,257 and 34,124,153 shares issued and outstanding, respectively | 36 |  |  | 34 |
Additional paid-in capital | 380,196 |  |  | 317,459 |
Accumulated other comprehensive income (loss), net of tax | (47,670) |  |  | (2,685) |
Retained earnings | 54,717 |  |  | 68,146 |
Total Tiptree Inc. stockholders’ equity | 387,279 |  |  | 382,954 |
Non-controlling interests: |  |  |
Fortegra preferred interests | 77,679 |  |  | — |
Common interests | 54,616 |  |  | 17,227 |
Total non-controlling interests | 132,295 |  |  | 17,227 |
Total stockholders’ equity | 519,574 |  |  | 400,181 |
Total liabilities and stockholders’ equity | $ | 3,994,084 |  |  | $ | 3,599,147 |

See accompanying notes to condensed consolidated financial statements.
F - 3

TIPTREE INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations (Unaudited)
(in thousands, except share data)

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021 |  |
Revenues: |  |  |  |  |  |  |  |  |
Earned premiums, net | $ | 237,877 |  |  | $ | 175,026 |  |  | $ | 662,234 |  |  | $ | 498,903 |  |  |
Service and administrative fees | 83,423 |  |  | 69,664 |  |  | 232,883 |  |  | 191,414 |  |  |
Ceding commissions | 4,023 |  |  | 2,722 |  |  | 9,886 |  |  | 8,827 |  |  |
Net investment income | 3,632 |  |  | 3,330 |  |  | 10,164 |  |  | 9,331 |  |  |
Net realized and unrealized gains (losses) | 17,159 |  |  | 14,805 |  |  | 50,050 |  |  | 120,268 |  |  |
Other revenue | 17,364 |  |  | 21,058 |  |  | 63,007 |  |  | 52,237 |  |  |
Total revenues | 363,478 |  |  | 286,605 |  |  | 1,028,224 |  |  | 880,980 |  |  |
Expenses: |  |  |  |  |  |  |  |  |
Policy and contract benefits | 121,242 |  |  | 80,831 |  |  | 330,353 |  |  | 237,198 |  |  |
Commission expense | 137,559 |  |  | 104,392 |  |  | 382,435 |  |  | 292,580 |  |  |
Employee compensation and benefits | 38,210 |  |  | 48,643 |  |  | 142,927 |  |  | 147,260 |  |  |
Interest expense | 5,503 |  |  | 8,657 |  |  | 24,837 |  |  | 26,890 |  |  |
Depreciation and amortization | 5,549 |  |  | 6,119 |  |  | 17,714 |  |  | 18,261 |  |  |
Other expenses | 30,290 |  |  | 34,379 |  |  | 100,978 |  |  | 104,340 |  |  |
Total expenses | 338,353 |  |  | 283,021 |  |  | 999,244 |  |  | 826,529 |  |  |
Income (loss) before taxes | 25,125 |  |  | 3,584 |  |  | 28,980 |  |  | 54,451 |  |  |
Less: provision (benefit) for income taxes | 5,068 |  |  | 237 |  |  | 31,537 |  |  | 11,416 |  |  |
Net income (loss) | 20,057 |  |  | 3,347 |  |  | (2,557) |  |  | 43,035 |  |  |
Less: net income (loss) attributable to non-controlling interests | 5,834 |  |  | 1,339 |  |  | 6,588 |  |  | 4,477 |  |  |
Net income (loss) attributable to common stockholders | $ | 14,223 |  |  | $ | 2,008 |  |  | $ | (9,145) |  |  | $ | 38,558 |  |  |
Net income (loss) per common share: |  |  |  |  |  |  |  |  |
Basic earnings per share | $ | 0.39 |  |  | $ | 0.06 |  |  | $ | (0.26) |  |  | $ | 1.15 |  |  |
Diluted earnings per share | $ | 0.38 |  |  | $ | 0.06 |  |  | $ | (0.26) |  |  | $ | 1.11 |  |  |
Weighted average number of common shares: |  |  |  |  |  |  |  |  |
Basic | 36,304,385 |  |  | 33,558,106 |  |  | 35,261,659 |  |  | 32,963,451 |  |  |
Diluted | 36,783,248 |  |  | 34,132,182 |  |  | 35,261,659 |  |  | 35,025,211 |  |  |
Dividends declared per common share | $ | 0.04 |  |  | $ | 0.04 |  |  | $ | 0.12 |  |  | $ | 0.12 |  |  |

See accompanying notes to condensed consolidated financial statements.
F - 4

TIPTREE INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)
(in thousands)

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021 |  |
Net income (loss) | $ | 20,057 |  |  | $ | 3,347 |  |  | (2,557) |  |  | $ | 43,035 |  |  |
Other comprehensive income (loss), net of tax: |  |  |  |  |  |  |  |  |
Unrealized gains (losses) on available for sale securities: |  |  |  |  |  |  |  |  |
Change in unrealized gains (losses) on available for sale securities | (18,125) |  |  | (1,970) |  |  | (56,509) |  |  | (5,845) |  |  |
Change in unrealized currency translation adjustments | (7,191) |  |  | — |  |  | (14,256) |  |  | — |  |  |
Related (provision) benefit for income taxes | 4,257 |  |  | 432 |  |  | 13,420 |  |  | 1,310 |  |  |
Other comprehensive income (loss), net of tax | (21,059) |  |  | (1,538) |  |  | (57,345) |  |  | (4,535) |  |  |
Comprehensive income (loss) | (1,002) |  |  | 1,809 |  |  | (59,902) |  |  | 38,500 |  |  |
Less: comprehensive income (loss) attributable to non-controlling interests | 1,479 |  |  | 1,333 |  |  | 1,421 |  |  | 4,459 |  |  |
Comprehensive income (loss) attributable to common stockholders | $ | (2,481) |  |  | $ | 476 |  |  | $ | (61,323) |  |  | $ | 34,041 |  |  |

See accompanying notes to condensed consolidated financial statements.
F - 5

TIPTREE INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)
(in thousands, except shares)

| Common stock |  |  |  |  |  |  |  |  |  | Non-controlling interests |  |
| Number of shares |  | Par value |  | Additional paid-in capital |  | Accumulated other comprehensive income (loss) |  | Retained earnings |  | Total Tiptree Inc. stockholders’ equity |  | Fortegra preferred interests |  | Common interests |  | Total stockholders' equity
Balance at December 31, 2021 | 34,124,153 |  |  | $ | 34 |  |  | $ | 317,459 |  |  | $ | (2,685) |  |  | $ | 68,146 |  |  | $ | 382,954 |  |  | $ | — |  |  | $ | 17,227 |  |  | $ | 400,181 |
Amortization of share-based incentive compensation | — |  |  | — |  |  | 5,086 |  |  | — |  |  | — |  |  | 5,086 |  |  | — |  |  | 728 |  |  | 5,814 |
Vesting of share-based incentive compensation | 281,277 |  |  | — |  |  | (293) |  |  | — |  |  | — |  |  | (293) |  |  | — |  |  | (1,086) |  |  | (1,379) |
Shares purchased under stock purchase plan | (158,162) |  |  | — |  |  | (1,654) |  |  | — |  |  | — |  |  | (1,654) |  |  | — |  |  | — |  |  | (1,654) |
Shares issued upon exercise of warrants | 1,999,989 |  |  | 2 |  |  | 13,722 |  |  | — |  |  | — |  |  | 13,724 |  |  | — |  |  | — |  |  | 13,724 |
Transfer of liability awards | — |  |  | — |  |  | 4,847 |  |  | — |  |  | — |  |  | 4,847 |  |  | — |  |  | — |  |  | 4,847 |
WP Transaction | — |  |  | — |  |  | 41,092 |  |  | 7,193 |  |  | — |  |  | 48,285 |  |  | 77,679 |  |  | 41,044 |  |  | 167,008 |
Non-controlling interest contributions | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 250 |  |  | 250 |
Non-controlling interest distributions | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (3,611) |  |  | (3,611) |
Net change in non-controlling interests and other | — |  |  | — |  |  | (63) |  |  | — |  |  | — |  |  | (63) |  |  | — |  |  | 414 |  |  | 351 |
Common stock dividends declared | — |  |  | — |  |  | — |  |  | — |  |  | (4,284) |  |  | (4,284) |  |  | — |  |  | — |  |  | (4,284) |
Other comprehensive income (loss), net of tax | — |  |  | — |  |  | — |  |  | (52,178) |  |  | — |  |  | (52,178) |  |  | — |  |  | (5,167) |  |  | (57,345) |
Subsidiary preferred dividends declared | — |  |  | — |  |  | — |  |  | — |  |  | (1,771) |  |  | (1,771) |  |  | — |  |  | — |  |  | (1,771) |
Net income (loss) | — |  |  | — |  |  | — |  |  | — |  |  | (7,374) |  |  | (7,374) |  |  | — |  |  | 4,817 |  |  | (2,557) |
Balance at September 30, 2022 | 36,247,257 |  |  | $ | 36 |  |  | $ | 380,196 |  |  | $ | (47,670) |  |  | $ | 54,717 |  |  | $ | 387,279 |  |  | $ | 77,679 |  |  | $ | 54,616 |  |  | $ | 519,574 |
Balance at June 30, 2022 | 36,305,016 |  |  | $ | 36 |  |  | $ | 379,371 |  |  | $ | (30,966) |  |  | $ | 41,964 |  |  | $ | 390,405 |  |  | $ | 77,679 |  |  | $ | 57,256 |  |  | $ | 525,340 |
Amortization of share-based incentive compensation | — |  |  | — |  |  | 1,486 |  |  | — |  |  | — |  |  | 1,486 |  |  | — |  |  | 108 |  |  | 1,594 |
Vesting of share-based incentive compensation | 10,860 |  |  | — |  |  | 120 |  |  | — |  |  | — |  |  | 120 |  |  | — |  |  | — |  |  | 120 |
Shares purchased under stock purchase plan | (68,619) |  |  | — |  |  | (718) |  |  | — |  |  | — |  |  | (718) |  |  | — |  |  | — |  |  | (718) |
Non-controlling interest distributions | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (3,028) |  |  | (3,028) |
Net change in non-controlling interests and other | — |  |  | — |  |  | (63) |  |  | — |  |  | — |  |  | (63) |  |  | — |  |  | 414 |  |  | 351 |
Common stock dividends declared | — |  |  | — |  |  | — |  |  | — |  |  | (1,470) |  |  | (1,470) |  |  | — |  |  | — |  |  | (1,470) |
Other comprehensive income (loss), net of tax | — |  |  | — |  |  | — |  |  | (16,704) |  |  | — |  |  | (16,704) |  |  | — |  |  | (4,355) |  |  | (21,059) |
Subsidiary preferred dividends declared | — |  |  | — |  |  | — |  |  | — |  |  | (1,613) |  |  | (1,613) |  |  | — |  |  | — |  |  | (1,613) |
Net income (loss) | — |  |  | — |  |  | — |  |  | — |  |  | 15,836 |  |  | 15,836 |  |  | — |  |  | 4,221 |  |  | 20,057 |
Balance at September 30, 2022 | 36,247,257 |  |  | $ | 36 |  |  | $ | 380,196 |  |  | $ | (47,670) |  |  | $ | 54,717 |  |  | $ | 387,279 |  |  | $ | 77,679 |  |  | $ | 54,616 |  |  | $ | 519,574 |

F - 6

TIPTREE INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)
(in thousands, except shares)

| Common stock |  |  |  |  |  |  |  |  |  |  |  |
| Number of shares |  | Par value |  | Additional paid-in capital |  | Accumulated other comprehensive income (loss) |  | Retained earnings |  | Total Tiptree Inc. stockholders’ equity |  | Non-controlling interests |  | Total stockholders' equity
Balance at December 31, 2020 | 32,682,462 |  |  | $ | 33 |  |  | $ | 315,014 |  |  | $ | 5,674 |  |  | $ | 35,423 |  |  | $ | 356,144 |  |  | $ | 17,394 |  |  | $ | 373,538 |
Amortization of share-based incentive compensation | — |  |  | — |  |  | 1,759 |  |  | — |  |  | — |  |  | 1,759 |  |  | 1,263 |  |  | 3,022 |
Vesting of share-based incentive compensation | 369,556 |  |  | — |  |  | 184 |  |  | — |  |  | — |  |  | 184 |  |  | (4,816) |  |  | (4,632) |
Shares issued in exchange for vested subsidiary awards (1) | 1,158,009 |  |  | 2 |  |  | 657 |  |  | — |  |  | — |  |  | 659 |  |  | (709) |  |  | (50) |
Shares purchased under stock purchase plan | (528,662) |  |  | (1) |  |  | (2,881) |  |  | — |  |  | — |  |  | (2,882) |  |  | — |  |  | (2,882) |
Shares issued upon exercise of warrants | 207,445 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Non-controlling interest contributions | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 100 |  |  | 100 |
Non-controlling interest distributions | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (355) |  |  | (355) |
Repurchase of vested subsidiary awards | — |  |  | — |  |  | (770) |  |  | — |  |  | — |  |  | (770) |  |  | (309) |  |  | (1,079) |
Net change in non-controlling interests and other | — |  |  | — |  |  | 97 |  |  | — |  |  | — |  |  | 97 |  |  | (97) |  |  | — |
Dividends declared | — |  |  | — |  |  | — |  |  | — |  |  | (4,020) |  |  | (4,020) |  |  | — |  |  | (4,020) |
Other comprehensive income (loss), net of tax | — |  |  | — |  |  | — |  |  | (4,517) |  |  | — |  |  | (4,517) |  |  | (18) |  |  | (4,535) |
Net income (loss) | — |  |  | — |  |  | — |  |  | — |  |  | 38,558 |  |  | 38,558 |  |  | 4,477 |  |  | 43,035 |
Balance at September 30, 2021 | 33,888,810 |  |  | $ | 34 |  |  | $ | 314,060 |  |  | $ | 1,157 |  |  | $ | 69,961 |  |  | $ | 385,212 |  |  | $ | 16,930 |  |  | $ | 402,142 |
Balance at June 30, 2021 | 33,395,395 |  |  | $ | 33 |  |  | $ | 314,983 |  |  | $ | 2,689 |  |  | $ | 69,313 |  |  | $ | 387,018 |  |  | $ | 18,031 |  |  | $ | 405,049 |
Amortization of share-based incentive compensation | — |  |  | — |  |  | 570 |  |  | — |  |  | — |  |  | 570 |  |  | 481 |  |  | 1,051 |
Vesting of share-based incentive compensation | 11,586 |  |  | — |  |  | 103 |  |  | — |  |  | — |  |  | 103 |  |  | (4,132) |  |  | (4,029) |
Shares issued in exchange for vested subsidiary awards (1) | 481,829 |  |  | 1 |  |  | (1,634) |  |  | — |  |  | — |  |  | (1,633) |  |  | 1,633 |  |  | — |
Repurchase of vested subsidiary awards | — |  |  | — |  |  | 10 |  |  | — |  |  | — |  |  | 10 |  |  | (33) |  |  | (23) |
Non-controlling interest distributions | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (355) |  |  | (355) |
Net change in non-controlling interests and other | — |  |  | — |  |  | 28 |  |  | — |  |  | — |  |  | 28 |  |  | (28) |  |  | — |
Dividends declared | — |  |  | — |  |  | — |  |  | — |  |  | (1,360) |  |  | (1,360) |  |  | — |  |  | (1,360) |
Other comprehensive income (loss), net of tax | — |  |  | — |  |  | — |  |  | (1,532) |  |  | — |  |  | (1,532) |  |  | (6) |  |  | (1,538) |
Net income (loss) | — |  |  | — |  |  | — |  |  | — |  |  | 2,008 |  |  | 2,008 |  |  | 1,339 |  |  | 3,347 |
Balance at September 30, 2021 | 33,888,810 |  |  | $ | 34 |  |  | $ | 314,060 |  |  | $ | 1,157 |  |  | $ | 69,961 |  |  | $ | 385,212 |  |  | $ | 16,930 |  |  | $ | 402,142 |

(1) Exchange included $50 in cash.
See accompanying notes to condensed consolidated financial statements.
F - 7

TIPTREE INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in thousands)

| Nine Months Ended September 30, |  |
| 2022 |  | 2021 |  |
Operating Activities: |  |  |  |  |
Net income (loss) attributable to common stockholders | $ | (9,145) |  |  | $ | 38,558 |  |  |
Net income (loss) attributable to non-controlling interests | 6,588 |  |  | 4,477 |  |  |
Net income (loss) | (2,557) |  |  | 43,035 |  |  |
Adjustments to reconcile net income to net cash provided by (used in) operating activities |  |  |  |  |
Net realized and unrealized (gains) losses | (50,050) |  |  | (120,268) |  |  |
Net (gain) loss on held for sale of business | (3,825) |  |  | 1,175 |  |  |
Non-cash compensation expense | 7,911 |  |  | 3,717 |  |  |
Amortization/accretion of premiums and discounts | 1,017 |  |  | 2,134 |  |  |
Depreciation and amortization expense | 17,714 |  |  | 18,261 |  |  |
Non-cash lease expense | 6,508 |  |  | 6,520 |  |  |
Deferred provision (benefit) for income taxes | 29,339 |  |  | 10,777 |  |  |
Amortization of deferred financing costs | 1,081 |  |  | 1,176 |  |  |
Other | 1,123 |  |  | 133 |  |  |
Changes in operating assets and liabilities: |  |  |  |  |
Mortgage loans originated for sale | (1,942,612) |  |  | (2,100,276) |  |  |
Proceeds from the sale of mortgage loans originated for sale | 2,195,612 |  |  | 2,184,852 |  |  |
(Increase) decrease in notes and accounts receivable | 2,313 |  |  | (57,859) |  |  |
(Increase) decrease in reinsurance receivables | (313,491) |  |  | (99,190) |  |  |
(Increase) decrease in deferred acquisition costs | (105,826) |  |  | (123,510) |  |  |
(Increase) decrease in other assets | 5,224 |  |  | 337 |  |  |
Increase (decrease) in unearned premiums | 225,405 |  |  | 192,430 |  |  |
Increase (decrease) in policy liabilities and unpaid claims | 181,221 |  |  | 80,176 |  |  |
Increase (decrease) in deferred revenue | 93,625 |  |  | 112,062 |  |  |
Increase (decrease) in reinsurance payable | 51,630 |  |  | 14,839 |  |  |
Increase (decrease) in other liabilities and accrued expenses | (505) |  |  | 15,518 |  |  |
Net cash provided by (used in) operating activities | 400,857 |  |  | 186,039 |  |  |
Investing Activities: |  |  |  |  |
Purchases of investments | (872,037) |  |  | (1,251,741) |  |  |
Proceeds from sales and maturities of investments | 944,531 |  |  | 1,064,915 |  |  |
Purchases of property, plant and equipment | (5,314) |  |  | (2,103) |  |  |
Proceeds from the sale of businesses and other assets | 742 |  |  | 125 |  |  |
Proceeds from notes receivable | 59,657 |  |  | 40,337 |  |  |
Issuance of notes receivable | (83,761) |  |  | (52,957) |  |  |
Business and asset acquisitions, net of cash and deposits | (14,960) |  |  | 133 |  |  |
Net cash provided by (used in) investing activities | 28,858 |  |  | (201,291) |  |  |
Financing Activities: |  |  |  |  |
Dividends paid | (4,705) |  |  | (4,020) |  |  |
Cash received for the exercise of warrants | 13,724 |  |  | — |  |  |
Net non-controlling interest (redemptions) contributions | (5,081) |  |  | (1,384) |  |  |
Issuance of Fortegra Common Stock | 98,433 |  |  | — |  |  |
Issuance of Fortegra Warrants | 13,101 |  |  | — |  |  |
Issuance of Fortegra Additional Warrants (Warburg) | 6,230 |  |  | — |  |  |
Issuance of Fortegra Preferred Stock | 83,486 |  |  | — |  |  |
Payment of WP Transaction costs | (12,848) |  |  | — |  |  |
Payment of debt issuance costs | (6) |  |  | (62) |  |  |
Proceeds from borrowings and mortgage notes payable | 2,114,394 |  |  | 2,265,796 |  |  |
Principal paydowns of borrowings and mortgage notes payable | (2,409,398) |  |  | (2,257,947) |  |  |
Repurchases of common stock and other changes in additional paid-in capital | (1,654) |  |  | (2,882) |  |  |
Net cash provided by (used in) financing activities | (104,324) |  |  | (499) |  |  |
Effect of exchange rate changes on cash | (6,833) |  |  | — |  |  |
Net increase (decrease) in cash, cash equivalents and restricted cash | 318,558 |  |  | (15,751) |  |  |
Cash, cash equivalents and restricted cash – beginning of period | 195,086 |  |  | 195,275 |  |  |
Cash, cash equivalents and restricted cash – beginning of period - held for sale | 9,360 |  |  | 4,879 |  |  |
Cash, cash equivalents and restricted cash – end of period | 523,004 |  |  | 184,403 |  |  |
Less: Reclassification of cash to held for sale / deconsolidation of cash previously held for sale | 9,172 |  |  | 12,319 |  |  |
Cash, cash equivalents and restricted cash – end of period | $ | 513,832 |  |  | $ | 172,084 |  |  |
Supplemental Schedule of Non-Cash Investing and Financing Activities: |  |  |  |  |
Right of use asset obtained in exchange for lease liability | $ | 12,232 |  |  | $ | 3,046 |  |  |
Bonds and trade receivables exchanged for corporate loans and equity securities | $ | 19,846 |  |  | $ | — |  |  |
Shares issued in exchange for vested subsidiary awards |  |  | $ | 659 |  |  |
| As of
Reconciliation of cash, cash equivalents and restricted cash | September 30, 2022 |  | December 31, 2021 |  |
Cash and cash equivalents | $ | 503,488 |  |  | $ | 175,718 |  |  |
Restricted cash | 10,344 |  |  | 19,368 |  |  |
Total cash, cash equivalents and restricted cash shown in the statements of cash flows | $ | 513,832 |  |  | $ | 195,086 |  |  |

See accompanying notes to condensed consolidated financial statements.
F - 8

TIPTREE INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
September 30, 2022
(in thousands, except share data)
(1) Organization
Tiptree Inc. (together with its consolidated subsidiaries, collectively, Tiptree, the Company, or we) is a Maryland Corporation that was incorporated on March 19, 2007. Tiptree’s common stock trades on the Nasdaq Capital Market under the symbol “TIPT”. Tiptree is a holding company that allocates capital across a broad spectrum of businesses, assets and other investments. We classify our business into two reportable segments: Insurance and Mortgage. We refer to our non-insurance operations, assets and other investments, which is comprised of our Mortgage reportable segment and our non-reportable segments and other business activities, as Tiptree Capital.
On June 21, 2022, the Company closed the WP Transaction whereby Warburg invested $200,000 in Fortegra in exchange for Fortegra Common Stock, Fortegra Preferred Stock, Fortegra Warrants and Fortegra Additional Warrants. See Note (17) Stockholders’ Equity for additional information regarding the terms of the securities issued in connection with the closing of the WP Transaction. As of September 30, 2022, Fortegra was owned approximately 79.5% by Tiptree Holdings, 17.4% by Warburg and 3.1% by management and directors of Fortegra, before giving effect to the exercise of outstanding warrants and the conversion of outstanding preferred stock.
(2) Summary of Significant Accounting Policies
Basis of Presentation and Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements of Tiptree have been prepared in accordance with generally accepted accounting principles in the United States of America (GAAP) and include the accounts of the Company and its subsidiaries. The condensed consolidated financial statements are presented in U.S. dollars, the main operating currency of the Company. The unaudited condensed consolidated financial statements presented herein should be read in conjunction with the annual audited financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021. In the opinion of management, the accompanying unaudited interim financial information reflects all adjustments, including normal recurring adjustments necessary to present fairly the Company’s financial position, results of operations, comprehensive income and cash flows for each of the interim periods presented. The results of operations for the three and nine months ended September 30, 2022 are not necessarily indicative of the results that may be expected for the full year ending on December 31, 2022.
Non-controlling interests on the condensed consolidated balance sheets represent the ownership interests in certain consolidated subsidiaries held by entities or persons other than Tiptree. Accounts and transactions between consolidated entities have been eliminated.
F - 9

TIPTREE INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
September 30, 2022
(in thousands, except share data)
Recent Accounting Standards
Recently Adopted Accounting Pronouncements

Standard | Description | Adoption Date | Impact on Financial Statements
Accounting Standard Update (ASU) 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) | The standard simplifies the accounting for certain financial instruments. The guidance reduces the number of accounting models for convertible debt instruments by eliminating the cash conversion and beneficial conversion models and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. The ASU amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. Either a full or modified retrospective method of transition is permissible for the adoption of this standard. | January 1, 2022 | The adoption of the standard does not currently impact the Company’s condensed consolidated financial statements.
Accounting Standard Update (ASU) 2021-08, Business Combinations (Topic 805) - Accounting for Contract Assets and Contract Liabilities from Contracts with Customers | This standard addresses diversity in practice and inconsistency related to recognition of an acquired contract liability, and payment terms and their effect on subsequent revenue recognized by the acquirer. This standard is effective for annual periods beginning after December 15, 2023, including interim periods within those fiscal years. Entities should apply the provisions of the new standard prospectively to business combinations occurring on or after the effective date of the standard. Early adoption is permitted, including in an interim period. We early adopted this standard and applied it to all 2022 business combinations. | January 1, 2022 | The adoption of the standard does not currently impact the Company’s condensed consolidated financial statements.

Recently Issued Accounting Pronouncements, Not Yet Adopted
During the nine months ended September 30, 2022, there were no accounting standards issued applicable to the Company.
(3) Acquisitions
Acquisition of ITC Compliance GRP Limited
On April 1, 2022, a subsidiary in our insurance business acquired all of the equity interests in ITC Compliance GRP Limited (“ITC”) for total cash consideration of approximately $15,000, net of cash acquired of $6,123, plus earn out payments based on achievement of specific performance metrics. ITC is a provider of regulatory support and compliance services to the retail automotive sector in the United Kingdom.
The preliminary purchase price allocation below has been developed based on preliminary estimates of fair value using the historical financial statements of ITC as of the acquisition date and is subject to the completion of management’s final analysis. Identifiable assets acquired were primarily made up of goodwill and intangible assets. Management’s preliminary allocation of the purchase price to the net assets acquired resulted in the recording of goodwill and intangible assets of $8,044 and $10,964, respectively, which the Company may modify during the one year period allowed for purchase accounting adjustments during the measurement period.
F - 10

TIPTREE INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
September 30, 2022
(in thousands, except share data)
(4) Assets and Liabilities Held for Sale
Luxury
The Company has entered into a definitive agreement to sell Luxury, which was classified as held for sale at December 31, 2021. The Company has deconsolidated Luxury effective as of July 1, 2022 due to the execution of an amendment to the definitive agreement to sell Luxury on that date. As of that date, Tiptree no longer had a variable interest in Luxury and all of the risks and rewards associated with Luxury were transferred to the buyer. The transaction did not meet the requirements to be classified as a discontinued operation. The following table presents detail of Luxury’s assets and liabilities held for sale in the condensed consolidated balance sheets for the following periods:

| As of
| September 30, 2022 |  | December 31, 2021
Assets: |  |  |
Investments: |  |  |
Loans, at fair value | $ | — |  |  | $ | 236,810 |
Other investments | — |  |  | 2,071 |
Total investments | — |  |  | 238,881 |
Cash, cash equivalents and restricted cash | — |  |  | 9,360 |
Notes and accounts receivable, net | — |  |  | 157 |
Other assets | — |  |  | 2,210 |
Assets held for sale | $ | — |  |  | $ | 250,608 |
Liabilities: |  |  |
Debt, net | $ | — |  |  | $ | 227,973 |
Other liabilities and accrued expenses | — |  |  | 15,021 |
Liabilities held for sale | $ | — |  |  | $ | 242,994 |

Luxury’s earnings had no impact to net income (loss) attributable to common stockholders for the three or nine months ended September 30, 2022 and 2021.
Marine
In the three months ended September 30, 2022, the Company completed the sale of two dry bulk vessels from its maritime shipping operations, which had previously been held for sale. The Company recognized a net gain of $14,100, based on proceeds of $46,200 plus final settlement of assets, for the three months ended September 30, 2022, and a net gain of $21,217, based on proceeds of $67,700 plus final settlement of assets, for the nine months ended September 30, 2022. Also in the three months ended September 30, 2022, we entered into definitive agreements to sell the remaining two product tankers for approximately $49,000. As of September 30, 2022, these two product tankers are classified as held for sale. We expect the remaining sales to be completed in the fourth quarter of 2022. The following table presents detail of the assets held for sale in the condensed consolidated balance sheet as of September 30, 2022:

| As of
| September 30, 2022
Assets: |
Investments: |
Other investments | $ | 33,113 |
Total investments | 33,113 |
Other assets | 724 |
Assets held for sale | $ | 33,837 |

(5) Operating Segment Data
Tiptree is a holding company that allocates capital across a broad spectrum of businesses, assets and other investments. Tiptree’s principal operating subsidiary, The Fortegra Group, is a leading provider of specialty insurance, service contract
F - 11

TIPTREE INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
September 30, 2022
(in thousands, except share data)
products and related service solutions. Based on the ASC 280, Segment Reporting, quantitative analysis performed, our reportable segments are Insurance and Mortgage. We refer to our non-insurance operations, assets and other investments, comprised of our Mortgage reportable segment and our non-reportable operating segments and other business activities, as Tiptree Capital. Corporate activities include holding company interest expense, employee compensation and benefits, and other expenses.
Our reportable segments’ income or loss is reported before income taxes and non-controlling interests. Segment results incorporate the revenues and expenses of these subsidiaries since they commenced operations or were acquired. Intercompany transactions are eliminated.
Descriptions of our Insurance reportable segment and Tiptree Capital, including our Mortgage reportable segment, are as follows:
Insurance operations are conducted through Fortegra, which is a leading provider of specialty insurance products and related services. Fortegra designs, markets and underwrites specialty property and casualty insurance products incorporating value-added coverages and services for select target markets or niches. Fortegra’s products and services include niche commercial and personal lines, service contracts, and other insurance services.
Tiptree Capital:
Mortgage operations are conducted through Reliance. The Company’s mortgage origination business originates loans for sale to institutional investors, including GSEs and FHA/VA and services loans on behalf of Fannie Mae, Freddie Mac, and Ginnie Mae.
Other includes our maritime shipping operations (including our two held for sale product tankers), asset management, other investments (including our Invesque shares), and Luxury mortgage operations (held for sale as of June 30, 2022 and deconsolidated effective as of July 1, 2022).
The tables below present the components of revenue, expense, income (loss) before taxes, and assets for our reportable segments as well as Tiptree Capital - Other for the following periods:

| Three Months Ended September 30, 2022
|  |  | Tiptree Capital |  |
| Insurance |  | Mortgage |  | Other |  | Total
Total revenues | $ | 327,028 |  |  | $ | 15,611 |  |  | $ | 20,839 |  |  | $ | 363,478 |
Total expenses | (311,724) |  |  | (16,551) |  |  | (1,762) |  |  | (330,037) |
Corporate expenses | — |  |  | — |  |  | — |  |  | (8,316) |
Income (loss) before taxes | $ | 15,304 |  |  | $ | (940) |  |  | $ | 19,077 |  |  | $ | 25,125 |
Less: provision (benefit) for income taxes |  |  |  |  |  |  | 5,068 |
Net income (loss) |  |  |  |  |  |  | $ | 20,057 |
Less: net income (loss) attributable to non-controlling interests |  |  |  |  |  |  | 5,834 |
Net income (loss) attributable to common stockholders |  |  |  |  |  |  | $ | 14,223 |

| Three Months Ended September 30, 2021
|  |  | Tiptree Capital |  |
| Insurance |  | Mortgage |  | Other |  | Total
Total revenues | $ | 246,706 |  |  | $ | 27,425 |  |  | $ | 12,474 |  |  | $ | 286,605 |
Total expenses | (233,369) |  |  | (21,158) |  |  | (17,174) |  |  | (271,701) |
Corporate expenses | — |  |  | — |  |  | — |  |  | (11,320) |
Income (loss) before taxes | $ | 13,337 |  |  | $ | 6,267 |  |  | $ | (4,700) |  |  | $ | 3,584 |
Less: provision (benefit) for income taxes |  |  |  |  |  |  | 237 |
Net income (loss) |  |  |  |  |  |  | $ | 3,347 |
Less: net income (loss) attributable to non-controlling interests |  |  |  |  |  |  | 1,339 |
Net income (loss) attributable to common stockholders |  |  |  |  |  |  | $ | 2,008 |

F - 12

TIPTREE INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
September 30, 2022
(in thousands, except share data)

| Nine Months Ended September 30, 2022
|  |  | Tiptree Capital |  |
| Insurance |  | Mortgage |  | Other |  | Total
Total revenues | $ | 903,388 |  |  | $ | 59,201 |  |  | $ | 65,635 |  |  | $ | 1,028,224 |
Total expenses | (864,331) |  |  | (55,851) |  |  | (45,167) |  |  | (965,349) |
Corporate expenses | — |  |  | — |  |  | — |  |  | (33,895) |
Income (loss) before taxes | $ | 39,057 |  |  | $ | 3,350 |  |  | $ | 20,468 |  |  | $ | 28,980 |
Less: provision (benefit) for income taxes |  |  |  |  |  |  | 31,537 |
Net income (loss) |  |  |  |  |  |  | $ | (2,557) |
Less: net income (loss) attributable to non-controlling interests |  |  |  |  |  |  | 6,588 |
Net income (loss) attributable to common stockholders |  |  |  |  |  |  | $ | (9,145) |

| Nine Months Ended September 30, 2021
|  |  | Tiptree Capital |  |
| Insurance |  | Mortgage |  | Other |  | Total
Total revenues | $ | 721,524 |  |  | $ | 87,191 |  |  | $ | 72,265 |  |  | $ | 880,980 |
Total expenses | (671,955) |  |  | (62,072) |  |  | (59,351) |  |  | (793,378) |
Corporate expenses | — |  |  | — |  |  | — |  |  | (33,151) |
Income (loss) before taxes | $ | 49,569 |  |  | $ | 25,119 |  |  | $ | 12,914 |  |  | $ | 54,451 |
Less: provision (benefit) for income taxes |  |  |  |  |  |  | 11,416 |
Net income (loss) |  |  |  |  |  |  | $ | 43,035 |
Less: net income (loss) attributable to non-controlling interests |  |  |  |  |  |  | 4,477 |
Net income (loss) attributable to common stockholders |  |  |  |  |  |  | $ | 38,558 |

The Company conducts its operations primarily in the U.S. with 7.3% and 9.0% of total revenues generated overseas for the three months ended September 30, 2022 and 2021, respectively, and 8.4% and 7.1% for the nine months ended September 30, 2022 and 2021, respectively.
The following table presents the reportable segments and Tiptree Capital - Other assets for the following periods:

| As of September 30, 2022 |  | As of December 31, 2021
|  |  | Tiptree Capital |  |  |  |  |  |  |  | Tiptree Capital |  |  |  |
| Insurance |  | Mortgage |  | Other |  | Corporate |  | Total |  | Insurance |  | Mortgage |  | Other |  | Corporate |  | Total
Total assets | $ | 3,648,191 |  |  | $ | 167,015 |  |  | $ | 73,311 |  |  | $ | 105,567 |  |  | $ | 3,994,084 |  |  | $ | 3,002,152 |  |  | $ | 201,134 |  |  | $ | 384,564 |  |  | $ | 11,297 |  |  | $ | 3,599,147 |

F - 13

TIPTREE INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
September 30, 2022
(in thousands, except share data)
(6) Investments
The following table presents the Company's investments related to insurance operations and other Tiptree investing activities, measured at fair value as of the following periods:

| As of September 30, 2022 |  |
|  |  | Tiptree Capital |  |  |  |  |  |  |  |
| Insurance |  | Mortgage |  | Other |  | Total |  |  |  |  |  |
Available for sale securities, at fair value, net of allowance for credit losses | $ | 584,081 |  |  | $ | — |  |  | $ | — |  |  | $ | 584,081 |  |  |  |  |  |  |
Loans, at fair value | 12,584 |  |  | 58,200 |  |  | — |  |  | 70,784 |  |  |  |  |  |  |
Equity securities | 69,229 |  |  | — |  |  | 15,874 |  |  | 85,103 |  |  |  |  |  |  |
Other investments | 66,805 |  |  | 7,404 |  |  | 2,326 |  |  | 76,535 |  |  |  |  |  |  |
Total investments | $ | 732,699 |  |  | $ | 65,604 |  |  | $ | 18,200 |  |  | $ | 816,503 |  |  |  |  |  |  |

| As of December 31, 2021
|  |  | Tiptree Capital |  |
| Insurance |  | Mortgage |  | Other |  | Total
Available for sale securities, at fair value, net of allowance for credit losses | $ | 577,448 |  |  | $ | — |  |  | $ | — |  |  | $ | 577,448 |
Loans, at fair value | 7,099 |  |  | 98,484 |  |  | — |  |  | 105,583 |
Equity securities | 109,684 |  |  | — |  |  | 28,799 |  |  | 138,483 |
Other investments | 79,975 |  |  | 7,981 |  |  | 80,700 |  |  | 168,656 |
Total investments | $ | 774,206 |  |  | $ | 106,465 |  |  | $ | 109,499 |  |  | $ | 990,170 |

Available for Sale Securities, at fair value
All of the Company’s investments in Available for Sale Securities, at fair value, net of allowance for credit losses (AFS securities) as of September 30, 2022 and December 31, 2021 are held by subsidiaries in the insurance segment. The following tables present the Company's investments in AFS securities:

| As of September 30, 2022
| Amortized cost |  | Allowance for Credit Losses(1) |  | Gross unrealized gains |  | Gross unrealized losses |  | Fair value
U.S. Treasury securities and obligations of U.S. government authorities and agencies | $ | 391,358 |  |  | $ | — |  |  | $ | 3,209 |  |  | $ | (37,808) |  |  | $ | 356,759 |
Obligations of state and political subdivisions | 54,472 |  |  | (3) |  |  | 6 |  |  | (5,174) |  |  | 49,301 |
Corporate securities | 174,076 |  |  | (280) |  |  | 8 |  |  | (15,691) |  |  | 158,113 |
Asset backed securities | 20,431 |  |  | (1) |  |  | — |  |  | (4,228) |  |  | 16,202 |
Certificates of deposit | 1,357 |  |  | — |  |  | — |  |  | — |  |  | 1,357 |
Obligations of foreign governments | 2,635 |  |  | (2) |  |  | — |  |  | (284) |  |  | 2,349 |
Total | $ | 644,329 |  |  | $ | (286) |  |  | $ | 3,223 |  |  | $ | (63,185) |  |  | $ | 584,081 |
| As of December 31, 2021
| Amortized cost |  | Allowance for Credit Losses(1) |  | Gross unrealized gains |  | Gross unrealized losses |  | Fair value
U.S. Treasury securities and obligations of U.S. government authorities and agencies | $ | 352,288 |  |  | $ | — |  |  | $ | 2,087 |  |  | $ | (3,197) |  |  | $ | 351,178 |
Obligations of state and political subdivisions | 57,923 |  |  | — |  |  | 1,050 |  |  | (313) |  |  | 58,660 |
Corporate securities | 145,997 |  |  | (241) |  |  | 517 |  |  | (1,396) |  |  | 144,877 |
Asset backed securities | 19,511 |  |  | — |  |  | 82 |  |  | (2,146) |  |  | 17,447 |
Certificates of deposit | 2,696 |  |  | — |  |  | — |  |  | — |  |  | 2,696 |
Obligations of foreign governments | 2,649 |  |  | (4) |  |  | 3 |  |  | (58) |  |  | 2,590 |
Total | $ | 581,064 |  |  | $ | (245) |  |  | $ | 3,739 |  |  | $ | (7,110) |  |  | $ | 577,448 |

(1) Represents the amount of impairment that has resulted from credit-related factors, and therefore was recognized in net realized and unrealized gains (losses) as a credit loss on AFS securities. Amount excludes unrealized losses relating to non-credit factors.
The amortized cost and fair values of AFS securities, by contractual maturity date, are shown below. Expected maturities
F - 14

TIPTREE INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
September 30, 2022
(in thousands, except share data)
may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

| As of
| September 30, 2022 |  | December 31, 2021
| Amortized Cost |  | Fair Value |  | Amortized Cost |  | Fair Value
Due in one year or less | $ | 58,860 |  |  | $ | 58,211 |  |  | $ | 41,033 |  |  | $ | 41,150 |
Due after one year through five years | 318,249 |  |  | 297,378 |  |  | 269,487 |  |  | 268,537 |
Due after five years through ten years | 58,443 |  |  | 53,134 |  |  | 52,561 |  |  | 52,000 |
Due after ten years | 188,346 |  |  | 159,156 |  |  | 198,472 |  |  | 198,314 |
Asset backed securities | 20,431 |  |  | 16,202 |  |  | 19,511 |  |  | 17,447 |
Total | $ | 644,329 |  |  | $ | 584,081 |  |  | $ | 581,064 |  |  | $ | 577,448 |

The following tables present the gross unrealized losses on AFS securities by length of time that individual AFS securities have been in a continuous unrealized loss position for less than twelve months, and twelve months or greater and do not have an allowance for credit losses:

| As of September 30, 2022
| Less Than or Equal to One Year |  | More Than One Year
| Fair value |  | Gross unrealized losses |  | # of Securities(1) |  | Fair value |  | Gross unrealized losses |  | # of Securities(1)
U.S. Treasury securities and obligations of U.S. government authorities and agencies | $ | 167,192 |  |  | $ | (14,219) |  |  | 407 |  |  | $ | 134,796 |  |  | $ | (23,589) |  |  | 307 |
Obligations of state and political subdivisions | 36,638 |  |  | (2,908) |  |  | 123 |  |  | 12,508 |  |  | (2,266) |  |  | 56 |
Corporate securities | 69,448 |  |  | (4,258) |  |  | 267 |  |  | 86,417 |  |  | (11,433) |  |  | 326 |
Asset backed securities | 9,670 |  |  | (477) |  |  | 54 |  |  | 6,532 |  |  | (3,751) |  |  | 33 |
Certificates of deposit | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Obligations of foreign governments | 307 |  |  | (1) |  |  | 1 |  |  | 2,042 |  |  | (283) |  |  | 8 |
Total | $ | 283,255 |  |  | $ | (21,863) |  |  | 852 |  |  | $ | 242,295 |  |  | $ | (41,322) |  |  | 730 |
| As of December 31, 2021
| Less Than or Equal to One Year |  | More Than One Year
| Fair value |  | Gross unrealized losses |  | # of Securities(1) |  | Fair value |  | Gross unrealized losses |  | # of Securities(1)
U.S. Treasury securities and obligations of U.S. government authorities and agencies | $ | 216,378 |  |  | $ | (2,827) |  |  | 324 |  |  | $ | 11,920 |  |  | $ | (370) |  |  | 47 |
Obligations of state and political subdivisions | 17,190 |  |  | (275) |  |  | 64 |  |  | 1,152 |  |  | (38) |  |  | 5 |
Corporate securities | 99,434 |  |  | (1,159) |  |  | 326 |  |  | 9,722 |  |  | (237) |  |  | 45 |
Asset backed securities | 7,454 |  |  | (84) |  |  | 38 |  |  | 2,316 |  |  | (2,062) |  |  | 5 |
Certificates of deposit | 1,339 |  |  | — |  |  | 2 |  |  | — |  |  | — |  |  | — |
Obligations of foreign governments | 2,278 |  |  | (58) |  |  | 8 |  |  | — |  |  | — |  |  | — |
Total | $ | 344,073 |  |  | $ | (4,403) |  |  | 762 |  |  | $ | 25,110 |  |  | $ | (2,707) |  |  | 102 |

(1) Presented in whole numbers.
Management believes that it is more likely than not that the Company will be able to hold the fixed maturity AFS securities that were in an unrealized loss position as of September 30, 2022 until full recovery of their amortized cost basis.
F - 15

TIPTREE INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
September 30, 2022
(in thousands, except share data)
The table below presents a roll-forward of the activity in the allowance for credit losses on AFS securities by type as of September 30, 2022:

| Obligations of state and political subdivisions |  | Corporate securities |  | Asset backed securities |  | Obligations of foreign governments |  | Total
Balance at December 31, 2020 | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
(Increase) in allowance for credit losses | — |  |  | (129) |  |  | — |  |  | (6) |  |  | (135) |
Reduction in credit losses due to AFS securities sold during the year | — |  |  | 3 |  |  | — |  |  | 1 |  |  | 4 |
Gains from recoveries of amounts previously written off | — |  |  | 46 |  |  | — |  |  | 1 |  |  | 47 |
Balance at September 30, 2021 | $ | — |  |  | $ | (80) |  |  | $ | — |  |  | $ | (4) |  |  | $ | (84) |
Balance at December 31, 2021 | $ | — |  |  | $ | (241) |  |  | $ | — |  |  | $ | (4) |  |  | $ | (245) |
(Increase) in allowance for credit losses | (3) |  |  | (109) |  |  | (1) |  |  | — |  |  | (113) |
Gains from recoveries of amounts previously written off | — |  |  | 70 |  |  | — |  |  | 2 |  |  | 72 |
Balance at September 30, 2022 | $ | (3) |  |  | $ | (280) |  |  | $ | (1) |  |  | $ | (2) |  |  | $ | (286) |

The Company applies a discounted cash flow model, based on assumptions and model outputs provided by an investment management company, in determining its lifetime expected credit losses on AFS securities. This includes determining the present value of expected future cash flows discounted at the book yield of the security.
The table below presents the amount of gains from recoveries (credit losses) on AFS securities recorded by the Company for the following period:

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021 |  |
Net gains from recoveries (credit losses) on AFS securities | 35 |  |  | (1) |  |  | (41) |  |  | (84) |  |  |

Pursuant to certain reinsurance agreements and statutory licensing requirements, the Company has deposited invested assets in custody accounts or insurance department safekeeping accounts. The Company cannot remove or replace investments in regulatory deposit accounts without prior approval of the contractual party or regulatory authority, as applicable. The following table presents the Company's restricted investments included in the Company's AFS securities:

| As of
| September 30, 2022 |  | December 31, 2021
Fair value of restricted investments in trust pursuant to reinsurance agreements | $ | 34,686 |  |  | $ | 42,471 |
Fair value of restricted investments for special deposits required by state insurance departments | 15,602 |  |  | 7,189 |
Total fair value of restricted investments | $ | 50,288 |  |  | $ | 49,660 |

The following table presents additional information on the Company’s AFS securities:

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021 |  |
Purchases of AFS securities | $ | 12,395 |  |  | $ | 142,420 |  |  | $ | 138,738 |  |  | $ | 285,151 |  |  |
Proceeds from maturities, calls and prepayments of AFS securities | $ | 13,689 |  |  | $ | 16,616 |  |  | $ | 51,328 |  |  | $ | 51,245 |  |  |
Gross proceeds from sales of AFS securities | $ | — |  |  | $ | 29,713 |  |  | $ | 16,970 |  |  | $ | 62,902 |  |  |

F - 16

TIPTREE INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
September 30, 2022
(in thousands, except share data)
The following table presents the gross realized gains and gross realized losses from sales and redemptions of AFS securities:

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021 |  |
Gross realized gains | $ | — |  |  | $ | 303 |  |  | $ | 74 |  |  | $ | 625 |  |  |
Gross realized (losses) | — |  |  | (7) |  |  | (184) |  |  | (9) |  |  |
Total net realized gains (losses) from investment sales and redemptions | $ | — |  |  | $ | 296 |  |  | $ | (110) |  |  | 616 |  |  |

Loans, at fair value
The following table presents the Company’s investments in loans measured at fair value and the Company’s investments in loans measured at fair value pledged as collateral:

| As of September 30, 2022 |  | As of December 31, 2021
| Fair value |  | Unpaid principal balance (UPB) |  | Fair value exceeds / (below) UPB |  | Pledged as collateral |  | Fair value |  | Unpaid principal balance (UPB) |  | Fair value exceeds / (below) UPB |  | Pledged as collateral
Insurance: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Corporate loans (1) | $ | 12,584 |  |  | $ | 14,888 |  |  | $ | (2,304) |  |  | $ | — |  |  | $ | 7,099 |  |  | $ | 10,156 |  |  | $ | (3,057) |  |  | $ | — |
Mortgage: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Mortgage loans held for sale (2) | 58,200 |  |  | 58,985 |  |  | (785) |  |  | 57,165 |  |  | 98,484 |  |  | 95,264 |  |  | 3,220 |  |  | 95,542 |
Total loans, at fair value | $ | 70,784 |  |  | $ | 73,873 |  |  | $ | (3,089) |  |  | $ | 57,165 |  |  | $ | 105,583 |  |  | $ | 105,420 |  |  | $ | 163 |  |  | $ | 95,542 |

(1) The cost basis of Corporate loans was approximately $14,888 and $9,094 at September 30, 2022 and December 31, 2021, respectively.
(2) As of September 30, 2022, there were no mortgage loans held for sale that were 90 days or more past due. As of December 31, 2021, there was one mortgage loan held for sale that was 90 days or more past due, with a fair value of $136.
Equity Securities
Equity securities consist mainly of publicly traded common and preferred stocks and fixed income exchange traded funds. Included within the equity securities balance are 17.0 million shares of Invesque as of September 30, 2022 and December 31, 2021, for which the Company has elected to apply the fair value option. The following table presents information on the cost and fair value of the Company’s equity securities related to insurance operations and other Tiptree investing activity as of the following periods:

| As of September 30, 2022 |  |
| Insurance |  | Tiptree Capital - Other |  | Total |  |  |  |  |  |
| Cost |  | Fair Value |  | Cost |  | Fair Value |  | Cost |  | Fair Value |  |  |  |  |  |
Invesque | $ | 23,339 |  |  | $ | 3,316 |  |  | $ | 111,491 |  |  | $ | 15,874 |  |  | $ | 134,830 |  |  | $ | 19,190 |  |  |  |  |  |  |
Fixed income exchange traded fund | 52,245 |  |  | 52,078 |  |  | — |  |  | — |  |  | 52,245 |  |  | 52,078 |  |  |  |  |  |  |
Other equity securities | 15,773 |  |  | 13,835 |  |  | — |  |  | — |  |  | 15,773 |  |  | 13,835 |  |  |  |  |  |  |
Total equity securities | $ | 91,357 |  |  | $ | 69,229 |  |  | $ | 111,491 |  |  | $ | 15,874 |  |  | $ | 202,848 |  |  | $ | 85,103 |  |  |  |  |  |  |

| As of December 31, 2021
| Insurance |  | Tiptree Capital - Other |  | Total
| Cost |  | Fair Value |  | Cost |  | Fair Value |  | Cost |  | Fair Value
Invesque | $ | 23,339 |  |  | $ | 6,015 |  |  | $ | 111,491 |  |  | $ | 28,799 |  |  | $ | 134,830 |  |  | $ | 34,814 |
Fixed income exchange traded fund | 52,176 |  |  | 53,154 |  |  | — |  |  | — |  |  | 52,176 |  |  | 53,154 |
Other equity securities | 49,664 |  |  | 50,515 |  |  | — |  |  | — |  |  | 49,664 |  |  | 50,515 |
Total equity securities | $ | 125,179 |  |  | $ | 109,684 |  |  | $ | 111,491 |  |  | $ | 28,799 |  |  | $ | 236,670 |  |  | $ | 138,483 |

F - 17

TIPTREE INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
September 30, 2022
(in thousands, except share data)
Other Investments
The following table contains information regarding the Company’s other investments as of the following periods:

| As of September 30, 2022
|  |  | Tiptree Capital |  |
| Insurance |  | Mortgage |  | Other |  | Total
Corporate bonds, at fair value (1) | $ | 41,494 |  |  | $ | — |  |  | $ | — |  |  | $ | 41,494 |
Vessels, net (2) | — |  |  | — |  |  | 949 |  |  | 949 |
Debentures | 24,961 |  |  | — |  |  | — |  |  | 24,961 |
Other | 350 |  |  | 7,404 |  |  | 1,377 |  |  | 9,131 |
Total other investments | $ | 66,805 |  |  | $ | 7,404 |  |  | $ | 2,326 |  |  | $ | 76,535 |

| As of December 31, 2021
|  |  | Tiptree Capital |  |
| Insurance |  | Mortgage |  | Other |  | Total
Corporate bonds, at fair value (1) | $ | 38,965 |  |  | $ | — |  |  | $ | — |  |  | $ | 38,965 |
Vessels, net (2) | — |  |  | — |  |  | 79,368 |  |  | 79,368 |
Debentures | 21,057 |  |  | — |  |  | — |  |  | 21,057 |
Trade claims | 19,737 |  |  | — |  |  | — |  |  | 19,737 |
Other | 216 |  |  | 7,981 |  |  | 1,332 |  |  | 9,529 |
Total other investments | $ | 79,975 |  |  | $ | 7,981 |  |  | $ | 80,700 |  |  | $ | 168,656 |

(1) The cost basis of corporate bonds was $47,906 and $36,436 as of September 30, 2022 and December 31, 2021, respectively.
(2) Net of accumulated depreciation of $99 and $13,059 as of September 30, 2022 and December 31, 2021, respectively.
Net Investment Income - Insurance
Net investment income represents investment income and expense from investments related to insurance operations as disclosed within net investment income on the consolidated statements of operations. The following table presents the components of net investment income by source of income:

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021 |  |
Interest: |  |  |  |  |  |  |  |  |
AFS securities | $ | 3,094 |  |  | $ | 1,840 |  |  | $ | 7,955 |  |  | $ | 5,246 |  |  |
Loans, at fair value | 173 |  |  | 181 |  |  | 514 |  |  | 680 |  |  |
Other investments | 1,382 |  |  | 1,597 |  |  | 4,240 |  |  | 4,593 |  |  |
Dividends from equity securities | 212 |  |  | 276 |  |  | 883 |  |  | 480 |  |  |
Subtotal | 4,861 |  |  | 3,894 |  |  | 13,592 |  |  | 10,999 |  |  |
Less: investment expenses | 1,229 |  |  | 564 |  |  | 3,428 |  |  | 1,668 |  |  |
Net investment income | $ | 3,632 |  |  | $ | 3,330 |  |  | $ | 10,164 |  |  | $ | 9,331 |  |  |

Other Investment Income - Tiptree Capital
Other investment income represents other revenue from other Tiptree non-insurance activities as disclosed within other revenue on the condensed consolidated statements of operations, see Note (16) Other Revenue and Other Expenses. The following tables present the components of other investment income by type:

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021 |  |
Interest: |  |  |  |  |  |  |  |  |
Loans, at fair value (1) | $ | 766 |  |  | $ | 1,450 |  |  | $ | 4,652 |  |  | $ | 4,506 |  |  |
Loan fee income | 3,998 |  |  | 5,014 |  |  | 14,494 |  |  | 15,511 |  |  |
Vessel related revenue | 7,829 |  |  | 11,426 |  |  | 28,337 |  |  | 25,043 |  |  |
Other investment income | $ | 12,593 |  |  | $ | 17,890 |  |  | $ | 47,483 |  |  | $ | 45,060 |  |  |

F - 18

TIPTREE INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
September 30, 2022
(in thousands, except share data)
(1) Includes income related to loans at fair value classified as Held for Sale for the periods prior to July 1, 2022. See Note (4) Assets and Liabilities Held for Sale.
Net Realized and Unrealized Gains (Losses)
The following table presents the components of net realized and unrealized gains (losses) recorded on the condensed consolidated statements of operations. Net unrealized gains (losses) on AFS securities are included within other comprehensive income (loss) (“OCI”), net of tax, and, as such, are not included in this table. Net realized and unrealized gains (losses) on non-investment related financial assets and liabilities are included below:

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021 |  |
Net realized gains (losses) |  |  |  |  |  |  |  |  |
Insurance: |  |  |  |  |  |  |  |  |
Reclass of unrealized gains (losses) on AFS securities from OCI | $ | — |  |  | $ | 296 |  |  | $ | (110) |  |  | $ | 616 |  |  |
Net gains from recoveries (credit losses) on AFS securities | 35 |  |  | (1) |  |  | (41) |  |  | (84) |  |  |
Net realized gains (losses) on loans | (1,241) |  |  | 90 |  |  | (1,617) |  |  | (389) |  |  |
Net realized gains (losses) on equity securities | (1,639) |  |  | (310) |  |  | (4,104) |  |  | (4,874) |  |  |
Net realized gains (losses) on corporate bonds | (2,937) |  |  | 1,676 |  |  | (3,049) |  |  | 3,174 |  |  |
Other | 3,951 |  |  | (509) |  |  | (2,612) |  |  | 1,401 |  |  |
Tiptree Capital |  |  |  |  |  |  |  |  |
Mortgage: |  |  |  |  |  |  |  |  |
Net realized gains (losses) on loans | 11,902 |  |  | 23,992 |  |  | 32,475 |  |  | 70,306 |  |  |
Other | 663 |  |  | (1,652) |  |  | 13,376 |  |  | 596 |  |  |
Other: |  |  |  |  |  |  |  |  |
Net realized gains (losses) on loans (1) | — |  |  | 16,644 |  |  | 24,403 |  |  | 42,232 |  |  |
Net realized gains on vessel sales | 14,099 |  |  | — |  |  | 21,217 |  |  | — |  |  |
Other | — |  |  | (231) |  |  | 762 |  |  | 1,523 |  |  |
Total net realized gains (losses) | 24,833 |  |  | 39,995 |  |  | 80,700 |  |  | 114,501 |  |  |
Net unrealized gains (losses) |  |  |  |  |  |  |  |  |
Insurance: |  |  |  |  |  |  |  |  |
Net change in unrealized gains (losses) on loans | (783) |  |  | (174) |  |  | (467) |  |  | 1,313 |  |  |
Net unrealized gains (losses) on equity securities held at period end | (452) |  |  | (779) |  |  | (5,087) |  |  | 14,511 |  |  |
Reclass of unrealized (gains) losses from prior periods for equity securities sold | (1) |  |  | (1,766) |  |  | (953) |  |  | (1,362) |  |  |
Other | (3,316) |  |  | (6,015) |  |  | (5,112) |  |  | (9,302) |  |  |
Tiptree Capital |  |  |  |  |  |  |  |  |
Mortgage: |  |  |  |  |  |  |  |  |
Net change in unrealized gains (losses) on loans | (2,104) |  |  | (255) |  |  | (4,005) |  |  | (1,080) |  |  |
Other | 385 |  |  | 566 |  |  | 2,866 |  |  | 3,632 |  |  |
Other: |  |  |  |  |  |  |  |  |
Net change in unrealized gains (losses) on loans (1) | — |  |  | 1,801 |  |  | (4,513) |  |  | (314) |  |  |
Net unrealized gains (losses) on equity securities held at period end | (1,405) |  |  | (10,396) |  |  | (12,924) |  |  | 3,512 |  |  |
Other | 2 |  |  | (8,172) |  |  | (455) |  |  | (5,143) |  |  |
Total net unrealized gains (losses) | (7,674) |  |  | (25,190) |  |  | (30,650) |  |  | 5,767 |  |  |
Total net realized and unrealized gains (losses) | $ | 17,159 |  |  | $ | 14,805 |  |  | $ | 50,050 |  |  | $ | 120,268 |  |  |

(1) Relates to Loans, at fair value classified as Held for Sale. See Note (4) Assets and Liabilities Held for Sale.
(7) Notes and Accounts Receivable, net
The following table presents the total notes and accounts receivable, net:
F - 19

TIPTREE INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
September 30, 2022
(in thousands, except share data)

| As of
| September 30, 2022 |  | December 31, 2021
Accounts and premiums receivable, net | $ | 141,251 |  |  | $ | 137,082 |
Retrospective commissions receivable | 178,263 |  |  | 157,853 |
Notes receivable, net - premium financing program | 114,091 |  |  | 89,788 |
Trust receivables | 15,256 |  |  | 41,889 |
Other receivables | 33,124 |  |  | 27,757 |
Total notes and accounts receivable, net | $ | 481,985 |  |  | $ | 454,369 |

The following table presents the total valuation allowance and bad debt expense for the following periods:

| Valuation allowance |  | Bad Debt Expense
| As of |  | Three Months Ended September 30, |  | Nine Months Ended September 30, |  |
| September 30, 2022 |  | December 31, 2021 |  |  |  |
|  |  | 2022 |  | 2021 |  | 2022 |  | 2021 |  |
Notes receivable, net - premium financing program (1) | $ | 95 |  |  | $ | 123 |  |  | $ | 39 |  |  | $ | 68 |  |  | $ | 129 |  |  | $ | 210 |  |  |
Accounts and premiums receivable, net | $ | 81 |  |  | $ | 120 |  |  | $ | 9 |  |  | $ | 10 |  |  | $ | 54 |  |  | $ | 20 |  |  |

(1) As of September 30, 2022 and December 31, 2021, there were $239 and $1,311 in balances classified as 90 days plus past due, respectively.
(8) Reinsurance Receivables
The following table presents the effect of reinsurance on premiums written and earned by our insurance business for the following periods:

| Direct amount |  | Ceded to other companies |  | Assumed from other companies |  | Net amount |  | Percentage of amount - assumed to net
Three Months Ended September 30, 2022 |  |  |  |  |  |  |  |  |
Premiums written: |  |  |  |  |  |  |  |  |
Life insurance | $ | 24,658 |  |  | $ | 12,230 |  |  | $ | 32 |  |  | $ | 12,460 |  |  | 0.3 | %
Accident and health insurance | 40,433 |  |  | 27,905 |  |  | 187 |  |  | 12,715 |  |  | 1.5 | %
Property and liability insurance | 340,593 |  |  | 193,181 |  |  | 171,707 |  |  | 319,119 |  |  | 53.8 | %
Total premiums written | 405,684 |  |  | 233,316 |  |  | 171,926 |  |  | 344,294 |  |  | 49.9 | %
Premiums earned: |  |  |  |  |  |  |  |  |
Life insurance | 21,176 |  |  | 10,514 |  |  | 115 |  |  | 10,777 |  |  | 1.1 | %
Accident and health insurance | 36,453 |  |  | 25,088 |  |  | 233 |  |  | 11,598 |  |  | 2.0 | %
Property and liability insurance | 284,119 |  |  | 151,756 |  |  | 83,139 |  |  | 215,502 |  |  | 38.6 | %
Total premiums earned | $ | 341,748 |  |  | $ | 187,358 |  |  | $ | 83,487 |  |  | $ | 237,877 |  |  | 35.1 | %

F - 20

TIPTREE INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
September 30, 2022
(in thousands, except share data)

| Direct amount |  | Ceded to other companies |  | Assumed from other companies |  | Net amount |  | Percentage of amount - assumed to net
Three Months Ended September 30, 2021 |  |  |  |  |  |  |  |  |
Premiums written: |  |  |  |  |  |  |  |  |
Life insurance | $ | 26,805 |  |  | $ | 12,640 |  |  | $ | 70 |  |  | $ | 14,235 |  |  | 0.5 | %
Accident and health insurance | 41,735 |  |  | 28,701 |  |  | 81 |  |  | 13,115 |  |  | 0.6 | %
Property and liability insurance | 312,988 |  |  | 150,761 |  |  | 35,774 |  |  | 198,001 |  |  | 18.1 | %
Total premiums written | 381,528 |  |  | 192,102 |  |  | 35,925 |  |  | 225,351 |  |  | 15.9 | %
Premiums earned: |  |  |  |  |  |  |  |  |
Life insurance | 19,268 |  |  | 9,994 |  |  | 295 |  |  | 9,569 |  |  | 3.1 | %
Accident and health insurance | 32,292 |  |  | 21,655 |  |  | 1,329 |  |  | 11,966 |  |  | 11.1 | %
Property and liability insurance | 226,446 |  |  | 121,349 |  |  | 48,394 |  |  | 153,491 |  |  | 31.5 | %
Total premiums earned | $ | 278,006 |  |  | $ | 152,998 |  |  | $ | 50,018 |  |  | $ | 175,026 |  |  | 28.6 | %
Nine Months Ended September 30, 2022 |  |  |  |  |  |  |  |  |
Premiums written: |  |  |  |  |  |  |  |  |
Life insurance | $ | 68,753 |  |  | $ | 32,052 |  |  | $ | 127 |  |  | $ | 36,828 |  |  | 0.3 | %
Accident and health insurance | 108,598 |  |  | 74,230 |  |  | 7,083 |  |  | 41,451 |  |  | 17.1 | %
Property and liability insurance | 936,007 |  |  | 506,664 |  |  | 336,590 |  |  | 765,933 |  |  | 43.9 | %
Total premiums written | $ | 1,113,358 |  |  | $ | 612,946 |  |  | $ | 343,800 |  |  | $ | 844,212 |  |  | 40.7 | %
Premiums earned: |  |  |  |  |  |  |  |  |
Life insurance | $ | 61,657 |  |  | $ | 30,949 |  |  | $ | 422 |  |  | $ | 31,130 |  |  | 1.4 | %
Accident and health insurance | 105,827 |  |  | 72,157 |  |  | 7,274 |  |  | 40,944 |  |  | 17.8 | %
Property and liability insurance | 798,660 |  |  | 428,395 |  |  | 219,895 |  |  | 590,160 |  |  | 37.3 | %
Total premiums earned | $ | 966,144 |  |  | $ | 531,501 |  |  | $ | 227,591 |  |  | $ | 662,234 |  |  | 34.4 | %
Nine Months Ended September 30, 2021 |  |  |  |  |  |  |  |  |
Premiums written: |  |  |  |  |  |  |  |  |
Life insurance | $ | 66,109 |  |  | $ | 34,218 |  |  | $ | 757 |  |  | $ | 32,648 |  |  | 2.3 | %
Accident and health insurance | 103,321 |  |  | 71,384 |  |  | 5,509 |  |  | 37,446 |  |  | 14.7 | %
Property and liability insurance | 839,271 |  |  | 416,048 |  |  | 167,726 |  |  | 590,949 |  |  | 28.4 | %
Total premiums written | $ | 1,008,701 |  |  | $ | 521,650 |  |  | $ | 173,992 |  |  | $ | 661,043 |  |  | 26.3 | %
Premiums earned: |  |  |  |  |  |  |  |  |
Life insurance | $ | 54,242 |  |  | $ | 29,405 |  |  | $ | 970 |  |  | $ | 25,807 |  |  | 3.8 | %
Accident and health insurance | 91,793 |  |  | 61,755 |  |  | 6,803 |  |  | 36,841 |  |  | 18.5 | %
Property and liability insurance | 670,077 |  |  | 387,047 |  |  | 153,225 |  |  | 436,255 |  |  | 35.1 | %
Total premiums earned | $ | 816,112 |  |  | $ | 478,207 |  |  | $ | 160,998 |  |  | $ | 498,903 |  |  | 32.3 | %

The following table presents the components of policy and contract benefits, including the effect of reinsurance on losses and loss adjustment expenses (LAE) incurred:

| Direct amount |  | Ceded to other companies |  | Assumed from other companies |  | Net amount |  | Percentage of amount - assumed to net
Three Months Ended September 30, 2022 |  |  |  |  |  |  |  |  |
Losses and LAE Incurred |  |  |  |  |  |  |  |  |
Life insurance | $ | 13,383 |  |  | $ | 7,388 |  |  | $ | 78 |  |  | $ | 6,073 |  |  | 1.3 | %
Accident and health insurance | 6,855 |  |  | 4,966 |  |  | 488 |  |  | 2,377 |  |  | 20.5 | %
Property and liability insurance | 119,369 |  |  | 87,898 |  |  | 57,906 |  |  | 89,377 |  |  | 64.8 | %
Total losses and LAE incurred | 139,607 |  |  | 100,252 |  |  | 58,472 |  |  | 97,827 |  |  | 59.8 | %
| Member benefit claims (1) |  | 23,415 |  |  |
| Total policy and contract benefits |  | $ | 121,242 |  |  |

F - 21

TIPTREE INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
September 30, 2022
(in thousands, except share data)

| Direct amount |  | Ceded to other companies |  | Assumed from other companies |  | Net amount |  | Percentage of amount - assumed to net
Three Months Ended September 30, 2021 |  |  |  |  |  |  |  |  |
Losses and LAE Incurred |  |  |  |  |  |  |  |  |
Life insurance | $ | 13,398 |  |  | $ | 7,610 |  |  | $ | 116 |  |  | $ | 5,904 |  |  | 2.0 | %
Accident and health insurance | 6,689 |  |  | 5,691 |  |  | 913 |  |  | 1,911 |  |  | 47.8 | %
Property and liability insurance | 90,094 |  |  | 57,568 |  |  | 20,911 |  |  | 53,437 |  |  | 39.1 | %
Total losses and LAE incurred | 110,181 |  |  | 70,869 |  |  | 21,940 |  |  | 61,252 |  |  | 35.8 | %
| Member benefit claims (1) |  | 19,579 |  |  |
| Total policy and contract benefits |  | $ | 80,831 |  |  |
Nine Months Ended September 30, 2022 |  |  |  |  |  |  |  |  |
Losses and LAE Incurred |  |  |  |  |  |  |  |  |
Life insurance | $ | 40,993 |  |  | $ | 22,158 |  |  | $ | 424 |  |  | $ | 19,259 |  |  | 2.2 | %
Accident and health insurance | 24,826 |  |  | 19,304 |  |  | 6,581 |  |  | 12,103 |  |  | 54.4 | %
Property and liability insurance | 333,582 |  |  | 234,440 |  |  | 133,552 |  |  | 232,694 |  |  | 57.4 | %
Total losses and LAE incurred | 399,401 |  |  | 275,902 |  |  | 140,557 |  |  | 264,056 |  |  | 53.2 | %
| Member benefit claims (1) |  | 66,297 |  |  |
| Total policy and contract benefits |  | $ | 330,353 |  |  |
Nine Months Ended September 30, 2021 |  |  |  |  |  |  |  |  |
Losses and LAE Incurred |  |  |  |  |  |  |  |  |
Life insurance | $ | 40,940 |  |  | $ | 23,987 |  |  | $ | 481 |  |  | $ | 17,434 |  |  | 2.8 | %
Accident and health insurance | 16,608 |  |  | 13,607 |  |  | 2,232 |  |  | 5,233 |  |  | 42.7 | %
Property and liability insurance | 262,447 |  |  | 180,991 |  |  | 77,121 |  |  | 158,577 |  |  | 48.6 | %
Total losses and LAE incurred | 319,995 |  |  | 218,585 |  |  | 79,834 |  |  | 181,244 |  |  | 44.0 | %
| Member benefit claims (1) |  | 55,954 |  |  |
| Total policy and contract benefits |  | $ | 237,198 |  |  |

(1) Member benefit claims are not covered by reinsurance.
The following table presents the components of the reinsurance receivables:

|  | As of
|  | September 30, 2022 |  |  | December 31, 2021
Prepaid reinsurance premiums: |  |  |  |  |
Life insurance (1) |  | $ | 76,898 |  |  |  | $ | 73,478 |
Accident and health insurance (1) |  | 83,594 |  |  |  | 81,521 |
Property and liability insurance |  | 566,682 |  |  |  | 479,091 |
Total |  | 727,174 |  |  |  | 634,090 |
Ceded claim reserves: |  |  |  |  |
Life insurance |  | 3,681 |  |  |  | 3,928 |
Accident and health insurance |  | 17,808 |  |  |  | 12,239 |
Property and liability insurance |  | 227,087 |  |  |  | 148,962 |
Total ceded claim reserves recoverable |  | 248,576 |  |  |  | 165,129 |
Other reinsurance settlements recoverable |  | 218,577 |  |  |  | 81,617 |
Reinsurance receivables |  | $ | 1,194,327 |  |  |  | $ | 880,836 |

(1) Including policyholder account balances ceded.
The following table presents the aggregate amount included in reinsurance receivables that is comprised of the three largest receivable balances from non-affiliated reinsurers:

| As of
| September 30, 2022
Total of the three largest receivable balances from non-affiliated reinsurers | $ | 193,533 |

F - 22

TIPTREE INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
September 30, 2022
(in thousands, except share data)
As of September 30, 2022, the non-affiliated reinsurers from whom our insurance business has the largest receivable balances were: Allianz Global Corporate & Specialty SE (A.M. Best Rating: A+ rated), Accelerant Insurance Limited (A.M. Best Rating: A- rated), and Canada Life Assurance Company (A.M. Best Rating: A+ rated). A majority of the related receivables from these reinsurers are collateralized by assets on hand and letters of credit; receivable balances from authorized reinsurers do not require collateral. Allianz Global Corporate & Specialty SE and Canada Life Assurance Company are authorized reinsurers in the states in which Fortegra’s U.S. based insurance entities are domiciled. The Company monitors authorization status and A.M. Best ratings of its reinsurers periodically. As of September 30, 2022, the Company does not believe there is a risk of loss due to the concentration of credit risk in the reinsurance program given the collateralization.
(9) Goodwill and Intangible Assets, net
The following table presents identifiable finite and indefinite-lived intangible assets, accumulated amortization, and goodwill by operating segment and/or reporting unit, as appropriate:

| As of September 30, 2022 |  |  | As of December 31, 2021
Finite-Lived Intangible Assets: | Insurance |  | Other |  | Total |  |  |  |  |  |  | Insurance |  | Other |  | Total
Customer relationships | $ | 149,310 |  |  | $ | — |  |  | $ | 149,310 |  |  |  |  |  |  |  | $ | 143,300 |  |  | $ | — |  |  | $ | 143,300 |
Accumulated amortization | (56,775) |  |  | — |  |  | (56,775) |  |  |  |  |  |  |  | (45,997) |  |  | — |  |  | (45,997) |
Trade names | 15,006 |  |  | 800 |  |  | 15,806 |  |  |  |  |  |  |  | 14,750 |  |  | 800 |  |  | 15,550 |
Accumulated amortization | (6,702) |  |  | (580) |  |  | (7,282) |  |  |  |  |  |  |  | (5,633) |  |  | (520) |  |  | (6,153) |
Software licensing | 12,138 |  |  | 640 |  |  | 12,778 |  |  |  |  |  |  |  | 9,300 |  |  | 640 |  |  | 9,940 |
Accumulated amortization | (8,990) |  |  | (640) |  |  | (9,630) |  |  |  |  |  |  |  | (8,790) |  |  | (594) |  |  | (9,384) |
Insurance policies and contracts acquired | 36,500 |  |  | — |  |  | 36,500 |  |  |  |  |  |  |  | 36,500 |  |  | — |  |  | 36,500 |
Accumulated amortization | (36,362) |  |  | — |  |  | (36,362) |  |  |  |  |  |  |  | (36,320) |  |  | — |  |  | (36,320) |
Other | 743 |  |  | — |  |  | 743 |  |  |  |  |  |  |  | 640 |  |  | — |  |  | 640 |
Accumulated amortization | (237) |  |  | — |  |  | (237) |  |  |  |  |  |  |  | (203) |  |  | — |  |  | (203) |
Total finite-lived intangible assets | 104,631 |  |  | 220 |  |  | 104,851 |  |  |  |  |  |  |  | 107,547 |  |  | 326 |  |  | 107,873 |
Indefinite-Lived Intangible Assets: (1) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Insurance licensing agreements | 13,761 |  |  | — |  |  | 13,761 |  |  |  |  |  |  |  | 13,761 |  |  | — |  |  | 13,761 |
Other | — |  |  | 1,728 |  |  | 1,728 |  |  |  |  |  |  |  | — |  |  | 1,124 |  |  | 1,124 |
Total indefinite-lived intangible assets | 13,761 |  |  | 1,728 |  |  | 15,489 |  |  |  |  |  |  |  | 13,761 |  |  | 1,124 |  |  | 14,885 |
Total intangible assets, net | $ | 118,392 |  |  | $ | 1,948 |  |  | $ | 120,340 |  |  |  |  |  |  |  | $ | 121,308 |  |  | $ | 1,450 |  |  | $ | 122,758 |
Goodwill | 184,236 |  |  | 1,708 |  |  | 185,944 |  |  |  |  |  |  |  | 177,395 |  |  | 1,708 |  |  | 179,103 |
Total goodwill and intangible assets, net | $ | 302,628 |  |  | $ | 3,656 |  |  | $ | 306,284 |  |  |  |  |  |  |  | $ | 298,703 |  |  | $ | 3,158 |  |  | $ | 301,861 |

(1) Impairment tests are performed at least annually on indefinite-lived intangible assets.
Goodwill
The following table presents the activity in goodwill, by operating segment and/or reporting unit, as appropriate, and includes the adjustments made to the balance of goodwill to reflect the effect of the final valuation adjustments made for acquisitions, as well as the reduction to any goodwill attributable to impairment related charges:

| Insurance |  | Other |  | Total
Balance at December 31, 2021 | $ | 177,395 |  |  | $ | 1,708 |  |  | $ | 179,103 |
Goodwill acquired (1) | 8,044 |  |  | — |  |  | 8,044 |
Foreign currency translation and other | (1,203) |  |  | — |  |  | (1,203) |
Balance at September 30, 2022 | $ | 184,236 |  |  | $ | 1,708 |  |  | $ | 185,944 |
Accumulated impairments | $ | — |  |  | $ | — |  |  | $ | — |

(1) See Note (3) Acquisitions for more information.
The Company conducts annual impairment tests of its goodwill as of October 1. For the three and nine months ended September 30, 2022 and 2021, no impairments were recorded on the Company’s goodwill.
F - 23

TIPTREE INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
September 30, 2022
(in thousands, except share data)
Intangible Assets, net
The following table presents the activity, by operating segment and/or reporting unit, as appropriate, in finite and indefinite-lived other intangible assets and includes the adjustments made to the balance to reflect the effect of any final valuation adjustments made for acquisitions, as well as any reduction attributable to impairment-related charges:

| Insurance |  | Other |  | Total
Balance at December 31, 2021 | $ | 121,308 |  |  | $ | 1,450 |  |  | $ | 122,758 |
Intangibles acquired (1) | 10,964 |  |  | 604 |  |  | 11,568 |
Amortization expense | (12,168) |  |  | (106) |  |  | (12,274) |
Foreign currency translation and other | (1,712) |  |  | — |  |  | (1,712) |
Balance at September 30, 2022 | $ | 118,392 |  |  | $ | 1,948 |  |  | $ | 120,340 |

(1) See Note (3) Acquisitions for more information.
The following table presents the amortization expense on finite-lived intangible assets for the following periods:

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021 |  |
Amortization expense on intangible assets | $ | 4,129 |  |  | $ | 3,892 |  |  | $ | 12,274 |  |  | $ | 11,690 |  |  |

For the three and nine months ended September 30, 2022 and 2021, no impairments were recorded on the Company’s intangible assets.
The following table presents the amortization expense on finite-lived intangible assets for the next five years and thereafter by operating segment and/or reporting unit, as appropriate:

| As of September 30, 2022
| Insurance |  | Other |  | Total
Remainder of 2022 | $ | 4,100 |  |  | $ | 20 |  |  | $ | 4,120 |
2023 | 15,594 |  |  | 80 |  |  | 15,674 |
2024 | 13,906 |  |  | 80 |  |  | 13,986 |
2025 | 11,792 |  |  | 40 |  |  | 11,832 |
2026 | 9,543 |  |  | — |  |  | 9,543 |
2027 and thereafter | 51,408 |  |  | — |  |  | 51,408 |
Total (1) | $ | 106,343 |  |  | $ | 220 |  |  | $ | 106,563 |

(1) Does not include foreign currency translation adjustment of ($1,712) as of September 30, 2022.
(10) Derivative Financial Instruments and Hedging
The Company utilizes derivative financial instruments as part of its overall investment and hedging activities. Derivative contracts are subject to additional risk that can result in a loss of all or part of an investment. The Company’s derivative activities are primarily entered into in order to manage underlying credit risk, market risk, and interest rate risk. In addition, the Company is also subject to counterparty risk should its counterparties fail to meet the contract terms. Derivative assets are reported in other investments. Derivative liabilities are reported within other liabilities and accrued expenses.
Interest Rate Lock Commitments
Derivatives for our mortgage business are primarily comprised of interest rate lock commitments (IRLCs), forward delivery contracts, and TBA mortgage backed securities. The fair value of these instruments is based upon valuation pricing models, which represent the amount the Company would expect to receive or pay at the balance sheet date to exit the position. Our mortgage origination subsidiary issues IRLCs to their customers, which are carried at estimated fair value on the Company’s condensed consolidated balance sheets. The estimated fair values of these commitments are generally calculated by reference to the value of the underlying loan associated with the IRLC net of costs to produce and an expected pull through assumption. The fair values of these commitments generally fall under Level 3 in the fair value hierarchy.
F - 24

TIPTREE INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
September 30, 2022
(in thousands, except share data)
Forward Delivery Contracts and TBA Mortgage Backed Securities
Our mortgage origination subsidiaries manage their exposure by entering into forward delivery commitments with loan investors. For loans not locked with investors under a forward delivery commitment, the Company enters into hedge instruments, primarily TBAs, to protect against movements in interest rates. The fair values of TBA mortgage-backed securities and forward delivery contracts generally fall under Level 2 in the fair value hierarchy.
The remaining derivatives are generally comprised of a combination of swaps, options and short positions, which are generally classified as Level 2 in the fair value hierarchy. In addition, the Fortegra Additional Warrant (Warburg) is a derivative liability and classified as Level 3 in the fair value hierarchy. See Note (17) Stockholders’ Equity for additional information regarding the Fortegra Additional Warrant.
The following table presents the gross notional and fair value amounts of derivatives (on a gross basis) categorized by underlying risk:

| As of September 30, 2022 |  | As of December 31, 2021
| Notional values |  | Asset derivatives |  | Liability derivatives |  | Notional values |  | Asset derivatives |  | Liability derivatives
Interest rate lock commitments | $ | 189,046 |  |  | $ | 1,505 |  |  | $ | — |  |  | $ | 268,878 |  |  | $ | 7,514 |  |  | $ | — |
Forward delivery contracts | 28,644 |  |  | 287 |  |  | 1 |  |  | 56,593 |  |  | 204 |  |  | 59 |
TBA mortgage backed securities | 220,000 |  |  | 5,612 |  |  | 550 |  |  | 316,000 |  |  | 262 |  |  | 425 |
Fortegra Additional Warrants (Warburg)(1) | — |  |  | — |  |  | 6,230 |  |  | — |  |  | — |  |  | — |
Other | 22,943 |  |  | 350 |  |  | 7,164 |  |  | 9,232 |  |  | 216 |  |  | 1,657 |
Total | $ | 460,633 |  |  | $ | 7,754 |  |  | $ | 13,945 |  |  | $ | 650,703 |  |  | $ | 8,196 |  |  | $ | 2,141 |

(1) See Note (17) Stockholders’ Equity for additional information.
F - 25

TIPTREE INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
September 30, 2022
(in thousands, except share data)
(11) Debt, net
The following table presents the balance of the Company’s debt obligations, net of discounts and deferred financing costs for our corporate and asset based debt. Asset based debt is generally recourse only to specific assets and related cash flows.

| As of September 30, 2022
Corporate debt | Insurance |  | Other |  | Corporate |  | Total
Secured revolving credit agreements (1) | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Secured term credit agreements (LIBOR + 6.75%)(4) | — |  |  | — |  |  | — |  |  | — |
Preferred trust securities (LIBOR + 4.10%) | 35,000 |  |  | — |  |  | — |  |  | 35,000 |
8.50% Junior subordinated notes | 125,000 |  |  | — |  |  | — |  |  | 125,000 |
Total corporate debt | 160,000 |  |  | — |  |  | — |  |  | 160,000 |
Asset based debt (3) |  |  |  |  |  |  |
Asset based revolving financing (LIBOR + 2.75%) | 58,568 |  |  | — |  |  | — |  |  | 58,568 |
Residential mortgage warehouse borrowings (1.88% to 2.50% over SOFR; 2.00% to 3.00% over BSBY) (2)(3) | — |  |  | 55,288 |  |  | — |  |  | 55,288 |
Total asset based debt | 58,568 |  |  | 55,288 |  |  | — |  |  | 113,856 |
Total debt, face value | 218,568 |  |  | 55,288 |  |  | — |  |  | 273,856 |
Unamortized discount, net | — |  |  | — |  |  | — |  |  | — |
Unamortized deferred financing costs | (7,592) |  |  | (9) |  |  | — |  |  | (7,601) |
Total debt, net | $ | 210,976 |  |  | $ | 55,279 |  |  | $ | — |  |  | $ | 266,255 |
| As of December 31, 2021
Corporate debt | Insurance |  | Other |  | Corporate |  | Total
Secured revolving credit agreements (1) | $ | 2,160 |  |  | $ | — |  |  | $ | — |  |  | $ | 2,160 |
Secured term credit agreements (LIBOR + 6.75%)(4) | — |  |  | — |  |  | 114,063 |  |  | 114,063 |
Preferred trust securities (LIBOR + 4.10%) | 35,000 |  |  | — |  |  | — |  |  | 35,000 |
8.50% Junior subordinated notes | 125,000 |  |  | — |  |  | — |  |  | 125,000 |
Total corporate debt | 162,160 |  |  | — |  |  | 114,063 |  |  | 276,223 |
Asset based debt (3) |  |  |  |  |  |  |
Asset based revolving financing (LIBOR + 2.75%) | 42,310 |  |  | — |  |  | — |  |  | 42,310 |
Residential mortgage warehouse borrowings (LIBOR + 1.88% to 3.00%) (2)(3) | — |  |  | 72,518 |  |  | — |  |  | 72,518 |
Vessel backed term loan (LIBOR + 4.75%) | — |  |  | 13,600 |  |  | — |  |  | 13,600 |
Total asset based debt | 42,310 |  |  | 86,118 |  |  | — |  |  | 128,428 |
Total debt, face value | 204,470 |  |  | 86,118 |  |  | 114,063 |  |  | 404,651 |
Unamortized discount, net | — |  |  | — |  |  | (1,458) |  |  | (1,458) |
Unamortized deferred financing costs | (8,474) |  |  | (1,069) |  |  | (301) |  |  | (9,844) |
Total debt, net | $ | 195,996 |  |  | $ | 85,049 |  |  | $ | 112,304 |  |  | $ | 393,349 |

(1) The secured revolving credit agreements provide a two rate structure at the Company’s discretion; Prime +1.25% for swing loans and LIBOR + 2.25%.
(2) Includes SOFR floor and BSBY floor of 0.25% and 0.50%, respectively, as of September 30, 2022.
(3) The weighted average coupon rate for residential mortgage warehouse borrowings was 5.01% and 2.76% at September 30, 2022 and December 31, 2021, respectively.
(4) Includes LIBOR floor of 1%.
The following table presents the amount of interest expense the Company incurred on its debt for the following periods:

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021 |  |
Total Interest expense - corporate debt | $ | 3,592 |  |  | $ | 6,038 |  |  | $ | 15,559 |  |  | $ | 18,402 |  |  |
Total Interest expense - asset based debt | 1,857 |  |  | 2,573 |  |  | 8,992 |  |  | 8,262 |  |  |
Interest expense on debt | $ | 5,449 |  |  | $ | 8,611 |  |  | $ | 24,551 |  |  | $ | 26,664 |  |  |

F - 26

TIPTREE INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
September 30, 2022
(in thousands, except share data)
The following table presents the contractual principal payments and future maturities of the unpaid principal balance on the Company’s debt for the following periods:

| As of
| September 30, 2022
Remainder of 2022 | $ | — |
2023 | 113,856 |
2024 | — |
2025 | — |
2026 | — |
2027 and thereafter | 160,000 |
Total | $ | 273,856 |

The following narrative is a summary of certain terms of our debt agreements for the period ended September 30, 2022:
Corporate Debt
Secured Revolving Credit Agreements
As of September 30, 2022 and December 31, 2021, a total of $0 and $2,160, respectively, was outstanding under the revolving line of credit in our insurance business. The maximum borrowing capacity under the agreements as of September 30, 2022 was $200,000.
Secured Term Credit Agreements
The remaining balance of the corporate secured term credit agreement was fully repaid during June 2022 in connection with the WP Transaction. As of December 31, 2021, a total of $114,063 was outstanding under the corporate secured term credit agreement.
Asset Based Debt
Asset Based Revolving Financing
As of September 30, 2022 and December 31, 2021, a total of $58,568 and $42,310, respectively, was outstanding under the borrowing related to our premium finance and service contract finance offerings in our insurance business.
Residential Mortgage Warehouse Borrowings
In April 2022, the $60,000 warehouse line of credit was renewed and the maturity date was extended from April 2022 to April 2023. In August 2022, the $50,000 warehouse line of credit was renewed and the maturity date was extended from August 2022 to August 2023. As of September 30, 2022 and December 31, 2021, a total of $55,288 and $72,518, respectively, was outstanding under such financing agreements.
Vessel-Backed Term Loan
The remaining balance of the vessel backed term loan was fully repaid at a discount during May 2022, for a net gain of $1,168. As of December 31, 2021, the maximum borrowing capacity and borrowings outstanding was $13,600.
Debt Covenants
As of September 30, 2022, the Company was in compliance with the representations and covenants for its outstanding debt or obtained waivers for any events of non-compliance.
(12) Fair Value of Financial Instruments
The Company maximizes the use of observable inputs and minimizes the use of unobservable inputs to the extent possible to
F - 27

TIPTREE INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
September 30, 2022
(in thousands, except share data)
measure a financial instrument’s fair value. Observable inputs reflect the assumptions market participants would use in pricing an asset or liability, and are affected by the type of product, whether the product is traded on an active exchange or in the secondary market, as well as current market conditions. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Fair value is estimated by applying the hierarchy discussed in Note (2) Summary of Significant Accounting Policies of our Annual Report on Form 10-K which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized within Level 3 of the fair value hierarchy.
The Company’s fair value measurements are based primarily on a market approach, which utilizes prices and other relevant information generated by market transactions involving identical or comparable financial instruments. Sources of inputs to the market approach include third-party pricing services, independent broker quotations and pricing matrices. Management analyzes the third-party valuation methodologies and its related inputs to perform assessments to determine the appropriate level within the fair value hierarchy and to assess reliability of values. Further, management has a process in place to review all changes in fair value that occurred during each measurement period. Any discrepancies or unusual observations are followed through to resolution through the source of the pricing as well as utilizing comparisons, if applicable, to alternate pricing sources.
The Company utilizes observable and unobservable inputs within its valuation methodologies. Observable inputs may include: benchmark yields, reported trades, broker-dealer quotes, issuer spreads, benchmark securities, bids, offers and reference data. In addition, specific issuer information and other market data is used. Broker quotes are obtained from sources recognized to be market participants. Unobservable inputs may include: expected cash flow streams, default rates, supply and demand considerations and market volatility.
Available for Sale Securities, at fair value
The fair values of AFS securities are based on prices provided by an independent pricing service and a third-party investment manager. The Company obtains an understanding of the methods, models and inputs used by the independent pricing service and the third-party investment manager by analyzing the investment manager-provided pricing report.
The following details the methods and assumptions used to estimate the fair value of each class of AFS securities and the applicable level each security falls within the fair value hierarchy:
U.S. Treasury Securities, Obligations of U.S. Government Authorities and Agencies, Obligations of State and Political Subdivisions, Corporate Securities, Asset Backed Securities, and Obligations of Foreign Governments: Fair values were obtained from an independent pricing service and a third-party investment manager. The prices provided by the independent pricing service and third-party investment manager are based on quoted market prices, when available, non-binding broker quotes, or matrix pricing and fall under Level 2 or Level 3 in the fair value hierarchy.
Certificates of Deposit: The estimated fair value of certificates of deposit approximate carrying value and fall under Level 1 of the fair value hierarchy.
Equity Securities
The fair values of publicly traded common and preferred equity securities and exchange traded funds (“ETFs”) are obtained from market value quotations provided by an independent pricing service and fall under Level 1 in the fair value hierarchy. The fair values of non-publicly traded common and preferred stocks are based on prices derived from multiples of comparable public companies and fall under Level 3 in the fair value hierarchy.
F - 28

TIPTREE INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
September 30, 2022
(in thousands, except share data)
Loans, at fair value
Corporate Loans: These loans are comprised of middle market loans and bank loans and are generally classified under either Level 2 or Level 3 in the fair value hierarchy. To determine fair value, the Company uses quoted prices, including those provided from pricing vendors, which provide coverage of secondary market participants, where available. The values represent a composite of mark-to-market bid/offer prices. In certain circumstances, the Company will make its own determination of fair value of loans based on internal models and other unobservable inputs.
Mortgage Loans Held for Sale: Mortgage loans held for sale are generally classified under Level 2 in the fair value hierarchy and fair value is based upon forward sales contracts with third-party investors, including estimated loan costs.
Derivative Assets and Liabilities
Derivatives for our mortgage business are primarily comprised of IRLCs, forward delivery contracts and TBA mortgage backed securities. The fair value of these instruments is based upon valuation pricing models, which represent the amount the Company would expect to receive or pay at the balance sheet date to exit the position. Our mortgage origination subsidiaries issue IRLCs to their customers, which are carried at estimated fair value on the Company’s condensed consolidated balance sheets. The estimated fair values of these commitments are generally calculated by reference to the value of the underlying loan associated with the IRLC net of costs to produce and an expected pull through assumption. The fair values of these commitments generally fall under Level 3 in the fair value hierarchy. Our mortgage origination subsidiaries manage their exposure by entering into forward delivery commitments with loan investors. For loans not locked with investors under a forward delivery commitment, the Company enters into hedge instruments, primarily TBAs, to protect against movements in interest rates. The fair values of TBA mortgage backed securities and forward delivery contracts generally fall under Level 2 in the fair value hierarchy.
The remaining derivatives are generally comprised of a combination of swaps, options and short positions, which are generally classified as Level 2 in the fair value hierarchy. In addition, the Fortegra Additional Warrant (Warburg) is a derivative liability and classified as Level 3 in the fair value hierarchy. See Note (17) Stockholders’ Equity for additional information regarding the Fortegra Additional Warrant.
Corporate Bonds
Corporate bonds are generally classified under Level 2 in the fair value hierarchy and fair value is provided by a third-party investment manager, based on quoted market prices. We perform internal price verification procedures monthly to ensure that the prices provided are reasonable.
Trade Claims
Trade claims represent unsecured claims of bankrupt companies and are generally classified under Level 3 in the fair value hierarchy. The fair value is determined using valuation methodologies that consider a range of factors, including but not limited to the price at which the investment was acquired, the nature of the investment, local market conditions, current and projected operating performance, and financing transactions subsequent to the acquisition of the investment. The inputs are intended to reflect the assumptions a market participant would use in pricing the asset or liability.
Securities Sold, Not Yet Purchased
Securities sold, not yet purchased are generally classified under Level 1 or Level 2 in the fair value hierarchy, based on the leveling of the securities sold short, and fair value is provided by a third-party investment manager, based on quoted market prices. We perform internal price verification procedures monthly to ensure that the prices provided are reasonable.
Mortgage Servicing Rights
Mortgage servicing rights are classified under Level 3 in the fair value hierarchy and fair value is provided by a third-party valuation service. Various observable and unobservable inputs are used to determine fair value, including discount rate, cost to service and weighted average prepayment speed.
F - 29

TIPTREE INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
September 30, 2022
(in thousands, except share data)
The following tables present the Company’s fair value hierarchies for financial assets and liabilities, measured on a recurring basis:

| As of September 30, 2022
| Quoted prices in active markets Level 1 |  | Other significant observable inputs Level 2 |  | Significant unobservable inputs Level 3 |  | Fair value
Assets: |  |  |  |  |  |  |
Available for sale securities, at fair value: |  |  |  |  |  |  |
U.S. Treasury securities and obligations of U.S. government authorities and agencies | $ | — |  |  | $ | 356,759 |  |  | $ | — |  |  | $ | 356,759 |
Obligations of state and political subdivisions | — |  |  | 49,301 |  |  | — |  |  | 49,301 |
Obligations of foreign governments | — |  |  | 2,349 |  |  | — |  |  | 2,349 |
Certificates of deposit | 1,357 |  |  | — |  |  | — |  |  | 1,357 |
Asset backed securities | — |  |  | 15,982 |  |  | 220 |  |  | 16,202 |
Corporate securities | — |  |  | 158,113 |  |  | — |  |  | 158,113 |
Total available for sale securities, at fair value | 1,357 |  |  | 582,504 |  |  | 220 |  |  | 584,081 |
Loans, at fair value: |  |  |  |  |  |  |
Corporate loans | — |  |  | 2,455 |  |  | 10,129 |  |  | 12,584 |
Mortgage loans held for sale | — |  |  | 58,200 |  |  | — |  |  | 58,200 |
Total loans, at fair value | — |  |  | 60,655 |  |  | 10,129 |  |  | 70,784 |
Equity securities: |  |  |  |  |  |  |
Invesque | 19,190 |  |  | — |  |  | — |  |  | 19,190 |
Fixed income ETFs | 52,078 |  |  | — |  |  | — |  |  | 52,078 |
Other equity securities | 7,238 |  |  | — |  |  | 6,597 |  |  | 13,835 |
Total equity securities | 78,506 |  |  | — |  |  | 6,597 |  |  | 85,103 |
Other investments, at fair value: |  |  |  |  |  |  |
Corporate bonds | — |  |  | 41,494 |  |  | — |  |  | 41,494 |
Derivative assets | 17 |  |  | 6,232 |  |  | 1,505 |  |  | 7,754 |
Other | — |  |  | — |  |  | 324 |  |  | 324 |
Total other investments, at fair value | 17 |  |  | 47,726 |  |  | 1,829 |  |  | 49,572 |
Mortgage servicing rights (1) | — |  |  | — |  |  | 41,912 |  |  | 41,912 |
Total | $ | 79,880 |  |  | $ | 690,885 |  |  | $ | 60,687 |  |  | $ | 831,452 |
Liabilities: (2) |  |  |  |  |  |  |
Securities sold, not yet purchased | $ | 14,578 |  |  | $ | 36,660 |  |  | $ | — |  |  | $ | 51,238 |
Derivative liabilities | — |  |  | 7,715 |  |  | — |  |  | 7,715 |
Fortegra Additional Warrants (Warburg) | — |  |  | — |  |  | 6,230 |  |  | 6,230 |
Contingent consideration payable | — |  |  | — |  |  | 2,871 |  |  | 2,871 |
Total | $ | 14,578 |  |  | $ | 44,375 |  |  | $ | 9,101 |  |  | $ | 68,054 |

(1) Included in other assets.
(2) Included in other liabilities and accrued expenses.
F - 30

TIPTREE INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
September 30, 2022
(in thousands, except share data)

| As of December 31, 2021
| Quoted prices in active markets Level 1 |  | Other significant observable inputs Level 2 |  | Significant unobservable inputs Level 3 |  | Fair value
Assets: |  |  |  |  |  |  |
Available for sale securities, at fair value: |  |  |  |  |  |  |
U.S. Treasury securities and obligations of U.S. government authorities and agencies | $ | — |  |  | $ | 351,178 |  |  | $ | — |  |  | $ | 351,178 |
Obligations of state and political subdivisions | — |  |  | 58,660 |  |  | — |  |  | 58,660 |
Obligations of foreign governments | — |  |  | 2,590 |  |  | — |  |  | 2,590 |
Certificates of deposit | 2,696 |  |  | — |  |  | — |  |  | 2,696 |
Asset backed securities | — |  |  | 16,832 |  |  | 615 |  |  | 17,447 |
Corporate securities | — |  |  | 144,877 |  |  | — |  |  | 144,877 |
Total available for sale securities, at fair value | 2,696 |  |  | 574,137 |  |  | 615 |  |  | 577,448 |
Loans, at fair value: |  |  |  |  |  |  |
Corporate loans | — |  |  | 5,002 |  |  | 2,097 |  |  | 7,099 |
Mortgage loans held for sale | — |  |  | 98,484 |  |  | — |  |  | 98,484 |
Total loans, at fair value | — |  |  | 103,486 |  |  | 2,097 |  |  | 105,583 |
Equity securities: |  |  |  |  |  |  |
Invesque | 34,814 |  |  | — |  |  | — |  |  | 34,814 |
Fixed income ETFs | 53,154 |  |  | — |  |  | — |  |  | 53,154 |
Other equity securities | 49,309 |  |  | — |  |  | 1,206 |  |  | 50,515 |
Total equity securities | 137,277 |  |  | — |  |  | 1,206 |  |  | 138,483 |
Other investments, at fair value: |  |  |  |  |  |  |
Corporate bonds | — |  |  | 38,965 |  |  | — |  |  | 38,965 |
Derivative assets | 113 |  |  | 569 |  |  | 7,514 |  |  | 8,196 |
Trade claims | — |  |  | — |  |  | 19,737 |  |  | 19,737 |
Other | — |  |  | — |  |  | 441 |  |  | 441 |
Total other investments, at fair value | 113 |  |  | 39,534 |  |  | 27,692 |  |  | 67,339 |
Mortgage servicing rights (1) | — |  |  | — |  |  | 29,833 |  |  | 29,833 |
Total | $ | 140,086 |  |  | $ | 717,157 |  |  | $ | 61,443 |  |  | $ | 918,686 |
Liabilities: (2) |  |  |  |  |  |  |
Securities sold, not yet purchased | $ | 242 |  |  | $ | — |  |  | $ | — |  |  | $ | 242 |
Derivative liabilities | — |  |  | 2,141 |  |  | — |  |  | 2,141 |
Contingent consideration payable | — |  |  | — |  |  | 200 |  |  | 200 |
Total | $ | 242 |  |  | $ | 2,141 |  |  | $ | 200 |  |  | $ | 2,583 |
(1) Included in other assets. (2) Included in other liabilities and accrued expenses. |  |  |  |  |  |  |

F - 31

TIPTREE INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
September 30, 2022
(in thousands, except share data)
Transfers between Level 2 and 3 were a result of subjecting third-party pricing on assets to various liquidity, depth, bid-ask spread and benchmarking criteria as well as assessing the availability of observable inputs affecting their fair valuation.
The following table presents additional information about assets that are measured at fair value on a recurring basis for which the Company has utilized Level 3 inputs to determine fair value for the following periods:

| For the Nine Months Ended September 30,
| 2022 |  | 2021
Balance at January 1, | $ | 61,443 |  |  | $ | 33,455 |
Net realized and unrealized gains or losses included in: |  |  |
Earnings | 8,572 |  |  | 12,664 |
OCI | 305 |  |  | (178) |
Origination of IRLCs | 42,722 |  |  | 84,034 |
Purchases | — |  |  | 15,336 |
Sales and repayments | (3,802) |  |  | (11,382) |
Conversions to mortgage loans held for sale | (48,731) |  |  | (83,976) |
Settlement of trade claims | (19,169) |  |  | — |
Exchange of bonds for term loans | 12,243 |  |  | — |
Exchange of trade receivables for equity securities | 7,104 |  |  | — |
Balance at September 30, | $ | 60,687 |  |  | $ | 49,953 |
Changes in unrealized gains (losses) included in earnings related to assets still held at period end | (5,171) |  |  | $ | 2,298 |
Changes in unrealized gains (losses) included in OCI related to assets still held at period end | $ | (395) |  |  | $ | (178) |

The following table presents the range and weighted average (WA) used to develop significant unobservable inputs for the fair value measurements of Level 3 assets and liabilities.
F - 32

TIPTREE INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
September 30, 2022
(in thousands, except share data)

| As of |  |  |  |  |  | As of
| September 30, 2022 |  | December 31, 2021 |  | Valuation technique |  | Unobservable input(s) |  | September 30, 2022 |  | December 31, 2021
Assets | Fair value |  |  |  | Range |  | WA (1) |  | Range |  | WA (1)
IRLCs | $ | 1,505 |  |  | $ | 7,514 |  |  | Internal model |  | Pull through rate |  | 55% | to | 95% |  | 66% |  | 55% | to | 95% |  | 66%
Mortgage servicing rights | 41,912 |  |  | 29,833 |  |  | External model |  | Discount rate |  | 9% | to | 14% |  | 9% |  | 10% | to | 12% |  | 9%
| Cost to service |  | $65 | to | $80 |  | $71 |  | $65 | to | $80 |  | $71
| Prepayment speed |  | 5% | to | 84% |  | 9% |  | 5% | to | 100% |  | 15%
Trade claims | — |  |  | 19,737 |  |  | Internal model |  | Plan projected recovery rate |  | N/A |  | 15% | to | 18% |  | 17%
Equity securities | 6,549 |  |  | — |  |  | Internal model |  | Forecast EBITDAR |  | $728,000 | to | $1,039,000 |  | N/A |  | N/A
Corporate loans and related receivables | 10,129 |  |  | — |  |  | Internal model |  | EBITDA |  | $188,000 |  | N/A |  | N/A
Total | $ | 60,095 |  |  | $ | 57,084 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fortegra Additional Warrants (Warburg) | $ | 6,230 |  |  | $ | — |  |  | External model |  | Discount rate |  | 3% | to | 5% |  | 3.3% |  | N/A
|  |  | Implied Equity Volatility |  | 40% | to | 50% |  | 45% |
Contingent consideration payable - ITC | 2,671 |  |  | — |  |  | Cash Flow model |  | Forecast Cash EBITDA |  | $2,500 | to | $4,000 |  | N/A |  | N/A
|  | Cash Flow model |  | Forecast Underwriting EBITDA |  | $— | to | $2,000 |  | N/A |  | N/A
Contingent consideration payable - Smart AutoCare | 200 |  |  | 200 |  |  | Cash Flow model |  | Forecast Cash EBITDA |  | $20,000 | to | $30,000 |  | N/A |  | $20,000 | to | $30,000 |  | N/A
|  | Actuarial analysis |  | Assumed Claim Liabilities |  | $55,000 |  | $55,000
Total | $ | 9,101 |  |  | $ | 200 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

(1) Unobservable inputs were weighted by the relative fair value of the instruments.
F - 33

TIPTREE INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
September 30, 2022
(in thousands, except share data)
The following table presents the carrying amounts and estimated fair values of financial assets and liabilities that are not recorded at fair value and their respective levels within the fair value hierarchy:

| As of September 30, 2022 |  | As of December 31, 2021
| Level within fair value hierarchy |  | Fair value |  | Carrying value |  | Level within fair value hierarchy |  | Fair value |  | Carrying value
Assets: |  |  |  |  |  |  |  |  |  |  |
Debentures (1) | 2 |  | $ | 24,961 |  |  | $ | 24,961 |  |  | 2 |  | $ | 21,057 |  |  | $ | 21,057 |
Notes receivable, net | 2 |  | 114,091 |  |  | 114,091 |  |  | 2 |  | 89,788 |  |  | 89,788 |
Total assets |  |  | $ | 139,052 |  |  | $ | 139,052 |  |  |  |  | $ | 110,845 |  |  | $ | 110,845 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |
Debt, net | 3 |  | $ | 270,731 |  |  | $ | 273,856 |  |  | 3 |  | $ | 419,599 |  |  | $ | 403,193 |
Total liabilities |  |  | $ | 270,731 |  |  | $ | 273,856 |  |  |  |  | $ | 419,599 |  |  | $ | 403,193 |

(1) Included in other investments.
Debentures: Since interest rates on debentures are at current market rates for similar credit risks, the carrying amount approximates fair value. These values are net of allowance for doubtful accounts.
Notes Receivable, net: To the extent that carrying amounts differ from fair value, fair value is determined based on contractual cash flows discounted at market rates for similar credits. Categorized under Level 2 in the fair value hierarchy. See Note (7) Notes and Accounts Receivable, net.
Debt: The carrying value, which approximates fair value of LIBOR based debt, represents the total debt balance at face value excluding the unamortized discount. The fair value of the Junior subordinated notes is determined based on dealer quotes. Categorized under Level 3 in the fair value hierarchy.
Additionally, the following financial assets and liabilities on the condensed consolidated balance sheets are not carried at fair value, but whose carrying amounts approximate their fair value:
Cash and Cash Equivalents: The carrying amounts of cash and cash equivalents are carried at cost which approximates fair value. Categorized under Level 1 in the fair value hierarchy.
Accounts and Premiums Receivable, net, Retrospective Commissions Receivable and Other Receivables: The carrying amounts approximate fair value since no interest rate is charged on these short duration assets. Categorized under Level 2 in the fair value hierarchy. See Note (7) Notes and Accounts Receivable, net.
Due from Brokers, Dealers, and Trustees and Due to Brokers, Dealers and Trustees: The carrying amounts are included in other assets and other liabilities and accrued expenses and approximate their fair value due to their short term nature. Categorized under Level 2 in the fair value hierarchy.
F - 34

TIPTREE INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
September 30, 2022
(in thousands, except share data)
(13) Liability for Unpaid Claims and Claim Adjustment Expenses
Roll forward of Claim Liability
The following table presents the activity in the net liability for unpaid losses and allocated loss adjustment expenses of short duration contracts for the following periods:

| For the Nine Months Ended September 30,
| 2022 |  | 2021
Policy liabilities and unpaid claims balance as of January 1, | $ | 331,703 |  |  | $ | 233,438 |
Less: liabilities of policy-holder account balances, gross | (801) |  |  | (5,419) |
Less: non-insurance warranty benefit claim liabilities | (10,785) |  |  | (30,664) |
Gross liabilities for unpaid losses and loss adjustment expenses | 320,117 |  |  | 197,355 |
Less: reinsurance recoverable on unpaid losses - short duration | (165,129) |  |  | (113,163) |
Less: other lines, gross | (576) |  |  | (247) |
Net balance as of January 1, short duration | 154,412 |  |  | 83,945 |
Incurred (short duration) related to: |  |  |
Current year | 265,277 |  |  | 176,644 |
Prior years | (2,205) |  |  | 3,866 |
Total incurred | 263,072 |  |  | 180,510 |
Paid (short duration) related to: |  |  |
Current year | 138,274 |  |  | 116,175 |
Prior years | 18,436 |  |  | 6,379 |
Total paid | 156,710 |  |  | 122,554 |
Net balance as of September 30, short duration | 260,774 |  |  | 141,901 |
Plus: reinsurance recoverable on unpaid losses - short duration | 248,418 |  |  | 154,513 |
Plus: other lines, gross | 157 |  |  | 397 |
Gross liabilities for unpaid losses and loss adjustment expenses | 509,349 |  |  | 296,811 |
Plus: liabilities of policy-holder account balances, gross | 2,715 |  |  | 1,690 |
Plus: non-insurance warranty benefit claim liabilities | 860 |  |  | 15,113 |
Policy liabilities and unpaid claims balance as of September 30, | $ | 512,924 |  |  | $ | 313,614 |

The following schedule reconciles the total short duration contracts per the table above to the amount of total losses incurred as presented in the condensed consolidated statements of operations, excluding the amount for member benefit claims:

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021 |  |
Short duration incurred | $ | 97,501 |  |  | $ | 61,061 |  |  | $ | 263,072 |  |  | $ | 180,510 |  |  |
Other lines incurred | (36) |  |  | 10 |  |  | 327 |  |  | 55 |  |  |
Unallocated loss adjustment expenses | 362 |  |  | 181 |  |  | 657 |  |  | 679 |  |  |
Total losses incurred | $ | 97,827 |  |  | $ | 61,252 |  |  | $ | 264,056 |  |  | $ | 181,244 |  |  |

During the nine months ended September 30, 2022, and 2021, the Company experienced a decrease in prior year development of $2,205, primarily as a result of lower-than-expected claim severity in its commercial lines business.
During the nine months ended September 30, 2021, the Company experienced an increase in prior year development of $3,866, primarily as a result of higher-than-expected claim severity from business written by a small group of producers of our personal and commercial lines of business.
Management considers the prior year development for each of these years to be insignificant when considered in the context of our annual earned premiums, net as well as our net losses and loss adjustment expenses and member benefit claims expenses. We analyze our development on a quarterly basis and given the short duration nature of our products, favorable or
F - 35

TIPTREE INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
September 30, 2022
(in thousands, except share data)
adverse development emerges quickly and allows for timely reserve strengthening, if necessary, or modifications to our product pricing or offerings.
Based upon our internal analysis and our review of the statement of actuarial opinions provided by our actuarial consultants, we believe that the amounts recorded for policy liabilities and unpaid claims reasonably represent the amount necessary to pay all claims and related expenses which may arise from incidents that have occurred as of the balance sheet date.
(14) Revenue from Contracts with Customers
The Company’s revenues from insurance and contractual and liability insurance operations are primarily accounted for under Financial Services-Insurance (Topic 944) that are not within the scope of Revenue for Contracts with Customers (Topic 606). The Company’s remaining revenues that are within the scope of Topic 606 are primarily comprised of revenues from contracts with customers for monthly membership dues for motor clubs, monthly administration fees for services provided for premiums, claims and reinsurance processing revenues, vehicle service contracts, vessel related revenue and revenues for household goods and appliances service contracts (collectively, remaining contracts).
The following table presents the disaggregated amounts of revenue from contracts with customers by product type for the following periods:

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021 |  |
Service and Administrative Fees: |  |  |  |  |  |  |  |  |
Service contract revenue | $ | 56,968 |  |  | $ | 43,094 |  |  | $ | 150,788 |  |  | $ | 111,970 |  |  |
Motor club revenue | 13,949 |  |  | 11,038 |  |  | 39,724 |  |  | 29,694 |  |  |
Vessel related revenue | 7,829 |  |  | 11,426 |  |  | 28,337 |  |  | 25,043 |  |  |
Other | 997 |  |  | 3,256 |  |  | 5,136 |  |  | 15,589 |  |  |
Revenue from contracts with customers | $ | 79,743 |  |  | $ | 68,814 |  |  | $ | 223,985 |  |  | $ | 182,296 |  |  |

Service and Administrative Fees
Service fee revenue is recognized as the services are performed. These services include fulfillment, software development, and claims handling for our customers. Management reviews the financial results under each significant contract on a monthly basis. Any losses that may occur due to a specific contract would be recognized in the period in which the loss is determined probable.
Administrative fee revenue includes the administration of premium associated with our producers and PORCs. In addition, we also earn fee revenue from debt cancellation, motor club, and auto and consumer goods service contracts. Related administrative fee revenue is recognized consistent with the earnings recognition pattern of the underlying insurance policies, debt cancellation contracts and motor club memberships being administered, using Rule of 78's, modified Rule of 78's, pro rata, or other methods as appropriate for the contract. Management selects the appropriate method based on available information, and periodically reviews the selections as additional information becomes available.
We do not disclose information about remaining performance obligations pertaining to contracts that have an original expected duration of one year or less. The transaction price allocated to remaining unsatisfied or partially unsatisfied performance obligations with an original expected duration exceeding one year was not material as of September 30, 2022.
The timing of our revenue recognition may differ from the timing of payment by our customers. We record a receivable when revenue is recognized prior to payment and we have an unconditional right to payment. Alternatively, when payment precedes the provision of the related services, we record deferred revenue until the performance obligations are satisfied.
Vessel Related Revenue
The Company generates its revenues from charterers for the charter hire of its vessels. Vessels are chartered under time or voyage charters, where a contract is entered into for the use of a vessel for a specific voyage or a specific period of time and at a specified daily charter rate. Charter revenues are recognized as earned on the straight-line basis over the term of the charter as service is provided.
F - 36

TIPTREE INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
September 30, 2022
(in thousands, except share data)
Revenue is recognized when a charter agreement exists, the vessel is made available to the charterer and collection of the related revenue is reasonably assured. Unearned revenue includes revenue received prior to the balance sheet date relating to services to be rendered after the balance sheet date.
The following table presents the activity in the significant deferred assets and liabilities related to revenue from contracts with customers for the following period:

| January 1, 2022 |  |  |  |  |  |  |  |  | September 30, 2022
| Beginning balance |  |  |  |  | Additions |  | Amortization |  | Ending balance
Deferred acquisition costs |  |  |  |  |  |  |  |  |  |
Service and Administrative Fees: |  |  |  |  |  |  |  |  |  |
Service contract revenue | $ | 110,220 |  |  |  |  |  | $ | 87,621 |  |  | $ | 37,388 |  |  | $ | 160,453 |
Motor club revenue | 19,424 |  |  |  |  |  | 31,052 |  |  | 31,364 |  |  | 19,112 |
Total | $ | 129,644 |  |  |  |  |  | $ | 118,673 |  |  | $ | 68,752 |  |  | $ | 179,565 |

Deferred revenue |  |  |  |  |  |  |  |  |  |
Service and Administrative Fees: |  |  |  |  |  |  |  |  |  |
Service contract revenue | $ | 470,399 |  |  |  |  |  | $ | 239,037 |  |  | $ | 150,788 |  |  | $ | 558,648 |
Motor club revenue | 24,870 |  |  |  |  |  | 40,375 |  |  | 39,724 |  |  | 25,521 |
Total | $ | 495,269 |  |  |  |  |  | $ | 279,412 |  |  | $ | 190,512 |  |  | $ | 584,169 |

For the periods presented, no write-offs for unrecoverable deferred acquisition costs and deferred revenue were recognized.
(15) Other Assets and Other Liabilities and Accrued Expenses
Other Assets
The following table presents the components of other assets as reported in the condensed consolidated balance sheets:

| As of
| September 30, 2022 |  | December 31, 2021
Loans eligible for repurchase | $ | 29,016 |  |  | $ | 36,732 |
Mortgage servicing rights | 41,912 |  |  | 29,833 |
Right of use asset - Operating leases | 31,161 |  |  | 23,870 |
Income tax receivable | 19,463 |  |  | 19,824 |
Furniture, fixtures and equipment, net | 17,504 |  |  | 14,878 |
Prepaid expenses | 8,871 |  |  | 10,722 |
Other | 14,191 |  |  | 10,985 |
Total other assets | $ | 162,118 |  |  | $ | 146,844 |

The following table presents the depreciation expense related to furniture, fixtures and equipment for the following periods:

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021 |  |
Depreciation expense related to furniture, fixtures and equipment | $ | 1,032 |  |  | $ | 893 |  |  | $ | 2,822 |  |  | $ | 2,666 |  |  |

F - 37

TIPTREE INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
September 30, 2022
(in thousands, except share data)
Other Liabilities and Accrued Expenses
The following table presents the components of other liabilities and accrued expenses as reported in the condensed consolidated balance sheets:

| As of
| September 30, 2022 |  | December 31, 2021
Accounts payable and accrued expenses | $ | 139,173 |  |  | $ | 149,816 |
Loans eligible for repurchase liability | 29,016 |  |  | 36,732 |
Deferred tax liabilities, net | 73,359 |  |  | 40,049 |
Operating lease liability | 39,826 |  |  | 29,396 |
Due to brokers | 4,985 |  |  | 10,763 |
Commissions payable | 30,291 |  |  | 20,412 |
Securities sold, not yet purchased | 51,238 |  |  | 242 |
Other | 32,011 |  |  | 19,126 |
Total other liabilities and accrued expenses | $ | 399,899 |  |  | $ | 306,536 |

(16) Other Revenue and Other Expenses
Other Revenue
The following table presents the components of other revenue as reported in the condensed consolidated statement of operations. Other revenue is primarily generated by Tiptree Capital’s non-insurance activities except as noted in the footnote to the table.

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021 |  |
Other investment income (1) | $ | 12,593 |  |  | $ | 17,890 |  |  | $ | 47,483 |  |  | $ | 45,060 |  |  |
Other (2) | 4,771 |  |  | 3,168 |  |  | 15,524 |  |  | 7,177 |  |  |
Total other revenue | $ | 17,364 |  |  | $ | 21,058 |  |  | $ | 63,007 |  |  | $ | 52,237 |  |  |

(1) See Note (6) Investments for the components of Other investment income.
(2) Includes $4,454 and $3,458 for the three months ended September 30, 2022 and 2021, respectively, and $11,371 and $8,045 for the nine months ended September 30, 2022 and 2021, respectively, related to Insurance.
Other Expenses
The following table presents the components of other expenses as reported in the condensed consolidated statement of operations:

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021 |  |
General and administrative | $ | 6,677 |  |  | $ | 9,334 |  |  | $ | 18,768 |  |  | $ | 27,397 |  |  |
Professional fees | 6,678 |  |  | 5,656 |  |  | 21,077 |  |  | 20,649 |  |  |
Premium taxes | 5,873 |  |  | 4,892 |  |  | 16,174 |  |  | 14,754 |  |  |
Mortgage origination expenses | 4,130 |  |  | 4,366 |  |  | 13,269 |  |  | 12,821 |  |  |
Rent and related | 4,384 |  |  | 4,170 |  |  | 13,302 |  |  | 12,556 |  |  |
Operating expenses from vessels | (518) |  |  | 3,444 |  |  | 5,852 |  |  | 9,770 |  |  |
Loss on extinguishment of debt | — |  |  | — |  |  | 940 |  |  | — |  |  |
Other | 3,066 |  |  | 2,517 |  |  | 11,596 |  |  | 6,393 |  |  |
Total other expenses | $ | 30,290 |  |  | $ | 34,379 |  |  | $ | 100,978 |  |  | $ | 104,340 |  |  |

F - 38

TIPTREE INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
September 30, 2022
(in thousands, except share data)
(17) Stockholders' Equity
Stock Repurchases
The Board of Directors authorized the Company to make repurchases of up to $20,000 of shares of the Company’s outstanding common stock in the aggregate, at the discretion of the Company's Executive Committee. During the nine months ended September 30, 2022, 158,162 shares were repurchased for a weighted average price per share of $10.43. As of September 30, 2022, the remaining repurchase authorization was $12,018.

Tiptree Warrants
In the six months ended June 30, 2022, warrants were exercised for 1,999,989 shares of Tiptree common stock, with 1,979,325 warrants exercised for $13,724 in cash, and 20,664 exercised cashless. As of September 30, 2022, there were no warrants for shares of Tiptree common stock outstanding.
Dividends
The Company declared cash dividends per share for the following periods presented below:

| Dividends per share for the |  |
| Nine Months Ended September 30,
| 2022 |  | 2021 |  |
First quarter | $ | 0.04 |  |  | $ | 0.04 |  |  |
Second quarter | 0.04 |  |  | 0.04 |  |  |
Third quarter(1) | 0.04 |  |  | 0.04 |  |  |
Total cash dividends declared | $ | 0.12 |  |  | $ | 0.12 |  |  |

(1) See Note (24) Subsequent Events for when the dividend was declared.
Fortegra Non-Controlling Interests
On June 21, 2022, the Company closed the WP Transaction. On that date, Fortegra converted to a Delaware corporation and Warburg made a $200,000 investment in Fortegra in exchange for Fortegra Common Stock, Fortegra Preferred Stock, Fortegra Warrants and Fortegra Additional Warrants. Also, in connection with the closing of the Warburg Transaction, Tiptree was issued Fortegra Additional Warrants, and management’s interests in LOTS Intermediate were exchanged for interests in Fortegra. As of September 30, 2022, Fortegra was owned approximately 79.5% by Tiptree Holdings, 17.4% by Warburg and 3.1% by management and directors of Fortegra. As a result of the WP Transaction, the Company recorded an increase of $167,008 to total stockholders’ equity of which $48,285 impacted Tiptree Inc. stockholders’ equity and $118,723 impacted non-controlling interests. Of the increase to Tiptree Inc. stockholders’ equity, $41,092 impacted additional paid in capital and $7,193 impacted accumulated other comprehensive income (loss). Additionally, the Company recognized $3,597 and $3,776 of net income attributable to non-controlling interests during the three months and nine months ended September 30, 2022, respectively, due to the increase in non-controlling interest.
Fortegra Preferred Stock
The face amount of the Fortegra Preferred Stock is $80,000. Dividends are cumulative and accrue at a rate of 8% per annum, compounding quarterly. Any quarterly dividend may be paid in cash, at Fortegra’s option. As of September 30, 2022, the Company had accrued $1,350 of cash dividends payable for the period.
Warburg has the option to convert, at any time, its shares of Fortegra Preferred Stock into shares of Fortegra Common Stock at an initial conversion premium of 33% to Warburg’s initial investment valuation (the “Fortegra Preferred Stock Conversion Price”). The Fortegra Preferred Stock Conversion Price is adjusted for any Fortegra Common Stock splits, dividends, extraordinary dividends and similar transactions. All of the Fortegra Preferred Stock will automatically convert into shares of Fortegra Common Stock at the Fortegra Preferred Stock Conversion Price upon the closing of a qualifying initial public offering, subject to a five year make-whole provision. Upon conversion, the Fortegra Preferred Stock would result in Warburg owning an additional 6.6% interest in Fortegra, for a total as converted ownership of 24.0% (including its ownership of Fortegra Common Stock).
F - 39

TIPTREE INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
September 30, 2022
(in thousands, except share data)
Fortegra Warrants
The Fortegra Warrants have a seven-year term and an exercise premium of 33% to Warburg’s initial investment valuation (the “Fortegra Warrant Exercise Price”). The Fortegra Warrant Exercise Price will be reduced by any Fortegra Common Stock cash dividends made by Fortegra and adjusted for stock splits, common stock dividends, extraordinary dividends and similar transactions. The Fortegra Warrants, if exercised with cash, would result in Warburg owning an additional 3.8% interest in Fortegra.
Fortegra Additional Warrants
The Fortegra Additional Warrants issued to both Warburg and Tiptree have a seven-year term and an exercise price of $0.01 per share of Fortegra Common Stock. The Fortegra Additional Warrants issued to Warburg will be forfeited based on Warburg achieving an all-in return on its investment in excess of 23%, as measured primarily by Fortegra’s Common Stock price. The Fortegra Additional Warrants issued to Warburg are classified as liabilities, at fair value. The Fortegra Additional Warrants issued to Tiptree will vest based on Warburg achieving an all-in return on its investment in excess of 30%, as measured primarily by Fortegra’s Common Stock price. The number of shares of Fortegra Common Stock issuable to Warburg or Tiptree with respect to the Fortegra Additional Warrants is subject to adjustment for Fortegra Common Stock splits, stock or cash dividends and similar transactions. The Fortegra Additional Warrants are exercisable from the earlier of a transaction that results in Warburg having sold 50% of its Fortegra Common Stock or the fifth anniversary of the closing date. The maximum number of shares issued to Warburg or Tiptree, if exercised with cash, would be an additional 1.7% interest in Fortegra on an as converted basis (including its ownership of Fortegra Common and Preferred Stock).
The following table presents the components of non-controlling interests as reported in the condensed consolidated balance sheets:

| As of
| September 30, 2022 |  | December 31, 2021
Fortegra preferred interests | $ | 77,679 |  |  | $ | — |
Fortegra common interests | 50,794 |  |  | 11,066 |
Other third-party common interests | 3,822 |  |  | 6,161 |
Total non-controlling interests | $ | 132,295 |  |  | $ | 17,227 |

Statutory Reporting and Insurance Company Subsidiaries Dividend Restrictions
The Company’s U.S. insurance subsidiaries prepare financial statements in accordance with Statutory Accounting Principles (SAP) prescribed or permitted by the insurance departments of their states of domicile. Prescribed SAP includes the Accounting Practices and Procedures Manual of the National Association of Insurance Commissioners (the NAIC) as well as state laws, regulations and administrative rules.
Statutory Capital and Surplus
The Company’s insurance company subsidiaries must maintain minimum amounts of statutory capital and surplus as required by regulatory authorities, including the NAIC; their capital and surplus levels exceeded respective minimum requirements as of September 30, 2022 and December 31, 2021.

Statutory Dividends
The Company’s U.S. domiciled insurance company subsidiaries may pay dividends to the Company, subject to statutory restrictions. Payments in excess of statutory restrictions (extraordinary dividends) to the Company are permitted only with prior approval of the insurance department of the applicable state of domicile. The Company eliminates all dividends from its subsidiaries in the condensed consolidated financial statements. There were no dividends paid to the Company by its U.S. domiciled insurance company subsidiaries for the periods ended September 30, 2022 and 2021.
The following table presents the combined amount available for ordinary dividends of the Company's U.S. domiciled insurance company subsidiaries for the following periods:
F - 40

TIPTREE INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
September 30, 2022
(in thousands, except share data)

| As of
| September 30, 2022 |  | December 31, 2021
Amount available for ordinary dividends of the Company's insurance company subsidiaries | $ | 35,145 |  |  | $ | 18,519 |

At September 30, 2022, the maximum amount of dividends that our U.S. domiciled insurance company subsidiaries could pay under applicable laws and regulations without regulatory approval was approximately $35,145. The Company may seek regulatory approval to pay dividends in excess of this permitted amount, but there can be no assurance that the Company would receive regulatory approval if sought.
(18) Accumulated Other Comprehensive Income (Loss)
The following table presents the activity of AFS securities in accumulated other comprehensive income (loss) (“AOCI”), net of tax, for the following periods:

| Unrealized gains (losses) on available for sale securities |  | Foreign currency translation adjustment |  | Total AOCI |  | Amount attributable to non-controlling interests |  | Total AOCI to Tiptree Inc.
Balance at December 31, 2020 | $ | 5,702 |  |  | $ | — |  |  | $ | 5,702 |  |  | $ | (28) |  |  | $ | 5,674 |
Other comprehensive income (losses) before reclassifications | (4,054) |  |  | — |  |  | (4,054) |  |  | 18 |  |  | (4,036) |
Amounts reclassified from AOCI | (481) |  |  | — |  |  | (481) |  |  | — |  |  | (481) |
OCI | (4,535) |  |  | — |  |  | (4,535) |  |  | 18 |  |  | (4,517) |
Balance at September 30, 2021 | $ | 1,167 |  |  | $ | — |  |  | $ | 1,167 |  |  | $ | (10) |  |  | $ | 1,157 |
Balance at December 31, 2021 | $ | (2,686) |  |  | $ | — |  |  | $ | (2,686) |  |  | $ | 1 |  |  | $ | (2,685) |
Other comprehensive income (losses) before reclassifications | (43,175) |  |  | (14,256) |  |  | (57,431) |  |  | 5,167 |  |  | (52,264) |
Amounts reclassified from AOCI | 86 |  |  | — |  |  | 86 |  |  | — |  |  | 86 |
WP Transaction | — |  |  | — |  |  | — |  |  | 7,193 |  |  | 7,193 |
OCI | (43,089) |  |  | (14,256) |  |  | (57,345) |  |  | 12,360 |  |  | (44,985) |
Balance at September 30, 2022 | $ | (45,775) |  |  | $ | (14,256) |  |  | $ | (60,031) |  |  | $ | 12,361 |  |  | $ | (47,670) |

The following table presents the reclassification adjustments out of AOCI included in net income and the impacted line items on the condensed consolidated statement of operations for the following periods:

|  | Three Months Ended September 30, |  | Nine Months Ended September 30, |  | Affected line item in consolidated statements of operations
Components of AOCI |  | 2022 |  | 2021 |  | 2022 |  | 2021 |  |  |
Unrealized gains (losses) on available for sale securities |  | $ | — |  |  | $ | 296 |  |  | $ | (110) |  |  | $ | 616 |  |  |  |  | Net realized and unrealized gains (losses)
Related tax (expense) benefit |  | — |  |  | (62) |  |  | 24 |  |  | (135) |  |  |  |  | Provision for income tax
Net of tax |  | $ | — |  |  | $ | 234 |  |  | $ | (86) |  |  | $ | 481 |  |  |  |  |

(19) Stock Based Compensation
Equity Plans
2017 Omnibus Incentive Plan
The Company adopted the Tiptree 2017 Omnibus Incentive Plan (2017 Equity Plan) on June 6, 2017, which permits the grant of restricted stock units (RSUs), stock, and stock options up to a maximum of 6,100,000 shares of common stock. The general purpose of the 2017 Equity Plan is to attract, motivate and retain selected employees and directors for the Company and its subsidiaries, to provide them with incentives and rewards for performance and to better align their interests with the interests of the Company’s stockholders. Unless otherwise extended, the 2017 Equity Plan terminates automatically on June 6, 2027. Amendment No. 1 to the 2017 Equity Plan, to increase the aggregate shares issuable under the Plan by 4,000,000 shares, was approved by stockholders on June 7, 2022.
F - 41

TIPTREE INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
September 30, 2022
(in thousands, except share data)
The table below summarizes changes to the issuances under the Company’s 2017 Equity Plan for the periods indicated, excluding awards granted under the Company’s subsidiary incentive plans that are exchangeable for Tiptree common stock:

2017 Equity Plan | Number of shares (1)
Available for issuance as of December 31, 2021 | 2,344,814 |
RSU, stock and option awards granted | (235,822) |
Forfeited | 528 |
Amendment to plan | 4,000,000 |
Available for issuance as of September 30, 2022 | 6,109,520 |

(1) Excludes awards granted under the Company’s subsidiary incentive plans that are exchangeable for Tiptree common stock.
Restricted Stock Units and Stock Awards
Tiptree Corporate Incentive Plans
The Company values RSUs at their grant-date fair value as measured by Tiptree’s common stock price. Generally, the Tiptree RSUs vest and become non-forfeitable after the third anniversary or with respect to one-third of Tiptree shares granted on each of the first, second and third year anniversaries of the date of the grant, and expensed using the straight-line method over the requisite service period. The RSUs granted after 2019 include a retirement provision and are amortized over the lesser of the service condition or expected retirement date.
Stock Awards - Directors’ Compensation
The Company values the stock awards at their issuance-date fair value as measured by Tiptree’s common stock price. Upon issuance, the awards are deemed to be granted and immediately vested.
The following table presents changes to the issuances of RSUs and stock awards under the 2017 Equity Plan for the periods indicated:

| Number of shares issuable |  | Weighted average grant date fair value
Unvested units as of December 31, 2021 | 599,012 |  |  | $ | 6.59 |
Granted | 235,822 |  |  | 12.93 |
Vested | (328,551) |  |  | 7.00 |
Forfeited | (528) |  |  | 6.26 |
Unvested units as of September 30, 2022 | 505,755 |  |  | $ | 9.64 |

The following tables present the detail of the granted and vested RSUs and stock awards for the periods indicated:

| For the |  |  |  |  | For the |  |
| Nine Months Ended September 30, |  |  | Nine Months Ended September 30,
Granted | 2022 |  | 2021 |  |  |  | Vested | 2022 |  | 2021 |  |
Directors | 28,246 |  |  | 50,251 |  |  |  |  | Directors | 28,246 |  |  | 50,251 |  |  |
Employees (1) | 207,576 |  |  | — |  |  |  |  | Employees | 300,305 |  |  | 354,133 |  |  |
Total Granted | 235,822 |  |  | 50,251 |  |  |  |  | Total Vested | 328,551 |  |  | 404,384 |  |  |
|  |  |  |  |  |  | Taxes | (47,274) |  |  | (34,828) |  |  |
|  |  |  |  |  |  | Net Vested | 281,277 |  |  | 369,556 |  |  |

(1) Includes 94,410 shares that vest ratably over three years and 113,166 shares that cliff vest in 2025 for the nine months ended September 30, 2022.
Tiptree Senior Management Incentive Plan
On August 4, 2021, a total of 3,500,000 Performance Restricted Stock Units (PRSUs) were awarded to members of the Company’s senior management. The PRSUs have a 10-year term and are subject to the recipient’s continuous service and a market requirement. A portion of the PRSUs will generally vest upon the achievement of each of five Tiptree share price target milestones ranging from $15 to $60, adjusted for dividends paid, within five pre-established determination periods
F - 42

TIPTREE INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
September 30, 2022
(in thousands, except share data)
(subject to a catch-up vesting mechanism) occurring on the second, fourth, sixth, eighth and tenth anniversaries of the grant date.
In November 2021, the first tranche of the PRSUs vested, resulting in a net issuance of 215,583 shares of Tiptree common stock. As of September 30, 2022, 3,266,667 PRSUs are unvested. The below table illustrates the aggregate number of PRSUs that will vest upon the achievement of each Tiptree share price target. Such price targets are adjusted down for cumulative dividends paid by the Company since grant (e.g., the next share price target is $19.80 as adjusted for cumulative dividends paid to date).

Original Tiptree Share Price Target |  | Number of PRSUs that Vest
$20 |  | 466,667
$30 |  | 700,000
$45 |  | 933,333
$60 |  | 1,166,667

Upon vesting, the Company will issue shares or if shares are not available under the 2017 Equity Plan, then the Company may in its sole discretion instead deliver cash equal to the fair market value of the underlying shares. As of December 31, 2021, the Company did not have sufficient shares available in the 2017 Equity Plan to settle the PRSUs awarded; as such, the PRSUs were classified as liability awards and were remeasured at each reporting date, and expensed using the straight-line method over the requisite service period. On June 7, 2022, the Board of Directors authorized additional shares, and the Company now has sufficient shares available in the 2017 Equity Plan to settle the PRSUs awarded. As such, the PRSUs were valued on June 7, 2022, and converted to equity awards on that date, and will be expensed using the straight-line method over the remaining service period.
The fair value of the PRSUs were estimated using a Black-Scholes-Merton option pricing formula embedded within a Monte Carlo model used to simulate the future stock prices of the Company, which assumes that the market requirement is achieved. The historical volatility was computed based on historical daily returns of the Company’s stock price simulated over the performance period using a lookback period of 10 years. The valuation was done under a risk-neutral framework using the 10-year zero-coupon risk-free interest rate derived from the Treasury Constant Maturities yield curve on the reporting date. The current quarterly dividend rates in effect as of the reporting date are used to calculate a spot dividend yield for use in the model.
The following table presents the assumptions used to remeasure the fair value of the PRSUs issued in 2021 as of June 7, 2022, when they were converted to equity awards.

Valuation Input |  |  |  |  |  | As of June 7, 2022 |  |
|  |  |  |  |  |  |  |  |  | Assumption |  |  |  |  |  |
Historical volatility |  |  |  |  |  |  |  |  |  | 38.70% |  |  |  |  |  |
Risk-free rate |  |  |  |  |  |  |  |  |  | 2.95% |  |  |  |  |  |
Dividend yield |  |  |  |  |  |  |  |  |  | 1.45% |  |  |  |  |  |
Cost of equity |  |  |  |  |  |  |  |  |  | 11.47% |  |  |  |  |  |
Expected term (years) |  |  |  |  |  |  |  |  |  | 6 |  |  |  |  |  |

Stock Option Awards
Tiptree Corporate Incentive Plans
Option awards have been granted to the Executive Committee with an exercise price equal to the fair market value of our common stock on the date of grant. The option awards have a 10-year term and are subject to the recipient’s continuous service, a market requirement, and vest one third on each of the three, four, and five-year anniversaries of the grant date.
During the year ended December 31, 2021, the market requirement for all outstanding options was achieved. There were no stock option awards granted in 2022 or 2021.

F - 43

TIPTREE INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
September 30, 2022
(in thousands, except share data)
The following table presents the Company's stock option activity for the current period:

| Options outstanding |  | Weighted average exercise price (in dollars per stock option) |  | Weighted average grant date value (in dollars per stock option) |  | Options exercisable
Balance, December 31, 2021 | 1,715,619 |  |  | $ | 6.49 |  |  | $ | 2.29 |  |  | 712,542 |
Balance, September 30, 2022 | 1,707,476 |  |  | $ | 6.49 |  |  | $ | 2.29 |  |  | 1,050,767 |
Weighted average remaining contractual term at September 30, 2022 (in years) | 5.4 |  |  |  |  |  |

Fortegra Equity Incentive Plan
Fortegra adopted the 2022 Equity Incentive Plan (“Fortegra Plan”) on June 21, 2022, which permits the grant of RSUs, stock and options up to approximately 7% of Fortegra Common Stock (assuming conversion of the Fortegra Preferred Stock), of which the substantial majority is expected to be delivered in options. The general purpose of the Fortegra Plan is to attract, motivate and retain selected employees of Fortegra, to provide them with incentives and rewards for performance and to better align their interests with those of Fortegra’s stockholders. Unless otherwise extended, the Fortegra Plan terminates automatically on June 21, 2032. The awards under the Fortegra Plan are not exchangeable for Tiptree common stock.
As of September 30, 2022, time vesting RSUs and options equal to approximately 0.3% of Fortegra Common Stock (assuming conversion of the Fortegra Preferred Stock) have been granted under the Fortegra Plan. The unvested RSUs were exchanged for prior RSUs granted to management of Fortegra under the LOTS Intermediate Co. Restricted Stock Unit Program.
Other Subsidiary Incentive Plans
Certain of the Company’s other subsidiaries have established incentive plans under which they are authorized to issue equity of those subsidiaries to certain of their employees. Such awards are accounted for as equity. These awards are subject to performance-vesting criteria based on the performance of the subsidiary (performance vesting awards) and time-vesting subject to continued employment (time vesting awards). Following the service period, such vested awards may be exchanged based on a formula which approximates fair market value, at the option of the holder, for Tiptree common stock under the 2017 Equity Plan. The service period for certain grants has been achieved and those vested subsidiary awards are currently eligible for exchange. The Company has the option, but not the obligation to settle the exchange right in cash.
The following table presents changes to the issuances of subsidiary awards under the subsidiary incentive plans for the periods indicated:

| Grant date fair value of equity shares issuable
Unvested balance as of December 31, 2021 | $ | 2,234 |
Granted | 282 |
Vested | (935) |
Performance assumption adjustment | 80 |
Unvested balance as of September 30, 2022 | $ | 1,661 |

The net vested balance of subsidiary awards eligible for exchange as of September 30, 2022 translates to 285,181 shares of Tiptree common stock.
F - 44

TIPTREE INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
September 30, 2022
(in thousands, except share data)
Stock Based Compensation Expense
The following table presents total stock based compensation expense and the related income tax benefit recognized on the condensed consolidated statements of operations:

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021 |  |
Employee compensation and benefits | $ | 1,573 |  |  | $ | 1,401 |  |  | $ | 7,559 |  |  | $ | 3,372 |  |  |
Director compensation | 122 |  |  | 103 |  |  | 350 |  |  | 345 |  |  |
Income tax benefit | (355) |  |  | (316) |  |  | (1,660) |  |  | (781) |  |  |
Net stock based compensation expense | $ | 1,340 |  |  | $ | 1,188 |  |  | $ | 6,249 |  |  | $ | 2,936 |  |  |

Additional information on total non-vested stock based compensation is as follows:

| As of September 30, 2022
| Stock options |  | Restricted stock awards and RSUs |  | Performance Restricted Stock Units
Unrecognized compensation cost related to non-vested awards (1) | $ | 146 |  |  | $ | 806 |  |  | $ | 8,386 |
Weighted - average recognition period (in years) | 1.38 |  | 0.87 |  | 1.03

(1) Includes $122 of unrecognized compensation cost related to stock options at The Fortegra Group that vest ratably over three years..
(20) Income Taxes
The following table presents the Company’s provision (benefit) for income taxes reflected as a component of income (loss):

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021
Total income tax expense (benefit) | $ | 5,068 |  |  | $ | 237 |  |  | $ | 31,537 |  |  | $ | 11,416 |
Effective tax rate (ETR) | 20.2 | % | (1) |  | 6.6 | % | (2) |  | 108.9 | % | (3) |  | 21.0 | % | (4)

(1) Lower than the U.S. federal statutory income tax rate of 21% primarily due to the impact of discrete items, partially offset by state taxes.
(2) Lower than the U.S. federal statutory income tax rate of 21% primarily due to the impact of the effect of foreign operations and discrete items, partially offset by state taxes.
(3) Higher than the U.S. federal statutory income tax rate of 21%, primarily due to the impact of deconsolidation of insurance subsidiaries for tax as a result of the WP Transaction.
(4) Equal to the U.S. federal statutory income tax rate of 21% due to the impact of state taxes offset by other discrete items.
On June 21, 2022, the WP Transaction was completed, in which Warburg invested $200,000 in Tiptree’s insurance subsidiary, Fortegra. The WP Transaction, along with Fortegra management’s ownership, reduced Tiptree’s ownership in Fortegra below 80% such that, while still consolidated for GAAP financial reporting purposes, Fortegra will no longer be included in the consolidated tax return group with Tiptree. Tiptree has recorded deferred tax liabilities related to the basis difference in Tiptree’s investment in Fortegra as of September 30, 2022. This deferred tax liability represents the tax that would be due, before consideration of loss carryforwards, if Tiptree were to sell any of its Fortegra stock at its carrying value on Tiptree’s balance sheet. The deferred tax liability as of September 30, 2022 relating to the WP Transaction was $38,168, of which $14,064 was recorded directly in Tiptree Inc. stockholders’ equity with respect to the gain component and $24,104 was recorded as a provision for income taxes in the condensed consolidated statements of operations for the nine months ended September 30, 2022.

(21) Commitments and Contingencies
The following table presents rent expense for the Company’s office leases recorded on the condensed consolidated statements of operations for the following periods:

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021 |  |
Rent expense for office leases (1) | $ | 1,942 |  |  | $ | 2,074 |  |  | $ | 6,508 |  |  | $ | 6,520 |  |  |

(1) Includes lease expense of $0 and $134 for the three months ended September 30, 2022 and 2021, respectively, and $202 and $306 for the nine months ended September 30, 2022 and 2021, respectively, for assets held for sale.
F - 45

TIPTREE INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
September 30, 2022
(in thousands, except share data)
Litigation
The Company is a defendant in Mullins v. Southern Financial Life Insurance Co., a class action filed in February 2006, in Pike County Circuit Court in the Commonwealth of Kentucky on behalf of Kentucky consumers that purchased certain credit life and disability insurance coverage between 1997-2007. The action alleges violations of the Kentucky Consumer Protection Act (“KCPA”) and certain insurance statutes, common law fraud and breach of contract and the covenant of good faith and fair dealing. Plaintiffs seek compensatory and punitive damages, attorneys’ fees and interest.
Two classes were certified in June 2010: Subclass A includes class members who suffered a disability during the coverage period but allegedly received less than full disability benefits; Subclass B includes all class members whose loan termination date extended beyond the termination date of the credit disability coverage period.
In a series of orders issued in October 2022 on competing motions for partial summary judgment, the court found in favor of Plaintiff as to the Subclass A breach of contract claim (the “Subclass A Order”) and, as to Subclass B, found that the Company was unjustly enriched to the extent the premium it collected exceeded the proportion of the premium for which the Company provided benefits coverage (the “Subclass B Order”). The court found in favor of the Company as to Plaintiff’s claims for common law fraud and violation of Kentucky’s insurance statutes and ordered Plaintiff’s Motion for Sanctions for Spoliation of Evidence held in abeyance. The Company has appealed the Subclass A Order and Subclass B Order and all interlocutory orders made final by entry of the Subclass A Order and Subclass B Order.
The parties’ competing motions for partial summary judgment as to Plaintiff’s breach of the covenant of good faith and fair dealing and KCPA claims remain pending and a trial has been scheduled for December 2023.
The Company considers such litigation customary in the insurance industry. In management's opinion, based on information available at this time, the ultimate resolution of such litigation, which it is vigorously defending, should not be materially adverse to the financial position of the Company. It should be noted that large punitive damage awards, bearing little relation to actual damages sustained by plaintiffs, have been awarded in certain states against other companies in the credit insurance business. At this time, the Company cannot estimate a range of loss that is reasonably possible.
The Company and its subsidiaries are parties to other legal proceedings in the ordinary course of business. Although the Company’s legal and financial liability with respect to such proceedings cannot be estimated with certainty, the Company does not believe that these proceedings, either individually or in the aggregate, are likely to have a material adverse effect on the Company’s financial position.
(22) Earnings Per Share
The Company calculates basic net income per share of common stock (common share) based on the weighted average number of common shares outstanding, which includes vested corporate RSUs. Unvested corporate RSUs have a non-forfeitable right to participate in dividends declared and paid on the Company’s common stock on an as vested basis and are therefore considered a participating security. The Company calculates basic earnings per share using the “two-class” method under which the income available to common stockholders is allocated to the unvested corporate RSUs.
Diluted net income attributable to common stockholders includes the effect of unvested subsidiaries’ RSUs, when dilutive. The assumed exercise of all potentially dilutive instruments is included in the diluted net income per common share calculation, if dilutive.
F - 46

TIPTREE INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
September 30, 2022
(in thousands, except share data)
The following table presents a reconciliation of basic and diluted net income per common share for the following periods:

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021 |  |
Net income (loss) | $ | 20,057 |  |  | $ | 3,347 |  |  | $ | (2,557) |  |  | $ | 43,035 |  |  |
Less: |  |  |  |  |  |  |  |  |
Net income (loss) attributable to non-controlling interests | 5,834 |  |  | 1,339 |  |  | 6,588 |  |  | 4,477 |  |  |
Net income allocated to participating securities | 195 |  |  | 35 |  |  | — |  |  | 725 |  |  |
Net income (loss) attributable to Tiptree Inc. common shares - basic | 14,028 |  |  | 1,973 |  |  | (9,145) |  |  | 37,833 |  |  |
Effect of Dilutive Securities: |  |  |  |  |  |  |  |  |
Securities of subsidiaries | (47) |  |  | (73) |  |  | — |  |  | (905) |  |  |
Adjustments to income relating to exchangeable interests and contingent considerations, net of tax | 3 |  |  | 1 |  |  | — |  |  | 1,820 |  |  |
Net income (loss) attributable to Tiptree Inc. common shares - diluted | $ | 13,984 |  |  | $ | 1,901 |  |  | $ | (9,145) |  |  | $ | 38,748 |  |  |
Weighted average number of shares of common stock outstanding - basic | 36,304,385 |  |  | 33,558,106 |  |  | 35,261,659 |  |  | 32,963,451 |  |  |
Weighted average number of incremental shares of common stock issuable from exchangeable interests and contingent considerations | 478,863 |  |  | 574,076 |  |  | — |  |  | 2,061,760 |  |  |
Weighted average number of shares of common stock outstanding - diluted | 36,783,248 |  |  | 34,132,182 |  |  | 35,261,659 |  |  | 35,025,211 |  |  |
Basic net income (loss) attributable to common shares | $ | 0.39 |  |  | $ | 0.06 |  |  | $ | (0.26) |  |  | $ | 1.15 |  |  |
Diluted net income (loss) attributable to common shares | $ | 0.38 |  |  | $ | 0.06 |  |  | $ | (0.26) |  |  | $ | 1.11 |  |  |

(23) Related Party Transactions
Corvid Peak is a related party of the Company because Corvid Peak is deemed to be controlled by Michael Barnes, the Company’s Executive Chairman. The Company is invested in funds managed by Corvid Peak (the “Corvid Peak Funds”) and Corvid Peak manages investment portfolio accounts of Fortegra and certain of its subsidiaries under an investment advisory agreement (the “IAA”). With respect to the Corvid Peak Funds and IAA, the Company incurred $847 and $185 of management and incentive fees for the three months ended September 30, 2022 and 2021, respectively. The Company incurred $2,255 and $769 of management and incentive fees for the nine months ended September 30, 2022 and 2021, respectively.
Beginning January 1, 2021, Tiptree has been allocated 10.2% of certain profits interests earned by Corvid Peak with an additional 10.2% interest for each of the next consecutive four years. Beginning January 1, 2022, Tiptree’s percentage interest increased to 21.95% (including interests acquired from former Corvid Peak equityholders).
Pursuant to the Transition Services Agreement, Tiptree and Corvid Peak have mutually agreed to provide certain services to one another. Payments under the Transition Services Agreement in the nine months ended September 30, 2022 and 2021 were not material.
Pursuant to a Partner Emeritus Agreement, Tiptree agreed to provide Mr. Inayatullah, a greater than 5% stockholder of the Company, office space and support services, and reimburse Mr. Inayatullah for a portion of benefit expenses in exchange for advice and other consulting services as requested by the Company’s Executive Committee. Transactions related to the Partner Emeritus Agreement in the nine months ended September 30, 2022 and 2021 were not material.
In 2022, Michael Barnes, the Company’s Executive Chairman, exercised warrants for 979,146 shares of Tiptree common stock for $6,783 and Mr. Inayatullah exercised warrants for 440,318 shares of Tiptree common stock for $3,050.
(24) Subsequent Events
On November 1, 2022, the Company’s board of directors declared a quarterly cash dividend of $0.04 per share to holders of common stock with a record date of November 21, 2022, and a payment date of November 28, 2022.
On October 21, 2022, Fortegra Financial Corporation (“FFC”) entered into a Second Amended and Restated Credit Agreement by and among FFC, its parent, Fortegra, and its subsidiary, LOTS Intermediate Co., as borrowers, the lenders
F - 47

TIPTREE INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
September 30, 2022
(in thousands, except share data)
from time to time party thereto, certain of Fortegra’s affiliates as guarantors, and Fifth Third Bank, National Association, as the administrative agent and issuing lender (the “Fortegra Credit Agreement”). The Fortegra Credit Agreement provides for a $200,000 revolving credit facility, all of which is available for the issuance of letters of credit, with a sub-limit of $25,000 for swing loans and matures on October 21, 2027.
F - 48

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Our Management’s Discussion and Analysis of Financial Condition and Results of Operations is presented in this section as follows:
•Overview
•Results of Operations
•Non-GAAP Measures and Reconciliations
•Liquidity and Capital Resources
•Critical Accounting Policies and Estimates
OVERVIEW
Tiptree allocates capital to select small and middle market companies with the mission of building long-term value. Established in 2007, we have a significant track record investing in the insurance sector and across a variety of other industries, including mortgage origination, specialty finance and shipping. Our largest operating subsidiary, Fortegra, is a leading provider of specialty insurance products and related services. We also generate earnings from a diverse group of select investments that we refer to as Tiptree Capital, which includes our Mortgage segment and other, non-insurance businesses and assets. We evaluate performance primarily by the comparison of 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 2022 highlights include:
Overall:
•Tiptree reported net income of $14.2 million for the third quarter, up from $2.0 million in the prior year, driven primarily by the gain on sale of dry bulk vessels and improved performance in our insurance business.
•Net loss was $9.1 million for the nine months, compared to net income of $38.6 million in 2021, driven by the deferred tax liability associated with the WP Transaction and unrealized losses on investments as compared to gains in the prior year, partially offset by improved performance in insurance and shipping operations.
•Adjusted net income of $48.8 million increased 3.9% from $47.0 million in 2021, driven by improvement in insurance and shipping operations. Adjusted return on average equity was 14.2%, as compared to 16.2% in 2021.
•In the quarter, we sold the remaining two dry bulk vessels for $46.2 million, representing a net gain of $14.1 million. Total proceeds from dry bulk vessel sales in 2022 were $67.7 million, or a net gain of $21.2 million.
•In the quarter, we signed definitive agreements to sell our two product tankers for an aggregate of $49.0 million, representing an approximate 44% gain as compared to the September 30, 2022 book value. The sale of the two tankers is expected to close in the fourth quarter 2022.
•In June 2022, Tiptree closed the previously announced $200 million investment in Fortegra, by Warburg. The investment gives Warburg an approximate 24% ownership in Fortegra on an as converted basis.
•As a result of the WP Transaction, Tiptree recognized a $63.2 million pre-tax gain in stockholders’ equity in the nine months ended September 30, 2022, which was partially offset by increased deferred tax liabilities resulting from the tax deconsolidation as Tiptree’s ownership of Fortegra was reduced to below 80%. The deferred tax liability was $38.2 million, with $14.1 million impacting stockholders’ equity directly and $24.1 million impacting net income for the nine months ended September 30, 2022.
Insurance:
•Gross written premiums and premium equivalents were $1.96 billion for the nine months ended September 30, 2022, as compared to $1.62 billion for the nine months ended September 30, 2021, up 20.9% as a result of growth in specialty insurance lines and fee-based service contract offerings.
•Total revenues increased 25.2% to $903.4 million, from $721.5 million in 2021, driven by increases in earned premiums, net and service and administrative fees.
•The combined ratio remained consistent at 91.0%, driven by the scalability of Fortegra’s technology and shared service platform, which improved the expense ratio, while the underwriting ratio increased due to a shift in business mix toward lines with higher loss ratios and lower expense ratios.
•Income before taxes of $39.1 million decreased by $10.5 million as compared to $49.6 million in 2021. Return on average equity was 12.1% in 2022 as compared to 17.3% in 2021. The decreases resulted from investment losses in 2022 compared to gains in 2021, offset by growth in underwriting and fee revenues.
•Adjusted net income increased 29.1% to $59.9 million, as compared to $46.4 million in 2021. Adjusted return on average equity was 25.8%, as compared to 20.9% in 2021.
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•In April 2022, Fortegra acquired ITC Compliance GRP Limited, a provider of regulatory and compliance services to the retail automotive sector in the United Kingdom, for net cash consideration of approximately $15.0 million, plus an earn-out.
Tiptree Capital:
•Maritime transportation income before taxes was $36.5 million in 2022, as compared to $7.7 million in 2021, driven by a rise in dry bulk and tanker charter rates and the gain on sale of three dry bulk vessels.
•Mortgage income before taxes was $3.4 million in 2022, as compared to $25.1 million in 2021, with the decrease driven by declines in origination volumes and gain on sale margins, partially offset by higher servicing fees and positive fair value adjustments on the mortgage servicing portfolio. Return on average equity was 5.6% in 2022.
Key Trends:
Our results of operations are affected by a variety of factors including, but not limited to, general economic conditions and GDP growth, market liquidity and volatility, consumer confidence, U.S. demographics, employment and wage growth, business confidence and investment, inflation, interest rates and spreads, the impact of the regulatory environment, and the other factors set forth in Part I, Item 1A in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021. Generally, our businesses are positively affected by a healthy U.S. consumer, stable to gradually rising interest rates, stable markets and business conditions, and global growth and trade flows. Conversely, rising unemployment, volatile markets, rapidly rising interest rates, inflation, changing regulatory requirements and slowing business conditions can have a material adverse effect on our results of operations or financial condition.
Fortegra generally offers products which have low severity but high frequency loss experiences and are short duration. In addition, the business has historically generated significant fee-based revenues. In general, the types of products Fortegra offers tend to have limited aggregation risk and limited exposure to catastrophic and residual risk. Underwriting risk is mitigated through a combination of reinsurance and retrospective commission structures with agents, distribution partners and/or third-party reinsurers. To mitigate counterparty risk, Fortegra ensures its distribution partners’ captive reinsurance entities are over-collateralized with highly liquid investments, primarily cash and cash equivalents. Insurance results primarily depend on pricing, underwriting, risk retention and the accuracy of reserves, reinsurance arrangements, returns on invested assets, and policy and contract renewals and run-off. Factors affecting these items, including conditions in financial markets, the global economy and the markets in which we operate, fluctuations in exchange rates, interest rates and inflation, including the current period of inflationary pressures, may have a material adverse effect on our results of operations or financial condition. While Fortegra’s insurance operations have historically maintained a relatively stable combined ratio, initiatives to change the business mix along with these economic factors could generate different results than the business has historically experienced. In particular, the current period of rising inflation can have an impact on replacement costs associated with claims from our customers. To the extent we are unable to pass the higher costs of claims through higher premiums, lower underwriting margins could adversely affect our profitability. In addition, the current impact of the strengthening U.S. dollar relative to other currencies, including the British pound and Euro, may have a negative impact on book value between periods, associated with the timing of the recognition of revenues and expenses related to multi-year insurance contracts.
Fortegra’s investment portfolio includes fixed maturity securities, loans, credit investment funds, and equity securities. Many of those investments are held at fair value. During the nine months of 2022, the U.S. fixed income markets have experienced a significant rise in interest rates. Rising interest rates have and could continue to impact the value of Fortegra’s fixed maturity securities, with any unrealized losses recorded in equity, and if realized, could impact our results of operations. Offsetting the impact of a rising interest rate environment, new investments in fixed rate instruments from both maturities and portfolio growth can result in higher interest income on investments over time. The weighted average duration of our fixed income available for sale securities is less than three years. During the nine months of 2022, 2-year treasury yields increased significantly, which resulted in a negative impact on Fortegra’s fixed income portfolio and our book value, as the substantial majority was unrealized. While our asset and liability mix is relatively matched, should we need to liquidate any of these investments before maturity to pay claims, any realized losses could materially negatively impact our results of operations.
Changes in fair value for loans, credit investment funds, and equity securities in Fortegra’s investment portfolio are reported quarterly as unrealized gains or losses in revenues and can be impacted by changes in interest rates, credit risk, 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, had provided tailwinds to the mortgage markets beginning in the second quarter of 2020 and through 2021, which had benefited our mortgage operations and margins. The substantial rise in rates starting in 2022 have resulted in a sharp reversal of those trends, with volumes and margins declining
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significantly. Only partially offsetting the declines in earnings in our origination business is an increase in the fair value of our mortgage servicing portfolio as rising rates slow prepayment speeds, with a resulting increase in servicing income. Continued rising mortgage rates could have a materially negative impact on our mortgage business results of operations, and 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. In addition, authorities that regulate LIBOR have announced plans to phase out LIBOR, such that LIBOR is expected to cease to exist as a benchmark for floating interest rates. Specifically, the ICE Benchmark Administration Limited announced that all LIBOR settings will either cease to be provided by any administrator or no longer be representative; (a) immediately after December 31, 2021, in the case of the 1-week and 2-month U.S. dollar LIBOR settings; and (b) immediately after June 30, 2023, in the case of the remaining U.S. dollar LIBOR settings. The Federal Reserve Board and the Federal Reserve Bank of New York organized the Alternative Reference Rates Committee, which identified the Secured Overnight Financing Rate (SOFR) as its preferred alternative rate for USD-LIBOR. It is unclear whether new methods of calculating LIBOR will be established such that it continues to exist after 2023. Similarly, it is not possible to predict whether LIBOR will continue to be viewed as an acceptable market benchmark, what rate or rates may become acceptable alternatives to LIBOR, or what effect these changes in views or alternatives may have on financial markets for LIBOR-linked financial instruments. Such uncertainty may result in a sudden or prolonged increase or decrease in reported LIBOR and/or its replacement rate. To address the phase out of LIBOR, the agreements for our debt facilities include a mechanism to replace LIBOR with an alternative reference rate under specified circumstances, whether that replacement is SOFR or another benchmark. If future rates based upon the successor reference rate are higher than LIBOR rates due to illiquidity or other factors, our interest expense could increase.
Common shares of Invesque represent a significant asset on our condensed consolidated balance sheets, both as part of insurance investments and separately in Tiptree Capital. Our investment in Invesque, which operates in the seniors housing, skilled nursing and medical office industries, is carried on our condensed consolidated balance sheets at fair value. Any additional declines in the fair value of Invesque’s common stock could continue to have a significant impact on our results of operations and the value of the investment.
The maritime transportation industry is highly competitive and fragmented. Demand for shipping capacity is a function of global economic conditions and the related demand for commodities, production and consumption patterns, and is currently affected by events, such as the war in Ukraine, which interrupt production, trade routes, and consumption. The shipping industry is cyclical with significant volatility in charter hire rates and profitability, which can change rapidly. If rising interest rates and global inflationary factors drive a global recession, both charter rates and utilization rates could be negatively impacted.
RESULTS OF OPERATIONS
The following is a summary of our condensed consolidated financial results for the three and nine months ended September 30, 2022 and 2021. In addition to GAAP results, management uses the Non-GAAP measures Adjusted net income, Adjusted return on average equity, Adjusted EBITDA and book value per share as measurements of operating performance. Management believes these measures provide supplemental information useful to investors as they are frequently used by the financial community to analyze financial performance and comparison among companies. Management uses Adjusted net income and adjusted return on average equity as part of its capital allocation process and to assess comparative returns on invested capital. Adjusted EBITDA is also used in determining incentive compensation for the Company’s executive officers. Adjusted net income represents income before taxes, less provision (benefit) for income taxes, and excluding the after-tax impact of various expenses that we consider to be unique and non-recurring in nature, stock-based compensation, net realized and unrealized gains (losses), and intangibles amortization associated with purchase accounting. The Company defines Adjusted EBITDA as GAAP net income of the Company plus corporate interest expense, plus income taxes, plus depreciation and amortization expense, less the effects of purchase accounting, plus non-cash fair value adjustments, plus significant non-recurring expenses, and plus unrealized gains (losses) on available for sale securities that are reported in other comprehensive income. Adjusted net income, Adjusted return on average equity and Adjusted EBITDA are not measurements of financial performance or liquidity under GAAP and should not be considered as an alternative or substitute for GAAP net income. See “Non-GAAP Reconciliations” for a reconciliation of these measures to their GAAP equivalents.
Selected Key Metrics

($ in thousands, except per share information) | Three Months Ended September 30, |  | Nine Months Ended September 30,
GAAP: | 2022 |  | 2021 |  | 2022 |  | 2021 |  |
Total revenues | $ | 363,478 |  |  | $ | 286,605 |  |  | $ | 1,028,224 |  |  | $ | 880,980 |  |  |
Net income (loss) attributable to common stockholders | $ | 14,223 |  |  | $ | 2,008 |  |  | $ | (9,145) |  |  | $ | 38,558 |  |  |

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($ in thousands, except per share information) | Three Months Ended September 30, |  | Nine Months Ended September 30,
GAAP: | 2022 |  | 2021 |  | 2022 |  | 2021 |  |
Diluted earnings per share | $ | 0.38 |  |  | $ | 0.06 |  |  | $ | (0.26) |  |  | $ | 1.11 |  |  |
Cash dividends paid per common share | $ | 0.04 |  |  | $ | 0.04 |  |  | $ | 0.12 |  |  | $ | 0.12 |  |  |
Return on average equity | 15.4 | % |  | 3.3 | % |  | (0.7) | % |  | 14.8 | % |  |
Non-GAAP: (1) |  |  |  |  |  |  |  |  |
Adjusted net income | $ | 19,395 |  |  | $ | 20,730 |  |  | $ | 48,833 |  |  | $ | 47,010 |  |  |
Adjusted return on average equity | 14.8 | % |  | 20.5 | % |  | 14.2 | % |  | 16.2 | % |  |
Adjusted EBITDA | $ | 8,904 |  |  | $ | 12,356 |  |  | $ | 49,415 |  |  | $ | 84,594 |  |  |
Book value per share | $ | 10.68 |  |  | $ | 11.37 |  |  | $ | 10.68 |  |  | $ | 11.37 |  |  |

(1) See “—Non-GAAP Reconciliations” for a discussion of non-GAAP financial measures.
Revenues
For the three months ended September 30, 2022, revenues were $363.5 million, which increased $76.9 million, or 26.8%, compared to the prior year period. For the nine months ended September 30, 2022, revenues were $1.03 billion, which increased $147.2 million, or 16.7%, compared to the prior year period. The changes for both periods were primarily driven by growth in earned premiums, net, and service and administrative fees in our insurance business, increased revenues from charter hires of our vessels and our mortgage servicing portfolio, partially offset by lower mortgage volumes and margins. The nine month comparison was impacted by net realized and unrealized losses on Invesque and other investments in 2022 compared to gains in the 2021 period.
The table below provides a break down between net realized and unrealized gains and losses from Invesque and other investments, 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.

($ in thousands) | Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021 |  |
Net realized gains - Maritime transportation | $ | 14,100 |  |  | $ | — |  |  | $ | 21,217 |  |  | $ | — |  |  |
Net realized and unrealized gains (losses) - Invesque | $ | (1,698) |  |  | $ | (12,566) |  |  | $ | (15,624) |  |  | $ | 4,246 |  |  |
Net realized and unrealized gains (losses)(1) | $ | (6,007) |  |  | $ | (4,267) |  |  | $ | (12,475) |  |  | $ | 9,345 |  |  |

(1) Excludes Invesque and Mortgage realized and unrealized gains and losses.
Net Income (Loss) Attributable to common stockholders
For the three months ended September 30, 2022, net income attributable to common stockholders was $14.2 million, an increase of $12.2 million, primarily driven by the sale of our two dry bulk vesselsa and growth in Fortegra’s underwriting and fee operations, partially offset by lower mortgage profitability.
For the nine months ended September 30, 2022, net loss attributable to common stockholders was $9.1 million, a decrease of $47.7 million from net income of $38.6 million for the nine months ended September 30, 2021, primarily driven by net realized and unrealized losses on Invesque and other investments in 2022 compared to gains in 2021, lower mortgage origination revenues and the tax impacts of the WP Transaction, partially offset by growth in Fortegra’s underwriting and fee operations, increased revenues from our mortgage servicing portfolio and improvement in dry bulk and tanker charter rates, including the gain on sale of three dry bulk vessels.
Adjusted net income & Adjusted return on average equity - Non-GAAP
Adjusted net income for the three months ended September 30, 2022 was $19.4 million, a decrease of $1.3 million, or 6.4%, from the three months ended September 30, 2021, driven by declines in our mortgage business. For the three months ended September 30, 2022, adjusted return on average equity was 14.8%, as compared to 20.5% at September 30, 2021, with the decrease driven by lower adjusted net income and the higher average equity balances as a result of the WP Transaction.
Adjusted net income for the nine months ended September 30, 2022 was $48.8 million, an increase of $1.8 million, or 3.9%, from the nine months ended September 30, 2021, with the increase driven by improved performance in our insurance and shipping operations, partially offset by declines in our mortgage business. For the nine months ended September 30, 2022,
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adjusted return on average equity was 14.2%, as compared to 16.2% at September 30, 2021, with the decrease primarily driven by the higher average equity balances as a result of the WP Transaction.
Adjusted EBITDA - Non-GAAP
Adjusted EBITDA for the three months ended September 30, 2022 was $8.9 million, a decrease of $3.5 million from 2021 driven by realized and unrealized losses on investments (including impacts to AOCI) and foreign currency translation in 2022.
Adjusted EBITDA for the nine months ended September 30, 2022 was $49.4 million, a decrease of $35.2 million from 2021, driven by realized and unrealized losses in 2022 (including impacts to AOCI) compared to gains in 2021, partially offset by the WP Transaction gain and improved operating performance noted above.
Book Value per share - Non-GAAP
Total stockholders’ equity was $519.6 million as of September 30, 2022 compared to $402.1 million as of September 30, 2021, with the increase driven by the WP Transaction and cash exercise of Tiptree warrants, partially offset by comprehensive losses over the trailing four quarters primarily resulting from unrealized losses on AFS securities and negative impacts from foreign currency translation. In the nine months ended September 30, 2022, Tiptree returned $5.9 million to stockholders through dividends paid and shares repurchased.
Book value per share for the period ended September 30, 2022 was $10.68, a decrease from book value per share of $11.37 as of September 30, 2021. The key drivers of the decrease over the past four quarters were the comprehensive loss per share primarily associated with unrealized losses on AFS securities, dividends paid of $0.16 per share, and issuance of shares as a result of the exercise of warrants and exchanges of vested subsidiary equity awards, partially offset by the net increase to Tiptree Inc. stockholders’ equity from the WP transaction.
Results by Segment
We classify our business into two reportable segments, Insurance and Mortgage, with the remainder of our operations aggregated into Tiptree Capital - Other. Corporate activities include holding company interest expense, corporate employee compensation and benefits, and other expenses, including, but not limited to, public company expenses.
The following tables present the components of Revenue, Income (loss) before taxes and Adjusted net income for the following periods:

($ in thousands) | Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021 |  |
Revenues: |  |  |  |  |  |  |  |  |
Insurance | $ | 327,028 |  |  | $ | 246,706 |  |  | $ | 903,388 |  |  | $ | 721,524 |  |  |
Mortgage | 15,611 |  |  | 27,425 |  |  | 59,201 |  |  | 87,191 |  |  |
Tiptree Capital - other | 20,839 |  |  | 12,474 |  |  | 65,635 |  |  | 72,265 |  |  |
Corporate | — |  |  | — |  |  | — |  |  | — |  |  |
Total revenues | $ | 363,478 |  |  | $ | 286,605 |  |  | $ | 1,028,224 |  |  | $ | 880,980 |  |  |
Income (loss) before taxes: |  |  |  |  |  |  |  |  |
Insurance | $ | 15,304 |  |  | $ | 13,337 |  |  | $ | 39,057 |  |  | $ | 49,569 |  |  |
Mortgage | (940) |  |  | 6,267 |  |  | 3,350 |  |  | 25,119 |  |  |
Tiptree Capital - other | 19,077 |  |  | (4,700) |  |  | 20,468 |  |  | 12,914 |  |  |
Corporate | (8,316) |  |  | (11,320) |  |  | (33,895) |  |  | (33,151) |  |  |
Total income (loss) before taxes | $ | 25,125 |  |  | $ | 3,584 |  |  | $ | 28,980 |  |  | $ | 54,451 |  |  |
Non-GAAP - Adjusted net income (1): |  |  |  |  |  |  |  |  |
Insurance | $ | 19,831 |  |  | $ | 19,533 |  |  | $ | 59,893 |  |  | $ | 46,400 |  |  |
Mortgage | (777) |  |  | 3,961 |  |  | (3,516) |  |  | 15,485 |  |  |
Tiptree Capital - other | 5,656 |  |  | 5,522 |  |  | 13,272 |  |  | 8,153 |  |  |
Corporate | (5,315) |  |  | (8,286) |  |  | (20,816) |  |  | (23,028) |  |  |
Total adjusted net income | $ | 19,395 |  |  | $ | 20,730 |  |  | $ | 48,833 |  |  | $ | 47,010 |  |  |

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(1) See “—Non-GAAP Reconciliations” for a discussion of non-GAAP financial measures.
Insurance
Fortegra is a specialty insurance underwriter and service provider, which focuses on niche programs and fee-oriented services. The combination of specialty insurance underwriting, service contract products, and related service solutions delivered through a vertically integrated business model creates a blend of traditional underwriting revenues, investment income and unregulated fee revenues. The business is an agent-driven model, distributing products through independent insurance agents, consumer finance companies, online retailers, auto dealers, and regional big box retailers to deliver products that complement the consumer transaction. As of September 30, 2022, Fortegra was owned approximately 79.5% by Tiptree Holdings, 17.4% by Warburg and 3.1% 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 and nine months ended September 30, 2022 and 2021.
Results of Operations - Three Months Ended September 30, 2022 compared to 2021

($ in thousands) | Three Months Ended September 30,
| 2022 |  | 2021 |  | Change |  | % Change
Revenues: |  |  |  |  |  |  |
Earned premiums, net | $ | 237,877 |  |  | $ | 175,026 |  |  | $ | 62,851 |  |  | 35.9 | %
Service and administrative fees | 83,423 |  |  | 69,664 |  |  | 13,759 |  |  | 19.8 | %
Ceding commissions | 4,023 |  |  | 2,722 |  |  | 1,301 |  |  | 47.8 | %
Net investment income | 3,632 |  |  | 3,330 |  |  | 302 |  |  | 9.1 | %
Net realized and unrealized gains (losses) | (6,382) |  |  | (7,492) |  |  | 1,110 |  |  | NM%
Other revenue | 4,455 |  |  | 3,456 |  |  | 999 |  |  | 28.9 | %
Total revenues | $ | 327,028 |  |  | $ | 246,706 |  |  | $ | 80,322 |  |  | 32.6 | %
Expenses: |  |  |  |  |  |  |
Net losses and loss adjustment expenses | 97,827 |  |  | $ | 61,252 |  |  | $ | 36,575 |  |  | 59.7 | %
Member benefit claims | 23,415 |  |  | 19,579 |  |  | 3,836 |  |  | 19.6 | %
Commission expense | 137,559 |  |  | 104,392 |  |  | 33,167 |  |  | 31.8 | %
Employee compensation and benefits | 22,071 |  |  | 19,526 |  |  | 2,545 |  |  | 13.0 | %
Interest expense | 5,027 |  |  | 4,268 |  |  | 759 |  |  | 17.8 | %
Depreciation and amortization | 4,742 |  |  | 4,307 |  |  | 435 |  |  | 10.1 | %
Other expenses | 21,083 |  |  | 20,045 |  |  | 1,038 |  |  | 5.2 | %
Total expenses | $ | 311,724 |  |  | $ | 233,369 |  |  | $ | 78,355 |  |  | 33.6 | %
Income (loss) before taxes (1) | $ | 15,304 |  |  | $ | 13,337 |  |  | $ | 1,967 |  |  | 14.7 | %
Key Performance Metrics: |  |  |  |  |  |  |
Gross written premiums and premium equivalents | $ | 761,446 |  |  | $ | 588,063 |  |  | $ | 173,383 |  |  | 29.5 | %
Return on average equity | 14.4 | % |  | 13.7 | % |  |  |  |
Underwriting ratio | 78.4 | % |  | 73.8 | % |  |  |  |
Expense ratio | 13.1 | % |  | 15.8 | % |  |  |  |
Combined ratio | 91.5 | % |  | 89.6 | % |  |  |  |
Non-GAAP Financial Measures (2): |  |  |  |  |  |  |
Adjusted net income | $ | 19,831 |  |  | $ | 19,533 |  |  | $ | 298 |  |  | 1.5 | %
Adjusted return on average equity | 24.8 | % |  | 26.8 | % |  |  |  |

(1) Net income was $11,539 for the three months ended September 30, 2022 compared to $9,943 for the three months ended September 30, 2021.
(2) See “—Non-GAAP Reconciliations” for a discussion of non-GAAP financial measures.
Revenues
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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.
Net Realized and Unrealized Gains (Losses) on investments are a function of the difference between the amount received by us on the sale of a security and the security’s cost-basis, as well as any “other-than-temporary” impairments and allowances for credit losses which are recognized in earnings. In addition, equity securities are carried at fair value with unrealized gains and losses included in this line.
Revenues - Three Months Ended September 30, 2022 compared to 2021
For the three months ended September 30, 2022, total revenues increased 32.6%, to $327.0 million, as compared to $246.7 million for the three months ended September 30, 2021. Earned premiums, net of $237.9 million increased $62.9 million, or 35.9%, driven by growth in specialty admitted and E&S insurance lines. Service and administrative fees of $83.4 million increased by 19.8% driven by growth in warranty and consumer goods service contract revenues. Ceding commissions of $4.0 million increased by $1.3 million, or 47.8%, in line with growth in ceded premiums. Other revenues increased by $1.0 million, or 28.9%, driven by growth in premium finance product offerings.
For the three months ended September 30, 2022, 28.1% of revenues were derived from fees that were not solely dependent upon the underwriting performance of Fortegra’s insurance products, resulting in more diversified earnings. For the three months ended September 30, 2022, 77.6% of fee-based revenues were generated in non-regulated service companies, with the remainder in regulated insurance companies.
For the three months ended September 30, 2022, net investment income was $3.6 million as compared to $3.3 million in the prior year period, primarily driven by growth in investments. Net realized and unrealized losses were $6.4 million, an improvement of $1.1 million, as compared to net realized and unrealized losses of $7.5 million in the prior year period, primarily driven by the change in fair value of certain equity and other investments carried at fair value.
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. Loss occurrences in insurance products are characterized by low severity and high frequency. Factors affecting loss frequency and loss severity include the volume of underwritten contracts, changes in claims reporting patterns, claims settlement patterns, judicial decisions, economic conditions, morbidity patterns and the attitudes of claimants towards settlements, and original pricing of the product for purposes of the loss ratio in relation to loss emergence over time. Losses and loss adjustment expenses are based on an actuarial analysis of the estimated losses, including losses incurred during the period and changes in estimates from prior periods.
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Member Benefit Claims 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.
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 September 30, 2022 compared to 2021
For the three months ended September 30, 2022, net losses and loss adjustment expenses were $97.8 million, member benefit claims were $23.4 million and commission expense was $137.6 million, as compared to $61.3 million, $19.6 million and $104.4 million, respectively, for the three months ended September 30, 2021. The increase in net losses and loss adjustment expenses of $36.6 million, or 59.7%, was driven by growth in U.S. and European Insurance lines and the shift in business mix toward commercial lines, which tend to have higher loss ratios and lower commission and expense ratios. The increase in member benefit claims of $3.8 million, or 19.6%, was driven by growth in vehicle service contracts. Commission expense increased by $33.2 million, or 31.8%, generally in line with the growth in earned premiums, net and service and administrative fees.
For the three months ended September 30, 2022, employee compensation and benefits were $22.1 million and other expenses were $21.1 million, as compared to $19.5 million and $20.0 million, respectively, for the three months ended September 30, 2021. Employee compensation and benefits increased by $2.5 million, or 13.0%, driven by investments in human capital associated with growth in admitted, E&S and warranty lines. Other expenses increased by $1.0 million, or 5.2%, driven primarily by premium taxes.
For the three months ended September 30, 2022, interest expense was $5.0 million as compared to $4.3 million for the three months ended September 30, 2021. The increase in interest expense of $0.8 million, or 17.8%, 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 September 30, 2022, depreciation and amortization expense was $4.7 million, including $4.1 million of intangible amortization related to purchase accounting associated with the acquisitions of Fortegra, Smart AutoCare, Sky Auto and ITC, as compared to $4.3 million, including $3.8 million of intangible amortization from purchase accounting in 2021.
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Results of Operations - Nine Months Ended September 30, 2022 compared to 2021

($ in thousands) | Nine Months Ended September 30,
| 2022 |  | 2021 |  | Change |  | % Change
Revenues: |  |  |  |  |  |  |
Earned premiums, net | $ | 662,234 |  |  | $ | 498,903 |  |  | $ | 163,331 |  |  | 32.7 | %
Service and administrative fees | 232,883 |  |  | 191,414 |  |  | 41,469 |  |  | 21.7 | %
Ceding commissions | 9,886 |  |  | 8,827 |  |  | 1,059 |  |  | 12.0 | %
Net investment income | 10,164 |  |  | 9,331 |  |  | 833 |  |  | 8.9 | %
Net realized and unrealized gains (losses) | (23,151) |  |  | 5,004 |  |  | (28,155) |  |  | NM%
Other revenue | 11,372 |  |  | 8,045 |  |  | 3,327 |  |  | 41.4 | %
Total revenues | $ | 903,388 |  |  | $ | 721,524 |  |  | $ | 181,864 |  |  | 25.2 | %
Expenses: |  |  |  |  |  |  |
Net losses and loss adjustment expenses | $ | 264,056 |  |  | $ | 181,244 |  |  | $ | 82,812 |  |  | 45.7 | %
Member benefit claims | 66,297 |  |  | 55,954 |  |  | 10,343 |  |  | 18.5 | %
Commission expense | 382,435 |  |  | 292,580 |  |  | 89,855 |  |  | 30.7 | %
Employee compensation and benefits | 64,159 |  |  | 57,007 |  |  | 7,152 |  |  | 12.5 | %
Interest expense | 15,166 |  |  | 13,097 |  |  | 2,069 |  |  | 15.8 | %
Depreciation and amortization | 13,697 |  |  | 12,905 |  |  | 792 |  |  | 6.1 | %
Other expenses | 58,521 |  |  | 59,168 |  |  | (647) |  |  | (1.1) | %
Total expenses | $ | 864,331 |  |  | $ | 671,955 |  |  | $ | 192,376 |  |  | 28.6 | %
Income (loss) before taxes (1) | $ | 39,057 |  |  | $ | 49,569 |  |  | $ | (10,512) |  |  | NM%
Key Performance Metrics: |  |  |  |  |  |  |
Gross written premiums and premium equivalents | $ | 1,956,998 |  |  | $ | 1,618,076 |  |  | $ | 338,922 |  |  | 20.9 | %
Return on average equity | 12.1 | % |  | 17.3 | % |  |  |  |
Underwriting ratio | 77.8 | % |  | 74.9 | % |  |  |  |
Expense ratio | 13.2 | % |  | 16.1 | % |  |  |  |
Combined ratio | 91.0 | % |  | 91.0 | % |  |  |  |
Non-GAAP Financial Measures (2): |  |  |  |  |  |  |
Adjusted net income | $ | 59,893 |  |  | $ | 46,400 |  |  | $ | 13,493 |  |  | 29.1 | %
Adjusted return on average equity | 25.8 | % |  | 20.9 | % |  |  |  |

(1) Net income was $27,958 for the nine months ended September 30, 2022 compared to $38,412 for the nine months ended September 30, 2021.
(2) See “—Non-GAAP Reconciliations” for a discussion of non-GAAP financial measures.
Revenues - Nine Months Ended September 30, 2022 compared to 2021
For the nine months ended September 30, 2022, total revenues increased 25.2%, to $903.4 million, as compared to $721.5 million for the nine months ended September 30, 2021. Earned premiums, net of $662.2 million increased $163.3 million, or 32.7%, driven by growth in admitted and E&S commercial lines. Service and administrative fees of $232.9 million increased by 21.7% driven by growth in warranty and consumer goods service contract revenues. Ceding commissions of $9.9 million increased by $1.1 million, or 12.0%, driven by higher ceding fees. Other revenues increased by $3.3 million, or 41.4%, driven by growth in premium finance product offerings.
For the nine months ended September 30, 2022, 28.1% of revenues were derived from fees that were not solely dependent upon the underwriting performance of Fortegra’s insurance products, resulting in more diversified earnings. For the nine months ended September 30, 2022, 78.6% of fee-based revenues were generated in non-regulated service companies, with the remainder in regulated insurance companies.
For the nine months ended September 30, 2022, net investment income was $10.2 million as compared to $9.3 million in the prior year period, primarily driven by growth in investments. Net realized and unrealized losses were $23.2 million, compared to net realized and unrealized gains of $5.0 million in the prior year period, primarily driven by the change in fair value of equity securities and other investments carried at fair value.
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Expenses - Nine Months Ended September 30, 2022 compared to 2021
For the nine months ended September 30, 2022, net losses and loss adjustment expenses were $264.1 million, member benefit claims were $66.3 million and commission expense was $382.4 million, as compared to $181.2 million, $56.0 million and $292.6 million, respectively, for the nine months ended September 30, 2021. The increase in net losses and loss adjustment expenses of $82.8 million, or 45.7%, was driven by growth in U.S. and European Insurance lines and the shift in business mix toward commercial lines, which tend to have a higher loss ratios and lower commission ratios. During the nine months ended September 30, 2022, the Company experienced a decrease in prior year development of $2.2 million primarily as a result of lower than expected claim severity in its commercial lines of business. In the nine months ended September 30, 2021 the Company experienced an increase in prior year development of $3.9 million primarily driven by 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 $10.3 million, or 18.5%, was driven by growth in vehicle service contracts. Commission expense increased by $89.9 million, or 30.7%, in line with the growth in earned premiums, net and service and administrative fees.
For the nine months ended September 30, 2022, employee compensation and benefits were $64.2 million and other expenses were $58.5 million, as compared to $57.0 million and $59.2 million, respectively, for the nine months ended September 30, 2021. Employee compensation and benefits increased by $7.2 million, or 12.5%, driven by investments in human capital associated with growth in admitted, E&S and warranty lines. Other expenses decreased by $0.6 million, or 1.1%, driven primarily by the deferral of current and certain prior year marketing and advertising costs aligned with the deferral of revenues from Sky Auto, partially offset by increases in premium taxes, which grew in line with earned premiums.
For the nine months ended September 30, 2022, interest expense was $15.2 million as compared to $13.1 million for the nine months ended September 30, 2021. The increase in interest expense of $2.1 million, or 15.8%, was primarily driven by increased asset based debt for premium finance lines and the rise in short-term interest rates.
For the nine months ended September 30, 2022, depreciation and amortization expense was $13.7 million, including $12.1 million of intangible amortization related to purchase accounting associated with the acquisitions of Fortegra, Smart AutoCare, Sky Auto and ITC, as compared to $12.9 million, including $11.5 million of intangible amortization from purchase accounting in 2021.

Key Performance Metrics
We discuss certain key performance metrics, described below, which provide useful information about our business and the operational factors underlying its financial performance.
Gross Written Premiums and Premium Equivalents
Gross written premiums and premium equivalents represent total gross written premiums from insurance policies and warranty service contracts issued, as well as premium finance volumes during a reporting period. They represent the volume of insurance policies written or assumed and warranty service contracts issued during a specific period of time without reduction for policy acquisition costs, reinsurance costs or other deductions. Gross written premiums is a volume measure commonly used in the insurance industry to compare sales performance by period. Premium equivalents are used to compare sales performance of warranty service and administrative contract volumes to gross written premiums. Investors also use these measures to compare sales growth among comparable companies, while management uses these measures to evaluate the relative performance of various sales channels.
The below table shows gross written premiums and premium equivalents by business mix for the three and nine months ended September 30, 2022 and 2021.

($ in thousands) | Three Months Ended September 30, |  | Nine Months Ended September 30, |
| 2022 |  | 2021 |  | 2022 |  | 2021 |
U.S. Insurance | $ | 534,272 |  |  | $ | 376,437 |  |  | $ | 1,317,662 |  |  | $ | 1,065,735 |  |
U.S. Warranty Solutions | 196,302 |  |  | 181,506 |  |  | 541,815 |  |  | 482,454 |  |
Europe Warranty Solutions | 30,872 |  |  | 30,120 |  |  | 97,521 |  |  | 69,887 |  |
Total | $ | 761,446 |  |  | $ | 588,063 |  |  | $ | 1,956,998 |  |  | $ | 1,618,076 |  |

Total gross written premiums and premium equivalents for the three months ended September 30, 2022 were $761.4 million, representing an increase of $173.4 million, or 29.5%. Total gross written premiums and premium equivalents for the nine months ended September 30, 2022 were $1,957.0 million, representing an increase of $338.9 million, or 20.9%. The increase
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in both periods 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 September 30, 2022, U.S. Insurance increased by $157.8 million, or 41.9%, driven by growth in specialty commercial insurance lines. For the three months ended September 30, 2022, U.S. Warranty Solutions increased by $14.8 million, or 8.2%, driven by growth in auto and roadside assistance service contracts. Europe Warranty Solutions increased by $0.8 million, or 2.5%, driven by growth in auto warranty lines.
For the nine months ended September 30, 2022, U.S. Insurance increased by $251.9 million, or 23.6%, driven by growth in commercial, E&S, and warranty insurance lines. For the nine months ended September 30, 2022, U.S. Warranty Solutions increased by $59.4 million, or 12.3%, driven by growth in auto and roadside assistance service contracts. Europe Warranty Solutions increased by $27.6 million, or 39.5%, 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 September 30, 2022, has resulted in an increase of $413.8 million, or 26.5%, in unearned premiums and deferred revenue on the condensed consolidated balance sheets as compared to September 30, 2021. As of September 30, 2022, unearned premiums and deferred revenues were $1,978.2 million, as compared to $1,564.4 million as of September 30, 2021.
Combined Ratio, Underwriting Ratio and Expense Ratio
Combined ratio is an operating measure, which equals the sum of the underwriting ratio and the expense ratio. Underwriting ratio is the ratio of the GAAP line items net losses and loss adjustment expenses, member benefit claims and commission expense to earned premiums, net, service and administrative fees and ceding commissions and other revenue. Expense ratio is the ratio of the GAAP line items employee compensation and benefits and other underwriting, general and administrative expenses to earned premiums, net, service and administrative fees and ceding commissions and other revenue.
A combined ratio under 100% generally indicates an underwriting profit. A combined ratio over 100% generally indicates an underwriting loss. These ratios are commonly used in the insurance industry as a measure of underwriting profitability, excluding earnings on the insurance portfolio. Investors commonly use these measures to compare underwriting performance among companies separate from the performance of the investment portfolio. Management uses these measures to compare the profitability of various products underwritten as well as profitability among programs between various agents and sales channels.
The combined ratio was 91.5% for the three months ended September 30, 2022, which consisted of an underwriting ratio of 78.4% and an expense ratio of 13.1%, as compared to 89.6%, 73.8% and 15.8%, respectively, for the three months ended September 30, 2021. The combined ratio for the three month period increased by 1.9%, driven by an increase in the underwriting ratio, offset by a decrease in the expense ratio, both related to changes in product mix toward lines with higher loss ratios and lower expense ratios.
The combined ratio was 91.0% for the nine months ended September 30, 2022, which consisted of an underwriting ratio of 77.8% and an expense ratio of 13.2%, as compared to 91.0%, 74.9% and 16.1%, respectively, for the nine months ended September 30, 2021. The combined ratio remained consistent for the nine month period, driven by the scalability of Fortegra’s technology and shared service platform, which improved the expense ratio, while the underwriting ratio increased due to a shift in business 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 14.4% for the three months ended September 30, 2022, as compared to 13.7% 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.
Return on average equity was 12.1% for the nine months ended September 30, 2022, as compared to 17.3% for the nine months ended September 30, 2021. The decrease in net income and annualized return on average equity was driven by net realized and unrealized losses in the 2022 period compared to net realized and unrealized gains in the 2021 periods as well as higher average equity balances, partially offset by revenue growth and an improved combined ratio.
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Non-GAAP Financial Measures
Underwriting and Fee Revenues and Underwriting and Fee Margin - Non-GAAP(1)
In order to better explain to investors the underwriting performance of the Company’s programs and the respective retentions between the Company and its agents and reinsurance partners, we use the non-GAAP metrics – underwriting and fee revenues and underwriting and fee margin. Underwritten exposures are managed using both reinsurance (e.g., quota share and excess of loss) and retrospective commission agreements with Fortegra’s agents (e.g., commissions paid are adjusted based on the actual underlying losses incurred). Period-over-period comparisons of revenues and expenses are often impacted by the agents and their PORC’s choice as to their risk retention appetite, specifically earned premiums, net, service and administration fees, ceding commissions, and other revenue, all components of revenue, and losses and loss adjustment expenses, member benefit claims, and commissions paid to Fortegra’s agents and reinsurers. Generally, when losses are incurred, the risk which is retained by Fortegra’s agents and reinsurers is reflected in a reduction in commissions paid.
Underwriting and fee revenues represents total revenues excluding net investment income, net realized and unrealized gains (losses). See “—Non-GAAP Reconciliations” for a reconciliation of underwriting and fee revenues to total revenues in accordance with GAAP.
Underwriting and fee margin represents income before taxes excluding net investment income, net realized and unrealized gains (losses), employee compensation and benefits, other expenses, interest expense and depreciation and amortization. Fortegra’s products and services are delivered on a vertically integrated basis to its agents. As such, underwriting and fee margin exclude general and administrative expenses, interest income, depreciation and amortization and other corporate expenses, including income taxes, as these corporate expenses support the vertically integrated delivery model and are not specifically supporting any individual business line. See “—Non-GAAP Reconciliations” for a reconciliation of underwriting and fee margin to total revenues in accordance with GAAP.
The below tables show underwriting and fee revenues and underwriting and fee margin by business mix for the three and nine months ended September 30, 2022 and 2021.

| Three Months Ended September 30,
($ in thousands) | Underwriting and Fee Revenues (1) |  | Underwriting and Fee Margin (1)
| 2022 |  | 2021 |  |  |  | 2022 |  | 2021 |  |
U.S. Insurance | $ | 243,564 |  |  | $ | 174,995 |  |  |  |  | $ | 42,981 |  |  | $ | 37,005 |  |  |
U.S. Warranty Solutions | 71,557 |  |  | 61,342 |  |  |  |  | 22,542 |  |  | 23,455 |  |  |
Europe Warranty Solutions | 14,657 |  |  | 14,531 |  |  |  |  | 5,454 |  |  | 5,185 |  |  |
Total | $ | 329,778 |  |  | $ | 250,868 |  |  |  |  | $ | 70,977 |  |  | $ | 65,645 |  |  |

(1) See “—Non-GAAP Reconciliations” for a discussion of non-GAAP financial measures.
Underwriting and fee revenues were $329.8 million for the three months ended September 30, 2022 as compared to $250.9 million for the three months ended September 30, 2021. Total underwriting and fee revenues increased $78.9 million, or 31.5%, driven by growth in U.S. Insurance and U.S. Warranty Solutions. The increase in U.S. Insurance was $68.6 million, or 39.2%, driven by growth in specialty commercial insurance lines. The increase in U.S. Warranty Solutions was $10.2 million, or 16.7%, driven by growth in auto, roadside assistance, and premium finance offerings. Europe Warranty Solutions increased by $0.1 million, or 0.9%.
Underwriting and fee margin was $71.0 million for the three months ended September 30, 2022 as compared to $65.6 million for the three months ended September 30, 2021. Total underwriting and fee margin increased $5.3 million, or 8.1%, driven by growth in U.S. Insurance. U.S. Insurance grew by $6.0 million, or 16.1%, driven by revenue growth in admitted and E&S lines. U.S. Warranty Solutions decreased by $0.9 million, or 3.9%, primarily driven by the deferral of revenues associated with contracts acquired by Sky Auto. This current period revenue deferral for Sky Auto was offset by the deferral of direct marketing costs in other expenses and therefore had minimal impact on the combined ratio or income before taxes. Europe Warranty Solutions increased by $0.3 million, or 5.2%, driven by growth in auto and consumer goods service contracts.
.

| Nine Months Ended September 30,
($ in thousands) | Underwriting and Fee Revenues (1) |  | Underwriting and Fee Margin (1)
| 2022 |  | 2021 |  |  |  | 2022 |  | 2021 |  |
U.S. Insurance | $ | 673,009 |  |  | $ | 504,038 |  |  |  |  | $ | 123,546 |  |  | $ | 101,812 |  |  |
U.S. Warranty Solutions | 200,045 |  |  | 168,476 |  |  |  |  | 64,197 |  |  | 65,453 |  |  |
Europe Warranty Solutions | 43,321 |  |  | 34,675 |  |  |  |  | 15,844 |  |  | 10,146 |  |  |
Total | $ | 916,375 |  |  | $ | 707,189 |  |  |  |  | $ | 203,587 |  |  | $ | 177,411 |  |  |

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(1) See “—Non-GAAP Reconciliations” for a discussion of non-GAAP financial measures.
Underwriting and fee revenues were $916.4 million for the nine months ended September 30, 2022 as compared to $707.2 million for the nine months ended September 30, 2021. Total underwriting and fee revenues increased $209.2 million, or 29.6%, driven by growth in all business lines. The increase in U.S. Insurance was $169.0 million, or 33.5%, driven by growth in commercial, E&S, and credit insurance lines. The increase in U.S. Warranty Solutions was $31.6 million, or 18.7%, driven by growth in auto, roadside assistance, and premium finance offerings. Europe Warranty Solutions increased by $8.6 million, or 24.9%, driven by growth in auto and consumer goods service contracts.
Underwriting and fee margin was $203.6 million for the nine months ended September 30, 2022 as compared to $177.4 million for the nine months ended September 30, 2021. Total underwriting and fee margin increased $26.2 million, or 14.8%, driven by growth in U.S. Insurance and Europe Warranty Solutions. U.S. Insurance grew by $21.7 million, or 21.3%, from growth in specialty admitted and E&S lines. U.S. Warranty Solutions decreased by $1.3 million, or 1.9%, primarily driven by the deferral of revenues associated with contracts acquired by Sky Auto. This current period revenue deferral for Sky Auto was offset by the deferral of direct marketing costs in other expenses and therefore had minimal impact on the combined ratio or income before taxes. Europe Warranty Solutions increased by $5.7 million, or 56.2%, 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 September 30, 2022, adjusted net income and adjusted return on average equity were $19.8 million and 24.8%, respectively, as compared to $19.5 million and 26.8%, respectively, for the three months ended September 30, 2021. For the nine months ended September 30, 2022, adjusted net income and adjusted return on average equity were $59.9 million and 25.8%, respectively, as compared to $46.4 million and 20.9%, respectively, for the nine months ended September 30, 2021. The improvement of adjusted net income in both periods was driven by the growth in underwriting and fee revenues.
Net Investment Income and Net Realized and Unrealized Gains (Losses) on Investments
The insurance investment portfolio includes investments held in statutory insurance companies and in unregulated entities. The portfolios held in statutory insurance companies are subject to different regulatory considerations, including with respect to types of assets, concentration limits, affiliate transactions and the use of leverage. Fortegra’s investment strategy is designed to achieve attractive risk-adjusted returns across select asset classes, sectors and geographies while maintaining adequate liquidity to meet claims payment obligations. As such, volatility from realized and unrealized gains and losses may impact period-over-period performance. Unrealized gains and losses on equity securities and loans held at fair value impact current period net income, while unrealized gains and losses on AFS securities impact AOCI.
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 September 30, 2022, net investment income was $3.6 million as compared to $3.3 million in the prior year period, driven by growth in investments. Net realized and unrealized losses were $6.4 million, compared to losses of $7.5 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 losses on AFS securities impacting OCI for the three months ended September 30, 2022 were $18.1 million, driven by the rise in interest rates and corresponding impact to the fair value of investments in U.S. Treasuries, obligations of U.S. government agencies, corporate securities, obligations of state and political subdivisions, and asset-backed securities.
For the nine months ended September 30, 2022, net investment income was $10.2 million as compared to $9.3 million in the prior year period, driven by growth in investments. Net realized and unrealized losses were $23.2 million, compared to gains
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of $5.0 million in the prior year period, driven by realized and unrealized losses on certain equity securities and other investments, including fixed income securities carried at fair value, in the 2022 period as compared to gains in the 2021 period. Unrealized losses on AFS securities impacting OCI for the nine months ended September 30, 2022 were $56.5 million, driven by the rise in interest rates and corresponding impact to the fair value of investments in U.S. Treasuries, obligations of U.S. government agencies, corporate securities, obligations of state and political subdivisions, and asset-backed securities.
Tiptree Capital
Tiptree Capital consists of our Mortgage segment, which includes the operating results of Reliance, our mortgage business, and Tiptree Capital - Other, which consists of our other non-insurance operating businesses and investments. As of September 30, 2022, Tiptree Capital - Other includes our Invesque shares and maritime transportation operations (including two product tankers).
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 September 30, 2022.
The following tables present the Mortgage segment results for the following periods:
Results of Operations

($ in thousands) | Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021 |  |
Revenues: |  |  |  |  |  |  |  |  |
Net realized and unrealized gains (losses) | $ | 10,847 |  |  | $ | 22,651 |  |  | $ | 44,711 |  |  | $ | 73,454 |  |  |
Other revenue | 4,764 |  |  | 4,774 |  |  | 14,490 |  |  | 13,737 |  |  |
Total revenues | $ | 15,611 |  |  | $ | 27,425 |  |  | $ | 59,201 |  |  | $ | 87,191 |  |  |
Expenses: |  |  |  |  |  |  |  |  |
Employee compensation and benefits | $ | 9,517 |  |  | $ | 14,382 |  |  | $ | 35,137 |  |  | $ | 42,849 |  |  |
Interest expense | 475 |  |  | 276 |  |  | 1,116 |  |  | 837 |  |  |
Depreciation and amortization | 190 |  |  | 218 |  |  | 618 |  |  | 670 |  |  |
Other expenses | 6,369 |  |  | 6,282 |  |  | 18,980 |  |  | 17,716 |  |  |
Total expenses | $ | 16,551 |  |  | $ | 21,158 |  |  | $ | 55,851 |  |  | $ | 62,072 |  |  |
Income (loss) before taxes | $ | (940) |  |  | $ | 6,267 |  |  | $ | 3,350 |  |  | $ | 25,119 |  |  |
Key Performance Metrics: |  |  |  |  |  |  |  |  |
Origination volumes | $ | 279,793 |  |  | $ | 384,958 |  |  | $ | 940,958 |  |  | $ | 1,180,772 |  |  |
Gain on sale margins | 4.9 | % |  | 5.5 | % |  | 4.6 | % |  | 5.7 | % |  |
Return on average equity | (5.9) | % |  | 36.5 | % |  | 5.6 | % |  | 44.4 | % |  |
Non-GAAP Financial Measures (1): |  |  |  |  |  |  |  |  |
Adjusted net income | $ | (777) |  |  | $ | 3,961 |  |  | $ | (3,516) |  |  | $ | 15,485 |  |  |
Adjusted return on average equity | (5.4) | % |  | 23.0 | % |  | (8.0) | % |  | 33.3 | % |  |

(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 - Three and Nine Months Ended September 30, 2022 compared to 2021
For the three months ended September 30, 2022, $279.8 million of loans were funded, compared to $385.0 million for 2021, a decrease of $105.2 million, or 27.3%. Gain on sale margins decreased to 4.9% for the three months ended September 30, 2022, down approximately 60 basis points from 5.5% for the three months ended September 30, 2021. For the nine months ended September 30, 2022, $941.0 million of loans were funded, compared to $1.18 billion for 2021, a decrease of $239.8 million, or 20.3%. Origination volumes for both periods in 2022 declined given the rise in mortgage interest rates. Gain on sale margins decreased to 4.6% for the nine months ended September 30, 2022, down approximately 110 basis points from 5.7% for the nine months ended September 30, 2021.
Net realized and unrealized gains for the three months ended September 30, 2022 were $10.8 million, compared to $22.7 million for 2021, a decrease of $11.8 million or 52.1%. The primary driver of decreased gain on sale revenues was the decline in volumes and gain on sale margins, partially offset by positive fair value adjustments in mortgage servicing rights of $82 thousand as prepayment speeds declined from December 31, 2021. Net realized and unrealized gains for the nine months ended September 30, 2022 were $44.7 million, compared to $73.5 million for 2021, a decrease of $28.7 million or 39.1%. The primary driver of decreased gain on sale revenues was the decline in volumes and gain on sale margins, partially offset by positive fair value adjustments in mortgage servicing rights of $8.0 million as prepayment speeds declined from December 31, 2021.
Other revenue for the three months ended September 30, 2022 remained flat at $4.8 million. Other revenue for the nine months ended September 30, 2022 was $14.5 million, compared to $13.7 million for 2021, an increase of $0.8 million, or 5.5%. The increase for the nine month period is driven primarily by higher servicing fees from an increase in loans serviced. As of September 30, 2022, the mortgage servicing asset was valued at $41.9 million, an increase from $29.8 million as of December 31, 2021.
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 expense 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 - Three and Nine Months Ended September 30, 2022 compared to 2021
For the three months ended September 30, 2022, employee compensation and benefits were $9.5 million, compared to $14.4 million in 2021, a decrease of $4.9 million or 33.8%. For the nine months ended September 30, 2022, employee compensation and benefits were $35.1 million, compared to $42.8 million in 2021, a decrease of $7.7 million or 18.0%. The decrease in both periods was driven primarily by reduced commissions on lower origination volumes.
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For the three months ended September 30, 2022 and 2021, interest expense was at $0.5 million, an increase of $0.2 million or 72.1% driven by higher interest rates. For the nine months ended September 30, 2022 and 2021, interest expense was at $1.1 million, an increase of $0.3 million or 33.3% driven by higher interest rates.
For the three months ended September 30, 2022, other expenses were $6.4 million, compared to $6.3 million in 2021, with the $0.1 million increase driven by increased loan origination expenses, including marketing costs. For the nine months ended September 30, 2022, other expenses were $19.0 million, compared to $17.7 million in 2021, with the $1.3 million increase driven by the same factors that impacted the three months.
Income (loss) before taxes
Loss before taxes for the three months ended September 30, 2022 was $0.9 million, compared to $6.3 million of income in 2021. Income before taxes for the nine months ended September 30, 2022 was $3.4 million, compared to $25.1 million in 2021. The decrease in both periods was driven by a decline in volumes and margins, partially offset by higher servicing fees attributable to the larger servicing portfolio, in addition to positive fair value adjustments on the mortgage servicing rights asset, as compared to 2021.
Tiptree Capital - Other
The following tables present a summary of Tiptree Capital - Other results for the following periods:
Results of Operations

| Three Months Ended September 30,
($ in thousands) | Total revenue |  | Income (loss) before taxes
| 2022 |  | 2021 |  |  |  | 2022 |  | 2021 |  |
Senior living (Invesque) | $ | (1,405) |  |  | $ | (10,396) |  |  |  |  | $ | (1,405) |  |  | $ | (10,396) |  |  |
Maritime transportation | 21,928 |  |  | 11,424 |  |  |  |  | 20,124 |  |  | 5,231 |  |  |
Other (1) | 316 |  |  | 11,446 |  |  |  |  | 358 |  |  | 465 |  |  |
Total | $ | 20,839 |  |  | $ | 12,474 |  |  |  |  | $ | 19,077 |  |  | $ | (4,700) |  |  |
| Nine Months Ended September 30,
($ in thousands) | Total revenue |  | Income (loss) before taxes
| 2022 |  | 2021 |  |  |  | 2022 |  | 2021 |  |
Senior living (Invesque) | $ | (12,924) |  |  | $ | 3,512 |  |  |  |  | $ | (12,924) |  |  | $ | 3,512 |  |  |
Maritime transportation | 49,554 |  |  | 25,041 |  |  |  |  | 36,537 |  |  | 7,738 |  |  |
Other (1) | 29,005 |  |  | 43,712 |  |  |  |  | (3,145) |  |  | 1,664 |  |  |
Total | $ | 65,635 |  |  | $ | 72,265 |  |  |  |  | $ | 20,468 |  |  | $ | 12,914 |  |  |

(1) Includes our held for sale mortgage originator (Luxury), asset management, and certain intercompany elimination transactions.
Revenues
Tiptree Capital - Other earns revenues from the following sources: net interest income; revenues on our 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 seaborne vessels and other ancillary assets.
Revenues for the three months ended September 30, 2022 were $20.8 million compared to $12.5 million for 2021. The primary drivers of the increase in revenues were the gain of $14.1 million related to the sale of two dry bulk vessels and increased dry bulk and tanker charter rates earned by the maritime transportation business, partially offset by unrealized losses on our investment in Invesque. Revenues for the nine months ended September 30, 2022 were $65.6 million compared to $72.3 million for 2021 with the decline primarily driven by unrealized losses on our investment in Invesque in the 2022 period compared to gains in the 2021 period and the deconsolidation of Luxury effective July 1, 2022, offset by higher charter rates and gain on sale of three dry bulk vessels in our maritime transportation business.
Income (loss) before taxes
The income before taxes from Tiptree Capital - Other for the three months ended September 30, 2022 was $19.1 million,
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compared to the loss before taxes of $4.7 million in 2021. The income before taxes from Tiptree Capital - Other for the nine months ended September 30, 2022 was $20.5 million, compared to income before taxes of $12.9 million in 2021, with the increase for both periods driven by the same factors that impacted revenues.
Adjusted net income - Non-GAAP(1)

($ in thousands) | Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021 |  |
Senior living (Invesque) | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  |
Maritime transportation | 5,477 |  |  | 5,503 |  |  | 12,949 |  |  | 8,074 |  |  |
Other | 180 |  |  | 19 |  |  | 324 |  |  | 79 |  |  |
Total | $ | 5,657 |  |  | $ | 5,522 |  |  | $ | 13,273 |  |  | $ | 8,153 |  |  |

(1) See “—Non-GAAP Reconciliations” for a discussion of non-GAAP financial measures.
Adjusted net income increased to $13.3 million for the nine months ended September 30, 2022 compared to $8.2 million in 2021. The increase was driven by the improvement in maritime transportation operations.
Corporate
The following table presents a summary of corporate results for the following periods:
Results of Operations

($ in thousands) | Three Months Ended September 30, |  | Nine Months Ended September 30, |  |
| 2022 |  | 2021 |  | 2022 |  | 2021 |  |  |  |
Employee compensation and benefits | $ | 1,880 |  |  | $ | 1,785 |  |  | $ | 5,824 |  |  | $ | 5,621 |  |  |  |  |
Employee incentive compensation expense | 3,032 |  |  | 4,835 |  |  | 12,069 |  |  | 10,760 |  |  |  |  |
Interest expense | — |  |  | 2,553 |  |  | 4,224 |  |  | 7,675 |  |  |  |  |
Depreciation and amortization | 205 |  |  | 203 |  |  | 604 |  |  | 602 |  |  |  |  |
Other expenses | 3,199 |  |  | 1,944 |  |  | 11,174 |  |  | 8,493 |  |  |  |  |
Total expenses | $ | 8,316 |  |  | $ | 11,320 |  |  | $ | 33,895 |  |  | $ | 33,151 |  |  |  |  |

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 $17.9 million for the nine months ended September 30, 2022, compared to $16.4 million for 2021, driven by an increase in performance related employee incentive compensation. Of the incentive compensation expense in the nine months ended September 30, 2022, $5.4 million was stock-based compensation expense primarily related to awards granted in third quarter 2021. Interest expense for the nine months ended September 30, 2022 and 2021 was $4.2 million and $7.7 million, respectively. As of September 30, 2022, the Company had no outstanding borrowings at the holding company, compared to $114.1 million at December 31, 2021. Other expenses of $11.2 million increased by $2.7 million from the nine months ended September 30, 2021, primarily driven by a $2.1 million loss on extinguishment of debt and increased consulting and professional fees.
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Provision for Income Taxes
On June 21, 2022, the WP Transaction was completed, in which Warburg invested $200.0 million in Tiptree’s insurance subsidiary, Fortegra. The WP Transaction, along with Fortegra management’s ownership, reduced Tiptree’s equity ownership in Fortegra below 80% such that, while still consolidated for GAAP financial reporting purposes, Fortegra will no longer be included in the consolidated tax return group with Tiptree. Tiptree has recorded deferred tax liabilities related to the basis difference in Tiptree’s investment in Fortegra as of September 30, 2022. This deferred tax liability represents the tax that would be due, before consideration of loss carryforwards, if Tiptree were to sell any of its Fortegra stock at its carrying value on Tiptree’s balance sheet. The deferred tax liability as of September 30, 2022 relating to the WP Transaction was $38.2 million, of which $14.1 million was recorded directly in Tiptree Inc. stockholders’ equity with respect to the gain component and $24.1 million was recorded as a provision for income taxes in the condensed consolidated statements of operations for the nine months ended September 30, 2022.
The total income tax expense of $5.1 million for the three months ended September 30, 2022 and $0.2 million for the three months ended September 30, 2021 are reflected as components of net income (loss). For the three months ended September 30, 2022, the Company’s effective tax rate was equal to 20.2%. The effective rate for the three months ended September 30, 2022 was slightly lower than the U.S. statutory income tax rate of 21.0%, primarily from the impact of discrete items, partially offset by state taxes. For the three months ended September 30, 2021, the Company’s effective tax rate was equal to 6.6%. The effective rate for the three months ended September 30, 2021 was lower than the U.S. federal statutory income tax rate of 21.0%, primarily from the impact of foreign operations and discrete items, partially offset by state taxes.
The total income tax expense of $31.5 million for the nine months ended September 30, 2022 and $11.4 million for the nine months ended September 30, 2021 are reflected as components of net income (loss). For the nine months ended September 30, 2022, the Company’s effective tax rate was equal to 108.9%. The effective rate for the nine months ended September 30, 2022 was significantly higher than the U.S. statutory income tax rate of 21.0%, primarily from the impact of recording deferred taxes relating to the tax deconsolidation of Fortegra. For the nine months ended September 30, 2021, the Company’s effective tax rate was equal to 21.0%. The effective rate for the nine months ended September 30, 2021 was equal to the U.S. federal statutory income tax rate of 21.0%, due to the impact of state taxes offset by other discrete items.
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 $3,994.1 million as of September 30, 2022, compared to $3,599.1 million as of December 31, 2021. The $394.9 million increase in assets is primarily attributable to the growth in the Insurance segment, proceeds from the WP Transaction and the increase in cash and equivalents from the sale of our dry bulk vessels.
Total stockholders’ equity was $519.6 million as of September 30, 2022, compared to $400.2 million as of December 31, 2021, with the increase primarily driven by the WP Transaction, partially offset by other comprehensive losses on available for sale securities for nine months ended September 30, 2022. As of September 30, 2022, there were 36,247,257 shares of common stock outstanding as compared to 34,124,153 as of December 31, 2021, with the increase driven by the exercise of warrants and the vesting of share-based incentive compensation, partially offset by stock repurchases.
The following table is a summary of certain balance sheet information:

| As of September 30, 2022
|  |  | Tiptree Capital |  |  |  |
($ in thousands) | Insurance |  | Mortgage |  | Other |  | Corporate |  | Total
Total assets | $ | 3,648,191 |  |  | $ | 167,015 |  |  | $ | 73,311 |  |  | $ | 105,567 |  |  | $ | 3,994,084 |
Corporate debt | $ | 160,000 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 160,000 |
Asset based debt | 58,568 |  |  | 55,288 |  |  | — |  |  | — |  |  | 113,856 |
Tiptree Inc. stockholders’ equity | $ | 185,679 |  |  | $ | 55,644 |  |  | $ | 63,668 |  |  | $ | 82,288 |  |  | $ | 387,279 |
Non-controlling interests: |  |  |  |  |  |  |  |  |
Fortegra preferred interests | 77,679 |  |  | — |  |  | — |  |  | — |  |  | $ | 77,679 |
Common interests | 50,795 |  |  | 1,065 |  |  | 2,756 |  |  | — |  |  | 54,616 |
Total stockholders’ equity | $ | 314,153 |  |  | $ | 56,709 |  |  | $ | 66,424 |  |  | $ | 82,288 |  |  | $ | 519,574 |

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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)
The following tables present revenue and expenses by business mix. We generally manage exposure to underwriting risks written by using both reinsurance (e.g., quota share and excess of loss) and retrospective commission agreements with our partners (e.g., commissions paid are adjusted based on the actual underlying losses incurred), which mitigates Fortegra’s risk. Period-over-period comparisons of revenues and expenses are often impacted by the PORCs and distribution partners’ choice as to whether to retain risk, specifically service and administration fees and ceding commissions, both components of revenue, and policy and contract benefits and commissions paid to our partners and reinsurers. Generally, when losses are incurred, the risk which is retained by our partners and reinsurers is reflected in a reduction in commissions paid. In order to better explain to investors the underwriting performance and the respective retentions between the Company and its agents and reinsurance partners, we use the non-GAAP metrics underwriting and fee revenues and underwriting and fee margin.
Underwriting and Fee Revenues — Non-GAAP — We define underwriting and fee revenues as total revenues from the Insurance segment excluding net investment income and net realized and unrealized gains (losses). Underwriting and fee revenues represents revenues generated by underwriting and fee-based operations and allows us to evaluate the Company’s underwriting performance without regard to investment income. We use this metric as we believe it gives our management and other users of our financial information useful insight into our underlying business performance. Underwriting and fee revenues should not be viewed as a substitute for total revenues calculated in accordance with GAAP, and other companies may define underwriting and fee revenues differently.

($ in thousands) | Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021 |  |
Total revenues | $ | 327,028 |  |  | $ | 246,706 |  |  | $ | 903,388 |  |  | $ | 721,524 |  |  |
Less: Net investment income | (3,632) |  |  | (3,330) |  |  | (10,164) |  |  | (9,331) |  |  |
Less: Net realized and unrealized gains (losses) | 6,382 |  |  | 7,492 |  |  | 23,151 |  |  | (5,004) |  |  |
Underwriting and fee revenues | $ | 329,778 |  |  | $ | 250,868 |  |  | $ | 916,375 |  |  | $ | 707,189 |  |  |

Underwriting and Fee Margin — Non-GAAP — We define underwriting and fee margin as income before taxes from the Insurance segment, excluding net investment income, net realized and unrealized gains (losses), employee compensation and benefits, other expenses, interest expense and depreciation and amortization. Underwriting and fee margin represents the underwriting performance of our underwriting and fee-based lines. As such, underwriting and fee margin excludes general administrative expenses, interest expense, depreciation and amortization and other corporate expenses as those expenses support the vertically integrated business model and not any individual component of the Company’s business mix. We use this metric as we believe it gives our management and other users of our financial information useful insight into the specific performance of our underlying business mix. Underwriting and fee margin should not be viewed as a substitute for income before taxes calculated in accordance with GAAP, and other companies may define underwriting and fee margin differently.
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($ in thousands) | Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021 |  |
Income (loss) before income taxes | $ | 15,304 |  |  | $ | 13,337 |  |  | $ | 39,057 |  |  | $ | 49,569 |  |  |
Less: Net investment income | (3,632) |  |  | (3,330) |  |  | (10,164) |  |  | (9,331) |  |  |
Less: Net realized and unrealized gains (losses) | 6,382 |  |  | 7,492 |  |  | 23,151 |  |  | (5,004) |  |  |
Plus: Depreciation and amortization | 4,742 |  |  | 4,307 |  |  | 13,697 |  |  | 12,905 |  |  |
Plus: Interest expense | 5,027 |  |  | 4,268 |  |  | 15,166 |  |  | 13,097 |  |  |
Plus: Employee compensation and benefits | 22,071 |  |  | 19,526 |  |  | 64,159 |  |  | 57,007 |  |  |
Plus: Other expenses | 21,083 |  |  | 20,045 |  |  | 58,521 |  |  | 59,168 |  |  |
Underwriting and fee margin | $ | 70,977 |  |  | $ | 65,645 |  |  | $ | 203,587 |  |  | $ | 177,411 |  |  |

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 September 30, 2022
|  |  | Tiptree Capital |  |  |  |
($ in thousands) | Insurance |  | Mortgage |  | Other |  | Corporate |  | Total
Income (loss) before taxes | $ | 15,304 |  |  | $ | (940) |  |  | $ | 19,077 |  |  | $ | (8,316) |  |  | $ | 25,125 |
Less: Income tax (benefit) expense | (3,765) |  |  | 92 |  |  | (3,963) |  |  | 2,568 |  |  | (5,068) |
Less: Net realized and unrealized gains (losses) | 6,382 |  |  | (82) |  |  | (12,694) |  |  | — |  |  | (6,394) |
Plus: Intangibles amortization (1) | 4,115 |  |  | — |  |  | — |  |  | — |  |  | 4,115 |
Plus: Stock-based compensation expense | 33 |  |  | — |  |  | 75 |  |  | 1,588 |  |  | 1,696 |
Plus: Non-recurring expenses | 89 |  |  | — |  |  | 53 |  |  | — |  |  | 142 |
Plus: Non-cash fair value adjustments | — |  |  | — |  |  | (130) |  |  | — |  |  | (130) |
Less: Tax on adjustments (2) | (2,327) |  |  | 153 |  |  | 3,238 |  |  | (1,155) |  |  | (91) |
Adjusted net income | $ | 19,831 |  |  | $ | (777) |  |  | $ | 5,656 |  |  | $ | (5,315) |  |  | $ | 19,395 |
Adjusted net income | $ | 19,831 |  |  | $ | (777) |  |  | $ | 5,656 |  |  | $ | (5,315) |  |  | $ | 19,395 |
Average stockholders’ equity | $ | 319,703 |  |  | $ | 57,133 |  |  | $ | 84,445 |  |  | $ | 61,178 |  |  | $ | 522,459 |
Adjusted return on average equity | 24.8 | % |  | (5.4) | % |  | 26.8 | % |  | NM% |  | 14.8 | %

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| Three Months Ended September 30, 2021
|  |  | Tiptree Capital |  |  |  |
($ in thousands) | Insurance |  | Mortgage |  | Other |  | Corporate |  | Total
Income (loss) before taxes | $ | 13,337 |  |  | $ | 6,267 |  |  | $ | (4,700) |  |  | $ | (11,320) |  |  | $ | 3,584 |
Less: Income tax (benefit) expense | (3,394) |  |  | 14 |  |  | 1,591 |  |  | 1,552 |  |  | (237) |
Less: Net realized and unrealized gains (losses) | 7,428 |  |  | (1,055) |  |  | 10,396 |  |  | — |  |  | 16,769 |
Plus: Intangibles amortization (1) | 3,830 |  |  | — |  |  | — |  |  | — |  |  | 3,830 |
Plus: Stock-based compensation expense | 475 |  |  | — |  |  | 197 |  |  | 832 |  |  | 1,504 |
Plus: Non-recurring expenses | (28) |  |  | — |  |  | 448 |  |  | — |  |  | 420 |
Plus: Non-cash fair value adjustments | — |  |  | — |  |  | (815) |  |  | — |  |  | (815) |
Less: Tax on adjustments (2) | (2,115) |  |  | (1,265) |  |  | (1,595) |  |  | 650 |  |  | (4,325) |
Adjusted net income | $ | 19,533 |  |  | $ | 3,961 |  |  | $ | 5,522 |  |  | $ | (8,286) |  |  | $ | 20,730 |
Adjusted net income | $ | 19,533 |  |  | $ | 3,961 |  |  | $ | 5,522 |  |  | $ | (8,286) |  |  | $ | 20,730 |
Average stockholders’ equity | $ | 291,281 |  |  | $ | 68,925 |  |  | $ | 118,729 |  |  | $ | (75,340) |  |  | $ | 403,595 |
Adjusted return on average equity | 26.8 | % |  | 23.0 | % |  | 18.6 | % |  | NM% |  | 20.5 | %

| Nine Months Ended September 30, 2022 |  |  |
|  |  | Tiptree Capital |  |  |  |  |  |  |
($ in thousands) | Insurance |  | Mortgage |  | Other |  | Corporate |  | Total |  |  |
Income (loss) before taxes | $ | 39,057 |  |  | $ | 3,350 |  |  | $ | 20,468 |  |  | $ | (33,895) |  |  | $ | 28,980 |  |  |  |
Less: Income tax (benefit) expense | (11,099) |  |  | (874) |  |  | (3,469) |  |  | (16,095) |  |  | (31,537) |  |  |  |
Less: Net realized and unrealized gains (losses) | 23,151 |  |  | (7,976) |  |  | (8,293) |  |  | — |  |  | 6,882 |  |  |  |
Plus: Intangibles amortization (1) | 12,146 |  |  | — |  |  | — |  |  | — |  |  | 12,146 |  |  |  |
Plus: Stock-based compensation expense | 2,376 |  |  | — |  |  | 98 |  |  | 5,437 |  |  | 7,911 |  |  |  |
Plus: Non-recurring expenses | 1,561 |  |  | — |  |  | (869) |  |  | 2,108 |  |  | 2,800 |  |  |  |
Plus: Non-cash fair value adjustments | — |  |  | — |  |  | 3,554 |  |  | — |  |  | 3,554 |  |  |  |
Less: Tax on adjustments (2) | (7,299) |  |  | 1,984 |  |  | 1,783 |  |  | 21,629 |  |  | 18,097 |  |  |  |
Adjusted net income | $ | 59,893 |  |  | $ | (3,516) |  |  | $ | 13,272 |  |  | $ | (20,816) |  |  | $ | 48,833 |  |  |  |
Adjusted net income | $ | 59,893 |  |  | $ | (3,516) |  |  | $ | 13,272 |  |  | $ | (20,816) |  |  | $ | 48,833 |  |  |  |
Average stockholders’ equity | $ | 309,042 |  |  | $ | 58,558 |  |  | $ | 94,169 |  |  | $ | (1,891) |  |  | $ | 459,878 |  |  |  |
Adjusted return on average equity | 25.8 | % |  | (8.0) | % |  | 18.8 | % |  | NM% |  | 14.2 | % |  |  |

| Nine Months Ended September 30, 2021
|  |  | Tiptree Capital |  |  |  |
($ in thousands) | Insurance |  | Mortgage |  | Other |  | Corporate |  | Total
Income (loss) before taxes | $ | 49,569 |  |  | $ | 25,119 |  |  | $ | 12,914 |  |  | $ | (33,151) |  |  | $ | 54,451 |
Less: Income tax (benefit) expense | (11,157) |  |  | (4,448) |  |  | (1,350) |  |  | 5,539 |  |  | (11,416) |
Less: Net realized and unrealized gains (losses) | (5,004) |  |  | (5,075) |  |  | (3,512) |  |  | — |  |  | (13,591) |
Plus: Intangibles amortization (1) | 11,499 |  |  | — |  |  | — |  |  | — |  |  | 11,499 |
Plus: Stock-based compensation expense | 1,347 |  |  | 331 |  |  | 209 |  |  | 1,831 |  |  | 3,718 |
Plus: Non-recurring expenses | 2,076 |  |  | — |  |  | 729 |  |  | 2,171 |  |  | 4,976 |
Plus: Non-cash fair value adjustments | — |  |  | — |  |  | (2,167) |  |  | — |  |  | (2,167) |
Less: Tax on adjustments (2) | (1,930) |  |  | (442) |  |  | 1,330 |  |  | 582 |  |  | (460) |
Adjusted net income | $ | 46,400 |  |  | $ | 15,485 |  |  | $ | 8,153 |  |  | $ | (23,028) |  |  | $ | 47,010 |
Adjusted net income | $ | 46,400 |  |  | $ | 15,485 |  |  | $ | 8,153 |  |  | $ | (23,028) |  |  | $ | 47,010 |
Average stockholders’ equity | $ | 296,125 |  |  | $ | 62,093 |  |  | $ | 110,818 |  |  | $ | (81,196) |  |  | $ | 387,840 |
Adjusted return on average equity | 20.9 | % |  | 33.3 | % |  | 9.8 | % |  | NM% |  | 16.2 | %

The footnotes below correspond to the tables above, under “—Adjusted Net Income - Non-GAAP and “—Adjusted Return on Average Equity - Non-GAAP”.
(1) Specifically associated with acquisition purchase accounting. See Note (9) Goodwill and Intangible Assets, net.
(2) Tax on adjustments represents the tax applied to the total non-GAAP adjustments and includes adjustments for non-recurring or discrete tax impacts. For the three and nine months ended September 30, 2022, included in the adjustment is an add-back of $(1.4) million and $24.1 million, respectively, related to deferred tax expense from the WP Transaction.
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Adjusted EBITDA - Non-GAAP
The Company defines Adjusted EBITDA as GAAP net income of the Company plus corporate interest expense, plus income taxes, plus depreciation and amortization expense, less the effects of purchase accounting, plus non-cash fair value adjustments, plus significant non-recurring expenses, and plus unrealized gains (losses) on available for sale securities reported in other comprehensive income. Adjusted EBITDA is used to determine incentive compensation for the Company’s executive officers. Adjusted EBITDA is not a measurement of financial performance or liquidity under GAAP and should not be considered as an alternative or substitute for GAAP net income.

($ in thousands) | Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021 |  |
Net income (loss) attributable to common stockholders | $ | 14,223 |  |  | $ | 2,008 |  |  | $ | (9,145) |  |  | $ | 38,558 |  |  |
Add: net (loss) income attributable to non-controlling interests | 5,834 |  |  | 1,339 |  |  | 6,588 |  |  | 4,477 |  |  |
Corporate debt related interest expense(1) | 3,592 |  |  | 6,038 |  |  | 15,559 |  |  | 18,402 |  |  |
Consolidated provision (benefit) for income taxes | 5,068 |  |  | 237 |  |  | 31,537 |  |  | 11,416 |  |  |
Depreciation and amortization | 5,549 |  |  | 6,119 |  |  | 17,714 |  |  | 18,261 |  |  |
Non-cash fair value adjustments(2) | (542) |  |  | (1,835) |  |  | 759 |  |  | (5,651) |  |  |
Non-recurring expenses(3) | 142 |  |  | 420 |  |  | 2,800 |  |  | 4,976 |  |  |
Other comprehensive income (loss), pre-tax | (25,279) |  |  | (1,970) |  |  | (70,727) |  |  | (5,845) |  |  |
Warburg gain to book value(4) | — |  |  | — |  |  | 54,013 |  |  | — |  |  |
Third party non-controlling interests(5) | 317 |  |  |  |  | 317 |  |  |  |  |
Adjusted EBITDA | $ | 8,904 |  |  | $ | 12,356 |  |  | $ | 49,415 |  |  | $ | 84,594 |  |  |

(1) | Corporate debt interest expense includes interest expense from secured corporate credit agreements, junior subordinated notes and preferred trust securities. Interest expense associated with asset-specific debt is not added-back for Adjusted EBITDA.
(2) | For maritime transportation operations, depreciation and amortization is deducted as a reduction in the value of the vessel.
(3) | Acquisition, start-up and disposition costs, including debt extinguishment, legal, taxes, banker fees and other costs.
(4) | The pre-tax gain recorded directly to Tiptree Inc. stockholders’ equity was included in Adjusted EBITDA, net of add-backs included in prior period Adjusted EBITDA.
(5) | Adjusts for the comprehensive income (loss) (including EBITDA and AOCI impacts) for the non-controlling interests of The Fortegra Group.

Book Value per share - Non-GAAP
Management believes the use of this financial measure provides supplemental information useful to investors as book value is frequently used by the financial community to analyze company growth on a relative per share basis. The following table provides a reconciliation between total stockholders’ equity and total shares outstanding, net of treasury shares.

($ in thousands, except per share information) | As of September 30,
| 2022 |  | 2021 |  |
Total stockholders’ equity | $ | 519,574 |  |  | $ | 402,142 |  |  |
Less: Non-controlling interests | 132,295 |  |  | 16,930 |  |  |
Total stockholders’ equity, net of non-controlling interests | $ | 387,279 |  |  | $ | 385,212 |  |  |
Total common shares outstanding | 36,247 |  |  | 33,889 |  |  |
Book value per share | $ | 10.68 |  |  | $ | 11.37 |  |  |

LIQUIDITY AND CAPITAL RESOURCES
Our principal sources of liquidity are unrestricted cash, cash equivalents and other liquid investments and distributions from operating subsidiaries, including income from our investment portfolio and sales of assets and investments. We intend to use our cash resources to continue to fund our operations and grow our businesses. We may seek additional sources of cash to fund acquisitions or investments. These additional sources of cash may take the form of debt or equity and may be at the parent, subsidiary or asset level. We are a holding company and our liquidity needs are primarily for compensation, professional fees, office rent and insurance costs.
Our subsidiaries’ ability to generate sufficient net income and cash flows to make cash distributions will be subject to numerous business and other factors, including restrictions contained in agreements for the strategic investment by Warburg in Fortegra, our subsidiaries’ financing agreements, regulatory restrictions, availability of sufficient funds at such subsidiaries, general economic and business conditions, tax considerations, strategic plans, financial results and other factors such as target capital ratios and ratio levels anticipated by rating agencies to maintain or improve current ratings. We expect
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our cash and cash equivalents and distributions from operating subsidiaries, our subsidiaries’ access to financing, and sales of investments to be adequate to fund our operations for at least the next 12 months, as well as the long term.
As of September 30, 2022, cash and cash equivalents, excluding restricted cash, were $503.5 million, compared to $175.7 million at December 31, 2021, an increase of $327.8 million primarily as a result of the WP Transaction, growth in gross written premium and premium equivalents at Fortegra, sales and maturities of investments within Fortegra and the sale of three dry bulk vessels in our maritime transportation business.
Our mortgage business relies on short term uncommitted sources of financing as a part of their normal course of operations. To date, we have been able to obtain and renew uncommitted warehouse credit facilities. If we were not able to obtain financing, then we may need to draw on other sources of liquidity to fund our mortgage business. See Note (11) Debt, net in the notes to condensed consolidated financial statements, for additional information regarding our mortgage warehouse borrowings.
We believe that cash flow from operations will provide sufficient capital to continue to grow the business and fund interest on the outstanding debt, capital expenditures and other general corporate needs over the next several years. As we continue to expand our business, including by any acquisitions we may make, we may, in the future, require additional working capital for increased costs.
For purposes of determining enterprise value and Adjusted EBITDA, we consider corporate credit agreements and preferred trust securities, which we refer to as corporate debt, as corporate financing and associated interest expense is added back. The below table outlines this amount by debt outstanding and interest expense at the insurance company and corporate level.
Corporate Debt

($ in thousands) | Corporate Debt Outstanding as of September 30, |  | Interest Expense for the three months ended September 30, |  | Interest Expense for the nine months ended September 30,
| 2022 |  | 2021 |  |  |  | 2022 |  | 2021 |  | 2022 |  | 2021 |  |
Insurance | $ | 160,000 |  |  | $ | 161,740 |  |  |  |  | $ | 3,592 |  |  | $ | 3,485 |  |  | $ | 10,944 |  |  | $ | 10,727 |  |  |
Corporate | — |  |  | 115,625 |  |  |  |  | — |  |  | 2,553 |  |  | 4,615 |  |  | 7,675 |  |  |
Total | $ | 160,000 |  |  | $ | 277,365 |  |  |  |  | $ | 3,592 |  |  | $ | 6,038 |  |  | $ | 15,559 |  |  | $ | 18,402 |  |  |

The balance of the corporate credit facility was repaid during June 2022 as part of the WP Transaction. See Note (11) Debt, net in the notes to condensed consolidated financial statements for details for prior periods.
On October 21, 2022, Fortegra Financial Corporation (“FFC”) entered into a Second Amended and Restated Credit Agreement by and among FFC, its parent, Fortegra, and its subsidiary, LOTS Intermediate Co., as borrowers, the lenders from time to time party thereto, certain of Fortegra’s affiliates as guarantors, and Fifth Third Bank, National Association, as the administrative agent and issuing lender (the “Fortegra Credit Agreement”). The Fortegra Credit Agreement provides for a $200 million revolving credit facility, all of which is available for the issuance of letters of credit, with a sub-limit of $25 million for swing loans and matures on October 21, 2027.
Consolidated Comparison of Cash Flows

($ in thousands) | Nine Months Ended September 30,
Total cash provided by (used in): | 2022 |  | 2021 |  |
Net cash (used in) provided by: |  |  |  |  |
Operating activities | $ | 400,857 |  |  | $ | 186,039 |  |  |
Investing activities | 28,858 |  |  | (201,291) |  |  |
Financing activities | (104,324) |  |  | (499) |  |  |
Net increase (decrease) in cash, cash equivalents and restricted cash | $ | 325,391 |  |  | $ | (15,751) |  |  |

Operating Activities
Cash provided by operating activities was $400.9 million for the nine months ended September 30, 2022. In 2022, the primary sources of cash from operating activities included proceeds from mortgage loans outpacing originations and growth in insurance premiums written resulting in increases in unearned premiums, policy liabilities and unpaid claims and deferred revenues, which were partially offset by increases in deferred acquisition costs and reinsurance receivables.
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Cash provided by operating activities was $186.0 million for the nine months ended September 30, 2021. In 2021, the primary sources of cash from operating activities included consolidated net income (excluding unrealized gains and losses), proceeds from mortgage loans outpacing originations and growth in unearned premiums and net deferred revenues, partially offset by increases in deferred acquisition costs and other assets in addition to decreases in other liabilities and accrued expenses.
Investing Activities
Cash provided by investing activities was $28.9 million for the nine months ended September 30, 2022. In 2022, the primary sources of cash were proceeds from the sale of investments outpacing the purchases of investments. The primary uses of cash from investing activities were the issuance of notes receivable outpacing proceeds and the acquisition of ITC.
Cash used in investing activities was $201.3 million for the nine months ended September 30, 2021. In 2021, the primary uses of cash from investing activities were the purchase of investments outpacing proceeds from the sales of investments in our insurance investment portfolio, and the issuance of notes receivable outpacing proceeds.
Financing Activities
Cash used in financing activities was $104.3 million for the nine months ended September 30, 2022. In 2022, principal repayments on corporate borrowings and mortgage warehouse facilities exceeded proceeds from borrowings, which was partially offset by cash received from the WP Transaction and the exercise of warrants.
Cash used in financing activities was $0.5 million for the nine months ended September 30, 2021. In 2021, the primary uses of cash from financing activities was the repurchase of $2.9 million of the Company’s common stock, repurchase of $1.1 million of vested subsidiary awards, the payment of dividends, and principal repayments in excess of proceeds from borrowings in our mortgage operations.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of our financial statements in accordance with U.S. GAAP, which requires management to make estimates and assumptions that affect the amounts reported in our financial statements and accompanying notes. Actual results could differ materially from those estimates. There have been no material changes to the critical accounting policies and estimates as discussed in Part II, Item 7A in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
Recently Adopted and Issued Accounting Standards
For a discussion of recently adopted and issued accounting standards, see the section “Recent Accounting Standards” in Note (2) Summary of Significant Accounting Policies of the notes to the accompanying consolidated financial statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 described our Quantitative and Qualitative Disclosures About Market Risk. There were no material changes to the assumptions or risks during the nine months ended September 30, 2022.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (Exchange Act) as of the end of the period covered by this report. The Company’s disclosure controls and procedures are designed to provide reasonable assurance that material information is recorded, processed, summarized and reported accurately and on a timely basis. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures are effective.
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Changes in Internal Control over Financial Reporting
There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d- 15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Our legal proceedings are discussed under the heading “Litigation” in Note (21) Commitments and Contingencies in the Notes to the condensed consolidated financial statements in this report.
Item 1A. Risk Factors
For information regarding factors that could affect our Company, results of operations and financial condition, see the risk factors discussed under Part I, Item 1A in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021. There have been no material changes in those risk factors.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
Share repurchase activity for the three months ended September 30, 2022 was as follows:

Period | Purchaser | Total Number of Shares Purchased(1) | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs(1)
July 1, 2022 to July 31, 2022 | Tiptree Inc. | 7,946 |  | $ | 10.48 |  | 7,946 |  |
August 1, 2022 to August 31, 2022 | Tiptree Inc. | — |  | $ | — |  | — |  |
September 1, 2022 to September 30, 2022 | Tiptree Inc. | 60,673 |  | $ | 10.41 |  | 60,673 |  |
| Total | 68,619 |  | $ | 10.41 |  | 68,619 |  | $ | 12,018 |

(1)On November 2, 2020, the Board of Directors of Tiptree authorized Tiptree’s Executive Committee to repurchase up to $20 million of its outstanding common stock in the aggregate from time to time.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not Applicable.
Item 5. Other Information
None.
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Item 6. Exhibits, Financial Statement Schedules

The following documents are filed as a part of this Form 10-Q: |
Financial Statements (Unaudited): |
Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021 | F- 3
Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2022 and 2021 | F- 4
Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2022 and 2021 | F- 5
Condensed Consolidated Statements of Changes in Stockholders’ Equity for the periods ended September 30, 2022 and 2021 | F- 6
Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021 | F- 8
Notes to Condensed Consolidated Financial Statements | F- 9
Exhibits: |
The Exhibits listed in the Index of Exhibits, which appears immediately following the signature page, is incorporated herein by reference and is filed as part of this Form 10-Q. |

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Tiptree Inc. has duly caused this report to be signed on its behalf by the undersigned, there unto duly authorized.

|  |  | Tiptree Inc.
Date: | November 2, 2022 |  | By:/s/ Michael Barnes
|  |  | Michael Barnes
|  |  | Executive Chairman
Date: | November 2, 2022 |  | By:/s/ Jonathan Ilany
|  |  | Jonathan Ilany
|  |  | Chief Executive Officer
Date: | November 2, 2022 |  | By:/s/ Sandra Bell
|  |  | Sandra Bell
|  |  | Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

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EXHIBIT INDEX

Exhibit No. | Description
10.1 | Amendment No. 4 to Partner Emeritus Agreement, by and between Tiptree Inc. and Arif Inayatullah effective November 1, 2022 (filed herewith).
10.2 | Separation and Transition Agreement between Tiptree Inc. and Sandra Bell, dated as of October 14, 2022 (previously filed as Exhibit 10.1 to the Registrant’s Current Repor t on Form 8-K (File No. 001-33549) filed on October 17, 2022 and herein incorporated by reference).**
10.3 | Executive Employment Agreement between Tiptree Inc. and Scott McKinney, dated as of October 14, 2022 (previously filed as Exhibit 10.2 to the Registrant’s Current Report on Form 8-K (File No. 001-33549) filed on October 17, 2022 and herein incorporated by reference).**
10.4 | Second A mended and Restated Credit Agreement dated as of October 21, 2022 by and among Fortegra Financial Corporation, LOTS Intermediate Co. and The Fortegra Group, Inc., as borrowers, the lenders from time to time party thereto, certain of Fortegra’s subsidiaries as guarantors and Fifth Third Bank, N.A. as administra t ive agent and issuing lender (previously filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 001-33549) filed on October 25, 2022 and herein incorporated by reference).
31.1 | Certification of Executive Chairman pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
31.2 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
31.3 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
32.1 | Certification of Executive Chairman pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).
32.2 | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).
32.3 | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).
101.INS | XBRL Instance Document*
101.SCH | XBRL Taxonomy Extension Schema Document*
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document*
101.LAB | XBRL Taxonomy Extension Label Linkbase Document*
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document*
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document*
104 | Cover page from Tiptree’s Form 10-Q for the quarter ended September 30, 2022 formatted in iXBRL (included in Exhibit 101).

* Attached as Exhibit 101 to this Quarterly Report on Form 10-Q are the following materials, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021, (ii) the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2022 and 2021, (iii) the Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2022 and 2021, (iv) the Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three and nine months ended September 30, 2022 and 2021, (v) the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021 and (vi) the Notes to the Condensed Consolidated Financial Statements.
** Denotes a management contract or compensatory plan, contract or arrangement.
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