What changed in this filing

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Item 9A. Controls and Procedures

2021-03-11 compared with 2020-03-12 · 98 added, 55 removed, 172 unchanged (47% of the section changed)

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures

The Company’s management, with the participation of its Executive Chairman, Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) of the Exchange Act) as of December 31, 2020.

Based upon that evaluation, the Company’s Executive Chairman, Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective as of December 31, 2020.

For the year ended December 31, 2020, the Company’s management excluded the Smart AutoCare business acquired on January 3, 2020 (within the Insurance segment) from its evaluation of internal control over financial reporting.

The total revenues and total assets for Smart AutoCare for the period January 3, 2020 through December 31, 2020 and as of December 31, 2020, were approximately $70 million and $349 million, respectively, which represent 9% and 12% of the Company’s total consolidated revenues and total consolidated assets for this period, respectively.

The Company is committed to maintaining a strong internal control environment which is accompanied by management’s ongoing focus on processes and related controls to achieve accurate and reliable financial reporting.

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Projections of the effectiveness of internal control to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management’s Report on Internal Control over Financial Reporting

(b) Management’s Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) of the Exchange Act.

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The effectiveness of the Company’s internal control over financial reporting as of December 31, 2020 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm that audited the Company’s consolidated financial statements as of and for the year ended December 31, 2020, as stated in their report, included in Item 8 of this Form 10-K, which expresses an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2020.

Changes in Internal Control over Financial Reporting

There were no changes in 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 three months ended December 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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(a)(2) Financial Statement Schedules

Schedule II—“Condensed Financial Information of Registrant”, is filed as part of this Annual Report on Form 10-K and should be read in conjunction with the financial statements and notes thereto contained in Item 8—“Financial Statements and Supplementary Data.”

Schedule II—“Financial Information of Registrant”, is filed as part of this Annual Report on Form 10-K and should be read in conjunction with the financial statements and notes thereto contained in Item 8—“Financial Statements and Supplementary Data.”

The financial statements of Invesque Inc.

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001-33549), filed on April 10, 2018 and herein incorporated by reference).

Description of the Registrant’s Securities Registered under Section 12 of the Securities Exchange Act of 1934.

4.3 Description of the Registrant’s Securities Registered under Section 12 of the Securities Exchange Act of 1934 (previously filed as Exhibit 4 .3 to the Registrant’s Annual Report on Form 10-K (File No.

001-33549), filed on March 1 2 , 20 20 and herein incorporated by reference).

10.1 Registrant’s 2017 Omnibus Incentive Plan (previously filed as Exhibit 10.1 to the Registrant’s Form S-8 Registration Statement (File No.

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001-33549), filed on March 14, 2018 and herein incorporated by reference).

Form of Non-Qualified Stock Option Agreement under the Registrant’s 2017 Omnibus Incentive Plan (for 2020 and beyond).

Form of Restricted Stock Unit Agreement under the Registrant’s 2017 Omnibus Incentive Plan (for 2020 and beyond) (annual vesting).

Form of Restricted Stock Unit Agreement under the Registrant’s 2017 Omnibus Incentive Plan (for 2020 and beyond) (cliff vesting).

10.5 Form of Non-Qualified Stock Option Agreement under the Registrant’s 2017 Omnibus Incentive Plan (for 2020 and beyond) (previously filed as Exhibit 10.

5 to the Registrant ’ s Annual Report on Form 10-K ( File No.

0 01-33549) , filed on March 12, 2020 and herein incorporated by referen ce) .**

10.6 Form of Restricted Stock Unit Agreement under the Registrant’s 2017 Omnibus Incentive Plan (for 2020 and beyond) (annual vesting) (previously filed as Exhibit 10.

6 to the Registrant’s Annual Report on Form 10-K (File No.

001-33549), filed on March 12, 2020 and herein incorporated by reference) .**

10.7 Form of Restricted Stock Unit Agreement under the Registrant’s 2017 Omnibus Incentive Plan (for 2020 and beyond) (cliff vesting) (previously filed as Exhibit 10.

7 to the Registrant’s Annual Report on Form 10-K (File No.

001-33549), filed on March 12, 2020 and herein incorporated by reference) .**

10.8 Form of Indemnification Agreement (previously filed as Exhibit 10.9 to the Registrant’s Registration Statement on Form S-11, as amended (File No.

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001-33549), filed February 21, 2020 and herein incorporated by reference).

Governance and Investor Rights Agreement, dated as of February 1, 2018, by and between Invesque Inc.

and Tiptree Operating Company, LLC (previously filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No.

001-33549), filed on February 7, 2018 and herein incorporated by reference).

10.11 Amended and Restated Credit Agreement, dated as of August 4, 2020 by and among Fortegra Financial Corporation (“Fortegra”) and its subsidiary, LOTS Intermediate Co., as borrowers, the lenders from time to time party thereto, certain of Fortegra’s subsidiaries, as guarantors, and Fifth Third Bank, National Association, as the administrative agent and issuing lender (previously filed as Exhibit 10.1 to Form 8-K (File No.

001-33549), filed August 5, 2020 and herein incorporated by reference).

10.12 Credit Agreement, dated as of October 16, 2020 by and among South Bay Financial Corporation, South Bay Funding LLC, the lenders from time to time party thereto and Fifth Third Bank, National Association as the administrative agent (previously filed as Exhibit 10.1 to Form 8-K (File No.

001-33549), filed October 21, 2020 and herein incorporated by reference).

10.13 Equity Interest Purchase Agreement, dated December 16, 2019, by and among Tiptree Warranty Holdings, LLC and Peter Masi (previously filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No.

001-33549), filed on December 17, 2019 and herein incorporated by reference).

Partner Emeritus Agreement, dated December 20, 2019, by and between Tiptree Inc.

10.14 Amendment to Partner Emeritus Agreement, effective January 1, 2021, by and between Tiptree Inc.

and Arif Inayatullah (previously filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No.

001-33549), filed on December 20, 2019 and herein incorporated by reference).

001-33549), filed on January 4, 2021 and herein incorporated by reference).

21.1 Subsidiaries of the Registrant (filed herewith).

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(filed herewith).

23.3 Consent of KPMG LLP, Independent Auditors of Invesque Inc.

(filed herewith).

31.1 Certification of Executive Chairman pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

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32.3 Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).

Consolidated Unaudited Financial Statements of Invesque Inc.

as at December 31, 2019 and 2018 (filed herewith).

99.1 Consolidated Financial Statements of Invesque Inc.

as at December 31, 2020 and 2019 (filed herewith) .

XBRL Instance Document*

XBRL Taxonomy Extension Schema Document*

XBRL Taxonomy Extension Calculation Linkbase Document*

XBRL Taxonomy Extension Label Linkbase Document*

XBRL Taxonomy Extension Presentation Linkbase Document*

XBRL Taxonomy Extension Definition Linkbase Document*

99.2 Consolidated Financial Statements of Invesque Inc.

as at December 31, 2018 and 2017 (previously filed as Exhibit 99.2 to the Registrant’s Annual Report on Form 10-K (File No.

001-33549), filed on March 12, 2020 and herein incorporated by reference).

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 Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, formatted in iXBRL (included in Exhibit 101).

* Attached as Exhibit 101 to this Annual Report on Form 10-K are the following materials, formatted in XBRL (eXtensible Business Reporting Language):

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has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

March 11, 2020

By:/s/ Jonathan Ilany

March 11, 2021 By:/s/ Jonathan Ilany

Jonathan Ilany

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Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

Signature Title Date

/s/ Jonathan Ilany

Jonathan Ilany

Chief Executive Officer and Director (Principal Executive Officer)

March 11, 2020

Chief Executive Officer and Director (Principal Executive Officer) March 11, 2021

/s/ Sandra Bell

Chief Financial Officer (Principal Financial Officer)

March 11, 2020

/s/ Timothy Schott

Timothy Schott

Principal Accounting Officer (Principal Accounting Officer)

March 11, 2020

Chief Financial Officer (Principal Financial Officer and

Principal Accounting Officer) March 11, 2021

/s/ Michael G.

Executive Chairman and Director

March 11, 2020

Executive Chairman and Director March 11, 2021

Director March 11, 2021

/s/ Lesley Goldwasser

Lesley Goldwasser

March 11, 2020

Director March 11, 2021

/s/ Bradley E.

March 11, 2020

Director March 11, 2021

/s/ Dominique Mielle

Dominique Mielle

March 11, 2020

Director March 11, 2021

Schedule II — Condensed Financial Information of Registrant

PARENT COMPANY ONLY CONDENSED STATEMENTS OF INCOME

(All amounts in thousands)

Years Ended December 31,

(All amounts in thousands) Year Ended December 31,

2020 2019 2018

Interest income (1)

$ 223 $ — $ 137

Other revenue 232 — 10

Total revenues 455 — 147

Employee compensation and benefits 15,195 — —

Interest expense 4,681 — —

Professional fees 4,476 — —

Rent and facilities 2,094 — —

General and administrative 1,259 — —

Depreciation and amortization 807 — —

Loss on extinguishment of debt 353 — —

Other expenses 1,513 3 30

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Equity in earnings (losses) of subsidiaries, net of tax (2)

Income (loss) before taxes from continuing operations

( 24,855 ) 18,364 ( 13,392 )

Income (loss) before taxes ( 54,778 ) 18,361 ( 13,275 )

provision (benefit) for income taxes ( 25,620 ) — —

Net income (loss) from continuing operations

Net income (loss) ( 29,158 ) 18,361 ( 13,275 )

Discontinued operations:

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common stockholders $ ( 29,158 ) $ 18,361 $ 23,933

(1) E liminated in consolidation for the period ending December 31, 2018 only.

(2) E liminated in consolidation.

PARENT COMPANY ONLY CONDENSED BALANCE SHEETS

(All amounts in thousands, except share data)

As of December 31,

(All amounts in thousands, except share data) As of December 31,

Investment in subsidiaries (1)

$ 337,951 $ 397,395

Cash and cash equivalents 712 87

Notes and accounts receivable, net 2,622 —

Intercompany receivables, net (1)

Income taxes receivable 15,590 —

Deferred tax assets 44,161 —

Other assets 15,332 580

Total assets $ 416,368 $ 398,062

Liabilities and Stockholders’ Equity

Deferred tax liabilities $ 23,889 $ —

Operating lease liability 12,241 —

Intercompany payables, net (1)

Accrued expenses 7,490 —

Other liabilities 6,743 —

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PARENT COMPANY ONLY CONDENSED STATEMENTS OF CASH FLOWS

(All amounts in thousands)

Years Ended December 31,

(All amounts in thousands) Year Ended December 31,

2020 2019 2018

Operating Activities:

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Equity in earnings of subsidiaries (1)

24,855 ( 18,364 ) ( 23,816 )

Depreciation expense 807 — —

Deferred provision (benefit) for income taxes ( 15,815 ) — —

Non-cash lease expense 1,660 — —

Non-cash compensation expense 3,110 — —

Amortization of deferred financing costs 172 — —

Changes in operating assets and liabilities

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Net cash provided by (used in) operating activities ( 13,105 ) ( 586 ) 4,889

Investing Activities:

Asset acquisitions due to merger with Operating Co.

Net cash flows provided by (used in) provided by investing activities 488 — —

Financing Activities:

Distributions from subsidiaries (1)

35,092 14,587 —

Dividends paid ( 5,565 ) ( 5,502 ) ( 4,781 )

Repurchases of common stock ( 13,889 ) ( 9,085 ) —

Subsidiary RSU exchanges ( 2,034 ) — —

Vesting of share-based incentive compensation ( 362 ) — —

Net cash provided by (used in) financing activities 13,242 — ( 4,781 )

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Basis of Presentation

(Tiptree or the Company) is a Maryland Corporation that was incorporated on March 19, 2007.

Tiptree is a holding company that allocates capital across a broad spectrum of businesses, assets and other investments.

Tiptree’s principal operating subsidiary and primary source of earnings, Tiptree Insurance, along with its subsidiaries, is a leading provider of specialty insurance, warranty products and related administration services.

Tiptree also allocates its capital across a diverse group of select investments that we refer to as Tiptree Capital.

Tiptree’s Common Stock is traded on the Nasdaq Capital Market under the symbol “TIPT”.

(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 combines specialty insurance operations with investment management capabilities.

We allocate our capital across our insurance operations 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.

Pursuant to the terms discussed in Note—(11) Debt, net in the notes to consolidated financial statements, a secured corporate credit agreement of a subsidiary of Tiptree restricts that subsidiary’s ability to pay or make any dividend or distribution to Tiptree Inc.

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As a result of these restrictions, these condensed financial statements of the Registrant have been prepared in accordance with Rule 12-04 of Regulation S-X, as restricted net assets of the Company's subsidiaries (as defined in Rule 4-08(e)(3) of Regulation S-X) exceed 25% of the Company's consolidated net assets as of December 31, 2020.

The Company is a holding company without any operations of its own.

For the periods ending December 31, 2019 and 2018, the Company was a holding company without any operations of its own.

On July 17, 2020, Operating Company merged into Tiptree, with Tiptree as the surviving entity (the Reorganization).

In connection with the Reorganization, Operating Company contributed substantially all of its assets to Caroline Holdings LLC, a wholly owned subsidiary of Operating Company, which was renamed Tiptree Holdings LLC.

Prior to the Reorganization, the Company was allocated itemized expenses of $ 2,000 related to operating as a public company from Operating Company for the six months ended June 30, 2020.

These condensed financial statements have been prepared on a "parent-only" basis.

Under a parent-only presentation, the Parent Company's investments in subsidiaries are presented under the equity method of accounting.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S.

GAAP have been condensed or omitted.

Stock based compensation expense associated with equity incentive awards issued by the Parent Company and the related tax effects are recorded at the subsidiary level where the employees provide the services.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted.

The accompanying condensed financial information should be read in conjunction with the Tiptree Inc.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures