−Removed: Tiptree is a holding company that allocates capital across a broad spectrum of businesses, assets and other investments.
−Removed: We classify our business as follows:
−Removed: the Insurance reportable segment and Tiptree Capital, including our Mortgage reportable segment.
−Removed: The remainder of our non-insurance operations are aggregated into Tiptree Capital - Other.
−Removed: Our Insurance segment consists of Fortegra, which is a leading provider of specialty insurance, warranty products and related administration services, and the Smart AutoCare brands.
−Removed: Insurance revenues are generated from earned premiums, net, service and administrative fees, ceding commissions and earnings on our investment portfolio.
−Removed: Our Mortgage segment consists of Reliance, which originates residential mortgage loans which are typically sold to secondary market investors, either servicing released or servicing retained.
−Removed: Mortgage revenues are generated from gain on sale of loans, net servicing income, net interest income and loan fee income.
−Removed: We also generate earnings from a diverse group of select investments that we refer to as Tiptree Capital - Other.
−Removed: Our business is comprised of the following:
−Removed: – Operations - We are a specialty insurance program underwriter and service provider, which focuses on niche business lines and fee-oriented services.
−Removed: The significant majority of our products are sold through independent agents.
−Removed: Our Insurance segment includes the Fortegra and the Smart AutoCare brands.
−Removed: – Investments - We invest a majority of our insurance related investment assets in high quality fixed income securities to support our claims paying activities.
−Removed: To enhance our investment return objectives, we selectively allocate a portion of our insurance portfolio to higher yielding credit-risk assets, equities and alternative investments.
−Removed: • Tiptree Capital - We also own a diverse group of investments, which includes control investments in businesses, investments in securities and other assets, all of which are managed to increase shareholder value, through a combination of current earnings and capital appreciation.
−Removed: We view these investment decisions as distinctly separate from our core insurance operations.
−Removed: We expect the investments within Tiptree Capital to change over time as we exit investments and our outlook on investment opportunities changes.
−Removed: Today, Tiptree Capital consists primarily of investments in shares of Invesque, maritime transportation and mortgage origination operations.
−Removed: – Mortgage - as a nationwide mortgage lender, we are approved to originate and service Fannie Mae, Freddie Mac and Ginnie Mae eligible loans.
−Removed: We primarily originate, sell and service conventional, conforming agency and government insured residential mortgage loans originated through our retail channel.
−Removed: – Other - consists primarily of investments in shares of Invesque and maritime transportation.
−Removed: As of December 31, 2020, Tiptree and its consolidated subsidiaries had 1,372 employees, 32 of which were at our corporate headquarters.
−Removed: Corporate employees are responsible for corporate strategy, capital allocation and investment decisions, as well as all public company reporting and compliance.
−Removed: Our businesses are subject to regulation as described below.
−Removed: The 1940 Act may limit the types and nature of businesses that we engage in and assets that we may acquire.
−Removed: See “Risk Factors-Risks Related to Regulatory and Legal Matters-Maintenance of our 1940 Act exemption will impose limits on our operations.”
+Added: At Tiptree, our mission is to build long-term value by allocating capital to select small and middle market companies across industries.
+Added: We have a significant track record investing in the insurance and credit-related financial sectors.
+Added: With proprietary access and a flexible capital base, we seek to uncover compelling investment opportunities and support management teams in unlocking the full value potential of their businesses.
+Added: This investment philosophy, executed by our experienced leadership, is our hallmark and has delivered consistent risk-adjusted returns to our shareholders since 2007.
+Added: We categorize our businesses into:
+Added: Insurance and Tiptree Capital.
+Added: Our Insurance segment is a group of companies operating as part of The Fortegra Group (“Fortegra”), which is a leading provider of specialty insurance products and related services.
+Added: Fortegra designs, markets and underwrites specialty commercial and personal property and casualty insurance products incorporating value-added coverages and services for select target markets or niches.
+Added: We target markets with specialized areas of demand, including smaller niche lines, and by offering innovative policy features.
+Added: We believe this approach allows us to compete by offering customized coverage and solutions, rather than competing solely on price.
+Added: Our products are distributed through a diverse multi-channel delivery system centered around our production underwriting organization and large independent agent network.
+Added: We use proprietary technology to efficiently and effectively administer business to specialty markets that we believe are underserved by larger, less agile insurers.
+Added: Our underwriting expertise, strong agent relationships and proprietary technology empower us to remain agile and take advantage of attractive opportunities.
+Added: Tiptree Capital:
+Added: We own a diversified group of businesses and investments that are owned and managed separately as Tiptree Capital, and include our Mortgage segment operations.
+Added: We manage Tiptree Capital with a long-term focus, balancing current cash flow and long-term value appreciation.
+Added: Today, Tiptree Capital consists primarily of our mortgage origination operations, maritime shipping operations and investments in shares of Invesque.
Our Operating Principles
−Removed: At Tiptree, we are continually looking for investment opportunities that fit within our operating principles and make capital allocation decisions for the most efficient deployment of our capital.
+Added: We acquire controlling interests and invest in businesses that we believe (i) operate in industries with long-term macroeconomic growth opportunities, (ii) have positive and stable cash flows, (iii) offer scalable business models with embedded optionality, and (iv) have strong management teams.
+Added: We believe that our patient capital approach and long-term outlook enhances the ability for our businesses to grow earnings and cash flows across market cycles.
Underwrite to a Profit .
−Removed: Our principal strategic objective is to continue expanding Fortegra’s operations, particularly the specialty insurance and warranty businesses.
+Added: Our principal strategic objective is to continue expanding Fortegra’s operations, particularly the specialty insurance and service contract businesses.
Our highest priority is to maintain strong underwriting practices, with attention paid to the insurance disciplines of pricing, underwriting and claims management.
Invest for Long-term Returns.
−Removed: Our financial goals are to generate consistent and growing earnings and cash flow, and to enhance shareholder value as measured by growth in book value per share plus dividends.
+Added: Our financial goals are to generate consistent and growing earnings and cash flow, and to enhance shareholder value as measured by growth in stock price plus dividends paid.
We manage Tiptree with a long-term perspective, balancing cash-flowing investments with opportunities for capital appreciation.
−Removed: We focus on targeting investment returns that have
−Removed: a combination of current earnings and long-term capital appreciation, understanding that temporary accounting gains and losses may vary significantly from one period to the next.
+Added: We focus on targeting investment returns that have a combination of current earnings and long-term capital appreciation, understanding that temporary accounting gains and losses may vary significantly from one period to the next.
Think Like Owners.
1 unchanged sentence
We aim to find the best use of capital to create long-term value for our shareholders.
−Removed: We hope to achieve this through a combination of acquisitions, investments in our existing businesses, monetization opportunities, opportunistic share repurchases and paying a consistent dividend.
+Added: We hope to achieve this through a combination of investments in our existing businesses, select acquisitions and monetization opportunities, opportunistic share repurchases and paying a consistent dividend.
As of March 7, 2022, directors, officers, employees and related trusts owned 32% of the Company.
−Removed: The Fortegra Group, LLC (“Fortegra”), is an established, growing and consistently profitable specialty insurer.
−Removed: We purposefully focus on niche business lines and fee-oriented services, providing us with a unique combination of specialty insurance program underwriting, warranty and service contract products and related service solutions.
−Removed: Our vertically integrated business model creates an attractive blend of traditional underwriting revenues, investment income and unregulated fee revenues.
−Removed: Our differentiated approach has led to robust growth, consistent profitability and high cash flows.
−Removed: Our business was founded in 1981.
−Removed: Fortegra is headquartered in Jacksonville, Florida, and as of December 31, 2020, had 716 employees across 15 offices in four countries.
−Removed: We target lines of business with a small premium-per-risk profile, which has increased our frequency exposure but has limited our severity and catastrophic risks.
+Added: As of December 31, 2021, Tiptree and its consolidated subsidiaries had 1,472 employees, 21 of whom were at our corporate headquarters.
+Added: Corporate employees are responsible for overall strategy, capital allocation and investment decisions, as well as public company reporting and compliance.
+Added: Our businesses are subject to regulation as described below.
+Added: The 1940 Act may limit the types and nature of businesses that we engage in and assets that we may acquire.
+Added: See “Risk Factors-Risks Related to Regulatory and Legal Matters-Maintenance of our 1940 Act exemption will impose limits on our operations.”
+Added: Fortegra is an established, growing and consistently profitable specialty insurer.
+Added: We focus on niche business lines and fee-oriented services, providing us with a unique combination of insurance, service contract products and related service solutions.
+Added: Our vertically integrated business model creates an attractive blend of traditional underwriting revenues, unregulated fee revenues and investment income.
+Added: This differentiated approach has led to robust growth, consistent profitability and high cash flows.
+Added: The business was founded in 1978 and is headquartered in Jacksonville, Florida.
+Added: We target lines of business with lower risk limits and use risk mitigation to limit both aggregation and catastrophic exposures.
We believe this focus has allowed us to produce superior underwriting results through a more granular spread of risk.
−Removed: We use our proprietary technology to efficiently and effectively administer our business to specialty markets that we feel are underserved by larger, less agile insurers.
−Removed: Our underwriting expertise, strong distribution relationships and proprietary technology empower us to remain agile and take advantage of attractive opportunities in challenging market conditions.
−Removed: We are an agent-driven business, employing a “one-to-many” distribution model, which allows us to leverage our high-quality partners’ brands and customer bases.
−Removed: We deliver our products through independent insurance agents.
−Removed: We also partner with agents that are embedded in consumer finance companies, online and regional big box retailers, auto dealers and other companies to deliver our products that complement the consumer transaction.
+Added: We use proprietary technology to efficiently and effectively administer business to specialty markets that we feel are underserved by larger, less agile insurers.
+Added: Our underwriting expertise, strong distribution relationships and proprietary technology empower us to remain agile and take advantage of attractive opportunities in all market conditions.
+Added: We use an agent-focused distribution model, employing a “one-to-many” strategy, which allows us to leverage our high-quality partners and their customer bases.
+Added: We deliver our insurance products through independent insurance agents.
+Added: We also partner with agents that are embedded in consumer finance companies, online and regional big box retailers, auto dealers and other companies to deliver our products that complement retail and consumer purchases.
We use artificial intelligence (“A.I.”) technology to create a distinct lead generation advantage for our insurance distribution partners and over the past five years have maintained a greater than 95% persistency rate, which represents the annual retention of the number of our producing agents.
2 unchanged sentences
Products and Services
−Removed: Provides niche, specialty insurance programs distributed through managing general agents (“MGAs”), wholesale agents, retail agents and brokers.
+Added: Provides niche, specialty insurance products distributed through managing general agents (“MGAs”), wholesale agents, retail agents and brokers.
We offer an array of commercial programs with a particular focus on casualty lines.
−Removed: These lines include professional liability, warranty, energy, allied health, general liability, directors and officers liability, life sciences, inland marine, contractors equipment, contractors liability, student legal liability, hospitality and business owner policy.
−Removed: We also offer a range of personal lines programs including storage unit contents, manufactured housing, GAP, auto, credit life and disability and collateral protection products.
+Added: These lines include professional liability, contractual liability, energy, allied health, general liability, directors and officers liability, life sciences, inland marine, contractors equipment, contractors liability, student legal liability, hospitality and business owner policy.
+Added: We also offer a range of personal lines programs including storage unit contents, manufactured housing, GAP, auto, credit life and disability and collateral insurance products.
Additionally, we offer related fee-earning, unregulated products and services, such as captive administration services, program administration and premium financing, to our U.S.
1 unchanged sentence
We are active in 50 states in the United States.
−Removed: • Commercial & Personal Lines:
−Removed: Our program business is focused on underwriting niche commercial and personal lines insurance coverages for agents, retail agents, MGAs, brokers and other program managers that require broad licensure, an “A-” or better A.M.
+Added: • Commercial Lines:
+Added: Our business is focused on underwriting specialty commercial insurance coverages for agents, retail agents, MGAs, brokers and other program managers that require broad licensure, an “A-” or better A.M.
Best rating, and specialized knowledge and expertise to deliver our products.
−Removed: Our commercial lines and personal lines programs include a wide array of niche commercial and personal lines programs, including admitted and excess and surplus (“E&S”) lines programs.
−Removed: With each program, we grant these agents and program managers the authority to produce, underwrite and administer policies subject to our pricing and underwriting guidelines.
−Removed: We typically transfer a substantial portion of the underwriting risk on these programs to third-party reinsurers for which we are paid a ceding fee.
+Added: Our commercial lines include a wide array of niche products, including admitted and excess and surplus (“E&S”) lines.
+Added: With each program, we grant agents and program managers the authority to produce, underwrite and administer policies subject to our pricing and underwriting guidelines.
+Added: We typically transfer a substantial portion of the underwriting risk to third-party reinsurers for which we are paid a ceding fee.
We generally retain between 40-60% of the premium on a net basis.
−Removed: • Credit Insurance & Collateral Protection:
−Removed: Our credit insurance products are designed to offer consumers and lenders protection from life events that limit a borrower’s ability to make payments on outstanding loan balances.
+Added: • Personal Lines:
+Added: Our personal lines offer a diverse set of specialty products including credit insurance, collateral insurance, non-standard auto and other niche personal lines.
+Added: Credit insurance products offer consumers and lenders protection from life events that limit a borrower’s ability to make payments on outstanding loan balances.
These products offer consumers and lenders the option to protect loan balance repayment in the event of death, involuntary unemployment or disability.
−Removed: Our collateral protection products are designed to primarily protect the lender from losses to
−Removed: collateral pledged to secure an installment loan.
+Added: Our collateral insurance products are designed to primarily protect the lender from losses to collateral pledged to secure an installment loan.
In most instances, these products offer lenders the option to protect collateral from a comprehensive loss due to fire, wind, flood and theft.
2 unchanged sentences
Provides consumers with protection from certain covered losses on automobiles, mobile devices, consumer electronics, appliances and furniture in the United States.
−Removed: Our programs include, but are not limited to, VSCs, roadside assistance and motor clubs, GAP, automobile dent and ding repair, key replacement, cellular handset protection and brown and white good service contracts.
−Removed: We distribute our programs through retailers, auto dealerships and cell-phone carriers.
+Added: Our offerings include, but are not limited to, vehicle service contracts, roadside assistance and motor clubs, GAP, automobile dent and ding repair, key replacement, cellular handset protection
+Added: and service contracts on other consumer goods.
+Added: We distribute our products through agents, retailers, auto dealerships and cell-phone carriers.
We are active in 50 states in the United States.
−Removed: Our warranty and service contract products and solutions provide consumers with coverage for specific losses to automobiles, recreation vehicles, mobile devices, consumer electronics, appliances and furniture and bedding.
+Added: Our service contract products and solutions provide consumers with coverage for specific losses to automobiles, recreation vehicles, mobile devices, consumer electronics, appliances and furniture and bedding.
These products offer benefits such as replacement, service or repair coverage in the event of mechanical breakdown, accidental damage and water or spill damage.
−Removed: Some of our warranty and service contract products are extensions of warranty coverage provided by their original equipment manufacturers.
+Added: Some of our service contract products are extensions of coverage provided by their original equipment manufacturers.
As part of our vertically integrated offering, we provide valuable services to our distribution partners including premium financing, lead generation support, insurance sales, and business process outsourcing.
1 unchanged sentence
Provides consumers with protection from certain covered losses on automobiles, mobile devices, consumer electronics, appliances and furniture in the European region.
−Removed: We offer a variety of programs, including GAP, auto extended warranty, automobile dent and ding repair, tire and wheel protection, cellular handset protection, consumer products accidental damage and others.
+Added: We offer a variety of programs, including GAP, VSCs, automobile dent and ding repair, tire and wheel protection, cellular handset protection, consumer products accidental damage and others.
We distribute our programs through MGAs, retail agents and auto dealerships.
+Added: Our Competitive Strengths
+Added: Focus on Niche, Underserved Specialty Lines with Significant Fee-Based Income
+Added: We focus on specialty insurance business and have continued to diversify our revenues.
+Added: We use three distinct approaches to grow our business:
+Added: (i) we pursue and acquire agents with select books of business that we believe will maintain risk-appropriate rates;
+Added: (ii) we seek agents with what we believe is distinct underwriting expertise to select specific niches;
+Added: and (iii) we target the lines of business we believe are overlooked by the standard markets.
+Added: For example, we often target the smaller premium-per-risk lines that we believe are highly profitable, have the potential to grow and are underserved by our competitors.
+Added: We believe we have a unique ability to source small programs that meet our rate, form and risk threshold through our extensive distribution network and A.I.
+Added: We believe our underwriting expertise, proprietary technology and deep distribution relationships allow us to serve our specialty markets and capture share.
+Added: We cross-sell multiple products to our customers through the breadth of our products and solutions, including fee-based services.
+Added: We believe the combination of a low limits profile, low severity products and attractive fee income provides higher underwriting margin and earnings stability for our business.
+Added: While low limits and low severity constitute most of our underwritten business, we believe we are agile enough to take advantage of attractive opportunities in challenging market conditions.
+Added: For the year ended December 31, 2021, Fortegra produced gross written premium and premium equivalents of $2,194 million, an increase from $963 million in 2017, representing a 23% compounded annual growth rate over the past five years.
+Added: Track Record of Growth, Profitable Underwriting and Strong Economic Alignment with Our Distribution Network
+Added: Consistent underwriting is a function of rate adequacy and risk selection by our specialized agents.
+Added: While we regularly establish sound actuarial rates similar to our insurance peers, we believe our stringent risk selection requires unique underwriting expertise by our agents and a high degree of specialty underwriting skillsets.
+Added: After we establish relationships with our targeted agents, we further solidify our alliance by creating additional value for our distribution partners through our technology platform.
+Added: We believe our A.I.
+Added: algorithm and machine learning assisted underwriting drives a distinct lead generation advantage for our agents.
+Added: technology and machine learning, we identify risks that fit into an acceptable profile, enhancing the agent’s efficiency and revenue base while allowing us to experience what we believe is a superior spread of risk and exceptional underwriting results.
+Added: For the year ended December 31, 2021, our combined ratio was 90.6% and has averaged 91.6% over the past five years.
+Added: Scalable, Proprietary Technology, Which Drives Efficiency and Delivers Premium Customer Service
+Added: We provide many aspects of insurance, including admitted specialty property-casualty products, E&S line offerings, administration, premium finance and other value-added services.
+Added: We have a scalable and flexible technology infrastructure, together with highly trained and knowledgeable IT personnel and consultants.
+Added: These resources allow us to launch new insurance and fee for service programs and expand gross written premiums and premium equivalents volume quickly and seamlessly without significant incremental expenses.
+Added: Our technology also delivers low-cost, highly automated underwriting and administration services to our partners without substantial up-front investments.
+Added: This technology-enhanced platform enables us to automate core business processes, reduce our operating costs, increase our operating efficiency and secure high agent retention.
+Added: We have maintained a 95% persistency rate with our insurance producing agents over the past five years.
+Added: Our underwriting expertise, strong distribution relationships and proprietary technology empower us to remain agile and take advantage of attractive opportunities in
+Added: challenging market conditions.
+Added: Our systems also enable us to provide a high level of service to our distribution partners and customers through technology.
+Added: High-Quality, Conservative Balance Sheet with Solid Capitalization and Ratings
+Added: We maintain a high quality, S&P “AA+” rated, fixed income investment portfolio.
+Added: Our investment portfolio’s principal objectives are to preserve capital and surplus, to maintain appropriate liquidity for corporate requirements, to support our strong ratings and to maximize returns.
+Added: We have a track record of reducing our reinsurance counterparty exposure by partnering with reinsurers that have high-grade credit quality, ensuring high-quality recoverable assets and by effectively using collateral and partnering with producer owned reinsurance companies (“PORCs”).
+Added: Our financial strength ratings of “A-” (Excellent) (Stable Outlook) from A.M.
+Added: Best and “A-” (Stable Outlook) from KBRA reflect our adherence to our core values.
Distribution and Marketing
−Removed: Our programs are marketed and sold by agents and program partners.
−Removed: Our program partners marketing and selling warranty solutions, collateral protection and credit insurance include financial services companies, big-box retailers, furniture stores, automobile dealerships, regional cellular service providers and mobile device service providers.
−Removed: Our commercial and personal lines insurance programs are marketed through a network of independent insurance agents, retailers, brokers and managing general agencies.
−Removed: Our warranty and service contract programs are primarily marketed and sourced through insurance intermediaries including third-party administrators (“TPAs”), insurance brokers, MGAs and agents.
+Added: Our products are marketed and sold by agents and distribution partners.
+Added: Our commercial and personal lines insurance products are marketed through a network of independent insurance agents, retailers, brokers and managing general agencies.
+Added: Our partners that market and sell service contracts, collateral protection and credit insurance include financial services companies, big-box retailers, furniture stores, automobile dealerships, regional cellular service providers and mobile device service providers.
+Added: Our service contract offerings are primarily marketed and sourced through insurance intermediaries including third-party administrators (“TPAs”), insurance brokers, MGAs and agents.
Our vertically integrated platform also allows us to engage and enter into direct relationships with distributors.
−Removed: In each case, we pay our program partners a commission-based fee (or a dealer net equivalent in the case of our service contract and protection product business).
−Removed: A significant portion of our commission agreements are on a retrospective commission basis.
−Removed: This type of arrangement allows us to adjust commissions based upon underwriting results.
−Removed: We believe these types of commission arrangements align the economic interests of the agent and insurer.
−Removed: Additionally, these arrangements deliver more consistent profit margins.
+Added: In each case, we pay our partners a commission-based fee (or a dealer net equivalent in the case of our service contract and protection product business).
We generally target markets that are niche and specialty in nature, which we believe are underserved by competitors and have high barriers to entry.
5 unchanged sentences
Our underwriting team consists of 90 underwriting professionals as of December 31, 2021.
−Removed: Our underwriters are industry veterans with deep knowledge of the specialty products that they underwrite, and they have longstanding relationships with our distribution partners.
+Added: Our underwriters are industry veterans with deep knowledge of the specialty products that they underwrite, and they have longstanding relationships with our agents and distribution partners.
We give limited underwriting authority to our MGAs.
2 unchanged sentences
Exceptions to the underwriting guidelines require approval from a senior underwriter.
−Removed: Our business strategy is supported by technology in four ways:
−Removed: the ability to effectively serve small policies in a cost efficient manner;
−Removed: the ability to generate business leads that fit our risk profile using A.I.;
−Removed: enhancing underwriting results, improving the business and experience of our distribution partners;
−Removed: and the ability to grow our business and add new product lines with minimal incremental expense.
+Added: Our portfolio of risk predominantly consists of business that is low severity and high frequency.
+Added: Our underwriting team prices the business to a target margin, taking into account anticipated claims and administrative services.
+Added: We believe our pricing encompasses prudent risk evaluation based on historical data, while remaining commercially competitive and sustainable.
+Added: We believe our approach to risk selection, pricing and underwriting has contributed to our superior combined ratio, which has averaged 91.6% over the past five years.
+Added: Fortegra is a data driven, technology enabled insurance platform that uses technology to support the business strategy through:
+Added: (i) the ability to effectively serve small policies in a cost efficient manner;
+Added: (ii) the ability to generate business leads that fit our risk profile using A.I.;
+Added: (iii) enhancing underwriting results, improving the experience of our distribution partners;
+Added: and (iv) the ability to grow our business and add new product lines with minimal incremental expense.
+Added: Our integrated, proprietary technology efficiently manages the high volume of policies and claims that result from servicing large numbers of small policyholders and contract holders.
+Added: Our technology is highly automated, scalable and allows us to operate at a
+Added: We believe this is a significant barrier to entry as many of our competitors have IT systems designed for larger policies, and do not have the ability to service a high volume of small policies in a cost efficient manner.
+Added: Through our A.I.
+Added: algorithm and machine learning assisted underwriting, we provide qualified leads for new business to our agents.
+Added: We gather proprietary customer performance data, correlated characteristics and macro-economic research to generate an ideal customer profile across our targeted business mixes.
+Added: We then work with a third-party marketing consultant to translate the ideal customer profiles into a proprietary target customer list that can be shared with our agents.
+Added: This both enhances the agent’s efficiency and revenue base while allowing us to experience a superior spread of risk.
+Added: Our flexible technology platform provides value-added services that we believe creates stronger relationships with our agents.
+Added: In addition to the A.I.
+Added: based lead generation service that we provide, our technology platform is connected to our agents and provides them with access to claims, research and reporting portals.
+Added: We believe our technology makes it easier for agents to do business with us.
+Added: These value-added services deepen our relationships and contribute to the high persistency rate with our agents.
+Added: Our technology infrastructure is scalable and affords us the opportunity to add new agents, distribution partners and services without significant additional expense.
Claims Management
2 unchanged sentences
When an insured reports a claim, it is immediately directed to the proper unit for handling.
−Removed: We maintain claims disposition authority for greater than 90% of claims adjudicated within the credit and warranty programs.
−Removed: We maintain claims disposition authority for greater than 70% of claims adjudicated within the property and casualty programs.
+Added: We maintain claims disposition authority for greater than 90% of claims adjudicated within the credit and service contract lines.
+Added: We maintain claims disposition authority for greater than 70% of claims adjudicated within the property and casualty lines.
When necessary, the claims team has access to a panel of expert attorneys, mediators, investigators and independent adjusters who will be retained in connection with litigation or loss inspection.
5 unchanged sentences
We have data systems that allow for the centralization of data and creation of reports, which creates a management reporting tool allowing for the identification of trends within a product, specific jurisdiction or across multiple jurisdictions.
−Removed: Investment income is a significant component of our earnings.
−Removed: Our primary investment objectives are to maintain liquidity, to preserve capital, and to generate a stable level of investment income.
−Removed: We rely on our conservative underwriting practices to generate investable funds.
−Removed: As of December 31, 2020, the majority of our investments, or $377.1 million, was comprised of fixed maturity securities that are classified as available-for-sale and carried at fair value with unrealized gains and losses on these securities, net of applicable taxes, reported as a separate component of accumulated other comprehensive income (AOCI).
−Removed: Also included in our investments were $34.3 million of equity securities, $7.8 million of loans, at fair value, $63.9 million of exchange traded fixed income funds, at fair value, and $125.8 million of other investments.
−Removed: Our investable assets are invested in asset classes that we believe will maintain liquidity and support capital preservation while producing attractive risk-adjusted returns.
+Added: We invest in asset classes that we believe will maintain liquidity and support capital preservation while producing attractive risk-adjusted returns.
Most of these securities are invested in short-duration fixed income securities that are both highly liquid and highly rated.
6 unchanged sentences
Consistent with standard industry practice for most insurance companies, we use reinsurance to manage our underwriting risk and efficiently utilize capital.
−Removed: For example, a significant portion of our distribution partners of credit and warranty insurance products have created captive reinsurance companies to assume the insurance risk on the products they deliver.
−Removed: These captive reinsurance companies are known as producer owned reinsurance companies (“PORCs”) and in most instances each PORC assumes almost all of the underwriting risk associated with the insurance products they deliver.
+Added: In our commercial insurance lines, our reinsurers tend to be highly rated, well-capitalized professional third-party reinsurers.
+Added: We typically contract with third-party reinsurers that have attained an “A-” or better financial strength rating from A.M.
+Added: Those reinsurers that fall below this threshold are required to post collateral on a funds held basis or with a letter of credit.
+Added: A significant portion of our distribution partners of credit and service contract insurance products have captive reinsurance companies to assume the insurance risk on the products they deliver.
+Added: These captive reinsurance companies are known as PORCs and in most instances each PORC assumes almost all of the underwriting risk associated with the insurance products
+Added: they deliver.
When we use PORCs, consistent with applicable laws and insurance regulations, we act in a fronting and administrative capacity on behalf of each PORC, providing underwriting and claims management services.
1 unchanged sentence
Because reinsurance does not relieve us of our primary liability to the policyholder, we generally require cash collateral to secure the reinsurance receivable in the event that a PORC is unable to pay the claims it has assumed.
−Removed: In our other commercial insurance program business, our reinsurers tend to be highly rated, well-capitalized professional third-party reinsurers.
−Removed: We typically contract with third-party reinsurers that have attained an “A-” or better financial strength rating
−Removed: Those reinsurers that fall below this threshold are required to post collateral on a funds held basis or with a letter of credit.
−Removed: Our Competitive Strengths
−Removed: Focus on Niche, Underserved Specialty Lines with Significant Fee-Based Income
−Removed: We focus on specialty insurance program business and have continued to diversify our revenues.
−Removed: We use three distinct approaches to grow our business – we pursue and acquire agents with select books of business that we believe will maintain risk-appropriate rates;
−Removed: we seek agents with what we believe is distinct underwriting expertise to select specific niches in programs;
−Removed: and we target the lines of business we believe are overlooked by the standard markets.
−Removed: For example, we often target the smaller premium-per-risk lines that we believe are highly profitable, have the potential to grow and are underserved by our competitors.
−Removed: We believe we have a unique ability to source small programs that meet our rate, form and risk threshold through our extensive distribution network and A.I.
−Removed: We believe our underwriting expertise, proprietary technology and deep distribution relationships allow us to serve our specialty markets and capture share.
−Removed: We cross-sell multiple products to our customers through the breadth of our products and solutions, including fee-based services.
−Removed: We believe the combination of a low limits profile, low severity products and attractive fee income provides higher underwriting margin and earnings stability for our business.
−Removed: While low limits and low severity constitute most of our underwritten business, we believe we are agile enough to take advantage of attractive opportunities in challenging market conditions.
−Removed: Track Record of Growth, Profitable Underwriting and Strong Economic Alignment with Our Distribution Network
−Removed: Consistent underwriting is a function of rate adequacy and risk selection by our specialized agents.
−Removed: While we regularly establish sound actuarial rates similar to our insurance peers, we believe our stringent risk selection requires unique underwriting expertise by our agents and a high degree of specialty program underwriting skillsets.
−Removed: After we establish relationships with our targeted agents, we further solidify our alliance by creating additional value for our distribution partners through our technology platform.
−Removed: We believe our A.I.
−Removed: algorithm and machine learning assisted underwriting drives a distinct lead generation advantage for our agents.
−Removed: technology and machine learning, we identify risks that fit into an acceptable profile, enhancing the agent’s efficiency and revenue base while allowing us to experience what we believe is a superior spread of risk and exceptional underwriting results.
−Removed: For the year ended December 31, 2020, our combined ratio was 91.5% and has averaged 91.6% over the past five years.
−Removed: Scalable, Proprietary Technology, Which Drives Efficiency and Delivers Premium Customer Service
−Removed: We provide many aspects of insurance, including admitted specialty property-casualty products, E&S line offerings, administration, premium finance and other value-added services.
−Removed: We have a scalable and flexible technology infrastructure, together with highly trained and knowledgeable IT personnel and consultants.
−Removed: These resources allow us to launch new insurance and fee for service programs and expand gross written premiums and premium equivalents volume quickly and seamlessly without significant incremental expenses.
−Removed: Our technology also delivers low-cost, highly automated underwriting and administration services to our program partners without substantial up front investments.
−Removed: This technology-enhanced platform enables us to automate core business processes, reduce our operating costs, increase our operating efficiency and secure high agent retention.
−Removed: We have maintained a 95% persistency rate with our insurance producing agents over the past five years.
−Removed: Our underwriting expertise, strong distribution relationships and proprietary technology empower us to remain agile and take advantage of attractive opportunities in challenging market conditions.
−Removed: Our systems also enable us to provide a high level of service to our distribution partners and customers through technology.
−Removed: High-Quality, Conservative Balance Sheet with Solid Capitalization and Ratings
−Removed: We maintain a high quality, S&P “AA” rated, fixed income investment portfolio.
−Removed: Our investment portfolio’s principal objectives are to preserve capital and surplus, to maintain appropriate liquidity for corporate requirements, to support our strong ratings and to maximize returns.
−Removed: We have a track record of reducing our reinsurance counterparty exposure by partnering with reinsurers that have high-grade credit quality, ensuring high-quality recoverable assets and by effectively using collateral and partnering with PORCs.
−Removed: Our financial strength ratings of “A-” (Excellent) (Stable Outlook) from A.M.
−Removed: Best and “A-” (Stable Outlook) from KBRA reflect our adherence to our core values.
Market Opportunity
−Removed: Commercial & Personal Lines
−Removed: We underwrite and administer both admitted and E&S line business.
+Added: Commercial Lines
+Added: We underwrite and administer both admitted and E&S business.
We believe underwriting business across multiple industries and geographies creates a conducive environment for targeting profitable programs, supporting agents with highly specialized skillsets and focusing on overlooked business lines.
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Through long-term relationships with our agents and substantial experience in the markets we serve, we believe we operate in an advantageous position against new market entrants, who we believe would find it time-consuming and expensive to compete against or replicate our success.
−Removed: Credit Insurance & Collateral Protection
−Removed: We are a leading provider of credit insurance protection products in the United States and believe we are well positioned to increase our market share both organically and potentially through acquisition.
+Added: Our commercial lines gross written premiums (including E&S lines) grew to $656.6 million in the year ended December 31, 2021, compared to $469.8 million in the year ended December 31, 2020, an increase of 39.7%.
+Added: Personal Lines
+Added: We are a leading provider of credit insurance and collateral protection products in the United States and believe we are well positioned to increase our market share both organically and potentially through acquisition.
We believe our capabilities and reputation have allowed us to better position ourselves competitively for new business and renewals in the marketplace.
We also believe our market position, capabilities and reputation will make us a preferred acquisition partner for smaller competitors that may choose to exit the market or desire a partner with more resources.
+Added: Our personal lines gross written premiums grew to $781.8 million in the year ended December 31, 2021, compared to $593.9 million in the year ended December 31, 2020, an increase of 31.6%.
Warranty Solutions
−Removed: We believe we can significantly increase our market presence in the warranty sector.
−Removed: We entered the warranty market as a natural extension of our insurance products given that it possesses similar attributes and distribution channels.
−Removed: Our warranty market gross premiums written equivalents grew to $550.0 million in the year ended December 31, 2020, compared to $297.3 million in the year ended December 31, 2019, which represents a 85% compounded annual growth rate.
+Added: We believe we can significantly increase our market presence in the service contract sector.
+Added: We entered the service contract market as a natural extension of our insurance products given that it possesses similar attributes and distribution channels.
+Added: Our service contract gross written premium equivalents grew to $652.1 million in the year ended December 31, 2021, compared to $550.0 million in the year ended December 31, 2020, an increase of 18.6%.
We believe the demand from consumers for extended service contracts on products such as automobiles, furniture, mobile phones and electronics will continue to drive long-term growth opportunities.
−Removed: We believe our acquisition of Smart AutoCare, combined with Fortegra, position us as a leading provider of automobile extended service contracts.
Europe Warranty Solutions
−Removed: In 2018, we expanded into Europe where we believe our existing warranty product offerings can be successfully distributed while maintaining similar levels of our existing underwriting performance.
+Added: In 2018, we expanded into Europe where we believe our existing protection solutions and service contract offerings can be successfully distributed while maintaining similar levels of historical underwriting performance.
+Added: Our European gross written premiums and equivalents grew to $103.6 million in the year ended December 31, 2021, compared to $53.2 million in the year ended December 31, 2020, an increase of 94.6%.
We operate in several markets, and believe that no single company competes against us in all of our business lines.
−Removed: We may compete with other specialty carriers or program managers within a given program, but no specific insurers can be identified as clear competition across all of our programs.
+Added: We may compete with other specialty carriers or program managers within a given program, but no specific insurers can be identified as clear competition across all of our business lines.
Within the United States, we compete with specialty insurers like Markel Corporation, RLI Corporation and Clear Blue Insurance Group.
−Removed: We also compete with larger insurance companies that may selectively underwrite specialty or credit programs like AIG and Allianz SE.
+Added: We also compete with larger insurance companies that may selectively underwrite specialty or credit lines such as AIG and Allianz SE.
Within our U.S.
and European Warranty Solutions lines of business, we compete with Assurant, Securian Financial, Great American, Asurion, LLC, AmTrust Financial, SquareTrade Inc., Allianz SE, Helvetia Insurance and AXA SA.
−Removed: These lists are not exhaustive and are constantly evolving as we and our competitors expand program coverage.
−Removed: In general, the insurance markets our programs operate in are highly competitive.
+Added: These lists are not exhaustive and are constantly evolving as we and our competitors expand coverages.
+Added: In general, the insurance markets we operate in are highly competitive.
The competition we face is due to a confluence of factors, including product pricing, industry knowledge and expertise, quality of customer service, effectiveness of distribution channels, technology platforms and underwriting processes, the quality of information systems, financial strength ratings, size, breadth of products offered, overall reputation, and other factors.
−Removed: We primarily compete by leveraging our proprietary technological innovations, decades of underwriting expertise, robust distribution relationships, data-driven marketing initiatives, our “agent-first” mentality, and best-in-class reputation.
+Added: We primarily compete by leveraging our proprietary technological platform, decades of underwriting expertise, robust distribution relationships, data-driven marketing initiatives, our “agent-first” mentality, and best-in-class reputation.
We are subject to federal, state, local and foreign regulation and supervision.
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Our insurance holding company is subject to the respective state insurance holding company statutes which may require prior regulatory approval or non-disapproval of material transactions between an insurance company and an affiliate or of an acquisition of control of a domestic insurer and payments of extraordinary dividends or distributions.
−Removed: Our insurance and warranty businesses are subject to U.S.
+Added: Our insurance and service contract businesses are subject to U.S.
federal and state regulations governing the protection of personal confidential information and data security, including the Gramm-Leach-Bliley Act, New York Department of Financial Services Cybersecurity Regulation and California Consumer Privacy Act.
−Removed: Our subsidiaries operating in the EU are subject to the General Data Protection Regulation, or the “GDPR,” which regulates data protection for all individuals within the EU, which became effective on May 25, 2018.
+Added: Our subsidiaries operating in the EU are subject to the General Data Protection Regulation, or the “GDPR,” which regulates data protection for all individuals within the EU.
A portion of our foreign business is conducted via our insurance company in Malta.
−Removed: Malta is a member country of the EU, and we are active in seven countries in the EU.
+Added: Malta is a member country of the EU, and we are active in fourteen countries in the EU, plus the United Kingdom.
The EU’s executive body, the European Commission, implemented insurance directives and capital adequacy and risk management regulations.
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Post-transition period changes to the EU and United Kingdom legal, trade and regulatory frameworks, as well as changes to United Kingdom regulatory requirements for insurers operating in that host country, could increase our compliance costs and subject us to operational challenges in the region.
−Removed: Additionally, a portion of our business is also ceded to our reinsurance company subsidiary domiciled in Turks and Caicos.
+Added: Additionally, a portion of our US and EU business is also ceded to our reinsurance company subsidiary domiciled in Turks and Caicos.
Our Turks and Caicos company is subject to Solvency II type of regulation by the domestic regulator.
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Additionally, our insurance subsidiaries have entered into confidentiality agreements with their clients that impose restrictions on client use of our proprietary software and other intellectual property rights.
−Removed: At December 31, 2020, Insurance employed 716 employees.
+Added: As of December 31, 2021, Fortegra had 778 employees across 15 offices in four countries.
Tiptree Capital
−Removed: We own a diversified group of investments across a broad spectrum of businesses and assets.
−Removed: These investments are owned and managed separately as Tiptree Capital, and include our Mortgage segment operations.
−Removed: We manage Tiptree Capital with a long term focus, balancing current cash flow and long-term value appreciation.
−Removed: When assessing potential acquisitions and investments, we look for opportunities that:
−Removed: • have strong and experienced management teams;
−Removed: • can generate long term attractive returns, from both current earnings and capital appreciation;
−Removed: • complement existing businesses or strategies;
−Removed: • have sustainable and scalable business models.
+Added: We own a diversified group of investments that are owned and managed separately as Tiptree Capital, and include our Mortgage segment operations.
+Added: Consistent with our operating principles, we manage Tiptree Capital with a long-term focus, balancing current cash flow and long-term value appreciation.
We expect the investments within Tiptree Capital to change over time as we exit investments and reallocate capital to new investment opportunities.
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Our mortgage operations are conducted through Reliance First Capital, LLC.
−Removed: Our mortgage business originates conventional and government one-to-four family, residential mortgage loans.
−Removed: The loans are typically sold in the secondary market, primarily through issuance of MBS securities guaranteed by Ginnie Mae and by whole loan sales to Fannie Mae, Freddie Mac and secondary market investors and aggregators.
−Removed: We sell our loans either servicing released or servicing retained.
−Removed: When we sell the loans servicing retained, we service those loans on behalf of the agencies.
−Removed: Revenues are primarily generated from gain on sale of loans, net interest income and loan fee income and loan servicing fees.
+Added: Our mortgage business has been focused on primarily originating and servicing agency-eligible (Federal Housing Administration (“FHA”) and Veterans Administration (“VA”)) and conventional loans that can be transferred to Government National Mortgage Association (“Ginnie Mae”) pools or sold on a servicing-retained or servicing-released basis to Federal National Mortgage Association (“Fannie Mae”), Federal Home Loan Mortgage Corporation (“Freddie Mac”) or secondary market investors and aggregators.
+Added: Revenues are primarily generated from gain on sale income, loan fee income, servicing fee income, and net interest income.
The growth in our mortgage business is expected primarily to come from increased origination volume, retention of additional mortgage servicing rights, and new products.
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Tiptree Capital - Other currently includes:
+Added: • Our investment holdings in the maritime transportation sector, primarily in dry bulk vessels and product tankers that transport commodities, such as coal, grains and clean petroleum products.
• Our share holdings of Invesque, a publicly traded real estate investment company that specializes in health care and senior living property investment throughout North America.
−Removed: • Our investment holdings in the maritime transportation sector, specifically in dry bulk vessels and product tankers that transport commodities, such as coal, grains and clean petroleum products.
+Added: • Our ownership of Corvid Peak, a credit oriented, special situations asset manager.
+Added: • Our held for sale mortgage originator, Luxury Mortgage.
Competitive Strengths
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In the sectors in which Tiptree Capital participates, the markets are highly competitive.
−Removed: There are a large number of competitors offering similar products and services, including many that operate on an international scale, and which are often affiliated with major multi-national companies.
+Added: There are a large number of competitors offering similar products and services, including many that operate on an international scale, and which are often affiliated with
+Added: major multi-national companies.
Many of these organizations have substantially more personnel and greater financial and commercial resources than we do.
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Human Capital
−Removed: At Tiptree, we strive to:
+Added: The success of our businesses depend on our ability to attract and retain experienced personnel and seasoned key executives who are knowledgeable about their industry and business.
+Added: We recruit talent in diverse communities.
+Added: Tiptree’s seven member board of directors includes two women and one underrepresented minority.
+Added: Tiptree’s seven person senior management team includes two women and one underrepresented minority.
+Added: Our talent strategy is focused on employee engagement and investments in programs to support career development, as well as recognizing and rewarding performance.
+Added: An important element of our talent strategy is succession planning and building leadership at various levels across the organization.
+Added: We strive to:
• Provide employee wages that are competitive and consistent with employee positions, skill levels, experience, knowledge and geographic location.
−Removed: • align executives’ long-term equity compensation with stockholders’ interests by linking realizable pay with revenue production and earnings.
+Added: • Align executives’ long-term equity compensation with stockholders’ interests by linking realizable pay with earnings and total stockholder return.
• Ensure that annual increases and incentive compensation are based on merit, which is communicated to employees at the time of hiring and documented through their talent management process as part of the annual review procedures and upon internal transfer and/or promotion.
−Removed: • ensure that all employees are eligible for health insurance, paid and unpaid leaves, and life and disability/accident coverage.
+Added: • Ensure that all employees are eligible for health insurance, paid and unpaid leaves, and life and disability/accident coverage as well as access to wellness programs.
+Added: The Fortegra Foundation, a non-profit corporation chaired by Fortegra’s Chief Executive Officer, Mr.
+Added: Kahlbaugh, is a 501(c)(3) tax-exempt charity committed to giving back to our communities by lending a helping hand to those in need.
+Added: We undertake multiple initiatives to support military families and local charities focused on the health and welfare of children and families.
+Added: We also support clean water initiatives in Africa.
+Added: Fortegra N.O.W.
+Added: (Network of Women) is working to ensure equal access to leadership positions in the insurance industry regardless of gender or race.
+Added: This is being accomplished through
+Added: unconscious bias training, mentoring programs, education reimbursement, and policies that support work/life balance and equal pay for equal jobs.
+Added: This group is led by female executives at Fortegra.
+Added: The programming and resources provided are available to all Fortegra employees.
At Fortegra, we have developed an education program that assists employees in developing key skills that enable them to perform their jobs and to advance their careers.
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Our goal for successful LDP participants is to hire them on a full time basis upon completion of the program.
+Added: We invest in our employees’ career growth and provide employees with a wide range of training and development opportunities, including face-to-face, virtual and self-directed learning, mentoring, external development opportunities and continuing education required by certain professional organizations.
AVAILABLE INFORMATION
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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.