Greetings and welcome to the Tiptree Financial Inc. First Quarter 2016 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Sandra Bell, Chief Financial Officer. Thank you. You may begin.

Good morning and welcome to our first quarter 2016 earnings call. I am joined today by our Executive Chairman, Michael Barnes; and Chief Executive Officer, Jonathan Ilany. I'm Sandra Bell, the Chief Financial Officer of Tiptree Financial. Prior to this call, we posted the earnings release and presentation on our website at tiptreefinancial.com. The presentation provides supplemental information to our prepared remarks, which we will refer to by page during the call. We list our required disclosures in detail on Page 1 of the presentation. Our remarks on this call are qualified in their entirety by the disclaimers on this page. This presentation is being provided as a supplement to our SEC filings solely for information purposes. Throughout the presentation there are forward-looking statements. Our businesses are subject to risks and uncertainties which are outlined in our SEC filings, and which could impact our expectations of future results. Except as required by the securities laws, we undertake no obligation to update any forward-looking statements. Lastly, we use non-GAAP measures, throughout the presentation. We believe these measures provide supplemental information useful to investors. As these measures are not GAAP, they should not be used as a substitute for GAAP. The appendix provides a reconciliation of each of these non-GAAP measures to their GAAP equivalent. With that disclaimer, let me turn it over to Michael.

Thank you, Sandra. Good morning and thank you for joining our call. Tiptree had a strong start to the year, as we are seeing positive momentum in many of our businesses. On a consolidated basis total revenues grew 48% to $132 million while contributing $15.3 million of adjusted EBITDA. Net income attributable to our publicly traded shares was $5.6 million. Earnings and other performance measures were up significantly against the first quarter of 2015. We continue to execute against our strategic priorities. On Page 3, we summarize some of the key achievements for the quarter. Fortegra adjusted EBITDA was up 46% with net revenues growing 15%. Growing demand for credit protection and specialty insurance products were the catalyst for improvement in the segment. Care; our senior's housing business continued a strategy of building out a real-estate portfolio by acquiring $55 million of new investments. Throughout 2016, we expect to see benefits from recent acquisitions as actions taken to improve property occupancy levels and net operating income flowed to the bottom line. We continued adding to our investment in non-performing mortgage loans ending the quarter with the portfolio of $52 million. Toward the end of March, we begin to see the volatility in middle market term loan prices stabilized. Which allowed Telos Asset Management to launch its 7 CLO in early April? Tiptree purchased $26 million of subordinated notes similar to prior CLOs. We believe leveraging our credit skills to invest in middle market loans generally with tighter covenants and greater spreads will generate stable cash distribution and CLO asset management fees overtime. We completed a tax restructuring to form a consolidating group, which further simplified our structure and will result in go forward efficiencies. Consistent with our decision to exist non-core asset, we sold our interest in Star Asia on…

Thank you, Michael. For the first quarter, we reported net income of $7.4 million for the operating company and $5.6 million for Tiptree Financial. This was up from prior period losses of $2 million and $1 million respectively. Results from continuing operations were positively impacted period-over-period by the improved profitability of Fortegra, increases in principal investment income, increased rental income at Care, both from recent acquisitions and improving results at existing properties and the benefits associated with the tax restructuring mentioned earlier. This was partially offset by reductions in specialty finance organic volumes combined with higher expenses, as we increased headcount to drive future sales growth. Declining interest rates quarter-over-quarter resulting in a $1.4 million fair value loss on interest rate swap in our real estate segment and higher corporate expenses to enhance our controls and infrastructure. On Page 7, we've laid out the components of our revenue and adjusted EBITDA growth by segment. First quarter revenue grew $43 million primarily driven by 23% growth in insurance and 48% growth in real estate. Adjusted EBITDA from continuing operations increased $10.5 million over the prior year driven by Fortegra margin improvements increased Care NOI both from acquisitions and improving yields on managed properties and higher principal investment income in unrealized gain. With that, we will now transition to a more detailed analysis of each segments performance and outlook. Starting on Page 9, we highlight three metrics that we use to measure our insurance and insurance services segment results. As adjusted revenue, as adjusted net revenues and adjusted EBITDA. All three are non-GAAP measures that remove the purchase accounting adjustments from their comparable GAAP metrics. We use these metrics to review relative performance year-over-year. While purchase accountings values acquired contracts advent to our balance sheet and amortizes them overtime. The single line…

So to summarize Tiptree's results for the quarter, we had a good first quarter with company having adjusted EBITDA of $15.3 million and net after-tax income of $7.4 million of which $5.6 million was attributable to the Class A shareholders. Our insurance sector was ahead of expectations and with the A.M. Best upgrade, we're optimistic that revenues will grow through increased product origination and returns on the investment pool. Our real sector made further acquisition to senior care facilities and continues to increase revenue in NOI, our asset management sector is stable and aside from CLOs, we're working toward raising capital and other forms of managed accounts. Our specialty finance sector was a bit light this past quarter were partly because of our investment in further building out existing business, which should yield improved production in the future, our corporate and other sector adjusted EBITDA was positive, which not only includes gains of our principal investment but also incorporates our companies corporate expenses. And importantly, we continue to make progress on this year's objectives of exiting non-core underperforming assets, reallocating to existing core businesses and further building out our infrastructure. And with that, we'll now open up for questions.

[Operator Instructions] our first question comes from the line of Andrew Cowen from Badge Investment, please go ahead.

Hi, everyone nice quarter. I had asked last quarter, if there was any kind of guidance that you guys might be able to provide. I understand that there are going to be certain things or going to be tough to predict and like CLO marks and stuff like that, but is there any kind of guidance you can give by segment at least just it seems like we're on kind of just started doing back of the envelope, but almost cash earnings rate of about $1 a share. I was wondering if you could give any kind of confirmation or detail around anything like that.

Andrew, it's Michael. Thank you very much for the question. We don't provide guidance really, is more in favor of philosophy than anything, however many of our businesses as you just suggested certainly have repeatable, predictable. We're not going to provide guidance on this call; we are certainly working each quarter as we seek to improve our financial disclosures to better communicate to investors, our performance and those businesses that we see continuing to perform well in the future. So I would say although, philosophically we're not going to be providing guidance. We're certainly going to be working towards improving our disclosures and transparencies, so that investors can better understand the predictability of our cash flow, but thank you for the question.

Just on a follow-up is there, with something like Fortegra which is going to be somewhat predictable or I guess your most predictable business beyond, I guess ex-real estate. Are these numbers sort of numbers we can look at going forward, something like a $12 million EBITDA quarterly number or anything like that and then maybe something in real estate or just asset management fee-based income?

So Andrew, I'm going to have Sandra Bell answer this question. As you see, we're continuing to make acquisitions in a real estate sector, it's our objective that continue to grow our asset management business not only in CLOs, as you've done in the past but also looking to expand and diversify their fee income to other types of managed accounts. So that's certainly something that we would look to grow in the future. With respect to Fortegra, Sandra would you like to take that one?

Yes, let me respond on this two ways. First Andrew is when you look at the couple that extra metrics we've added this quarter, our net written premiums and net revenues as well as adjusted EBITDA. You can begin to see the alignment among those metrics. It is a relatively predictable business and the contract terms are couple years long. So as you see written premiums grow, you can begin to translate that into trends. I just want to caution that the first quarter was an extraordinarily good quarter for Fortegra. We do believe, we'll see growth and we do believe that we'll begin to see improved performance on the investment income, but I wouldn't expect to see continued growth around 46%. It will be.

No, no I wasn't talking about the growth number as more of just split sort of more of a run rate steady state EBITDA number could be.

Yes, it tends to be steady state, its company that has disciplined cost control as well and that will support the steady state.

And I think Andrew, now that we've owned for more than a year, you can start to have comparison quarter-by-quarter with regard to this performance.

The other piece to answer your question about real estate, I think we've started to add NOI margins and that's basically net operating income which is property level metric over investment and again that metric will start to show you, how we expect improving performance on what I would call it same store sales type of basis.

Do you have any kind of FFO type numbers?

We have been providing NOI because of the nature of the business. We have the two components triple net leases and managed properties. We believe NOI is a better metric than FFO for this business.

Okay and then just lastly, you [indiscernible] some nice detail on all the depreciation line items particularly as regard to the [indiscernible] but based on book value I think it’s somewhere around official book value of around $9.16. How much has book value been impacted by that total depreciation? So if you wanted to basically assume that a cleaner book value is, I would imagine somewhat materially higher because you've had such a big depreciation, is there a cumulative effect on book value.

Andrew, I'll just comment you've certainly have picked on one of those things that when investing in real estate and also with respect to the purchase of Fortegra, depreciation amortization both last year and as we can continue to make acquisitions in real estate, will always be reflected in the GAAP results that we report and so it's one of those things that certainly depreciation relates to real estate certainly those against GAAP book value, NOI is certainly one of the metrics that we look at in terms of both a valuation metric as well as we increased our overall performance metric. So your point is spot on with respect to depreciation certainly effecting the GAAP reporting of book value and certainly it's our view and that intrinsic value very well exceeds what we would phase reportable GAAP book value in our opinion.

Is there some sort of accumulated depreciation number, we might have a look at and maybe add that back to some sort of official book value.

Well I would be happy to Andrew, I don't have that off the top of my head and put that together and offline walk you through, how to build that from our published financial statements.

Okay, it's just one of things I noticed with such a big number that I said well its looks like book value pretty materially understated versus true color intrinsic value, but yes any help on that front would be great.

We acknowledge your point.

Okay, thanks.

[Operator Instructions] ladies and gentlemen, we have no further questions in queue at this time. I would like to turn the floor back over to management for closing comments.

Thank you, Adam and thank you everyone for joining our call today. Certainly if you have any questions, pleases feel free to reach out to me directly and I'll be happy to work with you in going through our disclosures. We look forward to speaking with you at our second quarter call and this concludes our first quarter 2016 conference call. Have a nice day.

Thank you, ladies and gentlemen. This does conclude our teleconference for today. You may now disconnect your lines at this time. Thank you for your participation and have a wonderful day.