Greetings. Welcome to the Tiptree Inc. First Quarter 2021 Earnings Conference Call. [Operator Instructions] Please note this conference is being recorded. I will now turn the conference over to your host, Sandra Bell, Chief Financial Officer. Thank you. You may begin.

Good morning and welcome to our first quarter 2021 earnings call. We are joined today by our Executive Chairman, Michael Barnes and CEO, Jonathan Ilany. You can find the slides that accompany this review on our Investor Relations website. Please note that some of our comments today will contain forward-looking statements based on our current view of our business and actual future results may differ materially. Please see our most recent SEC filings, which identify the principal risks and uncertainties that could affect future performance. In addition, we will discuss certain adjusted or non-GAAP financial measures, which are described in more detail in this morning’s presentation. Reconciliations of non-GAAP financial measures and other associated disclosures are contained in our SEC filings, the appendix to our presentation and posted on our website. With that, I will turn the call over to Michael.

Thank you, Sandra and good morning to everyone. We are pleased to announce that the first quarter 2021 was a record quarter for Tiptree, with all of our holdings contributing to first quarter profits. Both revenues of $295 million and net income of $30.6 million were all-time highs for a single quarter driven by the particularly strong performance of Fortegra, our specialty insurance business; Reliance, our mortgage business; and gains on investment holdings across the company. Revenues, excluding mark-to-market, increased 26% and adjusted net income of $13.2 million increased 90% from the prior year. For our insurance and mortgage businesses, production and sales volumes are at all-time highs, and the management teams continue to drive growth while expanding margins. Given our confidence in the strength of these core operating trends, Tiptree repurchased close to 500,000 shares in the first quarter and 2.3 million shares over the past year, representing approximately 7% of outstanding shares. These repurchases were executed at a deep discount to bulk and an even further discount to intrinsic value. In our insurance business, the Fortegra management team led by Rick Kahlbaugh, continues to execute on its growth objectives. Gross written premiums and premium equivalents of $505 million were up 29% over first quarter 2020, driven by strong organic growth of 28%, with contributions from all business lines and geographies. Revenue growth and an improving combined ratio led to adjusted net income of $12.8 million, up 46% from the prior year. This performance translates into an annualized adjusted return on equity of 17.9%. As our shareholders are well aware, over the past several months, we have worked toward a potential IPO of Fortegra that will provide access to efficient long-term capital to accelerate its growth. Additionally, we saw several potential strategic benefits to Tiptree shareholders, including greater transparency…

Thank you, Michael. On Page 3 of the presentation, we highlight Tiptree’s key financial metrics for the first quarter 2021 compared to the prior year period. Net income before non-controlling interest for the quarter was $30.6 million, driven by continued growth in the insurance business, strong performance in mortgage operations and unrealized gains on investments in the current period as compared to unrealized losses in the prior year period. Excluding investment gains and losses, revenues were up 26% for the quarter, driven by organic growth in insurance operations and increased volumes and margins in our mortgage business. Adjusted net income for the quarter was $13.2 million, representing a 13.7% annualized adjusted return on average equity. The value per share increased to $11.63, which represented an increase of 19.5% versus the prior year. Our capital and liquidity position remains strong with cash and equivalents of $124 million as of the end of the quarter, including $78 million held outside of statutory insurance companies available to support growth across our businesses. On Page 4, we have updated our KPI trends. We evaluate the performance of our operations using adjusted net income, which removes realized and unrealized gains and losses, purchase accounting amortization, stock-based compensation and nonrecurring items. We believe that adjusted net income better aligns with similar metrics that are used by our peers, particularly those in the insurance industry who have a high proportion of both capital-light warranty businesses and fee-based revenues. Adjusted net income for the quarter increased 90% and to $13.2 million from $6.9 million in the prior year. These strong operating results were driven by the outperformance of our mortgage business and continued positive earnings performance in Fortegra’s business. We continue to see strong momentum in Fortegra’s top line results. For the first quarter 2021, premiums and equivalents…

Thanks, Sandra. Our first quarter 2021 was a great start to the year. Tiptree’s total return, as measured by change in book value per share plus dividends paid, was 21.2% over the past year. As I mentioned in my earlier remarks, we have a fantastic business in Fortegra and a collective management team that is energized to execute the growth plan and to continue looking at alternatives to accelerate it. The capital-light, fee-generating warranty programs complement Fortegra’s niche specialty insurance focus. And with the addition of Fortegra Specialty in late 2020, there is substantial capacity in excess and surplus lines to complement growth in admitted programs. The earnings strength of our mortgage business in a low interest rate environment serves as a great example of the embedded upside optionality and diversity of our capital allocation. We continue to believe that Tiptree’s overall intrinsic value has increased significantly and is materially greater than our current stock price would suggest. As we look forward, we believe Tiptree is well positioned to continue executing on our long-term growth objectives. With that, we will open the line for questions.

[Operator Instructions] Our first question is from [indiscernible] of Morgan Stanley. Please state your question.

Hi, good morning and thank you for the presentation. Could you talk a little bit about your maritime transportation business, the drybulk sector and just elaborate on your positioning in that business.

Sure. I’d be happy to. Thanks for the question, Alex. So, we started looking at this business probably about 4 years ago. And it was a long-term view that we had in terms of the anticipated growing of global economies and how we liked the embedded optionality in shipping, while producing current attractive cash-on-cash returns with the ability to expand in a lot of different directions and a very scalable model. I will say that the pandemic certainly set that back somewhat. However, it also created some anomalies in terms of the supply-demand, particularly in drybulk as certain – as it became more challenging to change crews as China certainly started keeping certain ships offshore. And as other kind of anomalies hit the shipping sector, there were fewer ships available. And what we’ve seen over the course of the last, let’s call it, 6 months, maybe even 12 months is an increase in rates as a result of that supply-demand shift. So part of our outlook from the beginning was not just the growth in global economies, but also what we viewed as a shift in terms of that supply-demand of ship availability versus demand in growing economies. So what we’re seeing now as economies are reopening and is exactly that. We are seeing that optionality that we felt was embedded in the sector start to be untapped. We will see how far it goes, but right now, we are enjoying the environment, particularly in the drybulk sector with respect to rates. We are also in the tanker sector, the product tanker sector. We entered that a few years ago as an expansion to our focus in shipping. There, we also saw some anomalies as the pandemic hit. And also as Saudi Arabia and Russia got into a tiff, we saw oil and related products plummet, but that actually created a storage need. And we saw product tankers suddenly come into demand from a storage demand. And now, more recently, with the recovery taking place, we are seeing a normal resumption of shipping in that sector. So, this is an area that we have taken a very long-term view. I think we have got great leadership and we are continuing to expand in the sector.

I don’t know if I am still on, I was just going to say, how many ships do you have in the drybulk sector?

Right now, we have 3 ships in the drybulk sector.

Okay. And are they at fixed rates currently or are they open to the spot market?

We have a combination of being participants in a pool as well as doing long-term charters. And so, the answer is that we tend to do longer term charters and not expose ourselves to the volatility of day rates.

Okay, thank you very much.

Sure. Thank you for the question.

[Operator Instructions] There are no more questions at this time and we have reached the end of the question-and-answer session. I will now turn the call back to Sandra Bell for closing remarks.

Thank you, Hillary and thanks everyone for joining us today. If you have any additional questions, please feel free to reach out to me directly. This concludes our first quarter 2021 conference call. Thank you.

This concludes today’s conference and you may disconnect your lines at this time. Thank you for your participation and have a great day.