Greetings, and welcome to Tiptree Inc.'s Third Quarter 2021 Earnings Conference Call [Operator Instructions]. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Sandra Bell, Chief Financial Officer.

Good morning, and welcome to our third 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. 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.

Good morning, everyone. Thank you all for your time, and welcome to our third quarter earnings call. Our performance in the quarter and throughout all of 2021 reflects the strength and diversification of our underlying operating businesses. Year-to-date revenues of $881 million and net income of $38.6 million were both up substantially from 2020 driven by the particularly strong performance of Fortegra, our specialty insurance business; Reliance, our mortgage business; and our dry-bulk shipping investment. After removing the impact of investment gains and losses, year-to-date revenue grew 34% and adjusted net income of $47 million increased 33% from the prior year. We are pleased with the strength in our businesses demonstrated by the growth in these financial metrics. In early October, we announced a $200 million strategic investment in Fortegra from Warburg Pincus, a leading global private equity firm focused on growth investment. As we have stated before, this capital investment represents a significant step forward for Fortegra and Tiptree and will provide many strategic benefits in advancing Fortegra's position as a global specialty insurer. Our primary objectives in this transaction were to source growth capital for Fortegra, to refine and recapitalize our balance sheet and to create greater transparency of Fortegra's value for investors and thereby seek to close the gap between Tiptree's stock price and intrinsic value. This transaction goes a long way in accomplishing these goals, and we believe it will provide a solid runway to continue Fortegra's growth over the next 2 to 3 years. Before transitioning to the quarterly performance, I would like to thank both the Fortegra and Tiptree teams for their efforts in getting this transaction across the finish line. It was a true team effort, an example of how Tiptree's ownership can benefit our subsidiaries and one that we believe will offer…

Thank you, Michael. On Page 3 of the presentation, we highlight Tiptree's key financial metrics for the third quarter 2021 compared to the prior year period. Net income for the quarter was $2 million, driven by continued growth in the insurance business and positive performance in our mortgage and shipping operations, offset by mark-to-market equity losses primarily from Invesque. Excluding investment gains and losses, revenues were up 31% for the quarter. driven by organic growth in insurance operations, continued strength in mortgage volumes and margins and increases in dry bulk charter rates. Adjusted net income for the quarter was $20.7 million, representing a 20.5% annualized adjusted return on average equity. For the year-to-date period, adjusted net income was $47 million, up 33% versus the prior year. These strong operating results were driven by the growth in revenues as well as the consistent combined ratio at Fortegra. Book value per share of $11.37 increased by 11.3% versus the prior year. Compared to the second quarter 2021, book value per share declined by $0.22, primarily driven by the exchange of certain diluted securities and our third quarter dividend, the combination of which offset the impact of positive earnings on book value per share for the quarter. Turning to Page 4, we highlight Tiptree's sum of the parts value, reflecting the impact of Warburg's $200 million investment in Fortegra. As we discussed on the transaction announcement call in October, $140 million of the investment will occur once regulatory approvals are received, with the next $60 million to be drawn as Fortegra needs the funds. Once the full $200 million is invested, Warburg's ownership of Fortegra will be divided between 17.5% attributable to their common stock and 6.6% attributable to their convertible preferred shares on an as-converted basis. Based on the investment transaction multiple…

Thanks, Sandra. With the company's performance thus far in 2021 and the recently announced investment in Fortegra, we believe our businesses are well positioned to drive continued growth and value for Tiptree shareholders. 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. Within shipping, the demand-supply imbalance in the bulker market continues to play out and has benefited our business as global economies reopen. Fortegra is a model of consistency, with top line growth at 24% over the past 4 years, while delivering best-in-class combined ratio of 91%. We believe these trends will continue and place a premium value on the consistency that the business generates year in, year out. With our new partner, Warburg Pincus. Fortegra enters its next phase of growth that we believe will lead to long-term value creation for Tiptree shareholders. With that, we will open the line for questions.

[Operator Instructions] Our first question comes from Andrew Cowen from Brean.

Really great quarter, congratulations. Two questions. So obviously, Warburg Pincus is an amazing investor to have, and congratulations on that deal and the valuation. Is there anything that they are looking to do in terms of accelerating growth within Fortegra that you could discuss?

So good question, Andrew, and thanks for that. And look, I think I can't speak for Warburg specifically, but what I can certainly say is that one of the things that -- through our discussions as they were doing their due diligence and deciding to make the investment, one of the things that certainly we all talked about was what they bring as a strategic partner, not just in their experience in the financial services sector and insurance, other related businesses that may have some synergies. So we see this certainly as adding more than just the capital. We see this as them helping us be a true partner in the growth of Fortegra, possibly bringing into play other sectors that they're involved in that may relate. And certainly, as we do consider going forward to an IPO again, their experience and relationships, I think, are going to go a long way.

And also on the shipping business, do you have any idea on like what kind of -- obviously, ships are very volatile in terms of valuation and their cash flows. Do you have any idea in like what kind of gains you might have just sort of, in general, what those ships are worth now? And is there a price where you'd consider selling them?

So we're in this business for a very long-term view, Andrew, I'll say, and it was our objective and we continue to execute on that objective of building out to be larger than we currently are. We continue to add to the fleet opportunistically, both with regard to dry bulk and to probably tanker. I'll say that to your point, we're enjoying an environment in the dry bulk. There's about a 12-year high in terms of rates. Certainly, as that has been sustained and I think as analysts continue to model this being sustained for an extended period, that does have an impact on the S&P market in terms of where ships are trading and where we would value our own ships. I think that there is -- that, that valuation always lags in terms of rates. But right now, we do believe we have a material appreciation in our investment value and certainly relative to our depreciated value. And I'll just say that we are going to continue to look to source opportunities to expand the fleet, again, opportunistically, when we see that there's value there. Our objectives have always been to invest where we see solid return on capital invested. But where we feel that the rate environment will lead to upside optionality, we're seeing that in the dry bulk. We saw that in the tanker space in early 2020. We think we'll see that return in the tanker space going forward.

[Operator Instructions] Ladies and gentlemen, there are no further questions at this time. I would like to turn the call back to Sandra Bell for any closing remarks.

Thank you, Joe, and thanks, everyone, for joining us today. As always, if you have any questions, please feel free to reach out to me directly. This concludes our third quarter 2021 conference call. Have a great day.

This concludes today's conference. You may disconnect your lines at this time. Thank you very much for your participation, and have a great day.