TIPT Stock: Why It Drastically Increased Today

By Amit Chowdhry ● Oct 12, 2021
  • The stock price of Tiptree Inc (NASDAQ: TIPT) increased by over 32% during intraday trading today. This is why it happened.

The stock price of Tiptree Inc (NASDAQ: TIPT) increased by over 32% during intraday trading today. Investors are responding positively to Tiptree announcing a $200 million strategic investment in its insurance subsidiary The Fortegra Group, LLC from Warburg Pincus, a leading global growth investor.

This investment will give Warburg Pincus an approximate 24% ownership in Fortegra on a fully diluted basis and is expected to close in the first quarter 2022. And this deal highlights the underlying intrinsic value of Fortegra to Tiptree shareholders, representing a significant milestone for the company.

Fortegra is known as a rapidly growing and consistently profitable specialty insurer, underwriting over $2 billion of gross written premiums and premium equivalents annually. And the business underwrites and administers a variety of specialty insurance products and warranty solutions across the United States and Europe.

Fortegra’s strong financial performance last year and the first half of this year demonstrates the growth trajectory and consistent underwriting results of the business. And with the backing of Tiptree and Warburg Pincus, Fortegra enters its next phase of growth focused on the specialty admitted and E&S lines while maintaining its historically strong underwriting principles.

KEY QUOTES:

“This investment accomplishes many of our strategic goals including raising capital to accelerate Fortegra’s growth and recapitalizing both companies balance sheets through the repayment of indebtedness.” Barnes continued, “We are excited to continue working with Rick and the Fortegra team as they execute on their long-term objectives, and we look forward to a strong partnership with Dan Zilberman and the Warburg Pincus team. They bring significant expertise across many sectors, including insurance, and will be great partners in support of Fortegra’s continued success.”

— Tiptree’s Executive Chairman Michael Barnes

“Our objective has always been to build an insurance enterprise that generates exceptional returns for its investors by complementing underwriting results with fee revenue. This transaction represents the collaboration of industry experience, capital and investment acumen that will be the catalyst to accelerate Fortegra’s growth as a global specialty insurer. Joining forces with Warburg Pincus is yet another chapter in the Fortegra story and together Fortegra, Tiptree and Warburg Pincus will accelerate the exceptional growth and profitability of Fortegra.”

— Rick Kahlbaugh, the Chief Executive Officer of Fortegra

“Fortegra’s talented management team has built a world-class specialty insurance platform delivering high quality products and services to its customers worldwide. We are excited to partner with Rick Kahlbaugh and Tiptree’s experienced management team and are committed to Fortegra’s continued growth and long-term success. Our investment in Fortegra underscores our commitment to partnering with innovative companies in the insurance sector. We look forward to supporting Fortegra as they continue to expand their capabilities,” added Jeff Stein, Managing Director, Warburg Pincus.

— Dan Zilberman, Managing Director and Head of Special Situations, Warburg Pincus

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.