Greetings and welcome to the Tiptree Financial Incorporated 2014 Earnings Conference 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. I would now like to turn the conference over to your host Mr. Chris DeRosa [ph] representing Tiptree Financial. Thank you, please go ahead.

Thank you and good morning. By now everyone should have access to Tiptree Financial Inc's earnings announcement which was released prior to this call. The earnings release we issued may also be found on our website at tiptreefinancial.com as well as the SEC's website as an exhibit to the Form 8-K we filed. References to Tiptree in today's call mean Tiptree operating company and its consolidated subsidiaries together with the standalone assets held by Tiptree Financial. References to Tiptree Financial means Tiptree Financial Inc. Tiptree Financial is publicly traded and own 77% of Tiptree operating company. Before we begin our formal remarks I need to remind everyone that any statements made on today's call other than historical information including statements about Tiptree's plans, objectives, expectations, and intentions are forward-looking statements under Federal Securities laws. Forward-looking statements involve risks, uncertainties, and contingencies many of which are beyond Tiptree's control which could cause actual results, performance, or achievements to differ materially from anticipated results, performance, or achievements. Forward-looking statements are not guarantees of future performance and therefore undue reliance should not be placed upon them. We refer you to the risk factors section of our Form 10-K filed with the SEC for a more detailed discussion of the risks that could impact the future operating results and financial condition of Tiptree. We disclaim any intentions or obligations to update or revise any forward-looking statements except to the extent required by applicable law. Also our discussion today may include references to certain non-GAAP measures. A reconciliation of these measures to the most comparable GAAP measure can be found in the earnings release. Hosting the call today are Tiptree's Executive Chairman, Michael Barnes; Co-CEO's Geoffrey Kauffman and Jonathan Ilany; as well as Chief Operating Officer, Julia Wyatt. I would like to introduce Michael Barnes. Michael.

Thank you, Chris. I would like to welcome everybody to the 2014 earnings conference call. Going forward we expect to hold these calls following the release of each quarter's results. Today I will spend a few minutes taking you through our overall company strategy and how we plan to generate long-term value for our shareholders. Geoffrey will then discuss our business in a bit more detail and Julia will take us through our financial highlights, and then we will provide answers to some questions. Before we get to the specifics of operations and the performance of our individual businesses, we thought it might be helpful to provide an overview of Tiptree's business strategy, summarize its competitive advantages, and review the policies and principles which guide our operations. Tiptree is a diversified holding company that draws upon the extensive experience of its management in the areas of insurance, specialty finance, asset management, and real estate to acquire and grow primarily controlling interest of operating businesses. We believe our business ownership mix of specialty insurance, operating companies which principally originate or own tangible assets and asset management companies which earn fees from third party investment vehicles, provides business synergies which should generate a higher overall return on shareholder capital. When making new acquisitions we strive to identify businesses that have strong and experienced management, have the potential to generate attractive and stable returns on capital with limited downside, and compliment existing businesses or strategies to clearly identifiable synergies, and have sustainable and scalable business models. Tiptree’s permanent capital base allows us to view our business through a long term lens providing competitive advantages relative to alternative capital sources with shorter term objectives. We will retain a well performing business for an indefinite period but will consider selling a business when we believe…

Thanks Michael. 2014 was truly an exceptional year at Tiptree as evidenced by the following accomplishments. We completed the acquisition of Fortegra Financial Corporation for approximately $218 million in December, our largest acquisition to date. We agreed to sell Philadelphia Financial Group to affiliates of Blackstone for approximately $165 million and expect to complete that transaction in the third quarter. We completed 2 CLOs at Telos Asset Management which added more than $750 million to assets under management bringing total Tiptree asset management AUM to more than 2 billion. Care Investment Trust had realized gains of 7.9 million in 2014, added 40 million in senior housing related investments, and added 85 million of senior housing facilities in the first quarter of this year. We agreed to purchase Reliance First Capital LLC, a mortgage origination business which will further expand Tiptree’s operations in the mortgage industry. Completion of the transaction is expected in the third quarter. Tiptree Financial shares were added to the Russell 2000 Index on June 30th. In November, Tiptree Financial completed the public registration of 21.2 million shares for resale by partners who exchanged private partnership units for Tiptree Class A shares. For the fourth quarter the Board approved a dividend of $0.025 per share to class a common stockholders and TFP Limited Partners on an as exchange basis with the record date of April 9th and a payment date of April 23rd. We now have seven operating businesses in the four industries of insurance and insurance services, specialty finance, asset management, and real estate. Tiptree's insurance operations consists of Fortegra which is a specialty insurance and insurance services company offering consumer related financial products including credit insurance, warranties, service contracts, and automotive warranty and roadside assistance. In 2014 Fortegra generated net revenue of 114.8 million, net income…

Thank you, Geoffrey. First I would like to discuss the steps we have taken to improve the transparency of our financial reporting. Then I will review our full year 2014 results. In the future you can expect to see our quarterly performance included in our results. Lastly, I will update you on the progress of our share purchase program. In 2014 we undertook a full review of our financial reporting with the goal of improving transparency and establishing reporting standard of comparable to other public companies. One significant change is our voluntary early adoption of new accounting guidance that allows us to report more transparent results of our consolidated CLO. The format of this quarters release is how we expect to report our financial information going forward by focusing on GAAP financials and providing adjusted EBITDA. For further information on how we define EBITDA and adjusted EBITDA and reconciliation to GAAP net income, please see page 8 of the earnings release. In the past we have regularly referred to our economic results along with the required GAAP financial reporting. The history of this was rooted in management's desire to provide transparency of Tiptree’s intrinsic value something that GAAP reporting often failed to accomplish. A few noteworthy differences between our economic and GAAP financials include our TAMCO asset management subsidiary which has zero value reflected in our GAAP book value reporting despite producing annual pre-tax net income north of $6 million each of the past few years, aggregate depreciation and amortization of 11.9 million for 2014 of which our real estate business had more than 7.2 million, and transaction cost incurred in the acquisition of Fortegra up 6.1 million that are deducted immediately for GAAP reporting and which for economic purposes would likely be amortized overtime. As a result of some…

Thanks Julia. To sum up 2014 was a transformative year at Tiptree. We will continue to focus our efforts in 2015 on growing our current operating businesses while pursuing strategic acquisitions. In 2015 we anticipate closing the sale of PFG in the third quarter, closing the purchase of Reliance First Capital on a similar timeframe, deploying capital in the residential nonperforming loan market, growing Fortegra’s business through increased market share, possible bolt-on acquisitions, and improving returns on Fortegra’s investment portfolio, expanding our asset management business through new CLOs and managed accounts.

Thank you Michael. We will now answer some questions we have received. The first question, can you provide more detail on the PFG transaction such as the expected net gain after taxes for Class A shareholders?

Yes, the sales price for PFG is $155 million on closing plus approximately $10 million payable over the next two years. We estimate that the GAAP pre-tax gain over book value will be approximately 35.2 million for the company. We estimate Tiptree Financial's incremental tax provisions at the time of sale to be approximately 11.1 million. The incremental provision would bring total provisions for PFG related tax to approximately 26.5 million which includes the deferred tax liability of 15.4 million recorded as of December 31, 2014.

Thank you, Julia. The next question, can you update us on the hiring of a Chief Financial Officer?

Yes, hiring the CFO is a high priority for us. We have engaged the assistance of a nationally recognized executive search firm and are in the process of interviewing candidates. We will make an announcement as soon as we have hired a CFO. In the interim Julia Wyatt, our Chief Operator Officer will oversee our accounting and finance department until a successor CFO is hired. In addition Richard Claiden has agreed to continue as a part time employee of Tiptree as a Consulting Senior Advisor on accounting and financial reporting matters.

Thank you, Michael. The next question, on the sale of PFG and the acquisition of Fortegra is linked?

No, the timing was purely co-incidental.

Thank you. Next question, can you break out the income from the CLOs into one, management fees; two, distributions; and three, the change in the market value?

Sure for 2014, management fees were 11.8 million, distributions were 15.7 million, and the mark-to-market was negative 7.9 million. If you look at the comparison of 2014 versus 2013, which is included on page 31 of the Form 10-K you will see that the management fees were slightly higher in 2013 due to incentive fees in the older CLOs and distributions were generally flat. So it is clear that declining income from the CLOs is primarily due to the mark-to-market in 2014 which is actually a return to expected levels from a higher than expected mark-to-market in 2013.

Thank you, Julia. Next question, can you give more detail on what makes up the adjustments to EBITDA.

Okay, adjusted EBITDA is EBITDA adjusted to one, subtract interest expense on asset specific debt incurred in ordinary course of our subsidiary business operations and two, to add significant non-recurring costs. The first piece is interest expense of 7.2 million associated with the asset specific debt of the subsidiary in the specialty finance, real estate, corporate, and other segments. The second piece consists of transaction cost in the acquisition of Fortegra of 6.1 million and 5.4 million of expenses associated with moving key factors physical locations from New Jersey to Philadelphia. Please see the earnings release page 8 for a reconciliation of EBITDA and adjusted EBITDA to net income.

Thank you, Julia. Next question, why did you borrow another 25 million from Fortress earlier this year?

That was for general corporate purposes to grow our businesses. We are required to use 25 million of the proceeds of the sale of PFG to repay borrowings under the Fortress Credit facility when that closes.

Thank you, Geoffrey. Next question, can you explain the drop in book value of $9.38 in 2013 to $8.94 in 2014?

Yes, the decrease in book value from 2013 to 2014 is primarily the result of the tax provisions related to the exchange of partnership units of Tiptree Financial Partners for Tiptree Financial Class A common stock. There is a detailed description in the tax footnote to the financial statements in our Form 10-K.

Final question, you are issuing shares in connection with the Reliance transaction, do you intend to do so in the future acquisitions?

Yes, when it makes sense. We believe the ability to use Tiptree Financial stock as acquisition currency is a competitive advantage.

Thank you, Geoffrey. And with that we thank everyone for attending today's call and for your interest in Tiptree. We look forward to updating you further on our operations on our next earnings call. Thank you and have a nice day.

Thank you ladies and gentlemen. This concludes today's conference. You may disconnect your lines at this time and thank you for your participation.