Operating Segment Data

During the year ended December 31, 2014, management changed its reportable operating segments. The Company now has five reportable operating segments. The Company’s five operating segments are: insurance and insurance services, specialty finance, asset management, real estate and our corporate and other segment. The Company’s operating segments are organized in a manner that reflects how management views these strategic business units.

The principal changes made to the operating segments in 2014 are summarized below:


•	Fortegra, which was acquired in December, 2014, was added to the insurance and insurance services segment. In October 2014, the Company entered into an agreement to sell PFG. Accordingly, the results of the Company’s PFG subsidiary, which had previously been presented in the Insurance and Insurance Services segment have been reclassified as discontinued operations for 2013 and 2014.


•	Luxury, a mortgage loan originator, which the Company acquired in January, 2014, was incorporated in the specialty finance segment. The Company had previously included Tiptree Direct and MFCA in the specialty finance segment, The results of Tiptree Direct and MFCA are now included in the corporate and other segment.

•

The real estate segment previously included investments in Star Asia entities. These investments are now reported in the corporate and other segment. The net income attributable to consolidated CLOs has been allocated to the asset management segment (representing the fees earned from the management of CLOs) and to the corporate and other segment (representing the distributions earned on the CLO subordinated notes and interest-only positions held by the Company and realized and unrealized gains and losses on such debt and positions). The expenses the Company incurs in connection with the management of the CLOs have also been allocated to the asset management segment. For further discussion of the Company’s interests in the CLOs its manages, please refer to Note 13—CLOs and Consolidated Variable Interest Entities, in the accompanying consolidated financial statements.

Each reportable segment’s profit/(loss) is reported before income taxes, discontinued operations and non-controlling interests. Intersegment revenue and expense relate to interest paid and received on loans and interest rate swaps between segments.

Descriptions of each of the reportable segments are as follows:

Insurance and Insurance Services operations are conducted through a wholly owned subsidiary, Fortegra, which the Company acquired on December 4, 2014. Fortegra is a specialized insurance company that offers a wide array of consumer related protection products, including credit-related insurance, mobile device protection, and warranty and service contracts. Fortegra also provides third party administration services to insurance companies, retailers, automobile dealers, insurance brokers and agents and financial services companies.

For Insurance and Insurance Services, the main drivers of revenue are earned premiums, net and service and administrative fees.

For the period ended December 31, 2014, the Company incurred $6,121 of charges, including consultancy fees and accelerated stock vesting costs, in connection with the Company’s purchase of Fortegra and which are not expected to recur. These charges have been included in the insurance and insurance services segment results.

Specialty Finance is comprised of Siena, which commenced operations in April 2013, and Luxury, which was acquired in January 2014. Segment results incorporate the revenues and expenses of these subsidiaries since they commenced operations or were acquired.

Siena’s business consists of structuring asset-based loan facilities across diversified industries which include manufacturing, distribution, wholesale, and service companies. Luxury is a residential mortgage lender that originates loans, primarily FHA, prime jumbo and super jumbo mortgages for sale to institutional investors.

For Specialty Finance, the main drivers of revenue are gain on the sale of loans held for sale, net, loan fees earned and investment interest.

Asset Management operations primarily comprise Telos Asset Management’s (TLAM) management of CLOs and Muni Capital Management’s (MCM) management of Non-Profit Preferred Funding Trust I (NPPF I). Both TLAM and MCM are subsidiaries of TAMCO, an SEC-registered investment advisor owned by the Company. NPPF I is a structured tax-exempt pass-through entity that holds tax-exempt bonds for the benefit of unaffiliated investors

The asset management segment generates fee income from the CLOs under management and from its management of NPPF I, a portfolio of tax-exempt securities owned by third-party investors.

Real Estate operations include Care LLC, a wholly-owned subsidiary of Tiptree which has a geographically diverse portfolio of seniors housing properties including assisted-living, independent-living, memory care and skilled nursing in the U.S.

Revenue for this segment includes largely rental revenue and investment interest.

Corporate and other operations include Tiptree Direct and MFCA. Tiptree Direct holds the Company’s principal investments, which consist of CLO subordinated notes, risk mitigation transactions, warehouse holdings, holdings in the Star Asia entities and other corporate investments. MFCA is a specialty finance company that owns and manages a portfolio of non-investment grade and non-rated direct and indirect debt obligations of middle-market tax-exempt borrowers.

For corporate and other, the main drivers of revenue include investment interest, net realized and unrealized gains on investments, distributions earned on the subordinated CLO debt and interest-only positions held by the Company and realized and unrealized gains and losses on such debt and positions.

The tabular information that follows shows components of revenue, expense, and profit or loss, for each of the operating segments for the years ended December 31, 2014 and 2013 and total assets as of December 31, 2014 and 2013.

Intersegment revenues/expenses refers to those items of revenue/expense which are eliminated upon consolidation. Intersegment revenue and expense between the specialty finance segment and corporate and other segment largely relate to interest paid and received on subordinated debt and interest-only positions. Management made estimates to allocate a proportionate share of MCM’s expenses to the asset management segment relating to its management of NPPF I. The remaining expenses not allocated are related to MFCA and have been allocated to the corporate and other segment.



	Year ended December 31, 2014
	Insurance and insurance services			Specialty finance			Asset management		Real estate		Corporate and other			Totals
Net realized and unrealized gains on investments	$	5		$	664		$	—	$	7,006	$	1,286		$	8,961
Interest income	196			3,611			—		1,529		9,509			14,845
Net credit derivative loss	—			—			—		—		(1,606		)	(1,606		)
Service and administrative fees	8,657			—			—		—		—			8,657
Ceding commissions	3,737			—			—		—		—			3,737
Earned premiums, net	12,827			—			—		—		—			12,827
Gain on sale of loans held for sale, net	—			7,154			—		—		—			7,154
Loan fee income	—			3,736			—		—		—			3,736
Rental revenue	—			52			—		19,695		—			19,747
Other income	753			6			278		1,051		167			2,255
Total revenue	$	26,175		$	15,223		$	278	$	29,281	$	9,356		$	80,313

Interest expense	$	637		$	1,530		$	—	$	4,111	$	6,263		$	12,541
Payroll and employee commissions	3,483			10,690			5,117		8,056		6,442			33,788
Commission expense	4,287			—			—		—		—			4,287
Member benefit claims	2,676			—			—		—		—			2,676
Net losses and loss adjustment expenses	3,153			—			—		—		—			3,153
Professional fees	690			842			294		873		6,555			9,254
Depreciation and amortization expenses	4,265			499			—		7,181		—			11,945
Acquisition costs	6,121			—			—		—		—			6,121
Other expenses	4,034			3,624			480		5,889		1,258			15,285
Total expense	29,346			17,185			5,891		26,110		20,518			99,050
Net intersegment revenue/(expense)	—			(341		)	—		—		341			—
Net income attributable to consolidated CLOs	—			—			11,770		—		7,755			19,525
Segment profit/(loss)	$	(3,171	)	$	(2,303	)	$	6,157	$	3,171	$	(3,066	)	$	788
Less: Provision for income taxes														4,141
Discontinued operations														7,937
Net income before non-controlling interests														$	4,584
Less: Net income attributable to non-controlling interest from continuing operations and discontinued operations														6,294
Net income available to common stockholders														$	(1,710	)

Segment assets	$	760,149		$	79,075		$	2,871	$	179,822	$	65,570		$	1,087,487
Assets of consolidated CLOs														1,978,094
Assets held for sale														5,129,745
Total Assets														$	8,195,326



	Year ended December 31, 2013
	Insurance and insurance services		Specialty finance			Asset management		Real estate			Corporate and other			Totals
Net realized and unrealized gains on investments	$	—	$	—		$	—	$	385		$	6,502		$	6,887
Interest income	—		498			—		2,316			8,836			11,650
Net credit derivative loss	—		—			—		—			(1,828		)	(1,828		)
Service and administrative fees	—		—			—		—			—			—
Ceding commissions	—		—			—		—			—			—
Earned premiums, net	—		—			—		—			—			—
Gain on sale of loans held for sale, net	—		—			—		—			—			—
Loan fee income	—		459			—		—			—			459
Rental revenue	—		—			—		5,760			—			5,760
Other income	—		12			350		413			40			815
Total revenue	—		969			350		8,874			13,550			23,743

Interest expense	—		24			—		1,825			3,016			4,865
Payroll and employee commissions	—		1,732			6,006		2,707			6,296			16,741
Commission expense	—		—			—		—			—			—
Member benefit claims	—		—			—		—			—			—
Net losses and loss adjustment expenses	—		—			—		—			—			—
Professional fees	—		292			242		1,957			4,646			7,137
Depreciation and amortization expenses	—		96			—		1,892			—			1,988
Acquisition costs	—		—			—		—			—			—
Other expenses	—		529			402		3,702			977			5,610
Total expense	—		2,673			6,650		12,083			14,935			36,341
Net intersegment revenue/(expense)	—		—			—		—			—			—
Net income attributable to consolidated CLOs	—		—			13,192		—			15,673			28,865
Segment profit/(loss)	—		(1,704		)	6,892		(3,209		)	14,288			16,267
Less: Provision for income taxes														560
Discontinued operations														25,022
Net income before non-controlling interests														$	40,729
Less: Net income attributable to non-controlling interest from continuing operations and discontinued operations														30,336
Net income available to common stockholders														$	10,393

Segment assets	$	—	$	21,338		$	176	$	160,328		$	334,347		$	516,189
Assets of consolidated CLOs														1,405,355
Assets held for sale														4,950,727
Total Assets														$	6,872,271