Out of Period Adjustments, Changes in Accounting Principles and Reclassifications

Management is presenting these tables to provide a clear understanding of out of period adjustments, the adoption of accounting principles and reclassifications to the Company’s historical results for the three and nine months ended September 30, 2014.

As it relates to the Consolidated Statements of Operations for the three months ended September 30, 2014, the Company has revised its prior year financial statements for an immaterial uncorrected misstatement. The revision, related to the Company’s real estate segment, increased depreciation and amortization expense by $852, and decreased net (loss) income attributable to noncontrolling interests - Tiptree Financial Partners, L.P. by $396 and decreased net (loss) income attributable to noncontrolling interests - Other by $170.

As it relates to the Consolidated Statements of Operations for the nine months ended September 30, 2014, the Company has revised its prior year financial statements for an immaterial uncorrected misstatement. The revision, related to the Company’s real estate segment, increased depreciation and amortization expense by $2,556, and decreased net (loss) income attributable to noncontrolling interests - Tiptree Financial Partners, L.P. by $1,412 and decreased net (loss) income attributable to noncontrolling interests - Other by $510. The effects of these adjustments are presented below.

As it relates to the Statements of Cash Flows, the Company has revised its prior year presentation for an immaterial uncorrected misstatement. This revision, related to the presentation of its activities from CLOs, reduced operating activities from CLOs by $12,959 and increased investing activities from CLOs by $12,959.

As mentioned in Note 2, in the Annual Report on Form 10-K for 2014, the Company elected to early adopt ASU 2014-13, Consolidation (Topic 810): Measuring the Financial Assets and the Financial Liabilities of a Consolidated Collateralized Financing Entity. The effects of these adjustments are presented below.

The sale of PFG is a transaction that qualifies to be treated as discontinued operations. This reclassification is reflected below (see Note 5—Dispositions, Assets Held for Sale and Discontinued Operations).

Certain prior period amounts have been reclassified to conform to the current year presentation. These amounts are identified under the reclassification heading in the tables below.



For the Three Months Ended September 30, 2014
	As previously filed			Out of period adjustments			ASU 2014-13 adoption			Discontinued operations			Reclassifications⁽¹⁾			As adjusted
Revenues:
Net realized (loss) gain on investments	$	7,909		$	—		$	—		$	(31	)	$	(7,878	)	$	—
Change in unrealized appreciation on investments	(1,819		)	—			—			14			1,805			—
Income from investments in partially owned entities	2,204			—			—			—			(2,204		)	—
Net realized and unrealized gains	8,294			—			—			(17		)	(8,277		)	—

Net realized and unrealized gains from investments	—			—			—			—			9,274			9,274
Net realized and unrealized gains on mortgage pipeline and associated hedging instruments	—			—			—			—			(273		)	(273		)
Interest income	7,363			—			—			(1,131		)	(2,889		)	3,343
Gain on sale of loans held for sale, net	2,383			—			—			—			42			2,425
Net Credit derivative losses	—			—			—			—			(786		)	(786		)
Separate account fees	5,931			—			—			(5,931		)	—			—
Administrative service fees	12,845			—			—			(12,845		)	—			—
Loan fee income	—			—			—			—			1,476			1,476
Rental revenue	4,469			—			—			—			—			4,469
Other income	1,537			—			—			(1		)	(1,138		)	398
Total revenues	42,822			—			—			(19,925		)	(2,571		)	20,326
Expenses:
Interest expense	8,500			—			—			(2,873		)	(2,571		)	3,056
Payroll expense	12,559			—			—			(4,889		)	—			7,670
Professional fees	3,420			—			—			(419		)	—			3,001
Change in future policy benefits	1,063			—			—			(1,063		)	—			—
Mortality expenses	2,667			—			—			(2,667		)	—			—
Commission expense	679			—			—			(679		)	—			—
Depreciation and amortization expenses	2,290			852			—			(1,409		)	—			1,733
Other expenses	5,505			—			—			(2,774		)	—			2,731
Total expenses	36,683			852			—			(16,773		)	(2,571		)	18,191
Results of consolidated CLOs:
Income attributable to consolidated CLOs	(4,093		)	—			18,569			—			—			14,476
Expenses attributable to consolidated CLOs	15,552			—			(3,812		)	—			—			11,740
Net (loss) income attributable to consolidated CLOs	(19,645		)	—			22,381			—			—			2,736
(Loss) income before taxes from continuing operations	(13,506		)	(852		)	22,381			(3,152		)	—			4,871
Provision (benefit) for income taxes	(20		)	—			—			(1,345		)	—			(1,365		)



For the Three Months Ended September 30, 2014
	As previously filed			Out of period adjustments			ASU 2014-13 adoption		Discontinued operations			Reclassifications⁽¹⁾			As adjusted
(Loss) income from continuing operations	(13,486		)	(852		)	22,381		(1,807		)	—			6,236
Discontinued operations:
Income from discontinued operations, net	—			—			—		1,807			—			1,807
Discontinued operations, net	—			—			—		1,807			—			1,807
Net (loss) income before noncontrolling interest	(13,486		)	(852		)	22,381		—			—			8,043
Less: net (loss) income attributable to noncontrolling interests	(1,904		)	—			—		—			1,904			—
Less net (loss) income attributable to VIE subordinated noteholders	(11,854		)	—			11,854		—			—			—
Less: net (loss) income attributable to noncontrolling interests - Tiptree Financial Partners, L.P.	—			(396		)	5,957		—			(1,653		)	3,908
Less: net (loss) income attributable to noncontrolling interests - Other	—			(170		)	271		—			(251		)	(150		)
Net income available to common stockholders	$	272		$	(286	)	$	4,299	$	—		$	—		$	4,285

Basic, continuing operations, net	$	0.02		$	(0.03	)	$	0.25	$	(0.05	)	$	—		$	0.19
Basic, discontinued operations, net	—			—			—		0.05			—			0.05
Basic earnings per share	$	0.02		$	(0.03	)	$	0.25	$	—		$	—		$	0.24

Diluted, continuing operations, net	$	0.02		$	(0.03	)	$	0.25	$	(0.05	)	$	—		$	0.19
Diluted, discontinued operations, net	—			—			—		0.05			—			0.05
Diluted earnings per share	$	0.02		$	(0.03	)	$	0.25	$	—		$	—		$	0.24



For the Nine Months Ended September 30, 2014
	As previously filed			Out of period adjustments		ASU 2014-13 adoption		Discontinued operations			Reclassifications⁽¹⁾			As adjusted
Revenues:
Net realized (loss) gain on investments	$	7,007		$	—	$	—	$	(31	)	$	(6,976	)	$	—
Change in unrealized appreciation on investments	(1,530		)	—		—		—			1,530			—
Income from investments in partially owned entities	2,884			—		—		—			(2,884		)	—
Net realized and unrealized gains	8,361			—		—		(31		)	(8,330		)	—

Net realized and unrealized gains from investments	—			—		—		—			10,034			10,034
Net realized and unrealized gains on mortgage pipeline and associated hedging instruments	—			—		—		—			(34		)	(34		)
Interest income	17,664			—		—		(3,464		)	(3,681		)	10,519
Gain on sale of loans held for sale, net	5,117			—		—		—			108			5,225
Net Credit derivative losses	—			—		—		—			(2,307		)	(2,307		)
Separate account fees	16,943			—		—		(16,943		)	—			—
Administrative service fees	37,786			—		—		(37,786		)	—			—
Loan fee income	—			—		—		—			2,885			2,885
Rental revenue	13,308			—		—		—			—			13,308
Other income	3,404			—		—		(2		)	(2,200		)	1,202
Total revenues	102,583			—		—		(58,226		)	(3,525		)	40,832
Expenses:
Interest expense	20,721			—		—		(8,683		)	(3,525		)	8,513
Payroll expense	35,642			—		—		(14,960		)	—			20,682
Professional fees	7,334			—		—		(1,343		)	—			5,991



For the Nine Months Ended September 30, 2014
	As previously filed			Out of period adjustments			ASU 2014-13 adoption			Discontinued operations			Reclassifications⁽¹⁾			As adjusted
Change in future policy benefits	3,260			—			—			(3,260		)	—			—
Mortality expenses	7,892			—			—			(7,892		)	—			—
Commission expense	1,837			—			—			(1,837		)	—			—
Depreciation and amortization expenses	5,656			2,556			—			(3,149		)	—			5,063
Other expenses	15,562			—			—			(7,816		)	—			7,746
Total expenses	97,904			2,556			—			(48,940		)	(3,525		)	47,995
Net (loss) before taxes and income attributable to consolidated CLOs from continuing operations	4,679			(2,556		)	—			(9,286		)	—			(7,163		)
Results of consolidated CLOs:
Income attributable to consolidated CLOs	20,742			—			26,432			—			—			47,174
Expenses attributable to consolidated CLOs	44,541			—			(11,817		)	—			—			32,724
Net (loss) income attributable to consolidated CLOs	(23,799		)	—			38,249			—			—			14,450
(Loss) income before taxes from continuing operations	(19,120		)	(2,556		)	38,249			(9,286		)	—			7,287
Provision (benefit) for income taxes	906			—			—			(4,003		)	—			(3,097		)
(Loss) income from continuing operations	(20,026		)	(2,556		)	38,249			(5,283		)	—			10,384
Discontinued operations:
Gain (loss)on sale of discontinued operations, net	—			—			—						—			—
Income from discontinued operations, net	—			—			—			5,283			—			5,283
Discontinued operations, net	—			—			—			5,283			—			5,283
Net (loss) income before noncontrolling interest	(20,026		)	(2,556		)	38,249			—			—			15,667
Less: net (loss) income attributable to noncontrolling interests	(2,353		)				—			—			—			(2,353		)
Less net (loss) income attributable to VIE subordinated noteholders	(20,041		)	—			20,041			—			2,353			2,353
Less: net (loss) income attributable to noncontrolling interests - Tiptree Financial Partners, L.P.	—			(1,412		)	11,536			—			(1,665		)	8,459
Less: net (loss) income attributable to noncontrolling interests - Other	—			(510		)	456			—			(688		)	(742		)
Net income available to common stockholders	$	2,368		$	(634	)	$	6,216		$	—		$	—		$	7,950

Basic, continuing operations, net	$	0.18		$	(0.05	)	$	0.48		$	(0.13	)	$	—		$	0.48
Basic, discontinued operations, net	—			—			—			0.13			—			0.13
Basic earnings per share	$	0.18		$	(0.05	)	$	0.48		$	—		$	—		$	0.61

Diluted, continuing operations, net	$	0.18		$	(0.05	)	$	0.48		$	(0.13	)	$	—		$	0.48
Diluted, discontinued operations, net	—			—			—			0.13			—			0.13
Diluted earnings per share	$	0.18		$	(0.05	)	$	0.48		$	—		$	—		$	0.61

Notes:

(1) Prior period information reclassified to conform to the current year presentation.