Tiptree Financial Shareholder Sends Letter Against Fortegra Group Sale
Veradace Partners, a significant shareholder of Tiptree (TIPT), with beneficial ownership of 5% of the outstanding common stock, issued an open letter to Tiptree shareholders regarding its opposition to the proposed sale of The Fortegra Group. Veradace urges shareholders to vote against the transaction at the company's special meeting of stockholders scheduled for December 3, 2025. The letter reads in part: "Veradace Partners L.P. is a 5.0% shareholder of Tiptree Inc. and the Company's second largest non-affiliated shareholder. We are a long-term holder that first purchased shares in 2019 and have owned shares in the Company without interruption since then. We beneficially own 1,402,480 shares of the Company's common stock and options to purchase another 489,300 shares. Veradace invested in Tiptree specifically because of its ownership of Fortegra, which over the last six years has accounted for the majority of Tiptree's value. As of the September 26, 2025 announcement of the proposed sale of Fortegra to DB Insurance Co., Ltd. ("DB Insurance"), Fortegra represented over 90% of Tiptree's total value. Fortegra is a leading provider of Specialty P&C and Warranty insurance and related services. Since 2019, when Veradace first invested, Fortegra's adjusted net income as reported by Tiptree has grown from $32.9 million to $177.7 million, a 5.4x increase in under six years. Fortegra's above-average growth and less volatile, more consistent combined ratio warrants a premium valuation relative to comparable companies. We believe this strong performance is the result of an insurance company that combines a Consumer and Warranty business with a Specialty Property and Casualty business, driving more consistent and less volatile earnings and higher returns. While we are disappointed that Tiptree's Board of Directors has chosen to sell Fortegra to DB Insurance at an inadequate valuation, we find it more troubling that the Proposed Transaction's structure is dramatically out of line with Tiptree shareholders' best interests. As an asset sale, rather than a sale of consolidated Tiptree, the Proposed Transaction is extremely tax-inefficient for Tiptree. The transaction structure appears to be designed to give Tiptree management a blank check of nearly $1 billion of shareholder funds. In aggregate, the difference between Tiptree's current market cap and the proceeds to Tiptree from the Proposed Transaction exceed $400 million. The 23% decline in the Company's share price since the Proposed Transaction was announced, and the more than $10 per share gap between the last closing share price and the Proposed Transaction's value, reveal that the market expects Tiptree's leadership to destroy value, literally valuing the Company at less than its cash. We believe that expectation is a reasonable conclusion based on the Tiptree leadership team's mixed investment track record and history of poor negotiating. The flawed capital allocation that has marked Tiptree in the past persists today, given Tiptree has disclosed it does not expect to distribute any proceeds of the Proposed Transaction to Tiptree shareholders. While Tiptree is receiving $28.75 per diluted share for Fortegra, shareholders' proceeds are still to-be-determined.3 Tiptree's non-Fortegra assets, worth approximately $1.91 per diluted share, are either securities or will become cash following the announced sale of their mortgage business in Q1 2026.4 The businesses that you own through your Tiptree stock, trading at $18.39 based on the last closing price, will be exchanged for more than $30 of cash value - and shareholders will receive none of it.5 The only real beneficiary of the Proposed Transaction is Tiptree's conflicted management team, who historically have transferred, on average, more than 5% of the Company's value to themselves each year.6 Shareholders deserve a better outcome..."
