Q2 2021 Tiptree Inc Earnings Call
[music].
Greetings and welcome to Tiptree, Inc. Second quarter 2021 earnings Conference call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone.
You bet.
As a reminder, this conference is being recorded I would now like to turn the conference over to your host Sandra Bell Chief Financial Officer.
Good morning, and welcome to our second quarter 2021earnings call.
We are joined today by our executive Chairman, Michael Barnes and CEO, Jonathan Alani.
Can find the slides that accompany this review on our Investor Relations website.
Please note that some of our comments today will contain forward looking statements based on our current view of our business and actual future results may differ materially.
Please see our most recent SEC filings, which identify the principal risks and uncertainties that could affect future performance.
In addition, we will discuss certain adjusted or non-GAAP financial measures, which are described in more detail in this morning's presentation reconciliations of non-GAAP financial measures and other.
Other associated disclosures are contained in our SEC filings the appendix to our presentation and posted on our website.
With that I will turn the call over to Michael.
Thanks Sandra.
Everyone.
Our second quarter performance was the continuation of the positive trends, we have experienced over the past year with all businesses contributing.
First half revenues of 594 million the net income of $36.6 million were both up substantially from 2020, driven by the particularly strong performance of for Tegra, our specialty insurance business reliance on our mortgage business and.
And gains on investment holdings across the company.
After removing the impact of investment gains and losses first half revenue growth was 35% and adjusted net income of $26 million increased 51% from the prior year.
Both great results.
Our insurance business. The particular group continues to deliver on its growth objectives, while maintaining focus on underwriting discipline debt.
It has contributed to consistent results over the past several years.
In the quarter the team cross the significant milestone with over $2 billion in trailing 12 month gross written premiums and premium equivalents.
That represents an exceptional 23, 8% annualized growth rate since 2017.
Year to date, written premiums and equivalents of nearly $1.1 billion were up 51% versus the prior year driven by robust organic growth across all lines of business.
Adjusted net income for the first half was $26.9 million.
Up 52% driven by revenue growth and an improved combined ratio.
The adjusted return on average equity.
Was 18, 3% up 550 basis points from the first half of 2020.
Once again for <unk> results demonstrate the attractiveness of combining a market leading specialty insurer with the capital light warranty business.
As we look forward. We expect this performance to continue led by growing top line and consistent combined ratio.
Switching to Tiptree capital.
Our 3 primary investments in mortgage origination.
On your housing and Maritime transportation, all generated positive net income for the quarter and it is worth noting the tiptree capital on a standalone basis now has over $195 million of book value.
Adjusted net income within Tiptree capital was $14 million for the first half up substantially from the prior year driven by strong performance in our mortgage and shipping operations.
The mortgage business had another excellent quarter.
The rate environment and home price appreciation continue to be tailwind.
Volumes were up 7% year over year, while gain on sale margins remained healthy compared to long term historical averages.
We believe the business can continue to deliver strong returns.
Particularly given the low interest rate environment and steady demand for cash out refinancings across the country.
In addition.
We have been adding to our mortgage servicing assets, which serves as a source for higher margin recapture volume and has the potential hedge in a rising rate environment.
Our shipping business also generated positive results for the first half the.
Just on continuing favorable market conditions, particularly in the dry bulk sector.
Overall, we are very pleased with the first half performance.
We believe Tiptree is well positioned for the second half of 2021 and going forward with that I'll pass it to Sandra who will take you through the financial results in more detail.
Thank you Michael.
On page 3 of the presentation, we highlight tiptree key financial metrics for the second quarter 2021 compared to the prior year period.
Net income for the quarter was $8 million driven by continued growth in the insurance business and positive performance in our mortgage and shipping operations.
Excluding investment gains and losses revenues were up 45% for the quarter driven by organic growth and insurance operations.
Mortgage volumes and margin and increases in dry bulk charter rate.
Adjusted net income for the quarter was $13.1 million, representing a 13% annualized adjusted return on average equity.
The strong operating results were driven by the growth in revenue as well as the consistent combined ratio at <unk>.
The value per share of $11.59, Inc.
Increased by 17, 9% versus the prior year.
Compared to the first quarter 2021, the value per share declined by 4 debt.
Primarily driven by legal and accounting fees associated with the preparation of the <unk> of IPO the.
The exchange of certain diluted securities.
Resulting from our Upsized corporate borrowing facility completed in the early 2020.
Before diving deeper into 2.4 of <unk> results on page 5 I would like to take a moment to remind everyone of the key characteristics of its business model that supports such consistent profitability and the opportunity for future revenue and earnings growth.
4 tegra is of specialty ensure that focuses on underwriting small premium per risk insurance that is underwriting programs that are more frequency exposed, but do not present significant aggregation or catastrophic loss exposures.
From a competitive point of view large standard insurers, who prefer to individually underwrite each transaction in touch every claim avoids small premium per risk insurance, because the infrastructure and personnel costs required preclude them from underwriting profitably or <unk>.
<unk> uses proprietary technology to overcome this challenge.
Both of our U S insurance and U S and European warranty offerings also generate a significant component of fee based earnings which contribute to the stable profitability.
In addition, 4 of <unk> warranty product offerings benefit from being capital of light as a result of a combination of unregulated earnings and predictable loss ratios.
As Michael mentioned, we continue to see strong momentum and <unk> top line results.
For the second quarter of 2021 premium set of equivalents increased 79% year over year, driven by growth and all lines of business, including admitted excess in surplus and more on T line.
As a reminder, particularly with respect to longer duration of warranty contracts much of the increase in this metric ends up on the balance sheet as GAAP recognizes the revenue over the life of the contract.
Deferred revenues and on and on premiums, which represent the future earnings potential.
1.4 billion of 40% year over year.
For the quarter underwriting and theme margin increased to 57 million of $17 million or 44%.
And the combined ratio had held stable at 92%.
On page 7 we highlight the kpa trends over the past 3 years.
Gross written premiums in premium equivalents have increased 37% over this period with a 26% organic growth rate.
Importantly, the combined ratio has consistently improved moving from 93.3% in the 2019 period, the 91.8% in the 2021 period.
4 of <unk> business model maintain strong economic alignment with its distribution network, which is important and delivering consistency in the combined ratio.
Several of the underwritten programs have variable retrospective commission structures, meaning.
Meaning if a book of business is profitable, we will share that underwriting profitability with our agents. If it is not profitable we reduced their condition and the economics of rationalized.
We evaluate the performance of the business using adjusted net income.
Which removes realized and the unrealized gains and losses per.
<unk> accounting amortization.
Doc based compensation and non-recurring items.
This metric has improved from $13.4 million in the first half of 2019 to $26.9 million in the first half of 2021.
Which has improved the adjusted room return on equity from 10% to 18% over the respective periods.
Turning to the next page.
We believe the hallmarks of <unk> business model underlie the opportunity for consistent growth and underwriting profitability, combining underwriting revenue and unregulated fee income, which leads to more predictable cash flows and enhanced return.
This plan is executed across 3 key areas. The first 2 are admitted programs and surplus lines programs both in the us insurance on.
On the third is balance sheet like programs, which is warranty solutions.
We believe it is the combination of these 3 and the complimentary nature of these diverse revenue streams that allows for tegra to grow and grow profitably, regardless of where pricing is in the PNC market cycle.
On page 9 we highlighted the key growth consideration.
The first 4 Tegra has a high persistence of right with his agents, which generates a large volume of recurring revenue.
Over the past 5 years revenues have increased at of 16% annual growth rate or 12% organically.
Second we right multiyear contracts the generate significant upfront cash flow to the balance sheet and provides greater visibility into the upcoming years revenue base.
Third new programs are added for both existing agents and from new agents.
Our technology gives us the ability to identify opportunities to expand participation by our agents clients in the programs, we offer to underwrite new programs profitably given the amount of data available to us to analyze the risks and to scale volumes efficiently.
When we add new agent relationships.
Ah recently announced expanded partnerships with Babcock and more in the U S and motor point in the UK are great. Examples of how we can add new business.
Lastly, this business continues to expand geography geographically, we are very pleased with the opportunities in Europe, where we can we can leverage our broad experience in the warranty space. We have a strong presence in central and eastern Europe and are growing into western Europe, and even the Pacific rim.
As you can see by the sides of these addressable markets. We believe for Tegra has the opportunity to continue to expand his volume an agent relationships without compromising underwriting profitability.
Turning to the insurance investment portfolio on page 10.
The total investments in cash and cash equivalents ended the quarter at 815 million up 36% year over year in line with the underlying premium growth.
We invest nearly 80% of the portfolio and high credit quality in liquid securities with an average rating of double way.
First half net income was 6 million. The net investment income was 6 million up slightly as the overall portfolio increased in line with premiums.
Net realized and unrealized gains were $12.5 million for the first half driven by unrealized gains on equities.
The capital and liquidity position remains strong at 4 tegra with $288 million of stockholders equity and the deck capacity of 200 million, both of which put the business and of solid position for future growth.
On page 12, we present the results of Tiptree capital, which is Michael mentioned earlier consists of or invest shares shipping and mortgage operations for.
For the first half pretax income is driven by unrealized gains on our investment and invest which is mark to market based on its share price.
In addition to strong volumes and margin and our mortgage business.
The first half 2021, adjusted net income and Tiptree capital increased to $14.2 million, primarily driven by improvement and mortgage volumes and margins and dry bulk charter rates.
As Michael mentioned, our mortgage business has benefited from several tail <unk>.
Include the higher refinance volumes supported by both low rates and rising home prices.
And lastly, we've been able to retain mortgage servicing rights at relatively low valuations providing opportunity for value of appreciation in the future rising interest rate environment.
As of June 30th 2021, the fair value of the MSR assets was $23 million.
Now, we will turn the call back to Michael to conclude our prepared remarks.
Thanks Sandra.
As I mentioned in my earlier remarks, we are pleased with the first half performance of our businesses.
Over the past 5 years for Tegra has increased its top line production of the 24% growth rate.
While delivering the best in class combined ratio of just under 92%.
We believe these trends will continue and please of premium value on the consistency that the business generates year on here.
The earnings strength of our mortgage business and the low interest rate environment serves as a great example of the embedded upside of Optionality and diversity of our capital allocation.
Within shipping.
The demand supplying balance in the bulker in tanker market continues to play out and has benefited our business is global economies reopen.
We continue to believe the tip of trees overall intrinsic value has increased significantly in his material the greater than our current stock price would suggest as.
As we look forward, we believe tiptree as well positioned to continue executing over the long term growth objectives with that we will open the line for questions.
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1 moment, please while we pull for questions.
Our first question is from just launch of Roger with Pope Street Capital. Please proceed.
Good morning, everybody.
Hey folks of just the just 2 quick questions first on this.
Press release, and I know, there's acquisitions, which insurance accounting for 1 of the things moving forward, but just as you list.
As of 630 prints versus year end of the equity holdings of 200 million versus 120, and then astra's held per sale went down.
<unk> can you put a little color on that movement.
Sure, Jeff all I am happy to and thanks for the question.
The good to speak to again.
So.
I guess the value of of our of our equity holdings who's going to the portrait on 2 on 2 basis, 1 as if it goes down on price includes the we fell down the position we're actively managing whatever equity positions we hold.
And frankly of had stability in our invest holdings over the last few quarters. So that has remained relatively stable and we continue to work with management and invest to try to optimize value for the investment in our insurance company flow. There, we're going to we had a very nice reopening trade on.
<unk> transportation and oil and gas sectors as we realized significant value on those trades, we've taken steps to reduce the as well as from public company physician, we had in the shipping sector. So we figured we'd just taken some profit sir.
Got it so.
And I'm, sorry, Sandra I apologize standard 1 of the endless.
Have you of anything you want to add to that please feel free to do too.
Yeah, Jeff 1 of nominally which if you get into our footnotes a little bit more clearly is we have a fixed income ETF physician that supports our business in Europe.
And that's what it's about 90.394 million of.
Of that number as of the end of the second quarter and as Europe has grown that ETF has also grown as a piece of the equities and it gets accounted for us equities and mark to market like equities, even though it's a fixed income ETF. So that was a bit of the anomaly that happen from.
I'm here on it at the end of the second quarter.
And so again it would be fair to say that investing is an asset held per sale.
Similarly, what you've spoken about on the past long run value of maximization, but.
Not a core holding the.
That would be continued to be correct right.
I think it's fair to say.
Got it and and I mean I.
God I really combo of it management of of the call but the.
The shipping purchase was astute, but is that again, the a something that was bought to be sold or are.
Are we going to be talking about your shipping position in 5 years, how do you view that.
So we started looking of the shipping business I'd say, probably almost 5 years ago.
It's a sector does it allows 1 to look at a lot of the different.
Industry segments the.
Feed into the shipping sector.
And what are long I'll say the investing in shipping.
We took a very long term view that starts with certainly the asset play first week Drybulk second with with tankers, we've added the small position.
Of the small shipping vessel in the U S.
More recently and we also as part of the transaction that we begin with also have a partial ownership interest in a pinch business the supplies paint per ship. So so we look at this as a way of participating in a broad range of of diversified businesses use.
You start with the assets play, but the long term objective is also the build out of the presence in management as well to again be in the business to take advantage of opportunities I'd say that are we evaluate the business regularly we do the full top to bottom of the view very recently and I'll see that business is on.
On past to our expectations of not exceeding them to your point as we entered into the asset play.
Although we were hit with the Corona virus and had the peculiar benefit to the tanker sector. During 2020 now through the reopening of the economy's, we're seeing the benefit and the Drybulk side, which is significant.
We hold our ships at the purchase posted the mindless depreciation not reflecting where we were the could be sold in the market and certainly the dry bulk I would give my own views of I think that could be higher in the current market and we will opportunistically.
Take advantage of markets to decide whether to allocate more if we feel that the.
Market is undervalued and the particular shipping sector or 2 downsides, However, I would say to achieve our objectives.
And building a management presence in the ships that we own as well as those that we may take on an jv's with third parties.
Maintaining ownership and ships at least through the beginning stages of building up management is essential so.
So we start with the asset I think that our premise as to where we were in the cycle as well as what's been played out more recently since coronavirus was correct and we benefited from some of the ups and downs of these last few years.
As well as.
The building out of our management company I think is right on track, but I will say the long term.
We will selectively decide whether the allergy more or not but so far we are right on path to what we expected.
And my last general question would be so.
What can you say again post for Tegra IPO attempt is is that a continually on a plate subject to you know.
Opportunities and market conditions is this you know.
He.
Didn't work for reasons previously noted it show for 2021 will review it later or what.
What could you say about the.
That process.
Thanks for the question, Jeff none of them I'm happy to speak about it we started down the path looking at an IPO for for Tigra actually on almost a year ago.
And knowing that that would also from ultimately.
Come to on IPO potential in April of this year.
The process frankly went relatively smoothly and we had set out a number of objectives that we wanted to achieve and taking for taking Republic..1 of the primary objectives was to create a platform for for taking care of to continue its growth in the future and to have a platform in the <unk> in the public market.
That we believed would allow us to access capital more efficiently than Tiptree could continue to provide it we felt that as the specialty ensure particularly in the capital of white business like warranty with the very attractive Standalone platform.
With with what we felt would be a very good valuation that would allow us to continue to grow raising its own capital independent of Tiptree.
Aside from that and by the way we.
We could have taken for take Republic.
We decided to pull the IPO based upon the market conditions at that time and based upon the question as to where whether we were truly achieving all of our objectives.
Yeah.
Again, it now that we pulled the IPO I will tell you that it is very much.
Something that we are continuing to consider.
We believe that we can continue to meet our growth targets without significant capital.
Coming in although we will again consider.
What capital is needed for either acquisitions of growth as we go forward and whether we want to raise of bringing capital for that but right now as I think communicated previously we believe for Tigra can continue to meet its growth objectives being part of Tiptree for the time being however.
Of the objectives that we had set out a year ago I think remain.
And so we are focused on at some point.
Whether it would be optimal to revisit the IPO market again, and I would say that that is very much on our thinking.
Thanks <unk>.
Sure.
Our next question is from Walter Shrinker with mass partners. Please proceed.
Uh huh.
Hi, Michael Hi, Sandra Hi, Walter.
It's sort of of piling on question.
But I've known the company for about I'm guessing 5 years, so I met some of the.
The conference Sandra at a conference number of years ago. If 1 looks at 10 years 5 years I'm very long term of my biggest position on on for 15 years.
The stock is sold under book value I suspect virtually throughout the whole period through might lose a brief period with the 4 of Tegra IPO, where it sold higher but even today. It is still close to 20% of 15% of $10.11, 90 undo book value.
The concept of a.
Portfolio of assets and I listened on the shipping and I listened to creating of management company as opposed to just fortuitously buying assets.
Good timing and hopefully showing it seems to imply a longer and stronger commitment to shipping.
Is not well received in the marketplace, but.
Not for months now for 6 months from 5 or 10 years.
How do you look at it and this is more of a michael than anyone else should the largest shareholders view of of the biggest economic interest, but I am of shareholder how do you look at your on the boards commitment and I know you can't talk for the whole board and I know you work more stock yourself.
To realizing or trying to create within a reasonable timeframe and I'll call you for a continuous of reasonable timeframe historically.
Value because I am convinced then you're convinced too by the way everyone's convinced that if you would of just fell off the non forte assets mortgage isn't going to get a lot better than it is today the stock would be much higher you'd have a clean insurance company, probably I'm, making up a number.
But the $20 a share because of the $7 you get for Sony will steal their assets. We've had this discussion I'm doing it again in the public Forum just give me your view of.
Creating shareholder value in a reasonable timeframe I happened to be in my seventies. So on my timeframe is no longer another 10 years.
I'm only 1 share things with them.
Thanks for the the question of alternative so you're not you're not alone on that question I will say and I'm happy to address that we from our inception 14 years ago, we created tiptree to be.
Be in a position with permanent capital to allocate to the highest yielding and most interesting and attractive of opportunities were small and that is some constraints. However, we we are in a position to find I think unique opportunities given her background or deep experience, particularly across the financials.
Services sector, and other hard assets investments and our priority as I've said many times.
Has been to look for.
Great management.
Cash flowing businesses.
Mailable and I've spoken about this often with an embedded optionality and you've seen a few of our business I think start to on tap that so the idea of getting paid while holding an option.
Is is our objective and I think all of our investments reflect that and some of which we've down scene really come into the money in that regard of mortgage business..1 example.
We have always as we as as an investment either matures or as others value of greater than we may we have sold assets and then reallocated of the capital and there is nothing that is more transparent and cash.
And so we you have seen us over the years occasionally return to cash and sell investments and again 1 of the things I like about our business through right. Now is that they are all cash flow driven businesses are on cash businesses, which as we as we as we perform we're accumulating more cash in on like that so.
So that is going to continue to be our objective now to your point.
1 of the things that you that I've.
People may even be getting tired of me, saying is our stock price doesn't reflect our intrinsic value and and it doesn't I think as evidence of that the fatigue or IPO, which as we said if we really chose to we probably could of force through and I think we made the right decision not to and we will revisit that I believe but you look.
At the at the intrinsic value of our pieces and they are materially higher the worst stock price trades.
And again, creating transparency to that value either through an IPO of 4 tigra or through the sale.
Of certain assets as a mature you should expect to see us do that as we go forward that being said if there's.
Your question is 1 of the most common questions I get asked when will you bridge the gap between of how will you bridge the gap between.
Where you are trading an intrinsic we see the intrinsic how do we get there and 2 when will we get there and in fact, you may have seen as part of our filings we did just.
Put in place with our.
Our board approval of new incentive structure that whose purpose is to prioritize increasing share price materially.
And 2 and particularly to achieve significant growth in share price with a time constraint placed on different levels at which are targeted.
So we we recently created an incentive structure for management to prioritize this and so creating a timeline to try to reflect that value management is very incentivised to do that.
And so.
I would draw your attention of the filing and and I am happy to discuss it off line. If you want to discuss further.
Okay. Thanks Micheal.
Sure.
[noise]. Thank you as a reminder, if you would like to ask the question. Please Gus stolen on the telephone keypad from a consolation total you figure the line is in the queue.
Our next.
Oh. The next question is from Joe Solano, what kinds of of Investor Misperceived.
Hey, guys can you hear me all.
Hi, Joe I hear Ya.
But.
Uhm.
This is almost day. This is almost on ironic question for stock the trades at the.
6.5.
6 times P.
Your gross is almost.
Too good to be.
To be imagine and again I realize the irony of their you know for of sectors transit.
So part of multiple but can you. Please.
Help explain the very impressive growth and 4 of Taborite on your on premiums and deferred revenue up something like 40% year over year is again for any company even companies trading of 20 times earnings.
That's stellar and and can you just kind of flesh out.
You guys are.
Producing that and doing it in a reasonable and profitable fashion.
Sure sure I'd I'd be happy to and all of that standard of certainly add to to my answer as well. The number 1 we've got great management, and I'd say that across all of our businesses joked off or take of what we've got great management and uncertain of our businesses particular, particularly there are certain elements of the economy's today, there's certainly tailwinds or benefit benefit.
The guys in.
In the case of fatigue, or I'll say as it relates to of mortgage business. That's definitely true. So I think that as you as we see continued low rates and on price appreciation. We should expect to see continued positive performance and that and we happen to be building out of our servicing of book as well that will serve as the knights hedge and all.
Allows us to recapture high margin business and refinancings and for Tegra not only the we have right management. We've also made some very good acquisitions over the last number of years, particularly in the warranty space on the audio on the auto warranty space.
As I said, there are certain tailwind from the economy, particularly as it relates to secondhand out of and the continuation of of of.
Warranty for those the choose to keep their cards as opposed to trade up that probably certainly have added some tailwind but to be Frank it's the sector that is capital light.
That we have made some key acquisitions over the last few years, adding to partakers overall of business and with management that we have I think they've done the fantastic job just continuing to grow those platforms.
But Sandra I don't know if you want to go a little deeper of you have anything you want to add to that.
Yeah, I think you asked really 2 components of the question, which how do you support crowded, but also how do you support it profitably and I think we covered both of those at a high level in the prepared remarks.
On and if you look at page 9 of the.
Investor presentation.
Think we covered 3 components in the.
First and foremost the.
Addressable markets in the areas, where the growth are are are massive relative to 4 tigress current position.
So it allows us to be selective while still growing and we really grow and 3 way stay on me. It's 1 as we add new programs on agents.
But even within our agents because of our technology and the date of that we have because we are very consistent relationships with those agents.
We do that because we can help extend our penetration among their client base on.
By providing them additional data.
And also because of the day that we have and the nature of the programs that we underwrite Ah.
Is we can.
Continue to grow their business profitably because we understand the risks really well. So the those are the 3 reasons why we can support the growth, but again I'll. Just if you look at historically and we lay these these metrics out on another page on the <unk>.
Presentation on page 7 we have the very consistent combined ratio it varies very little maybe 1 to 2 percentage points.
On Oh, since we have on them and and over history and I think that is really because of the nature of the business model the hi Fi component.
The the technology enabled platform and the relationship between frequency of exposure versus severity of exposure in the predictability of the underlying claims. So I think those are really the key points that allow us to support the kind of profitable growth on a consistent basis.
And Joe I think the last thing I'll say is on a consistent basis I think you should expect that at the moment.
We see nothing that would inhibit.
Oh of course constrained for take her from continuing to grow as it has so we're very excited about that business.
I know it's possible to.
Totally noticed hence the.
Answer this question in detail, but.
Maybe you can offer of sense of how much of your grosses.
Taking market share from for example, I I suspect that the entire industry the.
The lines that you guys plan or not.
Growing in aggregate, 31% I'm sorry, 40%.
Year over year and by the way I think most of that is organic I know you guys made.
Correct me, if I'm wrong. So if the entire space is in growing that much which again.
Guests would be it's not you guys were taking share and so is there a way to kind of guess ballparkish how.
How much of this is you guys taking share how much is it the whole market growing in and if you're taking share how.
So.
Good question and I'll say that you are correct that we certainly have been primarily growing that business organically from the acquisitions that we've made.
That being said is a large market worry we're still of small player and I think taking our market share is there is definitely part of the plan and again that goes to management.
Our experience again understanding of the risks as soon as it so I would expect the you'll see.
Are 1 thing in and out there taking additional market share as we see opportunity standard you on on everything.
No Michael lots of I think that's fair.
Okay.
Okay, and let me just if I may ask 1 more question uhm.
No I think mainly from Michael but.
In the in valuing tortilla and then getting comfortable on.
<unk>, what you think it's intrinsic value as soon as opposed to with the stock price suggests.
Uhm, Michael 2 questions on that 1.
Can can you help us how the I P O process helped you.
Uhm get it get comfortable on valuation with the obvious.
The caveat that did you happy or did it happen.
And 2 maybe my guess is there is a fair amount of the private market.
Transactions going on in the space because they are on top of any public we've traded companies aside from insurance it seems to play in.
Some of your core businesses on.
On the particular site so.
Can you is there an act of private market and can you speak to wear these assets trade, they're sort of another.
Salvation for what you think the intrinsic value for taking on that day.
Absolutely and so so I'll say from the from the IPO process. So we decided to poll, we certainly did a postmortem to say what do we learn from this and how can we improve when we go back to the process.
And it might view, it's it's the when not enough we very much believe still in the belief that for tegra would be better suited to have its own platform to have more efficient capital raises in the future for its business.
When you look of evaluation.
It's it's not particularly complicated in their sector.
Generally those businesses are are valued on a multiple of forward.
Just an earnings yoga, the last 12 months for photography, and it's the adjusted earnings which are.
Just shy of $53 million per trailing 12 months generally those businesses art valued on of trailing but of forward. So you can imagine our view of the forward is even greater and those multiples range, depending on on where you fit with respect to the peer group of your associated with anywhere from 15 to 20 times.
So you can start to get an idea as to where we would see value.
In particular of pre pre capital raised.
And so on that basis. So we also did is instead of postponing to say what were self inflicted.
Issues that we can improve upon when we go back and I think we've identified a number of of issues. There is a little bit of complexity to the offering and the story of that was told the result of a little bit of show me in the discussions with investors, particularly in the in the E&S business, who wanted to see some of the manifestation of the growth of expectation, which we.
You're showing.
There was also we did a small offering I think frankly, there was some question of the liquidity that I think we can improve amount of of did a slightly larger offerings. So I think we've learned from that.
We have had a lot of discussions with the bankers involved in others as to how we can improve I'll also be Frank I think we bring a lot to the table with our Investor base I think we can do a better job of making sure bankers cover our own investor base of those who would want to participate in the photography IPO. So you should expect down.
On the road, we certainly have as a priority for us revisiting that when appropriate from your.
Of your question of our private capital, there's a lot of private capital out there who certainly call. This after the fact, saying what can we do with you guys.
There may be some opportunities to clean up for taking the capital structure of in a more efficient way certainly will explore that opportunistically as array of the opportunities to enhance the IPO with the right partner, which is not an uncommon thing to see in ipos of of private partner participating, but we'll see look ipos or heart.
There's a lot of.
Of of of market elements that need to come together for it to work 1 of the biggest issues. We face Ironically was the marketed run up so much prior to our launching the IPO as well as having problems in the spec sector, which we had nothing to do with specs, but that'd kept some of the players on the sidelines. The we found the cool Mark.
But because of the run up at the time, we launched.
People concerned that the market of grown too far and was possessed was.
Essentially.
For a downturn. So we had a cool reception overall not because of the per tegra or of business, but the markets in general that didn't help and I think these other elements, we're going to improve on private capital will consider opportunistically when things makes sense, but to your question. Yeah, I actually think the capital was not only there, but but but frankly.
Somewhat aggressive in their willingness to invest it attractive levels and level of the frankly aren't too far away from where we would consider IPO capital.
So you're saying <unk> your your guests as the private market transactions.
In the space happy.
The happen transact Similarly, and at 15 to 20 times ballpark forward, Alright, I don't want to put numbers on it but I will say, there's a lot of capital being put to work right now.
And look with that capital goes to look for investments a well managed cash flowing growing business.
In the sector.
That the Tigers in with the combined regional loads of the low nineties with the prospects of on IPO in the relatively near term of the day, let's call. It a few years.
I think that's a very unique investment.
Okay, and I I would just chime in the the.
The market's me.
The unwashed with money and eager buyers forever right on you guys are sophisticated enough to know that but.
We can help it chime in with that.
Thank you very much for Ya per answering my questions I appreciate absolutely just that thank you very much appreciate it.
Thank you.
There are no more questions at this time I would like to turn on the call back the Sandra Bell for closing remarks.
Thank you Jeff.
And thank you everyone for joining us today. This concludes our.
<unk>.
2.220 21 earnings call. Obviously is always if anyone has any additional questions. Please feel free to reach out to me directly.
This concludes the news conference will disconnect. Your line. So at this time. Thank you very much for your participation and have a great day.
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