AM Best Affirms Credit Ratings of The Fortegra Group, Inc.’s Insurance Subsidiaries

Rhea-AI Summary

AM Best affirms A- (Excellent) FSR and 'a-' Long-Term ICRs of Fortegra Group, Inc. (TIPT). Positive balance sheet strength, solid liquidity, and strong capitalization. Stable outlook for both P/C and life/health operating subsidiaries.

Positive

• AM Best affirms A- (Excellent) FSR and 'a-' Long-Term ICRs of Fortegra Group, Inc. (TIPT)
• Fortegra's balance sheet strength is assessed as very strong
• Solid liquidity measures enhanced by positive underwriting and operating cash flows
• Strongest level of risk-adjusted capitalization
• Stable outlook for both P/C and life/health operating subsidiaries

Negative

• High ceded underwriting leverage
• Modest loss reserve volatility
• Elevated levels of reinsurance leverage for life group
• Fortegra Indemnity's balance sheet strength assessed as adequate
• Limited business profile for Fortegra Indemnity

OLDWICK, N.J.--(BUSINESS WIRE)-- AM Best has affirmed the Financial Strength Rating (FSR) of A- (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICRs) of “a-” (Excellent) of the operating subsidiaries of The Fortegra Group, Inc. (Fortegra) (headquartered in Jacksonville, FL). Fortegra is a wholly owned subsidiary of its publicly traded parent company, Tiptree Inc. [NASDAQ: TIPT]. The property/casualty (P/C) operating subsidiaries of Fortegra include: Lyndon Southern Insurance Company (Wilmington, DE); Insurance Company of the South (Athens, GA); Response Indemnity Company of California (Redondo Beach, CA); Blue Ridge Indemnity Company (Wilmington, DE); Fortegra Specialty Insurance Company (Fortegra Specialty) (Scottsdale, AZ); and Fortegra Europe Insurance Company Limited (FEI) (Malta). These companies are collectively referred to as Fortegra P&C Group (the P/C group).

In addition, AM Best has affirmed the FSR of A- (Excellent) and the Long-Term ICR of “a-” (Excellent) of Fortegra’s life/health operating subsidiaries, which include: Life of the South Insurance Company (Athens, GA); Bankers Life Insurance Company of Louisiana (Marksville, LA); and Southern Financial Life Insurance Company (Scottsville, KY). These companies are collectively referred to as Life of the South Group (the life group). The outlook of these Credit Ratings (ratings) is stable.

Concurrently, AM Best has affirmed the FSR of A- (Excellent) and the Long-Term ICR of “a-” (Excellent) of Fortegra Indemnity Insurance Company, LTD. (Fortegra Indemnity) (Turks and Caicos). The outlook of these ratings is stable.

The ratings of Fortegra P&C Group reflect its balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).

Fortegra P/C Group’s balance sheet strength assessment is based on its strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), its prudent investment portfolio, solid liquidity measures that are enhanced by positive underwriting and operating cash flows, and comprehensive reinsurance program. Partially offsetting these positive rating factors is the company’s substantial reliance on third-party reinsurance to provide capacity, which is demonstrated by high ceded underwriting leverage that is somewhat mitigated by the use of collateral, as well as its modest loss reserve volatility. The P/C group’s capital and surplus has shown strong, long-term growth through retained earnings, partially offset by modest dividends to the parent holding company.

The ratings of the Life of the South Group reflect its balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, neutral business profile and appropriate ERM. The ratings also reflect the life group’s strategic role within the consolidated organization as the provider of credit life and accident and health products.

The Life of the South Group has maintained the strongest level of risk-adjusted capitalization, as measured by BCAR. Growth in the life group’s absolute capital levels has been supported by consistent profitability. The life group itself has no debt and although it does have a conservative bond portfolio and liquid investment profile, it has taken on more investment risk in recent years. AM Best notes that the company maintains elevated levels of reinsurance leverage as the life group cedes over half of its gross premiums. The majority of its ceded business is held with U.S.-domiciled and offshore subsidiaries. Additionally, the life group maintains a number of reinsurance agreements with producer-owned reinsurance companies, which primarily serve as profit- and risk-sharing vehicles with the life group’s distribution partners.

The ratings of Fortegra Indemnity reflect its balance sheet strength, which AM Best assesses as adequate, as well as its adequate operating performance, limited business profile and appropriate ERM. These ratings also reflect Fortegra Indemnity’s strategic role within the consolidated organization as a captive reinsurer that assumes almost all the credit property exposure held by Fortegra P/C Group, net of external reinsurance, and more recently, related to a quota share treaty with its foreign affiliate.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2023 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

View source version on businesswire.com: https://www.businesswire.com/news/home/20231208698561/en/

Gordon McLean

Senior Financial Analyst

+1 908 882 2109

gordon.mclean@ambest.com

Christopher Sharkey

Associate Director, Public Relations

+1 908 882 2310

christopher.sharkey@ambest.com

Edin Imsirovic

Director

+1 908 882 1903

edin.imsirovic@ambest.com

Al Slavin

Senior Public Relations Specialist

+1 908 882 2318

al.slavin@ambest.com

Source: AM Best

FAQ

What are the recent Credit Ratings for Fortegra Group, Inc. (TIPT)?

AM Best has affirmed the Financial Strength Rating (FSR) of A- (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICRs) of 'a-' (Excellent) of the operating subsidiaries of The Fortegra Group, Inc. (Fortegra) (headquartered in Jacksonville, FL).

What is the outlook for the Credit Ratings of Fortegra Group, Inc. (TIPT)?

The outlook of these Credit Ratings (ratings) is stable for both P/C and life/health operating subsidiaries.

What are the positive aspects of Fortegra Group, Inc. (TIPT) according to the PR?

Positive aspects include very strong balance sheet strength, solid liquidity measures, and strong risk-adjusted capitalization.

What are the negative aspects of Fortegra Group, Inc. (TIPT) according to the PR?

Negative aspects include high ceded underwriting leverage, modest loss reserve volatility, and elevated levels of reinsurance leverage for the life group.