AM Best Affirms Credit Ratings of Fortegra Financial Corporation’s Insurance Subsidiaries
OLDWICK, N.J.–(BUSINESS WIRE)–#insurance—AM Best has affirmed the Financial Strength Rating (FSR) of A- (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a-” (Excellent) of the U.S.-based operating subsidiaries of Fortegra Financial Corporation (Fortegra) (headquartered in Jacksonville, FL). Fortegra is a wholly owned subsidiary of publicly traded parent company, Tiptree Inc. [NASDAQ: TIPT]. The U.S. property/casualty 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) and Fortegra Specialty Insurance Company (Fortegra Specialty) (Scottsdale, AZ), and are collectively referred to as Fortegra P&C Group. The life/health operating subsidiaries 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), which are collectively referred to as Life of the South Group. 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 Credit Ratings (ratings) is stable.
The ratings reflect Fortegra P&C Group’s 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).
The group’s risk-adjusted capitalization is assessed at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), supported by a conservative investment portfolio and strong reinsurance program. The group’s total capital increased in 2020, following the creation and initial capitalization of its new surplus lines entity, Fortegra Specialty. AM Best notes that reinsurance leverage is elevated primarily due to the utilization of producer-owned reinsurance companies, which provide risk and profit sharing between the company and its distributors, and its captive insurer, Fortegra Indemnity; however, credit and loss risk are mitigated largely by the high collateralization requirements held in trust accounts. The group’s operating performance has been supported by a long-term trend of strong premium growth and consistent profitability. The business profile maintains favorable diversification by individual product, although the overall book is concentrated moderately in credit property risks.
The ratings of 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 Life of the South Group’s strategic role within the consolidated organization as the provider of credit life and accident and health products.
Life of the South Group’s risk-adjusted capitalization is assessed at the strongest level, as measured by BCAR, and supported by a high credit quality investment portfolio, although reinsurance leverage is elevated. The group reported declining premiums in 2020 due to the COVID-19 pandemic; however, long-term trends remain positive. Additionally, the group has reported consistent profitability with generally favorable return metrics.
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 of the credit property exposure held by Fortegra P&C Group, net of external reinsurance.
Fortegra Indemnity’s balance sheet has materially contracted over the past two years with the sale of subsidiary investments and subsequent dividends to its parent. The entity’s risk-adjusted capitalization declined from the prior year due to a significant dividend in 2020 but remains assessed at the adequate level.
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 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.
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