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 ICR) of “a-” 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) and Blue Ridge Indemnity Company (headquartered in Jacksonville, FL), which operate under an intercompany pooling agreement 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 of Louisiana (Marksville, LA) and Southern Financial Life Insurance Company (Scottsville, KY), which are collectively referred to as the Life of the South Group. Concurrently, AM Best has affirmed the FSR of A- (Excellent) and the Long-Term ICR of “a-” 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 categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM). The group’s balance sheet is supported by the strongest level of risk-adjusted capitalization, a conservative investment portfolio and strong reinsurance program. AM Best notes that reinsurance leverage is elevated due to the utilization of producer owned reinsurance companies (PORCs), which provide risk- and profit-sharing between the company and its distributors, and its captive insurer, Fortegra Indemnity; however, credit and loss risk are largely mitigated by the high collateralization requirements held in trust accounts. Operating performance has been led by very strong premium growth in its core credit products and consistent underwriting profitability. The business profile maintains good diversification by individual product, although the overall book is moderately concentrated in credit property risks.
The ratings of Life of the South Group reflect its balance sheet strength, which AM Best categorizes 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. Risk-adjusted capitalization is assessed at the strongest level and the group has reported sustained growth in premiums and consistent profitability, with generally favorable return metrics.
The ratings Fortegra Indemnity reflect its balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, limited business profile and appropriate ERM. These ratings also reflect the financial support of its parent organization. Fortegra Indemnity is a captive reinsurer that assumes almost all of the credit property exposure held by the Fortegra P&C Group, net of external reinsurance. The entity maintains the strongest level of risk-adjusted capitalization and has reported consistent underwriting profitability in recent years.
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