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 (Scottsdale, AZ); and Fortegra Europe Insurance Company SE (Malta). These companies are collectively referred to as Fortegra P&C Group (the P/C group). The outlook of these Credit Ratings (ratings) is stable.

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 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).

The balance sheet strength of Fortegra P/C Group is supported by its risk-adjusted capitalization being at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), a conservative investment portfolio, solid liquidity metrics bolstered by positive underwriting and operating cash flows, and its robust reinsurance program. These favorable factors are partially offset by the group’s significant dependence on third-party reinsurance for capacity—evident in its elevated ceded underwriting leverage, which is somewhat mitigated through the use of collateral—as well as moderate loss reserve volatility. The group’s capital and surplus have demonstrated strong, sustained growth over time, primarily through retained earnings and contributed capital, offset by modest dividends paid to the parent holding company.

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 Life of the South Group has sustained the strongest level of risk-adjusted capitalization, as measured by BCAR. The group’s steady profitability has supported growth in its absolute capital levels. While the life group carries no debt and maintains a conservative bond portfolio along with a highly liquid investment profile, it has increased its investment risk exposure in recent years. AM Best notes that the company exhibits elevated reinsurance leverage, ceding over half of its gross premiums. Most of the ceded business is placed with both U.S.-domiciled and offshore subsidiaries. In addition, the life group holds several reinsurance agreements with producer-owned reinsurance companies, which primarily function as profit- and risk-sharing arrangements with its 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.

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