OLDWICK, N.J.--(BUSINESS WIRE)--
A.M. Besthas placed under review with negative implications the
issuer credit rating (ICR) of “bbb-’’ of Fortegra Financial
Corporation(Fortegra) (headquartered in Jacksonville, FL)
[NYSE:FRF] and the financial strength ratings of A- (Excellent) and ICRs
of “a-’’ of its insurance company operating subsidiaries following the
recent announcement that Fortegra has reached a definitive agreement to
be acquired by Caroline Holdings LLC, an indirect subsidiary of Tiptree
Financial Inc.[NASDAQ:TIPT]for approximately $218
million in cash. Fortegra’s life/health insurance subsidiaries are Life
of the South Insurance Company (Nashville, GA), Bankers Life of
Louisiana (Ruston, LA) and Southern Financial Life Insurance
Company (Scottsville, KY) and are collectively referred to as the Life
of the South Group. Fortegra’s property/casualty insurance
subsidiaries are Lyndon Southern Insurance Company (Wilmington,
DE) and Insurance Company of the South (Athens, GA).
The under review with negative implications reflects uncertainty
regarding the transaction’s impact on Fortegra’s financial flexibility.
In a regulatory filing, Fortegra, along with its potential acquirer,
announced that a syndicate of lenders has committed to provide a $90
million secured revolving credit facility and a $50 million secured term
loan, which will result in increased financial leverage at the close of
the transaction. Recently, Fortegra had significantly deleveraged its
balance sheet.
Fortegra is an insurance holding company that, through its subsidiaries,
offers a number of insurance and non-insurance products, including
payment protection products, motor club memberships, service contracts,
device and warranty service and administrative services to its business
partners. These partners include insurance companies, retailers,
dealers, insurance brokers, agents and financial service companies,
primarily in the United States. The transaction is anticipated to close
in late 2014 or early 2015, subject to regulatory approvals and other
customary closing conditions. A “go-shop” period, during which
Fortegra’s board may solicit, encourage and facilitate a competing offer
to acquire the company, is in effect until Sept. 10, 2014.
The ratings will be removed from under review following the close of the
transaction and A.M. Best’s discussions with management. However, if an
alternative acquirer is identified during the “go-shop” period, the
ratings will be evaluated again at that time. A negative rating action
could occur if the financial terms of the pending transaction results in
a material increase in financial leverage and/or an overall
deterioration in A.M. Best’s view of the credit profiles of Fortegra or
its subsidiaries.
The methodology used in determining these ratings is Best’s Credit
Rating Methodology, which provides a comprehensive explanation of A.M.
Best’s rating process and contains the different rating criteria
employed in the rating process. Best’s Credit Rating Methodology can be
found at www.ambest.com/ratings/methodology.
A.M. Best Company is the world's oldest and most authoritative
insurance rating and information source. For more information, visit www.ambest.com.
Copyright © 2014 by A.M. Best Company, Inc.ALL RIGHTS
RESERVED.
A.M. Best Company
Steven Faulks – L/H, 908-439-2200, ext. 5035
Senior
Financial Analyst
steven.faulks@ambest.com
or
Brian
O’Larte – P/C, 908-439-2200, ext. 5138
Senior Financial Analyst
brian.o'larte@ambest.com
or
Christopher
Sharkey, 908-439-2200, ext. 5159
Manager, Public Relations
christopher.sharkey@ambest.com
or
Jim
Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public
Relations
james.peavy@ambest.com
Source: A.M. Best Company, Inc.