OLDWICK, N.J.--(BUSINESS WIRE)--
A.M. Besthas upgraded the financial strength rating (FSR) to A-
(Excellent) from B++ (Good) and the issuer credit ratings (ICR) to “a-”
from “bbb+” of the rated operating subsidiaries of Fortegra Financial
Corporation (Fortegra) (headquartered in Jacksonville, FL). Fortegra is
a wholly owned subsidiary of Tiptree Financial Inc. (Tiptree)
[NASDAQ:TIPT]. The property/casualty operating subsidiaries of Fortegra
include; Lyndon Southern Insurance Company (Lyndon Southern)
(Wilmington, DE), Insurance Company of the South (ICOTS) (Athens,
GA) and Response Indemnity of California (RIC) Rondo Beach, CA),
which operate under an intercompany pooling agreement and are
collectively referred to as Fortegra P&C Group. Additionally,
A.M. Best has assigned the FSR of A- (Excellent) and an ICR of “a-” to
RIC. The outlook assigned to each rating is stable.
The life/health operating subsidiaries include: Life of the South
Insurance Company (Nashville, GA); Bankers Life of Louisiana(Ruston,
LA); and Southern Financial Life Insurance Company (Scottsville,
KY); which are collectively referred to as the Life of the South Group.
The ICR for each of the operating subsidiaries (except for RIC) has been
revised to stable from negative, while the FSR outlook remains stable.
The rating actions for Fortegra’s insurance subsidiaries reflect the
significant improvement in the group’s financial leverage measures as a
result of a significant capital infusion that Tiptree made in April
2016, which reduces Fortegra’s financial leverage measures to moderate
levels. The ratings of Fortegra P&C Group also recognize the companies’
solid risk-adjusted capitalization, niche distribution and the
historical profitable operating performance of their core credit–related
books of business. Somewhat offsetting these favorable rating factors
are the limited scope of the companies’ operations, considerable growth
in direct writings in recent years and heavy reliance on third-party
reinsurance, as evidenced by the companies’ elevated gross and ceded
underwriting leverage measures. However, the associated credit risk
related to the companies’ reliance on third-party reinsurance
recoverables is mitigated by the credit quality of its rated reinsurers
and collateralization of recoverables due from non-rated entities.
The ratings for the Life of the South Group acknowledge its sufficient
consolidated risk-adjusted capitalization and conservative investment
portfolios. The ratings also recognize the group’s positive net
operating performance, derived primarily from its core credit life and
credit accident and health businesses, as well as the positive trends in
premium growth. Somewhat offsetting these factors are Life of the South
Group’s limited business profile, although the group continues to expand
its product offerings and distribution capabilities. A.M. Best believes
the group may be challenged to sustain and improve its net operating
performance given the challenges of the persistent low interest rate
environment and the expense strains expected from anticipated new
business growth.
Rating factors that could result in negative rating actions include a
significant and sustained decline in risk-adjusted capitalization; a
decline in the current levels of underwriting or operating performance;
or a deterioration in the quality of Fortegra’s consolidated balance
sheet, including, but not limited to, an increase in financial leverage
or an increase in the ratio of intangible assets to stockholders’ equity.
This press release relates to rating(s) that have been published on
A.M. 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 A.M. Best’s Recent
Rating Activity web page.
A.M. Best is the world’s oldest and most authoritative insurance
rating and information source. For more information, visit www.ambest.com.
Copyright © 2016 by A.M. Best Rating Services, Inc. ALL RIGHTS
RESERVED.
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A.M. Best
Kimberly Muccia, +1 908 439 2200, ext. 5731
Financial
Analyst—P/C
kimberly.muccia@ambest.com
or
Peter
Kelly,+1 908 439 2200, ext. 5834
Senior Financial
Analyst—L/H
peter.kelly@ambest.com
or
Christopher
Sharkey,+1 908 439 2200, ext. 5159
Manager, Public
Relations
christopher.sharkey@ambest.com
or
Jim
Peavy, +1 908 439 2200, ext. 5644
Assistant Vice President,
Public Relations
james.peavy@ambest.com
Source: A.M. Best