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 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 U.S. 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); and Fortegra Specialty Insurance Company (Fortegra Specialty) (Scottsdale, AZ). These companies are collectively referred to as Fortegra P/C Group (the P/C group). 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 Credit Ratings (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 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).

Fortegra P/C Group's balance sheet strength assessment is based on its strongest level of risk-adjusted capitalization, as measured by Best's Capital Adequacy Ratio (BCAR), its prudent investment portfolio, solid liquidity measures that are enhanced by positive underwriting and operating cash flows, and comprehensive reinsurance program. Partially offsetting these positive rating factors is the company's substantial reliance on third-party reinsurance to provide capacity, which is demonstrated by high ceded underwriting leverage that is somewhat mitigated by the use of collateral, as well as its modest loss reserve volatility. The P/C group's capital and surplus has shown strong, long-term growth through retained earnings, partially offset by modest dividends to the parent holding company. Additional capital was contributed to the entire group in 2021, resulting in a significant increase to the P/C group's total capital.

The ratings of the 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 the life group's strategic role within the consolidated organization as the provider of credit life and accident and health products.

The Life of the South Group has maintained the strongest level of risk-adjusted capitalization, as measured by BCAR. Growth in the life group's absolute capital levels has been supported by consistent profitability. The life group itself has no debt and although it does have a conservative bond portfolio and liquid investment profile, it has taken on more investment risk in recent years. AM Best notes that the company maintains elevated levels of reinsurance leverage as the life group cedes over half of its gross premiums. The majority of its ceded business is held with U.S.-domiciled and offshore subsidiaries. Additionally, the life group maintains a number of reinsurance agreements with producer-owned reinsurance companies, which primarily serve as profit- and risk-sharing vehicles with the life group's 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.

Fortegra Indemnity's balance sheet strength assessment is based an adequate level of risk-adjusted capitalization, as measured by BCAR, to support its business risks, but notes increases in capital during 2021 through organic earnings and capital contribution. Fortegra Indemnity's balance sheet experienced growth in 2021, following two years of contraction. The company has a history of sporadic dividend payments, but has not made one since 2019. Total reserves were up in 2021 and relatively flat in previous years. The reserve profile is credit property and is relatively short in duration and less subjective to long tail risk factors.

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.

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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AM Best Affirms Credit Ratings of The Fortegra Group, Inc.'s Insurance Subsidiaries