Credit rating agency AM Best has upgraded the credit ratings of the Fortegra Group, Inc., a wholly owned subsidiary of DB Insurance Co., Ltd. (DBI), who acquired the specialty insurer back in June.
AM Best has removed from under review with positive implications and upgraded the Financial Strength Rating (FSR) to A (Excellent) from A- (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICRs) to “a” (Excellent) from “a-” (Excellent) of the operating subsidiaries of Fortegra.
The property and 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).
Collectively, these companies are referred to as Fortegra P&C Group.
In addition, AM Best has removed from under review with positive implications and upgraded the FSR to A (Excellent) from A- (Excellent) and the Long-Term ICRs to “a” (Excellent) from “a-” (Excellent) of Fortegra Belgium Insurance Company NV (FBIC) (Belgium), Fortegra Insurance UK Ltd. (FIUK) (United Kingdom), and Fortegra Indemnity Insurance Company, LTD. (Fortegra Indemnity) (Turks and Caicos), respectively.
Furthermore, AM Best has also upgraded the Credit Ratings (ratings) of Fortegra’s life and health (L&H) operating subsidiaries and assigned them a stable outlook.
These companies, collectively known as the Life of the South Group, 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).
Following their removal from under review with positive implications, their FSR was raised to A (Excellent) from A- (Excellent) and their Long-Term ICRs were upgraded to “a” (Excellent) from “a-” (Excellent).
The rating upgrades reflect rating enhancement based on Fortegra’s strategic importance to South Korea-based DBI, as well as anticipated financial and operational benefits stemming from ownership by a larger, higher-rated parent company.
DBI holds an FSR of A+ (Superior) and a Long-Term ICR of “aa-” (Superior) with stable outlooks.
As one of South Korea’s non-life insurers, DBI is expected to leverage Fortegra to expand its international footprint and strengthen product and geographic diversification.
In turn, AM Best expects Fortegra to leverage DBI’s operational scale and substantial financial flexibility if needed.
The ratings of Fortegra P&C Group reflect balance sheet strength assessed as very strong, complemented by adequate operating performance, a neutral business profile, and appropriate enterprise risk management (ERM).
Fortegra P&C Group is supported by risk-adjusted capitalisation at the “strongest” level, as evaluated by Best’s Capital Adequacy Ratio (BCAR), alongside solid liquidity, a conservative investment portfolio, and a robust reinsurance structure.
Offsetting factors include its dependence on third-party reinsurance for capacity and ongoing loss reserve volatility.
The ratings of the Life of the South Group reflect balance sheet strength assessed as strong, adequate operating performance, a neutral business profile, and appropriate ERM.
The L&H operations are sported by risk-adjusted capitalisation at the “strongest” BCAR level, steady profitability, and growth in absolute capital.
The group play a strategic role within the broader organisation as the provider of credit life and accident &health products.
Elevated reinsurance leverage and increased investment risk exposure in recent years, offset the above factors.
Finally, FBIC and FIUK were rated based on a strong balance sheet, adequate operating performance, limited business profiles, and appropriate ERM. Both entities serve as key platforms for European growth in specialty P&C lines.
Fortegra Indemnity was rated based on adequate balance sheet strength, adequate operating performance, a limited business profile, and appropriate ERM. Moreover, it serves as a captive reinsurer facilitating intragroup reinsurance capital flexibility.
