What changed in this filing

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Item 1. Business

2025-03-03 compared with 2024-02-29 · 46 added, 37 removed, 505 unchanged (14% of the section changed)

34 unchanged sentences

See “Risk Factors-Risks Related to Regulatory and Legal Matters-Maintenance of our 1940 Act exemption will impose limits on our operations.”

Fortegra is a growing, consistently profitable, and multinational specialty insurance company focused on underwriting complex and niche risks in underserved markets.

Fortegra is a growing multinational specialty insurance company focused on underwriting complex and niche risks in underserved markets.

Founded in 1978, the business has a long-standing track record of disciplined and stable underwriting results while generating strong growth and attractive returns on capital.

Fortegra is an underwriting-focused company,

with deep expertise within the admitted and E&S insurance lines and capital light fee-based services markets.

Fortegra is an underwriting-focused company, with deep expertise

within the admitted and E&S insurance lines and capital light fee-based services markets.

It targets moderate risk limits and utilizes a sophisticated reinsurance strategy to reduce volatility and protect its capital.

10 unchanged sentences

Business and Product Mix by Gross Written Premiums and Premium Equivalents

($ in thousands) Year Ended December 31,

($ in thousands) For the Year Ended December 31,

2024 2023 2022

38 unchanged sentences

– Alternative Risks , including credit insurance products designed to offer lenders protection from events that limit a borrower’s ability to make payments on outstanding loan balances.

Collateral protection products are designed to primarily protect the commercial entity from losses to collateral pledged to secure an installment loan.

Collateral protection products are designed to primarily protect the commercial entity from losses to collateral pledged to secure a loan.

In most instances, these products offer lenders the option to protect collateral from a comprehensive loss due to fire, wind, flood and theft.

2 unchanged sentences

These products offer consumers the option to protect loan balance repayment in the event of death, involuntary unemployment or disability.

Additionally, while the business has strategically and intentionally deemphasized non-standard auto coverage, it offers these products on a limited basis through select partners.

Additionally, while the business has strategically and intentionally de-emphasized non-standard auto coverage, it offers these products on a limited basis through select partners.

Includes lines of business that generate service fees and other sources of income through non-insurance services entities.

7 unchanged sentences

Fortegra administers multiple forms of motor clubs marketed by distribution partners, which are complementary to, and typically embedded within, other insurance or services programs.

As part of the expansion into Europe, Fortegra also provides regulatory support and compliance services to the retail automotive sector in the U.K.

As part of its European operations, Fortegra provides regulatory support and compliance services to the retail automotive sector in the U.K.

Included in Fortegra’s vertically integrated insurance and services offerings, the business generates additional sources of fee income through value-add services, including but not limited to, premium or warranty contract financing, lead generation support, and business process outsourcing.

1 unchanged sentence

We believe that Fortegra’s competitive strengths include:

Highly diversified and complementary business mix with an exclusive focus on underserved specialty insurance markets requiring distinct industry expertise.

Highly diversified and complementary business mix with a focus on underserved specialty insurance markets requiring distinct industry expertise.

Fortegra has a highly diverse set of specialty programs, focused on classes of business where its underwriters have extensive experience.

The exclusive focus on programs that we believe are frequently underserved in the market provides Fortegra a distinct competitive advantage.

For example, Fortegra often targets smaller limit lines of business that it believes are consistently profitable with significant growth potential but have been overlooked by traditional insurance carriers.

The focus on programs that we believe are frequently underserved in the market provides Fortegra a distinct competitive advantage.

For example, Fortegra often targets smaller limit lines of business that it believes has significant growth potential but have been overlooked by traditional insurance carriers.

Its dedicated underwriters have specific expertise in their given specialty markets, and will only enter a new market segment after extensive analysis and assessment.

11 unchanged sentences

The business takes a disciplined approach to program selection, due diligence, pricing and structuring led by long-tenured, specialty insurance underwriting and actuarial experts, with active input from compliance, information technology and legal teams.

Fortegra does not write commoditized, longer-tail classes of business which can experience periods of volatility such as workers compensation or commercial auto.

Fortegra generally does not write commoditized, longer-tail classes of business which can experience periods of volatility such as workers compensation or commercial auto.

The stability of its financial results is also driven by an intense data driven underwriting approach, which is enhanced by AI and machine learning to constantly refine pricing and risk appetite.

13 unchanged sentences

Fortegra utilizes a sophisticated reinsurance strategy to optimize capital deployed and reduce volatility while generating attractive economics.

This strategy is further augmented by Fortegra’s conservative balance sheet and highly liquid fixed income investment portfolio which has an average S&P rating of AA.

This strategy is further augmented by Fortegra’s conservative balance sheet and highly liquid fixed income investment portfolio which has an average S&P rating of A+.

Visionary, proven, and deep leadership team with a collaborative culture.

36 unchanged sentences

Fortegra has and seeks to maintain a strong and conservative balance sheet, supported by a comprehensive risk management program reflected by its financial strength ratings of “A-” (Excellent) (Outlook Stable) from A.M.

Fortegra has a short duration, liquid and high-quality investment portfolio, with 90% invested in cash and investment grade fixed income securities, which have an average S&P rating of AA, as of December 31, 2023.

Fortegra has a short duration, liquid and high-quality investment portfolio, with 89% invested in cash and investment grade fixed income securities, which have an average S&P rating of A+, as of December 31, 2024.

Fortegra has highly rated and well capitalized reinsurance partners and retains excess collateral where applicable to support its outstanding reinsurance recoverable.

22 unchanged sentences

Fortegra believes its approach to partner and program diligence, underwriting (including risk selection and pricing), and claims management, combined with its alignment and ability to improve its partner’s performance, has contributed to a superior combined ratio, which averaged 90.7% from 2019 through December 31, 2024.

Fortegra’s underwriting team consisted of over 90 professionals as of December 31, 2023.

Fortegra’s underwriting team consisted of 104 professionals as of December 31, 2024.

Fortegra hires experienced underwriters with a proven track record of underwriting profitability, deep knowledge of the specialty products that they underwrite, and longstanding relationships with its distribution partners.

15 unchanged sentences

it fosters collaboration, lasting relationships and consistent profitability.

Fortegra’s claims department consisted of over 300 claims professionals as of December 31, 2023.

Fortegra’s claims department consisted of 349 claims professionals as of December 31, 2024.

Fortegra organizes its claims department by product and geography, with specialized teams aligned by area of expertise.

38 unchanged sentences

Fortegra has various quota share contracts that cover its insurance programs.

Fortegra’s whole account quota share reinsurance agreement, which covers a portion of its commercial P&C insurance gross written premium (including general liability, professional liability, property and short-tail), provides a 60% quota share of losses and significant ceding fees to offset administrative, underwriting and acquisition expenses.

Fortegra’s whole account quota share reinsurance agreements (“WAQS”), which cover portions of its commercial P&C insurance gross written premiums (including general liability, professional liability, property and short-tail), provide between 55% and 60% quota share of losses and significant ceding fees to offset administrative, underwriting and acquisition expenses.

Additionally, this reinsurance agreement generates ceding commission income based on underlying underwriting performance, and investment income earned by the assuming reinsurers.

12 unchanged sentences

Treaty Description Net Retention Reinsurance Coverage

Whole Account Quota Share Covers general liability, professional liability, property and short-tail lines accounting for 40% of commercial P&C insurance gross written premiums 40%, $5 million per aggregate 60% Placed

Property Catastrophe Excess of Loss Protection in excess of a 1:200-year catastrophic event

(2023 - 2024) Covers general liability, professional liability, property and short-tail lines

40%, $5 million per aggregate 60% Placed

(2024 - 2025) Covers general liability, professional liability, property and short-tail lines

45%, $5 million per aggregate

WAQS - Specific GL

(2024 - 2025) Covers select general liability programs 43%, $5 million per aggregate

Property Catastrophe Excess of Loss

(2023 - 2024) Protection in excess of a 1:200 year catastrophic event;

a 1:250 event results in approximately 1% impact to loss / combined ratio

$8 Million, 50% co-participation on $4 million excess of $8 million $40 Million excess of $8 Million per event, $80 million in aggregate

Property Catastrophe Excess of Loss

(2024 - 2025) Protection in excess of a 1:200 year catastrophic event;

a 1:250 event results in approximately 1% impact to loss / combined ratio

$14 Million, 22% co-participation on $14 million excess of $14 million

22 unchanged sentences

(2) “Professional reinsurers” include all reinsurers except for third-party captives.

Total reinsurance receivables and prepaid reinsurance premiums were $1,854 million and $1,176 million as of December 31, 2023 and 2022, respectively.

Total reinsurance receivables and prepaid reinsurance premiums were $2.0 billion and $1.9 billion as of December 31, 2024 and 2023, respectively.

Of those amounts, $835 million and $871 million, respectively, related to contracts with third-party captives in which Fortegra holds collateral or receives letters of credit in excess of the reinsurance receivables and prepaid reinsurance premiums.

15 unchanged sentences

Unpaid claims reserves represent Fortegra’s best estimates at a given time, based on actuarial estimates.

Actual claim costs are dependent upon a number of complex factors such as changes in doctrines of legal liabilities and damage awards.

Actual claim costs are dependent

upon a number of complex factors such as changes in doctrines of legal liabilities and damage awards.

These factors are not directly quantifiable, particularly on a prospective basis.

2 unchanged sentences

Key assumptions underlying these analyses, including anticipated future loss development patterns and expected ultimate loss and loss adjustment expense ratios, are reviewed regularly and updated as needed based on actual claims experience.

In accordance with applicable statutory insurance company regulations, Fortegra’s recorded unpaid claims reserves are evaluated by

appointed independent third-party actuaries, who perform this function in compliance with the Standards of Practice and Codes of Conduct of the American Academy of Actuaries.

In accordance with applicable statutory insurance company regulations, Fortegra’s recorded unpaid claims reserves are evaluated by appointed independent third-party actuaries, who perform this function in compliance with the Standards of Practice and Codes of Conduct of the American Academy of Actuaries.

As of December 31, 2024, Fortegra’s reserves were found to be consistent with reserves computed in accordance with actuarial standards of practice and make a reasonable provision for all of its unpaid loss and loss adjustment expense obligations, as well as its unearned premium reserves for long duration contracts, by the appointed independent third-party actuaries.

1 unchanged sentence

Fortegra seeks to maintain a balanced and well-diversified investment portfolio with the primary investment objectives of remaining liquid to fund expected reserve payments, capital preservation, and a stable level of investment income enabling continued growth of core and new business lines.

Its investment portfolio, including cash and cash equivalents and total investments, were $1,327 million as of December 31, 2023.

Its investment portfolio, including cash and cash equivalents and total investments, were $1.5 billion as of December 31, 2024.

Fortegra’s investment policy establishes the investment parameters, such as maximum percentage of investment in a certain type of security and minimum levels of credit quality and is designed to manage investment risk.

Corvid Peak Capital Management, a credit oriented asset manager owned by the Company, manages Fortegra’s investment portfolio consistent with its internally prescribed guidelines and with oversight from Tiptree.

Tiptree Advisors, a credit oriented asset manager owned by the Company, manages Fortegra’s investment portfolio consistent with its internally prescribed guidelines and with oversight from Tiptree.

Fortegra’s investments are subject to general economic conditions and market risks in addition to risks inherent to particular securities and risks relating to the performance of its investment advisers.

1 unchanged sentence

Fortegra also maintains an investment committee that meets monthly to ensure its investment objectives remain aligned with its broader strategic and financial objectives.

As of December 31, 2023, the majority of its investments, $772 million or 58.2%, of total cash and invested assets, was comprised of fixed maturity securities that are classified as available for sale and carried at fair value with unrealized gains and losses on these securities, net of applicable taxes, reported as a separate component of AOCI.

Cash & cash equivalents were $410 million, or approximately 30.9% of total cash and invested assets as of December 31, 2023, as Fortegra has intentionally maintained a larger cash portion in its portfolio to capitalize on current short-term yields and maintain liquidity.

As of December 31, 2024, the majority of its investments, $1.1 billion or 70.9%, of total cash and invested assets, was comprised of fixed maturity securities that are classified as available for sale and carried at fair value with unrealized gains and losses on these securities, net of applicable taxes, reported as a separate component of AOCI.

Cash & cash equivalents were $286 million, or approximately 18.5% of total cash and invested assets as of December 31, 2024.

Also included in its investments were $99 million of equity securities, $10 million of loans, at fair value, $5 million of exchange traded fixed income funds, at fair value, and $50 million of other investments.

The following table provides a summary of Fortegra’s investments and cash and cash equivalents as of December 31, 2023 and December 31, 2022:

The following table provides a summary of Fortegra’s investments and cash and cash equivalents as of December 31, 2024 and 2023:

($ in millions) December 31, 2024 December 31, 2023

8 unchanged sentences

Fixed Maturity Securities

As of December 31, 2023, Fortegra’s fixed maturity securities totaled $1,191.5 million and included cash and cash equivalents, available for sale securities, at fair value and investment grade securities classified in other investments.

It had a weighted-average effective duration of 2.5 years, an average S&P rating of AA, and a book yield of 3.3%.

Fixed maturity securities represented 90% of total investments.

The following table provides a summary of Fortegra’s amortized cost and fair value on available for sale securities as of December 31, 2023 and December 31, 2022:

As of December 31, 2024, Fortegra’s fixed maturity securities portfolio totaled $1.4 billion, including cash and cash equivalents and available for sale securities, at fair value.

It had a weighted-average effective duration of 2.8 years, an average S&P rating of A+, and a book yield of 4.0%.

The fixed maturity securities portfolio represented 89% of total investments.

The following table provides a summary of Fortegra’s amortized cost and fair value on available for sale securities as of December 31, 2024 and 2023:

($ in millions) December 31, 2024 December 31, 2023

10 unchanged sentences

Total available for sale investments $ 1,141 $ 1,097 100 % $ 812 $ 773 100 %

The following table provides the credit quality of Fortegra’s available for sale investments as of December 31, 2023 and December 31, 2022:

The following table provides the credit quality of Fortegra’s available for sale investments as of December 31, 2024 and 2023:

($ in millions) December 31, 2024 December 31, 2023

115 unchanged sentences

Tiptree Capital - Other currently includes:

• Our principal investments which include cash and cash equivalents, government bonds and select equity securities, including Invesque, a publicly traded real estate investment company that specializes in health care and senior living property investment throughout North America.

• Our ownership of a credit oriented, special situations asset manager, Corvid Peak.

• Our remaining assets in the maritime transportation sector.

• Our principal investments which include cash and cash equivalents, government bonds and select equity securities.

• Our ownership of a credit oriented asset manager, Tiptree Advisors.

Competitive Strengths

19 unchanged sentences

Tiptree’s seven member board of directors includes two women and one underrepresented minority.

Tiptree’s seven person senior management team includes two women and one underrepresented minority.

Our talent strategy is focused on employee engagement and investments in programs to support career development, as well as recognizing and rewarding performance.

9 unchanged sentences

For example, the Foundation has supported clean water initiatives in Africa and, in 2022 alone, helped build three life-changing water wells in The Republic of Zambia.

Fortegra has developed program that assists employees in developing key skills that enable them to perform their jobs and to advance their careers.

Fortegra has programs that assist employees in developing key skills that enable them to perform their jobs and to advance their careers.

For example, Fortegra has a Leadership Development Program (“LDP”), an early career program designed to attract and develop talent.

14 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business