Fortegra launches E&S subsidiary to take advantage of rate hardening
US specialty insurer Fortegra Financial Corporation has formed a new excess and surplus lines (E&S) subsidiary, Fortegra Specialty Insurance Company, which has received approval in its domicile state of Arizona.
The new E&S subsidiary is working to obtain the remaining regulatory approvals necessary to conduct business throughout the US.
Tiptree-owned Fortegra anticipates the new E&S company will commence underwriting in the fourth quarter of 2020.
“We have seen rates harden in the market,” said Fortegra CEO Richard Kahlbaugh. “The catalysts for the hardening are diverse and as such we expect the trend to continue for the foreseeable future. Adding an excess and surplus lines company to our portfolio was a natural response, allowing us to broaden our product reach and scope within the US.”
Kahlbaugh added that the formation and operation of the E&S company will further Fortegra’s goal to carefully underwrite and expedite new program business.
Jacksonville-Florida-based Fortegra’s offerings currently include warranty solutions, credit insurance and specialty underwriting programs.
The insurer is the latest to target the booming E&S market, which has seen submission volumes rocket and pricing rapidly harden.
California-based specialty insurer Palomar launched an E&S unit in June.
Private equity-backed start-ups such as the vehicle being worked on by former Arch CEO Dinos Iordanou and scale-ups including the reboot of StarStone US led by Ed Noonan and Jeff Consolino are also aimed at the sector.
In addition, as this publication revealed earlier this month, Sirius Group has been working on a new E&S insurance platform that it hopes to go live with later this year.
Capital to access E&S risk has also come in from reinsurers through fronting platforms such as Accredited and Clear Blue, which have both launched new subsidiaries focused on the space.
Fortegra’s launch of an E&S subsidiary follows it in August closing on a $200mn line of credit that it said will give it greater freedom to build shareholder value through domestic and international expansion, including in programs.
As this publication reported earlier this year, Fortegra is targeting growth in the casualty program segment as it looks to grow its overall top line to $2bn over the next five years.
The carrier’s A- financial strength rating was affirmed by AM Best last week.
The ratings agency noted that operating performance has been led by very strong premium growth in its core credit products and consistent underwriting profitability.
“The business profile maintains good diversification by individual product, although the overall book is moderately concentrated in credit property risks,” AM Best said.