AM Best has assigned an A- (Excellent) financial strength rating and an “a-” long-term issuer credit rating to Fortegra Specialty Insurance Company, the excess and surplus lines insurer formed by Tiptree-owned Fortegra Financial.

Rick Kahlbaugh – Fortegra

Fortegra Specialty is a newly established, Arizona-domiciled insurance company that will offer surplus lines products not offered through its affiliated companies. Its formation was announced at the end of September

The platform was capitalised initially with a $55mn contribution from the parent company.

The ratings reflect Fortegra Specialty’s balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management. The outlook assigned to the ratings is stable.

AM Best is adding Fortegra Specialty as a member of the Fortegra P&C Group due its strategic role in the consolidated organization, shared operations and management, and a pooling agreement with its affiliated companies.

The ratings agency noted that initial projections forecast high growth trends in early years, benefiting from existing managing general agency relations with its affiliated companies. 

Fortegra noted hardening rates in the E&S market when the subsidiary was announced. The formation and operation of the E&S company will further Jacksonville, Florida-based Fortegra’s goal to carefully underwrite and expedite new program business, it said. 

In an interview with this publication last month, Fortegra’s CEO Rick Kahlbaugh said demand from agents for a broader programs capability was a factor in the subsidiary’s launch.

“We have had a large volume of enquiries since we started in program business asking when we’d have an E&S company to support a broader undertaking for each agent,” said Kahlbaugh.

“It was largely driven by demand from agents and we were also looking at the market and seeing the rates harden so quickly we felt having that vehicle was appropriate at this time,” he added.