(Image source: Fortegra website.)
Tiptree Inc., (New York) parent company of global specialty insurer and service provider The Fortegra Group (Jacksonville, Fla.), has announced a $200 million strategic investment in Fortegra from Warburg Pincus LLC, a global growth investor. The investment will give Warburg Pincus an approximate 24 percent ownership in Fortegra on a fully diluted basis and is expected to close in the first quarter 2022. Tiptree characterizes the transaction as highlighting the underlying intrinsic value of Fortegra to Tiptree shareholders and representing a significant milestone for the Company. Attorneys from Sidley Austin LLP based in New York and the firm’s headquarters in Chicago represented Tiptree Inc. and The Fortegra Group in the transaction.
Fortegra underwrites over $2.0 billion of gross written premiums and premium equivalents annually, according to Tiptree. The business underwrites and administers a variety of specialty insurance products and warranty solutions across the U.S. and Europe. The company has had 24 percent compound annual growth (19 percent organic) from 2017 to Q2 2021. From 2020 to 2021, Fortegra grew gross written premium and premium equivalents from $1,667,000,000 to $2,032,000,000. The company’s adjusted net income growth has gone from $26 million in 2017 to $53 million in Q2 2021. Fortegra has had a combined ratio of 91 percent over the past five years.
Tiptree characterizes Fortegra’s strong financial performance in 2020 and the first half of 2021 as demonstrating the growth trajectory and consistent underwriting results of the business. With the backing of Tiptree and Warburg Pincus, Fortegra enters its next phase of growth focused on the specialty admitted and E&S lines, while maintaining its historically strong underwriting principles.
“This investment accomplishes many of our strategic goals including raising capital to accelerate Fortegra’s growth and recapitalizing both companies balance sheets through the repayment of indebtedness,” comments Michael Barnes, Executive Chairman, Tiptree. “We are excited to continue working with Rick and the Fortegra team as they execute on their long-term objectives, and we look forward to a strong partnership with Dan Zilberman and the Warburg Pincus team. They bring significant expertise across many sectors, including insurance, and will be great partners in support of Fortegra’s continued success.”
“Our objective has always been to build an insurance enterprise that generates exceptional returns for its investors by complementing underwriting results with fee revenue,” says Rick Kahlbaugh, CEO, Fortegra. “This transaction represents the collaboration of industry experience, capital and investment acumen that will be the catalyst to accelerate Fortegra’s growth as a global specialty insurer. Joining forces with Warburg Pincus is yet another chapter in the Fortegra story and together Fortegra, Tiptree and Warburg Pincus will accelerate the exceptional growth and profitability of Fortegra.”
Commitment to Partnering with Innovative Insurers
“Fortegra’s talented management team has built a world-class specialty insurance platform delivering high quality products and services to its customers worldwide. We are excited to partner with Rick Kahlbaugh and Tiptree’s experienced management team and are committed to Fortegra’s continued growth and long-term success,” comments Dan Zilberman, Managing Director and Head of Special Situations, Warburg Pincus. “Our investment in Fortegra underscores our commitment to partnering with innovative companies in the insurance sector. We look forward to supporting Fortegra as they continue to expand their capabilities,” added Jeff Stein, Managing Director, Warburg Pincus.
Warburg Pincus has been an active investor in the insurance sector globally, with investments in companies such as Aeolus Re, Arch Capital, Cox Insurance Holdings, Foundation Risk Partners, ICICI Lombard Insurance, Max Life, McGill and Partners, PetPlan, RenaissanceRe, SBI General Insurance and Watford Holdings, amongst others.