Press Release - AUGUST 14, 2014
A.M. Best Places Ratings of Fortegra Financial Corporation
FOR IMMEDIATE RELEASE
OLDWICK - AUGUST 14, 2014
The under review with negative implications reflects uncertainty regarding the transaction's impact on Fortegra's financial flexibility. In a regulatory filing, Fortegra, along with its potential acquirer, announced that a syndicate of lenders has committed to provide a $90 million secured revolving credit facility and a $50 million secured term loan, which will result in increased financial leverage at the close of the transaction. Recently, Fortegra had significantly deleveraged its balance sheet.
Fortegra is an insurance holding company that, through its subsidiaries, offers a number of insurance and non-insurance products, including payment protection products, motor club memberships, service contracts, device and warranty service and administrative services to its business partners. These partners include insurance companies, retailers, dealers, insurance brokers, agents and financial service companies, primarily in the United States. The transaction is anticipated to close in late 2014 or early 2015, subject to regulatory approvals and other customary closing conditions. A "go-shop" period, during which Fortegra's board may solicit, encourage and facilitate a competing offer to acquire the company, is in effect until Sept. 10, 2014.
The ratings will be removed from under review following the close of the transaction and A.M. Best's discussions with management. However, if an alternative acquirer is identified during the "go-shop" period, the ratings will be evaluated again at that time. A negative rating action could occur if the financial terms of the pending transaction results in a material increase in financial leverage and/or an overall deterioration in A.M. Best's view of the credit profiles of Fortegra or its subsidiaries.
The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.