Fortegra Financial Corporation
) has inked a deal to sell its subsidiaries Bliss & Glennon
(B&G) and eReinsure to AmWINS Group Inc. for an undisclosed
amount. The acquisition is expected to culminate within a month's
time. B&G is a wholesale insurance broker in excess and
surplus lines and manages general agency. On the other hand,
eReinsure manages the placement of facultative reinsurance
through an online platform.
Divestiture of these two subsidiaries by Fortegra will allow the
company to intensify focus on its payment protection, service
contract and warranty products. These are deemed the major growth
drivers for Fortegra that will aid margin expansion going
Fortegra's payment protection segment reported a 31.5%
year-over-year increase in its net revenue during the third
quarter of 2013.
Nonetheless, Bliss & Glennon and eReinsure together had
contributed favorably toward consolidating Fortegra's market
position in the respective lines of business. Fortegra acquired
Willis Group Holdings Public Limited Company
) in Apr 2009. eReinsure had been taken over in Mar 2011. These
two subsidiaries have consistently garnered growth in brokerage
commissions and fees for Fortegra, in turn driving the company's
Brokerage commissions and fees of Fortegra had increased 39.7% to
$34.4 million in 2011. $1 million worth of increase was
contributed by B&G, while the acquisition of eReinsure
contributed $8.8 million in fees. In 2012, B&G contributed
additional $1.3 million to the 2.6% increase in brokerage
commissions and fees. eReinsure's declined by $0.4 million though
during that period due to lower license fees. However, for the
first nine months of 2013, both B&G and eReinsure contributed
additional $0.9 million and $0.2 million respectively to drive a
4.1% increase in total brokerage commissions and fees of
Fortegra expects to use the net proceeds from the sellout to
erase some of its debt burdens. The company had total debt of
$117.8 million as of Sep 30, 2013 which declined nearly 5.3% from
2012-end level. The debt profile is expected to improve further
and strengthen Fortegra's balance sheet in the coming quarters.
Fortegra presently carries a Zacks Rank #5 (Strong Sell).
However, better-ranked stocks in the multi-line insurance
Old Republic International Corporation
). Both these stocks sport a Zacks Rank #1 (Strong Buy).
FORTEGA FIN CP (FRF): Free Stock Analysis
OLD REP INTL (ORI): Free Stock Analysis
PRUDENTIAL PLC (PUK): Free Stock Analysis
WILLIS GP HLDGS (WSH): Free Stock Analysis
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