Fortegra Financial Organic Revenues Drive Q3 Earnings Beat - Analyst Blog

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Fortegra Financial Corporation ( FRF ) delivered operating net income of 20 cents per share in the third quarter of 2014, surpassing the Zacks Consensus Estimate by 3 cents. Earnings were 33% higher than 15 cents per share earned in the year-ago quarter.

The outperformance came on the back of organic revenue increases in payment protection products and a lower claims cost.

Fortegra Financial Corporation - Earnings Surprise | FindTheBest

Including transaction costs associated with acquisitions, net income of Fortegra Financial came in at 18 cents per share, up 38% year over year.

Behind the Headlines

Net revenue of Fortegra Financial improved 10.7% year over year to $27.6 million in the quarter, driven by strong management of ProtectCELL member benefit claims costs and volume growth in payment protection products reflected mainly in ceding commissions and net earned premium. Results were almost in line with the Zacks Consensus Estimate.

Direct and assumed written premiums written were a record $151.2 million, improving 29.8% year over year.

Operating expenses of Fortegra Financial rose 8.1% year over year to $20.2 million. The increase can be traced to higher personnel costs and other operating costs.

Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) increased 14.3% year over year to $9.6 million, with adjusted EBITDA margin rising 180 basis points to 33.4%.

Financial Details

Fortegra Financial exited the quarter with total investments and cash and cash equivalents of $168 million, up from $160 million at the end of 2013.

Total debt increased to $45.2 million at the end of the quarter from $38.3 million at the end of 2013.

As of Sep 30, 2014, shareholders equity was $179.4 million, up from $166.5 million at Dec 31, 2013.

Merger with Tiptree Financial Inc.

On Aug 11, Fortegra Financial entered into an Agreement and Plan of Merger pursuant to which the subsidiaries of Tiptree Financial Inc. ( TIPT ) will acquire the former for $218 million in cash. The transaction is expected to be wrapped up in 2014 or early 2015 subject to closing conditions.

Zacks Rank

Fortegra Financial carries a Zacks Rank #3 (Hold).

Other Outperformers

CNO Financial Group, Inc. ( CNO ) and The Hartford Financial Services Group, Inc. ( HIG ) have outperformed their respective Zacks Consensus Estimate in the third quarter.

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FORTEGA FIN CP (FRF): Free Stock Analysis Report

HARTFORD FIN SV (HIG): Free Stock Analysis Report

CNO FINL GRP (CNO): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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