Fortegra Financial Corp. (FRF)

This company completed an initial public offering (IPO) of its stock in 2010. View articles that reference this company. Recent IPOs:   Globe Specialty Metals   •   LogMeIn   •   Invesco Mortgage Capital   •   Medidata   •   Chemspec

 

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Remi Cossart

Fortegra Financial Corp (NYSE:FRF) provides payment protection, business processing, and wholesale brokerage services to insurance companies. Each of these services is marketed under a distinct brand name, but are centrally owned by Fortegra. The company's payment protection allows insurance companies, regional banks, and small loan companies to protect themselves with credit insurance, debt protection warranty, and service contracts. The business processing provides services such as billing and collection, sales and marketing support, and electronic underwriting to insurance and financial services companies for an administrative fee. Finally, the wholesale brokerage segment provides commercial insurance to retail insurance brokers and insurance companies to allow their clients to receive coverage for activities which are outside their core focus.^[1]

The insurance industry has pushed to outsource business functions which are outside of the company's core focus. This allows the insurance companies to focus on their core competencies, reduce operating costs, and increase productivity in general. Increased uncertainty and increased competition in the insurance market has further pushed these trends. According to Celent, an independent research firm, the extent of outsourcing from insurance companies is expected to grow from its 2008 size $2B to $4B in 2013. This growth would corresponds to a 14.9% compounded annual growth rate.^[2]

The company's initial public offering of stock on the NYSE occurred on December 16, 2010. The company offered 6M shares each for $11. The company had originally planned to sell 7.7M shares within the range of $14-$16. The original deal would have been worth $115.5M at the center of the price range. However, the decrease in shares and the cut in price brought the total deal to $66M. The lead underwriters of the IPO were Piper Jaffray Companies (PJC) and Suntrust Robinson Humphrey.^[3]

Fortegra's total revenues for the fiscal year 2009 were $186M. This corresponds to a 11% increase over its 2008 numbers of $167M. The company's net income in 2009 was $11.6M. This was 45% increase over the $8M announced for 2008. The total revenue for the first 9 months of 2010 were approximately 13% greater than the total revenue for the first 9 months of 2009. ^[4]

References

1. ↑ FRF S-1/A 2010 SUMMARY "Our Business" pg1-3
2. ↑ FRF S-1/A 2010 SUMMARY "Market Opportunity" pg3-4
3. ↑ Renaissance Capital - IPO Home "Fortegra Financial prices 6 million share IPO at $11" 17 Dec 2010
4. ↑ FRF S-1/A 2010 SUMMARY "Our Business" pg1-3