Fortegra Financial Corporation Reports Third Quarter 2012 Net

Fortegra Financial Corporation Reports Third Quarter 2012 Net Income
$4.1 Million; Net Revenues Increase 8.6% 
JACKSONVILLE, FL -- (Marketwire) -- 11/12/12 --  Fortegra Financial
Corporation (NYSE: FRF), an insurance services company providing
distribution and administration services and insurance-related
products, today reported results for the third quarter ended
September 30, 2012.  


 
--  Direct and assumed written premiums increased 6.3% year-over-year to a
    record $100.4 million
    
    
--  Net revenues climbed 8.6% compared to prior-year, including the impact
    from a change in accounting estimate
    
    
--  Third quarter net income was $4.1 million ($0.20 per diluted share)
    with Adjusted Net Income of $4.7 million ($0.23 per diluted share)
    
    
--  Third quarter Adjusted EBITDA was $10.9 million ($0.53 per diluted
    share) with Adjusted EBITDA margin of 34.9%

  
"I am pleased with the progress we are making at Fortegra. We continued
to build strength throughout the organization not only with our
current suite of products but also with the launch of additional
complementary products," said Richard S. Kahlbaugh, Chairman,
President and Chief Executive Officer of Fortegra. "While
cross-selling and direct marketing initiatives continue, we recently
conducted market tests on SnapBack, a warranty product providing
glass protection to mobile devices and tablets. Based on the positive
customer feedback, this confirmed SnapBack's market potential. With
SnapBack and other product development initiatives underway in our
business, I am confident we have the products and programs that allow
us to deliver on our long term growth strategy."  
Third Quarter Results
 Total revenues increased 13.8% to $64.3
million for the third quarter of 2012, compared to $56.5 million for
the third quarter of 2011. Net revenues (total revenues less net
losses and loss adjustment and commissions expenses) increased 8.6%
to $31.3 million for the third quarter of 2012, compared to $28.8
million for the prior-year period. The change in accounting estimate
recorded during the three months ended September 30, 2012 increased
total revenues and net revenues by $4.0 million and $1.2 million,
respectively. 
Operating expenses were $20.7 million compared with
 $18.2 million one
year ago. The 2011 acquisition of Pacific Benefits Group contributed
$1.4 million of the increase. 
Net income for the third quarter 2012 was $4.1 million or $0.20 per
diluted share, comparable to $4.1 million, or $0.19 per diluted share
in the third quarter 2011. The change in accounting estimate
contributed $1.0 million during the quarter. In addition, as
previously announced, the company experienced a one-time charge of
$0.7 million (pre-tax) during the quarter related to the retirement
of the previous debt facility. 
Adjusted EBITDA for the third quarter of 2012 was $10.9 million,
compared to $10.8 million for the third quarter of 2011. Adjusted
EBITDA margin for the third quarter of 2012 was 34.9%, compared to
37.7% for the prior-year period.  
Segment Results 
 Payment Protection
 For the three months ended
September, 2012, net revenues for the Payment Protection segment were
$17.5 million, compared to $15.8 million for the prior-year period.
The current period included net revenues of $1.2 million attributable
to the change in accounting estimate. EBITDA for the Payment
Protection segment was $7.9 million for the third quarter of 2012,
compared to $7.3 million for the prior-year period. EBITDA margin for
the Payment Protection segment was 45.3% for the third quarter of
2012, compared to 46.4% for the prior-year period. Direct and assumed
written premiums increased 6.3% year-over-year to a record $100.4
million. 
Business Process Outsourcing (BPO)
 Net revenues for the BPO segment
increased to $5.0 million for the third quarter of 2012, compared to
$3.8 million for the third quarter of 2011, primarily attributable to
the PBG acquisition. EBITDA for the BPO segment was essentially flat
at $1.1 million for the third quarter of 2012 compared to the
prior-year period. EBITDA margin for the BPO segment declined to
22.5% for the third quarter of 2012, compared to 29.1% for the
prior-year period. The decline reflects weaker than expected margins
from Pacific Benefits Group. 
Brokerage
 Net revenues for the
Brokerage segment declined to $8.8 million for the third quarter of
2012 from $9.2 million in the prior-year period. EBITDA for the
Brokerage segment fell modestly to $1.6 million for the third quarter
of 2012, compared to $1.7 million for the prior-year period. EBITDA
margin for the Brokerage segment declined 80 bps year over year to
17.8%. Bliss & Glennon revenues continued to outpace prior year
results, while a soft reinsurance market is impacting eReinsure. 
Balance Sheet
 Total invested assets and cash and cash equivalents
amounted to $129.2 million as of September, 2012 compared to $127.1
million as of December 31, 2011. Unearned premiums were $231.1
million as of September 30, 2012 compared to $227.9 million as of
December 31, 2011. Total debt outstanding at September 30, 2012 was
$106.2 million compared to $108.0 million as of December 31, 2011.
Stockholder's equity increased to $137.3 million as of September, 30,
2012 compared to $127.6 million as of December 31, 2011. 
During the quarter Fortegra continued to execute on its share
repurchase authorization, repurchasing 147,503 shares at an average
price of $8.02 per share. Since inception, the company repurchased
979,634 shares while $3.5 million remains available on the
authorization.  
Conference Call Information 
 Fortegra's executive management will
host a conference call to discuss its third quarter 2012 results
tomorrow, Tuesday, November 13, 2012 at 8:30 a.m. Eastern Time. To
participate in the live call, dial (877) 407-3982 within the U.S., or
(201) 493-6780 for international callers. A live audio webcast will
also be available on the Investors page of the company's website,
http://www.fortegra.com. A replay of the call will be available
beginning November 13, 2012 at 11:30 a.m. ET and ending on November
20, 2012 11:59 p.m. ET on the company's website, and by dialing (877)
870-5176 in the U.S. or (858) 384-5517 for international callers. The
passcode for the replay is 402337. 
Statistical Supplement
 In addition, the company has provided a
statistical supplement which can be accessed through the "Investor
Relations" section of Fortegra's website at: http://www.fortegra.com 
About Fortegra
 Fortegra Financial Corporation is an insurance
services company that provides distribution and administration
services and insurance-related products to insurance companies,
insurance brokers and agents and other financial services companies
in the United States. Fortegra's brands include: Life of the South,
Consecta, Bliss & Glennon (B&G), eReinsure (eRe), Auto Knight Motor
Club, Continental Car Club, United Motor Club, Pacific Benefits Group
(PBG), Universal Equipment Recovery Group (UERG), and South Bay
Acceptance Corporation (SBAC).  
Use of Non-GAAP Financial Information
 Fortegra presents certain
additional financial measures related to its Business Segments that
are "Non-GAAP measures" within the meaning of Regulation G under the
Securities Act of 1934. Fortegra presents these Non-GAAP measures to
provide investors with additional information to analyze Fortegra's
performance from period to period. Management also uses these
measures to assess performance for Fortegra's segments and to
allocate resources in managing Fortegra's businesses. However,
investors should not consider these Non-GAAP measures as a substitute
for the financial information that Fortegra reports in accordance
with GAAP. These Non-GAAP measures reflect subjective determinations
by management, and may differ from similarly titled Non-GAAP measures
presented by other companies. 
In this Earnings Release, we present EBITDA and Adjusted EBITDA.
These financial measures as presented in this Earnings Release are
considered Non-GAAP financial measures and are not recognized terms
under U.S. GAAP and should not be used as an indicator of, and are
not an alternative to, net income as a measure of operating
performance. EBITDA as used in this Earnings Release is net income
before interest expense, income taxes, non-controlling interest,
depreciation and amortization. Adjusted EBITDA as used in this
Earnings Release means "Consolidated Adjusted EBITDA" which is
defined under our credit facility with Well Fargo Bank, N.A., is
generally consolidated net income before consolidated interest
expense, consolidated amortization expense, consolidated depreciation
expense and consolidated income tax expense. The other items excluded
in this calculation may include if applicable, but are not limited
to, specified acquisition costs, impairment of goodwill and other
non-cash charges, stock-based compensation expense and unusual or
non-recurring charges. The calculation below does not give effect to
certain additional adjustments permitted under our credit facility,
which if included, would increase the amount of Adjusted EBITDA
reflected in this table. We believe presenting EBITDA and Adjusted
EBITDA provides investors with a supplemental financial measure of
our operating performance.  
In addition to the financial covenant requirements under our credit
facility, management uses EBITDA and Adjusted EBITDA as financial
measures of operating performance for planning purposes, which may
include, but are not limited to, the preparation of budgets and
projections, the determination of bonus compensation for executive
officers, the analysis of the allocation of resources and the
evaluation of the effectiveness of business strategies. Although we
use EBITDA and Adjusted EBITDA as financial measures to assess the
operating performance of our business, both measures have significant
limitations as analytical tools because they exclude certain material
expenses. For example, they do not include interest expense and the
payment of income taxes, which are both a necessary element of our
costs and operations. Since we use property and equipment to generate
service revenues, depreciation expense is a necessary element of our
costs. In addition, the omission of amortization expense associated
with our intangible assets further limits the usefulness of this
financial measure. Management believes the inclusion of the
adjustments to EBITDA and Adjusted EBITDA are appropriate to provide
additional information to investors about certain material non-cash
items and about unusual items that we do not expect to continue at
the same level in the future. Because EBITDA and Adjusted EBITDA do
not account for these expenses, its utility as a financial measure of
our operating performance has material limitations. Due to these
limitations, management does not view EBITDA and Adjusted EBITDA in
isolation or as a primary financial performance measure. 
We believe EBITDA and Adjusted EBITDA are frequently used by
securities analysts, investors and other interested parties in the
evaluation of similar companies in similar industries and to measure
the company's ability to service its debt and other cash needs.
Because the definitions of EBITDA and Adjusted EBITDA (or similar
financial measures) may vary among companies and industries, they may
not be comparable to other similarly titled financial measures used
by other companies.  
Forward-Looking Statements
 This press release may contain
forward-looking statements within the meaning of the Private
Securities Litigation Act of 1995. Such statements are subject to
risks and uncertainties. All statements other than statements of
historical fact included in this press release are forward-looking
statements. Forward-looking statements give our current expectations
and projections relating to our financial condition, results of
operations, plans, objectives, future performance and business. You
can identify forward-looking statements by the fact that they do not
relate strictly to historical or current facts. These statements may
include words such as "anticipate," "estimate," "expect," "project,''
"plan," "intend," "believe," "may," "should," "can have," "likely"
and other words and terms of similar meaning in connection with any
discussion of the timing or nature of future operating or financial
performance or other events.  
The forward-looking statements contained in this press release are
based on assumptions that we have made in light of our industry
experience and our perceptions of historical trends, current
conditions, expected future developments and other factors we believe
are appropriate under the circumstances. As you read this press
release, you should understand that these statements are not
guarantees of performance or results. They involve risks,
uncertainties (some of which are beyond our control) and assumptions.
Although we believe that these forward-looking statements are based
on reasonable assumptions, you should be aware that many factors
could affect our actual financial results and cause them to differ
materially from those anticipated in the forward-looking statements.
We believe these factors include, but are not limited to, those
described under Item 1A. - "Risk Factors" in Fortegra's most current
Annual Report on Form 10-K and most current Quarterly Report on Form
10-Q. Should one or more of these risks or uncertainties materialize,
or should any of these assumptions prove incorrect, our actual
results may vary in material respects from those projected in these
forward-looking statements.  
Any forward-looking statement made by us in this press release speaks
only as of the date on which we make it. Factors or events that could
cause our actual results to differ may emerge from time to time, and
it is not possible for us to predict all of them. We undertake no
obligation to publicly update any forward-looking statement, whether
as a result of new information, future developments or otherwise,
except as may be required by law.  
Further information concerning Fortegra and its business, including
factors that potentially could materially affect Fortegra's financial
results, is contained in Fortegra's filings with the SEC, which are
available free of charge at the SEC's website at http://www.sec.gov
and from Fortegra's website in the "Investor Relations" section under
"SEC Filings" at http://www.fortegra.com. 


 
                                                                            
                                                                            
                       FORTEGRA FINANCIAL CORPORATION                       
               CONSOLIDATED STATEMENTS OF INCOME (Unaudited)                
       (All Amounts in Thousands Except Share and Per Share Amounts)        
                                                       
                     
                         ------------------------- ------------------------ 
                            For the Three Months      For the Nine Months   
                                   Ended                     Ended          
                         ------------------------- ------------------------ 
                          September     September   September    September  
                           30, 2012     30, 2011     30, 2012     30, 2011  
                         -----------  ------------ -----------  ----------- 
Revenues:                                                                   
  Service and                                                               
   administrative fees   $    10,056  $     10,125 $    28,790  $    28,041 
  Brokerage commissions                                                     
   and fees                    8,411         8,611      27,295       25,686 
  Ceding commission           11,122         7,027      25,396       21,428 
  Net investment income          744           801       2,219        2,636 
  Net realized (losses)                                                     
   gains on the sale of                                                     
   investments                   (16)        1,196          (6)       2,423 
  Net earned premium          33,893        28,673      97,770       84,646 
  Other income                    52            18         172          138 
                         -----------  ------------ -----------  ----------- 
Total revenues                64,262        56,451     181,636      164,998 
  Net losses and loss                                                       
   adjustment expenses        11,430         9,714      32,272       28,338 
  Commissions                 21,548        17,926      61,479       53,766 
                         -----------  ------------ -----------  ----------- 
Net Revenues                  31,284        28,811      87,885       82,894 
                         -----------  ------------ -----------  ----------- 
                                                                            
Expenses:                                                                   
  Personnel costs             12,503        10,746      36,020       32,825 
  Other operating                                                           
   expenses                    7,876         7,252      21,425       23,704 
  Stock based                                                               
   compensation expense          288           214         657          615 
  Depreciation                   871           886       2,584        2,283 
  Amortization of                                                           
   intangibles                 1,127           998       3,775        3,428 
  Interest expense             2,025         1,906       5,267        5,862 
  Loss on sale of                                                           
   subsidiary                      -           477           -          477 
                         -----------  ------------ -----------  ----------- 
Total expenses                24,690        22,479      69,728       69,194 
                         -----------  ------------ -----------  ----------- 
Income before income                                                        
 taxes and non-                                                             
 controlling interest          6,594         6,332      18,157       13,700 
  Income taxes                 2,455         2,259       6,520        4,847 
                         -----------  ------------ -----------  ----------- 
Income before non-                                                          
 controlling interest          4,139         4,073      11,637        8,853 
  Less: net income                                                          
   (loss) attributable                                                      
   to non-controlling                                                       
   interest                       29             1          62         (171)
                         -----------  ------------ -----------  ----------- 
Net income               $     4,110  $      4,072 $    11,575  $     9,024 
                         ===========  ============ ===========  =========== 
                                                                            
Earnings per share:                                                         
  Basic                  $      0.21  $       0.20 $      0.59  $      0.44 
  Diluted                $      0.20  $       0.19 $      0.56  $      0.42 
Weighted average common                                                     
 shares outstanding:                                                        
  Basic                   19,531,694    20,404,441  19,705,105   20,355,057 
  Diluted                 20,463,238    21,214,365  20,620,084   21,375,184 
                                                                            
                                                                            
                                                                            
                       FORTEGRA FINANCIAL CORPORATION                       
                  CONSOLIDATED BALANCE SHEETS (Unaudited)                   
(All Amounts in Thousands Except Share and Per Share Amounts)               
                                                                            
                              September   June 30,    March 31,   December  
                              30, 2012     2012(1)     2012(1)    31, 2011  
                             ----------  ----------  ----------  ---------- 
Assets:                                                                     
Investments:                                                                
  Fixed maturity securities                                                 
   available-for-sale at                                                    
   fair value (amortized                                                    
   cost of $107,150 at                                                      
   September 30, 2012 and                                                   
   $92,311 at December 31,                                                  
   2011)                     $  110,833  $   88,021  $   92,843  $   93,509 
  Equity securities                                                         
   available-for-sale at                                                    
   fair value (cost of                                                      
   $5,882 at September 30,                                                  
   2012 and $1,203 at                                                       
   December 31, 2011)             6,085       5,653       3,793       1,219 
  Short-term investments            970         970         970       1,070 
                             ----------  ----------  ----------  ---------- 
    Total investments           117,888      94,644      97,606      95,798 
Cash and cash equivalents        11,284      28,350      18,676      31,339 
Restricted cash                  21,232      23,659      18,959      14,180 
Accrued investment income         1,115         985         927         929 
Notes receivable, net             4,281       3,783       3,802       3,603 
Accounts and premiums                                                       
 receivable, net                 25,056      27,384      31,184      20,172 
Other receivables                15,708      14,505      16,798       9,103 
Reinsurance receivables         197,184     191,671     186,421     194,740 
Deferred acquisition costs       56,903      55,983      52,517      55,467 
Property and equipment, net      17,227      16,915      15,728      14,666 
Goodwill                        104,668     104,668     104,500     104,500 
Other intangibles, net           50,803      51,930      
52,928      54,410 
Other assets                      6,452       6,702       5,836       6,070 
                             ----------  ----------  ----------  ---------- 
      Total assets           $  629,801  $  621,179  $  605,882  $  604,977 
                             ==========  ==========  ==========  ========== 
                                                                            
Liabilities:                                                                
Unpaid claims                $   32,041  $   31,618  $   32,497  $   32,583 
Unearned premiums               231,114     228,991     221,059     227,929 
Policyholder account                                                        
 balances                        26,223      26,942      27,565      28,040 
Accrued expenses, accounts                                                  
 payable, income taxes and                                                  
 other liabilities               51,785      49,347      42,348      35,446 
Deferred revenue                 19,164      18,386      17,617      20,781 
Note payable                     71,168      72,000      74,700      73,000 
Preferred trust securities       35,000      35,000      35,000      35,000 
Deferred income taxes, net       26,023      25,691      24,815      24,614 
                             ----------  ----------  ----------  ---------- 
    Total liabilities           492,518     487,975     475,601     477,393 
                             ----------  ----------  ----------  ---------- 
                                                                            
                                                                            
Stockholders' Equity:                                                       
Preferred stock, par value                                                  
 $0.01; 10,000,000 shares                                                   
 authorized; none issued              -           -           -           - 
Common stock, par value                                                     
 $0.01; 150,000,000 shares                                                  
 authorized; 20,681,252 and                                                 
 20,561,328 shares issued at                                                
 September 30, 2012 and                                                     
 December 31, 2011,                                                         
 respectively, including                                                    
 shares in treasury                 207         207         206         206 
Treasury stock, at cost;                                                    
 1,024,212 shares and                                                       
 516,132 shares at September                                                
 30, 2012 and December 31,                                                  
 2011, respectively              (6,651)     (5,468)     (4,122)     (2,728)
Additional paid-in capital       97,095      96,785      96,378      96,199 
Accumulated other                                                           
 comprehensive loss, net of                                                 
 tax                               (673)     (1,480)     (1,324)     (1,754)
Retained earnings                46,725      42,615      38,613      35,150 
                             ----------  ----------  ----------  ---------- 
Stockholders' equity before                                                 
 non-controlling interest       136,703     132,659     129,751     127,073 
Non-controlling interest            580         545         530         511 
                             ----------  ----------  ----------  ---------- 
    Total stockholders'                                                     
     equity                     137,283     133,204     130,281     127,584 
                             ----------  ----------  ----------  ---------- 
      Total liabilities and                                                 
       stockholders' equity  $  629,801  $  621,179  $  605,882  $  604,977 
                             ==========  ==========  ==========  ========== 
                                                                            
(1) The balance sheets for March 31, 2012 and June 30, 2012 have been       
 recast to reflect prior period adjustments related to business combination 
 valuation adjustments                                                      
                                                                            
                                                                            
                                                                            
                       FORTEGRA FINANCIAL CORPORATION                       
          CONSOLIDATED STATEMENTS OF INCOME- Segments (Unaudited)           
                         (All Amounts in Thousands)                         
                                                                            
                             ----------------------  ---------------------- 
                              For the Three Months     For the Nine Months  
                                      Ended                   Ended         
                             ----------------------  ---------------------- 
                              September   September   September   September 
                               30, 2012   30, 2011     30, 2012   30, 2011  
                             ----------- ----------  ----------- ---------- 
Segment Net Revenue                                                         
  Payment Protection         $    17,494 $   15,770  $    45,676 $   43,871 
  BPO                              4,951      3,833       13,565     11,088 
  Brokerage                        8,839      9,208       28,644     27,935 
  Corporate                            -          -            -          - 
                             ----------- ----------  ----------- ---------- 
  Segment net revenues            31,284     28,811       87,885     82,894 
  Net losses and loss                                                       
   adjustment expenses            11,430      9,714       32,272     28,338 
  Commissions                     21,548     17,926       61,479     53,766 
                             ----------- ----------  ----------- ---------- 
    Total segment revenue         64,262     56,451      181,636    164,998 
                             ----------- ----------  ----------- ---------- 
                                                                            
Operating Expenses                                                          
  Payment Protection               9,563      8,445       26,205     25,857 
  BPO                              3,836      2,717       10,320      8,164 
  Brokerage                        7,268      7,491       21,577     21,837 
  Corporate                            -         36            -      1,763 
                             ----------- ----------  ----------- ---------- 
  Total operating expenses        20,667     18,689       58,102     57,621 
  Net losses and loss                                                       
   adjustment expenses            11,430      9,714       32,272     28,338 
  Commissions                     21,548     17,926       61,479     53,766 
                             ----------- ----------  ----------- ---------- 
    Total operating expenses                                                
     before depreciation,                                                   
     amortization and                                                       
     interest expense             53,645     46,329      151,853    139,725 
                             ----------- ----------  ----------- ---------- 
                                                                            
EBITDA                                                     
                 
  Payment Protection               7,931      7,325       19,471     18,014 
  BPO                              1,115      1,116        3,245      2,924 
  Brokerage                        1,571      1,717        7,067      6,098 
  Corporate                            -        (36)           -     (1,763)
                             ----------- ----------  ----------- ---------- 
    Total EBITDA                  10,617     10,122       29,783     25,273 
                             ----------- ----------  ----------- ---------- 
                                                                            
Depreciation and                                                            
 amortization                                                               
  Payment Protection                 863        927        2,577      3,204 
  BPO                                494        307        1,495        824 
  Brokerage                          641        650        2,287      1,683 
  Corporate                            -          -            -          - 
                             ----------- ----------  ----------- ---------- 
    Total depreciation and                                                  
     amortization                  1,998      1,884        6,359      5,711 
                             ----------- ----------  ----------- ---------- 
                                                                            
Interest Expense                                                            
  Payment Protection               1,359      1,053        3,342      3,622 
  BPO                                294         96          820        258 
  Brokerage                          372        757        1,105      1,982 
  Corporate                            -          -            -          - 
                             ----------- ----------  ----------- ---------- 
    Total interest expense         2,025      1,906        5,267      5,862 
                             ----------- ----------  ----------- ---------- 
                                                                            
Income before income taxes                                                  
 and non-controlling                                                        
 interest                                                                   
  Payment Protection               5,709      5,345       13,552     11,188 
  BPO                                327        713          930      1,842 
  Brokerage                          558        310        3,675      2,433 
  Corporate                            -        (36)           -     (1,763)
                             ----------- ----------  ----------- ---------- 
Total income before income                                                  
 taxes and non-controlling                                                  
 interest                          6,594      6,332       18,157     13,700 
  Income taxes                     2,455      2,259        6,520      4,847 
  Less: net income (loss)                                                   
   attributable to non-                                                     
   controlling interest               29          1           62       (171)
                             ----------- ----------  ----------- ---------- 
Net income                   $     4,110 $    4,072  $    11,575 $    9,024 
                             =========== ==========  =========== ========== 
                                                                            
                                                                            
                                                                            
                       FORTEGRA FINANCIAL CORPORATION                       
     RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION - ADJUSTED EBITDA     
                                 (Unaudited)                                
             (All Amounts in Thousands, except for percentages)             
                                                                            
                              For the Three Months     For the Nine Months  
                                      Ended                   Ended         
                             ----------------------  ---------------------- 
                              September   September   September   September 
                              30, 2012    30, 2011    30, 2012    30, 2011  
                             ----------  ----------  ----------  ---------- 
Net income                   $    4,110  $    4,072  $   11,575  $    9,024 
  Depreciation                      871         886       2,584       2,283 
  Amortization of                                                           
   intangibles                    1,127         998       3,775       3,428 
  Interest expense                2,025       1,906       5,267       5,862 
  Income taxes                    2,455       2,259       6,520       4,847 
  Net income (loss)                                                         
   attributable to non-                                                     
   controlling interest              29           1          62        (171)
                             ----------  ----------  ----------  ---------- 
EBITDA                           10,617      10,122      29,783      25,273 
    Transaction costs (a)             5          36         139         829 
    Stock-based compensation                                                
     expense                        288         214         657         615 
    Corporate governance                                                    
     study                            -           -           -         248 
    Relocation expenses               -           -           -         207 
    Statutory audits                  -           -           -          98 
    Loss on sale of                                                         
     subsidiary                       -         477           -         477 
Adjusted EBITDA              $   10,910  $   10,849  $   30,579  $   27,747 
                             ==========  ==========  ==========  ========== 
                                                                            
EBITDA Margin                      33.9%       35.1%       33.9%       30.5%
Adjusted EBITDA Margin             34.9%       37.7%       34.8%       33.5%
                                                                            
(a) Represents transaction costs associated with acquisitions.              
                                                                            
                                                                            
                                                                            
                       FORTEGRA FINANCIAL CORPORATION                       
  RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION - NET INCOME (Unaudited) 
        (All Amounts in Thousands Except Share and Per Share Amounts)       
                                                                            
                                                                            
                               For the Three Months    For the Nine Months  
                                      Ended                   Ended         
                             ----------------------- -----------------------
                              September   September   September   September 
                               30, 2012    30, 2011    30, 2012    30, 2011 
                             ----------- ----------- ----------- -----------
Net income                   $     4,110 $     4,072 $    11,575 $     9,024
  Non-GAAP Adjustments, net                                                 
   of tax                                                                   
    Transaction costs                                        
               
     associated with                                                        
     acquisitions (1)                  5          36         139         829
    Stock-based compensation         186         138         425         398
    Corporate governance                                                    
     study                             -           -           -         156
    Relocation expenses                -           -           -         130
    Statutory audits                   -           -           -          62
    Loss on sale of                                                         
     subsidiary                        -         300           -         300
    Retirement of debt (2)           439           -         439         560
                             ----------- ----------- ----------- -----------
  Total Non-GAAP                                                            
   adjustments, net of tax           630         474       1,003       2,435
                             ----------- ----------- ----------- -----------
Net income - Non-GAAP basis  $     4,740 $     4,546 $    12,578 $    11,459
                             =========== =========== =========== ===========
                                                                            
GAAP Earnings per share -                                                   
 basic                       $      0.21 $      0.20 $      0.59 $      0.44
  Non-GAAP adjustments, net                                                 
   of tax                           0.03        0.02        0.05        0.12
                             ----------- ----------- ----------- -----------
Non-GAAP Earnings per common                                                
 share - basic               $      0.24 $      0.22 $      0.64 $      0.56
                             =========== =========== =========== ===========
                                                                            
GAAP Earnings per share -                                                   
 diluted                     $      0.20 $      0.19 $      0.56 $      0.42
  Non-GAAP adjustments, net                                                 
   of tax                           0.03        0.02        0.05        0.12
                             ----------- ----------- ----------- -----------
Non-GAAP Earnings per common                                                
 share - diluted             $      0.23 $      0.21 $      0.61 $      0.54
                             =========== =========== =========== ===========
                                                                            
Weighted average common                                                     
 shares outstanding:                                                        
  Basic                       19,531,694  20,404,441  19,705,105  20,355,057
  Diluted                     20,463,238  21,214,365  20,620,084  21,375,184
                                                                            
(1) Adjustments not tax effected.                                           
(2) Adjustments not tax effected for the 2011 periods presented. 2012       
 amounts represent the write off of $678 in previously capitalized          
 transactions costs on the termination of the SunTrust Bank, N.A., revolving
 credit line, net of tax.                                                   

  
Contact:
Stephanie Gannon
904-352-2759
investor.relations@fortegra.com