Warburg Pincus has invested $200 million in The Fortegra Group, a specialty insurer. Barclays acted as financial advisor to Tiptree while BofA Securities was financial advisor to Warburg Pincus. Fortegra is the insurance subsidiary of Tiptree, a holding company.
NEW YORK–(BUSINESS WIRE)–Tiptree Inc. (NASDAQ:TIPT) (“Tiptree” or the “Company”), today announced a $200 million strategic investment in its insurance subsidiary, The Fortegra Group, LLC (“Fortegra”) from Warburg Pincus, a leading global growth investor.
The investment will give Warburg Pincus an approximate 24% ownership in Fortegra on a fully diluted basis and is expected to close in the first quarter 2022. This transaction highlights the underlying intrinsic value of Fortegra to Tiptree shareholders, representing a significant milestone for the Company.
Fortegra is a rapidly growing and consistently profitable specialty insurer, underwriting over $2.0 billion of gross written premiums and premium equivalents annually. The business underwrites and administers a variety of specialty insurance products and warranty solutions across the United States and Europe.
Fortegra’s strong financial performance in 2020 and the first half of 2021 demonstrates the growth trajectory and consistent underwriting results of the business. With the backing of Tiptree and Warburg Pincus, Fortegra enters its next phase of growth focused on the specialty admitted and E&S lines, while maintaining its historically strong underwriting principles.
Tiptree’s Executive Chairman Michael Barnes said, “This investment accomplishes many of our strategic goals including raising capital to accelerate Fortegra’s growth and recapitalizing both companies balance sheets through the repayment of indebtedness.” Barnes continued,
“We are excited to continue working with Rick and the Fortegra team as they execute on their long-term objectives, and we look forward to a strong partnership with Dan Zilberman and the Warburg Pincus team. They bring significant expertise across many sectors, including insurance, and will be great partners in support of Fortegra’s continued success.”
“Our objective has always been to build an insurance enterprise that generates exceptional returns for its investors by complementing underwriting results with fee revenue. This transaction represents the collaboration of industry experience, capital and investment acumen that will be the catalyst to accelerate Fortegra’s growth as a global specialty insurer. Joining forces with Warburg Pincus is yet another chapter in the Fortegra story and together Fortegra, Tiptree and Warburg Pincus will accelerate the exceptional growth and profitability of Fortegra,” said Rick Kahlbaugh, the Chief Executive Officer of Fortegra.
“Fortegra’s talented management team has built a world-class specialty insurance platform delivering high quality products and services to its customers worldwide. We are excited to partner with Rick Kahlbaugh and Tiptree’s experienced management team and are committed to Fortegra’s continued growth and long-term success,” said Dan Zilberman, Managing Director and Head of Special Situations, Warburg Pincus. “Our investment in Fortegra underscores our commitment to partnering with innovative companies in the insurance sector. We look forward to supporting Fortegra as they continue to expand their capabilities,” added Jeff Stein, Managing Director, Warburg Pincus.
Warburg Pincus has been an active investor in the insurance sector globally, with investments in companies such as Aeolus Re, Arch Capital, Cox Insurance Holdings, Foundation Risk Partners, ICICI Lombard Insurance, Max Life, McGill and Partners, PetPlan, RenaissanceRe, SBI General Insurance and Watford Holdings, amongst others.
Barclays acted as exclusive financial advisor and Ropes & Gray LLP and Sidley Austin LLP provided legal counsel to Tiptree and Fortegra. BofA Securities acted as exclusive financial advisor and Willkie Farr & Gallagher LLP provided legal counsel to Warburg Pincus.
Tiptree Inc. (NASDAQ: TIPT) is a holding company that allocates capital across a broad spectrum of businesses, assets and other investments. The company’s largest operating business, Fortegra, is a leading specialty insurance underwriter and service provider, which focuses on niche business lines and fee-oriented services. The company also allocates capital to a diverse group of select investments that we refer to as Tiptree Capital. For more information, please visit www.tiptreeinc.com.