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Fortegra Financial Corporation Reports Fourth Quarter and Full Year 2013 Results

JACKSONVILLE, FL -- (Marketwired) -- 03/10/14 -- Fortegra Financial Corporation (NYSE: FRF), an insurance services company offering a wide array of revenue enhancing products, including payment protection products, motor club memberships, service contracts, device and warranty services, and administration services, to our business partners, including insurance companies, retailers, dealers, insurance brokers and agents and financial services companies, reported its results for the fourth quarter and full year ended December 31, 2013.

  • Completed the sale of Bliss & Glennon, Inc. ("B&G") and eReinsure.com, Inc. ("eReinsure") to AmWINS Holdings, LLC for gross proceeds of $83.5 million on December 31, 2013 (the "Disposition"), which resulted in an $8.8 million gain on sale, net of tax.

  • Debt was reduced by $77.5 million, and goodwill and other intangible assets were reduced by a combined $70.0 million, on December 31, 2013 as a result of the Disposition.

  • Net income for the full year 2013 was $22.7 million compared to $15.2 million for the full year 2012. Diluted earnings per share were $1.11 in 2013 compared to $0.74 in 2012.

  • Net income from continuing operations before non-controlling interests was $3.9 million for the fourth quarter of 2013 compared to $3.6 million for the fourth quarter of 2012.

  • Fourth quarter 2013 diluted earnings per share from continuing operations were $0.16 compared to $0.17 in the fourth quarter of 2012.

  • Direct and assumed written premiums for the fourth quarter 2013 rose 17.6% compared to the same period in 2012, and for the full year ended December 31, 2013 increased 11.5% to $410.2 million from $367.8 million for 2012.

  • Adjusted EBITDA from continuing operations for the year ended December 31, 2013 increased 14.0% to $34.3 million, compared with $30.1 million for the year ended December 31, 2012.

"We see 2013 as a transformational year in our company's history and one that will be viewed as a critical turning point towards our future success. We started the year having just acquired two exceptional companies, ProtectCELL and 4Warranty, and we finished the year with the sale of B&G and eReinsure. As a result of the Disposition, we de-leveraged our balance sheet by paying off the debt under our primary credit facility, and shifted our complete focus to our higher margin product and service offerings. Fortegra is more streamlined and integrated than ever before and our new operating structure will provide us increased efficiency and business flexibility. In the quarter, we took swift action to win over payment protection customers in response to the announcement of a major competitor's decision to exit a segment of the payment protection market, which created a sizeable market opportunity for us," said Richard S. Kahlbaugh, Chairman, President and Chief Executive Officer of Fortegra. "Moreover, we continued to see strong premium growth in our payment protection products, and while regulatory pressures in our Motor Clubs remain, our ProtectCell products had another strong revenue quarter. Last, we are pleased with the early performance of our recently introduced products, and we anticipate these new products will provide meaningful revenue growth in 2014."

Discontinued Operations and Revision of Business Segments
In connection with the Disposition, the financial results of the disposed businesses are reported as discontinued operations in the Consolidated Statements of Income. Fortegra also realigned its reporting structure to manage its ongoing business as a single profit center, and reports financial results from continuing operations in one reportable segment for all periods presented.

Fourth Quarter Results
Total revenues from continuing operations increased $28.9 million, or 45.4%, to $92.5 million for the fourth quarter of 2013, compared to $63.6 million for the fourth quarter of 2012. Net revenues, which are comprised of total revenues less net losses and loss adjustment expenses, member benefit claims, and commission expenses, increased $5.8 million, or 25.6%, to $28.2 million for the quarter compared to $22.5 million for the prior-year period. Operating expenses, which are comprised of personnel costs and other operating expenses, increased $4.7 million, or 32.2%, to $19.1 million for the quarter compared to $14.5 million for the prior-year period. Income from continuing operations before non-controlling interests for the quarter increased $0.3 million, or 7.3%, to $3.9 million from $3.6 million for the fourth quarter of 2012, principally a result of the expansion of our warranty service contracts through ProtectCELL and 4Warranty.

Net income attributable to Fortegra Financial Corporation, including discontinued operations, for the three months ended December 31, 2013 increased $8.8 million, or 232.0%, to $12.6 million from $3.8 million for the three months ended December 31, 2012. Earnings per diluted share attributable to Fortegra Financial Corporation, including discontinued operations, increased 244.4% to $0.62 for the three months ended December 31, 2013 from $0.18 for the same period in 2012. Our 2013 results include the $8.8 million gain, net of tax, or $0.43 per diluted share, from the Disposition. Non-GAAP earnings per share from continuing operations on a diluted basis were $0.18 and $0.20 for the three months ended December 31, 2013 and 2012, respectively.

Full Year 2013 Results
Total revenues from continuing operations increased $91.5 million, or 35.7%, to $347.9 million for the full year 2013, compared to $256.3 million for the full year 2012. Net revenues increased $22.9 million, or 27.7%, to $105.7 million for 2013 compared to $82.7 million for 2012. Operating expenses increased $21.9 million, or 41.5%, to $74.6 million for 2013 compared to $52.7 million for 2012. These increases resulted principally from the expansion of our warranty products through ProtectCELL and 4Warranty. Income from continuing operations before non-controlling interests for the year ended December 31, 2013 decreased $1.2 million, or 8.9%, to $11.8 million from $13.0 million for the year ended December 31, 2012. This decrease resulted from $0.8 million of expense due to the previously announced plan to consolidate certain functions within our operations in 2013, while our 2012 results included a $1.0 million benefit from a change in accounting estimate

Net income attributable to Fortegra Financial Corporation, including discontinued operations, for the year ended December 31, 2013 increased $7.6 million, or 49.8%, to $22.7 million from $15.2 million for the year ended December 31, 2012. Earnings per diluted share attributable to Fortegra Financial Corporation, including discontinued operations, increased 50% to $1.11 for the year ended December 31, 2013 from $0.74 for the same period in 2012. Our 2013 results include the impact of the $8.8 million gain, net of tax, or $0.43 per diluted share, from the Disposition, while 2012 included a $1.0 million benefit from a change in accounting estimate, or $0.05 per diluted share. Non-GAAP earnings per share from continuing operations on a diluted basis were $0.61 and $0.67 for the years ended December 31, 2013 and 2012, respectively.

Balance Sheet
Total investments and cash and cash equivalents increased to $160.5 million at December 31, 2013 compared to $133.3 million at December 31, 2012. Goodwill decreased $54.0 million to $73.7 million at December 31, 2013 compared to $127.7 million at December 31, 2012 as a result of the Disposition. Other intangible assets decreased $21.1 million, of which $14.1 million related to the Disposition. Unearned premiums were $256.4 million at December 31, 2013 compared to $235.9 million at December 31, 2012. Total debt outstanding at December 31, 2013 decreased to $38.3 million compared to $124.4 million at December 31, 2012. Stockholders' equity increased to $166.5 million at December 31, 2013 from $145.7 million at December 31, 2012.

Conference Call Information
Fortegra Financial's executive management will host a conference call to discuss its fourth quarter and year end 2013 results on Tuesday, March 11, 2014 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.fortegrafinancial.com. A replay of the call will be available beginning March 11, 2014 at 11:30 a.m. Eastern Time and ending on March 18, 2014 at 11:59 p.m. Eastern Time on the Company's website, and by dialing (877) 870-5176 in the U.S. or (858) 384-5517 for international callers. The pass code for the replay is 13577483.

Statistical Supplement
In addition, the Company has provided a statistical supplement, which can be accessed through the "Investor Relations" section of Fortegra Financial's website at: http://www.fortegrafinancial.com.

About Fortegra Financial Corporation
Fortegra Financial Corporation (references in this report to "Fortegra Financial," "Fortegra," "we," "us," "the Company" or similar terms refer to Fortegra Financial Corporation and its subsidiaries), traded on the New York Stock Exchange under the symbol: FRF, is an insurance services company headquartered in Jacksonville, Florida. Fortegra offers a wide array of revenue enhancing products, including payment protection products, motor club memberships, service contracts, device and warranty services, and administration services, to our business partners, including insurance companies, retailers, dealers, insurance brokers and agents and financial services companies. Fortegra's brands include Fortegra™, Life of the South®, 4Warranty, ProtectCELL™, Continental Car Club™, Auto Knight Motor Club™, United Motor Club™, Consecta™, Pacific Benefits Group™, and South Bay Acceptance Corporation.

Use of Non-GAAP Financial Information
We present certain additional financial measures related to our business that are "Non-GAAP measures" within the meaning of Regulation G under the Securities Act of 1934. We present these Non-GAAP measures to provide investors with additional information to analyze our performance from period to period. Management also uses these measures to assess performance and to allocate resources in managing our businesses. However, investors should not consider these Non-GAAP measures as a substitute for the financial information that we report 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 Net income from continuing operations - Non-GAAP Basis, Non-GAAP Earnings per share from continuing operations - basic and diluted, Net revenue, Operating expenses, EBITDA from continuing operations and Adjusted EBITDA from continuing operations. 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 or earnings per share as a measure of operating performance. Net income from continuing operations - Non-GAAP Basis as used in this Earnings Release, generally means net income adjusted (on a tax-effected basis) by transaction costs associated with acquisitions, stock-based compensation, restructuring expenses, and unusual or non-recurring charges and items that affect comparability of results. Non-GAAP earnings per share from continuing operations - basic and diluted as presented in this Earnings Release adjust for the impact of the Non-GAAP adjustments to net income, net of tax, on a per share basis. Net revenues as used in this Earnings Release is total revenues less net losses and loss adjustment expenses, member benefit claims, and commission expenses. Operating expense as used in this Earnings Release is the sum of personnel costs and other operating expenses. EBITDA from continuing operations as used in this Earnings Release is net income before interest expense, income taxes, net income attributable to non-controlling interests, depreciation and amortization. Adjusted EBITDA from continuing operations as used in this Earnings Release means "Consolidated Adjusted EBITDA", which is defined under our credit facility with Wells Fargo Bank, N.A. and which generally means consolidated net income before net income attributable to non-controlling interests, consolidated interest expense, consolidated amortization expense, consolidated depreciation expense and consolidated income tax expense, relating to continuing operations. 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 and items that affect comparability of results. 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 from continuing operations reflected in this table. We believe presenting Net Income from continuing operations - Non-GAAP Basis, Non-GAAP Earnings per share from continuing operations - basic and diluted, Net revenue, Operating expenses, EBITDA from continuing operations and Adjusted EBITDA from continuing operations provides investors with a supplemental financial measure of our operating performance.

In addition to the financial covenant requirements under our credit facility, management uses Net Income from continuing operations - Non-GAAP Basis, Non-GAAP Earnings per share from continuing operations - basic and diluted, Net revenues, Operating expenses, EBITDA from continuing operations and Adjusted EBITDA from continuing operations 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. We measure Net revenue as another means of understanding product contributions to our results. We measure Operating expenses to reconcile from Net revenues to EBITDA. Although we use EBITDA from continuing operations and Adjusted EBITDA from continuing operations 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 necessary elements of our costs and operations. Since we use property and equipment to generate 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 from continuing operations to derive Adjusted EBITDA from continuing operations 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 from continuing operations and Adjusted EBITDA from continuing operations do not account for these expenses, their utility as financial measures of our operating performance has material limitations. Due to these limitations, management does not view EBITDA from continuing operations and Adjusted EBITDA from continuing operations in isolation or as primary financial performance measures.

We believe Net Income from continuing operations - Non-GAAP Basis, Non-GAAP Earnings per share from continuing operations - basic and diluted, EBITDA from continuing operations and Adjusted EBITDA from continuing operations 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 Net Income from continuing operations - Non-GAAP Basis, Non-GAAP Earnings per share from continuing operations - basic and diluted, EBITDA from continuing operations and Adjusted EBITDA from continuing operations (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 (including statements regarding: the efficiency and flexibility of our business under our new operating structure, the size of the market opportunity resulting from our competitor's announced exist from a segment of the payment protection market, and the level of contribution of our recently introduced products to our revenue growth in 2014) 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, and any amendments to those reports. 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.fortegrafinancial.com.



                       FORTEGRA FINANCIAL CORPORATION
                CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
        (All Amounts in Thousands Except Share and Per Share Amounts)

                              For the Three Months
                                     Ended             For the Years Ended
                            ----------------------- ------------------------
                              December    December    December     December
                              31, 2013    31, 2012    31, 2013     31, 2012
                            ----------- ----------- -----------  -----------
Revenues:
    Service and
     administrative fees    $    45,776 $    23,355 $   172,427  $    90,550
    Ceding commissions            9,973       9,429      32,824       34,825
    Net investment income           635         848       3,050        3,067
    Net realized investment
     gains                            -           9       2,043            3
    Net earned premium           35,858      29,855     136,787      127,625
    Other income                    237          97         736          269
                            ----------- ----------- -----------  -----------
    Total revenues               92,479      63,593     347,867      256,339
                            ----------- ----------- -----------  -----------

Expenses:
    Net losses and loss
     adjustment expenses         10,471       7,947      41,567       40,219
    Member benefit claims        11,395       1,084      46,019        4,642
    Commissions                  42,382      32,094     154,606      128,741
    Personnel costs               9,638       7,231      39,487       28,475
    Other operating
     expenses                     9,489       7,242      35,117       24,233
    Depreciation and
     amortization                 1,249       1,166       4,858        3,275
    Amortization of
     intangibles                  1,371         698       5,527        2,742
    Interest expense                899         779       3,621        4,334
    (Gain) on sale of
     subsidiary                       -           -        (402)           -
                            ----------- ----------- -----------  -----------
Total expenses                   86,894      58,241     330,400      236,661
                            ----------- ----------- -----------  -----------
Income from continuing
 operations before income
 taxes                            5,585       5,352      17,467       19,678
    Income taxes -
     continuing operations        1,733       1,761       5,660        6,716
                            ----------- ----------- -----------  -----------
Income from continuing
 operations before non-
 controlling interests            3,852       3,591      11,807       12,962
                            ----------- ----------- -----------  -----------
Discontinued operations:
      Income from
       discontinued
       operations - net of
       tax                          476         202       3,546        2,275
      Gain on sale of
       discontinued
       operations - net of
       tax                        8,844           -       8,844            -
                            ----------- ----------- -----------  -----------
Discontinued operations -
 net of tax                       9,320         202      12,390        2,275
                            ----------- ----------- -----------  -----------
Net income before non-
 controlling interests           13,172       3,793      24,197       15,237
      Less: net income
       attributable to non-
       controlling
       interests                    614          10       1,482           72
                            ----------- ----------- -----------  -----------
Net income attributable to
 Fortegra Financial
 Corporation                $    12,558 $     3,783 $    22,715  $    15,165
                            =========== =========== ===========  ===========

Earnings per share - Basic:
Net income from continuing
 operations - net of tax    $      0.17 $      0.18 $      0.53  $      0.65
Discontinued operations -
 net of tax                        0.48        0.01        0.64         0.12
                            ----------- ----------- -----------  -----------
      Net income
       attributable to
       Fortegra Financial
       Corporation          $      0.65 $      0.19 $      1.17  $      0.77
                            =========== =========== ===========  ===========

Earnings per share -
 Diluted:
Net income from continuing
 operations - net of tax    $      0.16 $      0.17 $      0.50  $      0.63
Discontinued operations -
 net of tax                        0.46        0.01        0.61         0.11
                            ----------- ----------- -----------  -----------
      Net income
       attributable to
       Fortegra Financial
       Corporation          $      0.62 $      0.18 $      1.11  $      0.74
                            =========== =========== ===========  ===========

Weighted average common
 shares outstanding:
  Basic                      19,410,655  19,507,733  19,477,802   19,655,492
  Diluted                    20,388,890  20,507,329  20,482,652   20,600,362



                       FORTEGRA FINANCIAL CORPORATION
   CONSOLIDATED STATEMENTS OF INCOME - Discontinued Operations (Unaudited)
                         (All Amounts in Thousands)

                                           For the Three     For the Years
                                            Months Ended         Ended
                                         ----------------- -----------------
                                         December December December December
                                         31, 2013 31, 2012 31, 2013 31, 2012
                                         -------- -------- -------- --------
Income from discontinued operations:
Revenues:
    Brokerage commissions and fees       $  8,414 $  8,011 $ 36,823 $ 35,306
    Net investment income                       4        1       22        1
    Other income                               10        -       40        -
                                         -------- -------- -------- --------
Total revenues                              8,428    8,012   36,885   35,307
                                         -------- -------- -------- --------

Expenses:
    Personnel costs                         5,011    4,950   20,251   20,173
    Other operating expenses                1,415    1,477    5,778    6,121
    Depreciation and amortization             161      183      615      658
    Amortization of intangibles               487      480    1,929    2,211
    Interest expense                          551      578    2,318    2,290
                                         -------- -------- -------- --------
Total expenses                              7,625    7,668   30,891   31,453
                                         -------- -------- -------- --------
Income from discontinued operations
 before income taxes                          803      344    5,994    3,854
    Income taxes - discontinued
     operations                               327      142    2,448    1,579
                                         -------- -------- -------- --------
Income from discontinued operations -
 net of tax                                   476      202    3,546    2,275
                                         -------- -------- -------- --------

Gain on sale of discontinued operations:
Gain on sale of discontinued operations
 before income taxes                       14,739        -   14,739        -
  Income taxes - gain on sale of
   discontinued operations                  5,895        -    5,895        -
                                         -------- -------- -------- --------
Gain on sale of discontinued operations
 - net of tax                               8,844        -    8,844        -
                                         -------- -------- -------- --------

                                         -------- -------- -------- --------
Discontinued operations - net of tax     $  9,320 $    202 $ 12,390 $  2,275
                                         ======== ======== ======== ========




                       FORTEGRA FINANCIAL CORPORATION
                  CONSOLIDATED BALANCE SHEETS (Unaudited)
       (All Amounts in Thousands Except Share and Per Share Amounts)

                                                           At December 31,
                                                         ------------------
                                                           2013      2012
                                                         --------  --------
Assets:
Investments:
  Fixed maturity securities available-for-sale, at fair
   value                                                 $131,751  $110,641
  Equity securities available-for-sale, at fair value       6,198     6,220
  Short-term investments                                      871     1,222
                                                         --------  --------
    Total investments                                     138,820   118,083
Cash and cash equivalents                                  21,681    15,209
Restricted cash                                            17,293    31,142
Accrued investment income                                   1,175     1,235
Notes receivable, net                                      11,920    11,290
Accounts and premiums receivable, net                      18,702    27,302
Other receivables                                          33,409    13,393
Reinsurance receivables                                   215,084   203,988
Deferred acquisition costs                                 78,042    59,320
Property and equipment, net                                14,332    17,900
Goodwill                                                   73,701   127,679
Other intangible assets, net                               49,173    70,310
Income taxes receivable                                         -     2,919
Other assets                                                6,307     7,667
Assets of discontinued operations                             791         -
                                                         --------  --------
      Total assets                                       $680,430  $707,437
                                                         ========  ========

Liabilities:
Unpaid claims                                            $ 34,732  $ 33,007
Unearned premiums                                         256,380   235,900
Policyholder account balances                              23,486    26,023
Accrued expenses, accounts payable and other liabilities   53,035    58,660
Income taxes payable                                        2,842         -
Deferred revenue                                           76,927    55,043
Notes payable                                               3,273    89,438
Preferred trust securities                                 35,000    35,000
Deferred income taxes, net                                 19,659    28,651
Liabilities of discontinued operations                      8,603         -
                                                         --------  --------
    Total liabilities                                     513,937   561,722
                                                         --------  --------

Stockholders' Equity:
Preferred stock                                                 -         -
Common stock                                                  209       207
Treasury stock                                             (8,014)   (6,651)
Additional paid-in capital                                 99,398    97,641
Accumulated other comprehensive loss, net of tax           (3,665)     (631)
Retained earnings                                          72,532    49,817
                                                         --------  --------
    Stockholders' equity before non-controlling
     interests                                            160,460   140,383
Non-controlling interests                                   6,033     5,332
                                                         --------  --------
    Total stockholders' equity                            166,493   145,715
                                                         --------  --------
      Total liabilities and stockholders' equity         $680,430  $707,437
                                                         ========  ========



                       FORTEGRA FINANCIAL CORPORATION
        RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION (Unaudited)
  NET REVENUES, OPERATING EXPENSES, EBITDA FROM CONTINUING OPERATIONS AND
                ADJUSTED EBITDA, FROM CONTINUING OPERATIONS
             (All Amounts in Thousands, except for percentages)

RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION - NET REVENUES
                                        For the Three       For the Years
                                        Months Ended            Ended
                                     ------------------  ------------------
                                     December  December  December  December
                                     31, 2013  31, 2012  31, 2013  31, 2012
                                     --------  --------  --------  --------
Total revenues                       $ 92,479  $ 63,593  $347,867  $256,339
Less :
    Net losses and loss adjustment
     expenses                          10,471     7,947    41,567    40,219
    Member benefit claims              11,395     1,084    46,019     4,642
    Commissions                        42,382    32,094   154,606   128,741
                                     --------  --------  --------  --------
Net Revenues                         $ 28,231  $ 22,468  $105,675  $ 82,737
                                     ========  ========  ========  ========

RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION - OPERATING EXPENSES
                                        For the Three       For the Years
                                        Months Ended            Ended
                                     ------------------  ------------------
                                     December  December  December  December
                                     31, 2013  31, 2012  31, 2013  31, 2012
                                     --------  --------  --------  --------
Personnel costs                      $  9,638  $  7,231  $ 39,487  $ 28,475
Other operating expenses                9,489     7,242    35,117    24,233
                                     --------  --------  --------  --------
Operating expenses                   $ 19,127  $ 14,473  $ 74,604  $ 52,708
                                     ========  ========  ========  ========

RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION EBITDA FROM CONTINUING
OPERATIONS AND ADJUSTED EBITDA FROM CONTINUING OPERATIONS
                                        For the Three       For the Years
                                        Months Ended            Ended
                                     ------------------  ------------------
                                     December  December  December  December
                                     31, 2013  31, 2012  31, 2013  31, 2012
                                     --------  --------  --------  --------
Income from continuing operations
 before non-controlling interests    $  3,852  $  3,591  $ 11,807  $ 12,962
  Depreciation                          1,249     1,166     4,858     3,275
  Amortization of intangibles           1,371       698     5,527     2,742
  Interest expense                        899       779     3,621     4,334
  Income taxes                          1,733     1,761     5,660     6,716
                                     --------  --------  --------  --------
EBITDA from continuing operations       9,104     7,995    31,473    30,029
    Transaction costs (1)                  37       462       203       601
    Restructuring expenses                 65         -     1,299         -
    (Gain) on sale of subsidiary            -         -      (402)        -
    Legal expenses                        125         -       520         -
    Stock-based compensation expense      239       297     1,228       954
    Change in accounting estimate           -         -         -    (1,509)
                                     --------  --------  --------  --------
Adjusted EBITDA from continuing
 operations                          $  9,570  $  8,754  $ 34,321  $ 30,075
                                     ========  ========  ========  ========

EBITDA from continuing operations
 margin                                  32.2%     35.6%     29.8%     36.3%
Adjusted EBITDA from continuing
 operations margin (2)                   33.9%     39.0%     32.5%     36.9%

(1)  Represents transaction costs associated with acquisitions.

(2)  - The change in accounting estimate affecting the year ending December
     31, 2012 period impacted net revenues by $1.2 million and other
     operating expense by ($0.3) million. The Adjusted EBITDA Margin for
     these periods is computed based on net revenues and income before tax
     adjusted for these impacts.



                       FORTEGRA FINANCIAL CORPORATION
        RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION (Unaudited)
           NET INCOME FROM CONTINUING OPERATIONS - NON-GAAP BASIS
      AND EARNINGS PER SHARE FROM CONTINUING OPERATIONS NON-GAAP BASIS
       (All Amounts in Thousands Except Share and Per Share Amounts)

                             For the Three Months
                                    Ended             For the Years Ended
                           ----------------------- ------------------------
                             December    December    December     December
                             31, 2013    31, 2012    31, 2013     31, 2012
                           ----------- ----------- -----------  -----------

Income from continuing
 operations before non-
 controlling interests     $     3,852 $     3,591 $    11,807  $    12,962
    Less: net income
     attributable to non-
     controlling interests         614          10       1,482           72
                           ----------- ----------- -----------  -----------
Net income from continuing
 operations                      3,238       3,581      10,325       12,890

  Non-GAAP Adjustments,
   net of tax
    Transaction costs
     associated with
     acquisitions (1)               37         462         203          601
    Stock-based
     compensation                  155         190         797          615
    Restructuring expenses          42           -         841            -
    (Gain) on sale of
     subsidiary                      -           -        (261)           -
    Legal                           82           -         339            -
    Retirement of debt (2)           -           -           -          439
    Change in accounting
     estimate                        -           -           -         (976)
    Income tax provision-
     to-return true-ups              -           -         312          103
                           ----------- ----------- -----------  -----------
  Total Non-GAAP
   adjustments, net of tax         316         652       2,231          782
                           ----------- ----------- -----------  -----------
Net income from continuing
 operations - Non-GAAP
 basis                     $     3,554 $     4,233 $    12,556  $    13,672
                           =========== =========== ===========  ===========

Earnings per share -
 Basic:
GAAP earnings per share
 from continuing
 operations - basic        $      0.17 $      0.18 $      0.53  $      0.65
  Non-GAAP adjustments,
   net of tax                     0.02        0.03        0.11         0.04
                           ----------- ----------- -----------  -----------
Non-GAAP earnings per
 share from continuing
 operations - basic        $      0.19 $      0.21 $      0.64  $      0.69
                           =========== =========== ===========  ===========

Earnings per share -
 Diluted:
GAAP earnings per share
 from continuing
 operations - diluted      $      0.16 $      0.17 $      0.50  $      0.63
  Non-GAAP adjustments,
   net of tax                     0.02        0.03        0.11         0.04
                           ----------- ----------- -----------  -----------
Non-GAAP earnings per
 share from continuing
 operations - diluted      $      0.18 $      0.20 $      0.61  $      0.67
                           =========== =========== ===========  ===========

Weighted average common
 shares outstanding:
    Basic                   19,410,655  19,507,733  19,477,802   19,655,492
    Diluted                 20,388,890  20,507,329  20,482,652   20,600,362

 (1) Adjustments not tax effected.
 (2) 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.
     Note: Earnings per share amounts may not add or recalculate due to
     rounding.

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