Systemic Success Is the Name of the Game for Fortegra’s Rick Kahlbaugh

When Rick Kahlbaugh joined Fortegra in 2003, it was a monoline credit insurer, plain and simple.

Over time, moving into more volatile lines with measured steps, Kahlbaugh and his team built Fortegra into a solid player in the middle-market program business, in the process growing its economic footprint to more than $3 billion in assets and its annual revenue to more than $1 billion.

As a testament to how well Fortegra is doing, Warburg Pincus just bought a 24% stake in the company. And as head of a specialty insurer, Kahlbaugh says he is seeing unprecedented business opportunities.

“The flow of submissions is like nothing I’ve seen in my career,” said Kahlbaugh.

All well and good, and growth is good, but that’s not really what matters to Kahlbaugh.

What matters to Kahlbaugh is cementing relationships with managing general agents that can operate deftly in Fortegra’s sweet spot, that being an aggregator of programs in the $2 million to $10 million in gross written premiums range.

The company is also structured so that more complex claims are handled internally, while more boilerplate claims can be outsourced to a TPA.

Another interesting feature in the Fortegra structure is that approximately 70% of its revenue comes from underwriting and 30% of its revenue comes from warranty and service contracts.

“They generate a massive amount of fees and we don’t need a balance sheet to write them. It’s a nice hedge to the hard and soft market cycles,” Kahlbaugh said.

Fortegra’s underwriting appetite, as underlined by Kahlbaugh, includes professional liability, “certain” types of commercial property, allied health, surety and some cargo and “lighter” inland marine.

“But we do evaluate every program on its own merits,” Kahlbaugh said.  “We do look at our book in total to make sure we’re not getting unduly concentrated in any one line.”

The company’s year-to-date combined ratio as of the end of Q2 2022 was 90.7, which backs up Kahlbaugh’s contention that it’s educated risk selection that matters more than glittering topline growth.

“The growth is great. But frankly, I don’t worry too much about growth. I worry about underwriting profitability,” Kahlbaugh said.

As a leader, Kahlbaugh advises not being shy about reaching out to your professional community for advice. “Share your challenges and you just never know where you are going to get the best answer and the best idea,” he said.

This story focuses on one person. But Kahlbaugh says it’s the 1,000 Fortegra employees and the leaders at Fortegra’s parent company, Tiptree, who stand with him that make the company what it is.

“These are the people that have made Fortegra a great place to work, and a great place to park your business and trust that we’ll do the right thing by your broker and your insured,” he said.​ &

Rick Kahlbaugh has been selected as a 2023 Risk & Insurance® Executive to Watch. To see the other executives selected this year, visit here.