UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)
x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended September 30, 2012           OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from ____ to ____

Commission file number 001-35009

Fortegra Financial Corporation

(Exact name of Registrant as specified in its charter)

Delaware	58-1461399
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
10151 Deerwood Park Boulevard, Building 100, Suite 330 Jacksonville, FL	32256
(Address of principal executive offices)	(Zip Code)
Registrant's telephone number, including area code:	(866)-961-9529

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer o     Accelerated filer o Non-accelerated filer x Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

The number of outstanding shares of the registrant's Common Stock, $0.01 par value, outstanding as of October 31, 2012 was 19,657,152.

FORTEGRA FINANCIAL CORPORATION

QUARTERLY REPORT ON FORM 10-Q

FOR THE PERIOD ENDED

September 30, 2012

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION		Page Number
Item 1.	Financial Statements	3
	Consolidated Balance Sheets (unaudited)
	Consolidated Statements of Income (unaudited)
	Consolidated Statements of Comprehensive Income (unaudited)
	Consolidated Statement of Stockholders' Equity (unaudited)
	Consolidated Statements of Cash Flows (unaudited)
	Notes to Consolidated Financial Statements (unaudited)
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	45
Item 4.	Controls and Procedures	46
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	47
Item 1A.	Risk Factors	48
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	65
Item 3.	Defaults Upon Senior Securities	65
Item 4.	Mine Safety Disclosures	65
Item 5.	Other Information	65
Item 6	Exhibits	65
Signatures		66
Exhibit Index		67

1

PART I. FINANCIAL INFORMATION

Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q ("Form 10-Q") to "Fortegra Financial," "Fortegra," "we," "us," "the Company" or similar terms refer to Fortegra Financial Corporation and its subsidiaries.

FORWARD-LOOKING STATEMENTS

This Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which are made in reliance upon the protection provided by such act for forward-looking statements. Such statements are subject to risks and uncertainties. All statements other than statements of historical fact included in this Form 10-Q 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," "will," "likely" and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating results or financial performance or other events.

The forward-looking statements contained in this Form 10-Q 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 Form 10-Q, 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 Part I, ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS and Part II, ITEM 1A. RISK FACTORS. Should one or more of these risks or uncertainties materialize, or should any of these assumptions prove incorrect, our actual results may vary materially from those projected in these forward-looking statements.

Any forward-looking statement made by us in this Form 10-Q 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.

This Form 10-Q should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2011 ("Annual Report") along with the Company's other filings with the Securities and Exchange Commission ("SEC").

2

ITEM 1. FINANCIAL STATEMENTS

FORTEGRA FINANCIAL CORPORATION

CONSOLIDATED BALANCE SHEETS (Unaudited)

(All Amounts in Thousands Except Share and Per Share Amounts)

	September 30, 2012			December 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		$	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			1,219
Short-term investments	970			1,070
Total investments	117,888			95,798
Cash and cash equivalents	11,284			31,339
Restricted cash	21,232			14,180
Accrued investment income	1,115			929
Notes receivable, net	4,281			3,603
Accounts and premiums receivable, net	25,056			20,172
Other receivables	15,708			9,103
Reinsurance receivables	197,184			194,740
Deferred acquisition costs	56,903			55,467
Property and equipment, net	17,227			14,666
Goodwill	104,668			104,500
Other intangibles, net	50,803			54,410
Other assets	6,452			6,070
Total assets	$	629,801		$	604,977
Liabilities:
Unpaid claims	$	32,041		$	32,583
Unearned premiums	231,114			227,929
Policyholder account balances	26,223			28,040
Accrued expenses, accounts payable, income taxes and other liabilities	51,785			35,446
Deferred revenue	19,164			20,781
Note payable	71,168			73,000
Preferred trust securities	35,000			35,000
Deferred income taxes, net	26,023			24,614
Total liabilities	492,518			477,393
Commitments and Contingencies (Note 16)
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			206
Treasury stock, at cost;1,024,212 shares and 516,132 shares at September 30, 2012 and December 31, 2011, respectively	(6,651		)	(2,728		)
Additional paid-in capital	97,095			96,199
Accumulated other comprehensive loss, net of tax	(673		)	(1,754		)
Retained earnings	46,725			35,150
Stockholders' equity before non-controlling interest	136,703			127,073
Non-controlling interest	580			511
Total stockholders' equity	137,283			127,584
Total liabilities and stockholders' equity	$	629,801		$	604,977

See accompanying notes to these consolidated financial statements.

3

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 Nine Months Ended
	September 30, 2012			September 30, 2011		September 30, 2012			September 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
Expenses:
Net losses and loss adjustment expenses	11,430			9,714		32,272			28,338
Commissions	21,548			17,926		61,479			53,766
Personnel costs	12,708			10,945		36,467			33,365
Other operating expenses	7,959			7,267		21,635			23,779
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	57,668			50,119		163,479			151,298
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

See accompanying notes to these consolidated financial statements.

4

FORTEGRA FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

(All Amounts in Thousands)

	For the Three Months Ended						For the Nine Months Ended
	September 30, 2012			September 30, 2011			September 30, 2012			September 30, 2011
Net income	$	4,110		$	4,072		$	11,575		$	9,024
Other comprehensive income (loss), net of tax:
Unrealized gains (losses) on available-for-sale securities
Unrealized holding gains arising during the period	1,432			720			2,666			1,165
Related tax (expense) benefit	(501		)	(252		)	(933		)	(454		)
Less: reclassification of losses (gains) included in net income	16			(1,196		)	6			(2,423		)
Related tax (expense) benefit	(6		)	419			(2		)	848
Unrealized gains (losses) on available-for-sale securities, net of tax	941			(309		)	1,737			(864		)
Interest rate swap
Unrealized loss on interest rate swap	(159		)	(2,030		)	(915		)	(3,300		)
Related tax benefit	55			710			320			1,155
Add: reclassification of losses included in net income	(39		)	—			(83		)	—
Related tax expense	15			—			29			—
Unrealized loss on interest rate swap, net of tax	(128		)	(1,320		)	(649		)	(2,145		)
Other comprehensive income (loss) income before non-controlling interest, net of tax	813			(1,629		)	1,088			(3,009		)
Less: comprehensive income attributable to non-controlling interest	6			—			7			4
Other comprehensive income (loss)	807			(1,629		)	1,081			(3,013		)
Comprehensive income	$	4,917		$	2,443		$	12,656		$	6,011

See accompanying notes to these consolidated financial statements.

5

FORTEGRA FINANCIAL CORPORATION

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Unaudited)

(All Amounts in Thousands Except Share Amounts)

	Common Stock			Treasury Stock
	Shares	Amount		Shares		Amount			Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Non-controlling Interest			Total Stockholders' Equity
Balance, December 31, 2011, as previously reported	20,561,328	$	206	(516,132	)	$	(2,728	)	$	96,199	$	(1,754	)	$	39,822		$	532		$	132,277
Cumulative effect of adjustment resulting from new accounting guidance	—	—		—		—			—		—			(4,672		)	(21		)	(4,693		)
Balance, December 31, 2011, restated	20,561,328	206		(516,132	)	(2,728		)	96,199		(1,754		)	35,150			511			127,584
Net income	—	—		—		—			—		—			11,575			62			11,637
Other comprehensive income	—	—		—		—			—		1,081			—			7			1,088
Stock-based compensation	90,519	1		—		—			710		—			—			—			711
Shares issued for the Employee Stock Purchase Plan	29,405	—		—		—			167											167
Treasury stock purchased	—	—		(508,080	)	(3,923		)	—		—			—			—			(3,923		)
Options exercised, net of forfeitures	—	—		—		—			19		—			—			—			19
Balance, September 30, 2012	20,681,252	$	207	(1,024,212	)	$	(6,651	)	$	97,095	$	(673	)	$	46,725		$	580		$	137,283

See accompanying notes to these consolidated financial statements.

6

FORTEGRA FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(All Amounts in Thousands)

	For the Nine Months Ended
	September 30, 2012			September 30, 2011
Operating Activities
Net income	$	11,575		$	9,024
Adjustments to reconcile net income to net cash flows provided by operating activities:
Change in deferred policy acquisition costs	(1,437		)	3,369
Depreciation and amortization	6,359			5,711
Deferred income tax expense	822			2,704
Net realized loss (gains) on the sale of investments	6			(2,423		)
Loss on sale of subsidiary	—			477
Stock-based compensation expense	711			615
Amortization of premiums and accretion of discounts on investments	932			408
Non-controlling interest	62			(171		)
Changes in operating assets and liabilities, net of the effects of acquisitions and dispositions:
Accrued investment income	(186		)	39
Accounts and premiums receivable, net	(4,884		)	(5,300		)
Other receivables	(6,605		)	8,152
Reinsurance receivables	(2,444		)	(527		)
Other assets	(382		)	559
Unpaid claims	(542		)	(2,296		)
Unearned premiums	3,185			6,558
Policyholder account balances	(1,817		)	—
Accrued expenses, accounts payable, income taxes and other liabilities	15,340			(20,964		)
Deferred revenue	(1,617		)	(5,595		)
Net cash flows provided by operating activities	19,078			340
Investing activities
Proceeds from maturities, calls and prepayments of available-for-sale investments	8,052			7,418
Proceeds from sales of available-for-sale investments	4,980			33,663
Proceeds from maturities of short term investments	100			100
Purchases of available-for-sale investments	(33,484		)	(37,859		)
Purchases of property and equipment	(5,174		)	(5,411		)
Net paid for acquisitions of subsidiaries, net of cash received	(308		)	(40,611		)
Sale of subsidiary, net of cash paid	—			(153		)
Net (issuance) proceeds from notes receivable	(678		)	24
Change in restricted cash	(7,052		)	6,043
Net cash flows used in investing activities	(33,564		)	(36,786		)
Financing activities
Payments on notes payable	(126,200		)	(64,263		)
Proceeds from notes payable	124,368			91,550
Payments for initial public offering costs	—			(827		)
Payments on redeemable preferred stock	—			(10,940		)
Net proceeds from exercise of stock options	19			651
Purchase of treasury stock	(3,923		)	—
Net proceeds received from stock issued in the Employee Stock Purchase Plan	167			—
Net cash flows (used in) provided by financing activities	(5,569		)	16,171
Net decrease in cash and cash equivalents	(20,055		)	(20,275		)
Cash and cash equivalents, beginning of period	31,339			43,389
Cash and cash equivalents, end of period	$	11,284		$	23,114

See accompanying notes to these consolidated financial statements.

7

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(All Amounts in Thousands Except Share Amounts, Per Share Amounts or Unless Otherwise Noted)

Nature of Operations

Fortegra Financial Corporation (Traded on the New York Stock Exchange under the symbol: FRF), including its subsidiaries ("Fortegra" or the "Company"), is a diversified insurance services company headquartered in Jacksonville, Florida that provides distribution and administration services on a wholesale basis to insurance companies, insurance brokers and agents and other financial services companies primarily in the United States. In 2008, the Company changed its name from Life of the South Corporation to Fortegra Financial Corporation. The Company was incorporated in 1981 in the State of Georgia and re-incorporated in the State of Delaware in 2010. Most of the Company's business is generated through networks of small to mid-sized community and regional banks, small loan companies and automobile dealerships. The Consolidated Financial Statements include the Company and its majority-owned and controlled subsidiaries, including:

• LOTS Intermediate Co. ("LOTS IM")

• Bliss and Glennon, Inc. ("B&G")

• CRC Reassurance Company, Ltd. ("CRC")

• Insurance Company of the South ("ICOTS")

• Life of the South Insurance Company ("LOTS") and its subsidiary, Bankers Life of Louisiana ("Bankers Life")

• LOTS Reassurance Company ("LOTS RE")

• LOTSolutions, Inc.

• Lyndon Southern Insurance Company ("Lyndon Southern")

• Southern Financial Life Insurance Company ("SFLAC")

• South Bay Acceptance Corporation ("South Bay")

• Continental Car Club, Inc. ("Continental")

• United Motor Club of America, Inc. ("United")

• Auto Knight Motor Club, Inc. ("Auto Knight")

• eReinsure.com, Inc. ("eReinsure")

• Pacific Benefits Group Northwest, LLC ("PBG")

• Magna Insurance Company ("Magna")

The Company operates in three business segments: (i) Payment Protection, (ii) Business Process Outsourcing ("BPO") and (iii) Brokerage. Payment Protection specializes in protecting lenders and their consumers from death, disability or other events that could otherwise impair their ability to repay a debt and also offers warranty and service contracts and motor club solutions. BPO provides an assortment of administrative services tailored to insurance and other financial services companies through a virtual insurance company platform. Brokerage uses a pure wholesale sell-through model to sell specialty casualty and surplus lines insurance and also provides web-hosted applications used by insurers, reinsurers and reinsurance brokers for the global reinsurance market.

1. Basis of Presentation

The accompanying unaudited interim Consolidated Financial Statements of Fortegra have been prepared in conformity with generally accepted accounting principles in the United States of America ("U.S. GAAP") promulgated by the Financial Accounting Standards Board ("FASB"), Accounting Standards Codification ("ASC" or "the guidance") for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements and should be read in conjunction with the Company's Annual Report.

The interim financial statements in this Form 10-Q have not been audited. In the opinion of management, the accompanying unaudited interim financial information reflects all adjustments, including normal recurring adjustments and the adjustments for the retrospective adoption of the new accounting guidance for Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts as described in Note 3, necessary to present fairly Fortegra's financial position, results of operations and other comprehensive income for each of the interim periods presented. The results of operations for the three and nine months ended September 30, 2012 are not necessarily indicative of the results that may be expected for the full year ending on December 31, 2012.

2. Summary of Significant Accounting Policies

Fortegra's interim Consolidated Financial Statements as of September 30, 2012 and 2011 are unaudited and have been prepared following the significant accounting policies disclosed in Note 2 of the Notes to the Consolidated Financial Statements of the Company's Annual Report, except as discussed in Note 3 of this Form 10-Q for the adoption of the new guidance on Accounting

8

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(All Amounts in Thousands Except Share Amounts, Per Share Amounts or Unless Otherwise Noted)

for Costs Associated with Acquiring or Renewing Insurance Contracts effective January 1, 2012.

Principles of Consolidation

The unaudited Consolidated Financial Statements include the accounts of Fortegra Financial Corporation and its majority-owned and controlled subsidiaries. All material intercompany account balances and transactions have been eliminated. The third-party ownership of 15% of the common stock of SFLAC has been reflected as non-controlling interest on the Consolidated Balance Sheets. Income (loss) attributable to SFLAC's minority shareholders has been reflected on the Consolidated Statements of Income as income (loss) attributable to non-controlling interest and on the Consolidated Statements of Comprehensive Income as comprehensive income (loss) attributable to non-controlling interest.

Comprehensive Income (Loss)

Comprehensive income (loss) includes both net income and other items of comprehensive income comprised of unrealized gains and losses on investment securities classified as available-for-sale and unrealized gains and losses on the interest rate swap.

Use of Estimates

Preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Reclassifications

Certain items in prior financial statements have been reclassified to conform to the current presentation, which had no material impact on net income, comprehensive income or loss, net cash provided by operating activities or stockholders' equity, except as disclosed in Note 3.

Change in Accounting Estimate - Unearned Premium Reserves for the Payment Protection Segment

Prior to the three months ended September 30, 2012, the Company's method of estimating unearned premium reserves in relation to the loss patterns and the related recognition of income for certain types of credit property and vendor single interest payment protection products was based on the pro-rata method.  The use of the pro-rata method was based on the best information available at the time the Company's financial statements were prepared.

During the past two years the Company has increased the volume of business related to these product types, thereby increasing the volume of policy and claims data specific to the Company's product types. During the three months ended September 30, 2012, the Company determined it had accumulated a sufficient volume of policy and claims data to be able to perform an actuarial analysis in order to determine the preferable estimation approach. As a result of the analysis of the recently collected additional data, the Company has gained better insight into its product loss patterns and can provide improved judgment and estimation to more accurately calculate the unearned premium reserves and the associated recognition of income. Upon completion of the analysis, Management determined that the Rule of 78s applied on a daily basis provides a more accurate representation of historical loss patterns and the recognition of the related income; as such, the estimation method was changed. The change in approach has been accounted for as a change in accounting estimate that is effected by a change in accounting principle and is justifiable in that it is the preferable approach for income recognition based on the Company's actuarial study.  This change in accounting estimate was applied prospectively in accordance with ASC 250-10-45-18. Summarized below is the effect of the change in accounting estimate on the Consolidated Statement of Income for the following periods:

9

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(All Amounts in Thousands Except Share Amounts, Per Share Amounts or Unless Otherwise Noted)

	For the Three and Nine Months Ended
	September 30, 2012
Revenues:
Net earned premium	$	1,845
Ceding commission	2,135
Net increase to total revenues from the change in accounting estimate	3,980
Expenses:
Commissions	2,739
Other operating expenses	(268		)
Net increase to total expenses from the change in accounting estimate	2,471
Net increase to income before income taxes from the change in accounting estimate	1,509
Income taxes	533
Net increase to net income from the change in accounting estimate	$	976
Increase to earnings per share from the change in accounting estimate:
Basic	$	0.05
Diluted	$	0.05

Immaterial Correction of Prior Period Errors

Prior to the filing of the Company’s Form 10-Q for the three months ended September 30, 2012, the Company identified errors related to the purchase accounting adjustments for the April 2009 acquisition of B&G and the 2011 acquisition of Auto Knight. As a result, the Company’s historical balances for goodwill, property and equipment and deferred taxes were incorrectly reported in prior period filings for the years ending December 31, 2009, 2010 and 2011, respectively. Management evaluated the materiality of the errors from a qualitative and quantitative perspective and concluded that the errors were immaterial to each of the prior periods noted above.

As a result, in this Form 10-Q, the Consolidated Balance Sheet data as of December 31, 2011 has been revised to reflect the correction of the error associated with the Auto Knight acquisition. This correction increased goodwill by $0.6 million and increased deferred income tax liabilities by $0.6 million.

In addition, the Consolidated Balance Sheet data as of December 31, 2009 has been revised to reflect the correction of the error associated with the B&G acquisition. This correction increased goodwill by $0.4 million, decreased deferred income tax liabilities by $0.3 million and decreased property and equipment by $0.7 million. The revised financial data will be reflected in future filings containing Consolidated Balance Sheet information for the year ending December 31, 2009.

Subsequent Events

The Company reviewed all material subsequent events that occurred up to the date the Company's Consolidated Financial Statements were issued to determine whether any event required recognition or disclosure in the financial statements and/or disclosure in the notes thereto. For more information, please see the note, "Subsequent Events."

3. Recent Accounting Standards

Recently Adopted Accounting Pronouncements

In June 2011, the FASB issued Accounting Standards Update ("ASU") No. 2011-05, Comprehensive Income (Topic 820), which changes the presentation of comprehensive income. These changes give an entity the option to present the total of comprehensive income, the components of net income and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements; the option to present components of other comprehensive income as part of the statement of changes in stockholders' equity was eliminated. This guidance became effective for the Company on January 1, 2012 and only requires a change in the format of the presentation of comprehensive income. The adoption of this guidance did not impact the Company’s consolidated financial position, results of operations or cash flows.

In May 2011, the FASB issued ASU 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards ("IFRS"), which provides a consistent definition of

10

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(All Amounts in Thousands Except Share Amounts, Per Share Amounts or Unless Otherwise Noted)

fair value and ensures that the fair value measurement and disclosure requirements are similar between U.S. GAAP and IFRS. The guidance changes certain fair value measurement principles and expands the disclosure requirements particularly for Level 3 fair value measurements. The guidance became effective for the Company beginning January 1, 2012 and is to be applied prospectively. The adoption of this guidance, which primarily relates to disclosure, did not impact the Company’s consolidated financial position, results of operations or cash flows.

In October 2010, the FASB issued ASU 2010-26, Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts, which updates the accounting for deferred acquisition costs. This guidance modifies the definition of the types of costs incurred by insurance entities that can be capitalized in the acquisition of new and renewal insurance contracts. The amendments in this guidance specify that the costs are limited to incremental direct costs that result directly from successful contract transactions and would not have been incurred by the insurance entity had the contract transactions not occurred. These costs must be directly related to underwriting, policy issuance and processing, medical and inspection reports and sales force contract selling. The amendments also specify that advertising costs are only included as deferred acquisition costs if the direct-response advertising criteria are met. ASU 2010-26 is effective for interim and annual reporting periods beginning after December 15, 2011. The Company retrospectively adopted the new standard on January 1, 2012. As of January 1, 2011, the beginning of the earliest period presented, the cumulative effect of the adjustment recorded to adopt this guidance resulted in decreases of $6.4 million to deferred acquisition costs, $2.3 million to deferred income taxes and $4.2 million to retained earnings. The following tables present the effect of the retrospective adoption on the Company's Consolidated Financial Statement line items for prior periods:

	December 31, 2011
Consolidated Balance Sheets	As Previously Reported (1)		Effect of the Change			As Restated
Assets
Deferred acquisition costs	$	62,687	$	(7,220	)	$	55,467
Total assets	$	612,197	$	(7,220	)	$	604,977
Liabilities
Deferred income taxes	$	27,141	$	(2,527	)	$	24,614
Total Liabilities	479,920		(2,527		)	477,393
Stockholders' Equity
Retained earnings	39,822		(4,672		)	35,150
Non-controlling interest	532		(21		)	511
Total Stockholders' Equity	132,277		(4,693		)	127,584
Total Liabilities and Stockholders' Equity	$	612,197	(7,220		)	$	604,977

(1) - Includes the business acquisition valuation measurement period adjustments described in Notes 6, 7 and 8.

11

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(All Amounts in Thousands Except Share Amounts, Per Share Amounts or Unless Otherwise Noted)

	For the Three Months Ended							For the Nine Months Ended
	September 30, 2011							September 30, 2011
Consolidated Statements of Income	As Previously Reported		Effect of the Change			As Restated		As Previously Reported			Effect of the Change			As Restated
Revenues:
Total Revenues	$	56,451	$	—		$	56,451	$	164,998		$	—		$	164,998
Expenses:
Net losses and loss adjustment expenses	9,714		—			9,714		28,338			—			28,338
Commissions	17,926		—			17,926		53,766			—			53,766
Personnel costs	10,945		—			10,945		33,365			—			33,365
Other operating expenses	7,171		96			7,267		23,331			448			23,779
Depreciation	886		—			886		2,283			—			2,283
Amortization of intangibles	998		—			998		3,428			—			3,428
Interest expense	1,906		—			1,906		5,862			—			5,862
Loss on sale of subsidiary	477					477		477						477
Total expenses	50,023		96			50,119		150,850			448			151,298
Income before income taxes and non-controlling interest	6,428		(96		)	6,332		14,148			(448		)	13,700
Income taxes	2,292		(33		)	2,259		5,003			(156		)	4,847
Income before non-controlling interest	4,136		(63		)	4,073		9,145			(292		)	8,853
Less: net (loss) income attributable to non-controlling interest	1		—			1		(171		)	—			(171		)
Net income	$	4,135	$	(63	)	$	4,072	$	9,316		$	(292	)	$	9,024
Earnings per share:
Basic	$	0.20	$	—		$	0.20	$	0.46		$	(0.02	)	$	0.44
Diluted	$	0.19	$	—		$	0.19	$	0.44		$	(0.02	)	$	0.42

Recently Issued Accounting Pronouncements

In July 2012, the FASB issued ASU No. 2012-02, Intangibles-Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment. The ASU permits entities to perform an optional qualitative assessment for determining whether it is more likely than not that an indefinite-lived intangible asset is impaired. The guidance is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. The Company is evaluating the impact of the ASU; however, it is not expected to have a significant impact on the Company's consolidated financial position, results of operations or cash flows.

In December 2011, the FASB issued ASU No. 2011-11, Disclosures About Offsetting Assets and Liabilities. This standard requires the disclosure of both gross and net information about instruments and transactions eligible for offset in the statement of financial position, as well as instruments and transactions subject to an agreement similar to a master netting arrangement. In addition, the standard requires disclosure of collateral received and posted in connection with master netting agreements or similar arrangements. The new requirements are effective for the Company beginning on January 1, 2013. As the provisions of ASU No. 2011-11 only impact the disclosure requirements related to the offsetting of assets and liabilities, the Company does not expect a significant impact on its consolidated financial position, results of operations or cash flows as a result of adoption of these new requirements.

4. Earnings Per Share

Basic earnings per share is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding adjusted to include the effect of potentially dilutive common shares, which includes outstanding stock options and non-vested restricted stock awards, using the treasury stock method. Potentially dilutive common shares for which the exercise price was greater than the average market price of common shares are excluded from the computation of diluted earnings per share, as the effect would be anti-dilutive.

12

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(All Amounts in Thousands Except Share Amounts, Per Share Amounts or Unless Otherwise Noted)

Earnings per share is calculated as follows:	For the Three Months Ended				For the Nine Months Ended
	September 30, 2012		September 30, 2011		September 30, 2012		September 30, 2011
Numerator for both basic and diluted earnings per share:
Net income	$	4,110	$	4,072	$	11,575	$	9,024
Denominator:
Total average basic common shares outstanding	19,531,694		20,404,441		19,705,105		20,355,057
Effect of dilutive stock options and restricted stock awards	931,544		809,924		914,979		1,020,127
Total average diluted common shares outstanding	20,463,238		21,214,365		20,620,084		21,375,184
Earnings per share-basic	$	0.21	$	0.20	$	0.59	$	0.44
Earnings per share-diluted	$	0.20	$	0.19	$	0.56	$	0.42
Weighted average anti-dilutive common shares	567,995		512,298		431,446		283,762

5. Variable Interest Entities

The Company's investments in less than majority-owned companies in which it has the ability to exercise significant influence over operating and financial policies are accounted for using the equity method except when they qualify as Variable Interest Entities ("VIEs") and the Company is the primary beneficiary, in which case the investments are consolidated in accordance with ASC 810, "Consolidation." Investments that do not meet the above criteria are accounted for under the cost method.

In July 2011, the Company sold its 100% interest in Creative Investigations Recovery Group, LLC ("CIRG"). The consideration included a note receivable, included on the Consolidated Balance Sheets, with a first priority lien security interest in the assets of CIRG and other property of the buyers. The Company performed a detailed analysis of the CIRG sale transaction and determined that CIRG is considered a VIE, as defined in ASC 810, because the Company has an interest due to the note financing. The Company further determined that it is not the primary beneficiary because the Company does not have the power to direct the activities of the VIE and has no right to receive the residual returns of CIRG. Therefore, CIRG is not consolidated in the Company's results of operations. The Company's maximum exposure to loss in the VIE is limited to the outstanding balance of the note receivable, which is presented in the table below:

	At
	September 30, 2012		December 31, 2011
The Company's maximum exposure to loss in the VIE	$	1,139	$	1,142

6. Business Acquisitions

The values of certain assets and liabilities acquired in acquisitions are preliminary in nature, and are subject to adjustment as additional information is obtained, including, but not limited to, valuation of separately identifiable intangibles, fixed assets, deferred taxes and loss reserves. The valuations will be finalized within one year of the close of the acquisition. When the valuations are finalized, any changes to the preliminary valuation of assets acquired or liabilities assumed may result in adjustments to separately identifiable intangible assets and goodwill. A change to the acquisition date value of the identifiable net assets during the measurement period (up to one year from the acquisition date) affects the amount of the purchase price allocated to goodwill. Changes to the purchase price allocation are adjusted retrospectively in the consolidated financial statements.

During the three months ended March 31, 2012, the Company received the final valuation studies for identifiable intangible assets to determine the final valuation for the 2011 acquisition of eReinsure. In addition, during the three months ended September 30, 2012, the Company received the final valuation studies for identifiable intangible assets to determine the final valuation for the 2011 acquisition of PBG. Accordingly, the Consolidated Balance Sheet at December 31, 2011 has been retrospectively adjusted to include the effect of the measurement period adjustments as required under ASC 805, Business Combinations, ("ASC 805"). Please see the notes, "Goodwill," and "Other Intangible Assets," for more information on the retrospective measurement period adjustments made in 2012.

13

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(All Amounts in Thousands Except Share Amounts, Per Share Amounts or Unless Otherwise Noted)

The following table presents assets acquired, liabilities assumed and goodwill recorded for the 2011 acquisitions of eReinsure and PBG based on their fair values as of the respective acquisition date and the effects of the measurement period adjustments recorded in 2012, as discussed above:

	eReinsure			PBG
ASSETS:
Cash	$	3,694		$	38
Investments	1,212			—
Other receivables	1,828			—
Property and equipment, net	142			65
Other intangible assets, net	13,908			3,650
Other assets	54			22
Net deferred tax asset	—			127
LIABILITIES:
Accrued expenses and accounts payable	(2,801		)	(304		)
Commissions payable	—			(60		)
Deferred revenue	(835		)	—
Net deferred tax liability	(1,783		)	—
Net assets acquired	15,419			3,538
Purchase consideration (1)	38,931			7,607
Goodwill	$	23,512		$	4,069

(1) - Reflects a purchase price reduction of $0.3 million for the final eReinsure working capital adjustments.

7. Goodwill

During the three months ended March 31, 2012, the Company determined the final valuation for the 2011 acquisition of eReinsure, included in the Brokerage Segment. During the three months ended September 30, 2012, the Company determined the final valuation for the 2011 acquisition of PBG, included in the BPO segment. The following table shows the retrospective adjustments made to the balance of goodwill at December 31, 2011 to reflect the effect of these measurement period adjustments made in accordance with accounting requirements under ASC 805 and the adjustments made to goodwill for the immaterial error corrections under ASC 250 that are discussed in Note 2 to the Consolidated Financial Statements.

Goodwill balances by segment are as follows:	Payment Protection		BPO			Brokerage			Total
Balance as originally reported at December 31, 2011	$	36,632	$	15,632		$	56,533		$	108,797
Prior period adjustments for the B&G acquisition for the year ending December 31, 2009 increasing goodwill (1)	—		—			383			383
Goodwill adjustment under ASC 250 for the Auto Knight acquisition for the year ending December 31, 2011	608		—			—			608
Final valuation adjustments as required under ASC 805 for eReinsure	—		—			(2,626		)	(2,626		)
Final valuation adjustments as required under ASC 805 for PBG	—		(2,662		)	—			(2,662		)
Adjusted balance at December 31, 2011	37,240		12,970			54,290			104,500
Goodwill acquired during 2012	—		—			168			168
Balance at September 30, 2012	$	37,240	$	12,970		$	54,458		$	104,668

⁽¹⁾- Immaterial correction of an error adjustment from the year ending December 31, 2009 is shown as an adjustment to the December 31, 2011 balance since the goodwill balances from December 31, 2009 and December 31, 2010 are not being presented in this Form 10-Q.

8. Other Intangible Assets

Other intangible assets consist of finite- and indefinite-lived intangible assets. The following table shows finite-lived other intangible assets and their respective amortization periods:

14

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(All Amounts in Thousands Except Share Amounts, Per Share Amounts or Unless Otherwise Noted)

				September 30, 2012							December 31, 2011
	Amortization Period (Years)			Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Intangible assets with finite lives:
Customer and agent relationships	5	to	15	$	34,720	$	(11,458	)	$	23,262	$	34,552	$	(8,724	)	$	25,828
Software	7	to	10	8,773		(3,114		)	5,659		8,773		(2,345		)	6,428
Present value of future profits	0.3	to	0.75	548		(548		)	—		548		(548		)	—
Non-compete agreements	1.5	to	6	2,958		(2,691		)	267		2,958		(2,419		)	539
Total finite-lived intangible assets				$	46,999	$	(17,811	)	$	29,188	$	46,831	$	(14,036	)	$	32,795

The following table shows the carrying amount of indefinite-lived intangible assets at :	September 30, 2012		December 31, 2011
Tradenames	$	21,615	$	21,615

During the three months ended March 31, 2012, the Company determined the final valuation for the 2011 acquisition of eReinsure. During the three months ended September 30, 2012, the Company determined the final valuation for the 2011 acquisition of PBG. The intangible assets acquired in 2012 relate to the purchase of a book of business. The following table includes the retrospective adjustments made to the balance of other intangible assets at December 31, 2011 to reflect the effect of these measurement period adjustments made in accordance with the accounting requirements under ASC 805 and the current period activity.

Balance as originally reported at December 31, 2011	$	47,022
Final valuation adjustments as required under ASC 805 for eReinsure	4,508
Final valuation adjustments as required under ASC 805 for PBG	2,880
Adjusted balance at December 31, 2011	54,410
Intangible assets acquired in 2012	168
Less:Amortization expense	3,775
September 30, 2012	$	50,803

Estimated amortization of other intangible assets for the next five years and thereafter ending December 31 is presented below:

2012 (remaining three months)	$	1,128
2013	4,490
2014	4,478
2015	4,471
2016	3,904
Thereafter	10,717
Total	$	29,188

9. Investments

The following table summarizes the Company's available-for-sale fixed maturity and equity securities:

	September 30, 2012
Description of Security	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Obligations of the U.S. Treasury and U.S. Government agencies	$	20,853	$	923	$	(1	)	$	21,775
Municipal securities	15,770		473		—			16,243
Corporate securities	69,835		2,336		(63		)	72,108
Mortgage-backed securities	501		11		—			512
Asset-backed securities	191		4		—			195
Total fixed maturity securities	$	107,150	$	3,747	$	(64	)	$	110,833
Common stock	$	99	$	18	$	(5	)	$	112
Preferred stock	5,783		190		—			5,973
Total equity securities	$	5,882	$	208	$	(5	)	$	6,085

15

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(All Amounts in Thousands Except Share Amounts, Per Share Amounts or Unless Otherwise Noted)

	December 31, 2011
Description of Security	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Obligations of the U.S. Treasury and U.S. Government agencies	$	25,751	$	611	$	(2	)	$	26,360
Municipal securities	17,609		388		(5		)	17,992
Corporate securities	47,304		594		(426		)	47,472
Mortgage-backed securities	1,272		26		—			1,298
Asset-backed securities	375		12		—			387
Total fixed maturity securities	$	92,311	$	1,631	$	(433	)	$	93,509
Common stock	$	144	$	26	$	(17	)	$	153
Preferred stock	1,059		7		—			1,066
Total equity securities	$	1,203	$	33	$	(17	)	$	1,219

Pursuant to certain reinsurance agreements and statutory licensing requirements, the Company has deposited invested assets in custody accounts or insurance department safekeeping accounts. The Company is not permitted to remove invested assets from these accounts without prior approval of the contractual party or regulatory authority. The following table details the Company's restricted investments:

	At
	September 30, 2012		December 31, 2011
Fair value of restricted investments	$	19,080	$	18,319
Fair value of restricted investments for special deposits required by state insurance departments	$	12,375	$	11,618

The amortized cost and fair value of fixed maturity securities by contractual maturity are shown below. Expected maturities will differ from contractual maturities as borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

	At
	September 30, 2012				December 31, 2011
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	5,706	$	5,751	$	3,890	$	3,923
Due after one year through five years	57,739		59,580		51,210		51,839
Due after five years through ten years	26,392		27,423		23,623		23,973
Due after ten years	16,621		17,372		11,941		12,089
Mortgage-backed securities	501		512		1,272		1,298
Asset-backed securities	191		195		375		387
Total fixed maturity securities	$	107,150	$	110,833	$	92,311	$	93,509

The following table provides information on unrealized losses on investment securities that have been in an unrealized loss position for less than twelve months, and twelve months or greater, as of:

16

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(All Amounts in Thousands Except Share Amounts, Per Share Amounts or Unless Otherwise Noted)

	September 30, 2012
	Less than Twelve Months						Twelve Months or Greater						Total
Description of Security	Fair Value		Unrealized Losses			# of Securities	Fair Value		Unrealized Losses			# of Securities	Fair Value		Unrealized Losses			# of Securities
Obligations of the U.S. Treasury and U.S. Government agencies	$	345	$	(1	)	6	$	—	$	—		—	$	345	$	(1	)	6
Municipal securities	—		—			—	—		—			—	—		—			—
Corporate securities	10,189		(29		)	11	167		(34		)	1	10,356		(63		)	12
Mortgage-backed securities	—		—			—	—		—			—	—		—			—
Asset-backed securities	—		—			—	—		—			—	—		—			—
Total fixed maturity securities	$	10,534	$	(30	)	17	$	167	$	(34	)	1	$	10,701	$	(64	)	18
Common stock	$	39	$	(5	)	2	$	—	$	—		—	$	39	$	(5	)	2
Preferred stock	—		—			—	—		—			—	—		—			—
Total equity securities	$	39	$	(5	)	2	$	—	$	—		—	$	39	$	(5	)	2

	December 31, 2011
	Less than Twelve Months						Twelve Months or Greater						Total
Description of Security	Fair Value		Unrealized Losses			# of Securities	Fair Value		Unrealized Losses			# of Securities	Fair Value		Unrealized Losses			# of Securities
Obligations of the U.S. Treasury and U.S. Government agencies	$	1,902	$	(2	)	7	$	—	$	—		—	$	1,902	$	(2	)	7
Municipal securities	486		(1		)	1	478		(4		)	1	964		(5		)	2
Corporate securities	16,861		(426		)	26	—		—			—	16,861		(426		)	26
Mortgage-backed securities	—		—			—	—		—			—	—		—			—
Asset-backed securities	—		—			—	—		—			—	—		—			—
Total fixed maturity securities	$	19,249	$	(429	)	34	$	478	$	(4	)	1	$	19,727	$	(433	)	35
Common stock	$	83	$	(17	)	5	$	—	$	—		—	$	83	$	(17	)	5
Preferred stock	—		—			—	—		—			—	—		—			—
Total equity securities	$	83	$	(17	)	5	$	—	$	—		—	$	83	$	(17	)	5

The Company does not intend to sell the investments that are in an unrealized loss position at September 30, 2012 and it is more likely than not that the Company will be able to hold these securities until full recovery of their amortized cost basis for fixed maturity securities or cost for equity securities. At September 30, 2012, based on management's quarterly review, the Company deemed that 1 individual equity security was other than temporarily impaired and recorded an impairment charge of $16 thousand for the three months ended September 30, 2012. For the three months and nine months ended September 30, 2011, the Company deemed that 8 individual equity securities were other than temporarily impaired and recorded an impairment charge of $0.2 million.

The following table summarizes the gross proceeds from the sale of available-for-sale investment securities:

	For the Three Months Ended				For the Nine Months Ended
	September 30, 2012		September 30, 2011		September 30, 2012		September 30, 2011
Gross proceeds from sales	$	503	$	11,143	$	4,980	$	33,663

The following table summarizes the gross realized gains and gross realized losses for both fixed maturity and equity securities and realized losses for other-than-temporary impairments for available-for-sale investment securities:

	For the Three Months Ended						For the Nine Months Ended
	September 30, 2012			September 30, 2011			September 30, 2012			September 30, 2011
Gross realized gains	$	—		$	1,414		$	22		$	2,663
Gross realized losses	—			(68		)	(12		)	(90		)
Total net gains from sales	$	—		$	1,346		$	10		$	2,573
Impairment write-downs (other-than-temporary impairments)	$	(16	)	$	(150	)	$	(16	)	$	(150	)
Total net realized investment (losses) gains	$	(16	)	$	1,196		$	(6	)	$	2,423

17

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(All Amounts in Thousands Except Share Amounts, Per Share Amounts or Unless Otherwise Noted)

The following schedule details the components of net investment income:

	For the Three Months Ended						For the Nine Months Ended
	September 30, 2012			September 30, 2011			September 30, 2012			September 30, 2011
Fixed income securities	$	628		$	782		$	1,954		$	2,544
Cash on hand and on deposit	47			63			143			180
Common and preferred stock dividends	77			24			191			56
Notes receivable	75			34			201			123
Other income	34			23			104			107
Investment expenses	(117		)	(125		)	(374		)	(374		)
Net investment income	$	744		$	801		$	2,219		$	2,636

10. Reinsurance Receivables

The Company has various reinsurance agreements in place whereby the amount of risk in excess of the Company's retention is reinsured by unrelated domestic and foreign insurance companies. The Company remains liable to policyholders in the event that the assuming companies are unable to meet their obligations. The effects of reinsurance on premiums written and earned and losses and loss adjustment expenses ("LAE") incurred are presented in the tables below:

Premiums	For the Three Months Ended												For the Nine Months Ended
	September 30, 2012						September 30, 2011						September 30, 2012						September 30, 2011
	Written			Earned			Written			Earned			Written			Earned			Written			Earned
Direct and assumed	$	100,409		$	98,287		$	94,432		$	80,982		$	272,317		$	269,132		$	241,979		$	235,420
Ceded	(65,935		)	(64,394		)	(61,361		)	(52,309		)	(169,971		)	(171,362		)	(154,227		)	(150,774		)
Net	$	34,474		$	33,893		$	33,071		$	28,673		$	102,346		$	97,770		$	87,752		$	84,646

Losses and LAE incurred	For the Three Months Ended			For the Nine Months Ended
	September 30, 2012		September 30, 2011	September 30, 2012	September 30, 2011
Direct and assumed	$	23,069	$