Note Payable

As disclosed on August 7, 2012 in a Form 8-K, effective August 2, 2012, Fortegra terminated its existing line of credit with SunTrust Bank, N.A. and entered into a five-year $125.0 million secured credit agreement (the "Credit Agreement") with a syndicate of lenders, among them Wells Fargo Bank, N.A., who also serves as administrative agent ("Wells Fargo" or the "Administrative Agent"). The Credit Agreement provides for a $50.0 million term loan facility (the "Term Loan Facility"), as well as a $75.0 million revolving credit facility (the "Revolving Facility" and collectively with the Term Loan Facility, the "Facilities"). Subject to earlier termination, the Credit Agreement terminates on August 2, 2017. The Credit Agreement includes a provision pursuant to which, from time to time, the Borrowers may request that the lenders in their discretion increase the maximum amount of commitments under the Facilities by an amount not to exceed $50.0 million. In connection with the termination of the SunTrust Bank, N.A. revolving line of credit, the Company recorded a charge of $0.7 million to interest expense in the three months ended September 30, 2012 for previously capitalized transaction costs associated with this line of credit.



The Company's Note Payable consisted of the following at:	September 30, 2012			December 31, 2011
Wells Fargo Bank, N.A.- credit facility, maturing August 2017	$	71,168		$	—

Maximum balance allowed on Wells Fargo Bank, N.A credit facility	$	125,000		$	—

SunTrust Bank, N.A. - revolving credit facility, maturing June 2013	$	—		$	73,000

Maximum balance allowed on SunTrust Bank, N.A revolving credit facility	$	—		$	85,000

Interest rate on the respective note payable at the end of the respective periods:	3.59		%	4.59		%

Aggregate maturities for the Company's note payable at September 30, 2012 are as follows:



2012 (remaining three months)	$	1,250
2013	5,000
2014	5,000
2015	5,000
2016	5,000
Thereafter	49,918
Total	$	71,168

The Company must comply with various covenant requirements set forth by Wells Fargo Bank, N.A in the Credit Agreement. The following summarizes the definitions of the more significant financial covenants in effect at September 30, 2012 and the calculations used to arrive at each ratio:

Total Leverage Ratio - the ratio of (i) Consolidated Total Debt as of such date to (ii) Consolidated Adjusted EBITDA for the Measurement Period ending on or immediately prior to such date.

Fixed Charge Coverage Ratio - the ratio of (a) Consolidated Adjusted EBITDA less the actual amount paid by the Borrowers and their Subsidiaries in cash on account of Capital Expenditures less cash taxes paid by the Borrowers and their Subsidiaries to (b) Consolidated Fixed Charges, in each case for the Measurement Period ending on or immediately prior to such date.

Reinsurance Ratio - the ratio (expressed as a percentage) of (a) the aggregate amounts recoverable by the Borrowers and its Subsidiaries from reinsurers divided by (b) the sum of (i) policy and claim liabilities plus (ii) unearned premiums, in each case of the Borrowers and their Subsidiaries determined in accordance with GAAP.

RBC Ratio - the ratio (expressed as a percentage) of National Association of Insurance Commissioners ("NAIC") Risk Based Capital (as defined in the NAIC standards) for any Regulated Insurance Company on an individual basis, calculated at the end of any Fiscal Year, to the authorized control level" (as defined in the NAIC standards).

The following is a summary of the Company's more significant financial covenants related to the Wells Fargo Bank, N.A. facility calculated at September 30, 2012, except for RBC Ratios, which under the Credit Agreement are to reflect the ratios calculated as of the most recent fiscal year end, in this case December 31, 2011.



		Actual At
Covenant	Covenant Requirement	September 30, 2012
Total leverage ratio	not more than 3.50	2.40
Fixed charge coverage ratio	not less than 2.00	3.86
Reinsurance ratio	not less than 50%	75.0%

RBC Ratio's		Actual at December 31, 2011
RBC Ratio - Bankers Life of Louisiana	not less than 250%	507.0%
RBC Ratio - Southern Financial Life Insurance Company	not less than 250%	2,039.0%
RBC Ratio - Insurance Company of the South	not less than 250%	495.0%
RBC Ratio - Lyndon Southern Insurance Company	not less than 250%	339.0%
RBC Ratio - Life of the South Insurance Company	not less than 250%	352.0%