10-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

(Amendment No. 1)

(Mark One)
x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, 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
Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Name of each exchange on which registered
Common Stock, $0.01 par value per share	New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes o No x

Note - Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Exchange Act from their obligations under those Sections.

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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. 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 (Do not check if a smaller reporting company)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 aggregate market value of the voting common equity held by non-affiliates of the registrant was $53,422,712 at June 29, 2012 (last day of the registrant's most recently completed second quarter) based on the closing sale price of $8.00 per share for the common stock on such date as traded on the New York Stock Exchange.

The number of outstanding shares of the registrant's Common Stock, $0.01 par value, outstanding as of March 14, 2013 was 19,831,697.

Documents Incorporated by Reference

Certain specifically designated portions of Fortegra Financial Corporation's definitive proxy statement for its 2013 Annual meeting of Stockholders (the "Proxy Statement"), which will be filed on or prior to 120 days following the end of Fortegra Financial Corporation's fiscal year ended December 31, 2012, are incorporated by reference into Parts III and IV of this Form 10-K.

EXPLANATORY NOTE

Fortegra Financial Corporation (the "Company") is filing this Amendment No. 1 on Form 10-K/A (this "Amendment No. 1") to amend the Company's Annual Report on Form 10-K for the year ended December 31, 2012 (the "Original Form 10-K"), as originally filed with the Securities and Exchange Commission (the "SEC") on April 1, 2013. This Amendment No. 1 is being filed to amend Item 8 of Part II of the Original Form 10-K to correct the omission of certain information by Johnson Lambert LLP ("Johnson Lambert") in its Report of Independent Registered Public Accounting Firm. Johnson Lambert has revised its report to state that the 2011 and 2010 consolidated financial statements of the Company were restated to correct misstatements and to include an explanatory paragraph stating that the Company changedits method of accounting for the capitalization of deferred acquisition costs in 2012. Except as described above, no other changes have been made to the Original Form 10-K, including no changes to the consolidated financial statements of the Company.

As required by Rule 12b-15 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), set forth in this Amendment No. 1 is the complete text of each of the following items, as amended, of the Original Form 10-K: Item 8 of Part II, amended solely to include the revised report of Johnson Lambert; Item 15 of Part IV, to include as exhibits the certifications of the Company's Chief Executive Officer and Chief Financial Officer required by Rule 13a-14(a) and (b) of the Exchange Act; and an Exhibit 23, Consent of Independent Registered Public Accounting Firm.

This Amendment No. 1 speaks as of the date of filing of the Original Form 10-K and does not reflect any events that may have occurred after that date. The aforementioned changes do not modify or update in any way any other disclosures made in the Original Form 10-K. Accordingly, this Amendment No. 1 should be read in conjunction with the Original Form 10-K and the Company's subsequent filings with the SEC.

FORTEGRA FINANCIAL CORPORATION

ANNUAL REPORT ON FORM 10-K/A (Amendment No. 1)

DECEMBER 31, 2012

TABLE OF CONTENTS

		Page Number
PART II
Item 8.	Financial Statements and Supplementary Data	2
PART IV
Item 15.	Exhibits and Financial Statement Schedules	73
Signatures		80

1

PART II

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders of

Fortegra Financial Corporation

We have audited the accompanying consolidated balance sheets of Fortegra Financial Corporation (“the Company”) as of December 31, 2012 and 2011, and the related consolidated statements of income, comprehensive income, changes in stockholders' equity and cash flows for each of the years in the three-year period ended December 31, 2012. Our audits also included the financial statement schedules listed in Item 15. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Fortegra Financial Corporation as of December 31, 2012 and 2011, and the results of its consolidated operations and its cash flows for each of the years in the three-year period ended December 31, 2012 in conformity with accounting principles generally accepted in the United States. In addition, in our opinion, such financial statement schedules, when considered in relation to the basic financial statements as a whole, present fairly, in all material respects, the information set forth therein.

As discussed in Note 3 to the consolidated financial statements, the 2011 and 2010 financial statements have been restated to correct for misstatements.

As discussed in Notes 3 and 4 to the consolidated financial statements, in response to a new accounting standard, the Company changed its method of accounting for the capitalization of deferred acquisition costs in 2012.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of December 31, 2012, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 29, 2013 expressed an adverse opinion thereon.

/s/ Johnson Lambert LLP

Jacksonville, Florida

March 29, 2013

2

FORTEGRA FINANCIAL CORPORATION

CONSOLIDATED BALANCE SHEETS

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

	At December 31,
	2012			2011
Assets:				As Restated
Investments:
Fixed maturity securities available-for-sale, at fair value (amortized cost of $107,095 at December 31, 2012 and $92,311 at December 31, 2011)	$	110,641		$	93,509
Equity securities available-for-sale, at fair value (cost of $6,082 at December 31, 2012 and $1,203 at December 31, 2011)	6,220			1,219
Short-term investments	1,222			1,070
Total investments	118,083			95,798
Cash and cash equivalents	15,209			31,339
Restricted cash	31,142			14,180
Accrued investment income	1,235			929
Notes receivable, net	11,290			3,603
Accounts and premiums receivable, net	27,026			19,690
Other receivables	13,511			9,465
Reinsurance receivables	203,988			194,740
Deferred acquisition costs	79,165			55,628
Property and equipment, net	17,946			15,314
Goodwill	119,512			104,888
Other intangible assets, net	79,340			54,410
Income taxes receivable	2,897			—
Other assets	7,667			5,369
Total assets	$	728,011		$	605,353
Liabilities:
Unpaid claims	$	33,007		$	32,583
Unearned premiums	235,900			227,929
Policyholder account balances	26,023			28,040
Accrued expenses, accounts payable and other liabilities	58,563			33,982
Income taxes payable	—			1,344
Deferred revenue	70,452			22,420
Note payable	89,438			73,000
Preferred trust securities	35,000			35,000
Deferred income taxes, net	28,658			23,969
Total liabilities	577,041			478,267
Commitments and Contingencies (Note 23)
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; 20,710,370 and 20,561,328 shares issued at December 31, 2012 and 2011, respectively, including shares in treasury	207			206
Treasury stock, at cost;1,024,212 shares and 516,132 shares at December 31, 2012 and 2011, respectively	(6,651		)	(2,728		)
Additional paid-in capital	97,641			96,199
Accumulated other comprehensive loss, net of tax	(631		)	(1,754		)
Retained earnings	49,817			34,652
Stockholders' equity before non-controlling interests	140,383			126,575
Non-controlling interests	10,587			511
Total stockholders' equity	150,970			127,086
Total liabilities and stockholders' equity	$	728,011		$	605,353

See accompanying notes to these consolidated financial statements.

3

FORTEGRA FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

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

	For the Years Ended December 31,
	2012		2011			2010
Revenues:			As Restated			As Restated
Service and administrative fees	$	90,550	$	94,464		$	56,254
Brokerage commissions and fees	35,306		34,396			24,620
Ceding commission	34,825		29,495			28,767
Net investment income	3,068		3,368			4,073
Net realized investment gains	3		4,193			650
Net earned premium	127,625		115,503			111,805
Other income	269		170			230
Total revenues	291,646		281,589			226,399
Expenses:
Net losses and loss adjustment expenses	40,219		37,949			36,035
Member benefit claims	4,642		4,409			466
Commissions	128,741		126,918			92,646
Personnel costs	48,648		44,547			36,361
Other operating expenses	30,354		31,140			24,426
Depreciation and amortization	3,933		3,077			1,396
Amortization of intangibles	4,953		4,952			3,232
Interest expense	6,624		7,641			8,464
Loss on sale of subsidiary	—		477			—
Total expenses	268,114		261,110			203,026
Income before income taxes and non-controlling interests	23,532		20,479			23,373
Income taxes	8,295		7,140			8,159
Income before non-controlling interests	15,237		13,339			15,214
Less: net income (loss) attributable to non-controlling interests	72		(170		)	20
Net income	$	15,165	$	13,509		$	15,194
Earnings per share:
Basic	$	0.77	$	0.66		$	0.95
Diluted	$	0.74	$	0.64		$	0.88
Weighted average common shares outstanding:
Basic	19,655,492		20,352,027			15,929,181
Diluted	20,600,362		21,265,801			17,220,029

See accompanying notes to these consolidated financial statements.

4

FORTEGRA FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(All Amounts in Thousands)

	For the Years Ended December 31,
	2012			2011			2010
				As Restated			As Restated
Net income	$	15,165		$	13,509		$	15,194
Other comprehensive income (loss), net of tax:
Unrealized gains (losses) on available-for-sale securities:
Unrealized holding gains arising during the period	2,466			1,568			1,810
Related tax (expense) benefit	(862		)	(550		)	(634		)
Less: reclassification of losses (gains) included in net income	3			(4,193		)	(650		)
Related tax (expense) benefit	(1		)	1,468			228
Unrealized gains (losses) on available-for-sale securities, net of tax	1,606			(1,707		)	754
Interest rate swap:
Unrealized loss on interest rate swap	(611		)	(3,601		)	—
Related tax benefit	214			1,260			—
Add: reclassification of losses included in net income	(126		)	—			—
Related tax expense	44			—			—
Unrealized loss on interest rate swap, net of tax	(479		)	(2,341		)	—
Other comprehensive income (loss) before non-controlling interests, net of tax	1,127			(4,048		)	754
Less: comprehensive income (loss) attributable to non-controlling interests	4			(1		)	68
Other comprehensive income (loss)	1,123			(4,047		)	686
Comprehensive income	$	16,288		$	9,462		$	15,880

See accompanying notes to these consolidated financial statements.

5

FORTEGRA FINANCIAL CORPORATION

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

(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 Interests			Total Stockholders' Equity
													Restated			Restated			Restated			Restated
Balance, January 1, 2010, as previously reported	15,786,913	$	1,002		(44,578	)	$	(176	)	$	53,675		$	1,607		$	23,210		$	1,475		$	80,793
Cumulative effect of adjustment resulting from new accounting guidance	—	—			—		—			—			—			(3,156		)	(21		)	(3,177		)
Balance, January 1, 2010, restated	15,786,913	$	1,002		(44,578	)	$	(176	)	$	53,675		$	1,607		$	20,054		$	1,454		$	77,616
Net income, as restated	—	—			—		—			—			—			15,194			20			15,214
Other comprehensive income	—	—			—		—			—			686			—			68			754
Change in par value	—	(844		)	—		—			844			—			—			—			—
Stock-based compensation	160,000	2			—		—			174			—			—			—			176
Redemption of minority interest	—	—			—		—			—			—			—			(860		)	(860		)
Options exercised, net of forfeitures	44,185	—			—		—			203			—			—			—			203
Conversion of Class A common stock	—	—			—		—			—			—			(14,105		)	—			(14,105		)
Issuance of common stock	4,265,637	43			—		—			40,660			—			—			—			40,703
Balance, December 31, 2010, restated	20,256,735	$	203		(44,578	)	$	(176	)	$	95,556		$	2,293		$	21,143		$	682		$	119,701
Net income, as restated	—	—			—		—			—			—			13,509			(170		)	13,339
Other comprehensive loss	—	—			—		—			—			(4,047		)	—			(1		)	(4,048		)
Stock-based compensation	—	—			—		—			763			—			—			—			763
Shares issued for the Employee Stock Purchase Plan	10,167	—			—		—			58			—			—			—			58
Treasury stock purchased	—	—			(471,554	)	(2,552		)	—			—			—			—			(2,552		)
Options exercised, net of forfeitures	294,426	3			—		—			648			—			—			—			651
Initial public offering costs	—	—			—		—			(826		)	—			—			—			(826		)
Balance, December 31, 2011, restated	20,561,328	$	206		(516,132	)	$	(2,728	)	$	96,199		$	(1,754	)	$	34,652		$	511		$	127,086
Net income	—	—			—		—			—			—			15,165			72			15,237
Other comprehensive income	—	—			—		—			—			1,123			—			4			1,127
Stock-based compensation	87,011	1			—		—			1,043			—			—			—			1,044
Direct stock awards to employees	6,020	—			—		—			49			—			—						49
Shares issued for the Employee Stock Purchase Plan	53,511	—			—		—			330												330
Treasury stock purchased	—	—			(508,080	)	(3,923		)	—			—			—			—			(3,923		)
Options exercised, net of forfeitures	2,500	—			—		—			20			—			—			—			20
Non-controlling interest attributable to ProtectCELL acquisition	—	—			—		—			—			—			—			10,000			10,000
Balance, December 31, 2012	20,710,370	$	207		(1,024,212	)	$	(6,651	)	$	97,641		$	(631	)	$	49,817		$	10,587		$	150,970

See accompanying notes to these consolidated financial statements.

6

FORTEGRA FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(All Amounts in Thousands)

	For the Years Ended December 31,
	2012			2011			2010
Operating Activities				As Restated			As Restated
Net income	$	15,165		$	13,509		$	15,194
Adjustments to reconcile net income to net cash flows provided by operating activities:
Change in deferred acquisition costs	(3,692		)	3,908			(4,201		)
Depreciation and amortization	8,886			8,029			4,628
Deferred income tax expense	4,252			1,721			4,337
Net realized investment (gains) losses	(3		)	(4,193		)	(650		)
Loss on sale of subsidiary	—			477			—
Stock-based compensation expense	1,044			763			176
Direct stock awards to employees	49			—			—
Amortization of premiums and accretion of discounts on investments	1,283			609			348
Non-controlling interests	72			(170		)	(772		)
Change in allowance for doubtful accounts	(90		)	(31		)	(30		)
Changes in operating assets and liabilities, net of the effects of acquisitions and dispositions:
Accrued investment income	(306		)	(16		)	30
Accounts and premiums receivable, net	(4,933		)	(898		)	3,808
Other receivables	(4,139		)	(1,769		)	1,884
Reinsurance receivables	(9,248		)	(5,181		)	4,416
Income taxes receivable	(3,628		)	818			(818		)
Other assets	865			(389		)	(1,600		)
Unpaid claims	248			(315		)	(3,459		)
Unearned premiums	7,971			14,373			(5,222		)
Policyholder account balances	(2,017		)	(45		)	—
Accrued expenses, accounts payable and other liabilities	20,190			(14,909		)	(7,379		)
Income taxes payable	(1,344		)	1,344			(769		)
Deferred revenue	1,363			(6,469		)	3,181
Net cash flows provided by operating activities	31,988			11,166			13,102
Investing activities
Proceeds from maturities, calls and prepayments of available-for-sale investments	11,138			9,691			12,114
Proceeds from sales of available-for-sale investments	8,364			62,300			8,769
Net change in short-term investments	100			100			50
Purchases of available-for-sale investments	(40,445		)	(62,147		)	(24,047		)
Purchases of property and equipment	(5,830		)	(6,280		)	(9,191		)
Net paid for acquisitions of subsidiaries, net of cash received	(21,820		)	(49,873		)	(20,548		)
Sale of subsidiary, net of cash paid	—			(153		)	—
Net (issuance) proceeds from notes receivable	(1,346		)	(975		)	684
Change in restricted cash, net of restricted cash received from acquisitions	(9,452		)	1,542			2,368
Net cash flows used in investing activities	(59,291		)	(45,795		)	(29,801		)
Financing activities
Payments on notes payable	(130,450		)	(74,263		)	(20,000		)
Proceeds from notes payable	146,888			110,550			25,226
Capitalized closing costs for notes payable	(1,692		)	—			(1,379		)
Net proceeds from the issuance of common stock	—			—			40,703
Payments for initial public offering costs	—			(826		)	—
Payments on redeemable preferred stock	—			(11,040		)	(500		)
Stockholder funds disbursed at purchase	—			—			(14,105		)
Net proceeds from exercise of stock options	20			607			117
Excess tax benefits from stock-based compensation	—			45			86
Purchase of treasury stock	(3,923		)	(2,552		)	—
Net proceeds received from stock issued in the Employee Stock Purchase Plan	330			58			—
Net cash flows provided by financing activities	11,173			22,579			30,148
Net (decrease) increase in cash and cash equivalents	(16,130		)	(12,050		)	13,449
Cash and cash equivalents, beginning of period	31,339			43,389			29,940
Cash and cash equivalents, end of period	$	15,209		$	31,339		$	43,389
Supplemental disclosures of cash payments for:
Interest	$	5,292		$	6,184		$	7,246
Income taxes	8,684			3,451			5,316
Non-cash investing activities
Non-cash consideration received from the sale of subsidiary	$	—		$	1,143		$	—

See accompanying notes to these consolidated financial statements.

7

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(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 Company's majority-owned and controlled subsidiaries, are as follows:

• 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"), 85% owned

• 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")

• Digital Leash,LLC, d/b/a ProtectCELL ("ProtectCELL"), 62.4% owned

• 4Warranty Corporation ("4Warranty")

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

These Consolidated Financial Statements reflect the consolidated financial statements of Fortegra Financial Corporation and its subsidiaries. The accompanying 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").

2. Summary of Significant Accounting Policies

The following is a summary of significant accounting policies followed in the preparation of the Consolidated Financial Statements:

Principles of Consolidation

The 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 and 37.6% of the ownership interests of ProtectCELL have been reflected as non-controlling interests on the Consolidated Balance Sheets. Prior to 2011, third parties held a 52% ownership of the preferred stock of CRC Reassurance Company, Ltd. which were redeemed during the year ended December 31, 2010.

Income (loss) attributable to these non-controlling interests has been reflected on the Consolidated Statements of Income as income (loss) attributable to non-controlling interests and on the Consolidated Statements of Comprehensive Income as comprehensive income (loss) attributable to non-controlling interests.

8

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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, net of the related tax effects.

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 and Revision of Previously Issued Consolidated Financial Statements

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

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

Prior to 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 period:

	For the 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

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."

9

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Fair Value

Fair value as defined in the ASC as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.ASC 820-10 - Fair Value Measurements established a three-level hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure the assets or liabilities fall within different levels of the hierarchy, the classification is based on the lowest level input that is significant to the fair value measurement of the asset or liability. Classification of assets and liabilities within the hierarchy considers the markets in which the assets and liabilities are traded and the reliability and transparency of the assumptions used to determine fair value. The hierarchy requires the use of observable market data when available. The levels of the hierarchy and those investments included in each are as follows:

Level 1 - Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities traded in active

markets.

Level 2 - Inputs to the valuation methodology include quoted prices for similar assets or liabilities in active markets, quoted

prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable

for the asset or liability and market-corroborated inputs.

Level 3 - Inputs to the valuation methodology are unobservable for the asset or liability and are significant to the fair value

measurement. These unobservable inputs are derived from the Company's internal calculations, estimates and assumptions and

require significant management judgment or estimation.

The Company's policy is to recognize transfers between levels as of the actual date of the event or change in circumstances that caused the transfer.

The following methods and assumptions were used to estimate the fair value of each class of financial instrument:

Cash and cash equivalents: The estimated fair value of cash and cash equivalents approximates their carrying value.

Fixed maturity securities: Fair values were obtained from market value quotations provided by an independent pricing service.

Equity securities: The fair values of publicly traded common and preferred stocks were obtained from market value quotations provided by an independent pricing service. The fair values of non-publicly traded common and preferred stocks were based on prices obtained from an independent pricing service.

Notes receivable: The carrying amounts approximate fair value because the interest rates charged approximate current market rates for similar credit risks. These values are net of allowance for doubtful accounts.

Accounts and premiums receivable, net, and other receivables: The carrying amounts approximate fair value since no interest rate is charged on these short duration assets.

Short-term investments:The carrying amounts approximate fair value because of the short maturities of these instruments.

Notes payable and preferred trust securities: The carrying amounts approximate fair value because the applicable interest rates approximate current rates offered to the Company for similar instruments.

Interest rate swap: The fair value of the interest rate swap is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of the interest rate swap. This analysis reflects the contractual terms of the interest rate swap, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities.

The estimated fair values presented for the Company's investment portfolio are based on prices provided by an independent pricing service and a third party investment manager. The prices provided by these services are based on quoted market prices, when available, non-binding broker quotes, or matrix pricing. The independent pricing service and the third party investment manager provide a single price or quote per security. The Company obtains an understanding of the methods, models and inputs used by the independent pricing service and the third party investment manager, and has controls in place to validate that the amounts provided represent fair values.

Revenue Recognition

The Company's revenues are primarily derived from service and administrative fees, wholesale brokerage commissions and related fees, ceding commissions, net investment income and net earned premiums.

10

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Service and Administrative Fees

The Company earns service and administrative fees from a variety of activities, including the administration of credit insurance, the administration of debt cancellation programs, the administration of motor club programs, the administration of warranty programs and the administration of collateral tracking and asset recovery programs. The Payment Protection administrative service revenue is recognized consistent with the earnings recognition pattern of the underlying insurance policies, debt cancellation contracts and motor club memberships being administered, using Rule of 78's, modified Rule of 78's, pro rata, or other methods as appropriate for the contract. Management selects the appropriate method based on available information, and periodically reviews the selections as additional information becomes available. The BPO service fee revenue is recognized as the services are performed. These services include fulfillment, BPO software development, and claims handling for the Company's customers. Collateral tracking fee income is recognized when the service is performed and billed. Asset recovery service revenue is recognized upon the location of a recovered unit and or the location and delivery of a unit. Management reviews the financial results under each significant BPO contract on a monthly basis. Any losses that may occur due to a specific contract would be recognized in the period in which the loss occurs. During the years ended December 31, 2012, 2011 and 2010, the Company has not incurred a loss with respect to a specific significant BPO contract.

Brokerage Commissions and Fees

The Company earns brokerage commission and fee income by providing wholesale brokerage services to retail insurance brokers and agents and insurance companies and is primarily recognized when the underlying insurance policies are issued. A portion of the brokerage commission income is derived from profit commission agreements with insurance carriers. These commissions are received from carriers based upon the underlying underwriting profitability of the business that the Company places with those carriers. Profit commission income is generally recognized as revenue on the receipt of cash based on the terms of the respective carrier contracts. In certain instances, profit commission income may be recognized in advance of cash receipt where the profit commission income due to be received has been calculated or has been confirmed by the insurance carrier. The Company also derives fees from master license agreements to use the eReinsure system together with fees for the transactions completed through its platform.

Ceding Commissions

Ceding commissions earned under coinsurance agreements are based on contractual formulas that take into account, in part, underwriting performance and investment returns experienced by the assuming companies. As experience changes, adjustments to the ceding commissions are reflected in the period incurred and are based on the claim experience of the related policy.The adjustment is calculated by adding the earned premium and investment income from the assets held in trust for the Company's benefit less earned commissions, incurred claims and the reinsurer's fee for the coverage.

Net Investment Income

The Company earns net investment income from interest and dividends received from the investment portfolio, less portfolio management expenses and interest earned on cash accounts and notes receivable. Investment income also includes any amortization of premiums and accretion of discounts on securities acquired at other than par value.

Net Earned Premium

Net earned premium is from direct and assumed earned premium consisting of revenue generated from the direct sale of Payment Protection insurance policies by the Company's distributors and premiums written for Payment Protection insurance policies by another carrier and assumed by the Company. Whether direct or assumed, the premium is earned over the life of the respective policy using methods appropriate to the pattern of losses for the type of business. Methods used include the Rule of 78's, pro rata, and actuarial methods. Management selects the appropriate method based on available information, and periodically reviews the selections as additional information becomes available. Direct and assumed premiums are offset by premiums ceded to the Company's reinsurers, including producer owned reinsurance companies ("PORCs"), earned in the same manner. The amount ceded is proportional to the amount of risk assumed by the reinsurer.

Net Losses and Loss Adjustment Expenses

Net losses and loss adjustment expenses include actual claims paid and the change in unpaid claim reserves. The Company's profitability depends in part on accurately predicting net loss and loss adjustment expenses. Incurred claims are impacted by loss frequency, which is the measure of the number of claims per unit of insured exposure, and loss severity, which is based on the average size of claims. Factors affecting loss frequency and loss severity include changes in claims reporting patterns, claims settlement patterns, judicial decisions, legislation, economic conditions, morbidity patterns and the attitudes of claimants towards settlements.

Actual claims paid are claims payments made to the policyholder or beneficiary during the accounting period. The change in unpaid claim reserve is an increase or reduction to the unpaid claim reserve in the accounting period to maintain the unpaid claim reserve at the levels evaluated by our actuaries.

Unpaid claims are reserve estimates that are established in accordance with U.S. GAAP using generally accepted actuarial methods. Credit life and AD&D unpaid claims reserves include claims in the course of settlement and incurred but not reported ("IBNR").

11

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Credit disability unpaid claims reserves also include continuing claim reserves for open disability claims. For all other product lines, unpaid claims reserves are bulk reserves and are entirely IBNR. The Company uses a number of algorithms in establishing its unpaid claims reserves. These algorithms are used to calculate unpaid claims as a function of paid losses, earned premium, target loss ratios, in-force amounts, unearned premium reserves, industry recognized morbidity tables or a combination of these factors.

In arriving at the unpaid claims reserves, the Company conducts an actuarial analysis on a basis gross of reinsurance. The same estimates used as a basis in calculating the gross unpaid claims reserves are then used as the basis for calculating the net unpaid claims reserves, which take into account the impact of reinsurance. Anticipated future loss development patterns form a key assumption underlying these analyses. Our claims are generally reported and settled quickly, resulting in a consistent historical loss development pattern. From the anticipated loss development patterns, a variety of actuarial loss projection techniques are employed, such as the chain ladder method, the Bornhuetter-Ferguson method and expected loss ratio method.

The unpaid claims reserves do not represent an exact calculation of exposure, but instead represent the Company's best estimates, generally involving actuarial projections at a given time. The process used in determining the unpaid claims reserves cannot be exact since actual claim costs are dependent upon a number of complex factors such as changes in doctrines of legal liabilities and damage awards. These factors are not directly quantifiable, particularly on a prospective basis. The Company periodically reviews and updates its methods of making such unpaid claims reserve estimates and establishing the related liabilities based on our actual experience. The Company has not made any changes to its methodologies for determining unpaid claims reserves in the periods presented.

Member Benefit Claims

Member Benefit Claims represent claims paid on behalf of contract holders directly to third parties providers for roadside assistance and for the repair or replacement of covered products.  Claims can also be paid directly to contract holders as a reimbursement payment provided supporting documentation of loss is submitted to the Company.  Claims are recognized as expense when incurred.

Investments

Both fixed maturity securities and equity securities are classified as available-for-sale and carried at fair value with unrealized gains and losses reflected in other comprehensive income, net of tax. The cost of investments sold and any resulting gain or loss is based on the specific identification method and is recognized as of the trade date.

The Company conducts a quarterly review of all fixed maturity and equity securities with fair values less than their cost basis or amortized cost to determine if the decline in the fair value is other-than-temporary. In estimating other-than-temporary impairment ("OTTI") losses, the Company considers the following factors in assessing OTTI for fixed maturity and equity securities:

• the length of time and the extent to which fair value has been less than cost;

• if an investment's fair value declines below cost, the Company determines if there is adequate evidence to overcome the presumption that the decline is other-than-temporary. Supporting evidence could include a recovery in the investment's fair value subsequent to the date of the statement of financial position, a return of the investee to profitability and the investee's improved financial performance and future prospects (such as earnings trends or recent dividend payments), or the improvement of financial condition and prospects for the investee's geographic region and industry;

• issuer-specific considerations, including an event of missed or late payment or default, adverse changes in key financial ratios, an increase in nonperforming loans, a decline in earnings substantially below that of the investee's peers, downgrading of the investee's debt rating or suspension of trading in the security;

• the occurrence of a significant economic event that may affect the industry in which an issuer participates, including a change that might adversely impact the investee's ability to achieve profitability in its operations;

• the Company's intent and ability to hold the investment for a sufficient period to allow for any anticipated recovery in fair value; and

• with regards to commercial mortgage-backed securities ("CMBS"), the Company also evaluates key statistics such as breakeven constant default rates and credit enhancement levels. The breakeven constant default rate indicates the percentage of the pool's outstanding loans that must default each and every year with 40 percent loss severity (i.e., a recovery rate of 60 percent) for a CMBS class/tranche to experience its first dollar of principal loss. Credit enhancements indicate how much protection, or "cushion," there is to absorb losses in a particular deal before an actual loss would impact a specific security.

When, in the opinion of management, a decline in the estimated fair value of an investment is considered to be other-than-temporary or management intends to sell or is required to sell the investment prior to the recovery of cost, the investment is written down to its estimated fair value with the impairment loss included in net realized gains (losses) in the Consolidated Statements of Income. OTTI losses on equity securities and losses related to the credit component of the impairment on fixed maturity securities are recorded in the Consolidated Statements of Income as realized losses on investments and result in a permanent reduction of the cost basis of the underlying investment. Losses relating to the non-credit component of OTTI losses on fixed maturity securities are recorded in accumulated other comprehensive income (loss) ("AOCI") in the Consolidated Balance Sheets. The determination of

12

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

OTTI is a subjective process, and different judgments and assumptions could affect the fair value determination and the timing of loss realization.

Short-term Investments

Short-term investments consist of certificates of deposits issued by federally insured depository institutions and normally have maturities of less than one year. At various times throughout the year, the Company may have certificates of deposits with financial institutions that exceed the Federal Deposit Insurance Corporation ("FDIC") insurance limit amount of $250,000.The Company had $0 and $0.1 million in certificates of deposit at December 31, 2012 and 2011, respectively, that exceeded the FDIC insurance limit of $250,000. Management reviews the financial viability of these financial institutions on a periodic basis and does not anticipate nonperformance by the financial institutions.

Cash and Cash Equivalents

Cash and cash equivalents consist primarily of highly liquid investments, with original maturities of three months or less when purchased. At various times throughout the year, the Company may have cash deposited with financial institutions that exceed the federally insured deposit amount. Management reviews the financial viability of these financial institutions on a periodic basis and does not anticipate nonperformance by the financial institutions. The Company had approximately $8.2 million and $9.0 million of cash in interest bearing money market accounts at December 31, 2012 and 2011, respectively, that exceeded the FDIC insurance limit of $250,000.

Restricted Cash

Restricted cash primarily represents unremitted premiums received from agents, unremitted claims received from insurers, fiduciary cash for reinsurers and pledged assets for the protection of policy holders in various state jurisdictions. Restricted cash is generally required to be kept in certain bank accounts subject to guidelines which emphasize capital preservation and liquidity; pursuant to the laws of certain states in which the Company's subsidiaries operate and applicable contractual obligations, such funds are not available to service the Company's debt or for other general corporate purposes. The Company is entitled to retain investment income earned on these fiduciary funds. None of the restricted cash was held in interest bearing money market accounts, subject to the FDIC insurance limit of $250,000, at December 31, 2012 and 2011, respectively.

Accounts and Premiums Receivable, Net

Accounts and premiums receivable are presented net of the allowance for doubtful accounts and consist primarily of advance commissions and agents' balances in course of collection and billed but not collected policy premium. For policy premiums that have been billed but not collected, the Company records a receivable on its balance sheet for the full amount of the premium billed, with a corresponding liability, net of its commission, to insurance carriers. The Company earns interest on the premium cash during the period of time between receipt of the funds and payment of these funds to insurance carriers. The Company maintains an allowance for doubtful accounts based on an estimate of uncollectible accounts. The allowance for doubtful accounts totaled $0.5 million and $0.2 million at December 31, 2012 and 2011, respectively,

Other Receivables

Other receivables primarily represent amounts due to the Company from its business partners for retrospective commissions and for motor club fees.

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. Reinsurance receivables include amounts related to paid benefits, unpaid benefits and prepaid reinsurance premiums. Reinsurance receivables are based upon estimates and are reported on the Consolidated Balance Sheets separately as assets, as reinsurance does not relieve the Company of its legal liability to policyholders. The Company is required to pay losses even if a reinsurer fails to meet its obligations under the applicable reinsurance agreement. Management continually monitors the financial condition and agency ratings of the Company's reinsurers and believes that the reinsurance receivables accrued are collectible. Balances recoverable from reinsurers and amounts ceded to reinsurers relating to the unexpired portion of reinsured policies are presented as assets. Experience refunds from reinsurers are recognized based on the underwriting experience of the underlying contracts.

Deferred Acquisition Costs

Deferred Acquisition Costs - Insurance Related

The Company retrospectively adopted the new accounting standard ASU 2010-26, Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts, on January 1, 2012. Please see the Note "Recent Accounting Standards," for more information on the adoption and impact to the Consolidated Balance Sheets, Consolidated Statements of Income and Consolidated Statement of Stockholders' Equity, for the retrospective adoption of this new accounting standard.

13

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The Company defers certain costs of acquiring new business and retaining existing business in accordance with the guidance in ASU 2010-26. These costs are limited to direct costs that resulted from successful contract transactions and would not have been incurred by the Company's insurance entities had the transactions not occurred. These capitalized costs are amortized as the related premium is earned. The following table shows the amortization of deferred acquisition costs for the Company's insurance subsidiaries:

	Years Ended December 31,
	2012		2011		2010
Total amortization of deferred acquisition costs - insurance related	$	61,042	$	55,958	$	57,300

The Company evaluates whether deferred acquisition costs-insurance related are recoverable at year-end, and considers investment income in the recoverability analysis. As a result of the Company's evaluations, no write-offs for unrecoverable deferred acquisition costs were recognized during the years ending December 31, 2012, 2011 and 2010.

Deferred Acquisition Costs - Non-insurance Related

The Company defers certain costs of acquiring new business and retaining existing business in its Payment Protection Segment related to non-insurance subsidiary transactions. These costs are limited to direct costs, typically commissions and contract transaction fees, that resulted from successful contract transactions and would not have been incurred by the Company had the transactions not occurred. These capitalized costs are amortized as the related service and administrative fees are earned. The following table shows the amortization of deferred acquisition costs for the Company's non-insurance subsidiaries:

	Years Ended December 31,
	2012		2011		2010
Total amortization of deferred acquisition costs - non-insurance related	$	52,539	$	57,358	$	26,504

The Company evaluates whether deferred acquisition costs - non-insurance related are recoverable at year-end. As a result of the Company's evaluations, no write-offs for unrecoverable deferred acquisition costs were recognized during the years ending December 31, 2012, 2011 and 2010.

Inventory

Inventory, which is included in other assets as a result of the 2012 acquisition of ProtectCELL, consists of cell phone handsets and totaled $1.4 million at December 31, 2012. All inventoried handsets are recorded at actual cost, using the specific identification method, with the exception of repaired devices received from a single supplier relationship, which are recorded using an average cost method. Damaged or obsolete inventory is adjusted out of inventory on a monthly basis and recorded as an expense for the period. Handsets that are either obsolete or beyond economical repair are sent to be recycled. Handsets that are refurbished are recorded into inventory at their repair costs.

Property and Equipment

Property and equipment is carried at cost, net of accumulated depreciation and amortization of capitalized software. Gains and losses on sales and disposals of property and equipment are based on the net book value of the related asset at the disposal date using the specific identification method with the corresponding gain or loss recorded to operations when incurred. Maintenance and repairs, which do not materially extend asset useful life and minor replacements, are charged to earnings when incurred. Depreciation expense is computed using the straight-line method over the estimated useful lives of the respective assets with three years for computers and five years for furniture, fixtures and equipment. Leasehold improvements are depreciated over the remaining life of the lease.

The Company leases certain equipment under a single capital lease. The assets and liabilities under the capital lease are recorded at the lower of the present value of the minimum lease payments or the fair value of the asset. The assets under the capital lease are depreciated over the remaining life of the lease or their estimated productive lives.

The Company also leases certain office space and equipment under operating leases. The Company evaluates the impact of rent escalation clauses, renewal options, lease incentives, including rent abatements included in its operating leases. Rent escalation clauses, renewal options and lease incentives are considered in determining total rent expense to be recognized during the term of the lease, which begins on the date the Company takes control of the leased space. Rent expense related to lease agreements which contain escalation clauses are recorded on a straight-line basis. Renewal options are considered by evaluating the overall term of the lease. In the event that the Company terminates a lease prior to the expiration, the agreed upon lease termination penalty is charged to expense with a corresponding liability recorded on the Consolidated Balance Sheet. The liability is adjusted for changes, if any, resulting from revisions to the termination amount after the cease-use date.

14

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Internally Developed Software

The Company capitalizes internally developed software costs on a project-by-project basis in accordance with ASC 350-40, Intangibles - Goodwill and Other: Internal-Use Software. All costs to establish the technological feasibility of computer software development are expensed to operations when incurred. Internally developed software development costs are carried at the lower of unamortized cost or net realizable value and are amortized based on the current and estimated useful life of the software. Amortization is computed using the straight-line method over the estimated useful life of 5 years and begins when the software is ready for its intended use.

Business Combinations and Purchase Price Adjustments

Business Combinations

The Company accounts for business combinations in accordance with ASC 805, Business Combinations, ("ASC 805"). These transactions are accounted for using the purchase method with the related net assets and results of operations being included in the Company’s Consolidated Financial Statements as of the respective acquisition date(s).

The assets acquired may consist of a book of business, management contracts, customer relationships, non-compete agreements, trade name, and the excess of purchase price over the fair value of identifiable net assets acquired, or goodwill (see Summary of Significant Accounting Policies, "Goodwill" for more information ). The determination of estimated useful lives and the allocation of the purchase price to the intangible assets requires significant judgment and affects the amount of future amortization and possible impairment charges.

In certain instances, the Company may acquire less than 100% ownership of an entity, resulting in the recording of a non-controlling interest. The non-controlling interest is initially established at a preliminary estimate of fair value and may be adjusted during the measurement period based upon the results of a valuation study applicable to the business combination. See "Purchase Price Adjustments" below for more information on measurement period adjustments.

Purchase Price Adjustments

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 deferred revenue. 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.

Goodwill

Goodwill represents the excess cost of an acquisition over the fair value of the net assets acquired in a business combination and is carried as an asset on the Consolidated Balance Sheets. The Company's goodwill is not amortized but is reviewed annually in the fourth quarter for impairment or more frequently if certain indicators arise. The Company's impairment testing is performed at the segment level. In 2011, the Company early adopted Accounting Standards Update ("ASU") 2011-08, Intangibles – Goodwill and Other (Topic 350): Testing Goodwill for Impairment. ASU 2011-08 allows for the goodwill impairment analysis to start with an assessment of qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the qualitative factors, management determines that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then the Company performs the two-part quantitative impairment test under Topic 350. If the carrying amount of the goodwill of the reporting unit exceeds the implied fair value, an impairment charge is recorded equal to the excess.

The goodwill impairment review is highly judgmental and involves the use of significant estimates and assumptions. The estimates and assumptions have a significant impact on the amount of any impairment charge recorded. Discounted cash flow methods are dependent upon assumption of future sales trends, market conditions and cash flows of each reporting unit over several years. Actual cash flows in the future may differ significantly from those previously forecasted. Other significant assumptions include growth rates and the discount rate applicable to future cash flows.

The Company completed its annual assessment of goodwill for the years December 31, 2012, and 2011 in December of each respective year and concluded that the value of its goodwill was not impaired as of December 31, 2012 and 2011, respectively.

Other Intangible Assets

The Company has acquired significant other intangible assets through business acquisitions. The Company's other intangible assets consist of finite-lived intangibles, including customer related and contract based assets representing primarily client lists and non−compete arrangements and acquired software while the Company's indefinite-lived intangible assets consist of trademarks. Finite-

15

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

lived Intangible assets are amortized over periods ranging from 1 to 15 years. Trademarks are not amortized since these assets have been determined to have indefinite useful lives. The costs to periodically renew other intangible assets are expensed as incurred. Intangible assets are tested for impairment at least annually, or whenever events or circumstances indicate that their carrying amount may not be recoverable using an analysis of expected future cash flows.

Unpaid Claims

Unpaid claims include estimates for losses reported prior to the close of the accounting period and other estimates, including amounts for incurred but not reported claims. These liabilities are continuously reviewed and updated by management. Management believes that such liabilities are adequate to cover the estimated cost of the related claims. When management determines that changes in estimates are required, such changes are included in current operations.

The liability for unpaid claims includes estimates of the ultimate cost of known claims plus supplemental reserves calculated based upon loss projections utilizing certain actuarial assumptions and historical and industry data. In establishing its liability for unpaid claims, the Company utilizes the findings of actuaries.

Considerable uncertainty and variability are inherent in such estimates, and accordingly, the subsequent development of these reserves may not conform to the assumptions inherent in the determination. Management believes that the amounts recorded as the liability for policy and claim liabilities represent its best estimate of such amounts. However, actual loss experience may not conform to the assumptions used in determining the estimated amounts for such liability at the balance sheet date. Accordingly, such ultimate amounts could be significantly in excess of or less than the amounts indicated in the consolidated financial statements. As adjustments to these estimates become necessary, such adjustments are reflected in the Consolidated Statements of Income.

Unearned Premiums

Premiums written are earned over the life of the respective policy using the Rule of 78's, pro rata, or other actuarial method as appropriate for the type of business. Unearned premiums represent the portion of premiums that will be earned in the future. A premium deficiency reserve is recorded if anticipated losses, loss adjustment expenses, deferred acquisition costs and policy maintenance costs exceed the recorded unearned premium reserve and anticipated investment income. As of December 31, 2012, and 2011, no deficiency reserve was recorded.

Policyholder Account Balances

Policyholder account balances relate to investment-type individual annuity contracts in the accumulation phase. Policyholder account balances are carried at accumulated account values, which consist of deposits received, plus interest credited, less withdrawals and assessments. Minimum guaranteed interest credited to these contracts ranges from 3.0% to 4.0%.

Commissions

Commissions include the commissions paid to distributors selling credit insurance policies, motor club memberships, and warranty service contracts. Credit insurance commission rates, in many instances, are set by state regulators and are also impacted by market conditions. In certain instances, credit insurance commissions are subject to retrospective adjustment based on the profitability of the related policies. Under these retrospective commission arrangements, the producer of the credit insurance policies receives a retrospective commission if the premium generated by that producer in the accounting period exceeds the costs associated with those policies, which includes the Company's administrative fees, claims, reserves, and premium taxes. The Company analyzes the retrospective commission calculation on a monthly basis for each producer and, based on the analysis associated with each such producer, the Company records a liability for any positive net retrospective commission earned and due to the producer or, conversely, records a receivable amount due from such producer for instances where the net result of the retrospective commission calculation is negative.

The settlement of net positive retrospective commission with the producer in a subsequent period (usually the following month), is made through a cash payment to the producer. If the net result is negative, the Company offsets the receivable amount due from the producer by:

• reducing future retrospective commissions earned and payable against the receivable amount due from the producer;

• reducing the producer's up-front commission associated with current period written premium production, which is credited against the receivable amount due from the producer; or

• invoicing the producer for an amount equal to the amount due to the Company.

The Company reviews, on a regular basis, all instances where the retrospective result is a net negative amount (receivable due from the producer) to determine the action to be implemented with respect to such producer in order to collect any receivable amount.

Deferred Revenues

Deferred revenues represent the portion of income that will be earned in the future attributable to motor club memberships, mobile device protection plans, and other non-insurance service contracts that are earned over the respective contract periods using Rule of

16

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

78's, modified Rule of 78's, pro rata, or other methods as appropriate for the contract. A deficiency reserve would be recorded if anticipated contract benefits, deferred acquisition costs and contract service costs exceed the recorded deferred revenues and anticipated investment income. As of December 31, 2012, and 2011, no deficiency reserve was recorded.

Derivative Financial Instruments

Cash Flow Hedge

The Company uses interest rate swaps as part of its risk management strategy to manage interest rate risk and cash flow risk that may arise in connection with the variable interest rate provision of the Company's preferred trust securities. The Company accounts for its derivative financial instruments in accordance with ASC 815, Derivatives and Hedging, which requires all derivative instruments to be carried at fair value on the balance sheet.

Changes in fair value associated with the effective portion of a derivative instrument designated as a qualifying cash flow hedge are recognized initially in other comprehensive income (loss). When the cash flows for which the derivative is hedging materialize and are recorded in income or expense, the associated gain or (loss) from the hedging derivative previously recorded in AOCI is recognized in earnings. If a cash flow hedge is de-designated because it is no longer highly effective, or if the hedge relationship is terminated, the cumulative gain or loss on the hedging derivative to that date will continue to be reported in AOCI unless the hedged forecasted transaction is no longer expected to occur, at which time the cumulative gain or loss is recorded into earnings.

The Company records the fair value of the derivative instrument in other assets or other liabilities. To the extent a derivative is an effective hedge of the cash flow risk of the hedged debt obligation, any change in the derivative's fair value is recorded in AOCI, net of income tax. To the extent the derivative is an ineffective hedge, that portion of the change in fair value is recorded in other operating expenses or interest expense as appropriate. The Company is not a party to leveraged derivatives and does not enter into derivative financial instruments for trading or speculative purposes.

Income Taxes

Under Internal Revenue Code Section 1501, the Company files a consolidated federal income tax return with its affiliates which are at least 80% owned by the group. The Company has a tax sharing agreement with its subsidiaries where each company is apportioned the amount of tax equal to that which would be reported on a separate company basis. The components of other comprehensive income or loss included on the Consolidated Statements of Comprehensive Income and on the Consolidated Statements of Stockholders' Equity have been computed based upon the 35% federal tax rate.

Income taxes are accounted for under the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the consolidated statements of income in the period that includes the enactment date. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets if it is more likely than not that such assets will not be realized.

ASC subtopic 740-10, Income Taxes—Overall ("ASC 740-10") prescribes a comprehensive model for the financial statement recognition, measurement, classification, and disclosure of uncertain tax positions. ASC 740-10 contains a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, based on the technical merits of the position. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. The Company accounts for penalties and interest related to uncertain tax positions as part of its provision for federal and state income taxes.

Stock-Based Compensation

Stock Options and Restricted Stock Awards

The Company accounts for stock-based compensation in accordance with FASB Topic ASC 718, Compensation—Stock Compensation ("ASC 718"), which addresses accounting for stock-based awards, including stock options and restricted stock. The Company has stock options outstanding under its 2005 Equity Incentive Plan (the "2005 Plan") and time- and performance-based stock options and restricted stock awards outstanding under The 2010 Omnibus Incentive Plan (the "2010 Plan"). Time-based stock options and restricted stock awards are grants that vest based on the passage of time; whereas, performance-based stock options and restricted stock awards are grants that vest based on the Company attaining certain financial metrics.

Under ASC 718, compensation expense is measured using fair value and is recorded over the requisite service or performance period of the awards, or to an employee’s eligible retirement date under the award agreement, if earlier. The Company measures stock-based compensation expense using the calculated value method. Under this method, the Company estimates the fair value of each

17

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

stock option on the grant date using the Black-Scholes valuation model. The Company uses historical data to estimate expected employee behavior related to stock award exercises and forfeitures. Since there is not sufficient historical market experience for shares of the Company's stock, the Company has chosen to estimate volatility, by using the average volatility of a selected peer group of publicly traded companies operating in the same industry. Expected dividends are based on the assumption that no dividends were expected to be distributed in the near future. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the expected life of the options. The fair value of restricted stock awards is based on the market price of Fortegra's common stock at the grant date. The Company typically recognizes stock-based compensation expense for time-based awards on a straight-line basis over the requisite service period and on a graded vesting attribution model for performance-based awards. Stock-based compensation expense for time- and performance-based stock options and restricted stock awards for employee grants is recognized in personnel costs, while expense for restricted stock awards to directors is included in other operating expenses on the Consolidated Statements of Income. The related income tax expense (benefit) on stock-based compensation is recognized in income tax expense on the Consolidated Statements of Income. The Company's current policy is to issue new shares upon the exercise of stock options.

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. Common shares that are considered anti-dilutive are excluded from the computation of diluted earnings per share.

Treasury Stock

All repurchased common shares are recorded as treasury stock and are accounted for under the cost method.

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.

Advertising and Promotion

Advertising and promotional costs are expensed as incurred. Advertising expense for the following periods is presented below:

	Years Ended December 31,
	2012		2011		2010
Advertising expense	$	1,624	$	583	$	367

3. Restatement of the Consolidated Financial Statements

The Company has restated its previously issued Consolidated Balance Sheets, Consolidated Statements of Income and Consolidated Statements of Cash Flows as of and for the years ended December 31, 2011 and 2010, to correct for an error in the presentation of revenue and expense for the Motor Clubs division within the Payment Protection Segment, and errors in accounting as discussed in further detail below.

The effects of these restatements to the Consolidated Statements of Income, Consolidated Balance Sheets, and Consolidated Statements of Cash Flows as of and for the years ended December 31, 2011 and 2010 are presented in the financial statement schedules below, by line item. Also shown in the schedules below are the effects of the Company's retrospective adoption of ASU 2010-26, Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts, because these effects, which are not corrections of errors, are part of the reconciliation from previously reported information to restated amounts.

The Notes "Segment Results," "Quarterly Information - Restated (Unaudited)," and "Quarterly Segment Results - Restated (Unaudited)" disclose the material effects of these restatements by segment, by quarter, and by segment by quarter, respectively.

Correction of Prior Period Errors - Motor Clubs division

During 2010 the Company acquired Continental and United, which began the Company's Motor Clubs division. In 2010 and subsequent reporting periods, the Motor Clubs revenues were presented on a net basis in service and administrative fees on the Consolidated Statements of Income. This net presentation consisted of service and administration fees less member benefit claims expense and commission expense. During 2011, the acquisition of Auto Knight increased the revenues of the Company's Motor Clubs division.

18

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Due to the increased growth in and significance of this division to the Company and the Payment Protection segment, the Company reviewed its revenue presentation for service and administrative fees generated by the Motor Clubs division during the fourth quarter of 2012. The Company performed this analysis based on the guidance in ASC 605, Revenue Recognition, to determine the proper presentation of revenues for the Motor Clubs division. Based on its analysis, the Company determined that presentation of gross revenue and expense is most appropriate because the Company was and is the principal in transactions with motor club members, and was and is responsible for future claims and services to be provided to those members.

Thus, the service and administrative fees revenues generated by the Motor Clubs division have been restated to present them on a gross basis with the corresponding gross amounts of member benefit claims and commissions expenses restated in the Consolidated Statements of Income.

The effect of this correction had no impact on net income, basic or diluted earnings per share amounts, balance sheet values, or net cash provided by operating activities.

Concurrent with its review of Motor Clubs revenue presentation, the Company also reviewed its method of Motor Clubs revenue recognition and identified errors in revenue recognition for some of its product lines for the year ended December 31, 2011 and for the nine months ended September 30, 2012, and associated errors in purchase accounting related to deferred revenues and deferred acquisition costs on these products. Management evaluated the materiality of the errors from qualitative and quantitative perspectives and concluded that the errors were immaterial to the periods affected. The immaterial purchase accounting impacts, included in final purchase accounting amounts disclosed in Note "Business Combinations," were increases in deferred revenue liability of $0.7 million, deferred acquisition costs of $0.1 million, and goodwill of $0.4 million, and a decrease in deferred tax liabilities of $0.3 million. For the year ended December 31, 2011, this immaterial correction reduced retained earnings by $0.5 million. In this Form 10-K, the Consolidated Statement of Income, Consolidated Balance Sheet, and Consolidated Statement of Cash Flows as of and for the year ended December 31, 2011 have been restated to reflect the immaterial corrections.

For the nine months ended September 30, 2012, this immaterial correction reduced retained earnings by $0.2 million. The effects of these restatements to the first three quarters of 2012 are included in the Consolidated Statement of Income, Consolidated Balance Sheet, and Consolidated Statement of Cash Flows as of and for the year ended December 31, 2012.

Immaterial Correction of Prior Period Errors - Purchase Accounting Adjustments

As reported in the Company's Quarterly Report on Form 10-Q ("Form 10-Q") for September 30, 2012, during the third quarter 2012 the Company identified errors related to the purchase accounting adjustments for the 2011 acquisition of Auto Knight and the April 2009 acquisition of B&G. 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 ended December 31, 2011, 2010 and 2009, respectively. Management evaluated the materiality of the errors from qualitative and quantitative perspectives and concluded that the errors were immaterial to each of the prior periods noted above.

As a result, in this Form 10-K, 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, as previously disclosed in the Form 10-Q for the period ended September 30, 2012. This correction, included in final purchase accounting amounts disclosed in Note "Business Combinations" increased goodwill by $0.6 million and increased deferred income tax liabilities by $0.6 million. See the Note, "Goodwill" for more information on this correction. The effect of this correction had no impact on net income, basic or diluted earnings per share amounts, or stockholders' equity.

Further, the Consolidated Balance Sheet data as of December 31, 2009, 2010, and 2011 have been revised to reflect the immaterial correction of the error associated with the B&G acquisition occurring during the year ended December 31, 2009, as previously disclosed in the Company's Form 10-Q for the period ended September 30, 2012. This correction increased goodwill by $0.4 million, decreased deferred income tax liabilities by $0.3 million and decreased other assets by $0.7 million.

Immaterial Correction of Prior Period Error - Cash Flows

The Company identified an error in the Consolidated Statement of Cash Flows for the year ended December 31, 2011 caused primarily by the reporting of certain changes in deferred income taxes as operating rather than investing activities. Management evaluated the materiality of the error from qualitative and quantitative perspectives and concluded that the error was immaterial to the statement. The correction is reflected in the schedule below, and had no effect on other statements.

Retrospective adoption of ASU 2010-26, Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts

As more fully disclosed in Note "Recent Accounting Standards," the Company adopted ASU 2010-26, Accounting for the Costs Associated with Acquiring or Renewing Insurance Contracts, on a retrospective basis as permitted. This is not a correction of an error. However, in order to show all the effects of adjustments and restatements to the prior period financial statements in one set of schedules, the effects of this retrospective adoption are displayed in the schedules below.

19

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The following tables present our restated Consolidated Statements of Income, Consolidated Balance Sheets and Consolidated Statements of Cash Flows for the years ended December 31, 2011 and 2010, respectively.

	Consolidated Statement of Income
	For the Year Ended
	December 31, 2011
	As Previously Reported			Effect of the Restatement- Motor Clubs			Adoption of ASU 2010-26			As Restated
Revenues:
Service and administrative fees	$	38,200		$	56,264		$	—		$	94,464
Brokerage commissions and fees	34,396			—			—			34,396
Ceding commission	29,495			—			—			29,495
Net investment income	3,368			—			—			3,368
Net realized investment gains	4,193			—			—			4,193
Net earned premium	115,503			—			—			115,503
Other income	170			—			—			170
Total revenues	225,325			56,264			—			281,589
Expenses:
Net losses and loss adjustment expenses	37,949			—			—			37,949
Member benefit claims	—			4,409			—			4,409
Commissions	74,231			52,687			—			126,918
Personnel costs	44,547			—			—			44,547
Other operating expenses	30,362			—			778			31,140
Depreciation and amortization	3,077			—			—			3,077
Amortization of intangibles	4,952			—			—			4,952
Interest expense	7,641			—			—			7,641
Loss on sale of subsidiary	477			—			—			477
Total expenses	203,236			57,096			778			261,110
Income before income taxes and non-controlling interests	22,089			(832		)	(778		)	20,479
Income taxes	7,745			(333		)	(272		)	7,140
Income before non-controlling interests	14,344			(499		)	(506		)	13,339
Less: net (loss) attributable to non-controlling interests	(170		)	—			—			(170		)
Net income	$	14,514		$	(499	)	$	(506	)	$	13,509
Earnings per share:
Basic	$	0.71		$	(0.02	)	$	(0.03	)	$	0.66
Diluted	$	0.68		$	(0.02	)	$	(0.02	)	$	0.64
Weighted average common shares outstanding:
Basic	20,352,027									20,352,027
Diluted	21,265,801									21,265,801

20

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

	Consolidated Statement of Income
	For the Year Ended
	December 31, 2010
	As Previously Reported		Effect of the Restatement- Motor Clubs		Adoption of ASU 2010-26			As Restated
Revenues:
Service and administrative fees	$	34,145	$	22,109	$	—		$	56,254
Brokerage commissions and fees	24,620		—		—			24,620
Ceding commission	28,767		—		—			28,767
Net investment income	4,073		—		—			4,073
Net realized investment gains	650		—		—			650
Net earned premium	111,805		—		—			111,805
Other income	230		—		—			230
Total revenues	204,290		22,109		—			226,399
Expenses:
Net losses and loss adjustment expenses	36,035		—		—			36,035
Member benefit claims	—		466		—			466
Commissions	71,003		21,643		—			92,646
Personnel costs	36,361		—		—			36,361
Other operating expenses	22,873		—		1,553			24,426
Depreciation and amortization	1,396		—		—			1,396
Amortization of intangibles	3,232		—		—			3,232
Interest expense	8,464		—		—			8,464
Total expenses	179,364		22,109		1,553			203,026
Income before income taxes and non-controlling interests	24,926		—		(1,553		)	23,373
Income taxes	8,703		—		(544		)	8,159
Income before non-controlling interests	16,223		—		(1,009		)	15,214
Less: net income attributable to non-controlling interests	20		—		—			20
Net income	$	16,203	$	—	$	(1,009	)	$	15,194
Earnings per share:
Basic	$	1.02	$	—	$	(0.07	)	$	0.95
Diluted	$	0.94	$	—	$	(0.06	)	$	0.88
Weighted average common shares outstanding:
Basic	15,929,181							15,929,181
Diluted	17,220,029							17,220,029

21

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

	Consolidated Balance Sheet
	For the Year Ended
	December 31, 2011
	As Previously Reported (1)			Effect of the Restatement			Adoption of ASU 2010-26			As Restated
Assets:
Investments:
Fixed maturity securities available-for-sale	$	93,509		$	—		$	—		$	93,509
Equity securities available-for-sale	1,219			—			—			1,219
Short-term investments	1,070			—			—			1,070
Total investments	95,798			—			—			95,798
Cash and cash equivalents	31,339			—			—			31,339
Restricted cash	14,180			—			—			14,180
Accrued investment income	929			—			—			929
Notes receivable, net	3,603			—			—			3,603
Accounts and premiums receivable, net	19,690			—			—			19,690
Other receivables	9,465			—			—			9,465
Reinsurance receivables	194,740			—			—			194,740
Deferred acquisition costs	62,755			93			(7,220		)	55,628
Property and equipment, net	15,314			—			—			15,314
Goodwill	104,888			—			—			104,888
Other intangible assets, net	54,410			—			—			54,410
Other assets	5,294			75			—			5,369
Total assets	$	612,405		$	168		$	(7,220	)	$	605,353
Liabilities:
Unpaid claims	$	32,583		$	—		$	—		32,583
Unearned premiums	227,929			—			—			227,929
Policyholder account balances	28,040			—			—			28,040
Accrued expenses, accounts payable and other liabilities	33,982			—			—			33,982
Income taxes payable	1,344			—			—			1,344
Deferred revenue	21,495			925			—			22,420
Note payable	73,000			—			—			73,000
Preferred trust securities	35,000			—			—			35,000
Deferred income taxes, net	26,754			(258		)	(2,527		)	23,969
Total liabilities	480,127			667			(2,527		)	478,267
Stockholders' Equity:
Preferred stock	—			—			—			—
Common stock	206			—			—			206
Treasury stock, at cost	(2,728		)	—			—			(2,728		)
Additional paid-in capital	96,199			—			—			96,199
Accumulated other comprehensive loss, net of tax	(1,754		)	—			—			(1,754		)
Retained earnings	39,823			(499		)	(4,672		)	34,652
Stockholders' equity before non-controlling interests	131,746			(499		)	(4,672		)	126,575
Non-controlling interests	532			—			(21		)	511
Total stockholders' equity	132,278			(499		)	(4,693		)	127,086
Total liabilities and stockholders' equity	$	612,405		$	168		$	(7,220	)	$	605,353

⁽¹⁾ - Includes the business acquisition valuation measurement period adjustments presented in the Notes, "Business Combinations," "Goodwill," and "Other Intangible Assets."

22

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

	Consolidated Balance Sheet
	For the Year Ended
	December 31, 2010
	As Previously Reported			Adoption of ASU 2010-26			As Restated
Assets:
Investments:
Fixed maturity securities available-for-sale	$	85,786		$	—		$	85,786
Equity securities available-for-sale	1,935			—			1,935
Short-term investments	1,170			—			1,170
Total investments	88,891			—			88,891
Cash and cash equivalents	43,389			—			43,389
Restricted cash	15,722			—			15,722
Accrued investment income	880			—			880
Notes receivable, net	1,485			—			1,485
Accounts and premiums receivable, net	17,023			—			17,023
Other receivables	7,632			—			7,632
Reinsurance receivables	169,382			—			169,382
Deferred acquisition costs	65,142			(6,442		)	58,700
Property and equipment, net	11,996			—			11,996
Goodwill	74,430			—			74,430
Other intangible assets, net	39,997			—			39,997
Income taxes receivable	818			—			818
Other assets	4,857			—			4,857
Total assets	$	541,644		$	(6,442	)	$	535,202
Liabilities:
Unpaid claims	$	32,693		$	—		32,693
Unearned premiums	210,430			—			210,430
Accrued expenses, accounts payable and other liabilities	41,579			—			41,579
Income taxes payable	25,611			—			25,611
Deferred revenue	36,713			—			36,713
Note payable	35,000			—			35,000
Preferred trust securities	11,040			—			11,040
Deferred income taxes, net	24,691			(2,255		)	22,436
Total liabilities	417,757			(2,255		)	415,502
Stockholders' Equity:
Preferred stock	—			—			—
Common stock	203			—			203
Treasury stock, at cost	(176		)	—			(176		)
Additional paid-in capital	95,556			—			95,556
Accumulated other comprehensive loss, net of tax	2,293			—			2,293
Retained earnings	25,308			(4,166		)	21,142
Stockholders' equity before non-controlling interests	123,184			(4,166		)	119,018
Non-controlling interests	703			(21		)	682
Total stockholders' equity	123,887			(4,187		)	119,700
Total liabilities and stockholders' equity	$	541,644		$	(6,442	)	$	535,202

23

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

	Consolidated Statement of Cash Flows
	For the Year Ended
	December 31, 2011
Operating Activities	As Previously Reported			Immaterial Correction of Prior Period Error			Effect of the Restatement- Motor Clubs			Adoption of ASU 2010-26			As Restated
Net income	$	14,514		$	—		$	(499	)	$	(506	)	$	13,509
Adjustments to reconcile net income to net cash flows provided by operating activities:
Change in deferred acquisition costs	3,223			—			(93		)	778			3,908
Depreciation and amortization	8,029			—			—			—			8,029
Deferred income tax expense	3,397			(1,071		)	(333		)	(272		)	1,721
Net realized investment (gains) losses	(4,193		)	—			—			—			(4,193		)
Loss on sale of subsidiary	477			—			—			—			477
Stock-based compensation expense	763			—			—			—			763
Amortization of premiums and accretion of discounts on investments	609			—			—			—			609
Non-controlling interests	(170		)	—			—			—			(170		)
Change in allowance for doubtful accounts	(31		)	—			—			—			(31		)
Changes in operating assets and liabilities, net of the effects of acquisitions and dispositions:
Accrued investment income	(16		)	—			—			—			(16		)
Accounts and premiums receivable, net	(898		)	—			—			—			(898		)
Other receivables	(1,430		)	(339		)	—			—			(1,769		)
Reinsurance receivables	(5,181		)	—			—			—			(5,181		)
Income taxes receivable	818			—			—			—			818
Other assets	(389		)	—			—			—			(389		)
Unpaid claims	(315		)	—			—			—			(315		)
Unearned premiums	14,373			—			—			—			14,373
Policyholder account balances	(45		)	—			—			—			(45		)
Accrued expenses, accounts payable and other liabilities	(14,909		)	—			—			—			(14,909		)
Income taxes payable	1,344			—			—			—			1,344
Deferred revenue	(7,394		)	—			925			—			(6,469		)
Net cash flows provided by operating activities	12,576			(1,410		)	—			—			11,166
Investing activities
Proceeds from maturities, calls and prepayments of available-for-sale investments	9,691			—			—			—			9,691
Proceeds from sales of available-for-sale investments	62,300			—			—			—			62,300
Net change in short-term investments	100			—			—			—			100
Purchases of available-for-sale investments	(63,557		)	1,410			—			—			(62,147		)
Purchases of property and equipment	(6,280		)	—			—			—			(6,280		)
Net paid for acquisitions of subsidiaries, net of cash received	(49,873		)	—			—			—			(49,873		)
Sale of subsidiary, net of cash paid	(153		)	—			—			—			(153		)
Net (issuance) proceeds from notes receivable	(975		)	—			—			—			(975		)
Change in restricted cash, net of restricted cash received from acquisitions	1,542			—			—			—			1,542
Net cash flows used in investing activities	(47,205		)	1,410			—			—			(45,795		)
Financing activities
Payments on notes payable	(74,263		)	—			—			—			(74,263		)
Proceeds from notes payable	110,550			—			—			—			110,550
Payments for initial public offering costs	(826		)	—			—			—			(826		)
Payments on redeemable preferred stock	(11,040		)	—			—			—			(11,040		)
Net proceeds from exercise of stock options	607			—			—			—			607
Excess tax benefits from stock-based compensation	45			—			—			—			45
Purchase of treasury stock	(2,552		)	—			—			—			(2,552		)
Net proceeds received from stock issued in the Employee Stock Purchase Plan	58			—			—			—			58
Net cash flows provided by financing activities	22,579			—			—			—			22,579
Net (decrease) increase in cash and cash equivalents	(12,050		)	—			—			—			(12,050		)
Cash and cash equivalents, beginning of period	43,389			—			—			—			43,389
Cash and cash equivalents, end of period	$	31,339		$	—		$	—		$	—		$	31,339

24

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

	Consolidated Statement of Cash Flows
	For the Year Ended
	December 31, 2010
Operating Activities	As Previously Reported			Adoption of ASU 2010-26			As Restated
Net income	$	16,203		$	(1,009	)	$	15,194
Adjustments to reconcile net income to net cash flows provided by operating activities:
Change in deferred acquisition costs	(5,754		)	1,553			(4,201		)
Depreciation and amortization	4,628			—			4,628
Deferred income tax expense	4,881			(544		)	4,337
Net realized investment (gains) losses	(650		)	—			(650		)
Stock-based compensation expense	176			—			176
Amortization of premiums and accretion of discounts on investments	348			—			348
Non-controlling interests	(772		)	—			(772		)
Change in allowance for doubtful accounts	(30		)	—			(30		)
Changes in operating assets and liabilities, net of the effects of acquisitions and dispositions:
Accrued investment income	30			—			30
Accounts and premiums receivable, net	3,808			—			3,808
Other receivables	1,884			—			1,884
Reinsurance receivables	4,416			—			4,416
Income taxes receivable	(818		)	—			(818		)
Other assets	(1,600		)	—			(1,600		)
Unpaid claims	(3,459		)	—			(3,459		)
Unearned premiums	(5,222		)	—			(5,222		)
Policyholder account balances	—			—			—
Accrued expenses, accounts payable and other liabilities	(7,379		)	—			(7,379		)
Income taxes payable	(769		)	—			(769		)
Deferred revenue	3,181			—			3,181
Net cash flows provided by operating activities	13,102			—			13,102
Investing activities
Proceeds from maturities, calls and prepayments of available-for-sale investments	12,114			—			12,114
Proceeds from sales of available-for-sale investments	8,769			—			8,769
Net change in short-term investments	50			—			50
Purchases of available-for-sale investments	(24,047		)	—			(24,047		)
Purchases of property and equipment	(9,191		)	—			(9,191		)
Net paid for acquisitions of subsidiaries, net of cash received	(20,548		)	—			(20,548		)
Net (issuance) proceeds from notes receivable	684			—			684
Change in restricted cash, net of restricted cash received from acquisitions	2,368			—			2,368
Net cash flows used in investing activities	(29,801		)	—			(29,801		)
Financing activities
Payments on notes payable	(20,000		)	—			(20,000		)
Proceeds from notes payable	25,226			—			25,226
Capitalized closing costs for notes payable	(1,379		)	—			(1,379		)
Net proceeds from the issuance of common stock	40,703			—			40,703
Payments on redeemable preferred stock	(500		)	—			(500		)
Stockholder funds disbursed at purchase	(14,105		)	—			(14,105		)
Net proceeds from exercise of stock options	117			—			117
Excess tax benefits from stock-based compensation	86			—			86
Net cash flows provided by financing activities	30,148			—			30,148
Net (decrease) increase in cash and cash equivalents	13,449			—			13,449
Cash and cash equivalents, beginning of period	29,940			—			29,940
Cash and cash equivalents, end of period	$	43,389		$	—		$	43,389

4. 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 required 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.

25

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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 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 was 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, 2010, the beginning of the earliest period presented, the cumulative effect of the adjustment recorded to adopt this guidance resulted in decreases of $4.9 million to deferred acquisition costs, $1.7 million to deferred income taxes and $3.2 million to retained earnings. See the Note, "Restatement" for the effect of the retrospective adoption on the Company's Consolidated Financial Statement line items for the years ending December 31, 2011 and 2010, respectively.

Recently Issued Accounting Pronouncements

On February 5, 2013, the FASB issued ASU No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. This guidance is the culmination of the board’s redeliberation on reporting reclassification adjustments from AOCI. The new requirements will take effect for public companies in interim and annual reporting periods beginning after December 15, 2012 (the first quarter of 2013 for public, calendar-year companies). The Company is evaluating the impact of the ASU. The Company does not expect the adoption of this pronouncement to have a significant impact on the Company's consolidated financial position, results of operations or cash flows.

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. The Company does not expect the adoption of this pronouncement 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.

26

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

5. Earnings Per Share

Earnings per share is calculated as follows:	For the Years Ended December 31,
	2012		2011		2010
			As Restated		As Restated
Numerator: (for both basic and diluted earnings per share)
Net income	$	15,165	$	13,509	$	15,194
Denominator:
Total average basic common shares outstanding	19,655,492		20,352,027		15,929,181
Effect of dilutive stock options and restricted stock awards	944,870		913,774		1,290,848
Total average diluted common shares outstanding	20,600,362		21,265,801		17,220,029
Earnings per share-basic	$	0.77	$	0.66	0.95
Earnings per share-diluted	$	0.74	$	0.64	0.88
Weighted average anti-dilutive common shares (1)	480,795		301,010		—

⁽¹⁾ The weighted average anti-dilutive common shares presented in the 2011 Form 10-K for the year ended December 31, 2011 only included out-of-the money anti-dilutive stock options and has been revised to include all anti-dilutive stock options and restricted share awards calculated under the treasury method. The revision to the presentation of weighted average anti-dilutive common shares had no impact on the average basic and diluted common shares outstanding or the basic and diluted earnings per share calculations for the year ended December 31, 2011.

6. Variable Interest Entities

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

7. Business Acquisitions and Dispositions

Acquisitions in 2012

On December 31, 2012, the Company acquired a 62.4% ownership interest of Digital Leash, LLC, d/b/a ProtectCELL and an option to purchase the remaining 37.6% ownership interest in ProtectCELL after 2014. ProtectCELL provides membership plans that afford protection for mobile wireless devices and other benefits including data management and identity theft protection. ProtectCELL is one of the leaders in mobile device protection plans and will spearhead Fortegra's efforts to expand its warranty and service contract business in the mobile and wireless device space. ProtectCELL's results will be included in the Company's Payment Protection segment.

On December 31, 2012, the Company acquired 100% of the outstanding stock ownership of 4Warranty Corporation, a leading warranty and extended service contract administrator with extensive expertise in furniture, electronics, appliance, lawn and garden, and fitness equipment. 4Warranty complements the Company's rapidly expanding warranty business. 4Warranty's results will be included in the Company's Payment Protection segment.

On April 24, 2012, the Company acquired a 100% ownership interest in MHA & Associates LLC ("MHA"), for $0.3 million, obtaining the renewal rights of the business and hiring the prior owner to maintain and increase the block of business.

The Consolidated Balance Sheets at December 31, 2012, include the accounts of both ProtectCELL and 4Warranty as of December 31, 2012. The financial results for the 2012 acquisitions of ProtectCELL and 4Warranty have not been included in the Company's Consolidated Statements of Income for the year ended December 31, 2012, because both acquisitions closed after business on December 31, 2012.

27

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The Company did not issue shares of its common stock in connection with any of the acquisitions completed during the years ended December 31, 2012, 2011 and 2010, respectively.

The following unaudited pro forma summary presents the Company's consolidated financial information as if ProtectCELL and 4Warranty had been acquired on January 1 of each year. Due to the insignificant impact of the MHA acquisition, its pro forma results have been excluded from the table below. These amounts have been calculated after applying the Company's accounting policies and adjusting the results of the acquired company to reflect the additional interest expense associated with the funding necessary to complete the acquisition and any amortization of intangibles that would have been charged to operations assuming the intangible assets would have existed on January 1, 2012 and 2011, excluding the transaction costs and the consequential tax effect.

	Years Ended December 31,
	2012		2011
Revenue	$	359,950	$	321,135
Net income	$	11,615	$	9,549

The unaudited pro forma results in the above table were prepared for comparative purposes only and do not purport to be indicative of the results of operations which may have actually resulted had the acquisitions of ProtectCELL and 4Warranty occurred at January 1, 2012 and 2011, respectively, nor is it indicative of any future operating results of the Company.

During 2012, the Company received the final valuation studies for identifiable intangible assets to determine the final valuation for the 2011 acquisitions of eReinsure and 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. Please see the Notes, "Goodwill," and "Other Intangible Assets," for more information on the retrospective measurement period adjustments made in 2012.

The following table presents the preliminary determination of the fair value of the amounts for the identifiable assets acquired, liabilities assumed, non-controlling interests and goodwill recorded for the 2012 acquisitions of ProtectCELL and 4Warranty and the final amounts recorded for the 2011 acquisitions 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:

	2011 Acquisitions												2012 Acquisitions
	Auto Knight			eReinsure			PBG			Magna Insurance			4Warranty			ProtectCELL
Assets:
Cash	$	—		$	3,694		$	38		$	400		$	703		$	350
Restricted cash	—			—			—			—			72			7,438
Investments	1,403			1,212			—			2,432			—			—
Short-term investments	—			—			—			—			—			252
Notes receivable	—			—			—			—			—			6,341
Other receivables	90			1,826			—			83			199			2,312
Deferred acquisition costs	408			—			—			—			—			19,845
Property and equipment, net	—			142			65			—			61			674
Other intangible assets, net	1,807			13,908			3,650			—			1,900			27,815
Other assets	—			54			23			—			—			1,470
Net deferred tax asset	—			—			127			—			—			—
Liabilities:
Unpaid claims	—			—			—			—			—			(176		)
Accrued expenses and accounts payable	(137		)	(2,825		)	(304		)	(455		)	(180		)	(2,644		)
Commissions payable	(116		)	—			(60		)	—			(41		)	—
Deferred revenue	(2,443		)	(835		)	—			—			(1,260		)	(45,409		)
Income taxes payable	—			—			—			—			(296		)	—
Net deferred tax liability	(477		)	(1,757		)	—			(36		)	(266		)	—
Net assets acquired	535			15,419			3,539			2,424			892			18,268
Non-controlling interest	—			—			—			—			—			(10,000		)
Purchase consideration (1) (2)	4,750			38,931			7,607			2,424			3,616			20,000
Goodwill	$	4,215		$	23,512		$	4,068		$	—		$	2,724		$	11,732

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

⁽²⁾ - The purchase consideration for the 4Warranty acquisition includes $0.3 million of contingent consideration and $0.5 million of working capital and hold back reserves, which are expected to be paid out based on the agreed terms of the Stock Purchase Agreement.

28

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The Company has determined that none of the goodwill acquired in 2012 is expected to be tax deductible. The following table presents goodwill attributable to acquisitions that is expected to be tax deductible by year of acquisition:

	Year of the Acquisition
	2012		2011		2010
Total (1)	$	—	$	4,069	$	10,008

⁽¹⁾ The amount of goodwill attributable to acquisitions that is expected to be tax deductible for acquisitions completed in 2011 has been revised from the amount presented in the 2011 Annual Report on Form 10-K resulting from adjustments to goodwill for final valuations obtained in 2012 for the 2011 acquisitions.

Dispositions

In July 2011, the Company sold its wholly owned subsidiary, CIRG, for a sales price of $1.2 million, comprised of cash and a $1.1 million secured note receivable. For the year ended December 31, 2011, the Company recorded a $0.5 million loss on the sale of CIRG. This disposition resulted in a non-consolidated VIE. For more information see the Note, "Variable Interest Entity."

8. Goodwill

In 2012, the Company recorded goodwill in conjunction with the ProtectCELL and 4Warranty acquisitions. During 2012, the Company determined the final valuations for the 2011 acquisitions of eReinsure, included in the Brokerage Segment and 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 impacted balances prior to January1, 2011, that are discussed in the Note, "Restatement of the Consolidated Financial Statements," of Notes to the Consolidated Financial Statements.

Goodwill balances by segment are as follows:	Payment Protection		BPO			Brokerage (1)			Total
Balance at January 1, 2011 (1)	$	33,413	$	10,239		$	30,778		$	74,430
Segment reclassifications	—		(1,337		)	1,337			—
Goodwill disposed of during 2011	—		—			(1,337		)	(1,337		)
Goodwill acquired during 2011	3,219		6,730			26,138			36,087
Goodwill adjustment under ASC 250 for the Auto Knight acquisition for the year ending December 31, 2011	996		—			—			996
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	37,628		12,970			54,290			104,888
Goodwill acquired - purchased book of business	—		—			168			168
Goodwill acquired - ProtectCELL acquisition	11,732		—			—			11,732
Goodwill acquired - 4Warranty acquisition	2,724		—			—			2,724
Balance at December 31, 2012	$	52,084	$	12,970		$	54,458		$	119,512

⁽¹⁾ The January 1, 2011 balance includes an increasing adjustment of $0.4 million to goodwill for the immaterial correction of an error adjustment attributable to B&G acquisition for the year ending December 31, 2009, as discussed in the Note, "Restatement of the Consolidated Financial Statements" of Notes to the Consolidated Financial Statements in the section titled "Immaterial correction of Prior Period Errors - Purchase Accounting Adjustments."

9. Other Intangible Assets

The following table shows finite-lived other intangible assets and their respective amortization periods:

				December 31, 2012							December 31, 2011
	Amortization Period (Years)			Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Finite-lived other intangible assets:
Customer and agent relationships	5	to	15	$	57,780	$	(12,340	)	$	45,440	$	34,552	$	(8,724	)	$	25,828
Software	5	to	10	10,118		(3,385		)	6,733		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	5,008		(2,716		)	2,292		2,958		(2,419		)	539
Total finite-lived other intangible assets				$	73,454	$	(18,989	)	$	54,465	$	46,831	$	(14,036	)	$	32,795

29

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The following table shows the carrying amount of indefinite-lived other intangible assets:	At December 31,
	2012		2011
Tradenames	$	24,875	$	21,615

The finite-lived and indefinite-lived other intangible assets acquired in 2012 relate to the acquisition of ProtectCELL and 4Warranty and for the purchase of a book of business. In 2012, the Company determined the final valuations for the 2011 acquisitions of eReinsure and PBG and made retrospective adjustments to other intangible assets. 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.

Changes in other intangible assets are as follows:
Balance at January 1, 2011	$	39,997
Intangible assets acquired in 2011	11,977
Less: Amortization expense	4,952
Balance 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 - Purchased book of business	168
Intangible assets acquired in 2012 - ProtectCELL acquisition	27,815
Intangible assets acquired in 2012 - 4Warranty acquisition	1,900
Less: Amortization expense	4,953
Balance at December 31, 2012	$	79,340

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

2013	$	10,022
2014	10,010
2015	10,003
2016	9,378
2017	8,031
Thereafter	7,021
Total	$	54,465

10. Investments

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

	At December 31, 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	$	22,424	$	761	$	(7	)	$	23,178
Municipal securities	16,636		413		(8		)	17,041
Corporate securities	67,627		2,461		(80		)	70,008
Mortgage-backed securities	285		4		—			289
Asset-backed securities	123		2		—			125
Total fixed maturity securities	$	107,095	$	3,641	$	(95	)	$	110,641
Common stock - publicly traded	$	39	$	3	$	—		$	42
Preferred stock - publicly traded	4,975		133		(1		)	5,107
Common stock - non-publicly traded	59		4		(5		)	58
Preferred stock - non-publicly traded	1,009		4		—			1,013
Total equity securities	$	6,082	$	144	$	(6	)	$	6,220

30

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

	At 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 - publicly traded	$	40	$	—	$	(1	)	$	39
Preferred stock - publicly traded	50		2		—			52
Common stock - non-publicly traded	104		26		(16		)	114
Preferred stock - non-publicly traded	1,009		5		—			1,014
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 December 31,
	2012		2011
Fair value of restricted investments	$	17,942	$	18,319
Fair value of restricted investments for special deposits required by state insurance departments	$	10,988	$	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
	December 31, 2012				December 31, 2011
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	5,557	$	5,608	$	3,890	$	3,923
Due after one year through five years	58,378		60,323		51,210		51,839
Due after five years through ten years	24,983		25,900		23,623		23,973
Due after ten years	17,769		18,396		11,941		12,089
Mortgage-backed securities	285		289		1,272		1,298
Asset-backed securities	123		125		375		387
Total fixed maturity securities	$	107,095	$	110,641	$	92,311	$	93,509

31

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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:

	December 31, 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	$	857	$	(7	)	11	$	—	$	—		—	$	857	$	(7	)	11
Municipal securities	734		(8		)	1	—		—			—	734		(8		)	1
Corporate securities	12,625		(63		)	16	183		(17		)	1	12,808		(80		)	17
Mortgage-backed securities	—		—			—	—		—			—	—		—			—
Asset-backed securities	—		—			—	—		—			—	—		—			—
Total fixed maturity securities	$	14,216	$	(78	)	28	$	183	$	(17	)	1	$	14,399	$	(95	)	29
Common stock - publicly traded	$	—	$	—		—	$	—	$	—		—	$	—	$	—		—
Preferred stock - publicly traded	198		(1		)	1	—		—			—	198		(1		)	1
Common stock - non-publicly traded	—		—			—	39		(5		)	2	39		(5		)	2
Preferred stock - non-publicly traded	—		—			—	—		—			—	—		—			—
Total equity securities	$	198	$	(1	)	1	$	39	$	(5	)	2	$	237	$	(6	)	3

	At 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 - publicly traded	$	38	$	(1	)	2	$	—	$	—		—	$	38	$	(1	)	2
Preferred stock - publicly traded	—		—			—	—		—			—	—		—			—
Common stock - non-publicly traded	45		(16		)	3	—		—			—	45		(16		)	3
Preferred stock - non-publicly traded	—		—			—	—		—			—	—		—			—
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 December 31, 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 December 31, 2012, based on management's review, the Company deemed that 1 individual equity security was other than temporarily impaired and recorded an impairment charge of $16.0 thousand for the year ended December 31, 2012. For the year ended December 31, 2011 the Company deemed that 10 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 Years Ended December 31,
	2012		2011		2010
Gross proceeds from sales	$	8,364	$	62,300	$	8,769

32

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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 Years Ended December 31,
	2012			2011			2010
Gross realized gains	$	33		$	4,456		$	831
Gross realized losses	(14		)	(91		)	(116		)
Total net gains from investment sales	19			4,365			715
Impairment write-downs (other-than-temporary impairments)	(16		)	(172		)	(65		)
Net realized investment gains	$	3		$	4,193		$	650

The following schedule details the components of net investment income:	For the Years Ended December 31,
	2012			2011			2010
Fixed income securities	$	2,670		$	3,188		$	3,666
Cash on hand and on deposit	193			333			738
Common and preferred stock dividends	275			59			60
Notes receivable	267			155			157
Other income	138			141			(46		)
Investment expenses	(475		)	(508		)	(502		)
Net investment income	$	3,068		$	3,368		$	4,073

11. Reinsurance Receivables

The effects of reinsurance on premiums written and earned and on losses and loss adjustment expenses ("LAE") incurred are presented in the tables below:

Premiums	For the Years Ended December 31,
	2012						2011						2010
	Written			Earned			Written			Earned			Written			Earned
Direct and assumed	$	367,791		$	359,820		$	338,869		$	321,412		$	302,574		$	307,916
Ceded	(236,121		)	(232,195		)	(214,485		)	(205,909		)	(191,141		)	(196,111		)
Net	$	131,670		$	127,625		$	124,384		$	115,503		$	111,433		$	111,805

Losses and LAE incurred	For the Years Ended December 31,
	2012			2011			2010
Direct and assumed	$	86,409		$	81,843		$	79,403
Ceded	(46,190		)	(43,894		)	(43,368		)
Net losses and LAE incurred	$	40,219		$	37,949		$	36,035

The following table reflects the components of the reinsurance receivables:	At December 31,
	2012		2011
Prepaid reinsurance premiums (1):
Life	$	53,117	$	59,545
Accident and health	34,266		30,759
Property	85,805		80,758
Total	173,188		171,062
Ceded claim reserves:
Life	1,786		1,794
Accident and health	9,263		9,896
Property	8,663		7,743
Total ceded claim reserves recoverable	19,712		19,433
Other reinsurance settlements recoverable	11,088		4,245
Reinsurance receivables	$	203,988	$	194,740
(1)  Including policyholder account balances ceded.

33

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The following table shows the amount included in reinsurance receivable that is recoverable from three unrelated insurers:

	At December 31,
	2012		2011
Total recoverable from three unrelated reinsurers	$	126,633	$	124,160

At December 31, 2012, the three unrelated reinsurers are: London Life Reinsurance Company (A. M. Best Rating-A); London Life International Reinsurance Corporation (A. M. Best Rating-NR-3) and Spartan Property Insurance Company (A. M. Best Rating - Non-rated). Because Spartan Property Insurance Company does not maintain an A.M. Best rating, the related receivables are collateralized by assets held in trust accounts. At December 31, 2011, the three unrelated reinsurers are: Munich American Reassurance Company (A. M. Best Rating-A+); London Life Reinsurance Company (A. M. Best Rating-A); and London Life International Reinsurance Corporation (A. M. Best Rating-NR-3). Because London Life International Reinsurance Corporation does not maintain an A.M. Best rating, the related receivables are collateralized by assets held in trust accounts and letters of credit. At December 31, 2012, the Company does not believe there is a risk of loss as a result of the concentration of credit risk in the reinsurance program.

12. Property and Equipment

The components of property and equipment are as follows:	At December 31,
	2012		2011
Furniture, fixtures and equipment	$	3,038	$	2,868
Computer equipment	4,126		2,356
Equipment and software under capital lease	229		—
Software (1)	18,632		14,416
Leasehold improvements	568		357
Property and equipment, gross	26,593		19,997
Less: accumulated depreciation and amortization	8,647		4,683
Property and equipment, net	$	17,946	$	15,314
(1) Internally developed software not yet placed in service, included in software	$	942	$	5,302

The following reflects depreciation on property and equipment and amortization expense related to capitalized software costs:

	Years Ended December 31,
	2012		2011		2010
Depreciation expense on property and equipment	$	1,756	$	1,605	$	924
Amortization expense on capitalized software	2,177		1,472		472
Total depreciation and amortization	$	3,933	$	3,077	$	1,396

13. Leases

Operating Leases

The Company leases certain office space and equipment under operating leases expiring on various dates from 2013 through 2022. The Company assumed operating leases for office space from related parties in conjunction with the ProtectCELL and 4Warranty acquisitions. The terms of the related party leases are substantially the same as those offered for comparable transactions with non-related parties. The Company did not make payments on the related party lease during 2012. Please see the Note, "Related Party Transactions," for more information. The following table shows the Company's future minimum lease payments under operating leases with initial or remaining non-cancelable lease terms in excess of one year at:

	December 31, 2012
2013	$	2,574
2014	2,886
2015	2,732
2016	2,485
2017	2,415
Thereafter	9,453
Total payments	$	22,545

34

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The Company recognized rent expense for the:	Years Ended December 31,
	2012		2011		2010
Total rent expense	$	3,050	$	3,275	$	2,997

Capital Lease

The Company also leases equipment and software under a single capital lease expiring in 2014. The capital lease was assumed by the Company in conjunction with the 2012 acquisition of ProtectCELL. The following table shows the Company's future minimum lease payments for its capital lease at December 31, 2012:

	December 31, 2012
2013	$	134
2014	133
2015	—
2016	—
2017	—
Thereafter	—
Total minimum payments	$	267
Amounts representing interest	(26		)
Obligations under capital lease	241

14. Note Payable

The Company's Notes Payable consisted of the following at:	At December 31,
	2012			2011
Wells Fargo Bank, N.A.- credit facility, maturing August 2017	$	89,438		$	—
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:	2.76		%	4.59		%

Aggregate maturities for the Company's note payable at December 31, 2012 are as follows:

2013	$	1,250
2014	5,000
2015	5,000
2016	5,000
2017	73,188
Thereafter	—
Total	$	89,438

$125.0 million Secured Credit Agreement - Wells Fargo Bank, N.A.

At December 31, 2012, the Company had a $125.0 million secured credit agreement (the "Credit Agreement"), entered into on August 2, 2012, 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 has a five year term and 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 Company 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. 

At the Company's election, borrowings under the Revolving Facility will bear interest either at the base rate plus an applicable interest margin or the adjusted LIBO rate plus an applicable interest margin; provided, however, that all swingline loans will be base rate loans. The base rate is a fluctuating interest rate equal to the highest of: (i) Wells Fargo's publicly announced prime lending rate; (ii) the federal funds rate plus0.50%; and (iii) the adjusted LIBO rate, determined on a daily basis for an interest period of one month, plus1.0%.

35

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The adjusted LIBO rate is the rate per annum obtained by dividing (i) the London interbank offered rate ("LIBOR") for such interest period by (ii) a percentage equal to 1.00 minusthe Eurodollar Reserve Percentage (as defined in the Credit Agreement). The interest margin over the adjusted LIBO rate, initially set at 2.75%, may increase (to a maximum amount of 3.0%) or decrease (to a minimum amount of 2.0%) based on changes in our leverage ratio. The interest margin over the base rate, initially set at 1.75%, may increase (to a maximum amount of 2.0%) or decrease (to a minimum amount of 1.0%) based on changes in our leverage ratio.

In addition to interest payable on the principal amount of indebtedness outstanding from time to time under the Credit Agreement, the Company is required to pay a commitment fee, initially equal to 0.40% per annum of the unused amount of the Revolving Facility. The percentage rate of such fee may increase (to a maximum amount of 0.45%) or decrease (to a minimum amount of 0.25%) based on changes in the Borrowers' leverage ratio. The amount of outstanding swingline loans is not considered usage of the Revolving Facility for the purpose of calculating the commitment fee. The Company is also required to pay letter of credit participation fees on the undrawn amount of all outstanding letters of credit. The Company paid fees of approximately $1.7 million to Wells Fargo in connection with the execution of the Credit Agreement, which have been capitalized and are being amortized over the life of the Credit Agreement.

The Company, at its option, may prepay any borrowing, in whole or in part, at any time and from time to time without premium or penalty. However, after the end of our fiscal year (commencing with the fiscal year ending December 31, 2015), the Company is required to make mandatory principal prepayments of loans under the Facilities in an amount determined under the Credit Agreement based upon a percentage of the Company's Excess Cash Flow (as defined in the Credit Agreement) minus certain off set amounts relating to permitted acquisitions.

The Credit Agreement contains certain customary representations, warranties and covenants applicable to us for the benefit of the Administrative Agent and the lenders. The Company may not assign, sell, transfer or dispose of any collateral or effect certain changes to our capital structure and the capital structure of our subsidiaries without the Administrative Agent's prior consent. The Company obligations under the Facilities may be accelerated or the commitments terminated upon the occurrence of an event of default under the Credit Agreement, including payment defaults, defaults in the performance of affirmative and negative covenants, the inaccuracy of representations or warranties, bankruptcy and insolvency related defaults, cross defaults to other material indebtedness, defaults arising in connection with changes in control and other customary events of default.

The Credit Agreement also contains the financial covenants which the Company must maintain. See the section below, "Financial Covenants" for a presentation of the Company's more significant covenants associated with the Credit Agreement.

$85.0 million Revolving Credit Facility - SunTrust Bank, N.A.

At December 31, 2011, the Company had an $85.0 million revolving credit facility with SunTrust Bank, N.A.,(the "Facility"). The Facility had an original maturity of June 2013. The Facility bore interest at a variable rate determined based upon the higher of (i) the prime rate, (ii) the federal funds rate plus 0.50% or (iii) LIBOR plus 1%, plus a margin tied to the Company's leverage ratio. The Company could select at its discretion to convert the interest rate for all or a portion of the outstanding balance for a period of up to six months to a fixed EURO Dollar Funding rate which is equal to the adjusted LIBOR rate for the elected interest period in effect at the time of election, plus a margin tied to the Company's leverage ratio.

Termination of the $85.0 million Facility

On August 2, 2012, the Company terminated the Facility and entered into the Credit Agreement. In connection with the termination of the Facility, the Company recorded a charge of $0.7 million to interest expense for the year ending December 31, 2012, for previously capitalized transaction costs associated with the Facility.

Financial Covenants

At December 31, 2012 and 2011, respectively, the Company had to comply with various financial covenants set forth in the Credit Agreement and the Facility, respectively. The following describes the Credit Agreement's more significant financial covenants in effect at December 31, 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 Earnings Before Interest, Taxes, Depreciation and Amortization ("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.

36

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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 NAIC RBC (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 Credit Agreement's more significant financial covenants calculated at December 31, 2012:

		Actual At
Covenant	Covenant Requirement	December 31, 2012
Total leverage ratio	not more than 3.50	3.10
Fixed charge coverage ratio	not less than 2.00	2.33
Reinsurance ratio	not less than 50%	69.0%
RBC Ratio's:
RBC Ratio - Bankers Life of Louisiana	not less than 250%	469.0%
RBC Ratio - Southern Financial Life Insurance Company	not less than 250%	2,155.0%
RBC Ratio - Insurance Company of the South	not less than 250%	378.0%
RBC Ratio - Lyndon Southern Insurance Company	not less than 250%	255.0%
RBC Ratio - Life of the South Insurance Company	not less than 250%	386.0%

The following describes the Facility's more significant financial covenants in effect at December 31, 2011 and the calculations used to arrive at each ratio:

Fixed charge coverage ratio - is the ratio of Consolidated Adjusted EBITDA less the actual amount paid by the Company and its Subsidiaries in cash on account of Capital Expenditures less cash taxes to the Consolidated Fixed Charges, in each case measured for the four consecutive Fiscal Quarters ending on or immediately prior to such date.

Total leverage ratio - is the ratio of, as of any date, Consolidated Total Debt as of such date to the Consolidated Adjusted EBITDA for the four consecutive Fiscal Quarters ending on or immediately prior to such date.

Senior leverage ratio - is the ratio of, as of any date, Consolidated Senior Debt as of such date to the Consolidated Adjusted EBITDA for the four consecutive Fiscal Quarters ending on or immediately prior to such date.

Reinsurance ratio - is the ratio (expressed as a percentage) of, as of any date of determination, of the aggregate amounts recoverable by the Company and its Restricted Subsidiaries from reinsurers divided by the sum of (i) policy and claim liabilities plus (ii) unearned premiums, in each case of the Company and its Restricted Subsidiaries determined in accordance with GAAP.

The following is a summary of the Facility's more significant financial covenants in effect at December 31, 2011:

		Actual At
Covenant	Covenant Requirement	December 31, 2011
Fixed charge coverage ratio	not less than 1.25	4.50
Total leverage ratio	not more than 3.50	2.45
Senior leverage ratio	not more than 2.50	2.45
Reinsurance ratio	not less than 60%	75.0%

15. Derivative Financial Instruments - Interest Rate Swap

In April 2011, the Company entered into a forward interest rate swap (the "Swap") with Wells Fargo Bank, N.A, pursuant to which the Company swapped the floating rate portion of its outstanding preferred trust securities to a fixed rate. The Swap commenced in June 2012 and expires in June 2017 and is designated as a cash flow hedge.

The following table summarizes the fair value (including accrued interest) and related outstanding notional amounts of derivative instruments and indicates where within the Consolidated Balance Sheets each is reported:

37

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

	Balance Sheet Location	At December 31,
		2012			2011
Derivatives designated as cash flow hedging instruments:
Interest rate swap - notional value		$	35,000		$	35,000
Fair value of the Swap	Other Liabilities	$	(4,338	)	$	(3,601	)
Unrealized loss, net of tax, on the fair value of the Swap	AOCI	$	(2,820	)	$	(2,340	)
Variable rate of the interest rate swap (1)		0.31		%	—		%
Fixed rate of the interest rate swap (1)		3.47		%	—		%

^{(1) -} The swap took effect in June 2012.

The following table summarizes the pretax impact of the interest rate swap designated as a cash flow hedge on the Consolidated Financial Statements for the following periods:

	Years Ended December 31,
	2012			2011			2010
(Loss) recognized in AOCI on the derivative-effective portion	$	(611	)	$	(3,601	)	$	—
(Loss) reclassified from AOCI into income-effective portion	$	126		$	—		$	—
Gain (loss) recognized in income on the derivative-ineffective portion	$	—		$	—		$	—

The table below shows the estimated amount to be reclassified to earnings from AOCI during the next 12 months. These net losses reclassified into earnings are expected to primarily increase net interest expense related to the respective hedged item.

	At
	December 31, 2012
Estimated loss to be reclassified to earnings from AOCI during the next 12 months	$	1,117

16. Stock-Based Compensation

At December 31, 2012, the Company has outstanding time-based stock options under its 2005 Plan and outstanding time- and performance-based stock options and restricted stock awards under its 2010 Plan. The 2005 Plan permits awards of (i) Incentive Stock Options, (ii) Non-qualified Stock Options, (iii) Stock Appreciation Rights, (iv) Restricted Stock and (v) Restricted Stock Units. The 2010 Plan permits awards of (i) Incentive Stock Options, (ii) Non-qualified Stock Options, (iii) Stock Appreciation Rights, (iv) Restricted Stock, (v) Other Stock-Based Awards and (vi) Performance-Based Compensation Awards. The following table details the 2005 Plan and the 2010 Plan at December 31, 2012:

	2005 Plan	2010 Plan
Date the plan was established	October 18, 2005	December 13, 2010
Share permitted to be issued under the plan	1,312,500	4,000,000
Maximum contractual term of grants under the plan (in years)	10.0	10.0
Time-based stock options outstanding under the plan	1,545,462	470,769
Performance-based stock options outstanding under the plan	—	185,000
Time-based restricted stock awards under the plan	—	103,000
Performance-based restricted stock awards outstanding under the plan	—	80,861

38

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Stock Options

A summary of the Company's time- and performance-based stock option activity is presented below:

	Time-Based								Performance-Based
	Options Outstanding		Weighted Average Exercise Price		Options Exercisable		Weighted Average Exercise Price		Options Outstanding(1)	Weighted Average Exercise Price		Options Exercisable	Weighted Average Exercise Price
Balance, January 1, 2011	1,955,792		$	3.29	1,780,663		$	3.00	—	$	—	—	$	—
Granted	280,000		7.84		—		—		—	—		—	—
Vested	—		—		148,705		5.78		—	—		—	—
Exercised	(322,061	)	1.88		(322,061	)	1.88		—	—		—	—
Canceled/forfeited	(20,000	)	7.84		—		—		—	—		—	—
Balance, December 31, 2011	1,893,731		$	4.15	1,607,307		$	3.41	—	$	—	—	$	—
Granted	125,000		7.97		—		—		185,000	8.00		—	—
Vested	—		—		85,233		8.50		—	—		—	—
Exercised	(2,500	)	7.84		(2,500	)	7.84		—	—		—	—
Canceled/forfeited	—		—		—		—		—	—		—	—
Balance, December 31, 2012	2,016,231		$	4.38	1,690,040		$	3.66	185,000	$	8.00	—	$	—
Weighted average remaining contractual term at December 31, 2012 (in years)	5.0				4.2				9.5			0

⁽¹⁾ The performance-based stock options granted during the year ended December 31, 2012 will begin to vest equally over three years upon the Company's compensation committee determining that the Company has attained an Adjusted EBITDA of $46.0 million.

The following presents the Company's outstanding and exercisable time- and performance-based stock options by exercise price at December 31, 2012:

	Options Outstanding				Options Exercisable
Exercise Price	Option Shares Outstanding	Weighted Average Remaining Contractual Life (years)	Weighted Average Exercise Price		Option Shares Outstanding	Weighted Average Remaining Contractual Life (years)	Weighted Average Exercise Price
$3.03	787,500	2.88	$	3.03	787,500	2.88	$	3.03
3.25	757,963	4.82	3.25		757,963	4.82	3.25
7.84	257,500	8.50	7.84		80,214	8.50	7.84
7.93	15,000	9.75	7.93		—	—	—
7.97	110,000	9.67	7.97		—	—	—
8.00	185,000	9.50	8.00		—	—	—
11.00	88,268	7.96	11.00		64,363	7.96	11.00
Totals	2,201,231	5.35	$	4.69	1,690,040	4.21	$	3.66

Information on time- and performance-based stock options, vested and expected to vest, is as follows:	At
	December 31, 2012
Number of shares vested and expected to vest	2,188,170
Weighted average remaining contractual life (in years)	5.3
Weighted average exercise price per option (in dollars)	$	4.66
Intrinsic value	$	9,427

39

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Additional information on time- and performance-based options granted, vested and exercised is presented below:

	Years Ended December 31,
	2012		2011		2010
Weighted-average grant date fair value of stock options granted (in dollars)	$	2.80	$	2.92	$	3.18
Total stock options granted (in shares)	310,000		280,000		88,268
Total fair value of stock options vested during the year	$	268	$	268	$	167
Total intrinsic value of stock options exercised (1)	$	—	$	2,920	$	369
Cash received from stock option exercises	$	20	$	607	$	117
Tax benefits realized from exercised stock options	$	—	$	45	$	86
Cash used to settle equity instruments granted under stock-based compensation awards	$	—	$	—	$	—
New shares issued upon the exercise of stock options	2,500		322,061		44,185
Outstanding stock options issued outside of existing plans (in shares)	272,338		272,338		296,724

⁽¹⁾ Calculated as the difference between the market value at the exercise date and the exercise price of the shares.

The weighted average assumptions used to estimate the fair values of all stock options granted is as follows:

	Years Ended December 31,
	2012		2011		2010
Expected term (years)	6.2		6.1		5.0
Expected volatility	34.34	%	33.95	%	32.71	%
Expected dividends	—	%	—	%	—	%
Risk-free rate	0.91	%	2.22	%	2.06	%

Restricted Stock Awards

A summary of the Company's time- and performance-based restricted stock award activity is presented below:

	Time-Based				Performance-Based
	Shares		Weighted Average Grant Date Fair Value		Shares		Weighted Average Grant Date Fair Value
Shares outstanding at January 1, 2011	60,000		$	11.00	100,000		$	11.00
Grants	7,000		7.64		—		—
Vests	(18,500	)	10.36		—		—
Forfeitures	(15,500	)	10.90		(19,139	)	11.00
Shares outstanding at December 31, 2011	33,000		10.69		80,861		11.00
Grants	88,000		7.48		—		—
Vests	(18,000	)	10.43		—		—
Forfeitures	—		—		—		—
Shares outstanding at December 31, 2012	103,000		$	8.00	80,861		$	11.00

Stock-based Compensation Expense

Total time- and performance-based stock-based compensation expense and the related income tax (benefit), as recognized on the Consolidated Statements of Income, is as follows:

	Years Ended December 31,
	2012			2011			2010
Personnel costs	$	661		$	593		$	167
Other operating expenses	293			154			9
Income tax benefit	(365		)	(286		)	(67		)
Net stock-based compensation expense	$	589		$	461		$	109

Additional information on total non-vested stock-based compensation is as follows:	At
	December 31, 2012
	Stock Options		Restricted Stock Awards
Unrecognized compensation cost related to non-vested awards	$	1,180	$	1,039
Weighted-average recognition period (in years)	2.7		4.7

40

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Employee Stock Purchase Plan

The Company has an Employee Stock Purchase Plan ("ESPP"),which allows the Company to issue up to 1,000,000 shares of common stock to all eligible employees, including the Company's named executive officers, under the same offering and eligibility terms. The ESPP qualifies under Section 423 of the Internal Revenue Code and allows eligible employees to contribute, at their discretion, up to 10% of their payroll, up to $25,000 per year, to purchase up to a maximum of 3,500 shares of the Company's common stock per offering period. The purchase price of Fortegra's common stock is equal to 85% of the lesser of the fair market value of the closing stock price of Fortegra's common stock on either the first day of the offering period or the last day of the offering period. Each offering period has a duration of six months and begins on January 1st and July 1st of each year.

Information related to the Company's ESPP is as follows:	Years Ended December 31,
	2012		2011		2010 (1)
Common stock issued under the ESPP (in shares)	53,511		10,167		—
Weighted-average purchase price per share by participant in the ESPP	$	6.18	$	5.68	$	—
Total cash proceeds received from the issuance of common shares under the ESPP	$	330	$	100	$	—
ESPP compensation costs recognized	$	90	$	15	$	—

⁽¹⁾ The Company's ESPP began open enrollment in July 2011.

17. Share Repurchase Plan

Fortegra has an active share repurchase plan which allows the Company to purchase up to $10.0 million in total of the Company's common stock to be purchased from time to time through open market or private transactions. The plan was approved by the Board of Directors in November 2011 and provides for shares to be repurchased for general corporate purposes, which may include serving as a resource for funding potential acquisitions and employee benefit plans. The timing, price and quantity of purchases are at the discretion of Fortegra. The plan may be discontinued or suspended at any time and has no expiration date. None of the shares repurchased during the years ended December 31, 2012 and 2011, respectively, have been retired.

The following table shows the shares repurchased during the following periods:

	Years Ended December 31,
	2012		2011
Shares repurchased during the period	508,080		471,554
Total cost of shares repurchased during the period	$	3,923	$	2,552
Average price paid per share for shares purchased during the period	$	7.72	$	5.41

From January 1, 2013 through March 29, 2013, the Company did not purchase any of its common stock under the share repurchase plan.

18. 401(k) Profit Sharing Plan

The Company has a 401(k) plan (the "401(k) Plan") available to employees meeting certain eligibility requirements. The 401(k)Plan allows employees to contribute, at their discretion, a percentage of their pre-tax annual compensation and allows for employees to select from various investment options based on their individual investment goals and risk tolerances. Under the 401(k) Plan, the Company will match 100% of each dollar of the employee contribution up to the maximum of 5% of the employee's annual compensation. The contributions of the 401(k) Plan are invested at the election of the employee in one or more investment options by a third party plan administrator. In July 2009, the Company suspended the matching contribution. The matching contribution was reinstated in January 2010 and subsequently suspended in August 2010.

The Company's matching contributions to the 401(k) Plan are as follows:	Years Ended December 31,
	2012		2011		2010
401(k) matching contribution expense	$	—	$	—	$	568

19. Deferred Compensation Plan

The Company has a nonqualified deferred compensation plan for certain officers. Provision has been made for the compensation which is payable upon their retirement or death. The deferred compensation is to be paid to the individual or their beneficiaries over a period of ten years commencing with the first year following retirement or death. As of December 31, 2012, there were no further payments required under the plan.

41

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The Company also has deferred bonus agreements with several key executives whereby funds are contributed to "rabbi" trusts held for the benefit of the executives. The funds held in the rabbi trusts are included in cash and cash equivalents and the corresponding deferred compensation obligation is included in the line item, "Accrued expenses, accounts payable and other liabilities," on the Consolidated Balance Sheets. Pursuant to U.S. GAAP, the portion of the rabbi trusts invested in shares of the Company has been reflected in the treasury stock balance on the Consolidated Balance Sheets at December 31, 2012 and 2011.

20. Income Taxes

The provision for income taxes consisted of the following:	At December 31,
	2012		2011		2010
			As Restated		As Restated
Current	$	4,043	$	5,419	$	3,822
Deferred	4,252		1,721		4,337
Income taxes	$	8,295	$	7,140	$	8,159

The reconciliation of the income tax expense at the federal statutory income tax rate of 35% is as follows for the:

	Years Ended December 31,
	2012					2011 - As Restated					2010 - As Restated
	Amount			Percent of Pre-tax Income		Amount			Percent of Pre-tax Income		Amount			Percent of Pre-tax Income
Income taxes at federal income tax rate	$	8,236		35.00	%	$	7,168		35.00	%	$	8,181		35.00	%
Effect of:
Small life deduction	(444		)	(1.89	)	(375		)	(1.83	)	(465		)	(1.99	)
Non-deductible expenses	51			0.22		267			1.30		179			0.77
Non-deductible preferred dividends	—			—		105			0.51		301			1.29
Tax exempt interest	(123		)	(0.52	)	(120		)	(0.59	)	(117		)	(0.50	)
State taxes	535			2.27		339			1.66		597			2.55
Goodwill amortization	—			—		—			—		(243		)	(1.04	)
Prior year tax true up	98			0.42		(506		)	(2.47	)	(647		)	(2.77	)
Other, net	(58		)	(0.25	)	262			1.28		373			1.60
Income tax expense	$	8,295		35.25	%	$	7,140		34.86	%	$	8,159		34.91	%

The components of the Company's deferred taxes are as follows:	At December 31,
	2012		2011
Gross deferred tax assets			As Restated
Unearned premiums	$	4,852	$	4,825
Deferred revenue	8,002		8,140
Net operating loss carryforward	516		1,413
Unrealized loss on interest rate swap	1,636		1,260
Research credit	671		676
Unpaid claims	146		634
Deferred compensation	483		248
Bad debt allowance	238		118
Other deferred assets	108		71
Total gross deferred tax assets	16,652		17,385
Gross deferred tax liabilities
Deferred acquisition costs	20,250		19,235
Other intangible assets	14,218		14,170
Advanced commissions	4,204		2,759
Depreciation on property and equipment	5,246		4,642
Unrealized gains on investments	1,290		424
Other basis differences in investments	65		77
Other deferred tax liabilities	37		47
Total gross deferred tax liabilities	45,310		41,354
Deferred income taxes, net	$	28,658	$	23,969

42

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

At December 31, 2012, the Company had a net operating loss carry forward of $1.4 million, which is subject to certain limitations under IRC Section 382 and will begin to expire in 2019. The Company expects full utilization of the net operating loss carryforward by the end of 2013.

In addition, the Company has research and experimentation (research) tax credit carry forwards for federal and state income tax purposes in the amount of $0.5 million and $0.2 million, respectively. The federal research credit is also subject to certain limitations under IRC Section 382. The research credit carry forwards will begin to expire in 2019. As part of the valuation determinations of the subsidiary in which the research credit was generated, the Company recorded a $0.2 million liability against the research credit carryforward deferred tax asset.

The Company has reviewed its uncertain tax positions and management has concluded that there are no additional amounts required to be recorded in accordance with ASC 740-10.

As of December 31, 2012, the Company was under examination by the Internal Revenue Service ("IRS") for the 2009 and 2010 tax years. In February 2013, the IRS completed its field audit for those tax years and presented preliminary findings.  The Company has agreed to those findings and paid $57.0 thousand, an amount considered immaterial to the consolidated group as of December 31, 2012.  In March 2013, the Company received notice from the IRS that the audit report has been fully approved. The assessment will be expensed in the first quarter of 2013.

21. Fair Value of Financial Instruments 

The carrying and fair values of financial instruments are as follows:	At
	December 31, 2012				December 31, 2011
	Carrying Value		Fair Value		Carrying Value		Fair Value
Financial assets:					As Restated		As Restated
Cash and cash equivalents	$	15,209	$	15,209	$	31,339	$	31,339
Fixed maturity securities:
Obligations of the U.S. Treasury and U.S. Government agencies	23,178		23,178		26,360		26,360
Municipal securities	17,041		17,041		17,992		17,992
Corporate securities	70,008		70,008		47,472		47,472
Mortgage-backed securities	289		289		1,298		1,298
Asset-backed securities	125		125		387		387
Equity securities:
Common stock - publicly traded	42		42		39		39
Preferred stock - publicly traded	5,107		5,107		52		52
Common stock - non-publicly traded	58		58		114		114
Preferred stock - non-publicly traded	1,013		1,013		1,014		1,014
Notes receivable	11,290		11,290		3,603		3,603
Accounts and premiums receivable, net	27,026		27,026		19,690		19,690
Other receivables	13,511		13,511		9,465		9,465
Short-term investments	1,222		1,222		1,070		1,070
Total financial assets	$	185,119	$	185,119	$	159,895	$	159,895
Financial liabilities:
Notes payable	$	89,438	$	89,438	$	73,000	$	73,000
Preferred trust securities	35,000		35,000		35,000		35,000
Interest rate swap	4,338		4,338		3,601		3,601
Total financial liabilities	$	128,776	$	128,776	$	111,601	$	111,601

43

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The Company's financial assets and liabilities accounted for at fair value by level within the fair value hierarchy are as follows:

At December 31, 2012			Fair Value Measurements Using:
			Quoted prices in active markets for identical assets		Significant other observable inputs		Significant unobservable inputs
	Fair Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets:
Fixed maturity securities:
Obligations of the U.S. Treasury and U.S. Government agencies	$	23,178	$	—	$	23,178	$	—
Municipal securities	17,041		—		17,041		—
Corporate securities	70,008		—		69,956		52
Mortgage-backed securities	289		—		289		—
Asset-backed securities	125		—		125		—
Equity securities:
Common stock - publicly traded	42		—		42		—
Preferred stock - publicly traded	5,107		5,107		—		—
Common stock - non-publicly traded	58		—		—		58
Preferred stock - non-publicly traded	1,013		—		—		1,013
Short-term investments	1,222		1,222		—		—
Total assets	$	118,083	$	6,329	$	110,631	$	1,123
Financial Liabilities:
Interest rate swap	$	4,338	$	—	$	4,338	$	—

At December 31, 2011			Fair Value Measurements Using:
			Quoted prices in active markets for identical assets		Significant other observable inputs		Significant unobservable inputs
	Fair Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets:
Fixed maturity securities:
Obligations of the U.S. Treasury and U.S. Government agencies	$	26,360	$	—	$	26,360	$	—
Municipal securities	17,992		—		17,992		—
Corporate securities	47,472		—		47,396		76
Mortgage-backed securities	1,298		—		1,298		—
Asset-backed securities	387		—		387		—
Equity securities:
Common stock - publicly traded	39		39		—		—
Preferred stock - publicly traded	52		52		—		—
Common stock - non-publicly traded	114		—		—		114
Preferred stock - non-publicly traded	1,014		—		—		1,014
Short-term investments	1,070		1,070		—		—
Total Assets	$	95,798	$	1,161	$	93,433	$	1,204
Financial Liabilities:
Interest rate swap	$	3,601	$	—	$	3,601	$	—

There were no transfers between Level 1 and Level 2 for the year ended December 31, 2012. For the year ended December 31, 2012, a single equity security was transferred from Level 3 to Level 2. This transfer occurred due to the availability of Level 2 pricing for the equity security, which was unavailable in prior periods. The Company's use of Level 3 unobservable inputs included 7 individual securities that accounted for 1.0% of total investments at December 31, 2012. The Company utilized an independent third party pricing service to value 5 of the Level 3 securities. The value of 2 equity securities in Level 3, which are non-publicly traded preferred stocks, were calculated by the Company. One of the equity securities, with a value of $1.0 million was valued by taking into account the strength of the issuer's parent company guaranteeing the dividend of the issuer. The second Level 3 equity security, with a value of $13.0 thousand was valued by estimating the total value of the Class-A shares outstanding by the issuer and a review of the company's audited financial statements. At December 31, 2011, the Company had 12 individual securities valued under Level 3 that accounted for 1.3% of total investments.

44

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The following table summarizes the changes in Level 3 assets measured at fair value:	For the Years Ended December 31,
	2012			2011
Beginning balance, January 1,	$	1,204		$	1,425
Total investment gains or losses (realized/unrealized):
Included in net income	—			319
Included in other comprehensive (loss)	(31		)	(120		)
Sales	(47		)	(522		)
Transfers (out of) into Level 3	(3		)	102
Ending balance, December 31,	$	1,123		$	1,204

22. Statutory Reporting and Insurance Subsidiaries Dividend Restrictions

The Company's insurance subsidiaries may pay dividends to the Company, subject to statutory restrictions. Payments in excess of statutory restrictions (extraordinary dividends) to the Company are permitted only with prior approval of the insurance departments of the applicable state of domicile. All dividends from subsidiaries were eliminated in the Consolidated Financial Statements. The following table sets forth the dividends paid to the Company by its insurance company subsidiaries for the following periods:

	For the Years Ended December 31,
	2012		2011
Ordinary dividends	$	2,783	$	6,956
Extraordinary dividends	—		830
Total dividends	$	2,783	$	7,786

The following table details the combined statutory capital and surplus of the Company's insurance subsidiaries, the required minimum statutory capital and surplus, as required by the laws of the states in which they are domiciled and the combined amount available for ordinary dividends of the Company's insurance subsidiaries for the following periods:

	At December 31,
	2012		2011
Combined statutory capital and surplus of the Company's insurance subsidiaries	$	53,885	$	50,230
Required minimum statutory capital and surplus	$	15,300	$	15,300
Amount available for ordinary dividends of the Company's insurance subsidiaries	$	4,500	$	2,344

Under the NAIC's Risk-Based Capital Act of 1995, a company's RBC is calculated by applying certain risk factors to various asset, claim and reserve items. If a company's adjusted surplus falls below calculated RBC thresholds, regulatory intervention or oversight is required. The insurance subsidiaries' RBC levels, as calculated in accordance with the NAIC's RBC instructions, exceeded all RBC thresholds as of December 31, 2012 and 2011, respectively.

23. Commitments and Contingencies

Commitments

The Company, from time to time, may in the ordinary normal business enter into certain contractual obligations or commitments.

As part of the 2012 acquisition of ProtectCELL, the Company has a conditional commitment to provide up to $10.2 million of additional capital ("Additional Fortegra Capital Contributions") to ProtectCELL if the board of directors of ProtectCELL (the "PC Board") determines that ProtectCELL requires additional funds to support expansion and growth, or other appropriate business needs.

The Company is obligated to evaluate any such funding request received from the PC Board in good faith to determine whether in the Company's reasonable business judgment the requested capital should be contributed. Fortegra is not required to honor the funding request from the PC Board if it in good faith deems the request to be imprudent or unjustified.

The benefits of such additional funding would inure to the Company and to the non-controlling ownership interest of ProtectCell, in proportion to their respective ownership interests. However, in return for each $1,000 of Additional Fortegra Capital Contributions, the Fortegra Members shall receive one Series A Preferred Unit. Any unreturned Series A Preferred contribution is deducted from ProtectCELL's valuation in determining the option price.

45

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Contingencies

The Company is a party to claims and litigation in the normal course of its operations. Management believes that the ultimate outcome of these matters will not have a material adverse effect on the consolidated financial condition, results of operations or cash flows of the Company.

In the Payment Protection segment, the Company is currently a defendant in lawsuits that relate to marketing and/or pricing issues that involve claims for punitive, exemplary or extra-contractual damages in amounts substantially in excess of the covered claim.  Such litigation includes Lawson v. Life of the South Insurance Co., which was filed on March 13, 2006, in the Superior Court of Muscogee County, Georgia, and later moved to the United States District Court for the Middle District of Georgia, Columbus Division.  The allegations involve the Company's alleged duty to refund unearned premiums on credit insurance policies, even when the Company has not been informed of the payoff of the underlying finance contract. The action seeks an injunction requiring remedial action, as well as a variety of damages, including punitive damages and attorney fees and costs.  The action was brought as a class action, however the Company's May 11, 2012 Motion to Strike or Dismiss Plaintiffs' Class Action Allegations, or in the Alternative, to Deny Class Certification was granted on September 28, 2012.  Plaintiff's appeal of such ruling was denied on December 7, 2012.  The merits discovery phase continues in the individual, underlying case.

Also in the Payment Protection segment, the Company is currently a defendant in Mullins v. Southern Financial Life Insurance Co., which was filed on February 2, 2006, in the Pike Circuit Court, in the Commonwealth of Kentucky.  A class was certified on June 25, 2010.  At issue is the duration or term of coverage under certain policies.  The action alleges violations of the Consumer Protection Act and certain insurance statutes, as well as common law fraud.  The action seeks compensatory and punitive damages, attorney fees and interest.  The parties are currently involved in the merits discovery phase and discovery disputes have arisen.  Plaintiffs filed a Motion for Sanctions on April 5, 2012 in connection with the Company's efforts to locate and gather certificates and other documents from the Company's agents.  While the court did not award sanctions, it did order the Company to subpoena certain records from its agents.  The Company filed an appeal of this order, which was denied on August 31, 2012.  The Company is currently appealing the denial in the Kentucky Supreme Court. To date, no trial date has been set.

In the Motor Clubs business in the Payment Protection segment, the Company is currently a Defendant in Dill and Thurman v. Continental Car Club, Inc. and Fortegra Financial Corp., which was filed on August 18, 2011 in the Tennessee Chancery Court, Rhea County.  The Plaintiffs assert claims for breach of their employment and non-competition agreements, among other claims, and seek injunctive relief and damages in connection with the Company's purchase of Continental Car Club, Inc. from Plaintiffs in May 2010.  The trial court ruled in November 2012 that Plaintiffs resigned for good reason from the Company, the result of which is that the Company can enforce the non-competition and non-solicitation provisions contained in the Plaintiffs' employment agreements for a period of up to two years, but that the Company is required to pay Plaintiffs base salary and accrued benefits during such period. As of December 31, 2012, the value of such salary and benefits is $0.4 million; the value would increase over time through the two-year period to an estimated maximum of approximately $0.8 million.  The Company has filed for an appeal of this ruling and will vigorously defend its position.  The Company believes that it is not probable that the judgment will be upheld through the appeal process, and that reasonably possible outcomes range from $0 to the amount of the judgment.  Accordingly, the Company has not recorded a charge with respect to this loss contingency as of December 31, 2012.

The Company considers such litigation customary in its lines of business.  In management's opinion, based on information available at this time, the ultimate resolution of such litigation, which it is vigorously defending, should not be materially adverse to the financial position, results of operations or cash flows of the Company. It should be noted that large punitive damage awards, bearing little relation to actual damages sustained by plaintiffs, have been awarded in certain states against other companies in the credit insurance business. Loss contingencies may be taken as developments warrant, although such amounts are not reasonably estimable at this time.

24. Segment Results

The Company conducts business through three business segments: (i) Payment Protection; (ii) BPO; and (iii) Brokerage. The revenue for each segment is presented to reflect the operating characteristics of the segment. The Company allocates certain revenues and expenses to the segments. These items consist primarily of corporate-related income, transaction related costs, executive stock compensation and other overhead expenses. Segment assets are not presented to the Company's chief operating decision maker for operational decision-making and therefore are not disclosed in the accompanying table.

The Company measures the profitability of its business segments with the allocation of Corporate revenues and expenses and without taking into account amortization, depreciation, interest expense and income taxes. The Company refers to this financial performance measure as segment EBITDA (earnings before interest, taxes, depreciation and amortization). The Company's financial measure of segment EBITDA meets the definition of a Non-GAAP financial measure and is not a recognized term under U.S. GAAP, nor is it an alternative to the U.S. GAAP financial measures presented in this Form 10-K. The Non-GAAP financial measure in this Form 10-K should be used in addition to, but not as a substitute for, the U.S. GAAP financial measures presented elsewhere in this Form 10-K.

46

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The Company believes that this Non-GAAP financial measure provides useful information to management, analysts and investors regarding financial and business trends relating to the Company's results of operations and financial condition. The variability of the Company's segment EBITDA is significantly affected by segment net revenues because a large portion of the Company's operating expenses are fixed. The Company's industry peers may also provide similar supplemental Non-GAAP financial measures, although they may not use the same or comparable terminology and may not make identical adjustments. 

The following table presents the Company's business segment results:

	For the Years Ended December 31,
	2012			2011			2010
				As Restated			As Restated
Segment Net Revenue
Payment Protection
Service and administrative fees	$	70,365		$	76,244		$	34,568
Ceding commission	34,825			29,495			28,767
Net investment income	3,068			3,368			4,073
Net realized investment gains (losses)	3			4,193			650
Other income	269			170			230
Net earned premium	127,625			115,503			111,805
Net losses and loss adjustment expenses	(40,219		)	(37,949		)	(36,035		)
Member benefit claims	(4,642		)	(4,409		)	(466		)
Commissions	(128,741		)	(126,918		)	(92,646		)
Total Payment Protection Net Revenue	62,553			59,697			50,946
BPO	18,424			15,584			17,069
Brokerage
Brokerage commissions and fees	35,306			34,396			24,620
Service and administrative fees	1,761			2,636			4,617
Total Brokerage	37,067			37,032			29,237
Total segment net revenue	118,044			112,313			97,252
Operating Expenses
Payment Protection	36,420			33,514			25,126
BPO	14,227			11,598			10,002
Brokerage (1)	28,355			29,289			23,529
Corporate	—			1,763			2,130
Total operating expenses	79,002			76,164			60,787
EBITDA
Payment Protection	26,133			26,183			25,820
BPO	4,197			3,986			7,067
Brokerage (1)	8,712			7,743			5,708
Corporate	—			(1,763		)	(2,130		)
Total EBITDA	39,042			36,149			36,465
Depreciation and Amortization
Payment Protection	3,590			4,205			2,352
BPO	2,290			1,124			598
Brokerage	3,006			2,700			1,678
Total depreciation and amortization	8,886			8,029			4,628
Interest Expense
Payment Protection	4,146			4,649			7,197
BPO	1,035			419			433
Brokerage	1,443			2,573			834
Total interest expense	6,624			7,641			8,464
Income before income taxes and non-controlling interests

47

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

	For the Years Ended December 31,
	2012		2011			2010
			As Restated			As Restated
Payment Protection	18,397		17,329			16,271
BPO	872		2,443			6,036
Brokerage (1)	4,263		2,470			3,196
Corporate	—		(1,763		)	(2,130		)
Total income before income taxes and non-controlling interests	23,532		20,479			23,373
Income taxes	8,295		7,140			8,159
Less: net income (loss) attributable to non-controlling interests	72		(170		)	20
Net income	$	15,165	$	13,509		$	15,194

⁽¹⁾ - Includes loss on sale of subsidiary of $477 for the year ended December 31, 2011.

The following table reconciles segment information to the Company's Consolidated Statements of Income and provides a summary of other key financial information for each segment:

Reconciliation of Segment Net Revenue to Total Revenue and EBITDA to Net Income	For the Years Ended December 31,
	2012		2011			2010
			As Restated			As Restated
Segment Net Revenue
Payment Protection	$	62,553	$	59,697		$	50,946
BPO	18,424		15,584			17,069
Brokerage	37,067		37,032			29,237
Segment net revenues	118,044		112,313			97,252
Net losses and loss adjustment expenses	40,219		37,949			36,035
Member benefit claims	4,642		4,409			466
Commissions	128,741		126,918			92,646
Total segment revenue	291,646		281,589			226,399
Operating Expenses
Payment Protection	36,420		33,514			25,126
BPO	14,227		11,598			10,002
Brokerage (1)	28,355		29,289			23,529
Corporate	—		1,763			2,130
Total operating expenses	79,002		76,164			60,787
Net losses and loss adjustment expenses	40,219		37,949			36,035
Member benefit claims	4,642		4,409			466
Commissions	128,741		126,918			92,646
Total operating expenses before depreciation, amortization and interest expense	252,604		245,440			189,934
EBITDA
Payment Protection	26,133		26,183			25,820
BPO	4,197		3,986			7,067
Brokerage (1)	8,712		7,743			5,708
Corporate	—		(1,763		)	(2,130		)
Total EBITDA	39,042		36,149			36,465
Depreciation and amortization
Payment Protection	3,590		4,205			2,352
BPO	2,290		1,124			598

48

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Reconciliation of Segment Net Revenue to Total Revenue and EBITDA to Net Income	For the Years Ended December 31,
	2012		2011			2010
			As Restated			As Restated
Brokerage	3,006		2,700			1,678
Total depreciation and amortization	8,886		8,029			4,628
Interest Expense
Payment Protection	4,146		4,649			7,197
BPO	1,035		419			433
Brokerage	1,443		2,573			834
Total interest expense	6,624		7,641			8,464
Income (loss) before income taxes and non-controlling interests
Payment Protection	18,397		17,329			16,271
BPO	872		2,443			6,036
Brokerage (1)	4,263		2,470			3,196
Corporate	—		(1,763		)	(2,130	)
Total income before income taxes and non-controlling interests	23,532		20,479			23,373
Income taxes	8,295		7,140			8,159
Less: net income (loss) attributable to non-controlling interests	72		(170		)	20
Net income	$	15,165	$	13,509		15,194

⁽¹⁾ - Includes loss on sale of subsidiary of $477 for the year ended December 31, 2011.

25. Related Party Transactions

In conjunction with the December 31, 2012 acquisition of ProtectCELL, the Company assumed an office space lease between ProtectCELL and 39500 High Pointe, LLC, ("High Pointe"). The ownership of High Pointe includes three members who were the founding members and are currently employees of ProtectCELL. The Company did not make any lease payments to High Pointe for the year ended December 31, 2012.

In addition, ProtectCELL holds a $6.1 million note receivable carrying an interest rate of 8.00% from High Pointe, which is fully secured by a mortgage on the office building owned by High Pointe. For the year ending December 31, 2012, the Company did not receive payments from High Pointe on the note receivable.

An executive officer of ProtectCELL owns multiple wireless retail locations, which sell ProtectCELL protection plans to wireless retail customers. For the year ending December 31, 2012, the Company did not record income related to this related party arrangement.

In conjunction with the December 31, 2012 acquisition of 4Warranty, the Company assumed an office space lease between 4Warranty and Source International Incorporated ("Source"), effective January 1, 2013. The ownership of Source is comprised of two individuals who have consulting relationships with the Company. The Company did not make any lease payments to Source for the year ended December 31, 2012.

In January 2012, the Company recorded a receivable due from an officer of the Company relating to the 2010 acquisition of South Bay Acceptance Corporation, which has a balance of $0.1 million at December 21, 2012 and 2011, respectively.

In December 2011, the Company entered into an information technology support services agreement (the "IT Agreement") with a company for which a member serving on the Company's Board of Directors also serves on the board of the company receiving the information support services. The IT Agreement has no set term and calls for a total of $0.3 million plus reimbursement of expenses to be received by the Company over the duration of the agreement.

In December 2011, the Company entered into a marketing and referral agreement (the "Marketing Agreement") with a company in which a member serving on the Company's Board of Directors also serves on the board of the company providing the marketing services (the "Marketer"). The Marketing Agreement has a five year term and requires the Company to pay the Marketer a per account fee per month based on the number of enrolled customers the Marketer obtains for the Company.

49

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

In connection with the Summit Partners acquisition of the Company on June 20, 2007, $20.0 million of subordinated debentures were issued to affiliates of Summit Partners, a related party, and reported in the notes payable line of the Consolidated Balance Sheets. The subordinated debentures had an original maturity of June 20, 2012, which was subsequently amended to mature in June 2013, and bore interest at 14% per annum on the principal amount of such subordinated debentures, payable quarterly. In December 2010, the Company paid off the entire $20.0 million of outstanding subordinated debentures for $20.6 million, which included accrued but unpaid interest to the redemption date.

The following table details the amounts recorded on the Company's Consolidated Balance Sheets and Consolidated Statements of Income resulting from related party transactions:

	For the Years Ended December 31,
	2012		2011		2010
Income recorded by the Company from related parties	$	218	$	—	$	—
Related party interest expense	$	—	$	—	$	2,769
			At
			December 31, 2012		December 31, 2011
Accounts receivable from related parties			$	—	$	125
Notes receivable from related parties			$	6,269	$	—

26. Subsequent Events

Subsequent events have been measured through the date on which the Consolidated Financial Statements were filed. Management has determined that the following events merit disclosure as subsequent events:

Stock-Based Compensation Awards

On January 1, 2013, the Company granted 228,981 performance-based stock options and 76,326 performance-based restricted stock awards under the Company's Long-Term Incentive Plan ("LTIP").

The performance-based awards will vest, if at all, should the Company achieves three-year performance goals on or before December 31, 2015 for (i) net revenue (Compound Annual Growth Rate), (ii) earnings growth (Net Income) and (iii) profitable growth (Return on Average Equity). The performance metrics are equally weighted such that achievement of any one target results in vesting of one-third of the total equity award. If any of the target(s) are not attained by December 31, 2015, the award(s) associated with the unattained targets will be canceled.

In February 2013, the Company granted a total of 75,000 time-based restricted stock awards, equally distributed, to five of its Directors. The restricted stock vests equally on each of the three anniversaries of the grant date.

American Taxpayer Relief Act of 2012

On January 2, 2013, U.S. tax law was enacted which extends, through 2013, several expired or expiring temporary business tax provisions. The Company is still quantifying the impact of this law change; however, it is not expected to have a material impact on the Company's Consolidated Financial Statements.

Consolidation of Operations Plan

As disclosed on January 18, 2013 in the Company's Current Report on Form 8-K, effective January 14, 2013, the Company committed to a plan to consolidate the Company's fulfillment, claims administration and information technology functions for all its insurance related products (the "Plan"). Prior to the Plan, such functions resided in the Company's individual business units. The decision is part of the Company's efforts to streamline its operations, focus its resources and provide first in class service to its customers. When fully implemented, approximately 40 employee and contract positions will be eliminated.

Acquisition of Response Indemnity Company of California

On February 1, 2013, the Company acquired 100% of the outstanding stock of Response Indemnity Company of California ("RICC"), from subsidiaries of the Kemper Corporation ("Kemper") for $4.8 million.  RICC is a property/casualty insurance company domiciled and licensed in California.  RICC has, at the time of purchase, approximately $4.2 million in capital and surplus and no policies in

50

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

force. All remaining claim liabilities for previously issued policies are fully reinsured by Kemper's subsidiary, Trinity Universal Insurance Company.

Related Party Note Receivable Payoff

On March 15, 2013, the Company's subsidiary ProtectCELL, received $6.1 million representing the full payoff of the outstanding balance of the note receivable from High Pointe.

27. Summarized Quarterly Information (Unaudited)

The quarters ending March 31, 2012, June 30, 2012 and September 30, 2012 and the quarters ending March 31, 2011, June 30, 2011, September 30, 2011 and December 31, 2011 presented in the tables below have been restated as discussed in the Note, "Restatement," of the Consolidated Financial Statements and have been adjusted to reflect the retrospective adoption of ASU 2010-26, Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts. See the Note, "Quarterly Information - Restated (Unaudited)," of the Notes to Consolidated Financial Statements for additional information on the line items impacted for the for the above noted periods.

	2012
	First Quarter			Second Quarter		Third Quarter			Fourth Quarter
	As Restated			As Restated		As Restated
Revenues	$	71,139		$	70,313	$	76,376		$	70,747
Net investment income	743			732		744			849
Net realized (losses) gains on the sale of investments	(3		)	13		(16		)	9
Total revenues	71,879			71,058		77,104			71,605
Total expenses	66,560			64,991		70,654			65,909
Income before income taxes and non-controlling interest	5,319			6,067		6,450			5,696
Income taxes	1,887			2,108		2,397			1,903
Income before non-controlling interest	3,432			3,959		4,053			3,793
Less: net income attributable to non-controlling interest	18			15		29			10
Net income	$	3,414		$	3,944	$	4,024		$	3,783
Earnings per share:
Basic	$	0.17		$	0.20	$	0.21		$	0.19
Diluted	$	0.16		$	0.19	$	0.20		$	0.18
Weighted average common shares outstanding
Basic	19,904,819			19,705,276		19,531,694			19,507,733
Diluted	20,739,196			20,632,233		20,463,238			20,507,329

	2011
	First Quarter			Second Quarter		Third Quarter		Fourth Quarter
	As Restated			As Restated		As Restated		As Restated
Revenues	$	65,736		$	64,146	$	71,285	$	72,861
Net investment income	941			894		801		732
Net realized gains on the sale of investments	95			1,132		1,196		1,770
Total revenues	66,772			66,172		73,282		75,363
Total expenses	62,018			64,130		67,075		67,887
Income before income taxes and non-controlling interest	4,754			2,042		6,207		7,476
Income taxes	1,609			750		2,209		2,572
Income before non-controlling interest	3,145			1,292		3,998		4,904
Less: net (loss) income attributable to non-controlling interest	(174		)	2		1		1
Net income	$	3,319		$	1,290	$	3,997	$	4,903
Earnings per share:
Basic	$	0.16		$	0.06	$	0.20	$	0.24
Diluted	$	0.15		$	0.06	$	0.19	$	0.24
Weighted average common shares outstanding
Basic	20,464,592			20,510,254		20,404,441		20,343,038
Diluted	21,668,333			21,592,418		21,214,365		20,955,690

51

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

28. Quarterly Information - Restated (Unaudited)

The following tables present the Company's restated quarterly information for the quarters ending March 31, 2012, June 30, 2012 and September 30, 2012 and for the quarters ending March 31, June 30, September 30, and December 31, 2011 and 2010, respectively.

Adjustments in the 2012 and 2011 periods to service and administrative fees, member benefit claims, and commissions represent the effects of restatements for the errors in Motor Clubs revenue presentation and revenue recognition as discussed in Note "Restatement" of the Notes to Consolidated Financial Statements, unless otherwise noted.

Adjustments in the 2010 periods to service and administrative fees, member benefit claims, and commissions represent the effects of restatements for the errors in Motor Clubs revenue presentation, as discussed in Note "Restatement".

	For the Three Months Ended									For the Three Months Ended
	March 31, 2012									June 30, 2012
	As Previously Reported			Adjustment			As Restated			As Previously Reported		Adjustment			As Restated
Revenues:
Service and administrative fees	$	9,340		$	13,171		$	22,511		$	9,394	$	12,392		$	21,786
Brokerage commissions and fees	9,520			—			9,520			9,364		—			9,364
Ceding commission	7,064			—			7,064			7,210		—			7,210
Net investment income	743			—			743			732		—			732
Net realized investment (losses) gains	(3		)	—			(3		)	13		—			13
Net earned premium	31,972			—			31,972			31,905		—			31,905
Other income	72			—			72			48		—			48
Total revenues	58,708			13,171			71,879			58,666		12,392			71,058
Expenses:
Net losses and loss adjustment expenses	11,266			—			11,266			9,576		—			9,576
Member benefit claims	—			1,303			1,303			—		1,098			1,098
Commissions	20,039			11,949			31,988			19,892		11,390			31,282
Personnel costs	11,392			—			11,392			12,367		—			12,367
Other operating expenses	6,739			—			6,739			6,937		—			6,937
Depreciation and amortization	738			—			738			975		—			975
Amortization of intangibles	1,482			—			1,482			1,166		—			1,166
Interest expense	1,652			—			1,652			1,590		—			1,590
Total expenses	53,308			13,252			66,560			52,503		12,488			64,991
Income before income taxes and non-controlling interests	5,400			(81		)	5,319			6,163		(96		)	6,067
Income taxes	1,919			(32		)	1,887			2,146		(38		)	2,108
Income before non-controlling interests	3,481			(49		)	3,432			4,017		(58		)	3,959
Less: net income attributable to non-controlling interests	18			—			18			15		—			15
Net income	$	3,463		$	(49	)	$	3,414		$	4,002	$	(58	)	$	3,944
Earnings per share:
Basic	$	0.17		$	—		$	0.17		$	0.20	$	—		$	0.20
Diluted	$	0.17		$	(0.01	)	$	0.16		$	0.19	$	—		$	0.19
Weighted average common shares outstanding:
Basic	19,904,819						19,904,819			19,705,276					19,705,276
Diluted	20,739,196						20,739,196			20,632,233					20,632,233

52

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

	For the Three Months Ended
	September 30, 2012
	As Previously Reported			Adjustment			As Restated
Revenues:
Service and administrative fees	$	10,056		$	12,842		$	22,898
Brokerage commissions and fees	8,411			—			8,411
Ceding commission	11,122			—			11,122
Net investment income	744			—			744
Net realized investment (losses)	(16		)	—			(16		)
Net earned premium	33,893			—			33,893
Other income	52			—			52
Total revenues	64,262			12,842			77,104
Expenses:
Net losses and loss adjustment expenses	11,430			—			11,430
Member benefit claims	—			1,157			1,157
Commissions	21,548			11,829			33,377
Personnel costs	12,708			—			12,708
Other operating expenses	7,959			—			7,959
Depreciation and amortization	871			—			871
Amortization of intangibles	1,127			—			1,127
Interest expense	2,025			—			2,025
Total expenses	57,668			12,986			70,654
Income before income taxes and non-controlling interests	6,594			(144		)	6,450
Income taxes	2,455			(58		)	2,397
Income before non-controlling interests	4,139			(86		)	4,053
Less: net income attributable to non-controlling interests	29			—			29
Net income	$	4,110		$	(86	)	$	4,024
Earnings per share:
Basic	$	0.21		$	—		$	0.21
Diluted	$	0.20		$	—		$	0.20
Weighted average common shares outstanding:
Basic	19,531,694						19,531,694
Diluted	20,463,238						20,463,238

53

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

	For the Three Months Ended									For the Three Months Ended
	March 31, 2011									June 30, 2011
	As Previously Reported			Adjustment			As Restated			As Previously Reported		Adjustment			As Restated
Revenues:
Service and administrative fees	$	9,116		$	12,076		$	21,192		$	8,800	$	12,321		$	21,121
Brokerage commissions and fees	7,867			—			7,867			9,208		—			9,208
Ceding commission	8,158			—			8,158			6,243		—			6,243
Net investment income	941			—			941			894		—			894
Net realized investment gains	95			—			95			1,132		—			1,132
Net earned premium	28,437			—			28,437			27,536		—			27,536
Other income	82			—			82			38		—			38
Total revenues	54,696			12,076			66,772			53,851		12,321			66,172
Expenses:
Net losses and loss adjustment expenses	9,373			—			9,373			9,251		—			9,251
Member benefit claims	—			867			867			—		1,309			1,309
Commissions	18,517			11,389			29,906			17,323		11,404			28,727
Personnel costs	10,992			—			10,992			11,428		—			11,428
Other operating expenses	7,214			—			7,214			9,298		—			9,298
Depreciation and amortization	583			—			583			814		—			814
Amortization of intangibles	1,052			—			1,052			1,378		—			1,378
Interest expense	2,031			—			2,031			1,925		—			1,925
Total expenses	49,762			12,256			62,018			51,417		12,713			64,130
Income before income taxes and non-controlling interests	4,934			(180		)	4,754			2,434		(392		)	2,042
Income taxes	1,681			(72		)	1,609			907		(157		)	750
Income before non-controlling interests	3,253			(108		)	3,145			1,527		(235		)	1,292
Less: net (loss) income attributable to non-controlling interests	(174		)	—			(174		)	2		—			2
Net income	$	3,427		$	(108	)	$	3,319		$	1,525	$	(235	)	$	1,290
Earnings per share:
Basic	$	0.17		$	(0.01	)	$	0.16		$	0.07	$	(0.01	)	$	0.06
Diluted	$	0.16		$	(0.01	)	$	0.15		$	0.07	$	(0.01	)	$	0.06
Weighted average common shares outstanding:
Basic	20,464,592						20,464,592			20,510,254					20,510,254
Diluted	21,668,333						21,668,333			21,592,418					21,592,418

54

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

	For the Three Months Ended							For the Three Months Ended
	September 30, 2011							December 31, 2011
	As Previously Reported		Adjustment			As Restated		As Previously Reported		Adjustment			As Restated
Revenues:
Service and administrative fees	$	10,125	$	16,831		$	26,956	$	10,159	$	15,036		$	25,195
Brokerage commissions and fees	8,611		—			8,611		8,710		—			8,710
Ceding commission	7,027		—			7,027		8,067		—			8,067
Net investment income	801		—			801		732		—			732
Net realized investment gains	1,196		—			1,196		1,770		—			1,770
Net earned premium	28,673		—			28,673		30,857		—			30,857
Other income	18		—			18		32		—			32
Total revenues	56,451		16,831			73,282		60,327		15,036			75,363
Expenses:
Net losses and loss adjustment expenses	9,714		—			9,714		9,611		—			9,611
Member benefit claims	—		945			945		—		1,288			1,288
Commissions	17,926		16,011			33,937		20,465		13,883			34,348
Personnel costs	10,945		—			10,945		11,182		—			11,182
Other operating expenses	7,267		—			7,267		7,361		—			7,361
Depreciation and amortization	886		—			886		794		—			794
Amortization of intangibles	998		—			998		1,524		—			1,524
Interest expense	1,906		—			1,906		1,779		—			1,779
Loss on sale of subsidiary	477		—			477		—		—			—
Total expenses	50,119		16,956			67,075		52,716		15,171			67,887
Income before income taxes and non-controlling interests	6,332		(125		)	6,207		7,611		(135		)	7,476
Income taxes	2,259		(50		)	2,209		2,626		(54		)	2,572
Income before non-controlling interests	4,073		(75		)	3,998		4,985		(81		)	4,904
Less: net income attributable to non-controlling interests	1		—			1		1		—			1
Net income	$	4,072	$	(75	)	$	3,997	$	4,984	$	(81	)	$	4,903
Earnings per share:
Basic	$	0.20	$	—		$	0.20	$	0.24	$	—		$	0.24
Diluted	$	0.19	$	—		$	0.19	$	0.24	$	—		$	0.24
Weighted average common shares outstanding:
Basic	20,404,441					20,404,441		20,343,038					20,343,038
Diluted	21,214,365					21,214,365		20,955,690					20,955,690

55

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

	For the Three Months Ended							For the Three Months Ended
	March 31, 2010							June 30, 2010
	As Previously Reported		Adjustment			As Restated		As Previously Reported			Adjustment			As Restated
Revenues:
Service and administrative fees	$	7,975	$	—		$	7,975	$	8,843		$	3,082		$	11,925
Brokerage commissions and fees	6,730		—			6,730		6,404			—			6,404
Ceding commission	6,624		—			6,624		6,389			—			6,389
Net investment income	948		—			948		986			—			986
Net realized investment gains	2		—			2		47			—			47
Net earned premium	28,493		—			28,493		26,669			—			26,669
Other income	81		—			81		45			—			45
Total revenues	50,853		—			50,853		49,383			3,082			52,465
Expenses:
Net losses and loss adjustment expenses	8,777		—			8,777		7,316			—			7,316
Member benefit claims	—		—			—		—			(23		)	(23		)
Commissions	19,349		—			19,349		17,850			3,105			20,955
Personnel costs	9,081		—			9,081		9,332			—			9,332
Other operating expenses	5,136		656			5,792		5,891			167			6,058
Depreciation and amortization	275		—			275		284			—			284
Amortization of intangibles	779		—			779		779			—			779
Interest expense	1,891		—			1,891		1,985			—			1,985
Total expenses	45,288		656			45,944		43,437			3,249			46,686
Income before income taxes and non-controlling interests	5,565		(656		)	4,909		5,946			(167		)	5,779
Income taxes	2,076		(230		)	1,846		2,220			(58		)	2,162
Income before non-controlling interests	3,489		(426		)	3,063		3,726			(109		)	3,617
Less: net income (loss) attributable to non-controlling interests	15		—			15		(46		)	—			(46		)
Net income	$	3,474	$	(426	)	$	3,048	$	3,772		$	(109	)	$	3,663
Earnings per share:
Basic	$	0.22	$	(0.03	)	$	0.19	$	0.24		$	(0.01	)	$	0.23
Diluted	$	0.21	$	(0.03	)	$	0.18	$	0.22		$	(0.01	)	$	0.21
Weighted average common shares outstanding:
Basic	15,742,336					15,742,336		15,742,336						15,742,336
Diluted	16,941,372					16,941,372		17,040,432						17,040,432

56

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

	For the Three Months Ended									For the Three Months Ended
	September 30, 2010									December 31, 2010
	As Previously Reported			Adjustment			As Restated			As Previously Reported		Adjustment		Adoption of ASU 2010-26			As Restated
Revenues:
Service and administrative fees	$	9,229		$	8,738		$	17,967		$	8,098	$	10,289	$	—		$	18,387
Brokerage commissions and fees	6,034			—			6,034			5,452		—		—			5,452
Ceding commission	9,455			—			9,455			6,299		—		—			6,299
Net investment income	865			—			865			1,274		—		—			1,274
Net realized investment gains	107			—			107			494		—		—			494
Net earned premium	28,255			—			28,255			28,388		—		—			28,388
Other income	(6		)	—			(6		)	110		—		—			110
Total revenues	53,939			8,738			62,677			50,115		10,289		—			60,404
Expenses:
Net losses and loss adjustment expenses	10,993			—			10,993			8,949		—		—			8,949
Member benefit claims	—			211			211			—		278		—			278
Commissions	16,432			8,527			24,959			17,372		10,011		—			27,383
Personnel costs	9,526			—			9,526			8,422		—		—			8,422
Other operating expenses	6,500			125			6,625			5,346		—		605			5,951
Depreciation and amortization	431			—			431			406		—		—			406
Amortization of intangibles	788			—			788			886		—		—			886
Interest expense	2,246			—			2,246			2,342		—		—			2,342
Total expenses	46,916			8,863			55,779			43,723		10,289		605			54,617
Income before income taxes and non-controlling interests	7,023			(125		)	6,898			6,392		—		(605		)	5,787
Income taxes	2,576			(44		)	2,532			1,831		—		(212		)	1,619
Income before non-controlling interests	4,447			(81		)	4,366			4,561		—		(393		)	4,168
Less: net income attributable to non-controlling interests	—			—			—			51		—		—			51
Net income	$	4,447		$	(81	)	$	4,366		$	4,510	$	—	$	(393	)	$	4,117
Earnings per share:
Basic	$	0.28		$	—		$	0.28		$	0.27	$	—	$	(0.02	)	$	0.25
Diluted	$	0.26		$	—		$	0.26		$	0.25	$	—	$	(0.02	)	$	0.23
Weighted average common shares outstanding:
Basic	15,742,336						15,742,336			16,483,626		16,483,626		16,483,626			16,483,626
Diluted	17,057,157						17,057,157			17,703,334		17,703,334		17,703,334			17,703,334

57

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

29. Quarterly Segment Results - Restated (Unaudited)

The following tables present the Company's restated quarterly Segment Results for the quarters ending March 31, 2012, June 30, 2012 and September 30, 2012 and for the quarters ending March 31, June 30, September 30, and December 31, 2011 and 2010, respectively.

	For the Three Months Ended									For the Three Months Ended
	March 31, 2012									June 30, 2012
	As Previously Reported			Adjustment			As Restated			As Previously Reported			Adjustment			As Restated
Segment Net Revenue
Payment Protection
Service and administrative fees	$	4,632		$	13,171		$	17,803		$	4,567		$	12,392		$	16,959
Ceding commission	7,064			—			7,064			7,210			—			7,210
Net investment income	743			—			743			732			—			732
Net realized investment (losses) gains	(3		)	—			(3		)	13			—			13
Other income	72			—			72			48			—			48
Net earned premium	31,972			—			31,972			31,905			—			31,905
Net losses and loss adjustment expenses	(11,266		)	—			(11,266		)	(9,576		)	—			(9,576		)
Member benefit claims	—			(1,303		)	(1,303		)	—			(1,098		)	(1,098		)
Commissions	(20,039		)	(11,949		)	(31,988		)	(19,892		)	(11,390		)	(31,282		)
Total Payment Protection Net Revenue	13,175			(81		)	13,094			15,007			(96		)	14,911
BPO	4,205			—			4,205			4,409			—			4,409
Brokerage
Brokerage commissions and fees	9,520			—			9,520			9,364			—			9,364
Service and administrative fees	503			—			503			418			—			418
Total Brokerage	10,023			—			10,023			9,782			—			9,782
Total segment net revenue	27,403			(81		)	27,322			29,198			(96		)	29,102
Operating Expenses
Payment Protection	7,913			—			7,913			8,729			—			8,729
BPO	3,133			—			3,133			3,351			—			3,351
Brokerage	7,085			—			7,085			7,224			—			7,224
Total operating expenses	18,131			—			18,131			19,304			—			19,304
EBITDA
Payment Protection	5,262			(81		)	5,181			6,278			(96		)	6,182
BPO	1,072			—			1,072			1,058			—			1,058
Brokerage	2,938			—			2,938			2,558			—			2,558
Total EBITDA	9,272			(81		)	9,191			9,894			(96		)	9,798
Depreciation and Amortization
Payment Protection	849			—			849			865			—			865
BPO	503			—			503			498			—			498
Brokerage	868			—			868			778			—			778
Total depreciation and amortization	2,220			—			2,220			2,141			—			2,141
Interest Expense
Payment Protection	1,012			—			1,012			971			—			971
BPO	267			—			267			259			—			259
Brokerage	373			—			373			360			—			360
Total interest expense	1,652			—			1,652			1,590			—			1,590
Income before income taxes and non-controlling interests
Payment Protection	3,401			(81		)	3,320			4,442			(96		)	4,346
BPO	302			—			302			301			—			301
Brokerage	1,697			—			1,697			1,420			—			1,420

58

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

	For the Three Months Ended							For the Three Months Ended
	March 31, 2012							June 30, 2012
	As Previously Reported		Adjustment			As Restated		As Previously Reported		Adjustment			As Restated
Total income before income taxes and non-controlling interests	5,400		(81		)	5,319		6,163		(96		)	6,067
Income taxes	1,919		(32		)	1,887		2,146		(38		)	2,108
Less: net income attributable to non-controlling interests	18		—			18		15		—			15
Net income	$	3,463	$	(49	)	$	3,414	$	4,002	$	(58	)	$	3,944

	For the Three Months Ended
	September 30, 2012
	As Previously Reported			Adjustment			As Restated
Segment Net Revenue
Payment Protection
Service and administrative fees	$	4,677		$	12,842		$	17,519
Ceding commission	11,122			—			11,122
Net investment income	744			—			744
Net realized investment (losses)	(16		)	—			(16		)
Other income	52			—			52
Net earned premium	33,893			—			33,893
Net losses and loss adjustment expenses	(11,430		)	—			(11,430		)
Member benefit claims	—			(1,157		)	(1,157		)
Commissions	(21,548		)	(11,829		)	(33,377		)
Total Payment Protection Net Revenue	17,494			(144		)	17,350
BPO	4,951			—			4,951
Brokerage
Brokerage commissions and fees	8,411			—			8,411
Service and administrative fees	428			—			428
Total Brokerage	8,839			—			8,839
Total segment net revenue	31,284			(144		)	31,140
Operating Expenses
Payment Protection	9,563			—			9,563
BPO	3,836			—			3,836
Brokerage	7,268			—			7,268
Total operating expenses	20,667			—			20,667
EBITDA
Payment Protection	7,931			(144		)	7,787
BPO	1,115			—			1,115
Brokerage	1,571			—			1,571
Total EBITDA	10,617			(144		)	10,473
Depreciation and Amortization
Payment Protection	863			—			863
BPO	494			—			494
Brokerage	641			—			641
Total depreciation and amortization	1,998			—			1,998
Interest Expense
Payment Protection	1,359			—			1,359
BPO	294			—			294
Brokerage	372			—			372

59

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

	For the Three Months Ended
	September 30, 2012
	As Previously Reported		Adjustment			As Restated
Total interest expense	2,025		—			2,025
Income before income taxes and non-controlling interests
Payment Protection	5,709		(144		)	5,565
BPO	327		—			327
Brokerage	558		—			558
Total income before income taxes and non-controlling interests	6,594		(144		)	6,450
Income taxes	2,455		(58		)	2,397
Less: net income attributable to non-controlling interests	29		—			29
Net income	$	4,110	$	(86	)	$	4,024

	For the Three Months Ended									For the Three Months Ended
	March 31, 2011									June 30, 2011
	As Previously Reported			Adjustment			As Restated			As Previously Reported			Adjustment			As Restated
Segment Net Revenue
Payment Protection
Service and administrative fees	$	4,528		$	12,076		$	16,604		$	4,481		$	12,321		$	16,802
Ceding commission	8,158			—			8,158			6,243			—			6,243
Net investment income	941			—			941			894			—			894
Net realized investment gains	95			—			95			1,132			—			1,132
Other income	82			—			82			38			—			38
Net earned premium	28,437			—			28,437			27,536			—			27,536
Net losses and loss adjustment expenses	(9,373		)	—			(9,373		)	(9,251		)	—			(9,251		)
Member benefit claims	—			(867		)	(867		)	—			(1,309		)	(1,309		)
Commissions	(18,517		)	(11,389		)	(29,906		)	(17,323		)	(11,404		)	(28,727		)
Total Payment Protection Net Revenue	14,351			(180		)	14,171			13,750			(392		)	13,358
BPO	3,564			—			3,564			3,691			—			3,691
Brokerage
Brokerage commissions and fees	7,867			—			7,867			9,208			—			9,208
Service and administrative fees	1,024			—			1,024			628			—			628
Total Brokerage	8,891			—			8,891			9,836			—			9,836
Total segment net revenue	26,806			(180		)	26,626			27,277			(392		)	26,885
Operating Expenses
Payment Protection	8,768			—			8,768			8,644			—			8,644
BPO	2,619			—			2,619			2,828			—			2,828
Brokerage	6,819			—			6,819			7,527			—			7,527
Corporate	—			—			—			1,727			—			1,727
Total operating expenses	18,206			—			18,206			20,726			—			20,726
EBITDA
Payment Protection	5,583			(180		)	5,403			5,106			(392		)	4,714
BPO	945			—			945			863			—			863
Brokerage	2,072			—			2,072			2,309			—			2,309
Corporate	—			—			—			(1,727		)	—			(1,727		)
Total EBITDA	8,600			(180		)	8,420			6,551			(392		)	6,159
Depreciation and Amortization

60

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

	For the Three Months Ended									For the Three Months Ended
	March 31, 2011									June 30, 2011
	As Previously Reported			Adjustment			As Restated			As Previously Reported			Adjustment			As Restated
Payment Protection	953			—			953			1,324			—			1,324
BPO	240			—			240			277			—			277
Brokerage	442			—			442			591			—			591
Total depreciation and amortization	1,635			—			1,635			2,192			—			2,192
Interest Expense
Payment Protection	1,526			—			1,526			1,043			—			1,043
BPO	63			—			63			99			—			99
Brokerage	442			—			442			783			—			783
Total interest expense	2,031			—			2,031			1,925			—			1,925
Income before income taxes and non-controlling interests
Payment Protection	3,104			(180		)	2,924			2,739			(392		)	2,347
BPO	642			—			642			487			—			487
Brokerage	1,188			—			1,188			935			—			935
Corporate	—			—			—			(1,727		)	—			(1,727		)
Total income before income taxes and non-controlling interests	4,934			(180		)	4,754			2,434			(392		)	2,042
Income taxes	1,681			(72		)	1,609			907			(157		)	750
Less: net (loss) income attributable to non-controlling interests	(174		)	—			(174		)	2			—			2
Net income	$	3,427		$	(108	)	$	3,319		$	1,525		$	(235	)	$	1,290

	For the Three Months Ended									For the Three Months Ended
	September 30, 2011									December 31, 2011
	As Previously Reported			Adjustment			As Restated			As Previously Reported			Adjustment			As Restated
Segment Net Revenue
Payment Protection
Service and administrative fees	$	5,695		$	16,831		$	22,526		$	5,276		$	15,036		$	20,312
Ceding commission	7,027			—			7,027			8,067			—			8,067
Net investment income	801			—			801			732			—			732
Net realized investment gains (losses)	1,196			—			1,196			1,770			—			1,770
Other income	18			—			18			32			—			32
Net earned premium	28,673			—			28,673			30,857			—			30,857
Net losses and loss adjustment expenses	(9,714		)	—			(9,714		)	(9,611		)	—			(9,611		)
Member benefit claims	—			(945		)	(945		)	—			(1,288		)	(1,288		)
Commissions	(17,926		)	(16,011		)	(33,937		)	(20,465		)	(13,883		)	(34,348		)
Total Payment Protection Net Revenue	15,770			(125		)	15,645			16,658			(135		)	16,523
BPO	3,833			—			3,833			4,496			—			4,496
Brokerage
Brokerage commissions and fees	8,611			—			8,611			8,710			—			8,710
Service and administrative fees	597			—			597			387			—			387
Total Brokerage	9,208			—			9,208			9,097			—			9,097
Total segment net revenue	28,811			(125		)	28,686			30,251			(135		)	30,116
Operating Expenses
Payment Protection	8,445			—			8,445			7,657			—			7,657
BPO	2,717			—			2,717			3,434			—			3,434
Brokerage (1)	7,491			—			7,491			7,452			—			7,452

61

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

	For the Three Months Ended									For the Three Months Ended
	September 30, 2011									December 31, 2011
	As Previously Reported			Adjustment			As Restated			As Previously Reported		Adjustment			As Restated
Corporate	36			—			36			—		—			—
Total operating expenses	18,689			—			18,689			18,543		—			18,543
EBITDA
Payment Protection	7,325			(125		)	7,200			9,001		(135		)	8,866
BPO	1,116			—			1,116			1,062		—			1,062
Brokerage (1)	1,717			—			1,717			1,645		—			1,645
Corporate	(36		)	—			(36		)	—		—			—
Total EBITDA	10,122			(125		)	9,997			11,708		(135		)	11,573
Depreciation and Amortization
Payment Protection	927			—			927			1,001		—			1,001
BPO	307			—			307			300		—			300
Brokerage	650			—			650			1,017		—			1,017
Total depreciation and amortization	1,884			—			1,884			2,318		—			2,318
Interest Expense
Payment Protection	1,053			—			1,053			1,027		—			1,027
BPO	96			—			96			161		—			161
Brokerage	757			—			757			591		—			591
Total interest expense	1,906			—			1,906			1,779		—			1,779
Income before income taxes and non-controlling interests
Payment Protection	5,345			(125		)	5,220			6,973		(135		)	6,838
BPO	713			—			713			601		—			601
Brokerage (1)	310			—			310			37		—			37
Corporate	(36		)	—			(36		)	—		—			—
Total income before income taxes and non-controlling interests	6,332			(125		)	6,207			7,611		(135		)	7,476
Income taxes	2,259			(50		)	2,209			2,626		(54		)	2,572
Less: net income attributable to non-controlling interests	1			—			1			1		—			1
Net income	$	4,072		$	(75	)	$	3,997		$	4,984	$	(81	)	$	4,903
(1) - Includes loss on sale of subsidiary of $477 for the three months ended September 30, 2011.

	For the Three Months Ended								For the Three Months Ended
	March 31, 2010								June 30, 2010
	As Previously Reported			Adjustment		As Restated			As Previously Reported			Adjustment		As Restated
Segment Net Revenue
Payment Protection
Service and administrative fees	$	1,881		$	—	$	1,881		$	3,240		$	3,082	$	6,322
Ceding commission	6,624			—		6,624			6,389			—		6,389
Net investment income	948			—		948			986			—		986
Net realized investment gains	2			—		2			47			—		47
Other income	81			—		81			45			—		45
Net earned premium	28,493			—		28,493			26,669			—		26,669
Net losses and loss adjustment expenses	(8,777		)	—		(8,777		)	(7,316		)	—		(7,316		)
Member benefit claims	—			—		—			—			23		23

62

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

	For the Three Months Ended									For the Three Months Ended
	March 31, 2010									June 30, 2010
	As Previously Reported			Adjustment			As Restated			As Previously Reported			Adjustment			As Restated
Commissions	(19,349		)	—			(19,349		)	(17,850		)	(3,105		)	(20,955		)
Total Payment Protection Net Revenue	9,903			—			9,903			12,210			—			12,210
BPO	4,563			—			4,563			4,327			—			4,327
Brokerage
Brokerage commissions and fees	6,730			—			6,730			6,404			—			6,404
Service and administrative fees	1,531			—			1,531			1,276			—			1,276
Total Brokerage	8,261			—			8,261			7,680			—			7,680
Total segment net revenue	22,727			—			22,727			24,217			—			24,217
Operating Expenses
Payment Protection	5,094			656			5,750			6,191			167			6,358
BPO	2,774			—			2,774			2,635			—			2,635
Brokerage (1)	6,119			—			6,119			5,785			—			5,785
Corporate	230			—			230			612			—			612
Total operating expenses	14,217			656			14,873			15,223			167			15,390
EBITDA
Payment Protection	4,809			(656		)	4,153			6,019			(167		)	5,852
BPO	1,789			—			1,789			1,692			—			1,692
Brokerage	2,142			—			2,142			1,895			—			1,895
Corporate	(230		)	—			(230		)	(612		)	—			(612		)
Total EBITDA	8,510			(656		)	7,854			8,994			(167		)	8,827
Depreciation and Amortization
Payment Protection	470			—			470			585			—			585
BPO	174			—			174			80			—			80
Brokerage	410			—			410			398			—			398
Total depreciation and amortization	1,054			—			1,054			1,063			—			1,063
Interest Expense
Payment Protection	1,661			—			1,661			1,704			—			1,704
BPO	106			—			106			92			—			92
Brokerage	124			—			124			189			—			189
Total interest expense	1,891			—			1,891			1,985			—			1,985
Income before income taxes and non-controlling interests
Payment Protection	2,678			(656		)	2,022			3,730			(167		)	3,563
BPO	1,509			—			1,509			1,520			—			1,520
Brokerage	1,608			—			1,608			1,308			—			1,308
Corporate	(230		)	—			(230		)	(612		)	—			(612		)
Total income before income taxes and non-controlling interests	5,565			(656		)	4,909			5,946			(167		)	5,779
Income taxes	2,076			(230		)	1,846			2,220			(58		)	2,162
Less: net income (loss) attributable to non-controlling interests	15			—			15			(46		)	—			(46		)
Net income	$	3,474		$	(426	)	$	3,048		$	3,772		$	(109	)	$	3,663

63

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

	For the Three Months Ended									For the Three Months Ended
	September 30, 2010									December 31, 2010
	As Previously Reported			Adjustment			As Restated			As Previously Reported			Adjustment			As Restated
Segment Net Revenue
Payment Protection
Service and administrative fees	$	3,390		$	8,738		$	12,128		$	3,948		$	10,289		$	14,237
Ceding commission	9,455			—			9,455			6,299			—			6,299
Net investment income	865			—			865			1,274			—			1,274
Net realized investment gains	107			—			107			494			—			494
Other income	(6		)	—			(6		)	110			—			110
Net earned premium	28,255			—			28,255			28,388			—			28,388
Net losses and loss adjustment expenses	(10,993		)	—			(10,993		)	(8,949		)	—			(8,949		)
Member benefit claims	—			(211		)	(211		)	—			(278		)	(278		)
Commissions	(16,432		)	(8,527		)	(24,959		)	(17,372		)	(10,011		)	(27,383		)
Total Payment Protection Net Revenue	14,641			—			14,641			14,192			—			14,192
BPO	4,715			—			4,715			3,464			—			3,464
Brokerage
Brokerage commissions and fees	6,034			—			6,034			5,452			—			5,452
Service and administrative fees	1,124			—			1,124			686			—			686
Total Brokerage	7,158			—			7,158			6,138			—			6,138
Total segment net revenue	26,514			—			26,514			23,794			—			23,794
Operating Expenses
Payment Protection	6,435			125			6,560			5,853			605			6,458
BPO	2,588			—			2,588			2,005			—			2,005
Brokerage	5,783			—			5,783			5,842			—			5,842
Corporate	1,220			—			1,220			68			—			68
Total operating expenses	16,026			125			16,151			13,768			605			14,373
EBITDA
Payment Protection	8,206			(125		)	8,081			8,339			(605		)	7,734
BPO	2,127			—			2,127			1,459			—			1,459
Brokerage	1,375			—			1,375			296			—			296
Corporate	(1,220		)	—			(1,220		)	(68		)	—			(68		)
Total EBITDA	10,488			(125		)	10,363			10,026			(605		)	9,421
Depreciation and Amortization
Payment Protection	327			—			327			970			—			970
BPO	457			—			457			(113		)	—			(113		)
Brokerage	435			—			435			435			—			435
Total depreciation and amortization	1,219			—			1,219			1,292			—			1,292
Interest Expense
Payment Protection	1,873			—			1,873			1,959			—			1,959
BPO	126			—			126			109			—			109
Brokerage	247			—			247			274			—			274
Total interest expense	2,246			—			2,246			2,342			—			2,342
Income before income taxes and non-controlling interests
Payment Protection	6,006			(125		)	5,881			5,410			(605		)	4,805
BPO	1,544			—			1,544			1,463			—			1,463
Brokerage	693			—			693			(413		)	—			(413		)
Corporate	(1,220		)	—			(1,220		)	(68		)	—			(68		)
Total income before income taxes and non-controlling interests	7,023			(125		)	6,898			6,392			(605		)	5,787
Income taxes	2,576			(44		)	2,532			1,831			(212		)	1,619

64

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

	For the Three Months Ended							For the Three Months Ended
	September 30, 2010							December 31, 2010
	As Previously Reported		Adjustment			As Restated		As Previously Reported		Adjustment			As Restated
Less: net income attributable to non-controlling interests	—		—			—		51		—			51
Net income	$	4,447	$	(81	)	$	4,366	$	4,510	$	(393	)	$	4,117

The following table reconciles the restated segment information to the Company's Consolidated Statements of Income and provides a summary of other key financial information for each segment, as restated, for the quarters ending March 31, 2012, June 30, 2012 and September 30, 2012 and for the quarters ending March 31, June 30, September 30, and December 31, 2011 and 2010, respectively.

Reconciliation of Segment Net Revenue to Total Revenue and EBITDA to Net Income	For the Three Months Ended							For the Three Months Ended
	March 31, 2012							June 30, 2012
	As Previously Reported		Adjustment			As Restated		As Previously Reported		Adjustment			As Restated
Segment Net Revenue
Payment Protection	$	13,175	$	(81	)	$	13,094	$	15,007	$	(96	)	$	14,911
BPO	4,205		—			4,205		4,409		—			4,409
Brokerage	10,023		—			10,023		9,782		—			9,782
Segment net revenues	27,403		(81		)	27,322		29,198		(96		)	29,102
Net losses and loss adjustment expenses	11,266		—			11,266		9,576		—			9,576
Member benefit claims	—		1,303			1,303		—		1,098			1,098
Commissions	20,039		11,949			31,988		19,892		11,390			31,282
Total segment revenue	58,708		13,171			71,879		58,666		12,392			71,058
Operating Expenses
Payment Protection	7,913		—			7,913		8,729		—			8,729
BPO	3,133		—			3,133		3,351		—			3,351
Brokerage	7,085		—			7,085		7,224		—			7,224
Total operating expenses	18,131		—			18,131		19,304		—			19,304
Net losses and loss adjustment expenses	11,266		—			11,266		9,576		—			9,576
Member benefit claims	—		1,303			1,303		—		1,098			1,098
Commissions	20,039		11,949			31,988		19,892		11,390			31,282
Total operating expenses before depreciation, amortization and interest expense	49,436		13,252			62,688		48,772		12,488			61,260
EBITDA
Payment Protection	5,262		(81		)	5,181		6,278		(96		)	6,182
BPO	1,072		—			1,072		1,058		—			1,058
Brokerage	2,938		—			2,938		2,558		—			2,558
Total EBITDA	9,272		(81		)	9,191		9,894		(96		)	9,798
Depreciation and amortization
Payment Protection	849		—			849		865		—			865
BPO	503		—			503		498		—			498
Brokerage	868		—			868		778		—			778
Total depreciation and amortization	2,220		—			2,220		2,141		—			2,141
Interest Expense
Payment Protection	1,012		—			1,012		971		—			971
BPO	267		—			267		259		—			259
Brokerage	373		—			373		360		—			360
Total interest expense	1,652		—			1,652		1,590		—			1,590

65

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Reconciliation of Segment Net Revenue to Total Revenue and EBITDA to Net Income	For the Three Months Ended						For the Three Months Ended
	March 31, 2012						June 30, 2012
	As Previously Reported		Adjustment			As Restated	As Previously Reported		Adjustment			As Restated
Income (loss) before income taxes and non-controlling interests
Payment Protection	3,401		(81		)	3,320	4,442		(96		)	4,346
BPO	302		—			302	301		—			301
Brokerage	1,697		—			1,697	1,420		—			1,420
Corporate	—		—			—	—		—			—
Total income before income taxes and non-controlling interests	5,400		(81		)	5,319	6,163		(96		)	6,067
Income taxes	1,919		(32		)	1,887	2,146		(38		)	2,108
Less: net income attributable to non-controlling interests	18		—			18	15		—			15
Net income	$	3,463	$	(49	)	3,414	$	4,002	$	(58	)	$	3,944

Reconciliation of Segment Net Revenue to Total Revenue and EBITDA to Net Income	For the Three Months Ended
	September 30, 2012
	As Previously Reported		Adjustment			As Restated
Segment Net Revenue
Payment Protection	$	17,494	$	(144	)	$	17,350
BPO	4,951		—			4,951
Brokerage	8,839		—			8,839
Segment net revenues	31,284		(144		)	31,140
Net losses and loss adjustment expenses	11,430		—			11,430
Member benefit claims	—		1,157			1,157
Commissions	21,548		11,829			33,377
Total segment revenue	64,262		12,842			77,104
Operating Expenses
Payment Protection	9,563		—			9,563
BPO	3,836		—			3,836
Brokerage	7,268		—			7,268
Total operating expenses	20,667		—			20,667
Net losses and loss adjustment expenses	11,430		—			11,430
Member benefit claims	—		1,157			1,157
Commissions	21,548		11,829			33,377
Total operating expenses before depreciation, amortization and interest expense	53,645		12,986			66,631
EBITDA
Payment Protection	7,931		(144		)	7,787
BPO	1,115		—			1,115
Brokerage	1,571		—			1,571
Total EBITDA	10,617		(144		)	10,473
Depreciation and amortization
Payment Protection	863		—			863
BPO	494		—			494
Brokerage	641		—			641

66

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Reconciliation of Segment Net Revenue to Total Revenue and EBITDA to Net Income	For the Three Months Ended
	September 30, 2012
	As Previously Reported		Adjustment			As Restated
Corporate	—		—			—
Total depreciation and amortization	1,998		—			1,998
Interest Expense
Payment Protection	1,359		—			1,359
BPO	294		—			294
Brokerage	372		—			372
Total interest expense	2,025		—			2,025
Income (loss) before income taxes and non-controlling interests
Payment Protection	5,709		(144		)	5,565
BPO	327		—			327
Brokerage	558		—			558
Total income before income taxes and non-controlling interests	6,594		(144		)	6,450
Income taxes	2,455		(58		)	2,397
Less: net income attributable to non-controlling interests	29		—			29
Net income	$	4,110	$	(86	)	4,024

Reconciliation of Segment Net Revenue to Total Revenue and EBITDA to Net Income	For the Three Months Ended							For the Three Months Ended
	March 31, 2011							June 30, 2011
	As Previously Reported		Adjustment			As Restated		As Previously Reported		Adjustment			As Restated
Segment Net Revenue
Payment Protection	$	14,351	$	(180	)	$	14,171	$	13,750	$	(392	)	$	13,358
BPO	3,564		—			3,564		3,691		—			3,691
Brokerage	8,891		—			8,891		9,836		—			9,836
Segment net revenues	26,806		(180		)	26,626		27,277		(392		)	26,885
Net losses and loss adjustment expenses	9,373		—			9,373		9,251		—			9,251
Member benefit claims	—		867			867		—		1,309			1,309
Commissions	18,517		11,389			29,906		17,323		11,404			28,727
Total segment revenue	54,696		12,076			66,772		53,851		12,321			66,172
Operating Expenses
Payment Protection	8,768		—			8,768		8,644		—			8,644
BPO	2,619		—			2,619		2,828		—			2,828
Brokerage	6,819		—			6,819		7,527		—			7,527
Corporate	—		—			—		1,727		—			1,727
Total operating expenses	18,206		—			18,206		20,726		—			20,726
Net losses and loss adjustment expenses	9,373		—			9,373		9,251		—			9,251
Member benefit claims	—		867			867		—		1,309			1,309
Commissions	18,517		11,389			29,906		17,323		11,404			28,727
Total operating expenses before depreciation, amortization and interest expense	46,096		12,256			58,352		47,300		12,713			60,013
EBITDA
Payment Protection	5,583		(180		)	5,403		5,106		(392		)	4,714

67

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Reconciliation of Segment Net Revenue to Total Revenue and EBITDA to Net Income	For the Three Months Ended								For the Three Months Ended
	March 31, 2011								June 30, 2011
	As Previously Reported			Adjustment			As Restated		As Previously Reported			Adjustment			As Restated
BPO	945			—			945		863			—			863
Brokerage	2,072			—			2,072		2,309			—			2,309
Corporate	—			—			—		(1,727		)	—			(1,727		)
Total EBITDA	8,600			(180		)	8,420		6,551			(392		)	6,159
Depreciation and amortization
Payment Protection	953			—			953		1,324			—			1,324
BPO	240			—			240		277			—			277
Brokerage	442			—			442		591			—			591
Total depreciation and amortization	1,635			—			1,635		2,192			—			2,192
Interest Expense
Payment Protection	1,526			—			1,526		1,043			—			1,043
BPO	63			—			63		99			—			99
Brokerage	442			—			442		783			—			783
Total interest expense	2,031			—			2,031		1,925			—			1,925
Income (loss) before income taxes and non-controlling interests
Payment Protection	3,104			(180		)	2,924		2,739			(392		)	2,347
BPO	642			—			642		487			—			487
Brokerage	1,188			—			1,188		935			—			935
Corporate	—			—			—		(1,727		)	—			(1,727		)
Total income before income taxes and non-controlling interests	4,934			(180		)	4,754		2,434			(392		)	2,042
Income taxes	1,681			(72		)	1,609		907			(157		)	750
Less: net (loss) income attributable to non-controlling interests	(174		)	—			(174	)	2			—			2
Net income	$	3,427		$	(108	)	3,319		$	1,525		$	(235	)	$	1,290

Reconciliation of Segment Net Revenue to Total Revenue and EBITDA to Net Income	For the Three Months Ended							For the Three Months Ended
	September 30, 2011							December 31, 2011
	As Previously Reported		Adjustment			As Restated		As Previously Reported		Adjustment			As Restated
Segment Net Revenue
Payment Protection	$	15,770	$	(125	)	$	15,645	$	16,658	$	(135	)	$	16,523
BPO	3,833		—			3,833		4,496		—			4,496
Brokerage	9,208		—			9,208		9,097		—			9,097
Corporate	—		—			—		—		—			—
Segment net revenues	28,811		(125		)	28,686		30,251		(135		)	30,116
Net losses and loss adjustment expenses	9,714		—			9,714		9,611		—			9,611
Member benefit claims	—		945			945		—		1,288			1,288
Commissions	17,926		16,011			33,937		20,465		13,883			34,348
Total segment revenue	56,451		16,831			73,282		60,327		15,036			75,363
Operating Expenses
Payment Protection	8,445		—			8,445		7,657		—			7,657
BPO	2,717		—			2,717		3,434		—			3,434
Brokerage (1)	7,491		—			7,491		7,452		—			7,452
Corporate	36		—			36		—		—			—

68

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Reconciliation of Segment Net Revenue to Total Revenue and EBITDA to Net Income	For the Three Months Ended								For the Three Months Ended
	September 30, 2011								December 31, 2011
	As Previously Reported			Adjustment			As Restated		As Previously Reported		Adjustment			As Restated
Total operating expenses	18,689			—			18,689		18,543		—			18,543
Net losses and loss adjustment expenses	9,714			—			9,714		9,611		—			9,611
Member benefit claims	—			945			945		—		1,288			1,288
Commissions	17,926			16,011			33,937		20,465		13,883			34,348
Total operating expenses before depreciation, amortization and interest expense	46,329			16,956			63,285		48,619		15,171			63,790
EBITDA
Payment Protection	7,325			(125		)	7,200		9,001		(135		)	8,866
BPO	1,116			—			1,116		1,062		—			1,062
Brokerage (1)	1,717			—			1,717		1,645		—			1,645
Corporate	(36		)	—			(36	)	—		—			—
Total EBITDA	10,122			(125		)	9,997		11,708		(135		)	11,573
Depreciation and amortization
Payment Protection	927			—			927		1,001		—			1,001
BPO	307			—			307		300		—			300
Brokerage	650			—			650		1,017		—			1,017
Corporate	—			—			—		—		—			—
Total depreciation and amortization	1,884			—			1,884		2,318		—			2,318
Interest Expense
Payment Protection	1,053			—			1,053		1,027		—			1,027
BPO	96			—			96		161		—			161
Brokerage	757			—			757		591		—			591
Total interest expense	1,906			—			1,906		1,779		—			1,779
Income (loss) before income taxes and non-controlling interests
Payment Protection	5,345			(125		)	5,220		6,973		(135		)	6,838
BPO	713			—			713		601		—			601
Brokerage (1)	310			—			310		37		—			37
Corporate	(36		)	—			(36	)	—		—			—
Total income before income taxes and non-controlling interests	6,332			(125		)	6,207		7,611		(135		)	7,476
Income taxes	2,259			(50		)	2,209		2,626		(54		)	2,572
Less: net income attributable to non-controlling interests	1			—			1		1		—			1
Net income	$	4,072		$	(75	)	3,997		$	4,984	$	(81	)	$	4,903
(1) - Includes loss on sale of subsidiary of $477 for the three months ended September 30, 2011.

69

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Reconciliation of Segment Net Revenue to Total Revenue and EBITDA to Net Income	For the Three Months Ended									For the Three Months Ended
	March 31, 2010									June 30, 2010
	As Previously Reported			Adjustment			As Restated			As Previously Reported			Adjustment			As Restated
Segment Net Revenue
Payment Protection	$	9,903		$	—		$	9,903		$	12,210		$	—		$	12,210
BPO	4,563			—			4,563			4,327			—			4,327
Brokerage	8,261			—			8,261			7,680			—			7,680
Segment net revenues	22,727			—			22,727			24,217			—			24,217
Net losses and loss adjustment expenses	8,777			—			8,777			7,316			—			7,316
Member benefit claims	—			—			—			—			(23		)	(23		)
Commissions	19,349			—			19,349			17,850			3,105			20,955
Total segment revenue	50,853			—			50,853			49,383			3,082			52,465
Operating Expenses
Payment Protection	5,094			656			5,750			6,191			167			6,358
BPO	2,774			—			2,774			2,635			—			2,635
Brokerage	6,119			—			6,119			5,785			—			5,785
Corporate	230			—			230			612			—			612
Total operating expenses	14,217			656			14,873			15,223			167			15,390
Net losses and loss adjustment expenses	8,777			—			8,777			7,316			—			7,316
Member benefit claims	—			—			—			—			(23		)	(23		)
Commissions	19,349			—			19,349			17,850			3,105			20,955
Total operating expenses before depreciation, amortization and interest expense	42,343			656			42,999			40,389			3,249			43,638
EBITDA
Payment Protection	4,809			(656		)	4,153			6,019			(167		)	5,852
BPO	1,789			—			1,789			1,692			—			1,692
Brokerage	2,142			—			2,142			1,895			—			1,895
Corporate	(230		)	—			(230		)	(612		)	—			(612		)
Total EBITDA	8,510			(656		)	7,854			8,994			(167		)	8,827
Depreciation and amortization
Payment Protection	470			—			470			585			—			585
BPO	174			—			174			80			—			80
Brokerage	410			—			410			398			—			398
Total depreciation and amortization	1,054			—			1,054			1,063			—			1,063
Interest Expense
Payment Protection	1,661			—			1,661			1,704			—			1,704
BPO	106			—			106			92			—			92
Brokerage	124			—			124			189			—			189
Total interest expense	1,891			—			1,891			1,985			—			1,985
Income (loss) before income taxes and non-controlling interests
Payment Protection	2,678			(656		)	2,022			3,730			(167		)	3,563
BPO	1,509			—			1,509			1,520			—			1,520
Brokerage	1,608			—			1,608			1,308			—			1,308
Corporate	(230		)	—			(230		)	(612		)	—			(612		)
Total income before income taxes and non-controlling interests	5,565			(656		)	4,909			5,946			(167		)	5,779
Income taxes	2,076			(230		)	1,846			2,220			(58		)	2,162
Less: net income (loss) attributable to non-controlling interests	15			—			15			(46		)	—			(46		)

70

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Reconciliation of Segment Net Revenue to Total Revenue and EBITDA to Net Income	For the Three Months Ended						For the Three Months Ended
	March 31, 2010						June 30, 2010
	As Previously Reported		Adjustment			As Restated	As Previously Reported		Adjustment			As Restated
Net income	$	3,474	$	(426	)	3,048	$	3,772	$	(109	)	$	3,663

Reconciliation of Segment Net Revenue to Total Revenue and EBITDA to Net Income	For the Three Months Ended									For the Three Months Ended
	September 30, 2010									December 31, 2010
	As Previously Reported			Adjustment			As Restated			As Previously Reported			Adjustment			As Restated
Segment Net Revenue
Payment Protection	$	14,641		$	—		$	14,641		$	14,192		$	—		$	14,192
BPO	4,715			—			4,715			3,464			—			3,464
Brokerage	7,158			—			7,158			6,138			—			6,138
Segment net revenues	26,514			—			26,514			23,794			—			23,794
Net losses and loss adjustment expenses	10,993			—			10,993			8,949			—			8,949
Member benefit claims	—			211			211			—			278			278
Commissions	16,432			8,527			24,959			17,372			10,011			27,383
Total segment revenue	53,939			8,738			62,677			50,115			10,289			60,404
Operating Expenses
Payment Protection	6,435			125			6,560			5,853			605			6,458
BPO	2,588			—			2,588			2,005			—			2,005
Brokerage	5,783			—			5,783			5,842			—			5,842
Corporate	1,220			—			1,220			68			—			68
Total operating expenses	16,026			125			16,151			13,768			605			14,373
Net losses and loss adjustment expenses	10,993			—			10,993			8,949			—			8,949
Member benefit claims	—			211			211			—			278			278
Commissions	16,432			8,527			24,959			17,372			10,011			27,383
Total operating expenses before depreciation, amortization and interest expense	43,451			8,863			52,314			40,089			10,894			50,983
EBITDA
Payment Protection	8,206			(125		)	8,081			8,339			(605		)	7,734
BPO	2,127			—			2,127			1,459			—			1,459
Brokerage	1,375			—			1,375			296			—			296
Corporate	(1,220		)	—			(1,220		)	(68		)	—			(68		)
Total EBITDA	10,488			(125		)	10,363			10,026			(605		)	9,421
Depreciation and amortization
Payment Protection	327			—			327			970			—			970
BPO	457			—			457			(113		)	—			(113		)
Brokerage	435			—			435			435			—			435
Total depreciation and amortization	1,219			—			1,219			1,292			—			1,292
Interest Expense
Payment Protection	1,873			—			1,873			1,959			—			1,959
BPO	126			—			126			109			—			109
Brokerage	247			—			247			274			—			274
Total interest expense	2,246			—			2,246			2,342			—			2,342
Income (loss) before income taxes and non-controlling interests
Payment Protection	6,006			(125		)	5,881			5,410			(605		)	4,805

71

FORTEGRA FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Reconciliation of Segment Net Revenue to Total Revenue and EBITDA to Net Income	For the Three Months Ended								For the Three Months Ended
	September 30, 2010								December 31, 2010
	As Previously Reported			Adjustment			As Restated		As Previously Reported			Adjustment			As Restated
BPO	1,544			—			1,544		1,463			—			1,463
Brokerage	693			—			693		(413		)	—			(413		)
Corporate	(1,220		)	—			(1,220	)	(68		)	—			(68		)
Total income before income taxes and non-controlling interests	7,023			(125		)	6,898		6,392			(605		)	5,787
Income taxes	2,576			(44		)	2,532		1,831			(212		)	1,619
Less: net income attributable to non-controlling interests	—			—			—		51			—			51
Net income	$	4,447		$	(81	)	4,366		$	4,510		$	(393	)	$	4,117

72

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)1. Financial Statements:

The following Consolidated Financial Statements of Fortegra Financial Corporation and subsidiaries are included in this report:

(a)	Report of Independent Registered Public Accounting Firm on the Consolidated Financial Statements.
(b)	Consolidated Balance Sheets as of December 31, 2012 and 2011(Restated).
(c)	Consolidated Statements of Income for the years ended December 31, 2012, 2011 (Restated) and 2010 (Restated).
(d)	Consolidated Statements of Comprehensive Income for the years ended December 31, 2012, 2011 (Restated) and 2010 (Restated).
(e)	Consolidated Statements of Stockholders' Equity for the years ended December 31, 2012, 2011(Restated) and 2010(Restated).
(f)	Consolidated Statements of Cash Flows the years ended December 31, 2012, 2011(Restated) and 2010 (Restated).
(g)	Notes to Consolidated Financial Statements.

(a)2. Consolidated Financial Statement Schedules

The following financial statement schedule is attached hereto:

Schedule II - Condensed Financial Information of the Registrant

* All other schedules are omitted because they are not applicable, not required, or the information is included in the Consolidated Financial Statements or the Notes thereto.

Schedule II — Condensed Financial Information of Registrant

FORTEGRA FINANCIAL CORPORATION
PARENT COMPANY ONLY CONDENSED STATEMENTS OF INCOME
(All Amounts in Thousands)	Years Ended December 31,
	2012			2011			2010
Revenues				As Restated			As Restated
Management fee from subsidiaries*	$	—		$	—		$	—
Net investment income	290			298			307
Other income	—			—			—
Total net revenue	290			298			307
Expenses
Personnel costs*	—			—			—
Other operating expenses	1,036			558			598
Interest expense	210			1,062			904
Total expenses	1,246			1,620			1,502
Income before interest and income taxes interest	(956		)	(1,322		)	(1,195		)
Income taxes	(335		)	(357		)	(287		)
Income before equity in net income in subsidiaries	(621		)	(965		)	(908		)
Equity in net income of subsidiaries*	15,786			14,474			16,102
Net income	$	15,165		$	13,509		$	15,194
* Eliminated in consolidation

73

FORTEGRA FINANCIAL CORPORATION
PARENT COMPANY ONLY CONDENSED BALANCE SHEETS
(All Amounts in Thousands)	December 31,
	2012		2011
Assets:			As Restated
Investment in subsidiaries *	$	120,406	$	102,788
Cash and cash equivalents	279		138
Due from subsidiaries, net*	13,960		19,891
Notes receivable*	4,999		3,351
Other assets	933		903
Total assets	$	140,577	$	127,071
Liabilities:
Long-term debt	$	—	$	—
Other liabilities	194		496
Total liabilities	194		496
Stockholders' equity:
Total stockholders' equity	140,383		126,575
Total liabilities and stockholders' equity	$	140,577	$	127,071
* Eliminated in consolidation

FORTEGRA FINANCIAL CORPORATION
PARENT COMPANY ONLY CONDENSED STATEMENTS OF CASH FLOWS
(All Amounts in Thousands)	Years Ended December 31,
	2012			2011			2010
Operating Activities:				As Restated			As Restated
Net income	$	15,165		$	13,509		$	15,194
Adjustments to reconcile net income to net cash flows (used in) provided by operating activities
Equity in net income of subsidiaries*	(15,786		)	(14,474		)	(16,102		)
Cash dividend from subsidiaries	—			—			—
Deferred income tax expense	—			—			93
Stock based compensation	384			409			176
Other changes in assets and liabilities:
Net due to subsidiaries	5,931			14,012			(16,083		)
Other assets and other liabilities	(332		)	344			1,226
Net cash flows provided by (used in) operating activities	5,362			13,800			(15,496		)
Investing Activities:
Proceeds from maturities of investments	—			—			—
Net paid for the acquisition of subsidiaries	—			—			—
Proceeds from notes receivable	(1,648		)	84			703
Net cash flows (used in) provided by investing activities	(1,648		)	84			703
Financing Activities:
Repayments of notes payable	—			(11,040		)	(11,487		)
Additional borrowings under notes payable	—			—			—
Net proceeds from issuance of common stock	—			—			40,203
Initial public offering costs	—			(826		)	—
Net proceeds from exercise of stock options	20			651			203
(Purchase) issuance of treasury stock	(3,923		)	(2,552		)	—
Net proceeds received from stock issued in the Employee Stock Purchase Plan	330			—			—
Stockholder funds disbursed at purchase	—			—			(14,105		)
Net cash flows (used in) provided by financing activities	(3,573		)	(13,767		)	14,814
Net increase in cash and cash equivalents	141			117			21
Cash and cash equivalents at beginning of period	138			21			—
Cash and cash equivalents at end of period	$	279		$	138		$	21
* Eliminated in consolidation

74

(a)3. Exhibits

Exhibits listed in this Exhibit Index of this Form 10-K/A (Amendment No. 1) are filed herein or are incorporated by reference.

		Incorporated by Reference
Exhibit Number	Description of Exhibits	Form	File Number	Date Filed	Original Exhibit Number	Filed Herewith	Furnished Herewith
1.1	Form of Underwriting Agreement.	S-1/A	333-169550	11/29/2010	1.1
2.1	Agreement and Plan of Merger, dated as of March 7, 2007, by and among, Summit Partners Private Equity Fund VII-A, L.P., Summit Partners Private Equity Fund VII-B, L.P., Summit Subordinated Debt Fund III-A, L.P., Summit Subordinated Debt Fund III-B, L.P., Summit Investors VI, L.P., LOS Acquisition Co., the signing stockholders and Life of the South Corporation and N.G. Houston III, as Stockholder Representative.	S-1	333-169550	9/23/2010	2.1
2.2	First Amendment to Merger Agreement, dated as of June 20, 2007 by and among Summit Partners Private Equity Fund VII-A, L.P., Summit Partners Private Equity Fund VII-B, L.P., Summit Subordinated Debt Fund III-A, L.P., Summit Subordinated Debt Fund III-B, L.P., Summit Investors VI, L.P., LOS Acquisition Co., Life of the South Corporation and N.G. Houston, III, as Stockholder Representative.	S-1	333-169550	9/23/2010	2.2
2.3	Stock Purchase Agreement, dated as of April 15, 2009, by and among Willis HRH, Inc., Bliss and Glennon, Inc., LOTS Intermediate Co., Willis North America Inc. and Fortegra Financial Corporation.	S-1	333-169550	9/23/2010	2.3
2.4	Agreement and Plan of Merger, dated March 3, 2011 by and among eReinsure.com, Inc., a Delaware corporation, Alpine Acquisition Sub., Inc., a Delaware corporation, and Century Capital Partners III, L.P., as Agent solely for the purposes of Section 10.02, and LOTS Intermediate Co., a Delaware corporation.	8-K	001-35009	3/7/2011	2.1
3.1	Third Amended and Restated Certificate of Incorporation of Fortegra Financial Corporation.	S-1/A	333-169550	12/13/2010	3.3
3.3	Amended and Restated Bylaws of Fortegra Financial Corporation.	S-1/A	333-169550	11/29/2010	3.2
4.1	Form of Common Stock Certificate.	S-1/A	333-169550	12/13/2010	4.1
4.2	Stockholders Agreement, dated as of March 7, 2007, among Life of the South Corporation(together with its successors), the Rollover Stockholders (as defined therein), Employee Stockholders (as defined therein) and Investors (as defined therein).	S-1/A	333-169550	10/29/2010	4.2
10.1	Indenture, dated as of June 20, 2007, between LOTS Intermediate Co. and Wilmington Trust Company.	S-1	333-169550	9/23/2010	10.1
10.2	Form of Fixed/Floating Rate Senior Debenture (included in Exhibit 10.1).	S-1	333-169550	9/23/2010	10.2
10.3	Subordinated Debenture Purchase Agreement, dated as of June 20, 2007, among Summit Subordinated Debt Fund III-A, L.P., Summit Subordinated Debt Fund III-B, L.P., Summit Investors VI, L.P. and LOTS Intermediate Co.	S-1	333-169550	9/23/2010	10.3
10.4	Form of Subordinated Debenture (included in Exhibit 10.3).	S-1	333-169550	9/23/2010	10.4
10.5	Amended Subordinated Debenture Purchase Agreement, dated June 16, 2010, among Summit Subordinated Debt Fund III-A, L.P., Summit Subordinated Debt Fund III-B, L.P., Summit Investors VI, L.P. and LOTS Intermediate Co.	S-1	333-169550	9/23/2010	10.5

75

		Incorporated by Reference
Exhibit Number	Description of Exhibits	Form	File Number	Date Filed	Original Exhibit Number	Filed Herewith	Furnished Herewith
10.6	Revolving Credit Agreement, dated June 16, 2010, among Fortegra Financial Corporation and LOTS Intermediate Co., as borrowers, and the lenders from time to time a party thereto and SunTrust Bank, as administrative agent.	S-1	333-169550	9/23/2010	10.6
10.6.1	First Amendment to Credit Agreement, dated as of October 6, 2010, by and among Fortegra Financial Corporation and LOTS Intermediate Co., as borrowers, and the lenders from time to time a party thereto and SunTrust Bank, as administrative agent.	S-1/A	333-169550	10/29/2010	10.6.1
10.6.2	Joinder Agreement, dated November 30, 2010, by CB&T, a division of Synovus Bank, Suntrust Bank, as Administrative Agent and Fortegra Financial Corporation and LOTS Intermediate Co., as Borrowers.	S-1/A	333-169550	12/13/2010	10.6.2
10.6.3	Joinder Agreement, dated March 1, 2011, by Wells Fargo Bank, N.A., Suntrust Bank, as Administrative Agent and Fortegra Financial Corporation and LOTS Intermediate Co., as Borrowers	8-K	001-35009	3/7/2011	10.1
10.7	Revolving Credit Note, dated June 16, 2010, among Fortegra Financial Corporation and LOTS Intermediate Co., as borrowers, and SunTrust Bank, as lender.	S-1	333-169550	9/23/2010	10.7
10.8	Subsidiary Guaranty Agreement, dated June 16, 2010, among Bliss and Glennon, Inc., LOTSolutions, Inc., as guarantors and SunTrust Bank, as administrative agent.	S-1	333-169550	9/23/2010	10.8
10.9	Security Agreement, dated June 16, 2010, by Fortegra Financial Corporation and LOTS Intermediate Co., as borrowers and SunTrust Bank, as administrative agent.	S-1	333-169550	9/23/2010	10.9
10.10	Pledge Agreement, dated June 16, 2010 by and among Fortegra Financial Corporation, as pledgor and SunTrust Bank, as administrative agent.	S-1	333-169550	9/23/2010	10.10
10.11	Form of Fortegra Financial Corporation Director Indemnification Agreement for John R. Carroll and J.J. Kardwell.	S-1/A	333-169550	11/29/2010	10.18
10.12	Form of Fortegra Financial Corporation Director Indemnification Agreement for Francis M. Colalucci, Frank P. Filipps, Arun Maheshwari, Ted W. Rollins and Sean S. Sweeney.	S-1/A	333-169550	11/29/2010	10.19
10.13	Form of Fortegra Financial Corporation Officer Indemnification Agreement.	S-1/A	333-169550	12/3/2010	10.20
10.14	Form of Indemnity Agreement between Fortegra Financial Corporation and the executive officers serving as plan committee members for the Fortegra Financial Corporation 401(k) Savings Plan.	S-1/A	333-169550	10/29/2010	10.21
10.15 *	Executive Employment and Non-Competition Agreement, dated as of March 7, 2007, by and between Life of the South Corporation and Richard S. Kahlbaugh.	S-1/A	333-169550	12/3/2010	10.22
10.15.1*	Amendment No. 1 to Executive Employment and Non-Competition Agreement, dated as of November 1, 2010, by and between Fortegra Financial Corporation and Richard S. Kahlbaugh.	S-1/A	333-169550	12/3/2010	10.22.1
10.16 *	Executive Employment and Non-Competition Agreement, dated as of October 1, 2010, by and between Fortegra Financial Corporation and Walter P. Mascherin.	S-1/A	333-169550	12/3/2010	10.27
10.17 *	2005 Equity Incentive Plan.	S-1/A	333-169550	10/29/2010	10.28
10.18 *	Key Employee Stock Option Plan (1995) Agreement.	S-1/A	333-169550	10/29/2010	10.29

76

		Incorporated by Reference
Exhibit Number	Description of Exhibits	Form	File Number	Date Filed	Original Exhibit Number	Filed Herewith	Furnished Herewith
10.19	Stock Option Agreement by and between Life of the South Corporation and Richard S. Kahlbaugh, dated as of November 18, 2005, as amended on March 7, 2007 and June 20, 2007.	S-1/A	333-169550	11/16/2010	10.30
10.20	Stock Option Agreement by and between Life of the South Corporation and Richard Kahlbaugh, dated as of October 25, 2007.	S-1/A	333-169550	11/16/2010	10.31
10.21 *	2010 Omnibus Incentive Plan.	S-1/A	333-169550	12/3/2010	10.32
10.22 *	Employee Stock Purchase Plan.	S-1/A	333-169550	12/3/2010	10.33
10.23 *	Deferred Compensation Agreement, dated January 1, 2006 between Life of the South Corporation and Richard S. Kahlbaugh.	S-1/A	333-169550	10/29/2010	10.35
10.24	Administrative Services Agreement, dated August 1, 2002, by and between Life of the South Insurance Company and National Union Fire Insurance Company of Pittsburgh, PA., as amended on February 1, 2003, October 1, 2003 and August 1, 2008. (CONFIDENTIAL TREATMENT HAS BEEN GRANTED WITH RESPECT TO CERTAIN PORTIONS, WHICH HAVE BEEN FILED SEPERATELY WITH THE SECURTIES AND EXHANGE COMMISSION)	S-1/A	333-169550	11/16/2010	10.37
10.24.1	Amendment No. 4, dated January 31, 2012, to the Administrative Services Agreement, dated August 1, 2002, by and between Life of the South Insurance Company and National Union Fire Insurance Company of Pittsburgh, PA., as amended on February 1, 2003, October 1, 2003 and August 1, 2008	10-K	001-35009	4/1/2013	10.24.1
10.24.2	Amendment No. 5, dated February 1, 2012, to the Administrative Services Agreement, dated August 1, 2002, by and between Life of the South Insurance Company and National Union Fire Insurance Company of Pittsburgh, PA., as amended on February 1, 2003, October 1, 2003, August 1, 2008, and January 31, 2012.	10-K	001-35009	4/1/2013	10.24.2
10.25	Claims Services Agreement, dated December 1, 2008, by and between LOTSolutions, Inc. and National Union Fire Insurance Company of Pittsburgh, PA., as amended on August 1, 2010. (CONFIDENTIAL TREATMENT HAS BEEN GRANTED WITH RESPECT TO CERTAIN PORTIONS, WHICH HAVE BEEN FILED SEPERATELY WITH THE SECURTIES AND EXHANGE COMMISSION)	S-1/A	333-169550	11/16/2010	10.38
10.25.1	Amendment No. 2, dated January 1, 2012, to the Claims Services Agreement, dated December 1, 2008, by and between LOTSolutions, Inc. and National Union Fire Insurance Company of Pittsburgh, PA., as amended on August 1, 2010.	10-K	001-35009	4/1/2013	10.25.1
10.26 *	Form of Restricted Stock Award Agreement for Directors.	S-1/A	333-169550	12/3/2010	10.47
10.26.1 *	Amended - Form of Restricted Stock Award Agreement for Directors.	10-K	001-35009	4/1/2013	10.26.1
10.27 *	Form of Restricted Stock Award Agreement for Employees.	S-1/A	333-169550	12/3/2010	10.48
10.28 *	Form of Restricted Stock Award Agreement (Bonus Pool).	S-1/A	333-169550	12/3/2010	10.49
10.29 *	Form of Nonqualified Stock Option Award Agreement.	S-1/A	333-169550	12/3/2010	10.50
10.30 *	Form of Nonqualified Stock Option Award Agreement for Walter P. Mascherin.	S-1/A	333-169550	12/3/2010	10.51

77

		Incorporated by Reference
Exhibit Number	Description of Exhibits	Form	File Number	Date Filed	Original Exhibit Number	Filed Herewith	Furnished Herewith
10.31*	Executive Employment and Non-Competition Agreement, dated as of January 1, 2011, by and between Fortegra Financial Corporation and Alex Halikias.	10-Q	001-35009	5/15/2012	10.38
10.32 *	Executive Employment and Non-Competition Agreement, dated as of January 1, 2009, by and between Fortegra Financial Corporation and Joseph McCaw.	10-Q	001-35009	5/15/2012	10.39
10.33 *	Executive Employment and Non-Competition Agreement, dated as of October 1, 2010, by and between Fortegra Financial Corporation and John G. Short.	10-Q	001-35009	5/15/2012	10.40
10.34	Credit Agreement, dated August 2, 2012, among Fortegra Financial Corporation and LOTS Intermediate Co., as borrowers; the initial lenders named therein; Wells Fargo Bank, N.A., as administrative agent, swingline lender, and issuing lender; Wells Fargo Securities, LLC, as bookrunner and joint lead arranger; and Synovus Bank as joint lead arranger and syndication agent.	8-K	001-35009	8/7/2012	10.1
10.35	Subsidiary Guaranty Agreement, dated August 2, 2012, among certain subsidiaries of Fortegra Financial Corporation and LOTS Intermediate Co., as guarantors, and Wells Fargo Bank, N.A.	8-K	001-35009	8/7/2012	10.2
10.36	Pledge Agreement, dated August 2, 2012, by Fortegra Financial Corporation and LOTS Intermediate Co., as pledgors, and Wells Fargo Bank, N.A.	8-K	001-35009	8/7/2012	10.3
10.37	Security Agreement, dated August 2, 2012, among Fortegra Financial Corporation, LOTS Intermediate Co. and certain of its subsidiaries, as grantors, and Wells Fargo Bank, N.A.	8-K	001-35009	8/7/2012	10.4
10.38	Trademark Security Agreement, dated August 2, 2012, among the Fortegra Financial Corporation, LOTSolutions, Inc., Pacific Benefits Group Northwest, L.L.C., eReinsure.com, Inc., as grantors, and Wells Fargo Bank, N.A.	8-K	001-35009	8/7/2012	10.5
10.39	Patent Security Agreement, dated August 2, 2012, by eReinsure.com, Inc., as grantor, and Wells Fargo Bank, N.A.	8-K	001-35009	8/7/2012	10.6
10.40*	Executive Employment and Non-Competition Agreement, dated as of January 1, 2011, by and between Fortegra Financial Corporation and Igor Best-Devereux	10-K	001-35009	4/1/2013	10.40
11.1	Statement Regarding Computation of Per Share Earnings (incorporated by reference to Notes to Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K, as amended by Amendment No. 1 on Form 10-K/A).
21	List of Subsidiaries of Fortegra Financial Corporation	10-K	001-35009	4/1/2013	21
23.1	Consent of Johnson Lambert LLP, Independent Registered Public Accounting Firm	10-K	001-35009	4/1/2013	23
23.2	Consent of Johnson Lambert LLP, Independent Registered Public Accounting Firm					X
31.1	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.	10-K	001-35009	4/1/2013	31.1
31.2	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.					X
31.3	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.	10-K	001-35009	4/1/2013	31.2
31.4	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.					X

78

		Incorporated by Reference
Exhibit Number	Description of Exhibits	Form	File Number	Date Filed	Original Exhibit Number	Filed Herewith	Furnished Herewith
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	10-K	001-35009	4/1/2013	32.1
32.2	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.						X
101	The following materials from Fortegra Financial Corporation's Annual Report on Form 10-K for the year ended December 31, 2012, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets at December 31, 2012 and December 31, 2011, (ii) the Consolidated Statements of Income for the years ended December 31, 2012, 2011 and 2011, (iii) the Consolidated Statements of Comprehensive Income for the years ended December 31, 2012, 2011 and 2011, (iv) the Consolidated Statements of Stockholders' Equity for the years ended December 31, 2012, 2011 and 2011, (v) the Consolidated Statements of Cash Flows for the years ended December 31, 2012, 2011 and 2011, and (vi) the Notes to Consolidated Financial Statements. (1)	10-K	001-35009	4/1/2013	101 (1)
*	Management contract or compensatory plan or arrangement.
(1)	Previously furnished with the Annual Report on Form 10-K of Fortegra Financial Corporation for the year ended December 31, 2012, as filed on April 1, 2013.

79

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

			Fortegra Financial Corporation
Date:	August 23, 2013	By:	/s/ Richard S. Kahlbaugh
			Richard S. Kahlbaugh
			Chairman, President and Chief Executive Officer

80

EX-23.2

Exhibit 23.2

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the registration statements on Form S-8 (Nos. 333-171220 and 333-171221) and on Form S-1 (No. 333-169550) of Fortegra Financial Corporation of our report dated March 29, 2013 with respect to the consolidated financial statements and financial statement schedules of Fortegra Financial Corporation, included in this Amendment No. 1 to the Annual Report (Form 10-K/A) for the year ended December 31, 2012.

/s/ Johnson Lambert LLP

Jacksonville, Florida

August 23, 2013

EX-31.2

Exhibit 31.2

SECTION 302 CERTIFICATION FOR THE CHIEF EXECUTIVE OFFICER

I, Richard S. Kahlbaugh, Chairman, President and Chief Executive Officer of Fortegra Financial Corporation, certify that:

1. I have reviewed this Form 10-K/A (Amendment No. 1) of Fortegra Financial Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report.

Date:	August 23, 2013	/s/ Richard S. Kahlbaugh
		Richard S. Kahlbaugh
		Chairman, President and Chief Executive Officer

EX-31.4

Exhibit 31.4

SECTION 302 CERTIFICATION FOR THE CHIEF FINANCIAL OFFICER

I, Walter P. Mascherin, Executive Vice President and Chief Financial Officer, certify that:

1. I have reviewed this Form 10-K/A (Amendment No. 1) of Fortegra Financial Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report.

Date:	August 23, 2013	/s/ Walter P. Mascherin
		Walter P. Mascherin
		Executive Vice President and Chief Financial Officer

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Form 10-K/A (Amendment No. 1), as filed with the Securities and Exchange Commission on the date hereof (the "Report"), each of the undersigned, in the capacity and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of Fortegra Financial Corporation as of the dates and for the periods expressed in the Report.

Date:	August 23, 2013	By:	/s/ Richard S. Kahlbaugh
			Richard S. Kahlbaugh
			Chairman, President and Chief Executive Officer
Date:	August 23, 2013	By:	/s/ Walter P. Mascherin
			Walter P. Mascherin
			Executive Vice President and Chief Financial Officer

A signed original of this written statement required by Rule 13a-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350 has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request. 

This certification accompanies the Form 10-K/A (Amendment No. 1), to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Registrant under the Securities Act of 1933 or the Securities Exchange Act of 1934 (whether made before or after the date of the Form 10-K/A (Amendment No. 1)), irrespective of any general incorporation language contained in such filing.