A.M. Best Affirms Ratings of First Acceptance Insurance Group and Its Members

OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best Co. has affirmed the financial strength rating (FSR) of B (Fair) and issuer credit ratings (ICR) of “bb” of First Acceptance Insurance Group (First Acceptance) (Nashville, TN) and its members. Concurrently, A.M. Best has affirmed the ICR of “b-” of First Acceptance’s publicly traded parent holding company, First Acceptance Corporation (Delaware) [NYSE: FAC]. The outlook for all ratings is stable. (Please see below for a detailed listing of the companies.)

The ratings reflect First Acceptance’s above average underwriting leverage, variable operating performance and generally unfavorable loss reserve development. These negative rating factors are somewhat mitigated by First Acceptance’s improved risk-adjusted capital position and conservative investment strategy. The ratings further reflect the financial support the parent has historically provided to First Acceptance through capital contributions.

First Acceptance’s market presence has been developed through the extensive utilization of advertising, which has provided strong local brand recognition in its territories of operation. The high traffic environment generated by the company-owned retail offices presents opportunities to offer additional products and fee-based services. In addition, management continues to take steps to improve underwriting results including rate increases, closure of underperforming retail stores and more efficient use of technology. As a result of these actions, combined with continued competitive market conditions, premium production has slowed considerably, which has positively impacted underwriting leverage and overall risk-adjusted capitalization.

The FSR of B (Fair) and ICRs of “bb” have been affirmed for First Acceptance Insurance Group and its following pooled members:

• First Acceptance Insurance Company, Inc.
• First Acceptance Insurance Company of Georgia, Inc.
• First Acceptance Insurance Company of Tennessee, Inc.

For Best’s Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

The principal methodologies used in determining these ratings, including any additional methodologies and factors, which may have been considered, can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.