A.M. Best Co. has upgraded the issuer credit ratings (ICR) to “bb+” from “bb” and affirmed the financial strength rating (FSR) of B (Fair) of First Acceptance Insurance Group (First Acceptance) (Nashville, TN) and its members.
Concurrently, A.M. Best has upgraded the ICR to “b” from “b-” for First Acceptance’s publicly traded parent holding company, First Acceptance Corporation (Delaware) (NYSE: FAC). The outlook for all ratings has been revised to positive from stable. (Please see below for a detailed listing of the companies.)
The upgrading of the ICRs for First Acceptance reflects its reduced underwriting leverage, which has had a favorable impact on its overall capitalization, coupled with consistent fee and investment income. In addition, the group has seen improvement in its underwriting and operating performance since its reserve strengthening in 2007. The rating actions also contemplate that 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 (coupled with current economic conditions), premium production has slowed considerably, which has positively impacted underwriting leverage and overall risk-adjusted capitalization.
The outlook contemplates the sustainability of favorable risk-adjusted capitalization, the adherence to adequate pricing and reserving discipline, and controlled growth.The ICRs have been upgraded to “bb+” from “bb” and the FSR of B (Fair) has been affirmed for First Acceptance Insurance Group and its following pooled members: