This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

A.M. Best Affirms Ratings Of First Acceptance Corporation And Its Subsidiaries

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 pooled members. Concurrently, A.M. Best has affirmed the ICR of “b” of the group’s ultimate parent holding company, First Acceptance Corporation (Delaware) [NYSE: FAC]. The outlook for all ratings is positive. (Please see below for a detailed listing of the companies.)

The rating affirmations primarily are based on First Acceptance’s inconsistent earnings over the last five years, unprofitable operating performance in 2011, concentration of risk in highly competitive non-standard automobile lines and an aggressive growth strategy to increase production during soft market pricing and a low interest rate environment.

These negative rating factors are partially offset by First Acceptance’s favorable risk-adjusted capitalization, sound balance sheet liquidity, generally positive earnings and actions taken by management to improve profitability. The group operates under an intercompany pooling arrangement and proportionately shares in the overall underwriting performance of First Acceptance.

Earnings over the last five years have been negatively impacted by increased claims severity, higher expenses and a reduction in premium revenue due to the weak economy, competitive pricing and scaling back unprofitable production after a period of rapid growth. Losses in the current year primarily are attributed to higher bodily injury claims, spring and summer storm losses and higher expenses from initiatives put in place to improve pricing and fraud detection, as well as severance pay for several top executives.

First Acceptance’s balance sheet is favorable as a result of early capital contributions to support growth over the last five-year period and has been maintained by generally profitable operations over the same period. However, capitalization is expected to weaken; although, should remain supportive of the ratings as the group’s new management initiates an aggressive growth plan over the next few years. A.M. Best is concerned that earnings projections will be challenged if pricing, risk selection and reserving discipline are not maintained, along with growth, during the current competitive, soft non-standard auto market and low interest rate environment.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $93.74 0.00%
FB $117.58 0.00%
GOOG $693.01 0.00%
TSLA $240.76 0.00%
YHOO $36.60 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs