This Day On The Street
Continue to site right-arrow
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
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

A.M. Best Revises Outlook To Stable For First Acceptance Corporation And Its Subsidiaries

Stocks in this article: FAC

A.M. Best Co. has revised the outlook to stable from positive and affirmed the financial strength rating (FSR) of B (Fair) and issuer credit ratings (ICR) of “bb+” of the pooled subsidiary members (First Acceptance) of First Acceptance Corporation (Delaware) [NYSE: FAC]. Concurrently, A.M. Best has revised the outlook to stable from positive and affirmed the ICR of “b” of First Acceptance Corporation. (See below for a detailed listing of the companies.)

The ratings of First Acceptance are based upon unfavorable operating performance in recent years; concentration of risk in private passenger non-standard auto lines; and challenging economic conditions compounded by a below average interest rate environment. These negative factors are offset in part by strong risk-adjusted capitalization and sound balance sheet liquidity along with action being taken to improve earnings.

Losses in recent years have been negatively impacted by increased claims severity, storm losses and higher expenses, as well as declining revenue from premium writings, investment income and other income items. Premium volume and additional fees charged to policyholders were down due to scaling back production and the weakened economy. Investment income was lower from reductions in invested assets and low interest rates.

Capitalization remains more than supportive of the ratings but has weakened in recent years. First Acceptance Corporation contributed nearly $13.1 million of additional capital to the insurance operations in September 2012. This was to partially offset a reduction in surplus primarily due to operating losses in 2011 and 2012 as well as a dividend paid in 2011 to buy back shares. In addition, management has taken a number of actions to improve earnings, primarily by raising rates, closing under-performing retail stores and improving claims handling and underwriting. However, capitalization may continue to weaken as management executes an aggressive growth plan over the next couple of years. The ratings may be further stabilized by a return to a profitable operating trend that leads to capital appreciation; however, the ratings may be downgraded by further weakening in risk-adjusted capitalization.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs