A.M. Best Assigns Ratings to First Acceptance Insurance Company of Tennessee, Inc.; Affirms Ratings of First Acceptance Insurance Group

Business Wire, Jan 18, 2008

OLDWICK, N.J. -- A.M. Best Co. has assigned a financial strength rating (FSR) of B (Fair) and an issuer credit rating (ICR) of "bb" to First Acceptance Insurance Company of Tennessee, Inc. (Nashville, TN). In addition, A.M. Best has affirmed the FSR of B (Fair) and ICRs of "bb" of First Acceptance Insurance Company, Inc. (Grand Prairie, TX) and First Acceptance Insurance Company of Georgia, Inc. (Kennesaw, GA). All are members of the First Acceptance Insurance Group (First Acceptance) (Grand Prairie, TX).

Concurrently, A.M. Best has affirmed the ICR of "b-" of the publicly traded holding company, First Acceptance Corporation (Nashville, TN) (NYSE: FAC). The outlook for all ratings is stable.

The ratings reflect First Acceptance's elevated underwriting leverage, adverse reserve development and substantial cumulative growth in premiums over the past five years, which have constrained overall risk-adjusted capitalization. These negative rating factors are somewhat mitigated by First Acceptance's generally favorable operating results and conservative investment strategy. The ratings further reflect the financial support the parent has given 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 revisions, closure of underperforming retail stores and more efficient use of technology.

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