Acceptance Insurance

Overview

Acceptance Insurance is the consumer-facing brand of First Acceptance Corporation, a Nashville, Tennessee-based insurer whose operating subsidiaries — First Acceptance Insurance Company, Inc., First Acceptance Insurance Company of Georgia, Inc., and First Acceptance Insurance Company of Tennessee, Inc. — sell non-standard personal automobile insurance, the segment of the market that covers drivers other insurers reject or price out (AM Best; AM Best). The company’s own corporate paper trail begins not in 1969 or 1979, as insurance review sites variously claim, but in December 2003, when Liberté Investors, Inc. announced it would acquire USAuto Holdings — a Tennessee-based non-standard auto insurer — for $76 million in cash plus 13.25 million new shares, rename itself First Acceptance Corporation, and move its headquarters to Nashville (SEC). The merger closed in early 2004, and SEC filings since then identify First Acceptance Corporation as a Delaware corporation operating from 3813 Green Hills Village Drive in Nashville (SEC). The company’s stock, once listed on the New York Stock Exchange under the symbol FAC, now trades on the OTCQX market as FACO — a transition independently documented by AM Best’s own rating releases, which cite [NYSE: FAC] in 2010 and [OTCQX: FACO] by 2022 (AM Best; AM Best).

From Liberté Investors to First Acceptance

The December 2003 announcement is the clearest statement of the company’s origins. Liberté Investors, then listed on the NYSE under LBI, said it had entered a definitive merger agreement under which it would acquire 100% of USAuto’s stock — $76 million in cash and 13.25 million newly issued shares, with up to 750,000 more shares payable if USAuto hit 2004 operating targets (SEC). The deal was backed by Liberté’s chairman and 45% stockholder Gerald J. Ford and advised by Morgan Joseph & Co., and it carried a wholesale changing of the guard: USAuto CEO Stephen J. Harrison would replace Liberté CEO Donald J. Edwards, and COO Thomas M. Harrison would become executive vice president, while Ford stayed on as chairman (SEC). The release pitched USAuto as “one of the most dynamic and highly profitable companies in the industry,” with a proprietary technology platform vertically integrating agency, underwriting, and servicing (SEC).

The operating model that emerged is classic non-standard auto: in a later SEC filing, First Acceptance described itself as a holding company whose subsidiaries sell, service, and underwrite non-standard personal automobile insurance and related products, issued through the three state-licensed subsidiaries named above (SEC). AM Best’s 2022 analysis put the footprint at 13 states, concentrated almost entirely in the private passenger non-standard automobile line — an industry segment, AM Best noted, “that continues to face pressure with increased claim activity and rising costs, as well as ongoing competition” (AM Best).

The AM Best rating arc: B to C++ to withdrawn

If there is one independent narrative thread running through this company’s modern history, it is AM Best’s assessment of its balance sheet — and it trends downward. In December 2010, AM Best affirmed a Financial Strength Rating of B (Fair) and an Issuer Credit Rating of “bb+” for First Acceptance Insurance Group of Nashville, with the holding company’s ICR at “b” [NYSE: FAC] and a positive outlook — but the affirmation rested on negatives: historically high underwriting leverage, weak capitalization, and unstable loss reserve development in recent years, only partially offset by stronger recent balance-sheet improvement and historically positive earnings (AM Best).

By 2022 the picture had thinned. AM Best affirmed FSR B (Fair) and a Long-Term ICR of “bb” for the pooled subsidiaries and “b-” (Marginal) for the holding company, now [OTCQX: FACO], with a stable outlook (AM Best). The group had paid $16.9 million in dividends to the holding company in 2021; policyholder surplus had declined nearly 15% at year-end 2021 as post-pandemic driving patterns, auto-parts scarcity, labor shortages, inflation, and used-car price spikes lifted loss frequency and severity; and the combined ratio had escalated more than nine points (AM Best). One unusual cushion persisted throughout: significant fee and other income, excluded from the statutory combined ratio, contributed roughly seven points a year on average (AM Best).

The arc ended in July 2025. AM Best affirmed a Financial Strength Rating of C++ (Marginal) and Long-Term ICRs of “b+” (Marginal) for the subsidiaries, and “ccc-” (Weak) for First Acceptance Corporation — and then withdrew every one of the ratings, because the company had asked to no longer participate in AM Best’s interactive rating process (AM Best via Business Wire). The withdrawal release reads as a parting verdict: balance sheet strength “weak,” with volatile policyholder surplus, elevated underwriting leverage, and adverse reserve development over five years; operating performance “marginal,” driven by persistent underwriting losses only partly offset by fee income; business profile “limited” to solely non-standard automobile business; and enterprise risk management “marginal,” with risk capabilities “not fully aligned with the organization’s profile” (AM Best via Business Wire).

Not the Iowa company: the name-collision problem

The profile above covers the Nashville non-standard auto insurer. It does not cover Acceptance Insurance Companies Inc. — a different company, a different SEC registrant (Commission File No. 1-7461, versus First Acceptance Corporation’s 001-12117), headquartered at 300 West Broadway in Council Bluffs, Iowa, that filed a voluntary Chapter 11 petition in the U.S. Bankruptcy Court for the District of Nebraska on January 7, 2005, with two subsidiaries (Acceptance Insurance Services, Inc. and American Agrisurance, Inc.) filing Chapter 7 the same day (SEC; SEC). Confusing the two is easy — the names are nearly identical — but the bankruptcy belongs to the Iowa company, not the Nashville one, and none of the rating actions or corporate history described here apply to it.

The same caution applies to the founding date itself: the SEC record establishes only the 2004 merger origin of the present corporation (SEC; SEC), while secondary insurance sources give conflicting earlier years — a discrepancy this profile flags as an open item rather than resolving.

What this profile does not claim

This profile does not assert a founding year for Acceptance Insurance — the SEC record establishes only the 2004 merger origin of the present corporation, and the conflicting years given by secondary sources are flagged, not resolved. It does not state the date or terms of the NYSE-to-OTCQX move — AM Best releases independently document the ticker transition from [NYSE: FAC] (2010) to [OTCQX: FACO] (2022) (AM Best; AM Best), but the specific delisting date comes only from the company’s own filings, which this site’s policy excludes, so it is stated as an open item rather than a fact. It does not pin the exact timing of the downgrade from B to C++ — only that the 2022 affirmation was B and the July 2025 action affirmed C++ before withdrawal (AM Best; AM Best via Business Wire). It makes no claim about the company’s current financial condition after the AM Best withdrawal; without a participating rating, no independent rating assessment exists. And it claims nothing about the Iowa Acceptance Insurance Companies Inc. beyond its distinct legal identity and its 2005 bankruptcy filing — it is a separate entity, not a predecessor of the Nashville company.