First Acceptance Corporation Reports Operating Results for the Quarter Ended March 31, 2025

Rhea-AI Summary

First Acceptance Corporation (OTCQX:FACO) reported its Q1 2025 financial results, showing a significant decline in performance. The company's income before taxes decreased to $3.8 million from $8.9 million in Q1 2024. Net income fell to $2.9 million ($0.08 per diluted share) compared to $6.9 million ($0.18 per diluted share) in the same period last year.

The company recognized $0.2 million in unfavorable prior period loss development, down from $3.9 million in Q1 2024. Revenues were impacted by $23.3 million in ceded premiums earned from a new reinsurance agreement effective July 1, 2024. CEO Ken Russell attributed the performance decline to increased physical damage loss severity, citing marketplace price increases due to anticipated tariffs on imported vehicles and auto parts.

Positive

• New reinsurance agreement implemented, potentially reducing risk exposure
• Management actively monitoring market trends and planning pricing adjustments
• Unfavorable prior period loss development decreased significantly from $3.9M to $0.2M

Negative

• Net income declined 58% year-over-year to $2.9M from $6.9M
• Diluted EPS decreased 56% to $0.08 from $0.18
• Revenue reduction of $23.3M due to ceded premiums from reinsurance agreement
• Increased physical damage loss severity due to anticipated tariffs

News Market Reaction

-4.96%

1 alert

-4.96% News Effect

On the day this news was published, FACO declined 4.96%, reflecting a moderate negative market reaction.

Data tracked by StockTitan Argus on the day of publication.

NASHVILLE, TN / ACCESS Newswire / May 6, 2025 / First Acceptance Corporation (OTCQX:FACO) today reported its financial results for the quarter ended March 31, 2025. A quarterly report can be found at www.otcmarkets.com/stock/FACO/disclosure.

Income before income taxes for the three months ended March 31, 2025 was $3.8 million, compared with $8.9 million for the three months ended March 31, 2024. Net income for the three months ended March 31, 2025 was $2.9 million, compared with $6.9 million for the three months ended March 31, 2024. Diluted net income per share was $0.08 for the three months ended March 31, 2025, compared with $0.18 for the for the three months ended March 31, 2024.

For the three months ended March 31, 2025, we recognized unfavorable prior period loss and LAE development of $0.2 million compared with $3.9 million for the same period in the prior year.

Revenues for the three months ended March 31, 2025 were reduced by ceded premiums earned of $23.3 million from a new reinsurance agreement that was effective July 1, 2024.

The Company's President and Chief Executive Officer, Ken Russell, commented, "Our first quarter financial results were impacted by increased physical damage loss severity. We believe this was largely attributable to marketplace price increases in anticipation of tariffs on imported vehicles, auto parts and vehicle components. While uncertainty about the future of these tariffs still lingers, we, along with the automobile insurance industry, will focus on monitoring these trends and will respond accordingly by modifying our underwriting standards and seeking regulatory approval to increase our pricing where appropriate."

About First Acceptance Corporation

First Acceptance Corporation is an insurance holding company headquartered in Nashville that underwrites non-standard personal automobile insurance through insurance companies known as the First Acceptance Insurance Group. We solely offer our own underwritten insurance policies through independent agents.

Additional information about First Acceptance Corporation can be found online at www.firstacceptance.com.

Forward-Looking Statements

This press release contains forward-looking statements. All statements made other than statements of historical fact are forward-looking statements. You can identify these statements from our use of the words "believe," "expect," "look," or the negative of these objective terms and similar expressions. These statements, which have been included in reliance on the "safe harbor" provisions of the federal securities laws, involve risks and uncertainties. Investors are hereby cautioned that these statements may be affected by important factors, including, among others, the factors set forth under the caption "Risk Factors" in our Annual Report for the year ended December 31, 2024, filed by the Company with the OTCQX. Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.

First Acceptance Corporation and Subsidiaries
Condensed Consolidated Statements of Income
(amounts in thousands, except per share data)

		Three Months Ended
		March 31,
		2025				2024
Revenues		$	125,087			$	145,263
Income before income taxes		$	3,780			$	8,938
Net income		$	2,906			$	6,928
Net income per diluted share		$	0.08			$	0.18
Average diluted shares outstanding			38,628				38,681
Loss Ratio			78.9	%			70.0	%
Expense Ratio			20.9	%			26.2	%
Combined Ratio			99.8	%			96.2	%
Book Value per Common Share		$	4.60			$	3.87

INVESTOR RELATIONS CONTACT:
Michael J. Bodayle
mbodayle@firstacceptance.com

SOURCE: First Acceptance Corporation

View the original press release on ACCESS Newswire

FAQ

What was FACO's net income for Q1 2025?

First Acceptance Corporation reported a net income of $2.9 million for Q1 2025, down from $6.9 million in Q1 2024.

How much did First Acceptance Corporation's earnings per share drop in Q1 2025?

FACO's diluted earnings per share decreased to $0.08 in Q1 2025 from $0.18 in Q1 2024, representing a 56% decline.

What factors affected FACO's Q1 2025 financial performance?

The company's performance was impacted by increased physical damage loss severity due to marketplace price increases related to anticipated tariffs on imported vehicles and parts, plus a $23.3M revenue reduction from ceded premiums in a new reinsurance agreement.

How much did First Acceptance's reinsurance agreement affect revenues in Q1 2025?

The new reinsurance agreement, effective July 1, 2024, reduced revenues by $23.3 million in ceded premiums earned during Q1 2025.

What actions is FACO taking to address the decline in performance?

Management plans to modify underwriting standards and seek regulatory approval for price increases in response to market trends and tariff-related challenges.